Many people struggling to pay the mortgages are motivated to consider a short sale. I am often told that it is considered because of their concern that if a short sale is not done, and the property is allowed to foreclosure, they will never be able to own a home again. Today, I want to tackle the perception of that…and present a bit of reality, from my point of view.
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Specializing in Bankruptcy and Restructuring.
No one ever plans on being weighed down by debt and no one ever lends money without an expectation of being repaid. Yet sometimes, life does not go the way we planned or hoped.
If you and your family are drowning in debt and do not know where to turn, if you are concerned about losing your home to foreclosure, if your business has declined and you are concerned about the future, or if you are a creditor who finds themselves in a bankruptcy case, you have rights and options.
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Mcleod Law Blog
The Short Sale Option
February 7th, 2010
A short sale is when a homeowner sells property, but for less than the amount due on the outstanding mortgage. The lender agrees to release/discharge the mortgage on the property to allow the property to change hands to a new owner. Now, there seems to be a belief out there that short-selling a property is better than allowing it to slip into foreclosure. I’m not going to agree or disagree on this – because what’s good for some people, is just not good for others. But since there is a resurgence of media reports that former homeowners are “surprised” to learn they are still responsible for their debts to the bank even after a foreclosure, I thought I would revisit the subject and list out some pros and cons as well as perceptions and realities. Read the rest of this entry »
“I never thought I would be sitting here talking to you.”
February 2nd, 2010
I hear it from clients who meet with me for the first time, who have already had a chance to talk to me on the phone, and have already taken the time to start pulling together some important information and documents I need to assess their situation. And usually, I see a look in their eye. Something that reminds me that even though I am a fairly nice guy, some people find it painful to have to sit across the table from me. Read the rest of this entry »
Predatory Lending: Beyond the Buzzwords
January 31st, 2010
A few years ago, someone wrote something somewhere (it wasn’t here – I swear) that if you were the victim of predatory lending, you could get a free house. Actually, I recall someone at a legal seminar (not here in Massachusetts – I swear) suggesting that it could be done… which sent some colleagues of mine into a tizzy thinking they could easily get free houses for people who were preyed upon by bad bankers. If that could be done with such ease, then there would be firms not only doing this work, but we’d be reading billboards declaring their success rates on the sides of highways.
Saving the Home: Thinking Beyond “Delay and Pray”
January 30th, 2010
The foreclosure numbers don’t lie. According to ForeclosuresMass.com, a total of 478 new foreclosures were filed this week (ending January 29, 2010). Approximately 56 homes slipped into foreclosure every day for the last 60 days. The economy is far from a turn around.
HAMP is not really working – at least in not any meaningful way. Homeowners can expect a “delay and pray” modification or an “extend and pretend.” Taking arrears and putting on the tail end of the note, “delay” (which is a nice way of saying a “balloon” payment), means that for it to be paid off, the value of the property will have to increase (hence, the term “pray”). What seems more accurate is “extend and pretend.” You can extend the terms, such as turning a 30 year note into a 40 year note. Of course, the “pretend” comes into play when you want to “pretend” you want to live in the property, “pretend” that the economy and the housing market will turn around so that you still won’t have to come to the closing table with a checkbook in hand.
HAMP is not the only option available to homeowners trying to avoid foreclosure. There’s HARP, there are short sales and there is the possibility of keeping the home under bankruptcy court protection (either in chapter 13 or 11). While bankruptcy should be one of the last options, I am always surprised at people who quickly dismiss it altogether – especially when it’s the best option available.
Consider this scenario:
State of the Union Decompression: The Whole Mortgage Modification Thing
January 28th, 2010
After taking many months learning and understanding HAMP and how it works (and in many cases doesn’t), and after sitting through (and tweeting through) the President’s State of the Union Speech, I am admittedly still mulling it all over. Some tout the speech as the longest in President Obama’s career. Others are debating the propriety of the Nation’s Chief Executive chastising the Supreme Court in the House Chamber. Yet despite its length, its controversies and its platitudes, the word “foreclosure” was not used once. And that should be incredibly disheartening for any homeowner concerned about losing their home. As an insolvency professional who works with homeowners in financial crisis, it was for me. Read the rest of this entry »
The State of Our Union
January 27th, 2010
Tonight, like many Americans, I’m going to be watching the State of the Union speech. While I have many concerns as a citizen, as a bankruptcy and insolvency professional my concerns continue to be on the economy, and the government’s efforts in moving the country through the current economic mess it is in.
I’m not sensing any real effort from the White House, Capital Hill or even Beacon Hill in giving any meaningful solutions to distressed homeowners. Perhaps better said, all I am hearing is double-speak and mish-mash emanating from our elected officials who talk about programs like HAMP, while at the same time, skirt around the statistics that suggest that the program is an abysmal failure. Remember, Obama says HAMP is for “responsible homeowners” but we don’t really know how the term “responsible homeowner” is actually defined. And in no uncertain terms, what I am hearing from my clients, and what I am hearing from my colleagues all fuels my sense that things are not getting better, and Washington appears impotent to do anything about it.
Since tonight is the State of the Union speech, I’m going to hold off – for now – from telling my readers what my view of where things are and where I think things may be going. I do have some idea of what I think we need to do to make things better. And in the coming days, I’ll be sharing what I and McLeod Law Offices is going to do for our clients…and why. But first, tonight I will listen to what our President has to say.
And I’ll also be tweeting – so be sure and follow me on Twitter.
Facing Bankruptcy with Nagging Regret
January 20th, 2010
I recently met with a bankruptcy client who had a lot of credit card debt, almost no equity in their home, and were unable to meet their obligations.
After getting some information, and assessing their situation, I learned that they had lived in their home for almost 25 years, but in the last 12 years had refinanced their home 3 times. The client told me that in no uncertain terms he would not be contemplating bankruptcy if he was able to refinance their home to pay the credit card debt.
Clearly, that wasn’t going to happen.
But then I started thinking, how does someone who has lived in a home for 25 years in the same home have almost no equity to show for it?
Those People
I was recently chatting with an old friend who was sharing with me her recent trials and tribulations. She is on unemployment – has been for a while - and trying to sell her house. Her house is not priced to sell – but priced in line with what other houses in her neighborhood are going for… and are also not selling. She has also made some regrettable financial and life decisions that have lead her to the place she now finds herself in. It’s not a judgment – it’s more of an observation. Some of what she’s experiencing was avoidable. Some of it – like the unemployment, wasn’t. She asked me for my advice.
As I started offering some suggestions (among them, dropping the price on the house), I could tell she was getting upset. She then took a deep breath and said “you know, I’m not like those people you represent. Those people in bankruptcy.”
There was this period of awkward silence – I don’t think it was particularly long – but it was long enough for me to think something more serious than “really, Blanche. Really?” but not as dramatic as “oh. my. gawd!”‘
“Those people,” I said – and I could feel my eyes widening.
Being good friends, we could tell that we both hit a nerve in each other and we silently retreated to our respective corners. I did not have it in me to say what I wanted to say then.
I do now.
Read the rest of this entry »
Tags: Commentary, debt, Economy, Homes
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