Is Chapter 13 an Appropriate Remedy in the Face of Foreclosure?

My clients quite often asked me one very important question whether they should continue to seek mortgage modification, or go ahead and file a Chapter 13 to stop a foreclosure. It is of course a very pertinent question. There is a very slow pace of lenders’ response to modification applications on one pretext or the other. Let me analyze it with more emphasis this time.

1. First of all, You need to know what kind of modification you are applying for. Again, your modification does not stop the foreclosure process. In fact, both are dealt by two different sections of the same bank and have virtually no liasion with each other. If that is the case, you may have a very limited time in which to deal with a foreclosure if you are turned down for a modification. Other programs, like the HAMP program, require that lenders stop foreclosures while they process modifications. It is important to know whether your lender is proceeding with foreclosure in parallel with a modification application, or suspending foreclosure. If the latter is the case, you will have more time to respond, but you still may have to respond quickly.

2. It is has to be determined right away by your lender and you should know as well whether you are likely to qualify for modification under the application guidelines. For example, the HAMP program requires that you show that you have sufficient income to make the reduced payments in order to get approval. If you just lost your job, and you have no income, you aren’t going to qualify for that particular program. If you can predict with a fair amount of accuracy whether you will be accepted or rejected for modification, you can plan accordingly.

3. Please read this blog quite often as I update this continuously even on holidays and please educate yourself about the foreclosure process where you live, and where your case is in that process. I have a tremendous amount of information which is free of course and I never hide anything from Nevada residents. I like them to be fairly educated and make their own smart decisions in this regard. Please do not wait until the last minute to talk to a knowledgeable foreclosure defense attorney in this regard. Time, is of course, the essence in these matters. There can also be differences in what a lender considers to be “in foreclosure” and what a lawyer would describe as “in foreclosure.” The best way to determine what the process is and where you are in it is to consult with a seasoned attorney who handles such matters in your jurisdiction. Your options are very limited if the home is foreclosed.

4. You may want to consider whether you have defenses to foreclosure. First of all, most modification agreements that I have seen contain some language that says that you are waiving any defenses to the mortgage. Know what you are giving up before you sign such a release. Further, you may also want to consider defending a foreclosure action as a third alternative to modification programs or Chapter 13. Many attorneys who handle such matters report that the most meaningful modifications that they see are those that are the result of settlement negotiations where defenses to foreclosure have been raised.

5. There is nothing wrong with Chapter 13 filing when nothing else works or if your lender has become very stubborn. Deal with him in any way possible and stop the foreclosure on your home. This is your fortress and if it is foreclosed, next home purchase is too far away. Fight back, and don’t procastinate.

Who Owns Your Loan? Freddie, Fannie or Chinese?

As a Nevada foreclosure defense attorney, one thing I’ve learned is that mortgage servicers don’t want homeowners to know who owns their loan. There skills is perfect in hiding as much information as possible from you. Most of the time, in all foreclosure complaints I see, the servicer is the plaintiff and they would do their best to reveal the identity of their servicers or owners.

Well, we can summarize four type of owners of mortgage notes:
-the originator (the rarest of cases),
-a securitized trust (known as a REMIC),
-Fannie Mae (Federal National Mortgage Association)
-or Freddie Mac (Federal Home Loan Mortgage Corporation).

If you suspect, or know, that the plaintiff is merely the servicer of your loan, you need to determine whether Fannie, Freddie or a REMIC is the owner. To determine whether Fannie or Freddie own your loan, just go to the Fannie Mae lookup tool and the Freddie Mac lookup tool. If neither Fannie nor Freddie claim ownership, it is nearly certain that a REMIC is the purported owner of the note and mortgage.
Here is the tool:
http://loanlookup.fanniemae.com/loanlookup/

To look up if Fannie May is your lender, here is the tool to find out:
https://ww3.freddiemac.com/corporate/

Why do you want to know who allegedly owns your note and mortgage? Well, for one, Fannie and Freddie are essentially quasi-government entities now, and servicers are required to comply with the default servicing provisions established by these entities. Secondly, if the purported owner is a REMIC, there is a deadline by which your loan should have been completely transferred from the originator to the REMIC, and chances are that didn’t happen.

If you wish to fight your foreclosure, you should make an appointment with a skilled foreclosure defense attorney, and if the plaintiff seems to be a servicer, you should come to the consultation armed with the results of your preliminary research using the Fannie and Freddie tools.

What questions can be asked in 341 meetings?

Required Statements/Questions

1. State your name and current address for the record.
2. Please provide your picture ID and Social Security card for review.
a.If the documents are in agreement with the section 341(a) meeting notice, a suggested statement for the record is:

“I have viewed the original state of [rule;3] drivers license (or other type of original photo ID) and original Social Security card (or other original document used for proof) and they match the name and social security number on the section 341(a) meeting notice.”

b.If the documents are not in agreement with the section 341(a) meeting notice, a suggested statement for the record is:

“I have viewed the original Social Security card (or other original document used for proof) and the number does not match the number on the section 341(a) meeting notice. I have instructed the debtor (or debtor’s counsel) to submit to the court an amended verified statement by [date], with notice of the correct number to all creditors, the United States Trustee, and the trustee, and to file with the court a redacted copy of the notice, showing only the last four digits of the Social Security Number, and a certificate of service.”

c.When the documents do not match the petition, the trustee shall attempt to ascertain why, and shall report the matter to the United States trustee.

d.If the debtor did not bring proof of identity and Social Security Number, the trustee shall determine why.

