You Can Get Relief From Your Second Mortgage

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Homes need maintenance and often homeowners don’t have the money to do expensive upgrades like adding a new cooling system or fixing a leaky roof.  Home maintenance can be costly and taxing.  You have to hire a contractor, check on permits and then live through the hassle of living in a home that is under repair.  Many will be forced to take out a second mortgage or get a home equity line of credit to meet their financial needs. 

Sadly, some homeowners not only face a home that needs repairs (and the headaches that go with it) but they also owe more on the home than it is worth.  Loan modifications may be out of the homeowner’s reach due to their credit problems.  Short sales can take months and leave the homeowner searching for a new place to live.  Many homeowners don’t want to leave and invest in the repairs in anticipation of living in their homes for the rest of their lives.  But circumstances such as a lost job, health crisis, divorce or other crisis may have impacted their ability to pay their bills. 

A faster option than a short sale or lengthy bank negotiation for a loan modification is available to homeowners that may seem like a miracle.  A homeowner can get out of the second mortgage or home equity line of credit and still keep their home.  It’s called “stripping the lien” and it’s one of the benefits of a Chapter 13 Bankruptcy that may be possible for your situation. 

Here’s how it works: Once you file a Chapter 13 Bankruptcy, the trustee overseeing the plan can eliminate the second mortgage or home equity line of credit if your home is worth less than your first mortgage.  But that’s not the only benefit.  If you are behind on your first mortgage, the bankruptcy trustee can give you up to 60 months to catch up on your payments—without paying any interest!  Here’s another benefit—this can also apply to third mortgages.  However, it does not apply to first mortgages.

In addition, a Chapter 13 Bankruptcy can eliminate other debts you may owe such as credit cards.  This will give you additional money to help catch up your mortgage payments.

You don’t have to lose your home because of a crisis or credit problems.  Our firm has helped hundreds of clients work through their financial challenges and keep their home with options that are right for them.

What Homeowners Should Know About Foreclosure Defense

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Many homeowners across the nation are finding themselves in a difficult predicament and facing foreclosure on the home that they have worked so hard to attain for their family and loved ones.  Receiving a notice of intent to foreclose can be a devastating event; however, not all hope is lost.  Foreclosure defense is a way of actively fighting back against the lender to either stall the process of foreclosure or stop it altogether. 

Since banks have significantly changed the way in which they conduct business, working with your lender during times of financial distress is not as easy as it used to be.  Through mortgage securities, lenders package and sell pools of mortgages to investors and only act as “servicers” who collect payments and issue default notices.  The system is set up in such a way to where these servicers (that you think of as your lender) are making money by foreclosing on your home and losing money in working with you to modify the terms of your mortgage.  Put simply, foreclosure defense has become a necessity if you want to keep your home. 

 

Mortgage defense consists of a process in which an attorney who understands the laws and regulations around the mortgage and lending industry requires your lender to prove they have the right to foreclose on your home.  This works as a stalling tactic, especially since many lenders have already sold the mortgage to an investor as part of a mortgage pool, and might have difficultly proving on paper that they own the mortgage. 

This process often reveals errors on the part of the lender, such as an inability to produce the original note or proof that they have participated in “robo-signing” of documents.  Such errors allow the homeowner additional time to get caught up financially, which often results in saving their home.  

My mortgage lender has sent a foreclosure notice on my home. What are my chances of just working it out with my lender to get extra time to catch up?

Will I Be Able to Rent a House or Apartment if I File for Bankruptcy?

In today’s current economic climate, many people are forced to rent due to losing their homes in foreclosure and not having the credit or means to buy another house.  This means that rental property is really the only option for many households and landlords understand that.  People with perfect credit are more likely to be taking advantage of the great deals in the housing market right now due to short sells and bank-owned properties, so that leaves people with less-than-perfect credit to apply for most of the rental property available.  Landlords know this, so the good news is that bankruptcy will likely help your chances of renting more than hurt your chances.

