I was approved for a loan mod in march.  I was current when I was approved. the bank suspended my payments for three months because they were going to use the principle balance due that day plus the interest that continued to accrue during these three months in the paperwork they needed to submit to the lender.  Makes sense! 

My first new payment was due on June 1st which I paid, although I had not yet recieved the official loan documents.  I finally got the documents, signed, notarized, and returned and verified that they had received them.  I also paid July 1st payment.

Mid july I contacted the bank and they verified that the modification was complete however the two payments were not posted correctly but they assured me that it would be corrected. I then filed for bankrupcy protection. 

I called to find out where my August payment should be sent and I was informed that the mod was not complete before I filed and they were not going to honor it. I was transfered to loss mitigation who again verified that the mod was complete prior to filing.  I again called bk dept and was told the same thing, not complete and again transferred to loss mit who again said it was complete but that my payments had not been applied correctly. 

It has been almost two weeks and the payments have not yet been applied although they have cashed my Aug payment.  I called the bank today to request copies of the loan modification agreement, specifically the page that they signed.  I was transferred to five different people who could not do it but could connect me with somebody who could.  After 55 minutes of this game they finally tried to transfer me to the bk dept but the call was disconnected. 

I’m not into conspiracy theories but something stinks here!  I didn’t think of it at the time but today I noticed that the lender’s signature and my signature are on different pages, so even if they did physically sign these documents it could be conveniently replaced with an unsigned document.  Am I paranoid? 

Do I have any legal recourse if this were to go to court since they accepted three payments even though they did not apply them yet?  They didn’t reduce my interest or principle they just extended the loan back out to 30 years and it is a freddiemac loan.

Sobroke (more…)

Hi Paul:

I went through a bad divorce that ended with a foreclosure and a deficiency judgement of $90000+.

Would like to purchase another home in a couple of years and I am eligible for a va loan, but the judgement has to be paid or being paid on. The judgement is joint with ex and i can not afford to pay 1/2 of it nor all of it. 

Should I go ahead and file bankruptcy and try to repair my credit immediately. 

The wait for a va loan after foreclosure is 3 years and 2 years after bankruptcy discharge.

Rachel (more…)

Here’s my story…I bought a home with my ex (fiance at the time) about 5 years ago in Michigan. The original mortgage was for $85,000 with no money down.  My ex was listed first on the home and I was the co-signer.  The bank told us that in order to purchase the home, I needed to be the co-signer.  We were also advised by the bank to get a USDA Rural Development Loan, as it was easy for first time home buyers in areas like ours.

We broke up a few years later and I stayed in the house with my two children.   He was not willing to put the house up for sale or try to negotiate with the bank.  And since I was just technically the co-signer, the bank was not willing to work with me.  I couldn’t afford the mortgage on my own. The mortgage company offered to give me $2500 to move out, so I did.  The bank sold the home for $35,000.  I’ve since paid off my car, credit cards and other debts while trying to move forward in my life.

Recently I received a letter from USDA Rural Development, stating that they paid off the bank the difference between the mortgage owed and the selling price, and I will now owe the USDA $60,000!  The letter states that I have 60 days to declare bankruptcy, start making payments, or they’ll transfer the debt to the IRS or a collections agency. I have not had any other contact with them.
.
I have spoken to two lawyers.  The first lawyer said that I should file Chapter 7 Bankruptcy and that my case shouldn’t be a problem.  Since I am currently unemployed and a single mother of two, I have a high debt to income ratio.  The second lawyer said that he wouldn’t file a Chapter 7 for me.  He said that he wasn’t sure if the loan was a dismiss-able debt since it is owed to the government.  The attorney stated that he would first file Chapter 13, and then if it was decided to be a dismiss-able debt, he’d file Chapter 7.

I am only 26 years old and have no way of paying $60,000 for a home that I don’t even have.  Advice please!

Destiny (more…)

Daily Business Review – In a move an increasing number of condo associations are expected to follow, the Maison Grande in Miami Beach has filed for bankruptcy
 
Facing almost $1 million in claims by unsecured creditors, a troublesome recreational lease, and at least 100 unit owners delinquent on payments of their fees, the association filed a Chapter 11 petition last month in U.S. Bankruptcy Court in Miami.
 
As one of the first condo association bankruptcies of the current economic crisis, “it’s definitely cutting edge,” said attorney Mark Schorr, a solo practitioner in Fort Lauderdale who represents the Maison Grande association.
 
With residential foreclosures and personal bankruptcies soaring in South Florida, Maison Grande’s decision is expected to become more commonplace, said attorney Aleida Martinez Molina of Becker & Poliakoff in Coral Gables. She is not involved in the Maison Grande case.
 
The significant drop in property values is a key factor pushing associations toward bankruptcy filings, said attorney Robert Kaye of Kaye & Bender in Fort Lauderdale. He represents associations in Broward and Palm Beach counties that are considering bankruptcy. He declined to identify them.
 
“In prior times, there was enough equity in all the properties [in an association] so that assets would likely exceed liabilities,” he said. “Now, since a large percentage of associations are upside down, that’s changing their view about bankruptcy. Their debts have overtaken their assets.”
 
