"What I don't understand is that if the value of their house a t one time was around $600k (based on my quick reading of the NPR story), their mortgage went from $3000 to $4000, they should have some equity (if houses on the street are now going for $200K).
If they can't afford the $4000 mortgage, they should work with their lender to work out a reasonable reappraisal of the house to what it is actually worth now and make payments to get caught up.
Foreclosing on this house is not in the bank's best interest so its better to get this loan off their books somehow.
There's something missing from this story.
K."
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