• New Study Says Equipping Mortgage Servicers Better Could Have Prevented 800K Foreclosures

    We spent much of last week discussing options for Illinois homeowners in need of foreclosure help , and on September 20, 2012, the Chicago Tribune reported that 800,000 foreclosures “could have been prevented if large mortgage servicers had been better equipped to deal with the crush of troubled homeowners who needed help.” These were the findings of the Treasury Department’s latest report on the $75 billion Home Affordable Modification Program (HAMP). The study found “more than 1 million temporary and permanent modifications have failed since the administration kicked off its program shortly after President Barack Obama took office in 2009,” according to the Tribune.

    However, the news program “Dan Rather Reports” examined the effects HAMP was having in the December 2010 episode above, entitled “Home Loans From Hell.” Rather began the program by noting that 14 percent of homeowners in the country were delinquent on their mortgages at the time the show aired, and describing the robo-signing scandal as “just the tip of the iceberg.”

    “A little-reported and little-understood aspect to the foreclosure crisis … is that foreclosure is in fact a lucrative profit center for the servicers who are making millions off a laundry list of fees,” Rather said. “The banks who service home loans dispute this, but we’ve been talking to homeowners across the country who say their servicers pushed them into foreclosure instead of working with them to modify their loans.”

    The Tribune reported that researchers in the Treasury Department’s latest report found “great inconsistency in how large servicers responded to the program.” Some large servicers offered half as many loan modifications as other companies while other “more successful servicers” that renegotiated mortgages had programs and trained staff in place long before HAMP began, according to the Tribune.

    “This industry is mainly about accepting checks,” University of Chicago Booth School of Business assistant professor Amit Seru told the Tribune. “One wasn’t expected to be dealing with so many distressed borrowers.”

    If you are facing foreclosure, you should know that filing Chapter 7 or Chapter 13 bankruptcy can offer you real relief that could help you discharge much of your unsecured debt and may allow you to get current on your mortgage. Our Chicago bankruptcy lawyers can determine whether Chapter 7 or Chapter 13 is the better option for you and your family when you complete the form on this page or contact our firm at (866) 930-7482.

    Benjamin Brand Services – Chicago bankruptcy lawyers

  • Homeowners Facing Foreclosure Should Know Three Benefits to Chapter 7

    On Monday, we discussed Illinois having the highest foreclosure rate in the nation in August and talked about some of the benefits that a Chapter 13 bankruptcy offers for homeowners needing foreclosure help . As we said on Monday, Chapter 13 certainly has its perks for individuals who have a reliable source of income and are determined to save their homes, but what about people who do not have the necessary income for a repayment plan or understand that they can no longer afford their homes?

    Chapter 7 bankruptcy is another option for these homeowners. While a Chapter 7 filing will not save an individual’s house, it does allow people to:

    • Live rent-free for a few months – While most Chapter 7 cases do not take more than four months to complete, individuals filing Chapter 7 can stay in their homes during this time. This gives people filing Chapter 7 the time they need to find somewhere else to live, but it also lets them save the money they may need for the transition. This aspect is especially important nowadays because last month, Crain’s Chicago Business reported that average apartment rents per square foot both downtown and in the suburbs had hit all-time highs.
    • Cancel most or all of their debt – Chapter 7 wipes out unsecured debts, such as credit card bills and medical bills. While it cannot erase certain debts such as child support or student loans, Chapter 7 can be beneficial for homeowners facing foreclosure because it eliminates their responsiblity for the deficiency balance (the difference between what the homeowner owed and what the house sold for at foreclosure).
    • Eliminate tax liability – The Internal Revenue Service (IRS) cannot tax an individual on a discharged deficiency balance. Filing Chapter 7 exempts that individual from tax liability for the discharge of his or her home loan, and we will further discuss tax issues facing struggling homeowners in our next blog post.

    Again, Chapter 7 bankruptcy has a lot of upsides for individuals who are ready to give up their homes because of foreclosures. You need to pass the bankruptcy means test before you can file Chapter 7, and our Chicago bankruptcy lawyers can help you get started when you complete the form on this page or contact our firm at (866) 930-7482.

    Benjamin Brand Services – Chicago bankruptcy lawyers