If a house is in the name of two unmarried people, the foreclosure of the house may result in two separate bankruptcy cases. Even though the house would have been held jointly, only a married couple can file a joint bankruptcy petition. A relative or other non-spouse also responsible for the mortgage would have to file their own bankruptcy case in order to not have to pay the amount still owing after foreclosure sale.
April 6th, 2011 by Administrator
This past October has seen a temporary halt in foreclosures. Bank of America stopped nationwide foreclosures and the sales of foreclosed homes on October 8, but resumed foreclosures in 23 states on October 25. Inspired by the Maine case Federal National Mortgage Association v. Bradbury, JP Morgan Chase and Ally Financial, previously known as GMAC Mortgage, joined Bank of America. However, during this time, banks have not offered more loan modifications to homeowners who have experienced hardship.
November 6th, 2010 by Administrator
Many homeowners considering bankruptcy for unsecured debts have questions about concurrently modifying their home mortgages using federal relief available through the Home Affordable Modification Program (HAMP). This relief is available for homeowners whose monthly mortgage payment exceeds 31 percent of their verified gross (pre-tax) income. These homeowners must own a one- to four-unit home that is their principal residence; have received their mortgage on or before January 1, 2009; have a mortgage payment (including taxes, insurance, and homeowners’ association dues) that is more than 31 percent of their gross (pre-tax) monthly income; owe an amount that is less than or equal to $729,750 on their first mortgage for a one-unit property (with higher limits for two- to four-unit properties); and have a documented financial hardship. The Making Home Affordable Program which administers this relief uses applicants’ financial information to determine whether the applicants suffer hardship.
If you are in an active (open) Chapter 7 or Chapter 13 bankruptcy case, you must be considered for a HAMP modification if you, your attorney, or the bankruptcy trustee submits a request to the loan servicer. If you are in a HAMP trial period plan and subsequently file bankruptcy, you may not be denied a HAMP modification on the basis of the bankruptcy filing. Loan servicers can extend the trial period, but only for an additional two months, resulting in a maximum five-month trial period. Even if you have received a Chapter 7 bankruptcy discharge, you are eligible for HAMP. If you did not reaffirm your mortgage debt, the following language must be inserted in the Home Affordable Modification Agreement: “I was discharged in a Chapter 7 bankruptcy proceeding subsequent to the execution of the Loan Documents. Based on this representation, Lender agrees that I will not have personal liability on the debt pursuant to this Agreement.”
October 20th, 2010 by Administrator
In Massachusetts, there were 12,430 foreclosures in 2008. Foreclosures this year could reach 15,000. In order to deal with the inadequacies of our state’s non-judicial foreclosure procedure and the low acceptance rates of the federal Home Affordable Modification Program, HAMP, the legislature and governor signed into law “An Act Relative to Mortgage Foreclosures,” Chapter 258 of the Acts of 2010. Under the new law, before banks can foreclose, they must demonstrate an attempted good-faith effort to negotiate a “commercially reasonable alternative to foreclosure,” which can be done by an in-person or telephone conference. The 90-day right to cure period by delinquent borrowers has been extended to 150 days, with exceptions for creditors who can show they made attempts at the above-described alternatives. But borrowers can waive their right to this meeting and give themselves an extra 60 days. Borrowers still have to communicate with their bank within 60 days and the extended right to cure period can only be granted once every three years. A “creditor’s representative,” someone who has authority to negotiate the terms of and modify a mortgage loan, must be present at the meeting to discuss alternatives. According to the new law, the good faith standard includes an assessment of the borrower’s income and debts, a net present value test weighing the investor’s advantages of modification versus foreclosure, and consideration of the taxpayer’s interest if there are government funds involved. The bank sends a notice documenting these attempts to the borrower ten days before any meeting. Borrowers must respond within 30 days to any offer of loan modification. Tenants are also protected under the new law and cannot automatically be evicted from foreclosed properties except for “just cause” or if the property is sold to a non-bank third party. Foreclosing owners must provide their tenants with a 30 day notice of new ownership, payment and court eviction hearing rights.
