Help Is On The Way!

From Reuters:
Talks between U.S. states and top banks over mortgage abuses are nearing agreement on resolving a major sticking point that has bogged down settlement negotiations for more than a year.

A deal could be reached by the end of the month, according to three people familiar with the talks.

Under the proposed terms of the settlement — which could total $25 billion — banks would get a broader relief from potential state civil lawsuits in exchange for refinancing underwater loans, those mortgages where borrowers owe more than their homes are worth, the sources said.

Home Values Keep Falling

Local property values fell by eight percent compared with last year’s values. This from a new report by the Hamilton County Auditor. Values declined in nearly every county neighborhood. Other reports show that home sales and prices continue to fall across the Greater Cincinnati and Northern Kentucky region. Forty-five percent of all sales in March were lenders selling properties recently in foreclosure or a short sale.

All this is bad news from people trapped with a house payment that can no longer afford. Declining values make it more difficult to borrow or sell their homes.

Bankruptcy can help in a couple of ways. Chapter 13 gives people a way to catch up missed house payments. It some cases it allows the home owner to eliminate a second mortgage. Chapter 7 protects the owner from the mortgage debt if the owner wants to give up the house.

Understanding MERS

MERS is a way for mortgage companies to sell mortgages to one another quickly and with low cost. MERS is a straw party named as the owner of the mortgage. But it doesn’t really own it. But on county records across the country, MERS appears as the owner of millions of mortgages. As I said, the system was designed to avoid the costs involved in transferring mortgages among different owners. In theory, MERS keeps track of who owns the underlying mortgage. In practice, MERS does not keep accurate records. According to a recent study, fewer than 30% of mortgages held by MERS had accurate records.

And so the system, designed by the mortgage companies for speed and to control costs, is going to make solving the foreclosure problem much slower and more expensive.

Latest Foreclosure Stats Look Bleak

The latest statistics in the housing market are bleak: permanent loan modifications in September were at their lowest number since the start of the goverment program; home sales fell sharply compared to 2009 levels; home prices are falling again after a period of holding steady; 4.4 milllion homeowners are in severe default on mortgage payments but not yet in foreclosure.

Foreclosures To Resume Next Week

Bank of America and GMAC, two of the biggest mortgage lenders, announced that they will resume filing foreclosures on Monday. Expect other mortgage companies to follow suit.

Why did they stop filing foreclosures two weeks ago? Mostly in response to news about faulty courtaffidavits. Some affidavits were signed by employees without first reviewing the records. The mortgage companies paused filing new foreclosures in order to get their records straight. They say things are in order and they are starting to file new cases.

Do You Need Help Saving Your Home?

If you are behind on your mortgage payments, and cannot get current, Chapter 13 bankruptcy may be a good way to save your home. In Chapter 13 bankruptcy, you pay all or a portion of your debts over time through a repayment plan. Chapter 13 bankruptcy lets you pay off a mortgage “arrearage” (late, unpaid payments) over the length of the repayment plan — usually three or five years, depending on your income and the time it will take you to meet all the plan’s requirements.

Walking Away From Mortgage

60 Minutes had a recent segment on people who choose to walk away from their homes due to negative equity. Doing so requires careful consideration of tax consequences and the effect on credit scores. The mortgage company can pursue you on the debt. The video is at

http://www.cbsnews.com/video/watch/?id=6470184n&tag=api

Get rid of second mortgage in chapter 13

Chapter 13 allows some people to get eliminate second mortgages. For example, let’s say you have a first mortgage of $100,000 and a second mortgage of $25,000. If the appraised value of of your house is $95,000, the $25,000 second mortgage can be eliminated. Chapter 13 bankruptcy permits “stripping” the second mortgage in this case. The reason is that the amount of the first mortgage, $100,000, is greater than the value of the home, $95,000.