TheFloridaBankruptcyLawBlog

Foreclosure and Stay Relief Denied When Mortgage Lender Cannot Demonstrate Proper Assignment of Mortgage Instruments

10/17/11

As most know, during the years leading up to the real estate crisis mortgage lenders originated individual home loans and then assigned packages of these loans to investors who converted the packages to mortgage securities. The assignment process involved an intermediary organization called Mortgage electronic Registration System, Inc. (“MERS”) which held millions of mortgages as an agent of the original lender and essentially served as a mortgage storage bin to facilitate mortgage transfers during the securitization process.

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Federal Circuit Court Liberalizes Chapter 13 Stripping Of Unsecured Junior Mortgages

10/11/11

Because of substantial decline in Florida real estate values Chapter 13 bankruptcy is commonly used to strip off second and third mortgages from the debtor’s upside down  primary residence. Junior mortgages are not stripped off the residence at start of the Chapter 13. If that were the case then homeowners could file the Chapter 13 to wipe out the junior mortgage and quit payments soon thereafter. No, debtor’s junior mortgages are stripped at the “back end”, that is, at the end of the Chapter 13.

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Means Test Deductions Do Not Include Mortgage Payments For Surrendered Property

10/06/11

The Chapter 7  means test permits debtors to deduct from income the amounts of the debtor’s monthly mortgage payments. Many people who are walking away  from upside down mortgaged property file bankruptcy because they want to wipe out liability for a mortgage deficiency claim. The debtor would properly state on his bankruptcy petition his intent to surrender the upside down property.

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Insurance Trust To Protect Death Benefits From Surviving Spouse's Anticipated Bankruptcy

10/02/11

Several months ago a husband and wife consulted with me about filing Chapter 13 bankruptcy. The husband suffered from a terminal disease. He owned an insurance policy on his own life with a $250,000 death benefit. The beneficiary was his wife. Both spouses worked, but the husband was the primary income earner. After his death, the wife would need to file Chapter 13 bankruptcy to save their home including her stripping off a second mortgage and reducing credit card debt.

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Chapter 7 Bankruptcy Usually Will Not Stop Ongoing State Court Litigation To Establish Debtor Liability

09/27/11

There is some confusion about the automatic stay; some debtors don’t anticipate exceptions to the effect of bankruptcy upon their creditor actions. Bankruptcy stops collection of debts, but bankruptcy does not always stop creditor’s ongoing lawsuits to establish a judgment and their right to collect money from the debtor.

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More Chapter 13 Mortgage Mediation Insights

09/23/11

My last post discussed a bankruptcy seminar which promoted  advantages of court ordered mediation in the context of a Chapter 13 bankruptcy. Here are a some additional interesting points I heard from various seminar speakers (in no particular order)

  • Your mortgage servicer makes more money when your mortgage goes into default. Maybe this is one reason why your mortgage services insists that you be at least 90 days late before they will discuss short sales or modifications;

 

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Chapter 13 Mortgage Mediation Seminar Reports Program Success

09/19/11

Last month I attended a seminar about mortgage modifications in Chapter 13 bankruptcy. There were several points that warrant a series of blog posts.

One speaker compared mortgage mediation in the context of a Chapter 13 bankruptcy with mortgage mediation in a state court foreclosure. He explained why the homeowner usually has a better chance to save his home by filing Chapter 13 and requesting mortgage mediation.

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Another Court Says Reaffirm Personal Liability On Mortgage Or Face Foreclosure

09/15/11

Another bankruptcy court decision on reaffirmation of mortgage loans. Bankruptcy debtors have always understood that they had to reaffirm their liability for car loans if they wanted to keep the car through bankruptcy. Many debtors over the years believed they did not have to reaffirm secured loans such as home mortgages. A Middle District bankruptcy court ruled a couple years ago that a mortgage lender could demand the homeowner reaffirm personal liability on mortgage debt.

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Chapter 7 Debtor Can Lose Right To Amend Schedules

09/11/11

If the debtor and his attorney screw up the debtor’s exemption on his bankruptcy schedules the attorney usually can fix the problem by amending schedules. A bankruptcy court found that the right to amend can expire at some point in the bankruptcy case where the debtor and his attorney wait too long to amend.

 The particular case involved a Chapter 7 bankruptcy in which the debtor claimed the $4,000 wildcard exemption as to his personal property.

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Can Bankruptcy Stop A Residential Tenant Eviction?

09/06/11

About one month ago I received a call from a blog reader about the effect of filing bankruptcy on residential evictions. The caller wanted to know if he could stop an eviction from his rental apartment by filing Chapter 7 bankruptcy.

The answer depends upon the status of the eviction process is at the time of the bankruptcy filing. If the landlord has not obtained a state court judgment entitling the landlord to possession of the property and the removal of the debtor then the bankruptcy will stay the eviction proceeding.

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