As long as your bankruptcy has been completely discharged, your landlord will likely concentrate on the credit you’ve used after filing.  Your landlord will also recognize the fact that now that your debts have been discharged, you will likely have more cash flow to pay your rent and other living expenses.  This is a plus for him or her in assuring that money will be paid on time. 

One thing to keep in mind—whether you have filed bankruptcy or not—is that you should not attempt to rent if the amount is more than 30% of your gross income.  Keeping your search to one that is in the range of housing you can afford will be crucial to getting approved as a renter.  Another thing to keep in mind is that honesty regarding your financial past, including the details relating to your bankruptcy, will be important in your agreement with a landlord.  If you honestly explain the situation that led to your bankruptcy and are able to show how well you have handled your financial affairs post-bankruptcy, many landlords will work with you to make sure you have a home to live in. 

I've lost my home in a foreclosure and can't qualify for another mortgage. Will I be able to rent a house or apartment if I file for bankruptcy?

Foreclosure and a Home’s Sale Date—Can Bankruptcy Stop It?

If a lender has placed a home in foreclosure and has already set a sale date for the property, all hope is not lost—it is still possible to save the home by filing for Chapter 13 bankruptcy.  Filing Chapter 13 bankruptcy immediately stops the foreclosure process and allows the homeowner some time to catch up on payments that have gotten behind. 

This means that even if you have already received a notice of foreclosure and a sale date for your home, you still have time and available legal resources to stop the process.  In Chapter 13, your lender is prohibited by the bankruptcy court from continuing any collection efforts and an automatic stay is placed on your assets, including your home.  This automatic stay is not permanent but it will at least give you some time to figure out if you want to fight to keep your home and catch up on payments through the Chapter 13 repayment plan.  

However, just because you can stall the foreclosure process through Chapter 13 bankruptcy doesn't mean this is a wise financial decision.  Since filing bankruptcy doesn't lower your mortgage premiums or the amount you owe for your home, there is still the consideration of “can I afford this home?”  If your home costs more than you can afford, and the mortgage is greater than 30% of your monthly net income, then you should consider the fact that the home might be more than you can reasonably afford—with or without a bankruptcy. 

Filing for bankruptcy has allowed many homeowners to stay in their homes, despite the fact that the lender has already begun the foreclosure process and initiated a sale date for the home.  You can discuss your options with our bankruptcy attorneys and we will be able to help you determine the best course of action.  

Is it true that my credit takes a bigger hit if I file for bankruptcy than if I have to undergo a foreclosure?

Common Myths Related to Bankruptcy, Modification, and Foreclosure

The processes surrounding bankruptcy, loan modification and foreclosure in Miami are often complicated, resulting in several misunderstandings about how these processes work and which one you should pursue if you are facing distressing financial situations.  These common myths make it difficult to make the right decision for your financial future, so dispelling them and learning the truth about which process would work in your favor if you are considering bankruptcy in Florida is an important step to getting back on track with your life and financial goals.

Myth #1 – Loan modification is encouraged by the federal government and therefore anyone can easily get it to reduce the principal amount that’s owed on their home.

Wrong.

Less than 30% of the homeowners who apply for loan modifications are granted them.  Additionally, it’s not an easy process and can take many months to complete and there is no guarantee that the lender will reduce the principal amount on the mortgage.  You may have gone through the whole process merely to have your loan extended to 40 years and the interest rate temporarily reduced, not getting you any closer to paying off your home.

Myth #2 – If I apply for a modification, my house won’t go into foreclosure and my missed payments will be waived.

Wrong.

If the foreclosure process has already been started on your home, or is close to being started, applying for a loan modification will not stop this process.  At best, it might slow it down or postpone the sale date slightly, but there’s no guarantee.  Also, a loan modification will not waive your missed payments.  Most lenders simply add these missed payments on to the end of your loan terms. 

