New Less Paperwork Mortgage Mod Program Starts July 1

Washington, DC – The Federal Housing Finance Agency (FHFA) today announced that Fannie Mae and Freddie Mac will offer a new, simplified loan modification initiative to minimize losses and to help troubled borrowers avoid foreclosure and stay in their homes.

Less Paperwork

Beginning July 1, servicers will be required to offer eligible borrowers who are at least 90 days delinquent on their mortgage an easy way to lower their monthly payments and modify their mortgage without requiring financial or hardship documentation.

For Fannie Mae or Freddie Mac Loans

The program is available to those homeowners with loans owned or guaranteed by Fannie Mae or Freddie Mac. Click on these links to see if your loan is owned or guaranteed by Fannie Mae or Freddie Mac.

Kansas Attorney Disbarred for Mortgage Modification Scam

The Kansas Supreme Court disbarred attorney Tracy D. Weaver of Overland Park today for running a mortgage modification scam.

“Respondent took money from thousands of distressed and vulnerable mortgagors; he gave most of that money to nonlawyers and did nothing on behalf of the mortgagors; and then respondent refused to refund the fees to the dissatisfied clients as his advertisement had promised. Disbarment is the appropriate sanction.”

Read the opinion of the Court in In the Matter of Tracy D. Weaver, Respondent, No. 107,313, July 13, 2012.

When Will My Underwater House Break Even?

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.

Bankruptcy Mortgage Project Website Launched by NCLC

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:

Source:  National Association of Consumer Bankruptcy Attorneys (NACBA)

Do I Have to Pay My Creditor’s Attorneys Fees?

In re Loy, Case No. 07-41333
December 2007, Judge Karlin

This case contains a discussion of the various issues that are to be considered by court and counsel in the context of a 2016 application by a creditor. This same issues present themselves in proofs of claim issues pertaining to attorney fees.

Digest by:  Jan Hamilton, Trustee

Cram Down Value Used for Means Test in Wichita Bankruptcies

In re Hoss, Case No. 08-10365
In re Arroyo, Case No. 07-12779
August 2008, Judge Nugent
In above median income (AMI) cases, debtors sought to deduct contract payments, rather than the stripped off/crammed down amounts. The Court sustained the Chapter 13 Trustee’s objection to confirmation. This is a good analysis of the status of the law, as of the date of the issuance of the opinion. Judge Nugent applied the reasoning of Lanning, but on the expense side, rather than the income side, of the equation. He also disagreed with Judge Karlin’s decision in Allen, which would have reached an opposite result.

Why Did They Stop Sending My Mortgage Statements After Bankruptcy?

Most home mortgage lenders who send monthly statements to their borrowers will stop sending statements once a bankruptcy is filed.   They will stop withdrawing automatic payments form your bank account.  They claim sending the statements and withdrawing your funds might be seen as a violation of the bankruptcy automatic stay on collection and they don’t want to run afoul of the bankruptcy law.

Some Courts such as the Kansas bankruptcy courts have local rules allowing mortgage statements to be sent to debtors who want to retain their properties and continue paying the mortgage payments.

If you have filed bankruptcy and wish to keep your real estate that has been pledged as collateral for a loan, you must pay your mortgage payments.  Not getting a statement does not get you off the hook – you don’t get a free house.  YOU MUST PAY YOUR MORTGAGE PAYMENTS TO KEEP YOUR PROPERTY OUT OF FORECLOSURE. [Read more…]

What Is Collateral in Bankruptcy?

Collateral: The property that is subject to a lien. A creditor with rights in collateral is a secured creditor and has additional protections in the Bankruptcy Code for the claim secured by collateral. The measure of the secured claim is the value of the collateral available to secure the claim: it is possible to have a lien on property that is subject to a senior lien or liens such that the security available to pay the claim is really without value to the junior creditor. The general rule with respect to liens is “First in time, first in right.” More on Secured Debts.

Kansas Home Foreclosures Up 40%

The home mortgage foreclosure crisis got dramatically worse in Kansas in July, August and September 2009. RealtyTrac, a California company that tracks foreclosures, reports 3,402 foreclosure filings in Kansas during the third quarter, an increase of almost 40%.

The Kansas foreclosure rate is below the national average of one in every 136 households. The foreclosure rate in Kansas is 31st in the county at one in every 358 households.

