Oh, how much easier life would be for homeowners if all that was needed for a mortgage modification was an appraisal. In today’s troubled housing market it does seem equitable, doesn’t it? Demonstrate to your lender that you owe far more than your home is worth, and of course, that you’re experiencing legitimate financial hardship and…….problem solved…….mortgage modified. It sounds to good to be true, but chapter 13 bankruptcy can allow second and third mortgages liens to be removed entirely on the strength of a single appraisal.
Unfortunately, under normal circumstances, mortgage modification doesn’t exactly work like chapter 13 bankruptcy. Actually it doesn’t come anywhere close to working like chapter 13 bankruptcy. The press is full of mortgage modification horror stories in which an inconceivable lending bureaucracy has effectively stonewalled all efforts at real relief. Foreclosures continue to skyrocket. Borrowers granted temporary mortgage modifications are shocked to find (1.) that their application for permanent relief has been denied and (2.) that they owe the entire difference between the modified mortgage amount during the trial period and their previously unmanageable regular payments. In many cases, these “trial” modifications actually push a teetering family into foreclosure. Fact is nothing much is getting done. Enter chapter 13 bankruptcy……..
SOLUTION: CHAPTER 13 BANKRUPTCY CAN FORCE YOUR LENDER TO MODIFY A MORTGAGE…….. PERIOD.
Maybe you’ve grown tired of asking and you’re ready to start telling? Perhaps calling your lender four and five times a day trying to get your loss mitigation specialist on the phone is getting, well…..old? Try this: get an appraisal. Yes, you heard me get an appraisal, find out what your home is worth. If the balance on your first mortgage is greater than the value of your home, you can “strip” or remove second third and fourth mortgages through a chapter 13 bankruptcy. Once the appraisal demonstrates the fact that your home is underwater, there isn’t anything standing in the way of you and the mortgage modification you’re seeking. Your lender cannot tell you NO, as a federal court will now be telling them YES.
HOW IT WORKS………
It is the rare consumer who knows the full extent of their rights. Too bad because Congress has placed quite a few arrows in the consumer quiver. Chapter 13 bankruptcy is one of the most significant, allowing for the restructuring of secured debts such as mortgages and car loans. If you find yourself underwater on either, the amount of your loan that exceeds the value of your property can be stripped or removed, paid out at far less than 100% over the life of a repayment plan you create with the help of your bankruptcy attorney.
Let’s illustrate by way of example: You have two mortgages, the first with a balance of $150,000, the second with a balance of $50,000. An appraisal reveals that your home is worth $145,000. Once you file for chapter 13 bankruptcy, your attorney will file a lawsuit to remove the second mortgage. The debt will be paid as unsecured debt along with credit card and medical bills often at pennies on the dollar. Stripping the second or third mortgage has the potential to afford real relief, allowing a struggling homeowner or family to stay in their home with payments they can now afford. As long as you didn’t purchase your car in the last three years, the same principle applies to auto loans. Chapter 13 bankruptcy is a powerful yet complicated tool, if you have questions, consult an attorney.