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Category: Mortgage Modifications

New FHA Rules give hope for Mortgages after Bankruptcy

Posted by David Leibowitz on September 23rd, 2013 in Foreclosure - Saving Your Home, Mortgage Foreclosure Defense, Mortgage Modifications, Real Estate

If you filed bankruptcy through no fault of your own, or if you suffered a foreclosure for reasons beyond your control, it is now possible to get an FHA insured loan.

You can get a new mortgage  one year after bankruptcy or foreclosure if you can show you had a big cut in pay, a big decline in your business income or became unemployed for no fault of your own.  And as in the past, you can be eligible if you suffered a medical emergency or recently became a widow or widower.

You can’t get on this fast track to a new mortgage if you quit your job, or if you were fired for cause.

The new FHA policy is much more liberal than the harsh policies of Fannie Mae and Freddie Mac.  These agencies require a waiting period of 3 years after completion of a foreclosure or discharge from bankruptcy if there are “extenuating circumstances” and up to a seven year waiting period otherwise.

There are many bogus sources for FHA financing.  However, you can  find many answers to your questions about FHA loans at  http://portal.hud.gov/hudportal/HUD?src=/FHAFAQ.  You can also find an FHA approved lender at http://www.hud.gov/ll/code/llslcrit.cfm

To qualify for a mortgage after bankruptcy or to qualify for a mortgage after foreclosure, it’s very important that a bankruptcy case or the foreclosure case to be completely closed.  Lenders frequently fail to complete a foreclosure, especially for condominiums and homes with a home owner association because they don’t want to assume the costs of home-ownership.  This leaves the owner stuck holding the bag.  It also leave the owner ineligible to look for a new mortgage.

Lakelaw has developed innovative tools to force lenders to take action to conclude a foreclosure case and allowing borrowers to have a fresh start.

We at Lakelaw value our former clients and friends and hope you gain value from our periodic messages to you about developments in bankruptcy and foreclosure.

We especially appreciate your referrals of friends, family members and others you know who can benefit from our services.  Thank you for your continued interest in and support of Lakelaw – your financial lifesaver ™ We continue to represent people and businesses in bankruptcy and foreclosure defense in Illinois and Wisconsin.  We do so with care, kindness, courtesy, respect, professionalism and dedication. And we always will.


Changes to the MMM Program: News for Eastern District of Wisconsin Chapter 13 Clients

Posted by Ryan Blay on November 9th, 2012 in Bankruptcy, Chapter 13, Foreclosure - Saving Your Home, Mortgage Foreclosure Defense, Mortgage Modifications

The Bankruptcy Court for the Eastern District of Wisconsin created the MMM (mortgage modification mediation) program about a year and a half ago to help make modifications in Chapter 13s easier.  So far, it has had quite a few success stories, and the next step is making sure the program stays strong and allows mediation options for as many homeowners and servicers as possible.

Starting December 1, the fees for the program are increasing to allow mediators more recognition for their hard work.  The fees for homeowners will now be $200 to the mediator and $25 to the portal used for document submission.   Also, the portal is going to remain a preference, but servicers who don’t use the portal will see language allowing them, in some cases, to continue the mediation program while taking documents by e-mail or other means through their attorneys.  The portal is effective and worth the extra cost, but some servicers still struggle to get approval to use it.

As has been our practice for quite some time, the law firm representing the Chapter 13 debtors will pay the fees and the work by the mediator will start only when the fees are in.  We ask for the mediation fees from our clients in advance to start the process.

The MMM program can be a huge step to getting through the impossible hurdles some servicers have to get mortgages modified in a reasonable fashion. We hope to keep promoting and improvingthe program as time continues.


Southeast Wisconsin Foreclosures Increase in May 2012: Lakelaw is Not Surprised

Posted by Ryan Blay on June 5th, 2012 in Foreclosure - Saving Your Home, Mortgage Foreclosure Defense, Mortgage Modifications, Real Estate, Wisconsin

If you live in Kenosha, Racine, or Milwaukee County, you may see more of these signs.  According to the Milwaukee Journal-Sentinel, May foreclosures were up significantly over May 2011 filings.  Although the biggest servicers are under agreements with the states to reform their practices and provide money for principal reduction, it won’t solve the main problems spurring foreclosure issues:  slow turnaround on modification reviews, a lack of jobs to provide for affordable mortgages, and depressed real estate prices from the prior glut of foreclosed homes.

