Newspapers across our nation have been full of articles detailing bank foreclosure practices that have been abusive.  It now looks like the federal government will attempt to respond to this foreclosure abuse.  The Wall Street Journal has reported that federal regulators will review millions of foreclosure cases to determine whether some consumers should be compensated for mistakes made by banks (click here read the entire article).

The Journal reports that this review process could be unveiled in the next few weeks.  The Office of the comptroller of the Currency estimates that 4.5 million borrowers coul be eligible for review.

The federal government will be setting up a website and a toll free number giving the details of the process.

What bothers me is that the reviews will be conducted “by third party companies that were hired earlier his year by 14 banks that signed consent order in April with the OCC and the Federal Reserve.  The regulators had to sign off on the selection of these companies”  (See page C1 Wall Street Journal, October 4, 2011).

It seems to be like the government has agreed to allow a fox to be in charge of guarding the hen house.  I doubt we will see many people recover anything.  I bet there will be a few token cases where awards will be granted so that the foxes can claim to the government that they are doing their job.

Important points of the article are:

1.  Money awards will be determined on a case-by-case basis.

2.  There will be a deadline for borrowers to request reviews.

3.  Very few borrowers are expected to have their foreclosures overturned and their homes returned to them.

4.  Banks could be held liable for miscalculating mortgage payments.

5.  Banks could be held liable for impermissible fees and penalties.

6.  Banks could be held liable for forcing expensive insurance coverage into the mortgage payment and pushing consumers into foreclosure

7.  Banks could be held liable for starting foreclosure proceedings while they were receiving payments as part of trial loan modifications.

8.  Banks may be liable for foreclosing on people who provided all of the necessary documentation for loan modifications but still got foreclosed.

I think the proper place for these issues to be resolved is in a court of law and not some review process that will be run by “third party” companies.

Three years, Congress had the opportunity to pass a bill that would have allowed bankruptcy judges to modify mortgages.  Had this bill passed, the entire foreclosure meltdown would have been avoided.

1. What is Chapter 13?

2. What is Chapter 7?

3. How much does it cost to file?

4.  Stop Garnishment

5.  Stop Foreclosure

When a house gets foreclosed, many consumers fear that they will still owe money to the lender after the foreclosure of their home.  In Georgia, it is usually only the second mortgage companies that pursue a deficiency after a house is foreclosed.  However, the Wall Street Journal reports that many banks are now pursing deficiency judgments on the first mortgages as well (click here to read the full article).

In the article, the Journal details how mortgage companies are becoming more aggressive in Florida in pursuing these deficiency judgments after foreclosure sales.

I doubt that we will see first mortgage holders start pursuing deficiency judgments in Georgia.  Click here to read a blog post I wrote about confirmation of foreclosure in Georgia.  In my twelve years as a bankruptcy attorney, I’ve seen it happen only one time.  In almost every single case, it is complete waste of time for a mortgage company to chase a consumer who just lost their home in a foreclosure sale.

However, I have seen an increase in cases where a credit union refuses to foreclose on the house.  Instead, they sue the consumer on the note.  When they are successful in their lawsuit, the credit union will then be able to garnish twenty five percent of the consumer’s net income.

When I saw a consumer go through this type of situation, I advised him to continue living in the house while his wages were being garnished.  In his case, getting garnished was much cheaper than the mortgage payment.  Also, the amount he was being garnished for was much cheaper than renting an apartment.  In his case, the credit union was incredibly stupid by choosing to garnish his wages instead of just foreclosing on the house.

If we see first mortgage holders start to pursue deficiency judgments in Georgia after a foreclosure is completed, I doubt it will last long.  In almost every case, the consumer will file for bankruptcy and wipe out the mortgage company.  Legal fees for pursing a deficiency judgment against a consumer are expensive.  Thus, any mortgage company who chooses to pursue a deficiency judgment will most likely be throwing good money after bad.

1. What is Chapter 13?

2. What is Chapter 7?

3. How much does it cost to file?

4.  Stop Garnishment

5.  Stop Foreclosure

The federal government’s attempt at stemming the foreclosure crisis has been a complete failure.

Consumer Bankruptcy News reports in their April 7, 2011 edition that the Congressional Oversight Panel “officially ceased to exist on April 3.  Created to oversee how the U.S. Treasury Department spent money through the Troubled Asset Relief Program, COP’s final report expresses disappointment in the government’s foreclosure mitigation response.”

