Florida Foreclosure & Bankruptcy Lawyer Blog

Can Bankruptcy Cover Student Loans?

Student loans are NOT generally covered by Bankruptcy. There may be other alternatives that can relieve this debt though, as explained by a Miami-Dade bankruptcy attorney.

With the ongoing economic struggles our country is facing, many college graduates are left to wonder how they will ever pay off their debt. It is even worse for those who can't find jobs. This leads a lot of people to search for ways to get out from under hefty student loans. A Miami-Dade County bankruptcy attorney can offer guidance as to your next steps.

Is Bankruptcy the Way to Get Rid of My Student Loan?

One way that debt can be relieved is through bankruptcy, something that some college students consider. Bankruptcy, however, may not be the answer, as it does not generally discharge student loans.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 prevents federal and private student loans from being discharged in bankruptcy. Yet there are a couple of ways that you may get through this situation.

One is through automatic stay, also known as temporary relief. Even if your student loan can't be discharged, if you do file bankruptcy all attempts on collection are temporarily stopped.

During this time, you may be able to work out something with the lender, or you could try and find a way to catch up on what you owe. At the very least it gives you a little time to find a solution instead of being bombarded with lender and collection calls.

Another way you may be able to deal with your student loan is to apply for a discharge based on undue hardship. While it is not easy to obtain this discharge, it may be beneficial to speak with a lawyer about the possibility.

An undue hardship goes beyond having temporary financial problems. There are considerations that come into play such as whether or not you have at least made an effort to pay on your loan. Failing to notify your lender of your financial difficulties and choosing not to make payments will not look favorable.

Undue hardship also considers whether your financial status is unlikely to change. If you have a 5 year loan and it is found that nothing will change during that time, it may be considered a hardship.

Another consideration is whether you will be able to maintain a minimal standard of living in your current financial situation if you must also pay down your loan. There may be other factors that are also looked at when determining undue hardship.

Other Alternatives with Your Student Loan Debt

There may be other alternatives that can help with your student loan. One is a student loan cancellation where extreme circumstances such as a disability or death may allow forgiveness of your debt.

Another is consolidation. If you have several loans, consolidating them into one can potentially lower your monthly payment. Or you may ask for a temporary deferment on your loan payments, without receiving a penalty, if you are unemployed.

When you feel saddled down by debt, it can cause a significant amount of stress and worry. Not knowing what options are available can make the situation worse for you and your family, which is why it would be in your best interest to consult with a Miami bankruptcy attorney.

Continue reading "Student Loan Debt and Bankruptcy | A Miami Bankruptcy Attorney Weighs in" »

Student loans are not generally covered by bankruptcy. There may be other alternatives that can relieve this debt though, as explained by a Miami-Dade bankruptcy attorney.

With the ongoing economic struggles our country is facing, many college graduates are left to wonder how they will ever pay off their debt. It is even worse for those who can't find jobs. This leads a lot of people to search for ways to get out from under hefty student loans. This article intends to offer guidance as to your next steps.

Is Bankruptcy the Way to Get Rid of My Student Loan?

One way that debt can be relieved is through bankruptcy, something that some college students consider. Bankruptcy, however, may not be the answer, as it does not generally discharge student loans.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 prevents federal and private student loans from being discharged in bankruptcy. Yet there are a couple of ways that you may get through this situation.

One is through automatic stay, also known as temporary relief. Even if your student loan can't be discharged, if you do file bankruptcy all attempts on collection are temporarily stopped.

During this time, you may be able to work out something with the lender, or you could try and find a way to catch up on what you owe. At the very least it gives you a little time to find a solution instead of being bombarded with lender and collection calls.

Another way you may be able to deal with your student loan is to apply for a discharge based on undue hardship. While it is not easy to obtain this discharge, it may be beneficial to speak with a lawyer about the possibility.

An undue hardship goes beyond having temporary financial problems. There are considerations that come into play such as whether or not you have at least made an effort to pay on your loan. Failing to notify your lender of your financial difficulties and choosing not to make payments will not look favorable.

Undue hardship also considers whether your financial status is unlikely to change. If you have a 5 year loan and it is found that nothing will change during that time, it may be considered a hardship.

Another consideration is whether you will be able to maintain a minimal standard of living in your current financial situation if you must also pay down your loan. There may be other factors that are also looked at when determining undue hardship.

Other Alternatives with Your Student Loan Debt

There may be other alternatives that can help with your student loan. One is a student loan cancellation where extreme circumstances such as a disability or death may allow forgiveness of your debt.

Another is consolidation. If you have several loans, consolidating them into one can potentially lower your monthly payment. Or you may ask for a temporary deferment on your loan payments, without receiving a penalty, if you are unemployed.

