Around the country courts are questioning the standing of MERS to assert legal rights in foreclosure or bankruptcy proceedings. Many courts are finding that Mortgage Electronic Registration System, or “MERS,” is not a legal mortgage holder for lenders, investors and their loan servicers, and are invalidating bankruptcy claims or foreclosure processes.
On its website MERS describes itself:
"MERS is an innovative process that simplifies the way mortgage ownership and servicing rights are originated, sold and tracked. Created by the real estate finance industry, MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans."
Since the mortgage bubble burst, MERS has come under increasing attack in state and federal courts. Some courts (most notably in Kansas, Florida, and New York) have found that MERS does not have standing to assert mortgage rights because it is a mere nominee, and not a mortgage assignee (an assignment of a mortgage without the debt transfers nothing. 55 Am. Jur. 2d, Mortgages § 1002). Additionally, MERS routinely skips legally required processes when a mortgage is transferred.
MERS is not the beneficiary of a Deed of Trust, and has no ownership or possession of a promissory note. Therefore, many courts are finding noncompliance with state laws. Recently one bankruptcy court in the State of New York invalidated a bankruptcy claim by MERS when the company could not show how it had standing in the case.
Many bankruptcy attorneys are demanding proof of assignment and documents establishing a paper trail for their client’s mortgage. In many cases MERS is unable to provide this information; much like collection companies often cannot prove a debt. Original documents, recorded deeds, payment history, and executed assignments seem to be inconsequential matters to the MERS powerhouse. Fortunately, MERS is now under attack and accused of not following legal processes. It will be very interesting to see how the state and federal appellate courts address the MERS debacle.
If you are dealing with an uncooperative mortgage company and need assistance saving your home, speak with an experienced bankruptcy attorney and discuss your options. There are many legal options available and your bankruptcy attorney can help you determine the best choice for your family.
Showing posts with label Home Mortgage. Show all posts
Showing posts with label Home Mortgage. Show all posts
Monday, May 10, 2010
Friday, May 7, 2010
Can I Keep My House If I File Bankruptcy?
One of the most common and important questions asked by a client during the initial bankruptcy consultation is, “Can I keep my house?”
The happy answer is, “Yes.” However, every client’s case is different and requires a skilled and experience attorney to evaluate your situation and help you choose the appropriate debt relief process.
The first question is whether there is equity in your home. Every state allows the debtor to exempt home equity from creditors during bankruptcy. Home equity is simply the difference between the amount that is owed and what the property is worth. If you have more equity in your home than can be exempted, you may need to consider either a Chapter 13 repayment plan or a non-bankruptcy option for debt repayment. In a Chapter 13 the debtor pays the amount equal to the non-exempt home equity to unsecured creditors (like credit cards and medical bills) over a three to five year period. If Chapter 13 is not a feasible option, the debtor may want to consider borrowing against the home equity to pay unsecured creditors.
The second issue is whether you can afford to keep the home by making the monthly payments. A home mortgage is a secured debt which must be paid or you must surrender the property back to the mortgage holder. When circumstances have changed and you can no loner afford to keep your home, the bankruptcy laws can help you to leave on your terms without any lingering debt.
In some cases a third issue is present: the debt is more than the value of the house. In those cases bankruptcy may help either through lien stripping an entirely unsecured second mortgage, or by encouraging the mortgage holder to negotiate for a modification and reduction in principle. Typically the mortgage holder does not want your property, and is usually willing to discuss payment options once a bankruptcy case is filed.
Finally, some debtors are facing foreclosure from an uncooperative mortgage holder. A Chapter 13 bankruptcy can be used to force the mortgage holder to accept payments that cure mortgage arrears over three to five years.
There are many options available for saving your home. Your bankruptcy attorney can discuss the pros and cons of each and help you decide which option is best for your family. Use the federal law to your advantage and discover how the bankruptcy laws can help you keep your home.
The happy answer is, “Yes.” However, every client’s case is different and requires a skilled and experience attorney to evaluate your situation and help you choose the appropriate debt relief process.
The first question is whether there is equity in your home. Every state allows the debtor to exempt home equity from creditors during bankruptcy. Home equity is simply the difference between the amount that is owed and what the property is worth. If you have more equity in your home than can be exempted, you may need to consider either a Chapter 13 repayment plan or a non-bankruptcy option for debt repayment. In a Chapter 13 the debtor pays the amount equal to the non-exempt home equity to unsecured creditors (like credit cards and medical bills) over a three to five year period. If Chapter 13 is not a feasible option, the debtor may want to consider borrowing against the home equity to pay unsecured creditors.
The second issue is whether you can afford to keep the home by making the monthly payments. A home mortgage is a secured debt which must be paid or you must surrender the property back to the mortgage holder. When circumstances have changed and you can no loner afford to keep your home, the bankruptcy laws can help you to leave on your terms without any lingering debt.