The word “disappointment” in reference to federal efforts is a major understatement.  I have met with bankruptcy clients from Rome, Dalton, Dallas, Hiram and Cartersville,  Georgia who were completely devastated when they were informed by their mortgage company that their loan modification was not approved.

Many consumers are angry at Congress because millions of dollars were set aside to help people like them but the promised help was never delivered.  Many others are furious at their mortgage companies because they feel like no one really wants to help them in any way.  It will be interesting to see how this voter anger plays out in November.

Its too bad that the Mortgage Modification bill never passed.  Under this bill, bankruptcy judges would have been given the power to modify mortgages and lower future mortgage payments based the real value of the house.  Passage of this bill would have prevented the foreclosure crisis because debtors would have been able to stay in their homes with lower mortgage payments.  The best part would have been that this program would not have cost the American taxpayer any money.

Instead, “685,574 homeowners are being assisted by foreclosure prevention programs funded with $1.2 billion in TARP Money”  (Consumer Bankruptcy News, page 4).  The bad news is that the vast majority of people who applied for federal help never received it.

The good news is that Chapter 13 can stop foreclosures.  Past due mortgage payments can be put into a plan and spread out over five years.

However, it is important to note that Chapter 13 does not lower your future mortgage payments.  As a result, if you are in a situation where your mortgage payments is too high, Chapter 13 may not be the answer.

Other Posts:

1.  Loan Modification Mortgage Scam.

2.  What is a Motion for Relief?

3.  If I Surrender My House in Bankruptcy, How Fast do I have to move out?

“How fast do I need to file bankruptcy to stop a foreclosure in Georgia?  When is it too late to file?  Can I wait until the last second?”

I get these questions from potential bankruptcy clients in Dallas, Cartersville, Rome, Calhoun and Dalton, Georgia every month.

Technically, as long as you have a bankruptcy case number before the house is cried out on the steps of the courthouse on foreclosure day (the first Tuesday of every month), you are safe.  However, I don’t file cases at the last minute and no one should take a gamble that they will be able to find a Georgia bankruptcy attorney who will do so at the last minute.

I don’t file stop foreclosure bankruptcy cases at the last minute because:

1.  I don’t want to run the risk of losing your house because of a computer glitch.  Sometimes, the bankruptcy court computer system has to be shut down for maintenance.  In rare situations, the power goes out and shuts down my computer system.  During the winter, we may have an ice storm which can prevent anyone from being able to make it into work.  During January 2011, I had to shut my office down for four days in a row because of the snow.  The bottom line is that I don’t want to wait until the last second.

2.  Before we file any bankruptcy case on your behalf, I want to make sure its in your best interest.  I want to spend the time going over every single page of the bankruptcy petition and make sure all of the information is accurate.

In most situations, Chapter 13 is a great option for stopping foreclosures.  In a Chapter 13, we may be able to eliminate all of your unsecured debt (credit card debt, medical debt and signature loans) and put any arrears you have on your mortgage into the plan.  For most people, paying their future mortgage payments is a lot easier when they don’t have to worry anymore about the credit card bills.

In other situations, filing Chapter 13 may not be realistic.  For example, filing Chapter 13 is a bad idea when you can’t afford the future mortgage payments.  If your mortgage payment is $3,000 per month and your total income is $2,00o per month, you are not going to be able to keep your house unless you either get it refinanced or get a loan modification.  If you file Chapter 13 and then miss paying your future mortgage payments, you will lose your house.

3.  I don’t wait until the last second to file your case because I want analyze all of your necessary documents before we file the case.  Your monthly income and household expenses affect how much your Chapter 13 payment will be.  I need time to evaluate.  The types of debt you have affects the amount of your plan payment.

The bottom line is that you should not wait until the last second.  Take advantage of a free consultation and call me today at 706-295-0030 to see if Chapter 13 is a good option for saving your home.

Other Posts:

1. What is Chapter 13?

2. What is Chapter 7?

3. How much does it cost to file?

4.  You may be able to eliminate your second mortgage.

Bloomberg news has reported that U.S. Bankcorp and Wells Fargo have lost a major foreclosure case in the Supreme Court of Massachusetts (click here to see the full article).  This ruling upholds a decision from a lower court that declared that two foreclosures in Massachusetts were not valid because the banks did not prove they owned the mortgage.

In the conclusion of the decision, the Court states, “….we agree with the judge that the plaintiffs did not demonstrate that they were holders of the Ibanez and LaRace mortgages at the time that they foreclosed these properties, and therefore failed to demonstrate that they foreclosed these properties, and therefore failed to demonstrate that they acquired fee simple title to these properties by purchasing them at foreclosure sale.”

