New Dollar Amounts in Bankruptcy

For bankruptcy cases filed after April 1, 2010, new dollar amounts will apply. The list of changes can be viewed here: http://www.bkmass.com/misc/output.pdf. The most notable increases are the Chapter 13 debt limits, the dollar amounts of the federal exemptions, and the homestead cap (increased to $146,450).

New Rules for Mortgage Modifications in Massachusetts Bankruptcy

Today, the Massachusetts Bankruptcy Court issued an emergency standing order rendering void provisions in proposed loan modifications that state that the automatic stay will be lifted or waived upon default of the debtor. The order can be viewed here: http://www.mab.uscourts.gov/pdfdocuments/so10_02.pdf. This is a good rule. Debtors are often desperate for loan modifications in bankruptcy and will agree to anything that lowers their loan payment. The new rule prevents them from bargaining away the automatic stay if they default on their loan modification payments.

List of HAMP Mortgage Servicers

Wondering if your mortgage loan servicer is participating in the HAMP program? A list can be found here:
http://www.financialstability.gov/impact/contracts_list.htm

Home Affordable Modification Program: Introduction

The Home Affordable Modification Program ("HAMP") is a 2009 creation of the Obama Administration. The program provides for government payments to participating mortgage loan servicers in exchange for reductions in mortgage payments for eligible borrowers. The point is to reduce mortgage payments to a 31 percent debt-to-income ratio. Participating servicers are required check all mortgages that are more than 60 past due and loans for borrowers who ask for a modification and can represent that they face an imminent risk of default. Once a borrower is introduced into the program, any pending foreclosure must stop. A three-month trial period with a new, lower loan payment begins, often based on only a verbal commitment (although this will require more formal documentation starting in mid 2010). During the trial period, income and other documentation are verified. After the borrower makes three monthly payments, the trial loan is moved to permanent status.
A fact page can be found here:
https://www.hmpadmin.com/portal/programs/hamp.html

How Can I Afford Bankruptcy if I'm Broke?

Good question, one posed by many in rough financial straights. The quick answer is, you can't, that is if you're truly broke. Bankruptcy is for people seeking to bring some sanity and solvency to their financial affairs, not for those just struggling to survive. So, food, shelter, that sort of thing, must always come first. As the saying goes, bankruptcy is not for paupers. However, if things are tough, but not truly dire (which is usually the case), and would seem to improve without the weight of debt, phone calls, lawsuits, etc., then this is how people tend to pay the couple thousand dollars a typical bankruptcy case costs (sometimes more, sometimes less). People arrange payment plans to get a case filed. They often stop making certain debt payments (like credit cards) in the interim to help raise the money. This is quite a popular strategy and works just fine in most circumstances. However, there are times when a wage garnishment order is about to enter or some other shoe is about to drop, and this just won't work. Those circumstances are difficult, but even in those cases solutions can sometimes be found if the money is not available from a family member, friend, or retirement fund. Moreover, it tends to be quite rare that people wait until the last minute like that to explore their options. So, in the normal case, being on a payment plan for two to three months before filing works quite well. You are able to have a lawyer to go to with questions and help with the pre-filing heat (usually phone calls from debt collectors) and have the guidance to set up a case correctly.
This is just a common way that people scrape together the money to file. There are other ways, like having some savings or a family member to help. I find that this is a popular question and this quick blog post reveals the usual answer.

Massachusetts Mortgage Foreclosure Backlog

To foreclose on a mortgage in Massachusetts it is standard practice for the foreclosing mortgagee to file an action in the Land Court for a declaration that the homeowner isn't in the active duty military. This is done in order for a mortgagee to comply with its duty to get a fair sale price at the foreclosure auction. Due to certain protections under the Servicemembers Civil Relief Act (SCRA), a buyer can't be sure that the sale won't be invalidated due to the military service status of the defaulting homeowner, and therefore might pay less for the house, that is unless there is an order of a court or some other conclusive proof that the homeowner isn't under the protection of the SCRA. The bottom line: in Massachusetts, these Land Court SCRA lawsuits are standard before any foreclosure takes place.
Today I spoke with a contact at the Massachusetts Land Court and was informed that so-called "return dates" were about four and a half months out in cases filed now. What that means is that once a homeowner is served with a SCRA lawsuit, they will now still usually have four to five months before a foreclosure auction. That's a significant backlog when contrasted against the six weeks turn around time from filing to return date that used to be the norm in SCRA actions.

Massachusetts Land Court Foreclosure Case Affirmed

Judge Long of the Massachusetts Land Court recently reaffirmed his groundbreaking May decision invalidating a foreclosure sale due to a lack of properly-recorded assignment. The assignment issue came down to this. Due to the bundling of mortgages for sale and trading on Wall Street, mortgages have been transfered more and more frequently over the past few years. Under Massachusetts mortgage law, these transfers have to be documented at the registry of deeds, and only the record owner of the mortgage has the right to foreclose. Before Judge Long's ruling the practice had been to backdate the various mortgage assignments after a foreclosure sale to clean up the chain of title. Judge Long held that this was impermissible and that the assignments had be recorded on the date of the foreclosure.
What does all this mean for consumers here in Massachusetts? First, the validity of many mortgage foreclosures over the past few years have been put into doubt. This has the potential to create serious problems for many parties, including the people who purchased the foreclosed properties. For example, it might be possible to challenge the validity of a foreclosure sale with a backdated assignment and seek to cure the mortgage arrears in a Chapter 13 bankruptcy. However, this would be a very challenging case.
This decision will affect consumers who have defaulted on their mortgages in another way. It will create delay. Mortgage lenders will have to obtain and record the evidence of the assignments leading up to the foreclosing lender. This will take time and effort and will inevitably create more delay in the already bogged-down foreclosure process here in Massachusetts.