The Wall Street Journal recently reported on a mortgage company regulation bill that is working its way through Congress (Click here to read the article).  The Journal reports that mortgage companies are lobbying Congress to “soften a series of provisions that reshape how most Americans obtain home loans.”

The bill proposes:

1.  To require lenders to hold 5 percent of the loans they originate that are sold to investors as securities;

2.  To give borrowers greater protection when the mortgage process breaks down; and

3.  To force mortgage companies to charge all origination fees upfront or reflect them in the mortgage interest rate but not both.

I think we will most likely see some type of mortgage reform come out of Congress before the November elections.  In response to the mortgage meltdown of 2009, Congress is going to pass laws forcing mortgage companies to take a much closer look at potential home buyers before they are given any mortgage loans.  The Journal reports that the current proposed legislation “would require lenders to ensure that borrowers can repay their loans and to prove that any refinancing provides a ‘net tangible benefit’ to the borrower.”

The end result is going to be that obtaining a mortgage in the future will be much more difficult than it has been in recent times.  Because of these new stringent requirements, some people who are considering surrendering their house in a foreclosure may want to think twice before letting the house go.

Houses can be saved from foreclosure by filing a Chapter 13 bankruptcy.  A Chapter 13 can eliminate credit card debt, medical debt and any other type of unsecured debt.  Furthermore, any mortgage payments that have been missed can be put in a Chapter 13 plan.  In some cases, Chapter 13 can make it easier to pay future mortgage payments because you no longer have to worry about credit card payments or medical payments.

One of the cruel side effects of the new legislation is that some people who have owned homes in the past will never be able to buy another one in the near future.  Self employed applicants who have extreme income fluctuations throughout the year will have a difficult time complying with the new standards.

Any person in Georgia who is considering surrendering their house in foreclosure should first meet with a local bankruptcy attorney.  It cannot hurt to explore all of your options.

Other Posts:

1.  Can I Wipe Out a Second Mortgage in Chapter 13?

2.  Will I be taxed on my house after foreclosure?

3.  Should I file Bankruptcy or Short Sale My House?

The foreclosure crisis was supposed to end with help from the federal government. Consumer Bankruptcy News reports in the May 6, 2010 issue that the response of the federal government to the mortgage crisis is too slow.  The article reports that is has “been more than one year since President Obama announced the establishment of the Making Home Affordable initiative that included the Home Affordable Modification Plan.”  The plan was supposed to help between 7 and 9 million families restructure their mortgages and save their homes from foreclosure by the mortgage companies.  The article goes on to report that “the actual number of homeowners who have received final, five-year loan modifications through the program administered by the U.S. Department of the Treasury stands at 168,708.

The Congressional Oversight Panel’s April 2010 report entitled, Evaluating Progress of Tarp Foreclosure Mitigation Programs, “finds that Treasury is still struggling to get its foreclosure programs off the ground even as the crisis continues unabated.”  The report also states that in 2009, 2.8 million homeowners received a foreclosure notice,and one in four homeowners with a mortgage currently has negative equity. While housing prices have begun to stabilize in many regions, home values in several metropolitan areas continue to fall sharply.”

I have personally witnessed in my Dallas, Rome, Cartersville and Dalton Georgia office locations that consumers are not getting the promised federal help they need to stop the foreclosure of their homes.  While I have seen a few loan modifications approved even after my clients have filed Chapter 13, most loan modification applications have been denied.  I have been shocked how many mortgage companies are aggressively pursuing foreclosure in this dreadful market.

The good news is that Chapter 13 stops foreclosure   In a Chapter 13 bankruptcy, we can eliminate credit card debt and medical debt.  As a result, most consumers find it much easier to make their future mortgage payments when they no longer have worry about their past due credit card debts and medical debts.

I have recently noticed a significant increase in the foreclosure of homes in the Rome, GA area.  Mortgage companies seem to have gotten more aggressive about starting the foreclosure process in Georgia.  While there have been many headlines in the newspapers about government action that has been taken to stem the tide of foreclosures, I am just not seeing any positive results.

I recently met with a client in my Rome office who was completely baffled that the mortgage had initiated foreclosure against them.  About six months ago, my client called their mortgage company and explained to them that they were have financial difficulty and requested a loan modification in an attempt to prevent foreclosure   My clients were told by their mortgage company to make only half payments while they were being considered for the loan modification.  They thought they were safe from foreclosure   Six months later, they were denied a loan modification and received a demand letter for all missed payments.  The foreclosure process was started against them.  My clients were outraged because they did exactly what they were told by the mortgage company.  My clients thought that since they were making the half payments on time, they were current.  If you are not approved for a loan modification, the mortgage company has the right to demand every missed payment as defined by their written contract with you.

