What Homeowners Must Know About Filing Bankruptcy Without a Lawyer: Chapter 13 Issues

16 Wednesday Sep 2020

Posted by BNG in Bankruptcy, Borrower, Federal Court, Foreclosure, Foreclosure Defense, Judicial States, Non-Judicial States, Pro Se Litigation, Your Legal Rights

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Bankruptcy, bankruptcy court, Borrower, Foreclosure, foreclosure defense, Means Test Forms, Official B122C-2, Official Form B122C-1, Pro se legal representation in the United States, Real estate

It is possible to file bankruptcy without an attorney, and Chapter 13 cases present even more challenges for pro se filers than Chapter 7 cases. More forms, more calculations, and a payment plan must be approved by a Chapter 13 trustee and a judge.

Means Test Forms

Chapter 13 debtors must file two forms that together form the Means Test for a Chapter 13 case.

The first form is the Chapter 13 Statement of Your Current Monthly Income and Calculation of Commitment Period, Official Form B122C-1. This calculates your average monthly income and uses that figure to determine whether your case should last three years or as long as five years. In short, if your family income is less than the median for your state, your plan needs to last only three years. If your family income is more than the median, it needs to last five years. The median is the point at which 50 percent of families fall above and 50 percent fall below.

The second form is the Chapter 13 Calculation of Your Disposable Income, Official Form B122C-2 This calculates the difference between your income and your reasonable and necessary monthly expenses. If your income is higher than your expenses, you have disposable income. At least a part of that disposable income will be included in your Chapter 13 payment and will be used to pay allowed claims for unsecured debts like credit cards and medical bills.

While your income may be pretty easy to determine for the first form, there may be room for disagreement on whether certain expenses are reasonable or not on the second form. Some are set out for you in the calculation, based on national or regional averages, but others can be customized based on your particular circumstances. Getting those amounts approved by a Chapter 13 trustee can be the trickiest part of a Chapter 13 case.

Chapter 13 Plans

Once the income and expense calculations have been made and the commitment period has been determined, a payment plan can be calculated. The payment plan will include amounts for

disposable income from Official Form B122C-2.
arrearages owed to mortgage creditors
priority debts like back taxes
arrearages owed to car creditors
attorneys fees, if being paid through the plan
administrative fees to the Chapter 13 trustee
value of non-exempt assets

In some districts, known as conduit jurisdictions, debtors are required to make their entire house payment through a Chapter 13 trustee, not just an amount to cover arrearages. Studies have shown that debtors who make house payments this way are more likely to have a successful Chapter 13 plan.

It is possible to include your entire car payment in the plan and even adjust your interest rate or the amount of the principal you will repay if your car loan was at least 2 ½ years old when you filed the bankruptcy case.

Plan forms are usually specific to the jurisdiction in which a case is filed. Those can be found on the website for the court or the website for the Chapter 13 trustee to which the case has been assigned.

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

If you are a homeowner already in Chapter 13 Bankruptcy with questionable liens on your property, you needs to proceed with Adversary Proceeding to challenge the validity of Security Interest or Lien on your home, Our Adversary Proceeding package may be just what you need.

Homeowners who are not yet in Bankruptcy should wake up TODAY! before it’s too late by mustering enough courage for “Pro Se” Litigation (Self Representation – Do it Yourself) against the Lender – for Mortgage Fraud and other State and Federal law violations using foreclosure defense package found at https://fightforeclosure.net/foreclosure-defense-package/ “Pro Se” litigation will allow Homeowners to preserved their home equity, saves Attorneys fees by doing it “Pro Se” and pursuing a litigation for Mortgage Fraud, Unjust Enrichment, Quiet Title and Slander of Title; among other causes of action. This option allow the homeowner to stay in their home for 3-5 years for FREE without making a red cent in mortgage payment, until the “Pretender Lender” loses a fortune in litigation costs to high priced Attorneys which will force the “Pretender Lender” to early settlement in order to modify the loan; reducing principal and interest in order to arrive at a decent figure of the monthly amount the struggling homeowner could afford to pay.

If you find yourself in an unfortunate situation of losing or about to lose your home to wrongful fraudulent foreclosure, and need a complete package that will show you step-by-step litigation solutions helping you challenge these fraudsters and ultimately saving your home from foreclosure either through loan modification or “Pro Se” litigation visit: https://fightforeclosure.net/foreclosure-defense-package/

If you have received a Notice of Default “NOD”, take a deep breath, as this the time to start the FIGHT! and Protect your EQUITY!

If you do Nothing, you will see the WRONG parties WITHOUT standing STEAL your home right under your nose, and by the time you realize it, it might be too late! If your property has been foreclosed, use the available options on our package to reverse already foreclosed home and reclaim your most prized possession! You can do it by yourself! START Today — STOP Foreclosure Tomorrow!

What Borrowers Must Know About Voiding Liens in a Mortgage

06 Sunday Oct 2019

Posted by BNG in Appeal, Bankruptcy, Banks and Lenders, Borrower, Case Laws, Case Study, Federal Court, Foreclosure, Foreclosure Crisis, Foreclosure Defense, Fraud, Judicial States, Legal Research, Litigation Strategies, Loan Modification, Mortgage fraud, Mortgage Laws, Non-Judicial States, Note - Deed of Trust - Mortgage, Pro Se Litigation, Real Estate Liens, State Court, Trial Strategies, Your Legal Rights

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There are numerous methods for voiding questionable liens in any given mortgage. In this post, we’ll discuss an interesting decision by the U.S. Court of Appeals for the Ninth Circuit in Bankruptcy Adversary Proceeding.

This decision from the U.S. Court of Appeals for the Ninth Circuit poses a serious threat to mortgage companies that service mortgages of chapter 13 debtors. Mortgage servicers should be aware of the case’s implications and adjust their internal case monitoring procedures as necessary.

Consider a common situation. A borrower files a chapter 13 bankruptcy case, and her mortgage servicer files a proof of claim for the mortgage balance. The borrower then objects to the proof of claim based on some purported technicality: the signature was forged, the endorsement was improper, the servicer lacks standing to enforce the note, etc. For whatever reason, the mortgage servicer does not respond to this objection, and the claim is disallowed by default.

When this happens, the borrower will often attempt to leverage a favorable settlement, like a mortgage modification, by filing a lawsuit to void the mortgage under 11 U.S.C. § 506(d). This provision allows a bankruptcy court to void a lien if the lien secures a claim that is not “allowed.” Because the mortgage was “disallowed” by default due to the mortgage servicer’s failure to respond, this statute theoretically allows the court to void the mortgage altogether.

Courts generally do not void mortgages that are substantively valid but were disallowed because of a default. The most common solution in these situations is a settlement and a motion to reconsider the disallowance under 11 U.S.C. § 502(j). Bankruptcy courts may grant these motions for “cause” at their discretion, which is typically satisfied if the mortgage servicer can prove the substantive validity of the mortgage. See generally In re Oudomsouk, 483 B.R. 502, 513-14 (Bankr. M.D. Tenn. 2012). This works to everyone’s advantage: the mortgage servicer gets paid through the bankruptcy, and the debtor avoids the risk of post-bankruptcy foreclosure if the lien’s validity is ultimately upheld after the case concludes.

The decision of the U.S. Court of Appeals for the Ninth Circuit in In re Blendheim may change this result. 2015 WL 5730015 (9th Cir. Oct. 7, 2015). In Blendheim, the debtors owned a condominium with two mortgages. After filing chapter 7 and obtaining a discharge of their unsecured debts, the debtors immediately filed a chapter 13 case to restructure their mortgages on the condominium (this process is known as a “chapter 20”). HSBC, the senior servicer, filed a proof of claim for the senior mortgage, but the debtors objected because (a) HSBC attached only the deed of trust, and not the promissory note, to the proof of claim, and (b) one of the signatures on the note was purportedly forged.

For reasons unknown, HSBC did not respond to the objection, and the bankruptcy court entered an order disallowing HSBC’s claim by default. Five months later, the debtors brought an adversary proceeding to void the mortgage under 11 U.S.C. § 506(d). Almost eighteen months after the bankruptcy court disallowed HSBC’s claim, HSBC filed a motion to reconsider the disallowance. HSBC also challenged the debtors’ attempt to void the mortgage because the disallowance was not actually litigated; it was the result of a default. The bankruptcy court disagreed, finding that (a) HSBC had no good reason for failing to respond to the claim objection, and (b) the statute plainly permitted lien avoidance in these circumstances. After the bankruptcy court confirmed the debtors’ plan, which provided for payment of only the junior mortgage, HSBC appealed.

On appeal, HSBC raised three primary issues. First, it argued that Section 506(d) should not operate to void its mortgage, notwithstanding the plain language of the statute, when the order disallowing the claim was not actually litigated but was based on a default. Second, it argued that even if the lien were properly voided under Section 506(d), the result could not be permanent because the debtors, having recently received a discharge in their chapter 7 case, were not eligible for a discharge in their chapter 13 case. Third, it argued that by losing its lien because of a default order in the bankruptcy case, as opposed to a formal lawsuit, it was denied due process.

The court disagreed with HSBC on each issue. First, it held that lien avoidance was appropriate. HSBC cited cases where courts refused to void a mortgage when a claim was disallowed for being filed late. The court distinguished these cases, holding that a creditor who files a late proof of claim is not “actively participating in the case” and therefore cannot have its state law lien rights impacted. See generally Dewsnup v. Timm, 502 U.S. 410, 418-19. But when a creditor timely files a proof of claim then willfully fails to respond to the debtors’ objection to the claim, the situation is fundamentally different. According to the court, the Bankruptcy Code plainly allows permanent lien avoidance when a creditor, like HSBC, “just sle[eps] on its rights and refuse[s] to defend its claim.” Blendheim, 2015 WL 5730015, at *11.

Next, the court addressed HSBC’s second argument and held that lien avoidance was appropriate even though the debtors were not eligible for a discharge. Acknowledging a split of authority, the court clarified that discharge affects only personal liability, not the in rem rights of creditors, so the cases on which HSBC relied were distinguishable. Nothing in the Bankruptcy Code prohibits lien avoidance just because a borrower has no right to a discharge.

Finally, the court held that HSBC’s due process was not offended. HSBC received notice of the claim objection and had ample time to respond. Its failure to do so, while fatal to its lien, did not violate its due process rights.

