Bankruptcy Court’s Loss Mitigation Program
In 2009, The United States Bankruptcy Court – Eastern District of New York adopted a Loss Mitigation Program which applies in all individual Chapter 7, 11, and 13 cases.
The Bankruptcy Court’s General Order #543 provides the following:
The term “loss mitigation” is intended to describe the full range of solutions that may avert the loss of a debtor’s property to foreclosure, increased costs to the lender, or both. Loss mitigation commonly consists of the following general types of agreements, or a combination of them: loan modification, loan refinance, forbearance, short sale, or surrender of the property in full satisfaction. The terms of a loss mitigation solution will vary in each case according to the particular needs, interests, and goals of the parties.
Loss Mitigation may be requested by a debtor or creditor. Also, the Bankruptcy Court may enter a Loss Mitigation order at any time after notice to interested parties. However, in our experience, the Debtor’s attorney typically files a motion requesting loss mitigation in an effort to obtain a loan modification for the debtor.
We currently have several clients who are participating in the loss mitigation program. The program has some similarities to foreclosure settlement conferences held in state court, but appears to move along at a much faster pace.
You can click here to watch a video entitled “Loss Mitigation and Mortgage Modification in Bankruptcy Courts.”
Additionally, you can always call the Law Firm of Vaughn, Weber & Prakope, PLLC at 516-858-2620, to speak with an experienced bankruptcy attorney.
Nassau County Foreclosure Defense
Nassau County Foreclosure Defense cases have several steps. Knowing the procedure of the foreclosure case can dictate which steps should be taken at any particular moment throughout the course of the litigation. The following is a quick summary of the options that may be available in a Nassau County Foreclosure Defense case after the summons and complaint have been served on the home owner.
Gathering information necessary to the defense of the action is probably the most overlooked and underrated step that both pro-se litigants and attorneys make in defending foreclosures. Simple research such as ordering a foreclosure search should be part of the due diligence undertaken prior to litigating. Other methods such as discovery devices can be used to gather additional information during the pendency of the foreclosure litigation.
Responsive pleadings including affirmative defenses and counterclaims where applicable should be filed in a timely fashion. Responsive pleadings in foreclosure actions will often depend greatly on the information gathered about the property and circumstances surrounding the loan origination and servicing.
Motion practice can be used as part of a foreclosure defense strategy. Motions can accomplish several goals that can be of great importance to the preservation of the home owners rights.
Chapter 7 Bankruptcy should also be discussed as part of a comprehensive foreclosure defense strategy. Deciding on the appropriate time for filing of a Chapter 7 Bankruptcy to aid in a foreclosure defense will depend on a myriad of factors. Some cases dictate that a Chapter 7 should be filed prior to responsive pleadings. Some cases dictate that Chapter 7 should be filed after settlement conference negotiations have broken down. Other cases dictate that Chapter 7 will be of no use to a home owner in foreclosure.
Chapter 13 Bankruptcy is an extremely useful tool for foreclosure defense planning. Chapter 13 filings are often times more effective earlier in the process for certain logistical reasons. If the default in mortgage payments were in the not to distant past, the use of Chapter 13 is more likely to be successful.
Federal loss mitigation applications should be considered when weighing bankruptcy options. For its brief existence, this program seems to be very successful and worth the effort to apply.
Please understand that loan modification applications should be submitted in completed form as quickly as possible to initiate loss mitigation negotiations. This is not separate from any of the options listed herein for foreclosure defense, but rather as a supplement. As always, case specific facts will determine which options each individual will proceed with after detailed discussions with an attorney.
Foreclosure Defense Attorney in Nassau County
If you or someone you are concerned about are facing foreclosure, call the Law Firm of Vaughn, Weber & Prakope, PLLC at 516-858-2620 today. Remember, successful litigation is no accident.
Foreclosure Notice Requirement
The National Mortgage Settlement‘s Pre-Foreclosure Notice Requirement for servicers
Servicers must now provide the homeowner with a pre-foreclosure notice at least fourteen (14) days before referring the case to a foreclosure attorney.
*The notice must:
- Set forth facts supporting the Servicer’s or holder’s right to foreclose.
- Include an itemized summary setting forth account information (i.e. reinstatement amount/arrears, date of the last full payment, description of any late fees).
- Include a statement that upon written request the borrower may receive certain information (i.e. payment history, copy of the note, copies of any assignment of the mortgage, the name of the investor that holds the loan).
- Include a statement outlining the loss mitigation efforts the service has undertaken before foreclosure.
- State why the borrower was denied a loan modification or other loss mitigation.
- Include contact information to obtain more information from servicer.
- Include contact information for counseling agencies.
We have seen several of this notices and believe that they provide useful information to homeowners and their attorneys.
Long Island Foreclosure Defense Attorneys
Call the Law Firm of Vaughn, Weber & Prakope, PLLC at 516-858-2620 today.
*The above is a partial list.