While not exactly a sexy topic, there is a growing body of case law regarding what constitutes a creditor violation of the discharge injunction imposed under 11 U.S.C. Section 524 in a Chapter 7 case.
In a recent case decided by Chief Judge Alan Trust in the EDNY, Judge Trust clarified and distinguished a creditor's post-discharge rights when a mortgage debt is discharged in bankruptcy and the remedies that are still available to the creditor under applicable State Law.
A mortgage, in its simplest form, is a pledge of a property to guarantee the payment of a debt. When a mortgagor files Chapter 7 bankruptcy, the underlying personal ...
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How the Subprime Mortgage Crisis Began
The subprime mortgage crisis that shook the financial industry in the US in 2008 was triggered by the burst of the housing bubble. It resulted in a large number of foreclosures and delinquencies, and caused reverberations in other sectors including manufacturing, financial, automotive, hotel, retail, and others.
In this article we will look at how the mortgage crises had started, and what were its consequences on the economy in the US.
How the Subprime Mortgage Crisis Began?
A number of factors can be linked to the subprime mortgage crises, with experts assigning blame to regulators, credit agencies, financial institutions, and ...
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What is HARP?
Unlike HAMP, which provides loans for people who are behind on their mortgage, HARP (Home Affordable Refinance Plan) provides assistance for those who are current on their mortgage payments (or have limited delinquencies over the 12 months prior to refinancing) and their loan to value ratio is over 80%, or their home is worth less than the amount of the mortgage loan. In addition, the loan must be owned by Freddie Mac or Fannie Mae.
Initiated in March 2009, HARP offers borrowers who have little or no equity in their homes the ability to refinance their mortgage into more affordable loans without new or additional mortgage insurance. HARP has ...
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What is HAMP?
After the mortgage dilemma a few years back, which caused thousands of people to go into foreclosure, the government initiated plans to assist those who were and are having problems keeping up with their mortgage payments.
The Making Home Affordable (MHA) was initiated to assist homeowners avoid foreclosure and help bring the country back to financial stabilization. HAMP is one of these programs.
Qualifications
You must be at least six payments behind on your mortgage loan (if you are up to date on your payments and just recently fell into hardship, you will not qualify).
You financed the loan before January 1, 2009
Your ...
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Bill Proposes To Shorten Reporting Periods For Derogatory Credit
A new bill in Congress seeks to overhaul the consumer credit-reporting system by lessening the period that loan defaults and bankruptcies are included in credit reports.
The Fair Credit Reporting Improvement Act of 2014, introduced Wednesday by Rep. Maxine Waters (D., Calif.) calls for large-scale revisions to the information in consumers’ credit reports, including the removal of certain foreclosures and short sales. A short sale is when a home is sold for less than the borrower owes on the mortgage and any other loans on the house.
The bill’s introduction comes a month after Fair Isaac Corp. announced it would tweak its widely used FICO ...
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FHA MORTGAGE AFTER BANKRUPTCY? THE ANSWER IS YES!
Over the past five years, many of my bankruptcy clients have surrendered underwater primary residences to their lenders instead of modifying their mortgages. In a majority of the cases, the numbers simply did not make any sense financially - even if they tried to keep the property, they would never be able to build any equity within a reasonable time frame.
The single most asked question in these cases has been "Will I ever be able to buy another home?" The answer is YES!
After the issuance of a discharge in Chapter 7 bankruptcy, an FHA applicant must wait out the FHA's minimum "seasoning" period. At the time of this writing, that period is ...
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TAX RELIEF ON SHORT SALES ENDS – FILE BANKRUPTCY TO AVOID TAX CONSEQUENCES
In 2007, Congress enacted the Mortgage Forgiveness Debt Relief Act in 2007 — legislation that exempted from personal income taxes the portion of mortgage-related debts that were forgiven by lenders in the aftermath of the financial crisis.
Under the Internal Revenue Code, when the repayment of some or all of a loan obligation is waived — such as in the case of a mortgage cancellation, short sale or some other type of modification that reduces the unpaid balance of a loan — the IRS views the forgone amount the same as if it were paid as ordinary income, and it is fully taxable to the recipient. Congress saw fit to shield borrowers against ...
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Bankruptcy Filings Are Down – But That Doesn’t Mean People Do Not Need to File
Reuters reported today that the number of U.S. businesses and consumers filing for bankruptcy fell 14 percent in the first half of 2012 and could end the year at the lowest level since before the 2008 financial crisis, according to data released by Epiq Systems.
New bankruptcy filings fell to 632,130 in the first six months of the year compared to the same period last year, according to Epiq Systems Inc, which manages documents and claims for companies in bankruptcy.
The number of businesses filing for bankruptcy dropped 22 percent to 30,946 and the number of consumers seeking court protection from creditors fell 13 percent to 601,184.
"We ...
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Do You Want Bank of America As Your Landlord?
Bank of America has announced that it is rolling out a test program in three states (including New York) in which the bank will accept a deed-in-lieu of foreclosure from homeowners in foreclosure and then rent the properties back to the homeowners for an unspecified period of time.
For those homeowners who have tried to modify, have been unable to do so, and remain too stubborn to file for bankruptcy, this may be an option - but it may come with strings attached.
First, BOA has not discussed anything about the tax consequences of the transaction. Even if a homeowner “surrenders” a property bank to a lender, the lender still has the right ...
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Details of Mortgage Settlement Still Unclear – Don’t Jump For Joy Just Yet
After months of wrangling, the long-awaited foreclosure settlement between the government and the banks appears to be at hand.
A $26 billion settlement was announced Thursday morning between the federal government, state attorneys general and the five largest banks in the mortgage market: Ally Financial (GMAC), Bank of America, Wells Fargo, JP Morgan and Citigroup.
While many of the details still have to worked out, the major points are fairly clear:
(a) The settlement will only impact mortgages that were held by the five banks. If a loan was sold to Fannie or Freddie it may not be part of the pool that may be eligible to share in the ...
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