With respect to foreclosures, the attitude of mortgage companies seems to have drastically changed within the last few months.  In early 2009, I was amazed at how the mortgage companies were bending over backwards to avoid foreclosure   I had clients who were 18 months behind on their mortgage payments before a foreclosure action was taken against them.  I even saw a few cases where the client was over two years behind on the mortgage and no foreclosure action was stared.  In contrast, this past month, I’ve seen quite a few clients who were only five payments behind and yet foreclosure was started.

The good news is that Chapter 13 stops foreclosures.  Meeting with a bankruptcy attorney does not cost you anything.  Call me today at 706-295-0030 for your free consultation.

If you want to know if your house is being advertised for foreclosure, look in the classified section of the legal organ for your county.  You can also check online at www.gerogiapublicnotice.com.

If you are in a Chapter 13 case in the Northern District of Georgia, you can dismiss your case at any time.  Your attorney will file a document with the court called a voluntary dismissal.

Personally, I think it is a terrible idea in most cases to voluntarily dismiss a Chapter 13 bankruptcy.  First, you might be banned from refiling a case for a period of six months if you voluntarily dismiss your Chapter 13 after a Motion for Relief has been filed.  Here is an example of a nightmare scenario.  A person living in Dalton, Georgia has a house and misses six mortgage payments while the case is active.  This person then decides to quit their Chapter 13   Unfortunately, the mortgage company files a Motion for Relief exactly one second before the voluntary dismissal is entered.  Mortgage company then proceeds to begin foreclosure proceedings in Dalton, Georgia.  This person then decides to refile a Chapter 13 to save the Dalton house from foreclosure   Under Section 109(g) of the Bankruptcy Code, this person cannot refile their Chapter 13 bankruptcy case for a period of 180 days from the date of the voluntary dismissal.  In other words, goodbye house.

Another reason to stay with your Chapter 13 is that if you dismiss your case, any creditor that was garnishing your wages is free to restart the garnishment as soon as your case is dismissed.  If you throw in a Section 109(g) limitation on your ability to refile and you could be in for a painful six months.

Also, if you dismiss your Chapter 13, your car creditor is free to come and repossess your vehicle as soon as your case is dismissed.  All of your bankruptcy protection ends as soon as your case is dismissed.

Any person who is wishing to voluntarily dismiss their Chapter 13 should meet with an attorney and have her go over every single aspect of their case so that there are no unpleasant surprises.

In contrast to Chapter 13, a person in a Chapter 7 bankruptcy cannot quit the case without permission from the Bankruptcy Court.

Yes.  In the Northern District of Georgia, it is possible is some situations to wipe out a second mortgage in a Chapter 13 bankruptcy.  In order to eliminate your second mortgage, the value of your house must be lower than what you owe on your first mortgage.  If the value of your house is one penny more than what you owe on the first mortgage, you cannot wipe out the second mortgage in your Chapter 13 bankruptcy.

If a large number of foreclosures have occurred recently in your neighborhood, this will bring down the fair market value of your house.  As a consequence, this will make it easier to eliminate the second mortgage in a Chapter 13 bankruptcy case.  Dalton, Cartersville, Rome and Dallas, Georgia have suffered a high number of foreclosures during this past year.

When trying to determine the value of your house, a good place to start is your property tax bill from your county.  Somewhere on the bill, you will find a statement that says fair market value.  While this a good place to start, you will need more evidence than your tax bill because most counties tend to understate the fair market value of houses.  In some areas of Northwest Georgia, housing values are so depressed that even the county estimated fair market values are too high.

A much more reliable source of evidence is a written appraisal by a certified expert.  When getting your appraisal, make sure you explain to the expert that you may wish to hire them to testify in court if necessary.  Some appraisers want to stay away from court at all costs.

In Northwest Georgia, I reccommend that any client who needs to appraise property call Michael at 706-537-3845.  He is certified and has a significant amount of court experience.

Cost for appraisals can vary based on the size and nature of the real estate.  Another factor to consider when hiring an appraiser is the cost for them testify for you in court if the second mortgage company decides to challenge your appraisal in bankruptcy court with their own appraisal.

If you live in a mobile home and have a second mortgage, the chances of you eliminating the second mortgage are much higher than someone who owns a house because mobile homes depreciate so rapidly.

Call me today at 706-295-0030 for your free consultation.  Nothing in this post should be interpreted as legal advice.  No attorney client relationship exists until we have a written contract.

I recently spoke with a client in my Rome GA office who surrendered their house in Chapter 13  bankruptcy last year.  About six months into their Chapter 13 bankruptcy, they converted to a Chapter 7 bankruptcy.  This past week, they received a 1099A from their mortgage company showing that the debt was forgiven and suggested that they would be taxed by the IRS even though they filed bankruptcy.

