Bankruptcy clients often wonder if they should keep their home when the mortgage balance is more than they can sell the real estate for.  Their heart says keep the home, their head says don’t — once they have the facts.

Here is a simple calculator from my friend, Cathy Moran at the Consumer Ledger, to estimate when an underwater house will be worth what is now owed.  Shocking!

Filing bankruptcy is an option that allows you to get out from under the mortgage debt but only if you give up the house.  As Jay Fleischman tells us on Bankruptcy Law Network, you don’t get a free house when you file for bankruptcy. Jed Berliner (a KU graduate) reminds us bankruptcy is not the end of the story — it is not so simple to give back the house to the mortgage company.

The National Consumer Law Center (NCLC) has created an online Bankruptcy Mortgage Project Website for courts, trustees, attorneys, mortgage servicers, academics, and consumers in the bankruptcy community. It organizes and provides access to more than 500 local rules, forms, general orders, and court opinions addressing a variety of mortgage issues in consumer bankruptcy cases across the United States. This free “one-stop shop” collection can be a resource for those interested in adopting new programs and local rules to assist consumers, their attorneys and mortgage creditors in addressing mortgage claims and seeking alternatives to foreclosure. Many of the website’s documents are not easily accessible using traditional legal research tools.  The website was funded in part by a grant from the Endowment for Education of the National Conference of Bankruptcy Judges.

 The website is organized by topic: Loss Mitigation and Mediation, Cure Plan Requirements, Stay Relief Requirements, Lien Stripping, and Chapter 13 Plans. It is searchable by state, subject, court location (district and circuit), or document type. Visitors can also click on a map to pull up all relevant information for a particular state. Visitors can view and download all referenced documents. The URL is: http://www.bankruptcymortgageproject.org.

Source:  National Association of Consumer Bankruptcy Attorneys (NACBA)

As of 9/1/2009, only 1,711 permanent loan modifications

1.26% trial modifications made permanent

1 in 8 mortgages in default or foreclosure

foreclosure delayed, not avoided

10-12 million foreclosures predicted

50% mortgages will be underwater if problem not solved

Continue Reading

Watch out for all the mortgage modification scams out there preying on good people who desperately want to keep their home mortgage out of foreclosure. Many of the mortgage brokers who formerly got people into subprime loans are now calling themselves mortgage modification agents.

“You should not have to pay someone to help you with mortgage modification”, Jackie Blaesi-Freed of Topeka’s Housing and Credit Counseling, Inc., told the Topeka Capital-Journal last week. Help is available through your lender, the government’s Making Home Affordable program or a U.S. Department of Housing and Urban Development (HUD)-approved housing counselor such as HCCI, she said.

An excellent source of reliable information about mortgage loan modification programs is the non-profit National Consumer Law Center website.