What This Means for Mortgage Creditors

The Blendheim case may have serious implications for mortgage creditors. This situation is not an outlier: mortgage servicers commonly fail to respond to claim objections. his may be because of the quick deadline to respond to these objections or the use of separate legal counsel for handling administrative functions in bankruptcy versus defending adversary proceedings. Historically, when a claim is disallowed based on a creditor’s failure to respond to a claim objection, bankruptcy courts will grant a reconsideration motion under Section 502(j) if the creditor can prove the substantive validity of the mortgage.

After Blendheim, the result may be different. The Blendheim court, after all, did not seem to care about the underlying validity of HSBC’s claim. Instead, it focused on HSBC’s failure to respond without a good reason.

How does this Affect Mortgage Creditors

Mortgage servicers should be aware of this decision and should make sure that they are closely following the dockets of cases involving their borrowers in bankruptcy. If they don’t, they risk losing their mortgage lien, if any, altogether.

CASE STUDY: HSBC v. BLENDHEIM

[The views expressed in this document are solely the views of the Author. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance]

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

If you have received a Notice of Default “NOD”, take a deep breath, as this the time to start the FIGHT! and Protect your EQUITY!

How Homeowners Can Set Aside Foreclosure Sale

06 Sunday Oct 2019

Posted by BNG in Banks and Lenders, Borrower, Federal Court, Foreclosure, Foreclosure Crisis, Foreclosure Defense, Fraud, Judgment, Judicial States, Litigation Strategies, Mortgage fraud, Mortgage Laws, Non-Judicial States, Note - Deed of Trust - Mortgage, Pleadings, Pro Se Litigation, State Court, Trial Strategies, Your Legal Rights

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What are the Reasons a Foreclosure Sale May Be Set Aside

Generally, to set aside a foreclosure sale, the homeowner must show:

– irregularity in the foreclosure process that makes the sale void under state law
– noncompliance with the terms of the mortgage, or
– an inadequate sale price that shocks the conscience.

Sometimes homeowners are not aware that a foreclosure sale has been scheduled until after it has already been completed. Even if your home has been sold, there are some instances where you might be able to have the foreclosure sale invalidated, though this is uncommon. This post will discuss how to set aside a foreclosure sale and the circumstances that might warrant it.

Irregularity in the Foreclosure Process

State statutes lay out the procedures for a foreclosure. If there are irregularities in the foreclosure process—meaning, the foreclosure is conducted in a manner not authorized by the statute—the sale can potentially be invalidated.

Some examples of irregularities in the foreclosure process are:

The loan servicer does not send notice to the borrower.
A state statute requires notice by advertising the sale in a newspaper, but the servicer does not place the advertisement.
The foreclosing lender did not get an assignment of the mortgage.

Example. In U.S. Bank v. Ibanez, the Massachusetts Supreme Judicial Court invalidated two foreclosure sales where the mortgages were assigned to the lender after the completion of the foreclosure sale. The court decided that the foreclosures were void because the lenders lacked legal authority to foreclose.

However, in some states, courts are reluctant to set aside a foreclosure sale based upon violations of foreclosure statutes unless the violation resulted in actual prejudice (harm) to the homeowner. For instance, the homeowner may have to show that the lender’s failure to follow the statutory requirements chilled the bidding at the foreclosure sale and, as a result, the homeowner was liable for a larger deficiency judgment.

Noncompliance With Terms of the Mortgage

If the lender or servicer fails to comply with the terms of the mortgage contract, this may constitute sufficient reason to set aside a foreclosure sale.

Example. Many mortgages and deeds of trust require that the lender or servicer send the borrowers a breach letter giving them 30 days to cure the default before starting a foreclosure. If the servicer doesn’t send a breach letter, this may provide grounds for invalidating the foreclosure.

Inadequacy of Sale Price

Inadequacy of sale price might justify setting aside a foreclosure sale if the price is so low that it “shocks the conscience” of the court. It is often difficult to get a sale set aside on this basis. Usually to get a sale invalidated for inadequacy of sale price, you will also need additional circumstances that warrant voiding the sale.

For instance, courts are more likely to set aside a sale if there is an inadequate sales price combined with:

some irregularity (such as if the sale was advertised to take place at 3:00 p.m., but was actually held at 11:00 a.m.), or
unfairness (like if the lender re-sold the property for a much higher price right after the foreclosure sale, which demonstrates that it could have received a higher price at the foreclosure sale).

Though keep in mind that some courts might be hesitant to void the sale unless the violation resulted in actual prejudice to the homeowner.

How to Set Aside the Foreclosure Sale

The procedures to set aside a foreclosure sale depend on whether the sale was judicial (where the lender forecloses through the state court system) or nonjudicial (which means the lender does not have to go through state court to get one).

Setting Aside a Sale in a Judicial Foreclosure

Attempting to invalidate the sale in a judicial foreclosure can typically be done in the following ways, depending on state law:

If the foreclosure case stays open through completion of the sale process, then you can raise an objection to the legitimacy of the sale in that case.
If the state judicial process terminates once the foreclosure judgment is entered (and not appealed), then you must either file a motion to reopen the case or file a separate action to void the sale.

The actual process is generally determined by statute, rule, or case law.

Setting Aside a Sale in a Nonjudicial Foreclosure

If the property was foreclosed non-judicially, the homeowner will usually have to file a lawsuit in state court to void the sale. It may also be possible in some instances to file bankruptcy and ask that the sale be set aside as part of the bankruptcy case.

There are a few nonjudicial foreclosure states that require a court to confirm the sale. In those states, the homeowner can sometimes raise objections to the sale in the confirmation process. However, in some states the confirmation process is limited to determining whether or not the property sold for fair market value at the foreclosure sale and the court will not review other issues.

What Happens if the Sale Is Set Aside?

If the foreclosure sale is set aside as void, title to the property is typically returned to the homeowner while the mortgage and other liens generally are re-established. However, if the property has been resold to another party following an invalidated sale, some state statutes provide that the subsequent sale to a good faith purchaser eliminates the foreclosed homeowner’s right to challenge the sale on procedural grounds. In these types of cases, the homeowner might be able to seek damages against the lender or servicer.

The reasons that justify, as well as, the procedures for, invalidating a foreclosure sale are complicated. So, if you are considering trying to set aside a foreclosure sale, the earlier you begin the fight using the content found within our package, the better chance of succeeding.

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

Home owners should wake up TODAY! before it’s too late by mustering enough courage for “Pro Se” Litigation (Self Representation – Do it Yourself) against the Lender – for Mortgage Fraud and other State and Federal law violations using foreclosure defense package found at https://fightforeclosure.net/foreclosure-defense-package/ “Pro Se” litigation will allow Homeowners to preserved their home equity, saves Attorneys fees by doing it “Pro Se” and pursuing a litigation for Mortgage Fraud, Unjust Enrichment, Quiet Title and Slander of Title; among other causes of action. This option allow the homeowner to stay in their home for 3-5 years for FREE without making a red cent in mortgage payment, until the “Pretender Lender” loses a fortune in litigation costs to high priced Attorneys which will force the “Pretender Lender” to early settlement in order to modify the loan; reducing principal and interest in order to arrive at a decent figure of the monthly amount the struggling homeowner could afford to pay.

If you have received a Notice of Default “NOD”, take a deep breath, as this the time to start the FIGHT! and Protect your EQUITY!

If you are a homeowner already in Chapter 13 Bankruptcy and needs to proceed with Adversary Proceeding to challenge the validity of Security Interest or Lien on your home, Our Adversary Proceeding package may be just what you need.

What Homeowners With Business Should know About Federal Judgments and Chapter 11 Plans

16 Tuesday Jul 2019

Posted by BNG in Affirmative Defenses, Bankruptcy, Borrower, Case Laws, Credit, Federal Court, Judgment, Judicial States, Litigation Strategies, Non-Judicial States, Pro Se Litigation, Trial Strategies, Your Legal Rights

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What greeting card do you expect from the judgments warehoused in your file cabinets? Yes, those judgments can mail you a greeting card. Your first choice is the birthday card: “Happy 10th Year Anniversary. What a ride. Thanks for the renewal. See you in ten years.” Your other choice is the condolence card: “10 years? You waited too long. My dearest sympathy.”

Victory lasts forever, but not a federal judgment. “There is ‘no specific federal statute of limitations on how long [a federal] judgment is effective. (citation omitted) When no federal statute applied, state practices and procedures are utilized.”¹ State law provides a judgment creditor with the rights and remedies to enforce a federal money judgment under F.R.C.P. 69(a)(1), including the renewal of a money judgment.² The law of the state measures the life of a federal judgment. A pending appeal does not toll the enforceability period under C.C.P. § 683.020.³

The Law of the Domicile Measures the Life of a Federal Judgment

In In Re Levander,⁴ the Ninth Circuit held that the federal courts apply the law of the domicile in the enforcement of a judgment.⁵ Similarly, in McCarthy v. Johnson,⁶ the court held that Utah state law provided the mechanism for the renewal of a federal judgment. In Fidelity Nat. Fin. Inc. v. Friedman, the Ninth Circuit held that state law applies when measuring the life of judgments. Federal and bankruptcy courts apply state law when renewing a judgment because federal judgments lack a federal expiration date.⁷ While Fidelity dealt with a registered judgment, the principle that a registered judgment is deemed a judgment for all purposes under 28 U.S.C. § 1963 is nevertheless applicable.

