Washington Post recently reported that the Obama administration is not planning a large federally funded
program for relieving the troubled housing market. This news comes despite
the President's acknowledgement that the billions of dollars already
spent to bolster the weak housing market have not solved the problem.
The Post reports that the housing market is suffering from a glut of inventory.
cites David Stevens, head of the Mortgage Bankers Association, who says that it would take
more than nine months to sell all of the homes on the market at the current
sales rate. To add to this grim news, industry statistics suggest that
more than four million homeowners are having trouble paying their mortgages.
In direct opposition to promises made to the federal government, many banks
have been reluctant to write down the balances of underwater mortgages.
In some cases, banks have misled homeowners into spending their savings
with false promises of modifying their mortgages. So what can a homeowner
do to take control?
My office has been at the forefront of utilizing both Chapter 7 and Chapter
13 bankruptcy law to help Chula Vista and San Diego residents restore
the balance between the struggling homeowners and the bank. Filing a bankruptcy
will immediately stop the foreclosure process, and provides time to consider
available repayment options. A Chapter 13 bankruptcy case can force a
creditor to accept monthly payments for mortgage arrears (past due mortgage
payments) over a three to five year period. Additionally, an entirely
unsecured junior mortgage can be stripped away and included in a discharge
as an unsecured debt. To date my office has helped hundreds of homeowners
to completely eliminate their second mortgage.
For California debtors with underwater mortgages, the bankruptcy discharge
acts as a hammer during the negotiation process. If the lender refuses
to negotiate, the homeowner can walk away through a Chapter 7 or 13 bankruptcy
discharge with a fresh financial start. Bankruptcy debtors are also eligible
to participate in loan modification programs. Finally, a Chapter 7 case
provides an opportunity to negotiate a new contract between the lender
and borrower in the form of a reaffirmation agreement.
If you are experiencing trouble with your home mortgage, call the call the
Denton Law Group at (619) 458-3739 and review your options. The federal bankruptcy law
provides California homeowners with options to cure serious financial problems.