Myth #3 – My credit takes a bigger hit if I file for bankruptcy than if I have to undergo a foreclosure. 

Wrong.

Many people find that their credit score actually improves after bankruptcy, especially if they’ve been missing payments for a while on multiple accounts.  If you have a foreclosure on your credit, it will take a serious hit—often one that is more serious than bankruptcy causes. A Miami bankruptcy attorney will be able to look at your specific circumstances and help you determine if a bankruptcy will help you achieve better credit in the short-term and long-term.   

Should I be worried about the Mortgage Debt Relief Act expiring at the end of this year (2012)?

Expiration of the Mortgage Debt Relief Act – Should I be Worried?

The Mortgage Debt Relief Act of 2007 is set to expire at the end of 2012 and many Florida homeowners facing foreclosure are concerned about the effects this will have on their situation.  However, before you stress too much, there are several points you should know about this Act and how it can affect you.

First, you need to know a little about how foreclosures and deficiencies related to them work.  Let’s say you’re one of the many Florida homeowners who owe more on your home than the current value of the home.  If your mortgage is for $250,000 but your home is currently valued at $150,000, the $100,000 difference is the deficiency that would still be owed to your lender—even if your home goes into foreclosure.  For many people, this deficiency is money that the lender would still be able to collect on.  Not only would you lose your home, but the lender would also be able to collect on the $100,000 deficiency, even after foreclosing on your home and forcing you to seek for another place to live. 

However, many lenders are offering forgiveness of the debt that would otherwise be considered the deficiency on your mortgage, especially if it means getting you out of the home so they can attempt to resell it.  The problem with this is according to federal tax code, that forgiven debt is considered to be income for you and is taxed as such.  This means that even if the lender forgives the deficiency you would otherwise owe on the mortgage after the foreclosure, you could still be taxed for the entire amount.  For some people, this is a very high amount! 

The Mortgage Debt Relief Act of 2007 provides relief to people who were granted forgiveness of deficiencies by their lender, stating that they are no longer responsible paying taxes on them, so it’s a very real concern for many people facing foreclosure as to whether or not this Act will be extended past 2012.  However, since it has already been extended and this is an election year, it is highly likely that it will be extended again.  Even if it’s not, one way of avoiding that potentially huge tax liability is to just file bankruptcy. Either way, talk to a qualified foreclosure or bankruptcy attorney to review your options.

What are the Effects of Foreclosure on a Community?

The foreclosures that swept the country during the latest recession have had a devastating impact on many families.  However, the negative effects of this crisis didn’t stop there—communities were also greatly impacted by foreclosure rates.  Although surprisingly few studies have been completed on the topic, there is evidence supporting the fact that foreclosures have a deep and lasting negative impact on communities, as well.   Here is what the research found:

• An increase in theft—when homes are abandoned and banks fail to resell them in a timely fashion, it creates the perfect situation for thieves to take advantage.  Everything from the copper wiring to the appliances within a home (such as air conditioners, water heaters, refrigerators, stoves, and toilets) becomes up for grabs when there isn’t a watchful eye on the property.
• An increase in vandalism and vagrancy—foreclosed homes are primary targets for vandals and vagrants, resulting in additional costs needed to restore or repair the home for potential homeowners.
• Local governments suffer—when there are multiple homes in a particular ward that are foreclosures, property values lower and there is a smaller tax base to support the local government. According to the Center for Responsible Lending, “Over 44 million homes in the United States will experience property devaluation as a result of foreclosures in their neighborhoods. Forty-two counties in the United States can expect to see their property tax base erode by more than $1 billion.”
• Youth experience stress—according to the Center for Responsible Lending, “it is estimated that over 1.95 million youth are affected by foreclosure.”  Not only do foreclosures directly affect the stress level and stability of the children who lose their home, they also directly affect the children left in the neighborhood who experience their neighborhood’s value decreasing.  A smaller tax base affects everything from neighborhood school budgets to playground maintenance and safety.  