The Ninth Circuit held that the federal courts are to apply state law in determining the statute of limitations.⁸ Likewise, the Fifth Circuit applied Texas state law in Andrews v. Roadway Express, Inc. (5th Cir. 2006) 473 F.3d 565, holding that a consent decree, arising from a class action suit, was time barred as a result of the plaintiffs’ failure to timely renew the judgment and raising the issue whether other judgment providing for payment to class bear a fixed life.⁹ Unless a federal statute provides otherwise, the practice relative to the revival of dormant judgment is governed by state law.¹⁰

Deader Than a Doornail: the Statue of Repose

Some states have held that a time-barred judgment is extinguished and ceases to exist (“statute of repose”), as opposed to having a procedural rule that bars recovery in the enforcement of judgments.¹¹ In United States v. Tacoma Gravel & Supply Inc.,¹² the Ninth Circuit, construing Washington state law, held that Washington state’s limit on the enforceability of judgments is a statute of extinguishment (i.e., a statute of repose),¹³ not a statute of limitations. Moreover, the Ninth Circuit unequivocally held that “this is not a statute of limitations but of extinguishment; after six years, a Washington judgment has no force or effect—it ceases to exist. [Collection of Washington state cases]”¹⁴ The Tacoma court applied Washington state law to bar enforcement brought by the United States, stating that the “Appellant had no judgment left to renew,” a conclusion predicated in part on the government’s filing in state court.¹⁵ The court did not leave the government empty-handed. It left open the prospect that the underlying claim was still viable under United States v. Summerlin.¹⁶ Tacoma is important because it demonstrates that a renewal statute is also a statute of repose that may extinguish the judgment completely.

Read the Manual

California Code of Civil Procedure §§ 683.110 through 683.220 provide for the renewal of a judgment consisting generally of the filing and service of an application for renewal [Sections 683.140 to 683.150]. Upon filing the application, the clerk shall enter the renewal in the court records.¹⁷ Section 683.150(a) authorizes renewal without the necessity of service of process of the renewal “package.” (Judicial Council Form Nos. EJ-190, EJ-195, and MC-012, and include a detailed declaration of interest).

To initiate enforcement, the judgment creditor must serve the renewal by mail. See C.C.P § 683.160(b). To maintain the judgment lien on the real property, the judgment creditor must record a certified copy of the application for renewal. SeeC.C.P § 683.180.¹⁸ Ten years is a long time and expect that the debtor might have conveyed the property, fraudulently or otherwise. The judgment creditor must personally serve the transferee and file proof of service within 90 days of the renewal filing. See §§ 683.180(b)(1) & (2) in prosecuting the renewal. This is a common error and title reports (modern parlance and much cheaper: litigation guaranty) are de riguer in identifying the transferee. In the online world, nearly every county recorder (except Los Angeles) will identify the grantee of the debtor under the “granter/grantee” index. Use Judicial Council Form EJ-190 for the Northern District of California, not the Central District, which requires a traditional filing.¹⁹
Chapter 11 Plans Are Money Judgments and Expire Like Any Other Federal Judgment

The fact that a class action [“Andrews”] judgment expired suggests that a confirmed Chapter 11 plan, providing for payment to the creditors, would likewise expire unless renewed pursuant to the domicile law. Chapter 11 plans are a blend of contract, judgment, and consent decree, offering payment to a group of creditors.²⁰ Chapter 11 plans assure payment equivalent to their recovery in a Chapter 7 liquidation²¹ and are subject to enforcement if breached.²² If a consent decree arising from a class action expires like any other federal judgment, the confirmed Chapter 11 plan, bearing the near-identical attributes (judgment, class of claimants, continuing supervision, claim filings procedures, and pro rata payment based on the consent decree), would likewise expire absent a renewal under state law.²³ The statute of repose would extinguish the plan obligations and reinvigorate a mediocre balance sheet. The plan discharge would recapitalize the debtor. Who would be beneficiary of the plan “kicking the bucket?” Answer: the shareholders who are the [pre-petition] creditors.

Is dumping the Chapter 11 plan a good deal and for whom? Answer: Yes, if stock of the debtor, freed of the plan and publicly traded, offers greater value to the creditors than payments under the plan. Expiring Chapter 11 plans recast the asbestos mega-cases24 whose plans bear a lifespan of 10 years plus and compensate claimants with debtor’s stock [through a claimant’s trust]. The statute of repose frees the debtor of plan obligations [billions], jumpstarts the stock, and puts real money in the hands of the claimants.

Federal Courts Are Eternal But Federal Judgments Are Not

The life of a federal judgment could easily exceed 10 years, given various appeals up to the Supreme Court. Consent decrees offering payment over time to claimants can run 10 years or more. Asbestos Chapter 11 plans readily exceed ten years and the Johns Manville plan is now in excess of 20 years. These plans [judgments or decrees] bear the risk of extinguishment if not renewed and, if expired, would upset settled social and political expectations.

Is a plan implosion a disaster? In a Chapter 11, the beneficiaries are the creditors as shareholders, anticipating an upswing in the stock value, would move to extinguish the plan and inherit a revived company. This result suggests that the plan extinguishment more efficiently compensates victims of the mass tort than the plan payments because the invisible hand of the marketplace reveals this outcome. The plan extinguishment will wipe out the plan and the market will rush to the stock.

^1. In re Fifarek (Stark v. Fifarek), 370 B.R. 754, 758 (Bankr. Court, W.D. Mich. 2007); In re Hunt (Lillie v. Hunt), 323 B.R. 665, 666 (Bankr. W.D. Tenn. 2005) (“Since there is no specific statute of federal statute of limitations on how long this judgment is effective, the parties agree that we must look to Tennessee law [citation omitted])”.

^2. Fed R. Civ Pr. 69(a)(1)&(2)

^3. Fidelity Creditor Service, Inc. v. Browne (2001) 89 Cal.App.4th 195, 201 [106 Cal.Rptr.2d 854]: The period prescribed in Section 683.020 commences on the date of entry and is not tolled for any reason

⁴ In re Levander, 180 F.3d 1114 (9th Cir. 1999)

^5. Id. at 1121-1122, “We have held that Federal Rule of Civil Procedure 69(a) empowers federal courts to rely on state law to add judgment-debtors under Rule 69(a), which permits judgment creditors to use any execution method consistent with the practice and procedure of the state in which the district court sits.” citing to Cigna Property & Cas. Ins. Co. v. Polaris Pictures Corp., 159 F.3d 412, 421 (9th Cir.1998) (quoting Peacock v. Thomas, 516 U.S. 349, 359 n. 7, 116 S.Ct. 862 [1996])(internal quotation marks omitted); see also, Andrews at 568; Crump v. Bank of America, 235 F.R.D. 113, 115 (D.D.C. 2006); RMA Ventures v. Sun Am. Life Ins. Co., 576 F.3d 1070, 1074 (10th Cir. 2009) (“Once a federal district court issues a write of execution, a judgment creditor must follow the procedure on execution established by the laws of the state in which the district court sits. [Citations omitted] ***). Thus, as required by FRCP 69(a)(10), Defendants have turned here to the method of execution prescribed under Utah law.”

^6. McCarthy v. Johnson, 172 F.3d 63 (10th Cir. 1999). Unpublished Opinion

^7. Fed.R.Civ.Pro 69(a) et seq. incorporates the law of the state in enforcing money judgments, including the requirement of a renewal. McDaniel v. Signal Capital Corp., 198 B.R. 483, 486-487 (Bankr. S.D. Texas 1996); see also, In re Brink, 227 B.R. 94, 95-96 (Bankr. N.D. Texas, 1998); In re Davis, 323 B.R. 745, 748-749 (Bankr. D. Ariz, 2005); In re Hunt; (Lillie v. Hunt), 323 B.R. 665, 666-667 (Bankr. W.D. Texas 2005); In re Fifarek (Stark v. Fifark), 370 B.R. 754, 758 (Bankr. W. D. Mich. 2007). Also In re Romano (Romano v. LaVecchia), Westlaw cite unavailable [WESTLAW?] (9th Circuit BAP, 2009) (“Thus, state law governs the procedure for execution on a judgment in the absence of an applicable federal statute. There is no relevant federal statute we have been able to locate with regard to the renewal of judgment. The parties agree that Nevada law governs the enforcement of the judgment.” [6 years], aff’d 2010 Ap. Lex 5444 (9th Circuit, 2010).

^8. See Marx v. Go Publ. Co., Inc., 721 F.2d 1272, 1273 (1983); see also; Duchek v. Jacobi, 646 F.2d 415, 417 (1981).

^9. Andrews at 567-568 (collection of cases). Note the discussion whether the issue is the time limits for the issuance of a writ of execution is subject to state law and whether the judgment is extinguished.

^10. See Donellan Jerome Inc. v. Trylon Metals Inc., 996 F. Supp. 996 (USDC, N.D.Ohio 1967 (Collection of cases).

^11. Mississippi provides for statute of repose, not statute of limitations for judgment renewals. [Mississippi Code § Ann 15-1-43].

^12. United States v. Tacoma Gravel & Supply Co., 376 F.2d 343, 344-345 (9th Cir. 1967) (“Consequently, the judgment becomes inoperative for any purpose after expiration of six years.) Please note that, while Washington has extended the life of a judgment to ten years, the holding in Tacoma that the Washington statute is one of repose, extinguishing the judgment, still applies. Cf. RCW 4.16.020 and 4.56.210

^13. A statute of repose cuts off a right of action after a specified period time, irrespective of accrual or even notice that a legal right has been invaded. Giest v. Sequoia Ventures, 83 Cal.App.4th 300, 305 (Cal.App.1 Dist., 2000).

^14. Tacoma at 344.

^15. Id. at p. 345.

^16. In re Penberthy, 211 B.R. 391, 395 (Bankr.W.D. Wash. 1997).

^17. Goldman v. Simpson, 160 Cal.App.4th 255, 262: “The statutory renewal of judgment is an automatic, ministerial act accomplished by the clerk of the court; entry of the renewal of judgment does not constitute a new or separate judgment. ‘Filing the renewal application (and paying the appropriate filing fee, Gov.C. § 70626(b)) results in automatic renewal of the judgment. No court order or new judgment is required. The court clerk simply enters the renewal of judgment in the court records.’”

^18. Songer v. Cooney (Cal. App. 2 Dist. 1989) 214 Cal.App.3d 387, 393, 264 Cal.Rptr. 1 [abstract of judgment ensures enforceability of judgment lien even though the debtor is bankrupt].

