Chapter 13
Wage Earner

Chapter 7
Full Bankruptcy




More People Falling Behind on Mortgages

In August, the Mortgage Bankers Association (MBA) released data suggesting that more and more people were falling behind on their mortgages. According to a report in The Tennessean, the MBA data showed that 10.47 percent of mortgages in the state were past due between April and June, compared with 9.89 percent in the first quarter of the year. Experts believed this to be evidence of a looming foreclosure problem for the state and the rest of the country.

According to RealtyTrac, a leading foreclosure listing service, foreclosure activity hit a record high in September. One in every 371 properties in the U.S. received a foreclosure notice and bank repossessions reached over 100,000 for the first time since the company started tracking the data in 2005.

In the third quarter, over 372,000 foreclosure auctions were scheduled and over 288,000 properties were repossessed by banks during that time. Nevada continues to have the highest foreclosure rate in the country with one in every 69 properties receiving a foreclosure notice, followed by Florida, Arizona and California.

In September 2010, one in every 1,080 properties in Tennessee received a foreclosure notice. While foreclosure sales account for 17 percent of sales in the state, foreclosed homes are sold at an average discount of 38 percent, one of the highest discount rates in the country according to RealtyTrac.

The National Investigation into Mortgage Lenders

According to a Forbes Magazine report, attorneys general in all 50 states are investigating major loan servicers to see if they have used improper foreclosure practices. Bank of America has put a temporary freeze on all of its foreclosures and GMAC is also reviewing its mortgage foreclosure process on a national level.

Among the allegations against lenders is the practice of “robo-signing.” According to the National Association of Attorneys General, robo-signing occurs when documents signed by lenders contained known defects or the documents were signed outside the presence of a notary public. This practice may have resulted in countless defaults and repossessions.

In early October, Bank of America decided to temporarily freeze its foreclosure practices due to allegations of improper practices. GMAC is reviewing its procedures in all 50 states and suspended foreclosures in 23 states where courts are required to supervise the mortgage foreclosure process. Unfortunately, Bank of America and Ally Financial Inc.’s GMAC Mortgage unit has resumed foreclosures. Shaun Donovan, the secretary of Housing and Urban Development, said that they made a business decision in an interview at the White House. However, lenders could face fines and suits if they have found to have broken the law.

Working With an Attorney

Falling behind on a mortgage is typically a symptom of a larger problem. If you are having trouble paying your mortgage, it is important to discuss your situation with an experienced attorney. There may be ways to stop foreclosure and help save your home.

Many times it is the other financial obligations that cause you to fall behind on your mortgage and jeopardize your home. Chapter 7 or 13 bankruptcy may allow a realignment of debts and enable you to keep your home. Payment of some debts may be reduced, delayed or even eliminated to make it possible to pay your mortgage. Usually foreclosures can be stopped and the arrearage paid over as much as 60 months. You need to talk to a qualified bankruptcy attorney to see what can be done in your particular financial situation.