Married? Going to file a bankruptcy? Review this article.

http://ibrealestate.wordpress.com/2009/11/09/lien-on-home-not-exempt-in-bankruptcy/

Foreclosure

Tip of the day for those facing a foreclosure or potential short sale.  The current congress has extended the provisions in the Economic Recovery and Stabilization Act which pertain to discharge of indebtedness in your primary residence. 

If you need assistance with this and other questions feel free to contact us at www.swarnerlaw.com or at (208) 629-8407.  For other helpful hints follow the following link to the Foreclosure Survival Guide. http://www.nololawlibrary.com/foreclosure/

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Loan Modification Program That Could Be

 The current home modification program is failing.  The modification process is a long and time consuming process that can take as long as 6-months before a homeowner knows if they qualified.  If they didn’t, they are usually 6-months further behind on their mortgage with almost no hope for saving their home. Even bankruptcy judges have begun to show their distain for the extremely slow modification process.  See http://www.nytimes.com/2009/09/04/business/economy/04wells.html 

Earlier this year a bill was approved by the U.S. House of Representatives which would have allowed judicial modifications of homes in bankruptcy.  However, lobbyists such as the Mortgage Bankers Association and others in the credit industry have lobbied Congress claiming such provisions would make mortgages more expensive.  The Helping Families Save Their Homes in Bankruptcy Act of 2009 was introduced early in the 111^th Congress (2009-2010) in both the House of Representatives originally as H.R. 200 by Representative John Conyers, a Michigan Democrat, now H.R. 1106, and S 61 in the US Senate by Senator Richard Durbin, an Illinois Democrat.  

The bill would have allowed individuals who didn’t qualify under one of the current programs a final option other than foreclosure.  The bill would have allowed the debtor to cramdown the mortgage loans to his or her current fair market value of the property.  The bankruptcy judge would then have been allowed to develop an affordable plan for the homeowner to continue making payments.  More importantly, the proposed bill attempted to appease the lobbyists by forcing the debtor to attempt to qualify under one of the current loan programs and limited the loans to existing Fannie Mae and Freddie Mac conforming loan limits.  However, even with these attempts to protect lenders inserted into the bill, the Senate has failed to pass it. 

Currently, the Bankruptcy Code does not allow these so called “cramdowns” or “judicial modifications.” However, under a Chapter 13, debtors are able to strip off a second mortgage if they can show that the second mortgage is a wholly unsecured creditor.  While this process provides homeowners with some relief it may not be enough.  Most debtors may not qualify to strip off the lien because there is some value secured to the loan.  Something else is needed.  American’s should cry out to their Senators and Congressmen to support bills like H.R. 1106 and S61 which have not been passed.  I urge you all to contact your Senators and Congressmen in support of a new modification program.  

For Senators contact:

http://www.senate.gov/general/contact_information/senators_cfm.cfm

 For Representatives contact:

https://writerep.house.gov/writerep/welcome.shtml

 If you are interested in discussing these provisions further feel free to contact us for a free consultation at www.swarnerlaw.com. We are a debt relief agency and assist people in seeking relief under the Bankruptcy Code.

Loan Modifications: Why are they so slow?

Most loan modifications enter the system at a low level employee whose only job is to make sure that all of the materials (i.e. financial statements, hardship letter etc.) are present. After that (depending on that particular lenders policies and procedures) the package is submitted for review to a committee or a single negotiator. The review process is a painstaking, pride swallowing process that can take several months. The reason they take so long is because the lenders do not have the infrastructure to deal with the massive volume of loan modification requests and more importantly do not have the incentive. The Home Affordability and Stability Plan provides servicers with an up front $1,000 per loan modification plus up to $1,000 per year lenders for up to three years in “pay for success” incentives. See http://graphics8.nytimes.com/packages/pdf/politics/20090218factsheet.pdf for a copy of the fact sheet. What you don’t know is that most servicers receive more money than that in loan origination fees if the property is purchased after a foreclosure. Thus, what is the incentive for the lender to modify?

If you want assistance in your loan modification you have to be extremely diligent in your efforts. You must call the servicer daily to see where you are in the process. Your other strategy is to contact your senator. http://www.senate.gov/general/contact_information/senators_cfm.cfm Other modification bills have been presented in the House but the Senate has yet to hear such matters. See my subsequent blog entitled the Loan Modification Program That Could Be.

As always an attorney can help you navigate the process with a more in-depth analysis of your financial situation. There may be other options for you in relation to financing or modifying your current loan. If nothing else it can be sped up with a quick letter from an attorney they may cost you no more than $100-$300 dollars depending on your situation.

Don’t give up hope!!

Protect your retirement

Don’t touch your 401(k) or other qualified retirement plans.

Today’s reminder is for all of those individuals even remotely contemplating a bankruptcy. It is imperative to remember that the Idaho Code provides every debtor a list of exemptible items that cannot be touched by creditors. Therefore, if you are facing troubled times and you are uncertain what to do, NEVER TOUCH YOUR 401k or other qualified retirement accounts to pay your debts. These accounts are specifically protected by Section 11-604A of the Idaho Code. If the worst happens and you do file a bankruptcy you will be able to discharge your debts in bankruptcy and you will keep your retirement account free from creditors.

Welcome to the new Warner Law Offices blog. Please visit our blog regularly to read valuable insights regarding real estate and more.

Welcome to the new Warner Law Offices blog. Please visit our blog regularly to read valuable insights regarding estate planning and more.

Welcome to the new Warner Law Offices blog. Please visit our blog regularly to read valuable insights regarding business and more.

Welcome to the new Warner Law Offices blog. Please visit our blog regularly to read valuable insights regarding bankruptcy and more.

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