When you feel saddled down by debt, it can cause a significant amount of stress and worry. Not knowing what options are available can make the situation worse for you and your family, which is why it would be in your best interest to consult with and seek help from a Miami-Dade County bankruptcy attorney.

Continue reading "Student Loan Debt and Bankruptcy - A Miami Bankruptcy Lawyer weighs in" »

Will Debt forgiveness encourage borrowers to stop paying Florida loans that are current? If so, this could lead to serious consequences.

With various types of debt forgiveness programs available, it may leave you wondering if it will only encourage those who are current on their loans to stop paying. While it can certainly lead to that, it wouldn't be wise for a borrower to do so as there may be consequences to this.

One of which is that they could still end up paying, especially if the entire debt isn't cancelled. There may be other factors that will influence someone's decision to go this route, so before you stop paying, speak with a bankruptcy attorney in Miami.

Overview of the Mortgage Forgiveness Debt Relief Act

Under this act, a homeowner's mortgage debt may be reduced. In most cases it also allows for income from the debt that is discharged on their principal residence to be excluded.

However, this act doesn't always mean wiping out the mortgage. It could also mean forgiving in the way of foreclosure. Therefore, an owner could end up losing their home. It's important to realize that debt which is forgiven isn't always taxable. There are some situations where it may not be and will impact the homeowner.

Some examples of non-taxable "cancellation of debt income":

• non-recourse loans (where the only way to deal with the default is using the property as collateral or repossessing it);
• qualified principal residence indebtedness (which applies to most homeowners), with some exceptions and limitations;
• certain types of farm debt;
• bankruptcy; and
• insolvency.

Not everyone qualifies for the Mortgage Forgiveness Debt Relief Act, so the idea of stopping payments on a current loan in hopes of using this as a way out is a risky decision. In addition, it may come with a whole new set of problems.

Other Types of Debt Forgiveness

There are other types of loan forgiveness that may be available. Student loan debt can sometimes be forgiven. Again, there may be certain qualifications that must be met. So to just stop making payments isn't a good idea.

One of the things that many individuals don't realize is that debt forgiveness doesn't always mean the entire loan is cancelled. There are different amounts forgiven depending on the particulars of your case.

In addition, those who stop making payments on their loan are at risk of being in default, therefore, they may not qualify for debt forgiveness. Even the recent introduction of the Student Loan Forgiveness Act of 2012, isn't designed to completely erase all debt. It doesn't mean that students can stop making payments.

The idea behind this act is to allow for a point in time in which eventually payments on a loan stop. It will still require that payments equal to 10% of the borrower's discretionary income be made for 10 years. It is the remaining debt that will be forgiven.

Unfortunately, too many individuals look at debt forgiveness as a way out, so they stop paying their loans. But this can actually prevent your debt from being cancelled. Then you are in a deeper financial hole than you began with.

Bankruptcy is a serious decision to make. But it may be your only way out if you are buried in debt. Stopping payments on loans is never a good idea. However, there may be other options available.

Continue reading "Debt Forgiveness Qualifications as explained by a Miami Bankruptcy Attorney " »

Financial hardship letters are a way to ask a lender for help with a loan modification. A Miami-Dade County foreclosure attorney further explains this process.

Financial hardship letters are a way to explain why you are having difficulty with paying your mortgage. Before you attempt to work with your lender on finding a solution to your problem, which may include a loan modification, you will need to provide a letter of explanation, which is something a qualified foreclosure lawyer can help you with.

What Circumstances Might Necessitate a Financial Hardship Letter?

There are certain circumstances that may require you to seek help from your lender including:

• unexpected loss of income or additional expenses due to the death of a family member;
• loss of a job (due to a situation that was out of your control);
• lapse in payment for extended benefits (such as Worker's Compensation, unemployment, or short-term disability/long-term disability);
• hours of employment reduced (not by choice);
• elimination of overtime
• not being paid while out of work for medical reasons; and
• other extenuating circumstances.

Ingredients of a Financial Hardship Letter

There are certain ingredients that should be included in your letter to make it effective. Start the letter by explaining why you are writing it. You should include what financial hardship is present and necessitated the letter.

Do not just say, "I'm out of work." It could be assumed you are out of work because you quit. Be specific. "The company I have worked at for the last 20 years downsized and as a result they let go the department in which I worked."

In addition to stating what your financial hardship is, clearly explain what you are looking for. If you would like the lender to do a loan modification, say that.

You should also include what monthly payment you can afford. You certainly do not want to ask for a ridiculously low number, but at the same time you have to be honest about what you can truly afford.

The tone of your letter is important. You do not want to sound like a robot, so make it personal, yet professional. The letter should not drone on and on. State the basics of your situation, but include enough detail so the lender fully understands your current position.

