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Wednesday, July 29th, 2009

When Lenders Want Home Foreclosure for You

The bank helped you purchase your home, surely they'll help you keep your home? Right?

Sadly, this isn't the case. When it comes to your home and your mortgage, many lenders are hoping for foreclosure, says this new report in the Washington Post:

Policymakers often say it's a good deal for lenders to cut borrowers a break on mortgage payments to keep them in their homes. But, according to researchers and industry experts, foreclosing can be more profitable.

In case you thought banks were concerned about anything other than the bottom line, this story makes it clear. Whomever holds your mortgage has one interest: Getting paid.

(For a full breakdown of how lenders look at you, check out this chart from the post.)

And if they can make more money with your foreclosure then don't expect them to offer any help when it comes to renegotiating  your terms, holding off on fees or stopping foreclosure.

One man shares a story where he went to his bank looking for help to stay in his house. He needed to cut his monthly payment by about $200. They provided $25 a month in relief.

So if you're serious about staying in your home, you'll need to take serious action, and you may need to take legal action.

Your mortgage rates probably won't change quickly, and it may be a while before you have a significant increase in income. Filing bankruptcy, however, could stop all pending foreclosure action through the Automatic Stay.

This is a big step, for sure, but you may need to take big action to prevent foreclosure.

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Tuesday, July 21st, 2009

Faces of Foreclosure: First Person Accounts

Los Angeles may be home to movie stars, but it's also one of the areas hit hardest by the economic downturn.

With home foreclosures in Los Angeles still on the rise this year, the Los Angeles Times provides five first-hand accounts from people facing foreclosure.

It's a simple, captivating and heartbreaking read. Each of the five people profiled offers a distinctively different tale, but they've all faced the same stress: How do we stay in our home?

In reading their stories, I think there are several lessons that we can take away, particularly if you're facing foreclosure or other financial struggles.

  1. You can't take action soon enough. Many of the people in the article waited until it was too late to take action. Time is not on your side if you are facing foreclosure. Don't wait until you receive an eviction notice. If you are getting behind on your payments, then take steps today to improve your situation. The sooner you start, the more options you may have. If you lose your job and notify your bank right away, they may be more willing to work with you. Then again ...
  2. The banks are not on your side. Several of the people in the story mentioned how unwilling their banks were to work with them. Often the banks wouldn't even respond to requests for help. One bank wouldn't lower a man's $500,000 mortgage, but sold his house for a fraction of that! Also, several couples went to the bank seeking help only to have more loans pushed on them with higher interest rates and higher monthly payments.
  3. Know your rights. Some of the people turned to bankruptcy for help, only to report having banks turn up on their doorsteps with foreclosure notices. If you file bankruptcy, all foreclosure efforts must stop until your case is resolved. If you file, and a bank shows up on your doorstep, report this to your lawyer immediately. The bank is in violation of the law in these cases.
  4. Even the prepared can struggle. The people profiled had money in savings and retirement accounts. They owned their business and were often responsible. But still, they faced hardship. Even the best prepared can struggle. Don't let your pride keep you from seeking assistance.
  5. You need long-term help. When hard times hit - like a job loss or injury - it's difficult to say how long the trouble will last. Will you find work soon? Will things recover quickly? You never know. But many people get in trouble by trying short-term fixes that only complicate their problems. If you find yourself slipping into serious debt, you should look into real, lasting solutions right away.
  6. Help is available. Most of all, don't give up hope. You have options. The people in this story turned to free legal aid organizations for help. For many people, filing bankruptcy allows them to stay in their home. Other people need short-term assistance to help with food and child care. The support is there, if you take advantage of it.
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Saturday, July 18th, 2009

The Face of Foreclosure

In Florida, the state Association of Realtors hopes to bring about change in public policy regarding foreclosures by giving a human face to the concept, highlighting the individuals who have lost the homes that are now back on the market at depressed prices.

The agency has started a Web site: Faces of Foreclosure.

The site strives to collect information from those individuals caught up in the personal crisis that is home loss.

Hopes for Advocacy

The group hopes that the information collected on their Web site will “provide the building blocks for strong advocacy and ultimately, good public policy as it relates to the housing market in all its facets,” according to a statement from the agency as reported by the Bradenton Herald.

The site asks foreclosure victims questions that include what type of home they owned, the  size, their experience working with their lenders and what factors contributed to the eventual loss of their homes.

It's the Right Time to Focus on Foreclosure

Foreclosures in the area around Bradenton, Florida are comfortably on their way to smashing the record, set last year, so there are plenty of stories to chronicle.

Mary Aston, a local realtor, believes the idea may help prevent another crisis like the one the area is currently experiencing.

“We still have foreclosures coming in, and I really do think if the data will help fix the system, then it’s never too late,” Aston says.

