The good news first:  The bankruptcy court in New Jersey has a loss mitigation program that helps Debtors in bankruptcy cases get swift answers on whether they are eligible for a mortgage modification and hopefully prevents the three year long document losing circus that many of my clients have been dealing with by trying to get a modification on their own.

So how does loss mitigation work in the bankruptcy court?

1.  My office will file a Chapter 7 or a  Chapter 13 with a plan indicating you wish to request loss mitigation through the court.

2.  We will prepare and file a notice of request loss mitigation for your case.  This has to be done quickly as it is due before you have your 341 hearing.

3.  Once the order allowing loss mitigation is approved the mortgage company’s attorney will reach out to my office with a packet that will be submitted through a loss mitigation portal online with a direct contact person.  This presumably should help with the lost paperwork problem. (We hope.)

4.  Once we have submitted all the initially requested documentation the mortgage company will more likely than not come back with more documentation requests.  This is where it is in your best interests to get me the paperwork ASAP!  I usually get nastygrams from the other side if it takes more than 48 hours to get them documentation they request.  The faster we do this, the faster we get a decision.

5.  Once the paperwork is all submitted, the mortgage company sends it to an underwriter and makes a decision that is reported back to me.  If it is the decision you were hoping for my office will file a motion to allow a loan modification, in a 13 we will modify your plan to reflect the modification, and you move on with your life in your home!

Things to bear in mind during this process:

 – The above process is when things go smoothly.

This is not always the case.  Sometimes, getting a modification can be difficult.  Paperwork the mortgage company requests can be hard to find or has to be produced by our office.  Your case will not be as simple as just handing over your tax returns.

There is a lot of back and forth between my office and the mortgage company representative.  It is VERY VERY important that if you are in this process that you respond quickly to my requests for documentation.

 – Please keep your expectations realistic and don’t lose perspective.  

Principal reduction modifications are INCREDIBLY rare.  I have seen three in my entire career.  A lot of bankruptcy attorneys joke that having a client get offered a principal reduction modification is like seeing Bigfoot.  There are a few fuzzy videos out there but most of us have only ever caught him out of the corner of our eye once or twice.

If you are only a few months behind, your payment may go down but if you are more than 100K behind on your mortgage and your mortgage company agrees to modify your mortgage, your monthly payment MAY go up and not down.  This is because your missed payments are capitalized into the new loan and you will be charged interest on this amount.  It is important to remember that your mortgage will be current when this is all done so try to focus on the fact that you are keeping your home and not on the payment.

The Good News

The silver lining of all of this is that the New Jersey loss mitigation program has seen great success.  I have been able to get answers for clients on modifications within two months of filing for them. TWO MONTHS.  That is light years faster than outside of the program.  This is a great program and absolutely worth the time of any client trying to save their home.

Interested in how we can help you with your mortgage modification?  Give us a call at 732-302-9600 or fill out our online consultation form and we will call you!


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Have you received a letter from your mortgage company stating that you are eligible for a mortgage modification recently?  Does it list shockingly specific payment terms and include coupons?

A new streamlined mortgage modification process may explain the mail you have been getting from your mortgage company about a possible modification.

The new streamlined process that was started back in April is designed to shift the burden from the borrower to request a mortgage modification and provide the proper paperwork over to the servicer to offer a mortgage modification and work with the borrower to make it happen.

Eligibility for the program is as follows:

1.  You must be between 90 days and 24 months behind on your mortgage;

2.  This will only apply to a first mortgage that is worth more than 80% of your home and has been modified less than twice;

3.  The loan must be at least 12 months old;

4.  The loan must be a Fannie or Freddie Loan.

These modifications, when granted, would reduce the payments on the home an average of 30% but WILL NOT result in principal reductions.  Ever.

Our office’s experience with the program so far can be best described as sub-par.  I had a client send the payments in and deliver all of the required documentation and than some and was denied for failure to submit all of the documentation.

It is just like every other mortgage modification program out there, a complete run around that rarely resulted in a modification for a qualified buyer.

The New Jersey bankruptcy court now offers an excellent mortgage modification program within a bankruptcy proceeding.  This offers struggling homeowners a direct link to a modification representative, contempt of court proceedings in the event the mortgage co does not respond in a timely fashion, and stays any foreclosure proceedings so that all parties are working on the same goal at the same time, instead of the mortgage company working on a foreclosure and a modification at the same time (which all of you in loan mod programs should know…if you are behind they are working on a foreclosure.  I don’t care if they tell you they aren’t…rest assured they are).

Interested in talking to us about how to stop the foreclosure on your home?  Give us a call at 732-302-9600 or fill out our online consultation form and we will call you.