^19. If in state court, the alternative method (if timely) is to file a suit to renew the judgment. See Pratali vs. Gates (1992) 4 Cal App. 4th 632, 637-638 and Green vs. Zissis (1992) 5 Cal. App. 4th 1219, 1222; for more a detailed discussion, see Fredric Goldman vs. Orenthal James Simpson (O.J. Simpson) (2008) 160 Cal.App.4th 255 [continuing jurisdiction over judgment debtor who absconds from California]. If the defendant departed the state, C.C.P. § 351 tolls the statute of limitations. Green vs. Zissis, supra., at 1222-1123. See also Kertesz vs. Ostrosky (2004) 115 Cal. App. 4th 369, 373. A California state court judgment becomes final upon expiration of the appeal time, or issuance of the remittitur. Green vs. Zissis, supra. p. 1223. If notice of judgment is service, the judgment becomes final in 60 days, and absent notice, 180 days. The notice of entry of judgment kicks off the 60-day clock under C.R.C. 8.104(a)(1) & (2) [60 days after notice from clerk or party], but under C.R.C. 8.104(a)(3), the judgment does not become final until 180 days after entry of judgment. A federal judgment, on the other hand, differs from state law, and is final upon entry. Eichman v Fotomat Corp. (9th Cir 1985) 759 F.2d 1434, 1439.

^20. In re Bruce Bartleson, 253 B.R. 75 (9th Cir. BAP 2000) at 78-79

^21. 11 U.S.C. § 1129(a)(7)(A)(ii) [Unsecured creditors should emerge from the Chapter 11 with equal or better than what would a Chapter 7 would pay]

22. See In re OORC Leasing, LLC (Bankr. N.D. Ind. 2007) 359 B.R. 227 at 233.

^23. A statute of repose extinguishes the judgment. A statute of limitations on a judgment renders the judgment unenforceable. Consent decrees, Chapter 11 plans, and installment judgments provide for periodic payments, sometimes spanning more than ten years. Chapter 11 asbestos plans span decades. This article suggests that a statute of repose would extinguish the decree, plan, or judgment. The statute of limitations might render the decree, plan, or judgment unenforceable but the obligation might remain viable as a contract and enforceable by way of independent suit. Installment judgments have a separate clock under C.C.P. § 683.130(b)(1) based upon the accrual of the past-due payments. The math is left to another article.

^24. Nearly all publicly traded.

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

If you have received a Notice of Default “NOD”, take a deep breath, as this the time to start the FIGHT! and Protect your EQUITY!

What Homeowners Should Know About Foreclosure Defense

10 Friday May 2019

Posted by BNG in Banks and Lenders, Case Study, Credit, Federal Court, Foreclosure, Foreclosure Crisis, Foreclosure Defense, Fraud, Judicial States, Loan Modification, Mortgage fraud, Mortgage Laws, Non-Judicial States, Pro Se Litigation, State Court, Your Legal Rights

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adversary proceeding, affidavits, Bankruptcy, bankruptcy adversary proceeding, Banks and Lenders, Consequences of a Foreclosure, Court, Deed of Trust, defaulting on a mortgage, False notary signatures, Forbearance, Foreclosure, foreclosure defense, foreclosure defense strategy, Foreclosure in California, foreclosure in Florida, foreclosure process, homeowners, judicial foreclosures, lender, Loan Modification, MERS, mortgage, Mortgage Electronic Registration System, Mortgage fraud, Mortgage law, Mortgage loan, Mortgage note, mortgages, non-judicial foreclosures, Promissory note, Robo-signing, Securitization, securitized, UCC, Uniform Commercial Code

Over the past few years, a growing number of homeowners in the foreclosure process have begun to fight back, by stalling foreclosure proceedings or stopping them altogether. The legal strategy employed by these homeowners is known as foreclosure defense.

Since 2007, nearly 4.2 million people in the United States have lost their homes to foreclosure. By early 2014, that number is expected to climb to 6 million. Historically, the legal process of foreclosure, one that requires a homeowner to return his or her house to a lender after defaulting on a mortgage, has tilted in favor of the banks and lenders — who are well-versed in the law and practice of foreclosure.

The simplest way to avoid foreclosure is by modifying the mortgage. In a mortgage modification, the homeowner convinces the lender to renegotiate the terms of the mortgage in order to make the payments more affordable.

A mortgage modification can include:

A reduction or change in the loan’s interest rate.
A reduction in the loan’s principal.
A reduction or elimination of late fees and penalties for non-payment.
A reduction in your monthly payment.
Forbearance, to temporarily stop making payments, or extend the time for making payments.

The goal of the foreclosure defense strategy is to prove that the bank does not have a right to foreclose. The chances of success rest on an attorney’s ability to challenge how the mortgage industry operates. The strategy aims to take advantage of flaws in the system, and presumes illegal or unethical behavior on the part of lenders.

Foreclosure defense is a new concept that continues to grow alongside the rising tide of foreclosure cases. While some courts accept foreclosure defense arguments, others find them specious and hand down decisions more beneficial to banks than to homeowners.

A growing number of victories by homeowners in state and federal courts have altered the foreclosure landscape dramatically, giving optimism to tens of thousands of other homeowners in similar situations. And because many of America’s large banks have acknowledged unorthodox, unaccepted or even illegal practices in the areas of mortgages, loan modifications and foreclosures, they inadvertently have given homeowners additional ammunition with which to fight.

Foreclosure Defense Varies by State

A major strategy of foreclosure defense is to make a bank substantiate clear chains of title for a mortgage and a promissory note. If any link in either chain is questionable, it can nullify a lender’s ability to make a valid claim on a property.

The foreclosure process varies somewhat from state to state, depending on whether your state uses mortgages or deeds of trust for the purchase of real property. A mortgage or deed of trust outlines a transfer of an interest in a property; it is not, in itself, a promise to pay a debt. Instead, it contains language that gives the lender the right to take the property if the borrower breaches the terms of the promissory note.

If you signed a mortgage, it generally means you live in a state that conducts judicial foreclosures, meaning that a lender has to sue in court in order to get a judgment to foreclose. If you signed a deed of trust, you live in a state that conducts non-judicial foreclosures, which means that a lender does not have to go to court to initiate a foreclosure action.

In a judicial state, homeowners have the advantage because they can require that the lender produce proof and perfection of claim, at the initial court hearing. In a non-judicial state, the lender does not have to prove anything because the state’s civil code gives it the right to foreclose after a notice of default has been sent. So in non-judicial states, a homeowner must file a civil action against the lender to compel it to provide proof of claim.

Regardless of whether you signed a mortgage or a deed of trust, you also signed a promissory note — a promise to pay back a specified amount over a set period of time. The note goes directly to the lender and is held on its books as an asset for the amount of the promised repayment. The mortgage or deed of trust is a public record and, by law, must be recorded in a county or town office. Each time a promissory note is assigned, i.e. sold to another party, the note itself must be endorsed with the name of the note’s new owner. Each time a deed of trust or mortgage is assigned to another entity, that transaction must be recorded in the town or county records office.

Foreclosure Defense and Chain of Title

Here is where foreclosure defense can begin to chip away at a bank’s claim on your property. In order for a mortgage, deed of trust or promissory note to be valid, it must have what is known as “perfection” of the chain of title. In other words, there must be a clear, unambiguous record of ownership from the time you signed your papers at closing, to the present moment. Any lapse in the chain of title causes a “defect” in the instrument, making it invalid.

In reality, lapses occur frequently. As mortgages and deeds began to routinely be bought and sold, the sheer magnitude of those transfers made it difficult, costly and time-consuming for institutions to record every transaction in a county records office. But in order to have some method of record-keeping, the banks created the Mortgage Electronic Registration System (MERS), a privately held company that tracks the servicing rights and ownership of the nation’s mortgages. The MERS holds more than 66 million American mortgages in its database.

When a foreclosure is imminent, MERS appoints a party to foreclose, based on its records of who owns the mortgage or deed of trust. But some courts have rejected the notion that MERS has the legal authority to assign title to a particular party in the first place. A court can decide MERS has no “standing,” meaning that the court does not recognize its right to initiate foreclosure since MERS does not have any financial interest in either the property or the promissory note.

And since MERS has essentially bypassed the county record-keeping system, the perfection of chain of title cannot be independently verified. This is where a foreclosure defense can gain traction, by questioning the perfection of the chain of title and challenging MERS’ legal authority to assign title.

Promissory Notes are Key to Foreclosure Defense

Some courts may also challenge MERS’ ability to transfer the promissory note, since it likely has been sold to a different entity, or in most cases, securitized (pooled with other loans) and sold to an unknown number of entities. In the U.S. Supreme Court case Carpenter v. Longan, it was ruled that where a promissory note goes, a deed of trust must follow. In other words, the deed and the note cannot be separated.

If your note has been securitized, it now belongs to someone other than the holder of your mortgage. This is known as bifurcation — the deed of trust points to one party, while the promissory note points to another. Thus, a foreclosure defense claims that since the relationship between the deed and the note has become defective, it renders the deed of trust unenforceable.

Your promissory note must also have a clear chain of title, according to the nation’s Uniform Commercial Code (UCC), the body of regulations that governs these types of financial instruments. But over and over again, borrowers have been able to demonstrate that subsequent assignments of promissory notes have gone unendorsed.

In fact, it has been standard practice for banks to leave the assignment blank when loans are sold and/or securitized and, customarily, the courts have allowed blank assignment to be an acceptable form of proof of ownership. However, when the Massachusetts Supreme Court in U.S. Bank v. Ibenez ruled that blank assignment is not sufficient to claim perfection, it provided another way in which a foreclosure can be challenged.

In their most egregious attempts to remedy these glaring omissions, some banks have actually tried to reverse-engineer chains of title, using fraudulent means such as:

Robo-signing of documents.
False notary signatures.
Submission of questionable, inaccurate or patently counterfeit affidavits.

Exposure of these dishonest methods halted many foreclosures in their tracks and helped increase governmental scrutiny of banks’ foreclosure procedures.

Other Foreclosure Defense Strategies

Another option for a homeowner who wishes to expose a lender’s insufficient perfection of title is to file for bankruptcy. In a Chapter 7 filing, you can declare your home an “unsecured asset” and wait for the lender to object. This puts the burden of proof on the lender to show a valid chain of assignment. In a Chapter 13 bankruptcy, you can file an Adversary Proceeding, wherein you sue your lender to compel it to produce valid proof of claim. The Bankruptcy Code requires that your lender provide evidence of “perfected title.”

Another foreclosure defense argument explores the notion of whether the bank is a real party of interest. If it’s not, it doesn’t have the right to foreclose. For example, if your loan has been securitized, your original lender has already been paid. At that point, the debt was written off and the debt should be considered settled. In order to prove that your original lender has profited from the securitization of your mortgage, it is advised that you obtain a securitization audit. The audit is completed by a third-party researcher who tracks down your loan, and then provides you with a court-admissible document showing that your loan has been securitized.

