Practically everyone knows that the good times of loan modification are going to end next year. Loan modifications under HAMP are set to expire December 31, 2016 after several extensions. HAMP was a direct result of the mortgage bubble in 2007 to 2009 when everyone, including your dog, could qualify for a zero down mortgage to buy a house that would increase in value almost immediately. Since the investment bankers in Wall Street concocted this plan of making the American dream of owning a house come true for anyone with a social security number, real or not, doesn’t matter, when the bubble burst and homebuyers who really were not qualified for the mortgage started defaulting, the entire financial system of the United States and the world collapsed. The stock market lost 50% of its value and we elected our first minority President to rescue us from the financial chaos unleashed by Wall Street. Our President gave us HAMP and told the banks that got bail out funds to give loan modifications to those who qualified under the guidelines. If your mortgage exceeded 31% of your gross income, you could qualify. But a lot of homeowners still could not qualify under this guideline. So, that guideline was eventually removed.
In the midst of this chaos, there were some fortunate beneficiaries. By fortunate beneficiaries of this chaos, I mean homeowners who have not paid their mortgage for several years without the bank making a move to foreclose. I’ve seen clients who have not paid their mortgage for two or three years and still own their house today. However, recently, banks have been starting to ramp up foreclosures. Believe it or not, I have one client who has not paid his mortgage for 9 years as of today and the bank just sent him his notice of default, the start of the foreclosure process last week. That’s 9 years of free rent worth $324,000. Not bad at all. He is way ahead in the foreclosure game. I don’t think anyone can beat his record. It’s like winning the lottery and receiving $324,000 of cash over 9 years.
Client no. 1 is 55. He has not paid his mortgage for 2 years. His mortgage arrears total $120,000. I asked him if he disputes the arrears. He said no, that’s correct. His house now has equity of $300,000. I asked him are you sure you can afford to pay the current mortgage plus $2,000 a month plan payment to cure the default of $120,000? He said yes. He wants to keep his house. Apparently, some business associates owe him some money, about $200K, which he expects to collect in a couple of months. He decides to file a Chapter 13 to protect his house from foreclosure. It remains to be seen if he can actually produce the plan payments. But who am I to question client. If he says he can pay it, then well and good, it’s a good faith filing.
Client no. 2 is 63. Her default is $118,000. She owns a 4-plex. She lives in one unit and rents out the other 3. The rent she receives is about $45K a year. She and her husband receive about $3K a month total of social security. She has not paid the mortgage for 2 years. She actually sold her house in Orange County 6 years ago and transferred her net profit to buy the 4-plex where she planned to retire with her husband. The problem, it appears is that some scofflaws in Countrywide Home Loans, created a fake trust deed and drew out $40K and left her holding the bag. In addition, they added another $30K, which is part of her $120K default. So, she’s been working with another lawyer for the last 4 years trying the get his matter resolved without any success so far. But the current lender, the bank that purchased the notes, has set the foreclosure sale for next week. ONLY A CHAPTER 13 CAN STOP THE FORECLOSURE SALE. Client sees the urgent need for Chapter 13 and decides to file one to save her 4-plex.
“GIVE UNTO THE LORD THE GLORY DUE TO HIS NAME; WORSHIP THE LORD IN THE BEAUTY OF HOLINESS.” PSALM 29:2.
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Lawrence Bautista Yang specializes in bankruptcy, business, real estate and civil litigation and has successfully represented more than five thousand clients in California. Please call Angie, Barbara or Jess at (626) 284-1142 for an appointment at 1000 S. Fremont Ave, Mailstop 58, Building A-1 Suite 1125, Alhambra, CA 91803.
