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By Pankaj Malik, Managing Partner & Alexander Paykin, Associate, Malik & Associates, P.C.,

In late 2006, a decades-long housing boom began to slow. After the housing bubble burst, a sub-prime mortgage crisis soon followed. As homes started losing value amid falling real estate prices, many homeowners began experiencing difficulties paying their mortgages. Adjustable-rate mortgages soon bared their teeth as interest rates rose, and more and more homeowners could not meet their payments. As credit markets seized up and property values fell, refinancing under better terms became an increasingly less viable option. Many homeowners even saw the value of their homes fall well below the amount they still owed on their existing mortgages.

The sub-prime mortgage crisis soon spawned a systemic financial crisis. Banks curtailed lending, pensions were cut and unemployment shot up. Homeowners who had taken out sub-prime mortgages, often with adjustable rates, represented the most at-risk mortgage-holders. This was not especially surprising, given that these borrowers had frequently only been able to qualify for subprime mortgages because they posed high credit risks. These homeowners face a very grim situation, since many find themselves unable to make their mortgage payments and unable to refinance because of their bad credit risk. By the third quarter of 2007, 15.6% of sub-prime adjustable-rate mortgages were delinquent. Homeowners in this situation, as well as those in many others, may qualify for a loan modification, keeping their homes while greatly reducing their monthly liabilities. A loan modification can be a complex process, however, and is full of potential pitfalls.

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Malik & Associates, P.C.
138-02 Queens Boulevard
Briarwood, NY 11435

Local: (718)-657-5755
Toll Free: (877)-221-7901
Fax: (718)-657-5756
Email: pmalik@malikpc.com

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180 Froehlich Farm Boulevard
Woodbury, NY 11797

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