The Mortgage Forgiveness Debt Relief Act of 2007 is set to expire December 31, 2012.  As a result, people who lose their homes to foreclosure will be required to pay taxes on any debt that the bank or mortgage company does not recover after the sale of their foreclosed home.  The same applies to homeowners whose loan principle was reduced by a mortgage modification.  The Internal Revenue Service considers forgiven debt to be taxable income.

The 2007 Mortgage Forgiveness Act was a safe harbor that excepted forgiven debt on a principle residence from being considered taxable income, but that law expires December 31, 2012.   There are other exceptions to the rule that forgiven debt is taxable income.  Please see my article,  Tax Implications of Forgiven Debt and How Bankruptcy Can Help.

It seems ridiculous to penalize a homeowner who could not make her mortgage payments with a substantial tax debt.  Where a homeowner has made every mortgage payment owed, but the housing market reduced the value of the home and put the homeowner “under water,” the homeowner forced to sell “short” would effectively be taxed on money already lost!

Others see the exception offered by the Act as a reward for bad behavior, allowing homeowners off easy when they bit off more than they could chew.

A bill to extend the Act is in Senate but as of now has not been passed.  There is wide ranging opinions on if and when an extension may occur.


Interested in more information on how a bankruptcy can help with your foreclosure problem?  Give us a call at 732-302-9600 or fill out our online consultation form and we will call you.

If you have thought to yourself “Why I am a struggling to pay this mortgage when I owe double what my home is worth?” than you are not alone.

Many homeowners  have watched the value of their home plummet, while they struggle with high mortgage payments and banks that refuse to to modify the mortgage or work with them when they are behind.  At some point some of these homeowners decide it is not worth it and it is time to just leave the home and let the bank have it.

It is very important that before you decide to abandon your property in New Jersey that you seek the advice of a bankruptcy attorney.  A bankruptcy attorney can guide you on the best route to avoid potential pitfalls of abandonment or surrender and how best to follow New Jersey’s rules on abandoning property.

If you mortgage has become too much for your to handle feel free to contact our office at 732-302-9600 for a free consultation or fill out our online consultation form and we will call you.

Bank of America announced recently that it will be launching a new mortgage modification program as part of the DOJ settlement established earlier this year.  This mortgage modification has big promises, including forgiveness of up to $150,000 off the principal of your mortgage balance.

Sound too good to be true?  Here is a brief synopsis of what you need to know about this new settlement:

1.   Not every homeowner will qualify.  Specifically Bank of America is looking at homeowners that were behind on their mortgage on January 31, at least 60 days past due and whose homes are worth less than they owe.  If you meet these requirements it just means you are eligible, it does not mean you WILL be approved.

2.   There is the possibility of principal reduction in this type of modification but that does not mean that Bank of America is going to reduce the principal on your loan, it just means it is possible that Bank of America will do so.

3.   The qualification process will be much the same as your mortgage modification application was before.  You will still need to monitor the submission of paperwork and you will still likely have to resubmit and wait extended periods of time for a decision.

Still interested?  Great.  Give our office a call at 732-302-9600 or submit our contact us form and will will be happy to assist you in applying for your mortgage modification.

There are so many foreclosure scams out there now.  I feel like as a personal bankruptcy attorney I get to hear about all of them several times a week and my response is the same as it is with every other easy fix out there, “If it sounds too good to be true it probably is.”

There are a couple of really good tip offs that you are dealing with a foreclosure scam and not the real thing.

The first is that you live in New Jersey and the “assistance program” you are using is based on Ohio and not affiliated with any government agency or mortgage company.  This should be a dead giveaway.  If you are seeking assistance for a home in New Jersey, there are non-profit housing counselors in New Jersey that can help you.  You shouldn’t be paying someone in Florida to do this for you.

The next big tip off is that they ask you to pay them instead of paying your mortgage company.  This will get any personal bankruptcy attorney’s spider sense tingling when you tell us about how they are helping you.  We immediately become concerned because whatever you paid them is now gone.\

For more foreclosure scam tip offs visit our foreclosure scam list or call one of our Middlesex County bankruptcy attorneys at 732-302-9600!

Receiving a foreclosure notice can be a scary thing.  Most people don’t know what to do with a foreclosure notice.  They call their bank looking for answers only to find false promises of a “mortgage modification” option or no answers at all.

Your first call upon receiving a foreclosure notice should not be to your bank but to a personal bankruptcy attorney.  A personal bankruptcy attorney can guide you through what to expect next and how best to handle your foreclosure notice.  A personal bankruptcy attorney can address questions you may have and discuss how declaring personal bankruptcy may save your home.

New Jersey Bankruptcy Attorney Bruce C. Truesdale provides guidance to his clients at his office and through this website on foreclosure, what will happen next and how bankruptcy can help.

Have more questions than the articles can answer?  Give us a call at 732-302-9600 and we can talk about how our bankruptcy attorneys can help you with your foreclosure.


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