3. Did you sign the petition, schedules, statements, and related documents and is the signature your own? Did you read the petition, schedules, statements, and related documents before you signed them?
4. Are you personally familiar with the information contained in the petition, schedules, statements and related documents? To the best of your knowledge, is the information contained in the petition, schedules, statements, and related documents true and correct? Are there any errors or omissions to bring to my, or the court’s, attention at this time?
5. Are all of your assets identified on the schedules? Have you listed all of your creditors on the schedules?
6. Have you previously filed bankruptcy? (If so, the trustee must obtain the case number and the discharge information to determine the debtor(s)’ discharge eligibility.)
7. What is the address of your current employer?
8. Is the copy of the tax return you provided a true copy of the most recent tax return you filed?
9. Do you have a domestic support obligation? To whom? Please provide to me the claimant’s address and telephone number, but do not state it on the record.
10. Have you read the Bankruptcy Information Sheet provided by the United States Trustee?

Sample General Questions

1. Do you own or have any interest whatsoever in any real estate?

If owned: When did you purchase the property? How much did the property cost? What are the mortgages encumbering it? What do you estimate the present value of the property to be? Is that the whole value or your share? How did you arrive at that value?

If renting: Have you ever owned the property in which you live and/or is its owner in any way related to you?

2. Have you made any transfers of any property or given any property away within the last one year period (or such longer period as applicable under state law)?
If yes: What did you transfer? To whom was it transferred? What did you receive in exchange? What did you do with the funds?
3. Does anyone hold property belonging to you?
If yes: Who holds the property and what is it? What is its value?
4. Do you have a claim against anyone or any business? If there are large medical debts, are the medical bills from injury? Are you the plaintiff in any lawsuit? What is the status of each case and who is representing you?
5. Are you entitled to life insurance proceeds or an inheritance as a result of someone’s death?
If yes: Please explain the details. If you become a beneficiary of anyone’s estate within six months of the date your bankruptcy petition was filed, the trustee must be advised within fourteen days through your counsel of the nature and extent of the property you will receive. FRBP 1007(h).
6. Does anyone owe you money?
If yes: Is the money collectible? Why haven’t you collected it? Who owes the money and where are they?
7. Have you made any large payments, over $600, to anyone in the past year?
8. Were federal income tax returns filed on a timely basis? When was the last return filed? Do you have copies of the federal income tax returns? At the time of the filing of your petition, were you entitled to a tax refund from the federal or state government?
If yes: Inquire as to amounts.
9. Do you have a bank account, either checking or savings?
If yes: In what banks and what were the balances as of the date you filed your petition?
10. When you filed your petition, did you have:
a. Any cash on hand?
b. Any U.S. Savings Bonds?
c. Any other stocks or bonds?
d. Any Certificates of Deposit?
e. A safe deposit box in your name or in anyone else’s name?
11. Do you own an automobile?
If yes: What is the year, make, and value? Do you owe any money on it? Is it insured?
12. Are you the owner of any cash value life insurance policies?
If yes: State the name of the company, face amount of the policy, cash surrender value, if any, and the beneficiaries.
13. Do you have any winning lottery tickets?
14. Do you anticipate that you might realize any property, cash or otherwise, as a result of a divorce or separation proceeding?
15. Regarding any consumer debts secured by your property, have you filed the required Statement of Intention with respect to the exemption, retention, or surrender of that secured property? Please provide a copy of the statement to the trustee. Have you performed that intention?
16. Have you been engaged in any business during the last six years?
If yes: Where and when? What happened to the assets of the business?

In cases in which debtors are engaged in business, the following questions should be considered:

1.Who was responsible for maintaining financial records?
2.Which of the following records were maintained?
a. Cash receipts journal
b. Cash disbursements journal
c. General journal
d. Accounts receivable ledger
e. Accounts payable ledger
f. Payroll ledger
g. Fixed asset ledger
h. Inventory ledger
i. General ledger
j. Balance sheet, income statement, and cash flow statements
3.Where are each of the foregoing records now located?
4.Who was responsible for preparing financial statements?
5.How often were financial statements prepared?
6.For what periods are financial statements available?
7.Where are such financial statements now located?
8.Was the business on a calendar year or a fiscal year?
9.Were federal income tax returns filed on a timely basis? When was the last return filed?
10.Do you have copies of the federal income tax returns? Who does have the copies?
11.What outside accountants were employed within the last three years?
12.Do you have copies of the reports of such accountants? Who does have copies?
13.What bank accounts were maintained within the last three years?
14.Where are the bank statements and canceled checks now located?
15.What insurance policies were in effect within the last year? What kind, and why?
16.From whom can copies of such insurance policies be obtained?
17.If the business is incorporated, where are the corporate minutes?
18.Is the debtor owed any outstanding accounts receivable? From whom? Are they collectible?
19.Is there any inventory, property, or equipment remaining?