Most importantly, be honest. Do not exaggerate or lie about your situation, as they are likely to discover the truth eventually. If you actually quit your job, this will be discovered.

It is also important to be grateful. This is not the time to vent about the astronomically high interest rate you have been paying, or how the mortgage companies are only out for themselves. You are asking for their help, so express gratefulness for their willingness to at least consider a loan modification.

End the letter by thanking them for the time they have taken to read it and for their consideration. Remember that you are asking them to do something for you, so you should remain respectful.

We often can't predict when we are going to suddenly be hit with a financial hardship. The loss of a job or spouse, or an unexpected medical bill can change everything in a moment. As a result, you may face the prospect of losing your home.

Continue reading "Main Ingredients in a Loan Modification Financial Hardship Letter" »

There are risks involved when renting a home in foreclosure; however, as a renter you may have rights, which a Florida real estate attorney can explain to you.

With the mortgage crisis leading to foreclosures, it is important to realize that homeowners and investors are not the only ones affected. Renters face risks, too, but a Florida real estate attorney can help protect your rights.

Renting a Home That Is in Foreclosure

An obvious con to renting a home that is in foreclosure is that you could suddenly be without a place to live, even if you have always been current on your rental payment. Unfortunately, that matters little when the house you have been occupying is suddenly up for sale.

Meanwhile, you will still be expected to pay rent to the owner if you have a rental agreement with them. This can be an even bigger sting when they did not bother to forewarn you of the impending foreclosure.

Some tenants are given very little time to find a new place, pack up, and move. It can be quite a shock to learn that they have 30 days to do all of this. The real kicker is that in many cases, there is not much legal protection for tenants who find themselves in this situation. They seem to be at the mercy of the foreclosure. It is difficult to contend with a lender who has asked you to leave. They may even threaten to damage your credit report or slap a lawsuit on you.

Renters include those in single homes, apartments, and other types of residences. Even if you are renting a condo, a condo association foreclosure can still result in you being asked to leave.

However, the Pro to being a renter in a foreclosure is that you just might have rights of which you were not aware. Some cities have laws that allow evictions from a foreclosed home to be stopped. An attorney can help determine if this applies to you.

The other pro is that some lenders are more than willing to work with a renter and will give them adequate time to find a new place and move out. It will just depends on who you are working with. It may also depend on whether or not you secure legal representation to help you.

Not all foreclosures will result in a renter being forced out. Sometimes in the midst of the process, a new owner will come on the scene.

The Protecting Tenants at Foreclosure Act of 2009 is a Federal law passed by President Obama can help prevent the loss of a lease on a property that is in foreclosure. It also allows the tenant more time to work things out and find a new place to live.

A renter may be able to stay until their lease is up, or if they are on a month-to-month lease they are usually given 90 days to leave, which is longer than the 30 days most renters are subject to when evicted on a basis other than foreclosure. This is a protection of which not all tenants are aware.

The flip side is that if the new owner intends to occupy the residence, they may be able to terminate your lease with a 90 day notice. So even if you still have a year left, you may end up having to move out within 90 days.

Contacting a Florida Real Estate Attorney

Continue reading "The Pros and Cons of Renting a Foreclosed Home in Florida" »

The Servicemembers Civil Relief Act may help veterans avoid foreclosure. It applies during active military service and can protect your South Florida home. The Servicemembers Civil Relief Act (SCRA) can provide protection in a number of ways for those who are:

• entering the military;
• called to active duty; or
• deployed.

This protection applies to certain civil obligations, which may be delayed or stopped, depending on the circumstances. The point of this Federal Act is to relieve service members of the worries and stress that accompany many of these civil obligations. One of them applies to homes that are in danger of being foreclosed.

Mortgage obligations that existed prior to enlistment or active duty are protected under SCRA, those in the:

• Air Force;
• Coast Guard;
• Army;
• Marines; and
• Navy.

Mortgage Relief through a Reduced Interest Rate

You may be able to find mortgage relief through a reduction in your interest rate. Your interest rate must be lowered to at least 6% per year during your time of active military service.

Payments will be readjusted according to the new lower interest rate. It can be done with government-insured and conventional mortgages. It's important to understand that this reduction of the interest rate won't happen automatically. It is up to you to send in a written request to your lender. You should also send a copy of your military orders.

You should send this request as soon as possible, preferably once you have been given orders. It cannot be sent any later than 180 days after your release date from the military service.

The foreclosure process can be a complex one. You should not only know how much time you have to request a lowered interest rate but you should also be prepared for the possibility of it being denied.

This doesn't happen often but if your mortgage lender doesn't find that your service in the military has impacted your ability to pay the current mortgage, they may try to fight it.