Milwaukee, and its collar counties of Waukesha, Ozaukee, and Washington, continue with the depressing news.  While most areas of the country are seeing slow upticks of housing prices, Metro Milwaukee’s are falling.

The foreclosure settlements have not played any significant role in stopping the foreclosure tidal wives, and judging by the recent numbers of filings, there are still thousands of active and pending foreclosures to go before the housing market hits rock bottom and can start again.

We’re not surprised at these figures, but it is disheartening to see so many filings.  Despite the attorneys who have given their pro bono and paid time to try to fight the more suspicious foreclosure filings, it is clear that more leadership, and perhaps money, needs to be passed along to the homeowners, rather than to the banks.


Changes to the MMM Program Coming Soon!

Posted by Ryan Blay on June 5th, 2012 in Chapter 13, Foreclosure - Saving Your Home, Mortgage Foreclosure Defense, Mortgage Modifications, Real Estate, Wisconsin

Not content to rest on its laurels, the Eastern District of Wisconsin’s Mortgage Modification Mediation (MMM) Program has continued to inspire and innovate, becoming one of the leading bankruptcy courts in pushing for mortgage modifications during Chapter 13 Bankruptcies.

In addition to talk about expanding the program to the Western District of Wisconsin Bankruptcy Court, the program is planning a move to use the DMM Portal to upload documents and do the unheard of – actually encourage open lines of communication between servicers and debtor attorneys.  Through the work of Judge Susan Kelley and the attorneys, mediators, volunteers, and court staff who have nurtured the program, the MMM should be the envy of the courts for a long time to come.

If you want to know more about the MMM program and how it can help cut through the bog of modification applications toward an answer, please contact us at Lakelaw.  As attorneys who have been active with the program since its inception, we can maneuver clients through the program, work on the applications and its paperwork, and prepare homeowners to work within its guidelines to achieve positive outcomes.


Why is my mortgage lender suing itself for foreclosure?

Posted by Ryan Blay on April 11th, 2012 in Foreclosure - Saving Your Home, Illinois, Legal, Mortgage Foreclosure Defense, Mortgage Modifications, Wisconsin

It’s hard enough communicating with one mortgage servicer.  Anyone who has ever tried to get a loan modification, get approval for a short sale, or even deed the property back in exchange for avoiding foreclosure.

Can you imagine having two mortgages, with the same lender, and not being able to get the departments to agree on how to proceed?

Unfortunately, many homeowners across the country face that exact ridiculous situation right now.  And it comes to its absurd conclusion in foreclosure filings.  You see, when a lender forecloses, they need to obtain a clear right to take the property that trumps anybody else imaginable.  So very often you see a case caption that reads:

Huge National Bank v. Joe Homeowner, unknown spouse of Joe Homeowner, a/k/a Jane Homeowner, unknown tenants, XYZ Condo Association, Credit Card Judgment Company, and Huge National Bank

What does that all mean?  Well, Huge National Bank has a first mortgage on this property, let’s say for $200,000.  They have to sue Joe Homeowner, since he’s on title to the property, he’s the owner on the deed recorded with his county.  They may have to sue his wife, if he has one, because some states give spouses a 1/2 interest in their spouse’s property.  They would have to sue a Condo or Homeowner’s Association that has an interest in the property.  They need to notify any creditor that obtained a judgment for a debt (a credit card judgment, a judgment for an unpaid medical bill, a personal injury).  And of course, the holder of any junior mortgage.

So why is Huge National Bank suing itself?  Because it probably has a second mortgage for $50,000 that was either taken out at the same time as the first mortgage (usually referred to as an “80-20 loan” – 80% of the purchase was for the first mortgage, 20% for the second) or it bought the mortgage later from another lender.

The problem is that each department has different interests.  The first lender wants to foreclose if you can’t pay, because that way they can get clear title and move forward with another buyer.  They want to recover as much as possible on the loan.  The second lender wants to do the same thing.  They may have a higher rate of interest on the mortgage since second mortgages bear much more risk.  They might even hire their own law firm to defend themselves against….themselves.

It sounds like a headache and a special case of the law turning common sense into logic games.  You may be correct.  But knowing this can help you determine how you want to proceed with both mortgages.  If you have two mortgages fighting between themselves and refusing to help you, please contact us to discuss your options.


Can I Sue My Mortgage Lender or Servicer For Not Offering Me a Permanent Modification?