So many of Becker & Poliakoff’s association clients have inquired about filing for bankruptcy, that Martinez Molina has begun studying how a bankruptcy filing would impact associations.
 
“It’s not the answer for everyone,” she said. “It’s not a place to dump a situation to avoid other courts. But if there are special code sections or provisions that can help an association reorganize … it could be a very good forum.”
 
But associations shouldn’t go into bankruptcy without an exit strategy, she said. “They can’t hide under a rock. They have to have a game plan — what provision will you avail yourself of to weather the storm?” Martinez Molina said.
 
Typically, Chapter 11 petitioners are for-profit companies seeking financing as debtors-in-possession to bail themselves out of tough financial straits.
 
But associations are nonprofit organizations with limited budgets and funding. The severity of the recession means credit will remain tough to obtain for some time.
 
“The problem for everyone is the credit markets,” she said. “They are non-existent. But for that, there would be more bankruptcies.”
 
Unit owners’ maintenance fees are the only significant source of revenue for associations, but many owners are themselves filing for bankruptcy, she said.
 
In Maison Grande’s case, the board of directors is confident it can obtain financing to get out from under a burdensome recreational lease, Schorr said.
 
According to court documents, Maison Grande has to pay developer Dorten Inc. more than $112,000 a month for a 99-year lease of the pool and some parking spaces. The lease expires in 2074.
 
Miami-based Dorten, whose principals have included former executives of developer Avatar Holdings, sued the association in April for nonpayment of the lease. In May, Dorten sought to have a receiver appointed to collect the payments from the association. Shortly before a hearing on the receivership, Maison Grande filed for bankruptcy.
 
“If that pushed them into bankruptcy, so be it,” said Dorten attorney Norm Segall of Ruden McCloskey in Miami.
 
The association paid $15,000 in January and $75,000 before filing for bankruptcy but still owes Dorten almost $700,000, he said. 

The lawsuit is on hold while the bankruptcy action proceeds. The association plans to reject the lease and seek a cap on any damages that could result, according to the bankruptcy filing. If an agreement with Dorten can’t be reached to reduce the lease payment or buy the pool and parking spaces, Maison Grande will seek a loan, according to the bankruptcy filing.
 
Keeping the existing pool, even if the lease is rejected, is out of the question, said attorney Tom Messana of Messana & Stern in Fort Lauderdale, who represents Maison Grande in the bankruptcy.
 
A hearing is scheduled in bankruptcy court for July 15, but the parties have agreed to mediate.
 
Association president Ariel Melchor did not return phone calls.
 
Kaye represents a Tamarac condo association that is considering bankruptcy. With half of its 280 unit owners delinquent on their maintenance fees, the association is in the red to the tune of $50,000 per month, he said.
 
Kaye also represents a Palm Beach County condo association that is likely to file for bankruptcy after losing a court case against a roofing contractor.
 
A judgment of $130,000 could grow to more than $300,000 after attorney fees and court costs are added, he said.
 
“They can’t afford that, and 20 percent [of 120 unit owners] already are delinquent in paying fees,” Kaye said.
 
These associations, which he declined to name — and many more — are likely to file for bankruptcy protection as they run out of funding options, he said.
 
The state Legislature’s failure to amend the condo law this year to require lenders to pay a larger portion of past-due fees on foreclosed condos could force more associations into bankruptcy court, Kaye said.
 
State condo law currently caps lenders’ liability at the lesser of six months of unpaid fees or 1 percent of the original mortgage. But lenders don’t pay any association fees until a foreclosure is complete and they take title to a unit.
 
As foreclosure filings have soared in the wake of the housing and financial market bust, they can take almost two years to complete.
 
That means condo associations still must maintain the foreclosed units, and the remaining condo owners must pick up the tab of their non-paying neighbors.
 
“As long as lenders are extending foreclosures into 18 months and two years, the associations are pretty well stuck because there is no cash flow and they can’t raise funds necessary to operate,” Kaye said.
 
NO PAYMENT INCENTIVE
 
Meanwhile, unit owners in foreclosure have no incentive to pay their association fees, said Miami attorney Douglas Snyder, a solo practitioner who represents the 220-unit Greenwich condo in North Miami in its Chapter 11 bankruptcy filed in March.
 
Snyder said the association had been sued by service providers for non-payment of about $750,000. The court ordered the association to begin making payments “and it was bleeding them dry,” he said. “This way, they can handle everyone at the same time.”
 
About 20 percent of the unit owners are in foreclosure. Association president Lidia da Cunha did not reply to an e-mail seeking comment.
 
The financial crisis that is pushing condo associations toward bankruptcy is only going to worsen, said Martinez Molina.
 
“Bankruptcies are not the leading indicator of the economy, they are lagging indicators,” she said. “So people who were hurt with layoffs and cutbacks, those people won’t file for bankruptcy for some time. We haven’t even seen that wave of filings yet. And individual bankruptcy filings affect condo associations.”