A foreclosure defense can also argue that once a loan has been securitized, or converted to stock, it is no longer a loan and cannot be converted back into a loan. That means that your promissory note no longer exists, as such. And if that is true, then your mortgage or deed of trust is no longer securing anything. Instead of the bank insisting that you have breached the contract specified in the promissory note, foreclosure defense argues that the bank has actually destroyed that agreement itself. And if the agreement doesn’t exist, how can it be enforced? A corollary to this argument states that your loan is no longer enforceable because it is now owned by many shareholders and a promissory note is only enforceable in its whole entirety. How can thousands of people foreclose on your house?

While the foreclosure defense strategy is legal in nature, and can be handled differently by different courts, it should not be ignored when preparing a case.

The tactic of attacking a lender’s shoddy or illegal practices has proven to be the most successful strategy of foreclosure defense, since most courts are loathe to accept unlawful or unethical behavior, even from banks. If a homeowner can present clear instances of lost or missed paperwork, demonstrate that notes were misplaced or improperly endorsed, or prove that documents were forged, robo-signed, or reversed-engineered, the more likely a court will rule in his or her favor.

If you are considering a foreclosure defense, you have two options, you can either represent yourself in the Court as a Pro Se Litigant, (USING OUR FORECLOSURE DEFENSE PACKAGE), if you cannot afford to pay Attorneys Fees, as foreclosure proceeding can take years while you are living in your home WITHOUT PAYING ANY MORTGAGE. Or You may retain a Legal Counsel to Defend you. If you chose the second option, it is imperative that you retain the services of professional legal counsel. Regardless of how educated you are about the process, this is an area of law that requires a well-thought-out, competent presentation in a State or Federal court. Nonetheless, the Attorneys fees for foreclosure defense can accumulate over the years to thousands and even tens of thousands of dollars, that is why most homeowners, opt to represent themselves in the proceedings which can take anywhere between 1-7 years, while homeowners are living in their homes Mortgage-Free. The good news is that most foreclosure defense Attorneys equally use the same materials found in our foreclosure defense package to defend homeowner’s properties, and with these same materials, you can equally represent yourself as a Pro Se (Self Representing), litigant.

A successful foreclosure defense may prohibit or delay the foreclosure process or it simply may induce a lending institution to negotiate a loan modification that allows you to stay in your home — which, of course, was the goal in the first place. You can equally be awarded damages by the courts for mortgage law violations by the lenders, in addition to loan modification.

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

If you have received a Notice of Default “NOD”, take a deep breath, as this the time to start the FIGHT! and Protect your EQUITY!

How Many Bankruptcies Can a Homeowner File?

22 Friday Mar 2019

Posted by BNG in Bankruptcy, Borrower, Federal Court, Judicial States, Non-Judicial States, Pro Se Litigation, Your Legal Rights

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Attorney Fees, Bankruptcy, bankruptcy court, Bankruptcy Filing Fees, Credit Counseling and Financial Management Courses, homeowners, How Many Bankruptcies Can a Homeowner File, How Much Debt Do I Need To File Bankruptcy

Homeowners often find the need to file for Bankruptcy in order to save their homes. Hopefully, your first bankruptcy filing will be your last, and you’ll be able to start fresh and regain control over your finances. But there are times when people need to file bankruptcy multiple times. For example, a homeowner with serious financial problems may file Bankruptcy not only to save their homes, but equally to protect other assets. Secondly, someone may have a serious medical condition, but can’t get medical insurance. If the medical bills keep piling up, that person may need to file bankruptcy multiple times to get those bills discharged. Homeowners often wonder – how often can we file for bankruptcy?

The Bankruptcy Code does not specify a maximum number of times one can file bankruptcy. Bankruptcy courts are more apt, however, to scrutinize a bankruptcy filing by someone who has already filed previous cases. If the person keeps charging up credit card debt for unnecessary items, the court may dismiss that person’s successive bankruptcy case.

Also, a person may be denied a discharge if he or she received a prior discharge in a previous bankruptcy case. If you file for bankruptcy under Chapter 7, the bankruptcy court may deny your discharge if you already received a discharge in a previous Chapter 7 case filed within eight years of your current case. The court will also deny your Chapter 7 discharge if you previously received one in a Chapter 13 bankruptcy case that you filed within six years of your current case, unless you paid the majority of your creditors in that prior Chapter 13 case. Finally, if you file for bankruptcy under Chapter 13, you’ll be denied a discharge if you received one in a prior Chapter 7 bankruptcy case that was filed within four years of your current case, or in a Chapter 13 case filed within two years of your current case.

There’s a lesson here – if you file for bankruptcy, make sure you do it right, or you may not be able to do it again for a number of years.

Bankruptcy is a federal legal process that consists, at minimum, of filing a court petition, attending credit counseling classes, and meeting with a bankruptcy trustee. In every consumer bankruptcy case there are three categories of fees: (1) bankruptcy filing fees; (2) credit counseling fees; and (3) attorney fees. Filing a bankruptcy case does not have to be expensive or unaffordable. Below are some tips and tricks to keep costs low.

Bankruptcy Filing Fees

Because bankruptcy is a federal legal process, court filing fees are the same throughout the country. For a Chapter 7, an erase-your-debts-start-fresh bankruptcy case, the filing fee is $306. For a Chapter 13, a repayment plan, the filing fee is $281. These fees must be paid to the clerk of the court upon filing. However, with the court’s permission individual debtors may pay in installments. The final payment cannot be later than 120 days after you file the petition. In some rare cases the filing fee may be waived altogether for debtors who earn less than 150% of the poverty level. Bankruptcy filing fees are the same whether a debtor files a single or joint husband and wife bankruptcy.

Credit Counseling and Financial Management Courses

The federal Bankruptcy Code requires each consumer debtor to receive credit counseling from a nonprofit budget and credit counseling agency approved by the United States Trustee within 180 days prior to filing a bankruptcy. This counseling fee is around $50.00 per household and is available in-person, by telephone, or over the internet. After filing, the debtor must complete an “instructional course concerning personal financial management.” This class is also available in-person, by telephone, or over the internet for a fee around $50.00 per filer.

The Bankruptcy Code directs approved providers of the credit counseling and financial management courses to provide services without regard to your ability to pay. If you can’t afford the counseling, the agency may waive the fee or require you to pay a lesser amount.

Attorney Fees

Attorney fees are negotiated between the debtor and the attorney. Attorney fees are paid up-front in Chapter 7 cases. In Chapter 13 cases, the attorney may elect to receive attorney fees in equal monthly installments. The attorney is paid from the debtor’s monthly payment to the trustee, and makes the entire process more affordable. A few not-for-profit agencies and private attorneys provide free bankruptcy representation to indigent individuals.

If you are in need of debt relief, but are afraid that you cannot afford the bankruptcy fees, speak with an experienced bankruptcy attorney and discuss your options. There are strategies that you and your attorney can employ to make the process fit your budget.

How Much Debt Do I Need To File Bankruptcy

There is no qualifying minimum debt limit for an individual bankruptcy in most States. Debtors who otherwise qualify for Chapter 7 bankruptcy can file with any amount of secured or unsecured debt. The purpose of a Chapter 7 bankruptcy is to provide the debtor a fresh start without the burden of overwhelming debt. In some cases this debt may be objectively very small (perhaps only a few thousand dollars), but it be relatively very large to a person on a fixed income from retirement, disability, or otherwise.

In cases where the amount of dis-chargeable debt is objectively small, both the bankruptcy attorney and the client should take care to consider all of the consequences of filing. First, bankruptcy is not cheap. There is a court filing fee, a credit counseling fee, a personal financial management course fee, and, of course, your attorney’s fees. In some extreme cases some or all of these fees may be waived. Second, a bankruptcy filing can significantly impair the debtor’s ability to borrow money and obtain credit, at least for the short term. Finally, non-exempt property may be at risk. For many poor debtors, these consequences have little, if any, affect. Many poor debtors seek bankruptcy protection simply to rid themselves of the nuisance of debt collection.

While there is no minimum amount of debt required to file a Chapter 13 bankruptcy, the bankruptcy laws set a ceiling on the amount of secured and unsecured debt a person can have in a Chapter 13 case. These limits as of April 1, 2010 are $1,081,400 for secured debt and $360,475 for unsecured debt. The Chapter 13 debt limits adjust every three years. Cases that exceed these limits are ineligible for Chapter 13 bankruptcy, but may qualify under Chapters 7 or 11. There is currently some confusion in our courts as to how these debt limits apply in a joint husband and wife Chapter 13 case. Some courts will separately consider debt that is individual and not joint, effectively increasing the Chapter 13 limits.

An experienced bankruptcy attorney can evaluate your case and discuss any issues surrounding your case. Whatever the amount of your debt, if you are unable to pay, the federal bankruptcy laws can offer you substantial relief. Speak with an experienced bankruptcy attorney and discover how the federal bankruptcy laws can help you.

If you are experiencing financial difficulty and are considering bankruptcy, discuss your case with an experienced bankruptcy attorney.

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

If you have received a Notice of Default “NOD”, take a deep breath, as this the time to start the FIGHT! and Protect your EQUITY!

How Homeowners Can Avoid Mistakes During Bankruptcy

22 Friday Mar 2019

Posted by BNG in Bankruptcy, Federal Court, Fraud, Judicial States, Non-Judicial States, Pro Se Litigation, Your Legal Rights

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Avoid Mistakes During Bankruptcy, Avoid Mistakes in Bankruptcy, Bankruptcy, Bankruptcy Attorney, bankruptcy court, bankruptcy mistakes, bankruptcy process, Bankruptcy Trustee, Borrower, Creditor, debtor, federal bankruptcy laws, filing for bankruptcy, fresh financial start, homeowners, Plan for Bankruptcy

Homeowners must do their very best to avoid making mistakes during Bankruptcy Proceedings.

The federal bankruptcy laws promise a fresh financial start for the honest but unfortunate debtor. Bankruptcy balances the interests of the debtor to obtain a fresh start and the interests of the creditor to see that the debtor pays back whatever he or she can afford. But all too often, a debtor makes mistakes in bankruptcy, seriously compromising his or her case before it’s even filed.