In some cases, you may need to turn to a Florida foreclosure lawyer for help.

When a Reduced Interest Rate Isn't Enough to Provide Mortgage Relief

There is the possibility that even with a lowered rate, you still can't make your mortgage payments and are at risk of foreclosure. While your lender is under no obligation to do so, they may try and work with you.

It could even lead to your principal payment being temporarily suspended, also known as a forbearance. However, you would be expected to eventually pay it, once you have completed active duty service.

There may also be other programs available that can help provide mortgage relief. Your lender should be able to discuss these options with you.

Protection from Foreclosure

The good news is that service members don't have to worry about their home being foreclosed on as long as they are on active duty for 9 months, prior to Dec. 31, 2012. The only way around this is through court approval.

The grace period reverts back 3 months after Dec. 31, 2012. If there is a court proceeding, your mortgage lender would have to demonstrate that your ability to pay was not impacted by your service in the military.

Contacting a Florida Foreclosure Lawyer

As a veteran, your time in the service may have helped prevent your home from being foreclosed. However, there is the possibility that your lender could try to deny your protection.

Continue reading "How the Servicemembers Civil Relief Act Can Help Veterans Avoid Foreclosure in Florida" »

The robo-signing scandal led to thousands of false affidavits being signed. This could affect your lender's ability to foreclose on your South Florida home.

You may be facing the loss of your home and wondering if there is any recourse you can take. There may be if your home is affected by the robo-signing scandal. You should consult with a Palm Beach County foreclosure attorney to find out if it could stop your mortgage foreclosure.

An Understanding of the Robo-Signing Scandal

Robo-signing is the process of a bank signing off on papers without verifying important information. The employee of the bank or servicing company blindly signs thousands of documents without reviewing any of the details. In the area of mortgage foreclosures, it may forestall a foreclosure from occurring since these thousands of robo-signed documents are illegitimate.

The foreclosure process can be very complicated and may depend on where you live. In most states, the lender will have to prove that they own the mortgage because the owner has defaulted on the loan. Sometimes this requires the lender going to court.

In any event, the lender will need to provide evidence of a mortgage loan default. One piece of evidence that is used is an affidavit, which is a written sworn statement / documentation that is generally signed by a bank employee under oath.

However, the assumption is that the bank employee didn't just sign it without first reviewing all of the documents. They must believe that the owner truly has defaulted and the lender now owns the mortgage. If this is not proven, the bank or servicer should not sign the papers. Otherwise it might result in a false foreclosure.

This is where robo-signing comes in. It is the act of a bank signing one of these affidavits without verifying the authenticity of the foreclosure. Some of the bigger names that recently came to light as participating in robo-signing include:

• Wells Fargo;
• Bank of America;
• GMAC; and
• JP Morgan Chase.

In fact, thousands of these affidavits have been signed by servicer or bank employees without any real knowledge as to the truth of the situation. This means that some foreclosures should not happen.

How Robo-Signing May Affect You

You may have been the victim of a falsified affidavit. In that case, your foreclosure may not have been warranted. In fact, it is illegal for a bank to foreclose on a house if the paperwork is not in order.

Sadly, thousands of homes have been part of this robo-signing scandal. It has led to more scrutiny on the foreclosure process, causing delays. Some foreclosures are not being signed off on.

Homeowners have also taken a stand, many seeking legal action to prevent their foreclosure from going through. This has also resulted in the lender taking other measures to move it forward. Some lenders will decide to file a lawsuit against the owner if they fall behind on their mortgage payments. Yet this route is often not beneficial to the lender and costs them money.

Some foreclosure cases were dismissed because of the scandal. However, owners can't deny the reality that later on the lender may try it again. This can result in you looking for some type of mortgage foreclosure help.

The idea of losing your home is difficult to imagine. However, if you believe that you were the victim of the robo-signing scandal, there may be a way out. The team of foreclosure attorneys at The Neustein Law Group, P.A. serves residents of the Miami-Dade County, Broward County, Palm Beach County and other counties throughout the state of Florida.

Continue reading "The "Robo-Signing" Scandal: How It May Affect You in South Florida" »

Dear Mr. Neustein,

After 10 years of marriage, I recently got divorced. Suddenly, our two income household has been cut by more than half. I used to work full-time, but now I am limited to my disability check. We were recently served with foreclosure papers and I have basically been living off my credit cards which are almost maxed out. Should I file for Chapter 7 Bankruptcy to save the house? Is it too late to save my home from foreclosure?

