31 Jul Bankruptcy Mortgage Project Launches,Treasure Trove for Practitioners
The National Consumer Law Center has launched the Bankruptcy Mortgage Project, a treasure trove of legal resources about home mortgage issues in consumer bankruptcy cases.
The NCLC website collects local rules, forms, general orders and opinions about consumer mortgage issues from the 352 bankruptcy judges in 89 judicial districts in the United States. It serves as a one-stop source of information for courts, consumers, trustees, mortgage servicers, attorneys, academics, and others in the bankruptcy community.
There are a myriad of issues and controversies about home mortgages that occur in consumer bankruptcy cases. Hundreds of court rulings have been issued since the current bankruptcy code was adopted in 1978. Procedures and law differ from bankruptcy judge to judge and district to district.
Chapter 13 is a form of bankruptcy often used by consumers to save their homes from mortgage foreclosure.
Consumers in a Chapter 13 cases generally are not permitted to modify home mortgages, but they may submit a plan to the bankruptcy court in which they propose to cure a mortgage default. The typical “cure plan” provides that consumers will make payments to the mortgage creditor on both the amount they are behind before filing (the “arrearage” payments) and the regular, ongoing payments that come due after filing (the “maintenance” payments). If the plan is approved by the bankruptcy court and the consumer completes the plan, generally in a three to five year period, the consumer should emerge from bankruptcy with a fully current mortgage and the foreclosure will be avoided. Source: Bankruptcy Mortgage Project.
Many bankruptcy courts have responded to the increasing volume created by the current mortgage foreclosure crisis by facilitating voluntary loan modifications. The courts also have adopted local rules and procedures to balance the interests of debtors, creditors and trustees, to address perceived mortgage servicing abuses, and to specify treatment of junior mortgages. The Bankruptcy Mortgage Project website collects these local rules, general orders, and rulings to aid the consumer bankruptcy community.
There are a number of reasons, however, why consumers may have difficulty keeping up with their plan payments. There may be some life-changing event during the plan, such as job loss or major sickness, or the consumer’s mortgage payments may simply not be affordable. Another problem which has been well documented over the years is that mortgage servicers may file inaccurate claims listing amounts owed, may not properly credit cure plan payments as they are made, and may not disclose to consumers payment changes and fees assessed during the plan. It is not uncommon for debtors who successfully complete their Chapter 13 plans to receive a bill for thousands of dollars of previously undisclosed fees once they come out of bankruptcy. Source: Bankruptcy Mortgage Project.
Here are the categories of documents available for download on the Bankruptcy Mortgage Project site:
- Formal Loss Mitigation Program
- Orders Related to State Foreclosure Mediation Programs
- Loss Mitigation Requirement before Confirm./Stay Relief
- Creditor Contact with Debtor not Stay Violation
- Loan Modification and Forbearance Agreement Terms
- Loan Modification Approval
- General Mediation / ADR Programs
- Proof of Claim Attachments/Requirements
- Notice of Payment Change and/or Periodic Statements
- Notice of Fees and Charges
- Payment Application Requirements
- Requirement for Trustee Disbursement of Mortgage Payments
- Fee Dispute Resolution Procedure
- Effect of Cure
- Sanction for NonCompliance
- Itemization of Fees/Payments History
- Proof of Standing
- General Requirments including Worksheets, Declarations or Other Attachments
- Pleadings Requirements
- Service Requirements
- Proof/Valuation Requirements
- Timing and Content of Order
- Availability in No Discharge Cases
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