October 7th, 2010 by Administrator
The short answer is – Yes, as long as you are current on your mortgage and are able to keep up with the payments. If the homeowner can afford the mortgage terms but cannot afford to pay off other debts, such as credit cards or medical bills you may be able to keep your house under a Chapter 7 case by filing a Declaration of Homestead which protects the interest in the house you live in up to $500,000 in Massachusetts. What this means is, as long as your home value is below $500,000 & payments current you can keep your home and still file bankruptcy to deal with other debts.
There are several scenarios and conditions that we should consider.
These days there are many who try a last ditch effort to stop a foreclosure by filing bankruptcy. Even if an emergency bankruptcy petition is filed, this only buys you more time before the bank gets around the automatic stay protection of bankruptcy to foreclose on the house unless you are able to refinance your mortgage, able to work things out with the bank and somehow come up with the balance owed. This would be your ideal, best case scenario and everything works out for all parties involved. Unfortunately, this is not as easy as it sounds. You can see my post here about how the foreclosure process works.
If the house does go to foreclosure, then a Chapter 7 bankruptcy discharge will protect the homeowner from having to pay the mortgage deficiency. This is why it is very important to take a look at your credit report as the bank may not immediately go after you for this balance, but wait until your financial situation is more secure and then try to collect the money owed. This scenario is possible if your house went to foreclosure or you had a short sale.
Like always, this does not constitute legal advice. It is just general information. If you think you need help, please contact a bankruptcy attorney in your area to address your specific situation.
August 2nd, 2010 by Administrator
In the February 8, 2010 issue of Massachusetts Lawyers Weekly, James L. Rogal, who practices at Ablitt Law Offices in Woburn, MA representing mortgage lenders and servicers doing foreclosures, wrote an opinion piece titled “Borrowers bear responsibility in foreclosures.” What may be of interest is his explanation of the foreclosure process in Massachusetts. There is not the swiftness with the foreclosure process that there is for other legal actions such as eviction or wage garnishment. Banks rarely begin foreclosure after the first month of default. Only after the borrower is already several months in default does the mortgage lender or servicer send the borrower a notice of default giving him 30 days to cure the default. The next step is that the borrower is served with a 90-day right-to-cure letter as required by G.L.c. 244, s.35A (Acts of 2007) in the event the default is not cured or the borrower does not enter into some type of workout with the mortgagee. The bank cannot conduct any foreclosure activity during this 90-day period other than collecting principal and interest. Only after the 90-day period if the borrower is still in default can the bank file a complaint to foreclose with either the Land Court or the Superior Court. In about three to four months, the Land Court issues an order of notice with a return day approximately 45 to 60 days later. At that time, the formal notice of foreclosure is served on the borrower. The foreclosure sale by public auction is scheduled after the return of service is filed and after the judgment is issued by the court. The bank serves the borrower with a notice of sale as required by G.L.c.244, s.14. This notice of sale period lasts an additional 25 to 30 days. This whole process from service of the 90-day right-to-cure letter to completion of the foreclosure sale is about 160 to 180 days if the complaint is filed in Land Court and a little less if in Superior Court.
The entire process definitely lasts longer than a typical Chapter 7 bankruptcy case. While these steps are particular to Massachusetts, banks have to go through the procedures of the local state courts in the home’s jurisdiction in order to recover their interest in the property. The process is not easy for banks, but when they are faced with no other choice after a borrower’s default, they need to begin. Borrowers can take from this the lesson that the best way to protect their own liability after the start of foreclosure is to seek a discharge of their debts if they qualify to do so.
Disclaimer: This does not constitute legal advice. Please contact a bankruptcy or foreclosure attorney in your jurisdiction for questions related to your individual situation.
February 17th, 2010 by Administrator