Thanks,
Nancy

Dear Nancy,

In many instances, filing for Bankruptcy usually should be the option of last resort when trying to save your home. The best option is to hire an experienced litigation attorney to defend the foreclosure case on the merits of the case. The Mortgage is a contract which affords the Borrower with many protective covenants. The burden is on the bank to prove that they satisfied all the conditions precedent to bringing the foreclosure action. An experienced foreclosure lawyer can effectively defend the case much the same way as any litigation matter. A natural byproduct of any litigation matter is Time. It can take the bank a very long time to secure a judgment of foreclosure - IF they get one at all. While it is true that filing for Bankruptcy will put a "Temporary Stay" on any foreclosure proceedings, including the cancellation of a pending foreclosure sale, this Stay (or Freeze) is only temporary. Since a Mortgage is a "Secured Debt" (unlike a credit card which is unsecured), the Bank has the right to ask the Bankruptcy judge to remove the stay from the foreclosure proceeding. This request is routinely granted by the Bankruptcy Court. Sometimes it may make sense to file for Bankruptcy sooner if it helps you qualify for a mortgage loan modification. An example of this is if your debt to income ratio is too high. Sometimes, the elimination of some of the debts will improve your ratios enough to qualify for a loan modification. In any event, you should certainly consult an experienced attorney who has significant experience is Three distinct areas: (1) Foreclosure (2) Litigation and (3) Bankruptcy. There is subtle, but very important distinction between Foreclosure attorneys and foreclosure attorneys experienced in Litigation since many attorneys claim to specialize in foreclosures, but do not take depositions, routinely take these cases to trial, and Appeal the decisions of the lower court when there is a mistake, etc. Feel free to contact us directly any time with any questions, a free consultation or if we can be of further assistance.

Sincerely,
Frederick A. Neustein, Esq.

The net present value test helps decide if you qualify for a loan modification for a Florida property. Several factors are considered, which a Florida foreclosure attorney explains.

If you are finding it difficult to pay your mortgage or you are at risk of foreclosure, there may be a solution. A loan modification may be allowed.

Overview of a Loan Modification

A loan modification provides you the opportunity to work with your lender so that the terms of your mortgage loan are changed. This can be done on a temporary or permanent basis.

Changes generally affect your monthly payment, term, and rate. The idea is to get your mortgage down to 31% of your gross income.

To qualify, you must meet certain requirements. For instance, if the value of your home is lower than the balance left on your mortgage, you may qualify. Or you may qualify if you are showing signs of being in default.

Impact of the Net Present Value Test

A loan modification might sound like the perfect solution to your problem. However, you will first need to pass a test called the Net Value Present (NVP) test. If you fail, there is significantly less chance that a loan modification will be done.

The purpose of the test is to benefit the lender, as it will help determine what is more profitable for them in the long-term. It basically comes down to 2 choices: allowing your monthly mortgage payments to be lowered with a loan modification or allowing the possibility of a foreclosure by not doing a modification on your loan.

One of the risks to a lender is that even if they do modify your loan, there is still the potential for the house to go into foreclosure later on. If this is a reasonable possibility, which the NVP formula can help determine, you will fail the test.

However, this is not the only item factored into the NPV formula. While you can get a general idea on some of the components, you should also know that the exact formula is not something a homeowner will be made aware of.

Here are some of the factors that may influence the outcome of the NPV test:

• legal fees and other costs associated with foreclosure of the house;
• average number of months left before it is likely to go into default again;
• worth of the home a year from now;
• likelihood of the owner catching up on mortgage payments if a loan is not modified; and
• current worth of the home.

In addition, the Real Estate Owned (REO) discount will be considered. This is a formula used by the government which estimates the home's value in a year if it went into foreclosure and the REO discount, which are values and probabilities that are not made known to homeowners.

As a borrower, you will not be provided any information on the formula used or the estimates on your home's value. The lender will not share with you whether they think your house is at risk of being defaulted on again in the future.

You are basically at the mercy of the NPV test results. Pass, you can save your home. Fail the test and you may be at serious risk of losing it unless you retain an experienced Florida foreclosure lawyer.

The good news is that even if you do not pass the NPV test and your request for a loan modification is denied, you can re-apply again in the next quarter. Of course, you could always secure legal help from a Florida foreclosure attorney.

Continue reading "What iS the "Net Present Value" Test relating to Loan Modifications in Florida?" »

There are a few tax implications involved in the foreclosure of a home. For help with your situation, seek assistance with your tax professional FIRST and then a Fort Lauderdale foreclosure attorney.

When you are facing a mortgage foreclosure in Florida, there are tax implications of which you should be aware. For investors or homeowners it could mean serious financial consequences, but there may be some relief available.

The Mortgage Forgiveness Debt Relief Act of 2007

This act passed by Congress can prevent tax consequences for certain owners whose homes are in foreclosure. Homeowners facing financial difficulty may find that alleviating this tax concern may help significantly.