In order to help homeowners avoid those unnecessary complications, we’ve prepared this list of the 7 biggest mistakes in bankruptcy:

1. Paying an Insider Creditor

The bankruptcy laws attempt to ensure that all creditors receive fair treatment during the bankruptcy process. One concern is that the debtor will pay loans to family or friends before filing bankruptcy, and therefore deprive other creditors from receiving payment.

Family, friends, business partners, and other creditors who have close relationships with the debtor are called “insider creditors,” and transfers to insider creditors can be avoided by the bankruptcy trustee if the transfer occurred within one year before the bankruptcy filing.

For instance, if you gave your mother $1,000 from your income tax refund as payment for a debt, and then filed bankruptcy two months later, the bankruptcy trustee can sue your mother to recover the $1,000. To make matters worse, often the debtor could have protected the cash money during the bankruptcy and paid the debt without difficulty after the case was filed.

2. Incurring Debt After Deciding to File

Some people decide to charge up credit cards or take payday loans just before filing bankruptcy. If you have decided to file bankruptcy, do not incur additional debt. Taking loans with no intention to repay the creditor could be fraud, which is a crime.

3. Transferring Property Before Bankruptcy

Anytime an individual transfers property for less than full value shortly before a bankruptcy filing, the transfer seems “suspicious.” The bankruptcy trustee scrutinizes all property transfers before bankruptcy, and if a property transfer was not a fair and honest exchange, the trustee may avoid the transfer and get the property back.

One common bankruptcy mistake is transferring property to a friend or family member in an effort to hide it from the bankruptcy court. This is a very bad mistake that can result in: (1) losing the property anyway; (2) denial of your bankruptcy discharge; and/or (3) criminal prosecution for bankruptcy fraud.

If you need to sell or transfer property before your bankruptcy, contact an experienced Bankruptcy Attorney and discuss your options!

4. Paying Off Loans Before Bankruptcy

If you pay off a loan shortly before filing for bankruptcy, the bankruptcy trustee will be very interested in that payment. If you paid a large sum of money to one creditor just before filing, the trustee may ask the creditor to return the money.

Also, paying off an unsecured debt that is otherwise dis-chargeable (like a credit card or payday loan) is like throwing your money away. You need that money to help rebuild your finances after your case is completed.

And even paying off a secured debt can cause you problems. Bankruptcy exemptions commonly apply only up to a certain amount of equity. Your equity in some property is the difference between the fair market value of the property minus any secured loans.

When you pay off a secured loan, you increase your equity in the property. If that causes your equity to exceed the exemption limit, the bankruptcy trustee may ask you for the property or the cash difference between the equity and the exemption amount.

Bottom line: don’t pay off loans before bankruptcy!

5. Cashing out Retirement

Most retirement funds are fully protected from creditors and the bankruptcy trustee. That means if you file bankruptcy, you keep your retirement money. Congress wants you to have money for your retirement.

Unfortunately, some people are unaware of these broad protections and cash out their retirement savings out of fear that it will be taken during the bankruptcy. Along with the obvious problems associated with losing your future retirement money, cashing out retirement funds is also a huge mistake because:

Your attorney may no longer be able to protect available retirement money converted into cash; and
If you used your retirement funds to pay off an unsecured loan, the bankruptcy trustee may be able to undo those payments. Money paid to creditors before bankruptcy does not improve your financial situation or help you recover from bankruptcy.
In short, always discuss cashing out 401(k) or IRA retirement funds with your attorney prior to your filing bankruptcy.

6. Failing to Plan for Bankruptcy

The federal bankruptcy process is full of traps for the unwary—or the hasty. Most of these problem areas can be avoided with careful planning and a thorough pre-bankruptcy investigation.

When a client needs to file a bankruptcy quickly, the attorney relies heavily on the client to provide complete and accurate financial information. In some cases the client is not able to obtain those important records. To compound the issue, sometimes financial transactions are forgotten or overlooked.

Mistakes like these in hastily-filed bankruptcy cases can lead to big problems. For instance, a debtor who rushes into bankruptcy may forget an employment bonus that was paid or that is owed or underestimate an income tax refund. Under-reporting income can disqualify the debtor from receiving a discharge at the conclusion of his or her case, undermining the entire point of bankruptcy.

Many bankruptcy mistakes can be avoided by consulting a bankruptcy attorney early. Preparing a bankruptcy petition does not take long, but your attorney needs time to analyze your case, review your financial documents, and ask the right questions to avoid problems with your case.

7. Being Dishonest

This is the worst mistake of all because the bankruptcy laws do not protect a dishonest debtor. Failure to truthfully list all of your assets, debts, income and expenses is grounds for dismissal of your case, or you may have to answer allegations of bankruptcy fraud (a federal crime).

The Best Way to Avoid Mistakes in Bankruptcy

If you are experiencing financial difficulty and are considering bankruptcy, discuss your case with an experienced bankruptcy attorney.

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

If you have received a Notice of Default “NOD”, take a deep breath, as this the time to start the FIGHT! and Protect your EQUITY!

What Homeowners Must Know About Foreclosure

12 Wednesday Sep 2018

Posted by BNG in Banks and Lenders, Credit, Federal Court, Foreclosure Crisis, Foreclosure Defense, Judicial States, Mortgage Laws, Non-Judicial States, Note - Deed of Trust - Mortgage, Pro Se Litigation, Real Estate Liens, State Court, Your Legal Rights

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adjustable rate mortgage loan, Adjustable-rate mortgage, avoid foreclosure, bank forecloses, Deed in lieu of foreclosure, Foreclosure, Foreclosure Crisis, foreclosure defense, foreclosure suit, foreclosures, homeowners, Loan, Loan servicing, mortgage, Mortgage loan, Mortgage modification, non-judicial foreclosure, Pro se legal representation in the United States, Promissory note, Real estate, Real Estate Settlement Procedures Act, RESPA

Facing a foreclosure can be daunting prospect for people in trouble with their mortgages, especially when they are unsure of what to do. Across the country, six out of 10 homeowners questioned said they wished they understood their mortgage and its terms better.

When the economy collapsed in 2008, foreclosure became a fact of life for millions of Americans. About 250,000 new families enter into foreclosure every three months, according to the Federal Deposit Insurance Corporation.

The same percentage of homeowners also said they were unaware of what mortgage lenders can do to help them through their financial situation.

The first step to working through a possible foreclosure is to understand what a foreclosure means. When someone buys a property, they typically do not have enough money to pay for the purchase outright. So they take out a mortgage loan, which is a contract for purchase money that will be paid back over time.

A foreclosure consists of a lender trying to reclaim the title of a property that had been sold to someone using a loan. The borrower, usually the homeowner living in the house, is unable or unwilling to continue making mortgage payments. When this happens, the lender that provided the loan to the borrower will move to take back the property.

How do Foreclosures Work?

People enter into foreclosure for various reasons, but it typically follows a major change in their financial circumstances. A foreclosure can be the result of losing a job, medical problems that keep you from working, too many debts or a divorce.

Foreclosures often begin when the borrower stops making payments. When this happens, the loan becomes delinquent and the homeowner goes into default. The default status continues for about 90 days. During this time, the lender will get in touch with the borrower to see whether they will be able to pay the balance of the loan.

At this point, if the borrower cannot pay, the lender may file a Notice of Foreclosure, which begins the process. The lender will file foreclosure documents in a local court. This part of the process usually takes 120 days to nine months to complete. If borrowers need extra time, they can challenge the process in court, and that’s where our Foreclosure Defense Package comes in.

How do Foreclosures Relate to Debt?

Some people facing foreclosure find themselves in this position because of mounting debt that made it harder to make their mortgage payments.

A foreclosure can add to your financial problems if your state allows a deficiency judgment, which means the borrower owes the difference between what is owed on the foreclosed property and the amount it eventually sells for at an auction.

Thirty-eight states allow financial institutions to pursue borrowers for this money.

In cases when a lender does not use a deficiency judgment, a foreclosure can relieve some of your financial burden. Although it is a loss when a lender takes the home you partially paid for, it can be a start to rebuild your finances.

It is a good idea to work with a financial adviser or a debt counselor to understand what kind of debt you may incur during a foreclosure.

What Else Should I Know?

If you are thinking about going into foreclosure, there are a number of things to consider:

A foreclosure dramatically affects your credit score. Fair Isaac, the company that created FICO (credit) scores, drops credit scores from 85 points to 160 points after a foreclosure or short sale. The amount of the drop depends on other factors, such as previous credit score.
Get in touch with your lender as soon as you are aware that you are having difficulty making payments. You may be able to avoid foreclosure by negotiating a new repayment plan or refinancing that works better for you.
States have different rules on how foreclosures work. Understand your rights and get a sense of how long you can stay in your home once foreclosure proceedings begin.

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

If you have received a Notice of Default “NOD”, take a deep breath, as this the time to start the FIGHT! and Protect your EQUITY!

What Homeowners Should Know About the National Mortgage Settlement for Borrowers in Bankruptcy and Case Trustees

19 Thursday Jul 2018

Posted by BNG in Bankruptcy, Banks and Lenders, Foreclosure Crisis, Foreclosure Defense, Fraud, Judicial States, Mortgage fraud, Mortgage Laws, Mortgage Servicing, Non-Judicial States, Pro Se Litigation, Your Legal Rights

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Bank of America, Bankrupcty, Bankruptcy, bankruptcy court, Bankruptcy Trustee, Borrower, Borrowers in Bankruptcy, Case Trustees, Citi, Foreclosure, foreclosure defense, homeowners, J.P. Morgan Chase, Loan servicing, Mortgage loan, Mortgage servicer, National Mortgage Settlement, Pro se legal representation in the United States, Trustee, United States, Wells Fargo

The National Mortgage Settlement (the “Settlement”) is an agreement among the federal government, 49 states, and the five largest mortgage servicers and their affiliates (the “Banks”).

The Banks are:
Ally Financial, Inc. (formerly GMAC)
Bank of America Corporation
Citigroup, Inc.
J.P. Morgan Chase & Co.
Wells Fargo & Company

The Settlement provides benefits to borrowers, including borrowers in bankruptcy, whose residential mortgage loans are serviced by the Banks.