“Maybe it will prevent similar mistakes from being made in the future or maybe it will help people now who are trying to avoid foreclosure.

Long Overdue

Other Realtors feel the data collection is overdue.

“I feel like we’re way behind,” says Kathy Marlowe. “We should have been collecting data two years ago.”

Marlowe doubts the project will help as much as its planners intend. “How can you help people avoid foreclosure when they owe $300,000 on a mortgage on a home that’s worth only $175,000? Why would they even want to stay in that house?”

A spokeswoman for the Florida Association of Realtors, Marla Martin, says the study will provide more information than standard foreclosure and bankruptcy numbers services provide.

“They don’t tell you a lot about who’s going through it,” she told the paper.

“It seems like it’s better to have all the information you can gather out of the problem itself if you want to find a workable solution or at least some answers.”

Increased Foreclosure Awareness

The project has received a $97,000 grant from the National Association of Realtors to assist with foreclosure prevention and promote foreclosure prevention awareness.

The organization has furthered the initiative by purchasing statewide radio spots to inform the public of their project.

Another area realtor, Greg Owens, feels that the project will have a positive impact if the information obtained is used to lobby legislators.

“I feel that to give this a human face may change public policy in the future in order to avoid this situation again. I believe we could have avoided these massive failures and kept a lot of these people in their homes.

And frankly, that is going to take a lot of changes to avoid this happening in the future.”

Source: Bradenton Herald

Did you know: That Chapter 13 bankruptcy was designed to stop foreclosure? Find out if filing bankruptcy could help you.

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Monday, July 6th, 2009

Foreclosures Spreading to Prime Mortgages ~ When Will It End?

In what many consider an inevitable shift in the foreclosure crisis, prime, fixed-rate mortgages made up the largest portion of new foreclosures, according to a report issued by the Mortgage Bankers Association.

This was the first time for such numbers since the subprime lending boom began.

The Best-Laid Plans

Sources suggest that two major factors are contributing to the upswing in prime foreclosures:

  • Rising Unemployment: Though the unemployment rate for those with some type of college degree is 4.4 percent (compared with an 8.9 percent rate overall), this number represents a significant jump from a year ago, when unemployment among the college-educated was just 2 percent. This means that some families who counted on sustained income to keep their houses are now struggling to make payments – or finding they cannot.
  • A Glut of Unsold Homes: Because so many houses are currently on the market, selling a house has become a serious challenge, especially for those with bigger mortgages. This means that many of those struggling to pay off debts because of job loss cannot even raise money by selling their houses – the demand for real estate is currently very low.

Time to Buy, Not Sell

As you may already know, it’s a great time to buy a first home.

The sheer quantity of homes on the market means you’ll have a lot to choose from, and the current interest rates favor the purchasers rather than the vendors.

But if you’re looking to sell a larger (rather than a “starter”) home, you may not be so lucky.

Those who may be pushed by tantalizing interest rates to buy a home sooner than they would have otherwise likely won’t be interested in large, elaborate homes – especially in light of the cautionary tales told over and over by those suffering from the current foreclosure crisis.

When Will It All End?

Experts have predicted a variety of timetables for the prime foreclosure crisis.

The least optimistic among these put the crest two years for now, with steady foreclosure action well into 2012.

And Making Home Affordable, the foreclosure-prevention plan introduced by the Obama administration has reportedly only helped about 17,000 homeowners to date – far fewer than the seven to nine million who could benefit from the program, according to its Web site.

If you’re concerned about losing your home to foreclosure, it may be time to speak with one of our sponsoring bankruptcy lawyers about filing bankruptcy.

Chapter 13 bankruptcy designed to stop foreclosure. Talk to a bankruptcy attorney about filing bankruptcy.

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Saturday, June 27th, 2009

Michael Jackson, Neverland Ranch and Foreclosure

When ambulances were called to Michael Jackson's home last Thursday, they went to the Beverly Hills mansion he had been renting.

Jackson's most famous residence, the lavish, one-of-a-kind, amusement park-like Neverland Ranch, hadn't been his home for many years.

Amazing pictures of Neverland Ranch.

Jackson purchased the property in 1987 for almost $20 million. At the time, it was a working ranch, but under Jackson's care it would become a shrine to the childhood Jackson never had. From nineMSN:

The singer spent $35 million improving the property, which featured two railway lines, two helicopter pads, its own fire department, a zoo and a plethora of amusement part-style rides. The property cost an estimated $10 million a year to maintain.

Jackson lived at the ranch for many years, and underprivledged and sick children from California and across the country came to visit his theme-park.

But all the while Jackson was very private about the property. Visitors weren't allowed to take pictures inside, and they were required to sign confidentiality agreements upon arrival.