In general, if you lost your home in foreclosure or through a short sale, the discharged amount is taxable income. There are some exceptions, however. For instance, it does not apply to a non-recourse loan, where a mortgage company's only option is to repossess your home or use it as collateral.

Other exceptions include bankruptcy and insolvency. Insolvency is when the fair market value of your assets is less than the total of your debts. This is a bit more complicated, so you will likely require a professional to help figure out if this exception applies to you.

If you do not have a non-recourse loan, then your debt income is taxable. What's more, if there are reportable earnings from the sale of your home, this may also be taxable.

Determining Income to be Reported Stemming from a Foreclosure

Discharge of indebtedness income (DOI) is generally reported to the IRS by the taxpayer. The lender will provide the appropriate form for this: Form 1099-C. As a taxpayer, whether or not you receive a 1099-C from the lender, you must disclose DOI to the IRS.

The first step is to figure out the cancellation of debt income. You will first submit the entire amount of your debt before the foreclosure. From Form 1099-C, box 7, you will submit the equitable market worth of your home. Subtract the value of your home from your debt before foreclosure. Generally the value that is determined with this formula is the same as what is found in the Form1099-C, box 2. This is your taxable income. If you meet one of the exceptions, you will submit it on Form 1040, line 21, Other Income.

The second step is to figure out the gain from the foreclosure by entering the equitable market worth of your foreclosed home. If this is a non-recourse loan, you will enter the debt amount before the foreclosure. You will then enter the modified basis in the home. This is generally the purchase price in addition to any costs for major home improvements. Now, subtract the modified basis of your home from the fair value of your home. This will show the gain from your home's foreclosure.

There are exclusions that may apply and you definitely need to contact your tax professional since even the most experienced foreclosure lawyer is not licensed to give tax advice. For instance, if you owned the home and it was your primary home for at least 2 years during the 5 year period ending on your foreclosure date, you can eliminate a maximum of $250,000 from income.

If you file a joint return as a married couple, the amount excluded is $500,000. If your gain is greater than $250,000 or you do not qualify, you must reveal the taxable amount on Schedule D, Capital Gains and Losses.

The tax implications are just one complicated component a homeowner has to deal with when facing a foreclosure. A Fort Lauderdale foreclosure attorney may be able to help.

Continue reading "The Tax Implications of Foreclosure in Florida" »

A mortgage-to-lease may be right for a home owner who is about to lose his or her home in Palm Beach County, Florida. There may be other options available, though.

The idea of losing your home may lead you to extreme stress and worry. But there may be other options such as a pilot program called mortgage-to-lease that is being offered to some Bank of America and Fannie Mae customers. You may also find a helping hand from an attorney at a Palm Beach County foreclosure law firm.

Overview of the Mortgage-to-Lease Program

Bank of America is one of the well-known banks discovered to be engaged in what is being called the 'robo-signing scandal'. This involved banks signing off on foreclosures without properly analyzing them. As a result, some owners may have unnecessarily lost their homes. Perhaps as a way to make good on their mess, the mortgage-to-lease program was designed. It could potentially help thousands of owners save their homes.

The way it works is the owner will transfer the title of their home to the bank. In turn, their mortgage debt is erased. The owner then becomes a renter. They can rent their home for as long as 3 years. The rental market rate would be at or below the mortgage rate. Eventually, it may even allow the now-renter to buy back their house.

This could lift a huge financial burden, as the renter would be paying less each month than when they were paying their mortgage. In addition, they will not be responsible for homeowners insurance or property taxes.

To participate in this program, here are some of the requirements:

• earn enough income to pay the monthly rent;
• Bank of America must own the mortgage;
• must remain as occupants in the house;
• mortgage must be at least 60 days past due;
• there cannot be a second mortgage on the home;
• attempts have been made on other loan modifications; and
• house is at high risk of foreclosure.

The idea is that the program could eventually help stabilize housing prices in neighborhoods with several houses for sale due of foreclosure. When certain areas have a high rate of foreclosures, it makes selling a home any other way difficult.

Meanwhile, foreclosure activity in this nation has been ramping up. Some believe it is the result of pending foreclosure cases from 2011 now moving forward. And with Florida being one of the highest ranking states dealing with this issue, the idea of a mortgage-to-lease might sound like a great option for you.

The problem is that Florida is not one of the states in the pilot program. It is currently being offered to homeowners in New York, Nevada, and Arizona. However, if it is successful, it might eventually benefit home owners in Florida, including Miami-Dade County, Broward County and Palm Beach.

Of course, it is hard to say if a mortgage-to-lease would be right for you. There may be other options if you are facing a possible foreclosure on your home.

There may seem to be no way out when you are buried in debt, without a job, and at risk of losing your home. If you have not made your mortgage payments in 3 months, you may be facing foreclosure. However, a Palm Beach County foreclosure law firm may be able to help.

