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In February 2010 the H. Ohm-Honer family bought their dream home for $480,000. They put $80,000 down (i.e., 16%, just under the customary 20%) and financed the balance. They took a 5.2% (nominal) mortgage at the local Neighborhood Friendly Bank and Trust of $400,000 for 25 years (payable monthly, end-of period). From March 1, 2010 through April 1, 2022, they made each monthly payment timely and in full. However, since then they have fallen on hard times. They missed the next two payments, and cannot seem to make the July 2022 installment, as well.

The mortgage is in technical default. The bank is threatening to foreclose on the family and to repossess the home if the loan is in arrears for any additional length of time.

To compound the familys problems, the value of their dream home has dropped 30% from the original price it is worth only $336,000 at this time.