Home Saving Options

 So what is new on the housing market front?

                I came across the below mentioned article from a popular real estate publication. On the upside, the homeowner, short term, they get to stay in their home. The caution would be down the road, long term, when the homeowner has paid down the mortgage to create an equity blanket, but now will have to share that equity with the mortgage company.

                In my view, there could very well be a tax consequence that may occur for the forgiveness of debt. As a precautionary measure, get all the facts and have the loan modification agreement reviewed by a tax professional and our bankruptcy attorney at Steigerwalt Law Firm . 

Program Helps Troubled Borrowers Reduce Mortgage if They Share Upside with Investors

                Ocwen Financial Corporation is giving distressed home owners who owe more than their houses are worth an interesting option — the company will reduce your outstanding mortgage, but if your home increases in value by the time you sell or refinance it, you have to share that profit with your lender.

                In Ocwen’s Shared Appreciation Modification program, the principal of your loan is written down to 95% of the current market value of your home. The written-down portion is forgiven in one-third increments over the next three years, so long as you stay current on the modified mortgage. When you later sell or refinance your home, you have to share 25% of the appreciation with the investors that own the loan. You keep the other 75% of the gain.

                “Like all modifications, SAMs help home owners avoid foreclosure,” said Ocwen CEO Ronald Faris. “But they also restore equity. That’s a significant benefit to the customer and, we believe, the economy and housing market.”

                Ocwen data show an underwater home owner is one-and-a-half to two times more likely to default on his mortgage than one with at least some positive equity in his house.

                Ocwen launched the SAM program on a pilot basis in August, 2010. “The results of our initial pilot were extremely positive — 79% borrower acceptance rate with only 2.63% re-defaults,” Faris said.

                Ocwen has since ramped up the program and now has regulatory clearance to make it available to qualified customers in 33 states. “We think this program can make a real impact on curing the negative equity problem and are working hard to obtain approvals for SAMs in all jurisdictions,” Faris said.

Ocwen currently services $74 billion in residential mortgages.

Benefits of the Powerful Chapter 13 Bankruptcy

Have you ever wondered who benefits from filing a Chapter 13 Bankruptcy? A Chapter 13 Bankruptcy benefits individual and married consumers by addressing and resolving a number of the issues life throws their way. Throughout this blog, I will present three of the major benefits a Chapter 13 Bankruptcy has to offer.

The most obvious issue addressed in a Chapter 13 Bankruptcy is unsecured creditors. Throughout the duration of their payment plan, a Chapter 13 client is required to repay a portion of their unsecured debt. This portion can range from 0% to 100% of the client’s total liability and lasts for three to five years. The percentage of pay back and duration of plan are specific to each individual case, however, are generally determined using household size and gross annual income. While the benefits of a low percentage plan are obvious, you may wonder why a consumer would choose to file their case if a high percentage plan is proposed. Even if a consumer is required to repay 100% of their unsecured debts, they are able to do so at a 0% interest rate without the accrual of late fees and/or additional charges. The balances of all accounts are frozen upon filing and cannot increase. In addition, consumers are protected from summons, lawsuits, wage garnishments, levies, collection notices and, not to mention, harassing phone calls associated with creditors during the duration of their plan. Once a Chapter 13 plan is complete, the remaining balances on all unsecured accounts are discharged.

Many consumers also file for Chapter 13 Bankruptcy in an effort to address mortgage arrears. With the state of the economy today, many individuals have fallen behind on mortgage payments and found themselves drawing nearer to default or foreclosure. A Chapter 13 Bankruptcy can cure these arrears by putting the amount required to become current through the plan. Mortgage arrears must be paid in full during the first 36 months of the plan, and it is the client’s responsibility to remain current on both first and second mortgages moving forward. The same rule applies for back property taxes and back hoa dues. For those consumers who have fallen too far behind and are emotionally ready to part with their properties, a Chapter 13 Bankruptcy can surrender their mortgages in full and final. In other words, the consumer will not be held liable for any second or third mortgages post filing all while postponing the date of their Trustee Sale and allowing additional time to make a home elsewhere.

Lastly, a Chapter 13 Bankruptcy can benefit consumers with outstanding IRS or Franchise Tax liability. All liability will be paid in full at a 0% interest rate throughout the duration of the Chapter 13 plan. Upon filing, all garnishments, levies, installment payments, and notices with accruing interest and late fees will cease, and the balances owed will be addressed through the Bankruptcy. Moving forward post filing, it is the consumer’s responsibility to refrain from incurring future tax debt.

In conclusion, addressing unsecured debts, mortgage arrears, and tax liability are just three of the many benefits of the powerful Chapter 13 Bankruptcy. The San Diego bankruptcy attorneys at Steigerwalt Law Firm have extensive experience representing individuals through bankruptcy proceedings. We are committed to helping everyday people who have insurmountable credit card bills, medical bills, and other types of debt. Contact the bankruptcy attorneys at Steigerwalt Law Firm today for expert legal representation. Find out why we are one of the largest filers of consumer bankruptcy in San Diego.

Stay tuned for additional benefits and insight into a complex yet gainful Bankruptcy Chapter.