Posted by Ryan Blay on April 5th, 2012 in Foreclosure - Saving Your Home, Illinois, Legal, Mortgage Foreclosure Defense, Mortgage Modifications, Wisconsin

Well, to start, anyone can sue anyone.  That doesn’t mean you’ll win or collect.  But a new case from the 7th Circuit Court of Appeals (covering Wisconsin, Indiana and Illiinois) suggests that you may be able to.

In this case, coming from the Northern District of Illinois, Ms. Wigod was working with her servicer, Wells Fargo Home Mortgage, and had entered into a Trial Period under the government’s Home Affordable Modification Program.

As anyone who has entered one of these trial periods knows, the process is frustrating and often offers false hope.

Sometimes, homeowners fail to make payments during the trial period.  Other times they fail to get the signed documents back by a set time.  In other cases, homeowners make the payments AND send in the documents, but the servicers make math errors, miss or misprocess payments, or extend the trial payments at the end of the 3 months.

In Ms. Wigod’s case, Wells Fargo submitted a letter to her after her trial period was done informing her that regretfully they could not offer her a permanent modification due to investor guidelines.  This appeared to contradict what the HAMP trial offer letter stated, so she sued Wells Fargo. She sued in District Court to try to create a big class action lawsuit against everyone who faced similar problems with Wells Fargo or Wachovia.

Two years after her suit, the Seventh Circuit Court of Appeals allowed part of her case to continue.  So she’ll be back in trial court to try to establish her own individual lawsuit, but also the class action.  Based on this, we predict more people will try to raise identical claims in both state and federal courts in Wisconsin, Illinois and Wisconsin.

While she hasn’t been awarded anything yet, Ms. Wigod was able to confirm from the court what most of us knew deep down to be true already:  As part of these programs, the servicers and lenders made promises to homeowners.  If they fail to live up to those promises, the homeowners can sue and seek their damages.  If you feel you were in a similar situation and want to speak with an attorney from our offices in Illinois or Wisconsin, please contact us today.


Robosigning by Big Mortgage Servicers? Stop the Presses!

Posted by Ryan Blay on April 4th, 2012 in Foreclosure - Saving Your Home, Illinois, Mortgage Foreclosure Defense, Mortgage Modifications, Wisconsin

In what has come to be a weekly rite of passage, another big mortgage servicer is being investigated for its faulty servicing practices and “robo-signing”.  You probably heard about the Bank of America/Chase/Citigroup/Wells Fargo/GMAC (Ally) settlement from the attorneys general of 49 states.  You may have heard the less publicized news of a settlement with Litton Loan Servicing last year (they were a subsidiary of Goldman Sachs, a huge Wall Street firm – Ocwen services most of these loans now).

Now we have news of another suit by the Federal Reserve, this time against Saxon Mortgage Services, a company under the Morgan Stanley umbrella (yes, another major Wall Street Firm).  The same practices that all the other major services are being accused of emerges once again, with only the name of the servicer changed.

It’s worth noting that for all of the poor homeowners here unfortunate to have Ocwen Financial servicing their loans:  you’re in the same boat as a lot of people.  Ocwen is not only servicing the lousy loans of Litton, but Saxon as well.  Good luck trying to work with them and get a straight answer on a loan modification or other request.

If you were in a foreclosure from 2009 through 2010 and Saxon was the servicer, chances are you may be getting correspondence soon from somebody – either a government official or a representative of Ocwen.  If you have any concerns about such a loan or any paperwork you have received from these parties, please call us at Lakelaw to discuss further.


Where Did Our Mortgage Settlement Money Go?

Posted by Ryan Blay on February 10th, 2012 in Foreclosure - Saving Your Home, Mortgage Foreclosure Defense, Mortgage Modifications, Wisconsin

As of now, there has been no news from Illinois about the mortgage foreclosure settlement and how funds would be distributed. However, Wisconsin’s Governor, Scott Walker, and the attorney general, J.B. Van Hollen, have announced that $25.6 million of the $31.6 million received would go to fix the budget deficit instead of helping homeowners.

When the states received tobacco settlement money years ago, many states elected to do the same thing. In this case, however, the issue is not one of compensating smokers. After all, paying smokers or the victims of deceased smokers would do little to stop smoking or solve the outbreak of cancer and other health concerns that smoking caused. Paying homeowners, however, or writing down principal on mortgages to reflect the fair value of properties would absolutely have done more for the economy.

Instead of suddenly becoming tight-fisted, allowing homeowners to break even on homes instead of remaining underwater would arguably do more to stimulate spending and restore consumer confidence in homebuying. Instead, the foreclosure crisis will most likely lead to more lost houses and depressed home values until the market bottoms out. This could take years. This certainly won’t be good news for homeowners looking to refinance, to borrow from home equity, or to sell their homes (rental, vacation, or homestead) in the next few years.

