The New York Times recently published an insightful article detailing the struggles of homeowners facing foreclosure in the outer boroughs of New York City. At the New York State Supreme Court building in Jamaica, Queens, they come face-to-face with the lawyers representing the banks and the loan servicers that are pursuing foreclosure on their homes. These lawyers oversee large caseloads and don't appear to the Times reporter have the time to delve into each individual matter.
New York state lawmakers have passed laws requiring lenders to negotiate with homeowners in court. That's why the court's docket is full of homeowners facing foreclosure. However, the banks in question, and the loan servicers that represent them, aren't cutting deals to modify mortgages, despite the efforts of lawmakers to force the banks to do so. As a court referee says in the article, "I have yet to see an attorney for a servicer cut a deal."
The evidence suggests there isn't enough incentive for lenders and servicers to try to bargain with homeowners. The federal government has provided small financial incentives to services to allow loan modifications. But, because the servicers also make money from the foreclosure process, especially through fees charged to homeowners, the servicers don't have as much of a reason to take the federal government's money.
Even when modification is a possibility, the modification process often breaks down over logistics. For instance, homeowners often struggle to produce all of the paperwork lenders demand to see in order to process a modification. The Times also reports on an initiative to bring the documentation process online, allowing homeowners to store their documents in a database for safekeeping and to electronically track the progress of their modification efforts. A consultant quoted by the Times, however, remains pessimistic, stating bluntly, "[m]arginal improvements are not going to have a significant impact on increasing loan modifications."
It should be good news for homeowners that the federal and state governments have stepped in to provide incentives for lenders and servicers to modify mortgages. However, an incentive is only an incentive, and sadly, evidence suggests that lenders and servicers generally choose to foreclose rather than modify. If you are a homeowner experiencing difficulty making your mortgage payments or facing foreclosure, relying on modification as a last resort may land you in a lot of trouble.
Filing for bankruptcy, on the other hand, can in many instances protect your home from creditors and keep foreclosure out of the picture. If you have a regular income, a Chapter 13 bankruptcy filing offers the opportunity to catch up on your missed mortgage payments, and your home will be protected by the bankruptcy court's automatic stay, which stays, or freezes, collections actions, including foreclosures. A Chapter 7 bankruptcy filing may also protect your property, depending on the circumstances and the extent of your other outstanding debt. If you are looking for bankruptcy advice you can trust, do not hesitate to contact the attorneys at The Law Firm of John C. Orcutt.
If you're one of the many North Carolina homeowners facing foreclosure, contact the Law Offices of John T. Orcutt today to discuss how Chapter 13 bankruptcy can save your family's home. Call today: 1-888-234-4181.