Continue reading "Is a Mortgage-to-Lease Right for Me if I live in Palm Beach County?" »

When you are facing foreclosure, you may consider alternative measures such as bankruptcy or loss mitigation. It is important to understand the differences in evaluating which option might be best for you. If you need legal assistance, a Broward County foreclosure attorney can help.

Overview of Bankruptcy

The decision to file for bankruptcy is a serious one. Before taking the plunge, it is important to understand how it can impact your future.

There are 2 types of bankruptcy: Chapter 7 and Chapter 13. In a Chapter 7 bankruptcy, all or part of your debt may be completely erased. There is also the risk that your personal property may be sold in order to pay back creditors.

One of the benefits of a Chapter 7 bankruptcy is something called automatic stay. This will stop most of your creditors from collecting what is still owed to them, at least on a temporary basis. This gives you time to protect your home, your bank account, and your wages from being garnished. However, this protection only lasts so long. More importantly, the filing of a bankruptcy should be the absolute last thing you should do (chronologically). It is much more important to defend the foreclosure on the merits of the case prior to filing for bankruptcy. If time is what you need to arrange for a loan modification, arrange a short sale, or figure out your next move, this will give you the most.

At the same time, you are essentially handing over your property to a bankruptcy court, which means you cannot sell your property without permission. There may be a few exceptions that an attorney can explain in further detail.

Chapter 13 bankruptcy is more like a repayment plan in which you pay off some or all of your debts over a period of time. The timeframe will depend on how much you owe as well as your income.

This can be a good option if you are at risk of foreclosure. It may allow you the opportunity to pay your mortgage or make up late payments over a certain period of time. The automatic stay can be helpful here in that your foreclosure process may be stopped until a plan is put in place. However, there is no guarantee that you will be allowed the chance to participate in a repayment plan.

While these are ways to potentially save your house, there are bankruptcy alternatives that may be better. One example is loss mitigation.

An Overview of Loss Mitigation

Loss mitigation may allow a variety of options that can help homeowners save their house. This can be done through various options such as loan modification, forbearance, or refinancing.

If it is found that the mortgage just can't be managed, then a deed in lieu or short sale might be the way to get rid of mortgage debt. Of course, this also means losing the home.

One of the potential problems with loss mitigation is that unless something drastically changes in the homeowner's income, they are likely to face foreclosure again. So it may just delay the inevitable.

And with the options of a short sale or deed in lieu, it does not necessarily help if there is a second mortgage on the house or if there are other serious debt issues at play.

Contacting a Broward County Foreclosure Attorney

Deciding whether to file for bankruptcy or to pursue loss mitigation can be a complicated decision to make. There are pros and cons to both options of which a typical homeowner may not be aware. It may be in your best interest to discuss your current financial situation with a Broward County foreclosure attorney to determine what option is best for you in your current situation. Most of the time we advise our clients that filing a Bankruptcy is the last thing you should do chronologically after you have exhausted all other alternatives.

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While 2010 saw a record number of foreclosures across the nation, the current wave of foreclosures is leaving many to wonder why this is happening. In fact, 2011 saw a drop in foreclosures, leading some to believe it was nearing the end. Yet many homeowners do not realize why this is and how it is leading to an increase in 2012.

Increase in Foreclosures in South Florida

In 2010, there were 1.05 million homes foreclosed upon. At that time, Florida was among the top 3 states dealing with this epidemic with more than half of all the country's foreclosures.

Unfortunately, things haven't gotten much better for the state of Florida. In fact, foreclosures in South Florida continue to be an ongoing problem, with much of it stemming from the robo-signing scandal. If you are struggling to save your home, you should explore your options with a Fort Lauderdale foreclosure attorney. The robo-signing scandal involved a number of big-name banks signing off on affidavits that allowed lenders to move forward with mortgage foreclosures. Yet these documents were being signed without anyone taking the time to verify the information and that the foreclosure actions the lender was seeking were valid. In addition, many of these robo-signer signatures are forgeries of the alleged affiant and/or the notary.
Once this was discovered in 2011, the foreclosure process drastically slowed, but it wasn't due to housing market improvements. It was because of investigations being launched into what has become known as the robo-signing scandal. As a result, pending foreclosure cases have been waiting for extended periods of time to go through. So it wasn't that 2011 experienced an improvement in foreclosure activity but that it was pushed off into the year 2012.

This explains much of the new wave of foreclosures hitting South Florida. Palm Beach, Miami-Dade and Broward Counties are ranked 3rd in potential cases involving the robo-signing scandal. Floridians are dealing with a serious crisis that could take a long time to work through. In addition, there are thousands of foreclosure cases being filed. Home sales continue to drop, jobs are scarce and families are finding it difficult to make their mortgage payments. With this combination, it is no small wonder that there has been a significant jump in mortgage foreclosures.