Despite what they letter from the mortgage company may have said, my clients will not be taxed on their foreclosure of their house.  Click here to read the IRS publication 4681 which clearly states that this is not a taxable event.  I cannot imagine how frustrated they must have felt thinking they were going to be taxed on something they gave back to their creditor.  Good thing they were able to contact their bankruptcy attorney and got a quick response.

Here is what you need to do if you have had a house foreclosed during the course of your Chapter 13 or Chapter 7 bankruptcy.  The IRS says “to show that your debt was canceled in a bankruptcy case and is excluded from income, attach Form 982 to your federal income tax return and check the box on line 1a.  Lines 1b through 1f do not apply to a cancellation that occurs in a title 11 bankruptcy case on line 2.”  If you do not feel comfortable working with IRS forms, get a professional accountant to do the work for you.  Don’t mess up your tax return.

Even if my clients had not been in bankruptcy, the foreclosure of their house most likely would not have been a taxable event.  Under the Mortgage Forgiveness and Debt Relief Act, taxpayers can “exclude income from the discharge of debt on their principal residence.  Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with  a foreclosure, qualifies for the relief.”

Also, if a person is insolvent (as defined by the IRS) at the time the debt is forgiven, they will not be taxed on the debt forgiveness.  Insolvent means that the amount you owe on all of your debts exceeds the amount of everything you own.

1. What is Chapter 13?

2. What is Chapter 7?

3. How much does it cost to file?

4.  Stop Garnishment

5.  Stop Foreclosure

Yes. Chapter 13 stops the foreclosure of your house. We don’t need the permission of your mortgage company to stop the foreclosure of your house. Also, Chapter 7 may stop temporarily stop the foreclosure of your house while the Chapter 7 trustee evaluates the value of your house. I encourage anyone who is facing foreclosure to read every article on this website that relates to foreclosure of your home.

I think anyone who might be interested in keeping their house should explore Chapter 13 as an option before deciding to do a short sale or let the house foreclose. In a Chapter 13, we can take the payments that you are behind on and put them into a payment plan that will work for you. If you are in a position not able to make the future mortgage payments on your house, Chapter 13 may not be the best answer.

A short sale is when the lender agrees to take a lower price for a house than the amount owed to the lender.  The main advantage of a short sale is that it protects your credit score from the damage of a foreclosure   A short sale might be a good option for someone whose only debt problem is a house that can’t be sold for the amount owed.  People who owe credit card debt, medical debt, car debt, and other types of debt should explore Chapter 13 and Chapter 7 before making a decision to short sale.

Amy Cochran, a short sale specialist from Cartersville, says that one of the most common mistakes she sees people make after they fall behind on house payments is that they move out of the house before the mortgage company takes any action against the house.  When a house is empty, it is much more difficult to get a short sale completed.

It can’t hurt to explore all options.  Weigh the pros and cons of each option before making your decision.

In my opinion, this is a bad idea.  If you are able to make your mortgage payments, do so.  I recently spoke with a person who quit making mortgage payments so that his mortgage company would consider him for a loan modification.  They filled out all the papers as requested by the bank for the modification.  After about four months of not receiving any payments, the bank started foreclosure proceedings.  The debtors never opened their mail from the foreclosure attorney and ignored a certified letter that was sent to their residence.  As a result, there house was foreclosed and there is nothing they can do to get it back.  Chapter 13 /a> does not lower your future mortgage payment but it can wipe out credit card debt to make is easier to pay the mortgage.

The answer to “when will the house be foreclosed on in Georgia” is that it depends on your mortgage company. Some companies move really fast. Other take up a year before they get around to finally conducting the foreclosure sale in Georgia.

Here is what the mortgage company must do in Georgia to foreclose on your house.  First, they must advertise your house for four weeks prior to the foreclosure date.  In all likelihood, you will receive a flood of advertisements once your house is being advertised. Pay attention to the mail you receive. A few months ago, I met with a man that lived in Hiram Georgia whose wife was hiding the mail from him. She was so stressed out that she did not open the mail. As a result, their house got foreclosed and they didn’t even know it! Read your mail!

Normally, foreclosures are conducted the first Tuesday of each month.  Holidays can mess up this general rule.  If you are in the middle of the month and your house is not being advertised in the legal organ of your county, you have at least forty days before the foreclosure can take place because the mortgage company will have to wait until next month to begin to advertise your house.

Second, the mortgage company is required to send you notification of the foreclosure   You should have at least four weeks notice of the foreclosure date.  Notice to you is generally accomplished by sending you a certified letter. When the mailman shows up to your house and leaves that green sticky thing on your door, don’t ignore it. Drive to your local Georgia Post Office and get that letter so that you know what is coming down the pipe.

Chapter 13 can stop the foreclosure and save your house. Take advantage of a free consultation and meet with a bankruptcy attorney.

Other Posts:

1. What is Chapter 13?

2. What is Chapter 7?

3. How much does it cost to file?

4.  Stop Garnishment

5.  Stop Foreclosure