by evolveAdmin | Aug 13, 2012 | Mortgage Assistance
A report by RealtyTrac highlights a problem for borrowers interested in a short sale of their home. According to Bloomberg, a RealtyTrac analysis showed only 4.2 percent of short sales were completed in the first quarter with second mortgages. The Bloomberg story notes that some holders of second mortgages can be demanding during negotiations, and stop a short sale cold. While a second mortgage holder may have the power to cause problems for a short sale, their power is not unlimited. If the home mortgage is underwater, the second lien holder is in the unenviable position of having gone from being a secured creditor to being unsecured. The second mortgage is now the equivalent of credit card debt, because there is no equity in the home to secure it. Relief Through Chapter 13 Bankruptcy Borrowers who are underwater and have a second mortgage could file a Chapter 13 and have the bankruptcy court strip the lien in the bankruptcy. In a Chapter 13, borrowers can reorganize their debts, pay mortgage arrears and remove any second mortgages on an underwater loan. This may give them the flexibility to remain in their home. During the Chapter 13, if they are unable to maintain their plan payments or it no longer makes economic sense to stay in the home, they could convert to a Chapter 7 and discharge most of their remaining debt, including any deficiency balance caused by a short sale or foreclosure. A bankruptcy attorney can provide advice as to whether a Chapter 7 or Chapter 13 bankruptcy would be the best solution for borrowers dealing with an underwater mortgage....
by evolveAdmin | Dec 16, 2011 | Foreclosure Defense
In December 2009, the Florida Supreme Court ordered that lenders and borrowers be allowed to file for pre-suit mediation prior to initiating the foreclosure process. This pre-suit mediation program, dubbed Residential Mortgage Foreclosure Mediation, fulfills Florida’s mediation requirement for all foreclosure matters and allows lenders and borrowers to voluntarily attempt to obtain a resolution. The goal of the program is to help homeowners keep their homes and give them a fresh start financially. The program was initially available only in state courts. However, in recent months the Federal Bankruptcy Court enlisted bankruptcy trustee Laurie Weatherford’s help in creating a similar program to help homeowners in the federal bankruptcy courts. Bankruptcy judges had grown concerned with the number of debtors who were entering their court rooms owing more on their mortgages then their properties were worth, and seriously behind on their mortgage payments. The federal program works in conjunction with Chapter 13 bankruptcy proceedings. Chapter 13 proceedings can often allow homeowners to keep their homes by working out a debt repayment plan with their creditors. How does the Mortgage Mediation Program Work? The program requires the borrower and lender to come together to work out a resolution. In the first stage, the lender and borrower select a mediator. Mediators are neutral parties who work with the lender and borrower toward a resolution. Once a mediator is chosen, the lender and borrower, and often the borrower’s attorney, sit down together and try to find a solution that keeps the homeowner in their home. Many times the lender will agree to modify the current mortgage. A mortgage modification often lowers the current interest rate on the...
by evolveAdmin | Jul 29, 2011 | Bankruptcy
While Florida bankruptcy filings show a decline compared to last year, experts say the percentages may be skewed. Most economists are not celebrating yet; they do not believe that Florida is quite yet on the mend as unemployment remains high throughout Central Florida. Some believe the drop-off was caused by a temporary backlog of foreclosure filings from lenders due to the accusations of fraudulent paperwork in 2009-2010. While banks sort though legal issues and company tactics, delinquent mortgages have been put on the back burner, slowing the number of foreclosures. The Hidden Benefit of the Foreclosure Backlog: No Mortgage Payments Some Florida homeowners who have lost their jobs or have otherwise fallen prey to the Great Recession are benefitting from the backlog. As lenders slow the rate at which they are filing foreclosures, many people have been able to live ‘rent free’ in their home, allowing funds to be used elsewhere. Living without a mortgage payment and being able to stay in their home is enabling some homeowners to get back on their feet financially, avoiding or postponing bankruptcy. The timing of a bankruptcy filing is a critical issue for anyone considering bankruptcy relief; the lack of a mortgage payment has given some Orlando-area families additional time and money during these difficult times. Bankruptcy Options for Floridians Individuals have two main bankruptcy options, Chapter 7 and Chapter 13 bankruptcy. A Chapter 7 bankruptcy, if filed correctly, will allow the homeowner to eliminate unsecured debt and keep their home. A Chapter 13 bankruptcy allows you to restructure all debt including your mortgage in order to make payments more manageable. A Chapter 13 filing...
by evolveAdmin | Jun 15, 2011 | Bankruptcy
Here’s the typical scenario: You owe more than what your home is worth. You have someone who will buy your house for what it’s currently valued at (called a short sale). Your mortgage lender agrees to the sale; the paperwork and sale are finalized. You give the keys to the new owner, move out and are relieved that you no longer are stuck paying for a home that just isn’t worth the money. You walk away and start over. But wait, it’s not over. You may still owe the bank the balance of your mortgage minus the money that was brought in from the short sale. This is called a deficiency and the bank has the right to collect that money from you even though you no longer live in nor own the house unless you received a “written waiver of deficiency judgment” from your bank upon the sale of the home. Florida law allows lenders up to five years to file for a deficiency judgment. Once the judgment is entered, your mortgage lender can collect the amount by garnishing your salary or bank accounts, placing a lien on any other real estate you may own or attacking any source of equity you may otherwise have other than your homestead. A deficiency judgment does not have to be pursued by your bank right away. In fact, many Floridians are just now receiving notices for homes that were sold by short sale two or three years ago. For many, a short sale may seem appealing as an answer to mortgage troubles. But, more often than not, bankruptcy is a better option. Whether you are...