In some cases a third issue is present: the debt is more than the value of the house. In those cases bankruptcy may help either through lien stripping an entirely unsecured second mortgage, or by encouraging the mortgage holder to negotiate for a modification and reduction in principle. Typically the mortgage holder does not want your property, and is usually willing to discuss payment options once a bankruptcy case is filed.
Finally, some debtors are facing foreclosure from an uncooperative mortgage holder. A Chapter 13 bankruptcy can be used to force the mortgage holder to accept payments that cure mortgage arrears over three to five years.
There are many options available for saving your home. Your bankruptcy attorney can discuss the pros and cons of each and help you decide which option is best for your family. Use the federal law to your advantage and discover how the bankruptcy laws can help you keep your home.
Thursday, October 29, 2009
Home Mortgage Cramdown is Back in the News
Earlier this year a bill that would have given bankruptcy judges the authority to modify home mortgages was soundly defeated in the Senate after intensive lobbying by the financial industry. After the defeat Sen. Dick Durbin said of the bank lobbying effort, “Frankly, they own the place.”
Six months later, it is apparent that legislation designed to encourage home loan modification between lender and home owner is impotent. The “Home Affordable Program (HAMP)” and the 2008 HUD “Hope for Homeowners” are voluntary programs that have proven too costly and cumbersome to be effective. The Huffington Post recently characterized the situation this way:
“The Obama administration had high hopes for the law Congress passed intended to encourage mortgage modifications. The law is all carrot, however, and no stick. Cramdown is the stick. If banks think they could get hit in bankruptcy court, they're more likely to bargain.”
Rising unemployment rates and mounting home foreclosures are putting new pressures on Congress to do something. Some lawmakers are revisiting the idea of bankruptcy cramdown to encourage voluntary modification by lenders, or to enable forced modification by the bankruptcy courts. Passage of this cramdown legislation would give Federal bankruptcy judges the authority to modify bankruptcy debtors’ mortgage contracts by lengthening terms, cutting mortgage rates, or reducing loan balances. The current bankruptcy law allows modification of some contracts, but not home loans.
House Financial Services Committee Chairman Barney Frank (D-Mass.) has announced his intent to push for legislation giving bankruptcy judges the authority to modify home mortgages. The Huffington Post reports that Frank has met with key members of the Senate Banking Committee who are ready to make a serious push at major financial regulatory reform before the year was out.
If you are behind on your mortgage and experiencing difficulty with your lender, consult an experienced bankruptcy attorney for advice. There are many options available to homeowners, and new opportunities are developing, but quick action is still vital to your chances for a positive result. Take control of your situation by learning your rights and legal options. The Law Office of Erich M. Niederlehner, PA has 4 convenient locations in Mobile, Pensacola, Fairhope and Fort Walton Beach. Please call toll free 877-607-2228 to schedule a free consultation.
Congress has designated us a debt relief agency. We help people file for bankruptcy under the bankruptcy code. No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers. Main office is in Pensacola, Florida. No attorney client relationship is established by using this website.
Six months later, it is apparent that legislation designed to encourage home loan modification between lender and home owner is impotent. The “Home Affordable Program (HAMP)” and the 2008 HUD “Hope for Homeowners” are voluntary programs that have proven too costly and cumbersome to be effective. The Huffington Post recently characterized the situation this way:
“The Obama administration had high hopes for the law Congress passed intended to encourage mortgage modifications. The law is all carrot, however, and no stick. Cramdown is the stick. If banks think they could get hit in bankruptcy court, they're more likely to bargain.”
Rising unemployment rates and mounting home foreclosures are putting new pressures on Congress to do something. Some lawmakers are revisiting the idea of bankruptcy cramdown to encourage voluntary modification by lenders, or to enable forced modification by the bankruptcy courts. Passage of this cramdown legislation would give Federal bankruptcy judges the authority to modify bankruptcy debtors’ mortgage contracts by lengthening terms, cutting mortgage rates, or reducing loan balances. The current bankruptcy law allows modification of some contracts, but not home loans.
House Financial Services Committee Chairman Barney Frank (D-Mass.) has announced his intent to push for legislation giving bankruptcy judges the authority to modify home mortgages. The Huffington Post reports that Frank has met with key members of the Senate Banking Committee who are ready to make a serious push at major financial regulatory reform before the year was out.
If you are behind on your mortgage and experiencing difficulty with your lender, consult an experienced bankruptcy attorney for advice. There are many options available to homeowners, and new opportunities are developing, but quick action is still vital to your chances for a positive result. Take control of your situation by learning your rights and legal options. The Law Office of Erich M. Niederlehner, PA has 4 convenient locations in Mobile, Pensacola, Fairhope and Fort Walton Beach. Please call toll free 877-607-2228 to schedule a free consultation.
Congress has designated us a debt relief agency. We help people file for bankruptcy under the bankruptcy code. No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers. Main office is in Pensacola, Florida. No attorney client relationship is established by using this website.
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