Grossbart on Bankruptcy Law

I am falling behind on my mortgage and don't know who to pay?

How can this be? Easy. When you obtained your mortgage supposedly before your papers were dry, your Note was transfered into a securitized trust. How would you know? More and more people are learning the answer if you received a notice of intent (Maryland) to foreclose.

That notice must tell you the owner of the Note. Here is where things get confusing. For your Note to get into the trust the Note must be properly negotited into the trust. The rules that control this transaction are contained in a documement called a pooling and servicing agreement (PSA).

If this transaction is not done properly the foreclosing party does not have standing and can't foreclose. It is possible to challenge the foreclosing party and prevent a foreclosurebecaue of lack of standing. If you find yourself in this situation, it is time to contact a bankruptcy attorney to explore your options.

If I file for bankruptcy will I lose my house?

 

 

This question requires more questions. First whose name(s)is/are on the deed? If it's just one person then the question becomes how much equity is there?  In Maryland you are allowed $11,000 in exemptions that can be applied to a home. If the property is owned husband and wife (called tenancy by the entireties) the question is "are there any joint unsecured creditors that both spouses owe"? If the answer is no, the amount of equity does not matter and the property is safe. If the answer is yes, then you must ask how much joint unsecured debt there is while simultaneously considering how much equity there is to see if the property is safe. 

Bankruptcy and the "underwater home"

Many individuals find themselves with a residence that has gone down in value. These same people might have obtained what is referred to as a  80/20 mortgage. The first mortgage is usually a low initial interest rate adjustable mortgage and the second mortgage a high interest fixed  rate. What does a chapter 13 allow the homeowner to do? If the debtor files a chapter 13 bankruptcy and their residence is worth less than the first mortgage, they can strip off the second mortgage? How does that work? Here are typical facts:

Fair market value (FMV)of residence $250,000

1st mortgage balance                              260,000

2nd mortgage (home equity) balance    50,000

The debtor must file the appropriate motion that has a valid appraisal attached to strip off the mortgage. The debtor continues to pay the first mortgage and the second mortgage becomes an unsecured debt. The  second mortgage is typically paid a percentage of its balance by the chapter 13 Trustee.