February 2008

29 Feb Senators compromise to allow bankruptcy judges to alter subprime loans

A bipartisan compromise bill in the U.S. Senate (S.2636), which closely aligns with a similar House bill, would allow bankruptcy courts to modify existing subprime mortgages to help families save their homes from foreclosure. Under the terms of the Foreclosure Prevention Act, a borrower can qualify only if it can be proven that he or she cannot afford the subprime mortgage. If eligible, a bankruptcy judge could (a) reduce the balance owed on the house to the current fair market value and (b) convert the mortgage to a 30 year note with a fixed rate of interest no lower than prime plus a risk premium. If the family sells their home within five (5) years of the modification, any increase in the market value of the home, up to the original mortgage amount, would be given back to the lender.
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26 Feb Is Owner Financing an Alternative to Foreclosure?

I had an interesting question today from a client who is preparing to file bankruptcy. When he and his wife married, they each owned a home. They moved into one, and rented out the other. They have been talking with their tenant for some time about buying the home, but she has so far been unable to obtain financing. They asked whether they could owner-finance the tenant's purchase of the home, and whether that would affect their bankruptcy. If they are unable to keep the property rented, or sell it (extremely unlikely in the current market) they will have to surrender it to foreclosure.
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26 Feb Bankruptcy in Florida: Carmen Dellutri’s 2008 Predictions Part II

As consumer bankruptcy attorneys, the members of this network are on the cutting edge of bankruptcy issues, and more importantly, we see the latest trends and issues that consumers see in debt collection, mortgage fraud, credit card abuses, etc.  Well the two most common used words in my offices in 2008 are CASH ADVANCES.  It seems that an overwhelming amount of new client intakes have issues with cash advances.  When I say an overwhelming amount, I mean the number has quadrupled in the past two months.  Quite frankly, there is a serious liquidity problem in Southwest Florida.  My clients are suffering so badly that they have no alternative but to use secondary financing to keep their heads above water.
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26 Feb Defense of Foreclosure

With foreclosures heading toward an all time high, defensive tactics are becoming increasingly important. Due to the complexity of the home loan securitization process, it is often hard for a loan servicer to find the original paperwork from the loan transaction. Here is a news...

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26 Feb Who Owns Your Mortgage?

There are so many unsavory and sometimes surprising details emerging about the mortgage industry, it's hard to keep up. One of the issues that has emerged in foreclosure litigation in several districts is whether the foreclosing lender actually owns the mortgage it's trying to foreclose.
Judges in at least five states have stopped foreclosure proceedings because the banks that pool mortgages into securities and the companies that collect monthly payments haven't been able to prove they own the mortgages. The confusion is another headache for U.S. Treasury Secretary Henry Paulson as he revises rules for packaging mortgages into securities. ``I think it's going to become pretty hairy,'' said Josh Rosner, managing director at the New York-based investment research firm Graham Fisher & Co. ``Regulators appear to have ignored this, given the size and scope of the problem.''
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