The North Carolina Bankruptcy Information Blog

Jobs in the private sector may be on the way up—a complete change of pace from the post-Recessionary years—but optimism about the mortgage industry is still way down in the wake of massive foreclosure abuses at major mortgage lenders.

In fact, The New York Times recently published a shocking article detailing the struggles of homeowners facing foreclosure framed by mortgage servicing horror stories piling up all across the nation.

According to the Times, dubious mortgage practices— widespread document execution fraud, misrepresenting fees, forgeries on signatures for your key mortgage documents, and making deceptive statements about efforts to correct paperwork—have become the norm, not the exception, for many a major mortgage lender from the West Coast to the East Coast.…

In this blog we often talk about the benefits of bankruptcy for individuals and businesses—debtors who are part of the American fabric that are facing the significant financial perils of the current economic malaise.

But what if one of the financial entities that is often the primary culprit for harassing these same American debtors seeks the safe havens of bankruptcy relief? What are the economic impacts of such a filing?

Well, we just might see, as one of the nation’s major mortgage insurers filed for Chapter 11 bankruptcy protection this month– a move that’s seen as a blow to lenders overall and ultimately to borrowers who seek credit, including those in dire need of home loans.…

The Making Home Affordable program was designed to be the savior of the crashing real estate economy. People nationwide were taking solace in the President’s effort to save our homes and lead us through the worst economic situation our country has faced in almost 100 years. Hundreds of thousands of homeowners facing foreclosure due to the bubble bursting on a plague of poorly schemed sub-prime mortgages rejoiced in what seemed to be a cooperative effort on the part of the a supportive new Washington administration and the Wall Street.

Unfortunately, the program has landed far from expectations. The foreclosure rate has seen only minor blips in decline and it has become difficult to hear government officials even address the existence of the program, unless to defend it.…

Is Mortgage Cramdown Back on the Table?

Last week, amidst the hectic flurry of the election in Massachusetts and Obama’s announcement of new regulations on banks, another announcement didn’t get quite as much attention: the Obama administration will revamp the Home Affordable Modification Program (HAMP). The program will be streamlined, making it easier to file the necessary documents; for example, borrowers will be able to use pay stubs as proof of income rather than having to provide tax forms.

One of the most egregious policies is already in the process of changing – right now, the fine print of most mortgage modification contracts allows the lender to deny your application and resume foreclosing proceedings, without even informing you of the decision.…

The latest chapter in the Obama administration’s attempts to make lenders modify mortgages is to send SWAT teams – no, I’m not kidding, really, SWAT teams – into the call centers of major lenders to try to ensure that they follow the proper procedures and actually modify loans. Seriously, wouldn’t it be a whole lot easier just to pass cramdown and allow bankruptcy judges to modify mortgages than to try to sweet talk, bribe or otherwise convince bankers to do it on their own?

Because they’re not. Making Homes Affordable, the program implemented by the government last May, is designed to encourage banks to modify the loans of homeowners who are having trouble making mortgage payments.…

Foreclosure is a common precursor to bankruptcy. More often than necessary, it happens before a family really knows where to turn for help.

Worse yet, those who lose their home in foreclosure continue to spiral into debt and end up filing bankruptcy long after it could have been used to help save their home in addition to relieving them from the agony of overwhelming monthly credit card bills and other debts. Fortunately for many citizens of North Carolina, a foreclosure prevention program has become a model for the nation and to date has assisted more than 2,500 of us from having to give back the property we worked so hard to obtain.…

It hardly seems fair.

Those needing help with a bad mortgage that can be blamed on banking industry profit strategies are now faced with the problem of having their credit ratings ransacked as a result of enrollment in a federally-backed mortgage modification program.

The subprime mortgage crisis forced hundreds of thousands of Americans into bankruptcy or foreclosure. As the government realized, despite its public reticence, that it played a tremendous role in the state of its citizens’ bleak checking accounts, it announced the creation of the Making Home Affordable program, a concerted effort to offer banks financial incentives to adjust their customers’ mortgages at more favorable terms to the customer.…

If the present economic environment wasn’t Scrooge enough, just in time for the holidays, it appears the Obama Administration’s Making Home Affordable foreclosure prevention plan has failed to meet its goal of helping millions of Americans avoid foreclosure.

In fact, according to a recent Treasury Department report, 27 percent of the 650,000 homeowners taking part in the mortgage modification program are now delinquent on their mortgage payments.  Reflecting the mortgage industry’s aversion to permanently modify mortgages, of that number, only 1,711 participating homeowners attempting to avoid foreclosure have been able to convert their modifications to permanent status. Homeowners facing foreclosure and needing help to secure a loan modification were encouraged to visit http://www.makinghomeaffordable.gov.…

Of all the special programs and incentives in place to help struggling Americans during what many have now deemed “The Great Recession,” perhaps the most critical is the often debated but not often publicly discussed “mortgage cram-down” bill.

First introduced last year but shot down in the Senate in favor of the President’s “Making Home Affordable” loan modificationprogram, the cram-down provision would grant bankruptcy judges special authority over the terms of a mortgage during the bankruptcy process. Based on a filer’s situation, the judge could lengthen the payment term, reduce the interest rate or decrease the balance. The judge will have the right to alter the mortgage even in the face of lender rejection.…

It’s official: Making Home Affordable isn’t owning up to its namesake.

After months of simmering frustration with the federal program designed to financially encourage lenders to be more cooperative with economically-challenged mortgage holders, it seems that the national media has finally created an outlet for the hundreds of thousands of Americans trying to sort it all out.

The success of a program like Making Home Affordable, and the general willingness of banks to assist consumers in adjusting their mortgages, is so critical because recent reports have indicated that avoiding foreclosure is one of the primary reasons people file bankruptcy. In most cases, a Chapter 13 will allow a person to stay in their home by catching up on missed mortgage payments.…