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Business Law Blog
- The Importance of Forum Selection and Choice of Law Clauses In Contracts
- Starting And Managing Your Business 101: Avoiding Legal Problems Through Proper Record Keeping And Organization
- Starting And Managing Your Business101:Financing The Company
- Starting and Managing Your Business 101: Protecting Your Company’s Intellectual Property
- Starting & Managing Your Business 101: Employee Rights
Real Estate Law Blog
- Comparing Loan Modification, Short Sale, and Foreclosure
- Understanding Judicial And Non-Judicial Foreclosure In California
- Facing Foreclosure In California? The Pros & Cons of Loan Modification, Short Sales and Foreclosure
- The Home Affordability and Stability Act And Home Foreclosure
- Successfully Defending A Homeowner Facing A Foreclosure Action In California
Bankruptcy Law Blog
- No Job? A Look At Unemployment Insurance
- Qualifying for Chapter 7 Bankruptcy in California: The Means Test
- Filing Bankruptcy In California: Whether To File Individually or Jointly
- Bankruptcy Options When Faced With Car Repossession: Chapter 7 vs. Chapter 13
- Car Repossession And Bankruptcy: Redemption And Reaffirmation
Family Law Blog
Avoiding Foreclosure In California Through Chapter 7 And 13
Are you facing foreclosure? You may be someone looking to walk away from their home, or you may want to stay in your home but you just can’t afford your current payments. Whatever your situation, this is an area of the law that you just should not try to navigate on your own without the assistance of a trusted real estate and bankruptcy attorney.
Some mortgage lenders and service providers who service the loan have become more aggressive in pursuing borrowers for alleged mortgage fraud and deficiency judgments. And if you have walked away from your home or did a short sale without a legally binding negotiation, you could still be liable for a loan deficiency—the difference between the current value of the property and your loan balance. Or if you made representations on your loan documents that are now being used against you, and you are now facing foreclosure, it is imperative that you have representation and know your rights.
Foreclosures are on the rise and are expected to continue to increase with the state of the economy. Our law firm has many options to assist homeowners who are facing a foreclosure, or thinking about possibly walking away from their mortgage.
If you are a California homeowner facing foreclosure, you may feel helpless and uncertain about your financial future and your options. This is a situation that more and more California residents are facing given the current state of the economy and the mortgage meltdown.
Comparing Foreclosure With Short Sales And Loan Modification: First Look At All The Options
in Contra Costa, Alameda County,
Tri-Valley and the Bay Area
With property values falling, jobs evaporating and lenders in disarray, mortgage default andproperty foreclosure have risen dramatically. In this environment, it is easy to feel that you have no options when debt and mortgage payments become overwhelming.
If you are facing foreclosure and cannot work out a deal or other alternative with the lender, Chapter 13 bankruptcy may be an option. By far, the most common reason debtors choose to declare chapter 13 is to save a home. With all the debt being cancelled in a Chapter 7, you may wonder why the foreclosure on your home won’t be cancelled too. The trouble is, when you bought your home you probably signed two documents –a promissory note to repay the mortgage loan, and a security agreement or lien to enforce performance on the promissory note.
Chapter 7 bankruptcy gets rid of your personal liability under the promissory note, but it doesn’t remove the lien. It gets rid of debt but not liens—so you still may have to give up the house under the lien since that’s what provided collateral for the loan.By contrast, the repayment plan under Chapter 13 bankruptcy stops foreclosure proceedings, and allows you to get back on track to paying off the home loan.
Chapter 13 bankruptcy lets you pay off the “arrearages” (late, unpaid payments) over the length of a repayment plan you propose. But you’ll need enough income to keep current on your mortgage payment at the same time you’re paying off the arrearage. Assuming you make all the required payments up to the end of the repayment plan, you’ll avoid foreclosure and keep your home.
Lien Stripping & 2nd and 3rd mortgage payments.
Chapter 13 may also help you eliminate the payments on your second or third mortgage. That’s because, if your first mortgage is secured by the entire value of your home (which is possible if the home has dropped in value), you may no longer have any equity with which to secure the later mortgages. That allows the Chapter 13 court to “strip off” the second and third mortgages and reclassify them as unsecured debt –which, under Chapter 13, takes last priority and often does not have to be paid back at all.
Other Options
Foreclosure won’t happen overnight. The foreclosure process typically starts after you fall behind on your payments for at least two months, and often three or four. That gives you time to try some alternate measures, such as loan forbearance, a short sale, loan modification, or a deed in lieu of foreclosure.
Short Sales
In today’s economy, declining home values, credit card debt, high adjustable rate mortgages (ARMs) and other financial challenges can lead to the need to sell a home to reduce housing expenses. The term “short sale” has become an increasingly familiar option as thousands of Americans have suffered from the effects of the economic housing and mortgage crisis. Short sales refer to home sales in which the fair market value of the home has diminished to the point where the proceeds from the sale of the home is less than the balance owed on the mortgage(s). You can avoid financial liability for the outstanding balance either in conjunction with, or apart from, bankruptcy proceedings. An experienced attorney can help you facilitate the short sale process with your lender, negotiate with your lender regarding partial and full debt forgiveness, draft hardship letters and other documents, and help you reach a binding, final solution.Loan Modifications
At the beginning of the mortgage crisis, many lenders were unwilling to modify loans or work with borrowers to find solutions. Now, some lenders are willing to work with borrowers, yet many obstacles remain. For instance, loan laws are changing constantly, making it difficult for borrowers to proceed with certainty. Also, each lender operates with a different internal policy regarding qualifications and conditions for loan modification approval. An experienced lawyer can help you analyze your loan situation and options.
Are you facing home foreclosure or a short sale? In many instances, home foreclosure is preventable. Do not allow your lender to foreclose on your home without first consulting with an experienced lawyer. At KORB/LAW, with our combined experience in Real Estate and Bankruptcy, we can help homeowners who are facing foreclosure. It is our goal to provide you with the legal counsel that will help you avoid foreclosure or that will offer you the best options for a brighter financial future. When you work with Richard Korb, you have the backing of years of experience and knowledge regarding California real estate and mortgage law, foreclosures and bankruptcy law.
For further information or for a free consultation to get help and discuss your options regarding foreclosure, short sales, loan modification or bankruptcy, we invite you to schedule a free confidential consultation with Richard Korb, by calling us at (510)524-0903, or filling out our contact form on our website.