Truth About Mortgage Modification – Few Getting Help to Stop Foreclosure

Foreclosure Prevention Toolkit

Foreclosure Truth: Few Getting Help

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

[Read more…]

Foreclosure Prevention Toolkit

FDIC has published this online took kit to help homeowners prevent unnecessary foreclosures and stop foreclosure “rescue” scams that promise false hope to consumers at risk of losing their homes.

* Is Foreclosure Knocking at Your Door? This brochure explains how mortgage modification programs can help those at risk of foreclosure save their home.

* Beware of Foreclosure Rescue Scams. This brochure provides information on common scams, tips for detecting fraudulent deals, and resources for reporting criminal activity.

* The Your Own Home module of the FDIC’s Money Smart curriculum encourages homeowners to promptly seek help to avoid foreclosure and avoid scams.

Watch Out for Mortgage Modification Scams

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.

Can They Take My Home Away from Me if I File Bankruptcy in Kansas?

Kansans in financial distress often ask, “Will I will lose my home if I file bankruptcy?“  The simple answer is that most Kansans do not lose their home if they file for bankruptcy.  We are lucky in Kansas to have a homestead law that protects one acre of land in the city and 160 acres of land in the country from forced sale. There is no limit on the dollar value of the homestead.

The longer answer to the question, though, is that some Kansans filing for bankruptcy relief will lose their homesteads to mortgage foreclosure, but probably not to the bankruptcy. Occasionally, bankruptcy filers lose their homes in bankruptcy because their home does not qualify for Kansas homestead protection or other exception to the general rule.

Kansas homesteads are not exempt for debts [Read more…]

Bankruptcy: Mortgage Meltdown Melodrama at Attorney Seminar

Mortgage Meltdown Melodrama – Tied to the Railroad Track:  A Story of Villains, Heroes, and Happy Endings will be featured at the 20th annual conference of the Kansas Women Attorneys Association in Lindsborg in July.

Kansas Chief Bankruptcy Judge Robert Nugent, Chapter 13 Standing Bankruptcy Trustee Laurie Williams and Chapter 7 Interim Trustees Patricia Hamilton and Jill Olsen will present the continuing legal education in bankruptcy.

Pulitzer prize winning columnist Ellen Goodman of the Washington Post is the keynote address speaker.

More information about the Lindsborg conference may be found on the KWAA website.

What Interest Rate Does the Chapter 13 Bankruptcy Trustee Pay on Secured Claims?


by Jan Hamilton, Standing Chapter 13 Trustee

  • The Discount Rate (Interest Rate) for chapter 13 bankruptcy cases filed in Topeka, Kansas, on or after March 1, 2009, is 4.75%.

This rate will typically be changed no more than once a month, on the beginning of the

Beginning on July 1, 2004, we began using our version of the Till rate. [Till v SCS Credit Corporation, 541 U.S. 465, 124 S. Ct. 1951 (2004)]. We start with the Wall Street Journal Prime as reported by We will adjust prime for new cases filed once per month on the 1st day of each month. We then add 1.5% to that rate as the risk factor. This rate has never been challenged but certainly, in the appropriate case, the risk factor might be higher or lower.

This rate was approved by Judge Karlin in In re Lowder, Case No. 05-44802, in a decision entered on August 14, 2006. [Read more…]

Call Kansas Senators to Support Judicial Mortgage Modification in Bankruptcy

Judicial modification of residential mortgages in chapter 13 bankruptcy is part of H.R. 1106, which passed in the U.S. House of Representatives last week.  The bill now moves to the U.S. Senate and may come up for a vote this week.  We need your help to get the bill passed into law.  Call your Kansas senators and tell them you support judicial modification of home mortgages in bankruptcy.

The bill is designed to stop the home foreclosure crisis and prevent people from losing their homes to mortgage foreclosure.  Using judicial modification in chapter 13 bankruptcy, the loan could be restructured by writing the principal down to the value of the home, fixing the interest rate at a reduced rate and extending the loan to 40 years.  Judicial modification will not save all homes, but will help Kansans who have been victimized by predatory lending.  It will give individual homeowners the same benefits corporations have in chapter 11 bankruptcy. The law change is necessary because lenders are not making voluntary loan modifications.  People who don’t file bankruptcy will be helped by the bill also.

You can help pass this legislation by calling or faxing your Kansas Senators today.  Tell the person who answers you support judicial modification of home mortgages in bankruptcy.  Sen. Sam Brownback,  (202) 224-6521, fax (202) 228-1265, and Sen. Pat Roberts, (202) 224-4774, fax (202) 224-3514.

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