The next step for these banks will be to get their paperwork in order and start the foreclosing process again.  The debtors in these cases are not going the get a free house.

As a Georgia bankruptcy attorney, I fear that some Georgia consumers are going to read about these types of court rulings in some newspaper and fail to take proper action to prevent the foreclosure of their home because of misconceptions.  While its true that banks across the nation are being investigated for their sloppy paperwork in relation to the sale of mortgages, this does not change the fact a legal foreclosure can quickly take place in Georgia.

In a conducting a nonjudicial foreclosure, all the banks have to do in Georgia is advertise the property in question for four consecutive weeks before the foreclosure in the legal organ of the Georgia county in which the property is located.  On the first Tuesday of the following month, the foreclosure sale takes place.

However, Chapter 13 is a great option for Georgia consumers to save their home.  The foreclosure stops when the bankruptcy case is filed.  In a Chapter 13 bankruptcy, a debtor can pay back the arrears on the mortgage over a period of up to 60 months.  In addition, unsecured debt like credit card bills and medical debt can be eliminated.

Any consumer in Northwest Georgia that is facing foreclosure should take advantage of a free consultation and call me at 706-295-0030 to schedule an appointment so that I can review the entire situation with you.  Ignoring the problem won’t make it go away.  Procrastination may cost you dearly.  Take action and call me today.

Other Posts:

1.  Can I eliminate my unsecured second mortgage in a Chapter 13?

2.  How much does it cost to file?

3.  How does a Chapter 13 work?

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 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.

The answer to this question is maybe.  If you have a foreclosure scheduled against you, you should file Chapter 13 to stop the foreclosure and save your home.  I have had so many clients where someone from the mortgage company called and told the homeowner that they would try to work something out to stop the foreclosure   Nothing got worked out, and they lost their home.  Ask yourself this question, “If the mortgage is willing to work with me, why did they file the foreclosure action against me in the first place?”  If your mortgage company says they are going to call off the foreclosure, GET IT IN WRITING before the foreclosure date.  If you are considering Chapter 13 to the stop the foreclosure, call me today at 888-832-8249 for your free consultation.  We need time to get your paperwork prepared.  Don’t wait until the last second.

If someone tells you to pay them money so that they can “renegotiate your loan,” don’t do it!  There are so many scams.  Take advantage of a free consultation with an attorney and let a bankruptcy attorney review any offers you are considering.

If you want a loan modification, you can speak to your mortgage company directly.  You don’t need to pay anyone to help you with any type of loan modification.  Go to the Federal Trade Commission website and read all about the foreclosure scams. Call the FTC at 888-HOPE-NOW.

I was speaking with a client from my Dallas GA office a few months ago who was victimized by one these scams.  She actually mailed some company in Florida $600 to get her loan renegotiated.  This company did absolutely nothing for my client accept take her money.  The FTC has really started cracking down hard on these types of scams.

If you have a first and a second mortgage, you may need to consider bankruptcy even if you are willing to let the house get foreclosed.  For more information on second mortgage issues, please see my prior post.

If you have only one mortgage and you don’t have any other debt issues, you probably don’t need to file bankruptcy in Georgia.  Under Georgia law, a mortgage company is required to file a “confirmation of foreclosure” against you within 30 days of the foreclosure date.  Mortgage companies almost never conduct a confirmation of foreclosure in Georgia.  It is extremely rare for any mortgage company to pursue a deficiency on a first mortgage.

It might be a good idea to wait at least 30 days after the foreclosure to see if they take action against you.  If they do, meet with a bankruptcy attorney.

Section 44-14-161 of the Georgia Code states in part, “(a) When any real estate is sold on foreclosure, without legal process, and under powers contained in security deeds, mortgages, or other lien contracts and at the sale the real estate does not bring the amount of the debt secured by the deed, mortgage, or contract, no action may be taken to obtain a deficiency judgment unless the person instituting the foreclosure proceedings shall, within 30 days after the sale, report the sale to the judge of the superior court of the county in which the land is located for confirmation and approval and shall obtain an order of confirmation and approval thereon.

(b) The court shall require evidence to show the true market value of the property sold under the powers and shall not confirm the sale unless it is satisfied that the property so sold brought its true market value on such foreclosure sale.

(c) The court shall direct that a notice of the hearing shall be given to the debtor at least five days prior thereto; and at the hearing the court shall also pass upon the legality of the notice, advertisement, and regularity of the sale.  The court may order a resale of the property for good cause shown.”

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