I already modified my mortgage, but because of new circumstances I am late again. Must I Short Sale my home now?
You may be able to get another loan modification based on your “new circumstances.” The HAMP guidelines were recently changed to address this situation. Homeowners who have defaulted on a trial or permanent HAMP loan modification are now eligible for a new HAMP loan modification. Additionally, the bank can always offer you an in-house loan modification if they want to. You may have several other options you can explore before doing a short sale. One of your options may be a chapter 13 bankruptcy. We have developed several strategies to assist distressed homeowners. A Short Sale is never the first option! It may be a good idea to consult with an attorney before making a final decision.
Call (516) 858-2620 to discuss your options. The Law Firm of Vaughn & Weber is here to assist you!
Bank of America mortgage forgiveness and bankruptcy
Recently we have written about Bank of America forgiving second mortgages and the National Mortgage Servicer Settlement. Many homeowners facing foreclosure are anxious to find out if their second mortgage will be forgiven by Bank of America.
Well, it appears that one pattern may have emerged. Many homeowners who have already filed bankruptcy are receiving letters stating that their 2nd mortgage will be forgiven. Great news, right? Maybe. Some of these debtors are in active bankruptcy (chapter 7 & chapter 13). Some debtors have already received a bankruptcy discharge and are no longer personally liable for their mortgages. Other debtors have “stripped” their 2nd mortgages and BOA will likely receive much less than 100% of what is owed on the 2nd mortgage.
Not So Good
- It appears that BOA may receive credit, against the amount it owes under the National Servicer Settlement Agreement, by forgiving mortgages they can could no longer collect or only collect a portion of. This may lead to fewer distressed homeowners actually benefiting from the Settlement.
- There may be tax issues (the advice of a tax professional may be necessary).
- Distressed homeowners who are not in bankruptcy are receiving letters from BOA stating that their 2nd mortgages are being forgiven. This will make it easier for some homeowners to avoid foreclosure.
- Debtors in bankruptcy who are paying back 100% of the arrears on their 2nd mortgages and their full 2nd mortgage payment have received notification that their loan is being forgiven. This could alleviate the need for a chapter 13 bankruptcy altogether.
- Some homeowners may find themselves with instant home equity.
If you have any questions about this or other legal issues, call The Law Firm of Vaughn and Weber PLLC, at 516-858-2620, for a free consultation!
+This is not tax or legal advice.
A recent NY Times article discusses a recent study of racial differences in bankruptcy filings:
The study of racial differences in bankruptcy filings was written by Robert M. Lawless, a bankruptcy expert and law professor, and Dov Cohen, a psychology professor, both with the University of Illinois; and Jean Braucher, a law professor at the University of Arizona.
A survey conducted as part of their research found that bankruptcy lawyers were much more likely to steer black debtors into a Chapter 13 than white filers even when they had identical financial situations. The lawyers, the survey found, were also more likely to view blacks as having “good values” when they expressed a preference for Chapter 13.
This is news to me! As a NY Bankruptcy Attorney this has not been my experience, but I did find the article interesting and look forward to reviewing the study. I can assure you that bankruptcy can be a very difficult area of law (even for attorneys). There are many factors that need to be considered when deciding which bankruptcy chapter is best for you. No one should be steered into any chapter of bankruptcy! Make sure your bankruptcy attorney is a member of NACBA (National Association of Consumer Bankruptcy Attorneys). Also consult with several attorneys if possible (most offer a free consultation). We have no problem providing a free consultation to answer your general questions. We also have answers to frequently asked bankruptcy questions right here on this site.
As always, the Law Firm of VAUGHN & WEBER, PLLC is here to assist you. We are conveniently located in the heart of Nassau County, Long Island, at 393 Jericho Tpke., #208, in Mineola, NY. Contact us at (516) 858-2620 to arrange a FREE consultation with a bankruptcy attorney.
In a recent chapter 13 bankruptcy case, IN RE WRIGHT, Bankr. Court, ED New York 2011, a debtor was NOT allowed to “strip off” a second mortgage held by Chase. At trial several issues were raised regarding how the Debtor’s appraiser conducted his appraisal. The Court found that the Debtor failed to meet its burden of establishing that Chase’s lien was wholly unsecured.
A second mortgage can only be “stripped” and treated as unsecured if the chapter 13 debtor can prove that his/her home is not worth any more than their first mortgage.
As always, the bankruptcy Law Firm of VAUGHN & WEBER, PLLC is here to assist you. We are conveniently located in the heart of Nassau County, Long Island, at 393 Jericho Tpke., #208, in Mineola, NY. Contact us at (516) 858-2620 to arrange a consultation with a bankruptcy attorney.