This is a fantastic site for anyone who is facing any type of mortgage related financial issues.  My question is this…

My wife and I want to file Chapter 13 to help eliminate a lot of unsecured debt that has piled up over the past few years, mainly because of a job layoff I suffered in 2007, and the ongoing housing crisis that has destroyed our house value here in FL.

We have two homes, one in Florida, and one in VA.  If we file Chapter 13, we hope to eliminate our credit card debt, a large amount of hospital bills and two car repossessions.  Until I lost my job, our bills were paid on time every month, but since then, we have found it impossible to catch up. 

Our primary residence is two months behind, and we owe about $75,000.00 more than it is worth on an 80/20 loan.  Our 2nd home in VA is one month behind, but has roughly $40,000.00 in equity.  We are thinking of giving back both homes, and read that you can possibly qualify for an FHA secured mortgage after making 12 payments in a Chapter 13 plan. 

If we relinquish both properties and rent for a year, is this possible, or will we have to wait just as we would if we let both the homes foreclose? 

I read in one of your blogs that the mortgage company can file a motion b/c the 1st mortgage on our primary residence and the mortgage on the second home are both secured, even though the 2nd mortgage on our 1st home can be stripped off.

We have talked to two bankruptcy attorneys, both of whom said to let go of both houses, and apply for an FHA loan after making 12 payments with the bankruptcy trustee.  I would rather keep our primary residence than rent if we will have to wait 3 or 4 years. 

What is your thought on this?  Thanks for the help.

Jason (more…)

I’ll try to make this short. My wife and I were discharged from a Chapter 7 almost a year ago (we’re in Colorado). We kept our home, did not reaffirm 1st (ARM) or 2nd (HELOC) mortgages.

After almost one year we are upside down in the home (value $150K, owe $210K). We starting to struggle. 2nd mortgage will not subordinate for a refinance, even though they are discharged and have no equity position. We are unable to keep up on badly needed repairs, etc., and definitely will fall behind if rates rise.

We have decided to give back the home (we’ll have no liability due to the BK). Wondering if we should do a short sale to prevent a foreclosure on our credit reports, or if it matters. 1st has not reported to credit reports in a year, but second has been reporting current payments, even though we have had lates (are they allowed to report after BK when not reaffirmed?).

We are going to stop making all payments to 1st and 2nd to save for a new home, possibly starting short sale process soon. Will we be able to buy a more modest home in 1-2 years? We will rent until then.

Casey (more…)

Hello Paul.

I went bankrupt 9 years ago. Once the court approved my payment plan, I kept up with all my payments.

The mortgage company ignored the payment plan and continued to report all the payments as 120+ days late.

I now have perfect credit except for this account. They claim that since my wife didn’t go bankrupt, she was late and since I’m on the laon, I’m also responsible for her late payments.

Can anything be done about this? I’m trying to buy a house and this one thing is killing me.

Jim (more…)

Complex scenario… looking for advice.

Situation is that debtor has recorded recognized land patent on his property. Later took out mortgage, but gave notice of superior claim of land patent. Bank lent money anyway. Later mortgage was defaulted on, bank foreclosed, but with illegal trustee (unregistered corporation). Lender admitted that they could not produce the original note. Alleged debtor filed Lis Pendens and Administrative Notice in Circuit Court. Lender withdrew unlawful detainer action and has remained discommunicative. Debtor has a non-related judgment against him for $400K, which specifically agreed not to attach the house or land patent. The Debtor wants to file bankruptcy against the $400K judgment and some credit card debt, but is confused about disclosure of the mortgage and land. In the public record, the Lender has foreclosed 10 months ago on the real property, but stopped once they were confronted with the Administrative Complaint. Any suggestions? Thanks

Mac

Paul, My Chapter 7 bk was recently discharged.  Included was a mortgage on an investment property, very upside down.  I am now considering doing a short sale rather than foreclosure.  Seems best for everyone.  However, I want to be sure I don’t “mess up” the exclusion from debt cancellation income which bk affords for discharged debts.  For tax purposes, would the ultimate disposition of a short sale versus foreclosure or deed in lieu make any difference as far as the exclusion of debt cancellation income is concerned?

By the way, I have appreciated the very useful info on your blog, and your scriptural insights as well, and have referred this blog to a few associates and will continue to do so.

Jim (more…)

If you are currently in a chapter 13 can you qualify for an FHA mortgage? 

The chapter 13 plan was approved but with the debtor surrendering the 2 properties that have NOT been offically foreclosed.

Can the trustee help the debtor by not letting the mortgage company pursue foreclosure since the properties are surrendered and the mortgage companies did not object to the confirmation plan?

Also there was a pending lawsuit that made it difficult beyond the debtor’s control to hold the properties thus surrendering and moved toward confirmation of debtor’s plan.

FHA guidelines stupilate that you can’t have any foreclose property for 3 years but will consider if the foreclosure happened beyond the debtor control. The debtors original filings have all been to pay back 100% to creditors but couldn’t due to lawsuit.  The debtor has strong employment and hasn’t missed any payments to chpter 13. 

Any advise????

Ana (more…)