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Archive for the ‘Mortgage Relief’ Category

The best form of Loan Modification may not be a Loan Modification at all! Part 2 of 2: Eliminating Junior Liens

Friday, May 13th, 2011

Here is how it works: years ago, when home values were at their height, home owners used the equity in their home(s) to borrow against. They took out second mortgages, third mortgages, and even fourth mortgages. Those mortgages were secured by the equity in the home. But today, one in four California homeowners is upside down (where the liens against a property exceed the value of the property).  In many cases, debtors can completely eliminate junior liens either in a Chapter 13 or Chapter 11 Bankruptcy!

For most individuals and families, eliminating their junior mortgages and creating an affordable three to five year repayment plan on their debt is better than anything possibly achieved through a loan modification. Consumers are able to get caught up on delinquent mortgage payments and eliminate their junior mortgages upon the completion of their Chapter 11 or 13 plan. Consumers then walk away from their plan, free of all unsecured debts and their second mortgages in some cases. It truly represents a fresh start.

The great news is that by using this plan, it is possible to stay in your home while paying only a percentage of your unsecured debt even though you may be making less than you did several years ago.

The only shame is that most people who qualify for this type of bankruptcy don’t even know it exists!

To read the full story click here

The best form of Loan Modification may not be a Loan Modification at all! Part 1 of 2: Chapter 11 & 13 Bankruptcies

Thursday, May 12th, 2011

In California, consumer bankruptcies rose 25% in 2010 and were up 9% nationwide. There were 24,117 consumer bankruptcy filings here in the Santa Ana division of the Central District of California…and that was just in the first quarter of 2010! The majority of those were Chapter 7 filings to liquidate assets and eliminate unsecured debts.

What should be of great interest, especially here in South Orange County is the growth seen in Chapter 13 and consumer Chapter 11 bankruptcy filings. In both of these, the consumers typically are able to keep their homes, eliminate their junior mortgages (i.e. 2nd, 3rd, and 4th mortgages) entirely, and even reduce the amount owed on other secured debts. When an individual does not qualify for Chapter 13, they often consider a Chapter 11 bankruptcy.  For example, if a debtor’s secured debt exceeds $1,081,000 and/or combined unsecured debt exceeds $360,475, and the debtor wishes to keep delinquent assets, the only viable bankruptcy recourse would be to file for Chapter 11 bankruptcy protection.

To read the full story click here

Loan Modifications in Bankruptcy – The Wild West Comes to Court

Thursday, May 27th, 2010

The process of loan modification closely resembles the Wild West.  There’s a sheriff in town, but he’s likely hiding behind an overturned stagecoach when the real shooting begins.  For the myriad of people engaged in discussions, discussions and more discussions with their lenders, it’s hard to get the timing of the loan modification and bankruptcy in sync.

Ideally a loan modification should be complete before filing either Chapter 7 or Chapter 13 bankruptcy, but when stuck in endless rounds of paperwork coupled with the glacial pace of most banks, often the bankruptcy becomes pressing as other creditors actively pursue lawsuits, wage garnishments and liens.

Have no fear, there’s a new sheriff in town.  If you’ve filed bankruptcy, all is not lost on the loan modification front.  You are still free to enter into an agreement with your mortgage company as your bankruptcy progresses to discharge. (*specific Chapter 13 information).

More good news from the land of tumbleweeds; all is not lost if the bankruptcy is completed before the loan modification.  Once on the other side of bankruptcy, armed with a discharge of your debts, your debt to income ratio for the purposes of determining whether you qualify for a loan modification is much improved.  Many Los Angeles and Orange County bankruptcy clients find they get more favorable loan modifications after the bankruptcy than were in the works before.

* In a Chapter 13, once a loan modification is negotiated, it must be approved by the court and the Chapter 13 Trustee.  The Trustee may demand that if the loan modification results in a lower payment, that difference be added into the Chapter 13 plan payment as excess income.   The Trustee may reject the loan modification if it would increase the monthly mortgage payment and debtors wish to lower their plan payment to make the payments (which, from the Trustee’s point of view leaves less for unsecured creditors like credit cards).

Note that the above does not apply to instances where the creditor of a property has been granted relief from the automatic stay by the court.  In those instances, the property is removed from the bankruptcy estate.  This usually occurs when the debtors have defaulted on a mortgage payment after the bankruptcy has been filed.  With the estate removed from bankruptcy, some mortgage creditors have expressed willingness to work out some arrangement outside the bankruptcy court if they believe the default is not a future concern.

Keep an Eye on Your Mortgage Company and Their Locksmith

Monday, May 17th, 2010

Recently it has become common practice for mortgage lenders to keep an eye on their investments once they near foreclosure.  Sometimes, the lender sends out a realtor to appraise and review the property and occasionally the lender authorizes their agent to change the locks to secure and protect their investment.

Lenders supposedly instruct their agents to secure only abandoned property, but the locksmith is no doubt under a financial incentive to change locks – surely he is paid more when he finds an abandoned property and has to add on hardware to his bill.

These actions are blatantly illegal, and yet they have become commonplace. In a recent case in Sarasota, Florida, the lender even locked up the wrong property!  Chaos ensued.  You own your property until it is sold on the courthouse steps, and even after that, you may have rights; however courts frequently turn a blind eye to these home invasions because usually no one cares.

The moral of the story is to Stand Up for Yourself!  If you have been victimized by your mortgage lender in this way, please call our Orange County bankruptcy law firm or another attorney to ensure and enforce your rights.

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