by evolveAdmin | Jun 29, 2012 | Bankruptcy
For many in the Orlando area it has become common to owe more on your home than it is currently worth. A recent decision out of the Eleventh Circuit Court of Appeals offers a new avenue of relief for struggling homeowners who may soon face foreclosure. In McNeal v. GMAC Mortgage, LLC, the court found that in a Chapter 7 bankruptcy an individual can “strip off” a junior lien. The bankruptcy term “strip off” means that an unsecured lien is removed in its entirety. What is an Unsecured Junior Lien? A homeowner purchased a home for $200,000 in 2004 and financed $165,000 through a mortgage. The value of the home increased and in 2006, the homeowner consolidated debts with a second mortgage of $40,000. In 2012, the home is now valued at $150,000. The homeowner owes $158,000 on the first mortgage and $35,000 on the second mortgage. The second mortgage is a junior lien and is unsecured, because the house is no longer worth the amount owed on the first mortgage. How Does the Case Benefit Underwater Homeowners? Prior to this case, an individual who was underwater and facing foreclosure could only strip a junior lien, such as a home equity line of credit or a homeowner’s association lien, with a Chapter 13 filing. The individual pays back a portion of the debt they owe under a three- or five-year plan in Chapter 13. Banks holding those junior liens receive a portion of what was owed and are treated similarly to other unsecured creditors. In the past a homeowner might have needed to file a Chapter 13 solely to strip off junior...
by evolveAdmin | Jun 11, 2012 | Foreclosure Defense
Florida has been hit hard by the foreclosure crisis. Many in the Orlando area wonder when the glut of foreclosures will work their way through the system and home prices will stabilize. In March, Orlando experienced an increase of almost 50 percent in foreclosure filings. Florida had the second highest number of foreclosure filings in the country during the first quarter of 2012. The Orlando metro area reported 2,997 foreclosure filings in March. That means that one in every 314 homes had received a foreclosure-related filing. A foreclosure proceeding includes notices of default, auction notices and bank repossessions. However, a homeowner may be able to successfully fight foreclosure if the bank committed errors in the foreclosure process. Consulting an experienced foreclosure defense attorney is one way to find out whether any errors exist. Even if when the process has been handled correctly, other options are available. Some of the options that exist for those who are facing foreclosure include: Reinstatement Forbearance Loan modification Renting Bankruptcy, refinance and sale Each option has benefits and drawbacks. For example, reinstatement is one of the simplest options for those facing foreclosure. In a reinstatement, the homeowner only needs to request the amount that is due on that date, and does not need the lender’s approval to reinstate the mortgage. For a mortgage to be reinstated the homeowner must be able to pay the amount that is in default, usually several mortgage payments, and any fines or late fees. Homeowners can reinstate a mortgage up until the day before the foreclosure sale. The right course of action depends on your particular facts and situation. These options...