In fact, some experts say that nearly 1 million homes should have been foreclosed on in the year 2011. Because of the suspicious activity and ensuing investigations, these cases have been moved into the current year. There are many who don't see an end in sight, at least not for a few years. And there are even some who predict that 2012 will end up being worse than the record number of foreclosures experienced in 2010. Meanwhile, investigations into the robo-signing scandal have led to new practices and ways to resolve it. Yet implementing these procedures will only further delay the process of seeing these foreclosures through.

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Florida is one of many states that were victimized by the mishandling of mortgages. A West Palm Beach mortgage foreclosure attorney may be able to help if you were one of those victims.

$8 Billion Settlement to Be Received in Florida

In all, a settlement of $25 billion was reached with state of Florida and federal authorities in regard to 5 of the nation's largest lenders engaging in the robo-signing scandal. These banks include Citigroup, Bank of America, Ally Financial, JPMorgan Chase and Wells Fargo. Of that amount, Florida will receive $8 billion.

However, the only amount currently being guaranteed to the state of Florida is at least $4 billion from Bank of America, Wells Fargo and JPMorgan Chase. This includes $3.1 billion to reduce and modify principal loans for those homeowners who face significant financial difficulties.

It also includes $309 million for those homeowners who are not behind on mortgage payments, but their high interest rate loans are greater than the value of their home. This will allow them the opportunity to refinance.

Penalties will be meted out if any of the banks fail to comply with the settlement. However, this doesn't mean that Florida is out of the woods yet.

That's because Florida is one of the top states to experience mortgage fraud. Most of the settlement will go to the counties of Miami-Dade, Broward and Palm Beach County in the way of loan modifications.

The settlement also should include about $334 million to help fund foreclosure prevention programs and other housing-related programs in the state of Florida. Approximately $171 million will go toward those owners who lost their homes, as a means of partially compensating them for fraudulent mortgage practices.

Florida's attorney general has indicated that Florida is one of the states on the monitoring committee. It intends to hold banks accountable and make sure that they comply with the settlement.

Yet not everyone believes this settlement is enough to cover the losses experienced. There are some homeowners who will still be left holding the bag.

Overview of the Robo-Signing Scandal

It was the robo-signing scandal that led to thousands of owners losing their homes through foreclosure. This settlement is a means of compensating for the fraudulent practices, of which homeowners in Florida were many of the victims.

The previously named 5 banks engaged in practices in which a bank employee signed off on foreclosures without verifying it was legitimate. In some cases, this meant that a home may have been foreclosed on, even though the owner wasn't truly in default.

Falsified affidavits and failure to review documents may have led to illegal foreclosures. Even if a home was potentially at risk, by not following the practice of reviewing all documents before signing off, it could help a homeowner fight the loss of their home.

Contacting a West Palm Beach Mortgage Foreclosure Attorney

It is hard to imagine that the traumatic loss of a home could have been avoided, or to learn that a home was illegally foreclosed upon. If you have been the victim of fraudulent mortgage practices, you may be able to pursue legal action.

If your home is in the midst of being foreclosed on, and you would like to know if you have the right to stop it, you should contact a mortgage foreclosure attorney at The Neustein Law Group, P.A.

Our law firm serves residents of the Palm Beach County, Miami-Dade County, Broward County and various other counties throughout the state of Florida. If you would like to learn what your rights are and how you can protect your home from foreclosure, contact us today - (561) 232-3788 (West Palm Beach), (888)400-ATTY (2889) or (305)531-2545 (Direct HQ).

Fort Lauderdale Bankruptcy Attorney Explains Long-Term Effects of Defaulting on a Student Loan.

There are many long-term effects of defaulting on a student loan. A Fort Lauderdale bankruptcy lawyer in Broward County explains how it can It can have a serious impact on your future.

Defaulting on a Student Loan

Neglecting the payments on your student loan or ignoring the lenders who call you can result in default. This can occur anywhere between 270 and 360 days of nonpayment.

You may feel like you have a good reason for defaulting on your loan. It could be that you are unable to find a job in the field you studied, or any job for that matter. It may be that you never finished school.

Some individuals mistakenly believe that later on they can file for bankruptcy and get rid of their student loan debt that way. However, it has become nearly impossible to erase student loan debt through bankruptcy.

That's because there are strict requirements that must be met. Even if you do manage to meet these requirements, which isn't very likely, you will still end up having to pay off at least some of your loan.

No matter what your reason may be or how you think you can eventually see your loan discharged, you cannot walk away from a student loan. If you decide to, there are long-term consequences you will face.

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