Will other states follow Wisconsin’s lead and funnel the money into fixing a budget deficit or attack the foreclosure problem directly by paying down principal and encouraging modifications to stop foreclosures and save the homes of their residents? What role will this have in the upcoming recall elections? Stay tuned for more.


What Is the National Mortgage Settlement?

Posted by Ryan Blay on February 9th, 2012 in Foreclosure - Saving Your Home, Illinois, Mortgage Foreclosure Defense, Mortgage Modifications, Wisconsin

Today a national mortgage settlement was announced with five of the country’s biggest servicers: Ally (GMAC), Bank of America, Citi, Chase and Wells Fargo. A website was even created to answer some of the most basic questions – and direct the rest of your questions to the servicers. So if you have questions about what relief you are supposed to receive – call the parties that committed the robosigning and other bad acts in the first place!

What this means for homeowners who are still suing these lenders and servicers is unclear. The settlement terms supposedly allow lawsuits against the servicers and the mysterious MERS Corp., allow criminal actions against the servicers, send some money to foreclosed borrowers from January 1, 2008 through December 31, 2011, and provide money to the states for principal reductions on first and second mortgages.

What are your thoughts? Is the $25 billion received in the settlement enough? Will the nationwide servicing standards actually be enforced against the servicers if they continue to improperly foreclose? Will homeowners who lost their houses due to unethical and possibly illegal activity ever get compensated? Will the money to help write down some mortgages slow or stop the ongoing foreclosure crisis? Only time will tell. But don’t let this news stop you from calling us at (866) LAKELAW or (262) 694-7300 in Wisconsin if you are still facing foreclosure or have questions about your mortgage and other debts.


Saving Your Home Through Bankruptcy

Posted by Ryan Blay on December 19th, 2011 in Bankruptcy Information, Chapter 13, Foreclosure - Saving Your Home, Illinois, Mortgage Foreclosure Defense, Mortgage Modifications, Uncategorized, Wisconsin

While each bankruptcy case is different we attorneys at Lakelaw see a common theme among many bankruptcy filers: the threat of losing a home in foreclosure. This post tries to explain some of the options debtors have when facing foreclosure.

The first question anyone must answer is whether or not to try and save the home. Someone wishing to walk away from their home without a final foreclosure could have two options: Attempting a Deed in Lieu of Foreclosure or agreeing to a Short Sale

In a Deed-in-Lieu, the offer is to give the home back to the bank to stop the foreclosure. However, mortgage defense attorneys have not seen much success with this lately. Due to so many homes already foreclosed (and those that are still going to be foreclosed on any day now), banks are often refusing to accept a Deed in Lieu of Foreclosure.

A second is a short sale. A short sale involves a homeowner, with the help of a realtor, finding a buyer who is willing to buy the home at a reduced value. The bank would then have to agree to waive the difference between what the home sold for and what was owed—the deficiency—or the homeowner would have to bring money to pay the difference at closing. Banks like the idea of having a waiting buyer instead of waiting through months of foreclosure, but they do not like the idea of walking away from the deficiency amount.

What if you want to try and keep your home? If you and your bank are working well with each other, a home modification could be an option. The bank would be willing to work with the borrower and try to find a payment plan that works. It should be noted that the Wisconsin branch of Lakelaw has seen some promise in mortgage modification within the Chapter 13 modification program set up in the Eastern District of Wisconsin bankruptcy court).

Another option is Chapter 13 Bankruptcy. This may be the best option a debtor has to save their home. When the debtor files a Chapter 13 bankruptcy an automatic stay goes into place. This means the bank must stop the foreclosure and the borrower can stay in the house as long as they are making payments to the trustee and a payment to the mortgage company after the bankruptcy filing. The goal is to find a way to cover the regular monthly mortgage payment plus an additional amount to catch up on the arrearage. A Chapter 13 bankruptcy is a difficult process and is different for each person, so it is always best to speak with an attorney about your particular situation.

If you have questions about saving your home, the professionals at Lakelaw are here to help. We serve our clients with Care, Kindness, Courtesy, Respect, Professionalism and Dedication. We can be reached at 1-800-LAKELAW in Illinois and 262.694.7300 in Wisconsin. Give us a call so we can help you with your finances and your home.

This post was drafted by Attorney Nicholas Strom


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