Information concerning the Settlement and its impact on borrowers in bankruptcy can be found at a dedicated page on the United States Trustee Program’s website at http://www.justice.gov/ust/eo/public_affairs/consumer_info/nms

In addition, the website http://www.nationalmortgagesettlement.com provides resources about the Settlement, including a copy of the Settlement, an executive summary of the Settlement, a fact sheet, and FAQs. The FAQs on that website discuss general issues, including:

• What Bank conduct is covered by the Settlement?

• What loans are covered by the Settlement?

• What are the financial provisions of the Settlement?

• How will the Settlement be enforced?

Finally, the Settlement requires the appointment of an independent monitor to oversee the Banks’ compliance with the Settlement. The website for the monitor is: www.mortgageoversight.com

Question 1: What do these FAQs cover?

The United States Trustee Program, the component of the Department of Justice responsible for overseeing the administration of bankruptcy cases and private trustees, has prepared these FAQs primarily for borrowers in bankruptcy or borrowers who are considering filing bankruptcy, including those who have lost their homes in foreclosure. These FAQs also address questions that trustees who administer bankruptcy cases may have.

These FAQs are provided as a basic resource and should not be considered legal advice. The United States Trustee Program is prohibited from providing legal advice. If you have any questions, you should consult an attorney.

Question 2: What bankruptcy issues did the Settlement address?

The Settlement addresses misconduct by the Banks in bankruptcy cases, including:

• Inflated or inaccurate claims.

Some of the Banks filed inflated or inaccurate documents in bankruptcy courts. When a borrower files for bankruptcy relief, the Bank may file a proof of claim or motion for relief from the automatic stay. These documents tell a bankruptcy court how much the Bank claims the borrower owes the Bank. The proof of claim also governs what a borrower in bankruptcy must pay through a chapter 13 repayment plan, and the motion for relief can determine whether the Bank may seek to commence to foreclose upon a home even if the borrower is in bankruptcy.

The accuracy of these documents is crucial. A number of parties, including the borrower in bankruptcy, the bankruptcy court, the trustee administering the case, the United States Trustee, and other creditors, rely on these documents.

When a Bank inflates or misstates what a borrower in bankruptcy owes in these documents, the consequences can be severe. For example, the Bank may be paid too much and other creditors may not receive amounts they are owed. At worst, the borrower in bankruptcy is unable to propose a repayment plan that can be approved and the bankruptcy case is dismissed, or the Bank improperly obtains relief from the automatic stay and is permitted to foreclose on the borrower’s home. As a result, the borrower in bankruptcy loses the ability to keep the home and obtain a fresh start in bankruptcy.

• Improper accounting of mortgage payments made by borrowers in bankruptcy.

Some of the Banks misapplied payments made by borrowers in bankruptcy. When a Bank does this, it appears on the Bank’s books as if the borrower has failed to make regular monthly payments and the Bank can file a motion seeking relief from the automatic stay to foreclose upon the borrower’s home. This misapplication of payments also results in the Bank improperly asserting that the borrower is behind on mortgage payments and can lead to the Bank imposing loan default fees and other charges.

• Adding improper fees and charges to the mortgage accounts of borrowers in bankruptcy.

Some of the Banks charged borrowers in bankruptcy for services not warranted, or in amounts not allowed. For example, some of the Banks sought to recover escrow payments twice, and conducted unnecessary or excessive property inspections and appraisals.

• Charging “hidden fees” to the mortgage accounts of borrowers in bankruptcy.

Some of the Banks also imposed “hidden fees” – fees that are assessed during the bankruptcy case but are not disclosed until after a borrower in bankruptcy receives a discharge. This can result in borrowers believing they are current on their mortgages, only to have a Bank claim the borrowers owe additional amounts. This deprives borrowers in bankruptcy of the “fresh start” promised by the bankruptcy discharge. These hidden fees also often violate bankruptcy court orders finding that borrowers are current on their mortgages.

• Seeking relief from stay to foreclose while borrowers in bankruptcy have pending applications for loan modifications.

Some of the Banks separated their bankruptcy operations from other aspects of their mortgage servicing business, so they did not have a clear picture of the status of a borrower in bankruptcy’s mortgage.

For example, the Banks sometimes provided borrowers in bankruptcy the opportunity to modify the terms of their home loans. Modification has benefits for both the Bank, which continues to receive payments, and the borrower, who receives a more manageable monthly payment.

However, while applications for loan modifications were being processed by one group of the Bank, its bankruptcy operations might move forward with requests for relief from the automatic stay so the Bank could commence foreclosure.

Question 3: Will the Settlement impact borrowers in bankruptcy?

Yes. The Settlement requires the Banks to collectively dedicate approximately $20 billion toward various forms of financial relief for borrowers including principal reduction, forbearance of principal for unemployed borrowers, short sales and transitional assistance, and specific benefits for service members.

The Banks must also make payments to state and federal authorities exceeding $5 billion. Of this amount, $1.5 billion has been set aside to establish a “Borrower Payment Fund” administered by Rust Consulting LLC (the “Settlement Administrator”).

Much of this relief is available to borrowers in bankruptcy. A borrower should contact the appropriate Bank (see question 4) to determine eligibility for relief. A borrower should contact the Settlement Administrator regarding the Borrower Payment Fund (see question 5).

Additionally, the Banks must implement extensive new mortgage servicing standards, including provisions specific to borrowers in bankruptcy. These standards address what occurs when borrowers fall behind on their mortgage payments, including when borrowers file for bankruptcy relief. As explained in these FAQs (see questions 7 through 11), the servicing standards require, among other things:

• A single point of contact at each Bank for borrowers in bankruptcy, who want information or assistance when they fall behind on their mortgage payments;

• New processes to ensure that the Banks provide accurate information about the amount that borrowers in bankruptcy owe on their mortgages;

• Better dispute resolution processes;

• Clear itemization of the principal, interest, fees, expenses and other charges incurred prior to bankruptcy that the Banks claim in bankruptcy cases;

• Prompt posting of payments and proper designation of pre-and post- petition payments and charges;

• Timely disclosure of fees, expenses, and charges incurred after a ` borrower files for chapter 13 bankruptcy.

Question 4: How will borrowers in bankruptcy know if they are eligible for financial assistance under the Settlement?

The Banks may directly contact borrowers, including borrowers in bankruptcy. However, borrowers should not wait to be contacted. To determine eligibility, a borrower or their attorney should contact the appropriate Bank:

Ally/GMAC: 800-766-4622

Bank of America: 877-488-7814

(Available Monday – Friday, 7:00 a.m. – 9:00 p.m. (CT),
and Saturdays, 8:00 a.m. – 5:00 p.m. CT))

Citi: 866-272-4749

J.P. Morgan Chase: 866-372-6901

Wells Fargo: 800-288-3212
(Available Monday – Friday, 7:00 a.m. – 7:00 p.m. (CT))

A borrower should not use these phone numbers for questions concerning payments from the Borrower Payment Fund. See question 5 for information concerning these payments.

Question 5: Who can a borrower contact for information concerning payments from the Borrower Payment Fund?

The Settlement required the Banks to pay $1.5 billion to a “Borrower Payment Fund” that will be used to make payments to borrowers who lost their homes through foreclosure between and including January 1, 2008 and December 31, 2011. The Settlement Administrator has mailed Notice Letters and Claim Forms to eligible borrowers.

If you believe that you are eligible for relief and have not received a Notice Letter or Claim Form or have other questions concerning the Borrower Payment Fund, please contact the Settlement Administrator at 866-430-8358, Monday through Friday, 7:00 a.m. – 7:00 p.m. (CT).

Question 6: What if a borrower in bankruptcy already has a claim against a Bank?

The Settlement includes a release of liability by the federal government and the participating states for certain conduct by the Banks that occurred prior to the Settlement. The Settlement does not release claims a borrower, including a borrower in bankruptcy, may have under state or federal law, and a borrower does not need to choose between accepting relief under the Settlement and pursuing those claims.

Question 7: Can borrowers in bankruptcy participate in the Settlement and receive financial assistance from other sources?

Yes. Borrowers, including borrowers in bankruptcy, may participate in the programs offered under the Settlement and other programs. For example, borrowers may be eligible for a separate restitution process administered by the federal banking regulators, including the Office of the Comptroller of the Currency (the “OCC”). For more information about the federal banking regulator claims process, please visit www.independentforeclosurereview.com or call 1-888-952-9105.

Question 8: Is there someone at the Banks whom borrowers in bankruptcy can contact with questions concerning their mortgage?

Yes. Each Bank has a single point of contact for borrowers (a “SPOC”), including borrowers in bankruptcy, who want information or assistance when they fall behind on their mortgage payments. The SPOCs for borrowers in bankruptcy must be knowledgeable about bankruptcy issues. Also, the Banks must have adequate staff to handle the calls.

Question 9: Do the Banks have special contacts that chapter 13 trustees can utilize to address trustee inquiries?

Yes. The Settlement requires that each Bank establish a toll-free hotline staffed by employees trained in bankruptcy to respond to inquiries from chapter 13 trustees.

Trustees should have received information regarding these hotlines. Any chapter 13 trustee who has not received this information should contact their local United States Trustee office.

Question 10: How does the Settlement address the Banks’ filings in bankruptcy courts going forward?

The Settlement imposes new standards on the Banks to ensure the accuracy of information they provide to bankruptcy courts. These standards are designed to ensure that the Banks provide accurate information about the amount that borrowers in bankruptcy owe on their mortgages.

Moreover, under the new servicing standards, the Banks must implement better dispute resolution processes. If a Bank files inaccurate or misleading documents in a bankruptcy case, a borrower can use these new procedures and make a complaint with the Bank.

In addition, with respect to proofs of claim and certain affidavits attached to documents filed in bankruptcy courts, the Banks must correct any significant inaccuracies promptly and also provide notice of the correction to the affected borrower or counsel to the borrower.

Question 11: What kind of information must the Banks provide concerning a mortgage when a borrower files for bankruptcy?

For a borrower in a chapter 13 (repayment) case, if a Bank files a proof of claim, the Bank must include an accurate and clear statement of exactly what the Bank claims the borrower owes. That statement must itemize the principal, interest, fees, expenses, and other charges that the Bank claims is owed as of the filing of the bankruptcy case.