Perhaps the most intimate view of the property came from a lengthy 20/20 report that highlighted some of the property's extraordinary features.

Foreclosure on Neverland Ranch?

But the joy of Neverland Ranch, named after the magical land in "Peter Pan" were children never grew up, wouldn't last.

Jackson had an almost $25 million loan out on the house. In 2007, he was $23 million delinquent on the loan and foreclosure proceedings began.

In California, after you miss three mortgage payments in a row you have 90 days to make a payment. Jackson, who hadn't released an album since 2001, was unable to make a payment.

For most people, this would have been the end of the line. For most people facing imminent foreclosure, filing bankruptcy is the best option for protecting their home. Of Course, Michael Jackson isn't most people.

Jackson's celebrity helped stop foreclosure. His debt was transferred to another loan company, and the property stayed with him.

However, Jackson continued to have money problems. The zoo and many of the amusement park rides were auctioned off. With money problems and child molestation charges - stemming from a child's visit to the ranch - Jackson said he could no longer feel at home there.

And then the man who had already spent so many nights in hotels across the world while on tour, began living elsewhere.

At the time of his death Neverland Ranch was still in Jackson's possession. Today, the property is valued somewhere between $90-120 million. With his death, the property may be worth even more.

But with Jackson's debts rumored to be near $500 million, the property could be auctioned off to pay his creditors. Others, however, say that the property may become a museum similar to Elvis Presley's Graceland.

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Monday, June 22nd, 2009

Your Second Mortgage Debt Could Potentially be Dismissed by Filing Bankruptcy

What type of debt you have can make a big difference in how bankruptcy can affect your debt.

Generally speaking, unsecured debt is more likely to be dismissed - that is, retired completely - than secured debt.

And, your debt is usually either secured or unsecured, one or the other. So stuff like credit card debt and payday loans are considered unsecured, because ther'es no property attached to them.

Car notes and mortgages are secured debt, because they are connected to a property.

However, as columnist and attorney Ronald H. Surabian points out in the Burlington Union, second mortgages are a different story. After attending a recent workshop he wrote:

The thing that I found interesting about the Chapter 13 bankruptcy proceedings is that second mortgages, home equity loans and the like can be wiped out if these second mortgages are considered unsecured.

And this is something that we even overlook here. We often speak of how filing bankruptcy may help your credit card debt or mortgage, but we don't often discuss second mortgages.

Perhaps we should be because millions of homeowners have a second mortgage - often taken out to fund home repairs or improvements - and are now struggling to make that extra monthly payment.

So, is your second mortgage unsecured and, therefore, potentially able to be dismissed by filing bankruptcy? Surabian provides a clear example:

Assume the fair market value of your home is $370,000 and you have a first mortgage of $376,000 and a 2nd mortgage of $95,000. The second mortgage will be treated as unsecured and will be treated in the same way as credit cards. It will either be wiped out or paid off for pennies on the dollar.

There you have it. If you're facing foreclosure because of a second mortgage and other debts, then bankruptcy may be able to save your home.

To see if your second mortgage is considered unsecured, speak with a local attorney about filing bankruptcy.

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Wednesday, May 13th, 2009

Foreclosures Rise Again in April

According to the latest report from RealtyTrac, foreclosures jumped again in April.

CNNMoney.com reports that 342,000 U.S. homes received default or auction notices or were in the process of bank repossession last month.

This translates to one in every 324 U.S. homes involved in some part of the foreclosure process, a number which represents a one percent increase from March and a whopping 32 percent increase from the same time last year.

Here are some hard numbers that paint a picture of how serious this news is for American homeowners:

  • April numbers are the highest ever recorded by RealtyTrac in more than four years of monitoring such figures.
  • Since the start of the real estate bust cycle in August of ’07, more than 1.3 million homes have been foreclosed upon.
  • RealtyTrac’s original forecast of 3.4 million foreclosure filings for 2009 will likely be revised upward after April’s statistics.
  • Though foreclosures are a problem nationwide, 10 states were home to 75 percent of all filings (California, Florida, Nevada, Arizona, Illinois, Ohio, Michigan, Georgia, Texas and Virginia).

Dipping Home Prices Compound the Problem

Some experts are concerned about the effect falling home values will have on future foreclosure rates.

As housing prices keep decreasing, more and more borrowers find themselves “under water” on their mortgages (they owe more than their homes are worth).

This has reportedly led to an increase in people simply walking away from their homes and handing their keys over to the bank, and will likely mean missed payments and defaults for those who choose to stay.

Bank Repossessions Down – For Now

April’s bank repossession numbers actually decreased 11 percent from March, according to sources.