They’re Taking My Home: Understanding the Foreclosure Process

When you receive a foreclosure notice for your home due to unforeseen financial circumstances or lost wages, it’s natural to immediately give up hope and think that it’s over—there’s nothing you can do to save your home.  This is simply untrue.  The foreclosure process is a long, paperwork-heavy procedure that can take several weeks (or even months) to progress.  It begins with the foreclosure notice but this notice doesn’t mean that you’ve run out of options.

 

The best way to not give up hope when you receive your foreclosure notice is to understand the foreclosure process so you’ll have more incentive to make the right choices to save your home during this critical time.  With this understanding, along with the right help from a qualified professional, your foreclosure can be stalled until you have time to get back on your feet.  It can even be completely avoided!

1. When you receive missed-payment notices

Many banks have a grace period for which they allow homeowners to be slightly late on payments.  For some, this grace period is 5 days, for others it is 10 days, and for others it might be 15 days or more.  When you miss your payment, the first thing you should expect to receive is a missed-payment notice.  As long as you send in your payment by the date given to you on this notice, your mortgage will be in good standing.  Many mortgage companies require a late payment, however, if the payment is made within the grace period.

 

2. When you receive a notice of default

Homeowners typically receive a notice of default (NOD) when they are 30 days or more late on their mortgage payment.  This notice gives you a certain number of days to make the mortgage current or run the risk of foreclosure.

 

3. When you get the foreclosure notice

This notice will generally give you the total amounts due, including interest owed, and the contact information for the mortgage company’s attorney.  After you receive this notice, it could be anywhere from 15 days to 15 months before the home goes up for auction on the foreclosure auction block.  The amount of time will depend largely on your lienholder’s regulations and the amount of foreclosure “backlog” they have to work on.  It will also largely vary depending on your location and how many foreclosures are happening within your area or municipality.  

When does the foreclosure process start and how does it work?

What options do I have if I'm in foreclosure?

Foreclosure Rescue Scams - Don’t be a Victim!

“Stop foreclosure now!”  Ever seen a handmade sign bearing these words on the side of the road?  Or perhaps you’ve received an email from someone who promises to work with your bank and keep foreclosure from happening?  Foreclosure defense and “avoid foreclosure now” promises are everywhere, especially in a market that is still struggling.

    

While it is certainly important to seek help when you are facing a foreclosure on your home, knowing who to trust for the right kind of help is crucial.  The wrong kind of help can put you deeper in the financial hole than you were when you started.  Sure, there are a lot of people who say they can help you stop your foreclosure.  But are they legitimate?  Here are scams to watch for:

The "Forensic Audit"

Forensic auditors will attempt to collect an up-front fee from you in order to “look over” and “assess” your mortgage and foreclosure documents.  They will then use their “expertise” to review your mortgage documents and create a report how you can avoid foreclosure.  The funny part is that this process of reviewing the paperwork is just the first step that qualified foreclosure defense attorney will make and it’s an important one, but not enough.  That’s why the “forensic audit” promise is a scam if that’s all they’re offering. 

Rent-to-Buy Schemes

In this scam, a con artist will say that if you give them the title to your house, you can stay there as a renter and buy it back from them later.  They will tell you that when the title is surrendered to them, they can refinance it with their good credit to prevent losing your home.  What they won’t tell you, however, is that these scams often involve impossibly difficult “buy back” arrangements, allowing these new owners to walk away with your house AND your money. They might also raise the “rent” they agreed upon at the beginning and forcing eviction if you can’t pay the higher amount.  

Should I Try a Short Sale if Threatened with Foreclosure?

Should I Try a Short Sale if Threatened With Foreclosure?