Question 12: How does the Settlement affect how the Banks apply mortgage payments made by borrowers or a trustee in bankruptcy?

The Banks must promptly post payments received from a borrower or trustee while a borrower is in bankruptcy and accurately designate payments between any arrearage owed before the bankruptcy filing and what is owed for regular mortgage payments after the filing. The Banks must also reconcile accounts, including funds held in suspense accounts, at the end of each bankruptcy case and update their records so they are consistent with the account reconciliation.

Question 13: How does the Settlement affect what the Banks charge after a borrower files for bankruptcy?

The Banks must timely disclose fees, expenses, and charges incurred after a borrower files a chapter 13 bankruptcy case. A Bank waives fees, expenses, and charges of which the Bank has not given timely notice to the Borrower. The Banks must also timely give notice to a borrower of any changes in payments the borrower will have to make due to, for example, interest rate adjustments or changes in the escrow amount.

Question 14: Should a trustee administering the case of a borrower in bankruptcy seek to recover funds received by the borrower under the Settlement?

Eligible borrowers in bankruptcy may receive payments from the Banks as a part of the Settlement. A trustee should consider all relevant circumstances when deciding whether to seek turnover of the payments in a particular case. Factors to consider include:

• The payment amount and any interest of a non-debtor spouse or other person in the payment;

• The cost of recovering and administering the payment, including litigation with a borrower in bankruptcy who may seek a judicial determination regarding whether the funds are subject to administration;

• The extent to which recovering the payment will enable creditors to receive a meaningful distribution; and

• The applicability of state and federal exemptions.

The United States Trustee Program will not seek to compel a trustee to recover payments that the trustee, in the exercise of discretion, decides not to recover.

Question 15: How does the Settlement affect the trustees’ review of the Banks’ proofs of claim?

Generally, the Settlement will not alter a trustee’s review of claims filed by the Banks. If a trustee concludes, based on a review of a Bank’s bankruptcy filings, that a Bank violated the Settlement, the trustee, usually will contact the United States Trustee’s office in the jurisdiction in which the case was filed.

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

What Homeowners Must Know About Reinstating their Mortgage Loan

18 Monday Jun 2018

Posted by BNG in Banks and Lenders, Foreclosure Crisis, Foreclosure Defense, Judicial States, Loan Modification, Mortgage mediation, Mortgage Servicing, Non-Judicial States, Pro Se Litigation, Your Legal Rights

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avoid foreclosure, Deed in lieu of foreclosure, foreclose, foreclosing on home, Foreclosure, Foreclosure Crisis, foreclosure defense, foreclosures, homeowners, mortgage lender, Mortgage loan, mortgage loan modification, mortgage loan modifications, mortgage loans, Mortgage modification, Mortgage servicer, Pro se legal representation in the United States, short sale, United States

Once you fall behind on your mortgage, the amount you’re behind is called the arrears.

In the past, we have discussed how you may have loan modification options available to you that let you stay in your home and resume making mortgage payments without having to pay your arrears all at once.

But sometimes homeowners would rather pay their arrears, get current on their mortgage loan and resume making their regular mortgage payments.

This is called reinstating your loan. Reinstating your loan means you pay the entire amount you’re behind (arrears) plus all related fees (such as interest and late fees) to bring your loan current. After you reinstate, your loan will appear as paid to date in the lender’s records and you will resume making your original mortgage payments.

If you have fallen behind on your mortgage payments and want to reinstate your loan, your first step is to determine whether the lender has initiated the foreclosure process.

Reinstating before the foreclosure process has started

If you’re not in the foreclosure process yet, you want to cure the default on the loan. You need to ask your lender to give you a reinstatement quote. This document can be issued 30 days in advance of your payment date. For example, on May 1 you can order a reinstatement quote good through June 1 so you know how much will be due in 30 days.

If you pay the amount listed on the reinstatement quote, the default will be cured and you can resume making regular mortgage payments. The lender will then be unable to start foreclosure.

Make sure you pay the full amount listed on the reinstatement quote

Simply adding up missed mortgage payments and sending that amount may not be the actual amount due. Based on the terms you signed in your original note, the lender may add late fees for missed payments. If you don’t pull a reinstatement quote and send only what you believe is owed, the lender may deem this a partial payment. They will likely keep the partial payment but refuse to show the loan as fully up to date. This could lead to foreclosure.

Don’t accept any verbal reinstatement payoff amount, whether on the phone or in person. Make the lender give you the quote in writing. Verbal reinstatement amounts may be inaccurate and they may change. They are also impossible to verify later. If you send payment based on a verbal quote, the lender could change their mind and you would have no way to prove what they originally told you.

Reinstating after the foreclosure process has started

If you have fallen behind on your mortgage payments and want to pay your arrears but your loan has entered the foreclosure process, rather than talk to your lender, work with the Trustee. The Trustee is the party who issued your Notice of Trustee’s Sale (NOTS). Their contact information should be listed in the NOTS.

Once a lender starts foreclosure and hires a Trustee, the Trustee is in charge of the foreclosure. They are responsible for documenting and holding all reinstatement amounts and quotes.

Things to know and things you should do:

Legal fees paid to the Trustee by the lender may be added to your total reinstatement amount. So, if you decide to reinstate the loan you may see additional legal fees added to the total amount due.
Make sure you receive your reinstatement quote directly from the Trustee, not the lender. At this point in the process, to ensure that you’re making a full payment, the Trustee is the only one who has that number.
Make the request in writing. Include your name, loan number, and Trustee Sale number found on your NOTS. Write “Please send me a reinstatement quote good through (Date) at (my contact information).”

Fax the request to the fax number provided on the NOTS and to your lender. Call the Trustee to make sure they received the fax and continue to follow up until they send you the quote.
In the state of Washington, you’re allowed to reinstate your loan up to 11 days before your foreclosure sale date. If you believe reinstatement is the right move for you, make sure you request the quote and gather the funds so you can send payment before that 11-day mark.
Ask your Trustee how they would like to receive payment. Most Trustees want a cashier’s check made out to the Trustee but payment processes are different for each Trustee. Have this conversation with them before you make payment.

How does reinstatement affect foreclosure?

If you fully reinstate before the 11-day deadline, the Trustee will cancel the foreclosure of your home and withdraw from the case.

You will resume making monthly mortgage payments outlined in your original loan.

You have to track your foreclosure date to make sure the sale actually is canceled. Get written confirmation from the Trustee that they have canceled the sale.

Are the fees attached to the reinstatement quotes negotiable?

Sometimes. It is important to review all late fees and attorney’s fees attached to the reinstatement quote. Some Trustees and Lenders will take advantage of a reinstatement situation by tacking on fees in excess of work performed. There is little regulation on these fees, so it is important to review the fees carefully.

If you see something that looks excessive, request a full accounting of each fee. The Trustee should be able to provide you a breakdown of how they arrived at the reported fees. Request a breakdown for excessive late fees sent by the lender to make sure they only reflect legal late fees for missed mortgage payments.

Are there any exceptions to the 11-day requirement to reinstate?

If you believe that you may be able to reinstate your loan, but not before the 11-day deadline, reach out to the Trustee and tell them your situation.

If you can prove that you fully intend to reinstate and have the ability to do so, the Trustee or lender may provide you more time in order to reinstate the loan. Reinstatement is generally good for lenders. They want you to pay them back and get current. Many times, lenders agree to postpone foreclosure in order to allow you to reinstate, but you have to demonstrate your ability to reinstate in a persuasive way.

We recommend putting together a package including:

A signed and dated letter stating that you intend to reinstate the loan
- Include how you plan to come up with the funds
- Give a date for when you’ll have the funds
- Ask for a foreclosure postponement of a certain time (e.g. 15 days, 30 days, etc.). Asking for a general, indefinite postponement likely won’t work.
- Do everything you can to indicate that you are serious about wanting to reinstate
Proof of funding: Demonstrate how you will come up with the funds. For example, if the funds are in a retirement account, send the retirement fund statement showing that the money is there. If you are borrowing the money, have the people you’re borrowing from sign and notarize a letter stating that they will be lending you money. Include the amount borrowed and the source.

Fax the package to the lender and the Trustee. Call to make sure they received the fax. While you’re on the phone, find out who is looking at your request and see if you can email them directly. It is not enough to simply fax the package, you have to push both the lender and the Trustee to pay attention to your request.

Is a partial payment ever acceptable?

It may be an option for you to offer a partial payment of the full reinstatement amount in order to get a postponement that will give you time to gather the full funds. Lenders may agree to take a portion of money in exchange for foreclosure postponement.

Be careful with this option. Unless you are absolutely, 100% certain you will be able to fully reinstate, you shouldn’t send money or you may lose it. Never send money without an agreement in writing that the lender will postpone in exchange for a lump sum received.

Because you’re in default, the lender will keep the money you paid regardless of whether you’re able to fully reinstate. Don’t do this unless you know will be able to come up with the rest of the money.

Modification options instead of reinstatement

If you’re barely making it through the month in your current financial situation, reinstating the loan may not be the best solution for you. If the reasons why you defaulted are still part of your life, it may be better for you to pursue an alternative like a loan modification or a short sale so you can get to a more affordable housing situation.

Some homeowners think reinstatement is the only way to stay in their home. That’s not always true.

Don’t spend thousands of dollars to get current on a loan you may not be able to maintain. Call us to learn about all your options to tailor the best plan to fit your situation.

If you think you want to reinstate, keep it as your last option. After all, you can reinstate all the way up until 11 days before the foreclosure sale. Other options may allow you to stay in your home and avoid having to pay a large lump sum.

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

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Reinstating before the foreclosure process has started

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Irregularity in the Foreclosure Process

Noncompliance With Terms of the Mortgage

Inadequacy of Sale Price

How to Set Aside the Foreclosure Sale

Setting Aside a Sale in a Judicial Foreclosure

Setting Aside a Sale in a Nonjudicial Foreclosure

What Happens if the Sale Is Set Aside?

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Like this:

Foreclosure Defense Varies by State

Foreclosure Defense and Chain of Title

Promissory Notes are Key to Foreclosure Defense

Other Foreclosure Defense Strategies

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How do Foreclosures Work?

How do Foreclosures Relate to Debt?

What Else Should I Know?

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Reinstating before the foreclosure process has started

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