South Carolina Supreme Court Takes Drastic Action In Response to the Foreclosure Crisis

Published Tuesday, May 12, 2009 @ 5:20 pm

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In a surprising move, the South Carolina Supreme Court on May 5th issued a temporary restraining order against thousands of lenders in the process foreclosing homes in the state. The court was acting in response to a request from Fannie Mae and Freddie Mac, the two federal mortgage giants charged with implementing the new Home Affordable Modification Program (HAMP), which is designed to give certain homeowners an opportunity to modify their mortgages to avoid foreclosure. Fannie and Freddie were concerned that thousands of eligible homeowners in South Carolina would miss the opportunity to apply for HAMP before their homes were sold in foreclosure. Lenders seeking foreclosure in South Carolina have an incentive to move more quickly because the laws in that state allow courts to cancel the process if the lenders take too long.

The restraining order applies to any foreclosure proceedings where Fannie or Freddie is the mortgage holder or where the lender has agreed to participate in HAMP. The foreclosure process is suspended to give the homeowner an opportunity to apply for the program. Real estate figures show that the owners of more than 5,000 homes facing foreclosure in the state could qualify for HAMP. Basically, a homeowner qualifies for HAMP if: the property is a single family, personal residence with one to four units; the mortgage originated before January 1, 2009; the home is not vacant or condemned; and the first mortgage is no more than $729,750.

The South Carolina Supreme Court’s action is unprecedented. Those in other states facing similar problems might be wondering whether their judicial system will step in — and if so, when. But the good news is, you don’t have to wait to find out. If you don’t qualify for HAMP, or if your lender refuses to stop the foreclosure process to give you a chance to apply for the program, consider filing bankruptcy. A Chapter 13 bankruptcy can stop a foreclosure and allow you to repay missed payments through an affordable repayment plan. And, if your home is worth less than your first mortgage, bankruptcy can completely wipe out any second or third mortgage!

Even if you do qualify under HAMP, you should still consider bankruptcy as an alternative. If you’re in this boat, chances are, your mortgage is not the only financial baggage you’re lugging around. If you’re like many of the people caught up in this crisis, you’ve been forced to rack up credit card debt, skip payments to other creditors, or take out high-interest loans in an effort to keep up with ballooning mortgage payments and property tax bills. This means your credit rating is already on the downward slide, and it will just keep getting worse until you regain control over your finances.

Bankruptcy will help you deal with all of your troublesome debts — not just your mortgage. And, at the end of your case, you’ll be able to walk away from most, if not all, of those debts. You can make a completely fresh start and begin rebuilding both your credit and your life. So, don’t wait any longer. Call a bankruptcy attorney today and find out how you can resolve your mortgage problems and start rebuilding your life right now. The Law Offices of John T. Orcutt, serving the Triangle area, also with convenient locations in Fayetteville and Wilson.

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