If you have been unable to keep up with your monthly payments and are under the threat of losing your home in foreclosure, it might seem like you don’t have a lot of options and are financially cornered.  However, this feeling is normal when we experience stress and life-changing situations, although incorrect in this case.  You have several options if you are faced with a foreclosure and there are professionals who can guide you through them.

If you are being threatened with foreclosure in Miami, Florida, think of it this way: foreclosure is your worst case scenario. Not only will your lender take your house—they will charge you attorney and court fees related to filing the mortgage.  That’s why anything is better than a foreclosure, so it’s important to stop for a moment, take a breath, and find out your options.

One such option is a short sale of your home.  While most lenders aren’t particularly agreeable to the option, it involves you taking the initiative to sell your home for less than the amount of the mortgage.  The lenders will then weigh their options and either take the short sale offer or not.  Talk to anyone who has gone through a short sale in South Florida, and you might hear a different story.  Tales of multiple offers falling through at the last minute, endless “tire-kickers” traipsing through your home.  Sometimes there are better ways of resolving your problem.

A short sale will likely affect your credit somewhat—possibly as much as lowering your score by 200 points.  However, it is important to realize that this is not NEARLY the beating your credit report will take if your home is foreclosed on.  200 points can be fixed with a year or two of responsible credit use, but the after effects of a foreclosure will take longer.  

Still—a short sale will be a better option for you than a foreclosure.  A qualified bankruptcyattorney could lead you through the process and help you connect with a real estate agent who specializes in short sales.  Professionals on your side in situations like these are always an asset—the more, the better.  

Should I just ignore my foreclosure summons and turn my home over to the bank if I can't afford a lawyer?

Ignoring a Foreclosure: Why You Shouldn’t Make it Easy For Them To Take Your Home

Believe it or not, there are worse things the bank can do to you than foreclose on your home.  First, they can convince you to make it easy for them.  Then, they can charge you enormous court and attorney fees for the process they had to go through to take it. 

In fact, they get by with this tactic all the time. A recent study showed that 95% of the foreclosures in this country were foreclosures in which the homeowners didn’t do anything and simply handed over their home without a fight.  They fell for the bank’s bait of “don’t give us any hassle” and walked away from the home and stability they had worked so hard for—it’s such a sad waste.  

Banks are telling homeowners it is okay not to respond because they know that many people can’t afford an attorney, or feel overwhelmed with their financial situation and want to avoid any conflict.  Here’s the truth.  A foreclosure is a lawsuit.  A lawsuit is an adversarial process, it’s you versus them.  Of course they don’t want you to fight back.

A knowledgeable attorney will have an array of tools (including bankruptcy) to help you meet your goals.  There are several bankruptcy attorneys who will provide assistance with your foreclosure pro bono or who will offer payment plans to fit your budget.  You should never let worries of what’s affordable convince you to make it easy for Wall Street to take your home without a fight.  Take our word for it—you need someone to fight in your corner.  

Has Your Lender Initiated a Foreclosure? Here’s What to Do

There are no specific rules for how to handle things if your home is already in foreclosure.  Lenders vary in how they handle things, and beyond this, the laws vary from state to state.  In some states, the foreclosure process may take months; in others, everything could happen within a matter of days.  This is why it is crucial to speak with a foreclosure defense attorney immediately if your lender has already placed your home in foreclosure. 

The best thing you can do is fight back.  The more you fight, the longer the foreclosure process will take—this will allow you more time to get in a better financial situation and work to keep your home. Even if the foreclosure goes through, you should continue to fight because of the redemption period.  This is a period of time in which former homeowners can buy back their property if they decide to do so.  This redemption period varies from state to state: it is 30 days in Alabama and up to 10 months in Delaware. 

The thing to keep in mind is that the foreclosure process isn’t a simple one.  There is a lot of paperwork that has to cross a lot of desks, and anything you can do to stall that paperwork between desks will help you find more time (and money!) to get your home out of foreclosure.  Speaking with an attorney early in the process will be your best bet to help you stay in your home.