But this isn’t a trend that’s likely to continue: bank repossession is the last stop on the foreclosure train, and as more and more houses enter foreclosure proceedings, more and more will have to complete them in the future.

Chapter 13 Bankruptcy & Foreclosure

If you are one of the many Americans facing the threat of foreclosure, filing for Chapter 13 bankruptcy may provide you some of the relief you need.

Thanks to the protection of the automatic stay, all creditor collection actions (including garnishment, repossession and foreclosure) are typically halted for the duration of your case.

Many bankruptcy filers find that Chapter 13’s three- to five-year repayment plan offers them the time and breathing room they need to get current on their mortgages or at least make alternate living arrangements.

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Thursday, April 30th, 2009

Sad Day for Many Homeowners: Senate Slaps Down Anti-Foreclosure Bill

The Senate voted 45-51 against Dick Durbin's anti-foreclosure bill. Twelve democrats opposed the bill.

We were hoping the Senate would help deal with the massive foreclosure epidemic and pass the bill, which would have allowed bankruptcy judges to adjust the terms of mortgages of people who were facing foreclosure, among other things.

Obama made public statements saying the bill was an important aspect to helping the economy; however, it's been speculated that he didn't throw in 100% support because banks  opposed to the bill's passage.

Here's a quote from the Associated Press article posted on the Kansas City Star on Obama's support or lack thereof:

"Obama long has backed the proposal to give debt-ridden individuals the option of turning to bankruptcy to save their homes. He cited that support last fall as he privately lobbied skeptical Democrats to back the $700 billion Wall Street bailout. And once he was president, he had promised, he would push for its passage."

If your home is in danger of being taken away, learn how bankruptcy may stop pending foreclosure.

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Wednesday, April 29th, 2009

Helping Families Save their Homes in Bankruptcy Act Up For Vote

We wrote about Illinois Senator Dick Durbin's bill when it was first being considered.

Now, the measure that would potentially stop foreclosure for millions of Americans by allowing bankruptcy judges to change the terms of a mortgage - including interest rate and principal owed - is up for a vote.

However, the vote is going to be very close.

If you want to stand up and help keep people in their homes and protect Americans going through difficult financial times, contact your Senators and Congress people today.

You can visit http://www.congressweb.com/cweb4/index.cfm?orgcode=nacba&hotissue=1 to find a simple form that will allow you to contact the Senator in your home state.

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Thursday, March 12th, 2009

The Wrong Voices are ALWAYS Heard

Remember in elementary school choir how there was always that one kid who couldn't carry a tune, but who belted out every song and made sure everyone heard him?  Unfortunately, the same thing is happening in the political process today--lobbyists don't have the best interests of the country (and certainly not of the average person) at heart, but they're singing out loud and clear and everyone is hearing them.

The banking and consumer credit industries spent a decade and a hundreds of millions of dollars to pass the Bankruptcy Abuse Prevention and Consumer Protection Act in 2005...an act which has been almost universally assessed to cause far more trouble than it's worth without effectively achieving any of its intended purposes.  Today, that same lobby is at work again, trying to prevent Congress from correcting a strange inconsistency in the U.S. Bankruptcy Code--one that will impact millions of people who have never even considered filing bankruptcy.

That's right.  It doesn't matter whether or not you ever plan to file for bankruptcy--if you own a home, or rent a home, or live in a neighborhood where there have been a lot of foreclosures, or hope to buy a home, S. 61 will affect you.

If, that is, it ever sees the light of day.

The bill, whose companion bill passed the House of Representatives last week, would allow bankruptcy judges to modify mortgages in bankruptcy court.  The banking industry wants you to think that's radical, but in fact right now virtually any secured debt (car loan, vacation home, commercial real estate, etc.) can be modified in bankruptcy court EXCEPT for the loan secured by the debtor's home.

With an estimated 8 million + foreclosures in the pipeline over the next few years, this provision could slow or even stop the slide in the housing market, make it possible for homeowners to stay in their homes, and stabilize housing costs.  Even homeowners who DO NOT FILE BANKRUPTCY will see those benefits, as mortgage holders will have a new incentive to renegotiate rather than institution foreclosure proceeedings.

Right now, the banking industry, mortgage holders...the very people who created this mess over the past decade...are singing loudly--they're being heard.  They have the loudest voices, but there are far more of us than there are of them, and hundreds of thousands of soft voices can add up to a roar.

Please take a moment to let your Senator know that you support the mortgage modification bill, S. 61.

You can find contact information for your Senator here:  http://www.senate.gov/general/contact_information/senators_cfm.cfm

It only takes about a minute to make this phone call or to send an email, but it could make a lasting difference to someone you know!

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Posted in Bankruptcy News and Events, Mortgage Foreclosure, Setting the Record Straight about Bankruptcy | 1 Comment »

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