Upside Down Mortgage

Archive for March, 2009

Mortgage Default After Bankruptcy

Question: Can banks seize your other assets if you default on your mortgage?

I know banks can foreclose on the house and sell it, but can they legally garnish my wages, take my savings, etc. or are they only limited to taking away the house? Will I still be liable for the remaining balance on the mortgage? I'm not talking bankruptcy. Does the bank taking my house clear my debt with them since they will pocket the proceeds from the sale? Isn't that a risk banks assume when lending?

Answer: The collateral the lender signed for is the property they will go after.

There is a thing called deficiency judgment. Personally I have heard of one time where they went after someone for that and that was because the house burnt to the ground.

Once the foreclosure procedures have taken place and is complete, that is normally all there is.

Very seldom will they come after you or garnish your wages, these are scare tactics that have been used in the pass.

When you signed your loan docs the only thing you offered as collateral was the property you were purchasing or refinancing. Your car, a second house or job was not offered as collateral on the loan docs.

If the bank/lender is unable to get the desired funds from the foreclosure auction, the bank retains possession of the property.

The bank hires a real estate agent to get the maximum out of the property they can to include any foreclosure fees they charged for trying to collect and the requirements to do the foreclosure in your state.

Your debt to the bank is not longer there once they have completed the foreclosure procedure. That is the collateral that they signed for when they gave you the loan.

They will annotate your credit report with a foreclosure and the amount of the foreclosure might even be there.

I hope this has been of some use to you, good luck.

"FIGHT ON"

AFTER THE FIRE

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Wells Fargo Loan Modification Debt Ratio

JP Morgan Chase & Co. back in November stated it is widening its effort to modify home loans in an attempt to limit foreclosures by up to $70 billion in mortgages.

The loan-modification program will also be provided to borrowers who have loans with Washington Mutual and EMC. JP Morgan purchased Washington Mutual in October after the bank became the largest in the country’s history to fail. JP Morgan also bought EMC, which was a mortgage unit of Bear Stearns.

As JP Morgan acquired these two giant lenders, it also received mortgages that included adjustable-rate mortgages with minimum payment options. Option ARMs give borrowers a choice of four payment options every month, like paying less than the interest owed on the loan, thus raising the principal loan balance. JP Morgan claims modifications for Option ARMs would erase the paying less than the interest owed feature and the monthly options. Borrowers will more than likely be offered a fixed rate mortgage.

Option ARMs have been among the worst performing loans dating back to the summer of 2007 as mortgage defaults have surged and the real estate market has accelerated in the wrong direction. Hence the statement from JP Morgan officials, "We are doing this because we think it's the right thing to do."

I also agree it needs to stop as some things cannot just be let to run its course or the damage will be insurmountable. The program helps homeowners who live in their homes and who "demonstrate the ability and wanting to pay”.  They have also gone so far to say they will modify mortgages with borrowers who are current on their mortgage payments.

They will typically modify the loan to more conservative standards like making it work on a 28/36 debt to income ratio basis. In the past few years lenders were approving loans with up to 60% debt ratios which is absurd.  Moving back a decade and beyond, the system worked right and foreclosures or borrowers becoming late were not as rampant.

Additional big banks are following the steps of JP Morgan by offering loan modifications to their customers such as Bank of America which acquired Countrywide and even Wells Fargo which has less risky customers due to their more conservative underwriting approach. Even if borrowers do not have a home loan with large banks they can still be approved for a loan modification program by a company that specializes in debt restructuring and loan modifications.

In addition, when some banks leave the client in the dust by not approving a loan modification or the modification is only for 3 or 5 years, they have other options to rid themselves of a home they cannot afford such as a short sale or a short refinance. Banks need to help homeowners stop foreclosure in order to halt the financial crisis. Many people understand this. Who will make legislation to make this a reality instead of talk while homeowners fall deeper behind.

About the Author:

Frank Collins is a real estate investor and suggest that you find solutions for your late payment dilemma due to an adjustable rate mortgage that will rise soon, loss of income or other hardship.
If you are interested in a Stopping Foreclosure, please visit our website www.ApplyLoanModification.com or for a real estate lawyer.

Source - Large Banks Are Helping Homeowners Stop Foreclosure

Mortgage Help For Disabled

Question: I am permentally disabled and have a mortgage, and pay property taxes, can I still claim for tax purposes?

even though I am not able to work? How does this work, I pay the mortgage payments along with the property taxes do I claim a deduction? I am not employed though?
I just wanna make sure that the taxes are paid. The property taxes are for the school taxes and I wanna make sure its paid.
?
I am not on welfare or public assistance. I am on Disability insurance. So would it matter?

Answer: I think you are talking about income taxes but you might be talking about property taxes (claiming a deduction).

I think you can only claim an income tax deduction if you have income to deduct it from.

As far as the property tax. In Texas their are various exemptions to reduce the property tax based on age or disability or homestead or such. You could contact your local property tax authority to help you handle this.

No help for middle class family losing their home