Miracles Possible in Mortgage Mess

INVOKE THE SECOND DIVINE MIRACLE OF THE VANISHING EQUITY

Why Many Homeowners Need to Run,  Not Walk, to Bankruptcy Court and File for Chapter 13 Bankruptcy.

The world has many sacred sites.

Places that inspire great faith.

Places where people go to express, renew, and sometimes discover their faith. Rome, Mecca, and the Holy Land come to mind.

But there are humbler locales like Bakersfield, or maybe it was Barstow, where, nestled in a modest single family home, one hears tell of the visage of Jesus appearing in the genuine imitation wood-grain veneer on the bathroom door when the homeowner takes a shower.

Closer to home, the forest near Pinto Lake in Watsonville California, is said to contain a tree in which the face of the Virgin Mary appears to true believers. Cool…

In the Internet Age, you don’t have to travel the world to see a miracle, discover your faith, or renew it. Miracles have bubbled up much closer to home than they’ve ever done before, creating a little mini-Lourdes springing forth beneath your feet.

Miracle one

For Americans who are still in their homes, the first miracle may be just to have retained your home against the onslaught of deliberately deceptive neg-am mortgages, mail fraud, wire fraud, conspiracy, forgery, and perjury committed by the financial industry, all of which has gone completely unpunished.

All of  those constitute serious felonies that the federal courts, yet the Untied States Attorneys and of course the FBI, can’t do enough to ignore. Meanwhile these crimes continue to be uncovered daily by civil attorneys fighting desperately, house by house, to save the homes of individual homeowners.

The Miracle You Perform

The hidden miracle under your feet may be something much greater… It’s the second miracle of the disappearing value of the real estate you call “home”. It may  time for you to make lemonade from your biggest lemon.

That “underwater” lemon that is your house could be your own personal financial savior. That is, if salvation consists of keeping your home.

If you want to give the holder of your second and third mortgage that taste of cold steel many of them so richly deserve, now may be the time.

Enter Chapter 13

With lenders engaged in a cruel, corrupt and one-sided game of loan-modification-water-torture, there is a way for many homeowners to level the playing field. It’s known as a Chapter 13 Bankruptcy strip-off AKA lien stripping. For many homeowners it’s now time to quote chapter and verse from the Federal Bankruptcy Code.

Time to do it now. Before a Congress, completely co-opted by the financial industry, does the bidding of its paymasters and removes this tool from the pathetically tiny toolbox of homeowner rights.

Stripping Off Your Second Mortgage in Bankruptcy

In the 9^th Circuit of the federal court system, which sadly includes California, federal district and appellate court judges generally despise distressed homeowners. They’ve made no secret of their hatred of homeowners. The body of decisions emanating from this group reads like and ode to the sanctity of any and all things that will satisfy the lending industry’s every whim.

Standing defiantly removed from that not so august cabal, are the U.S. Bankruptcy Court’s decisions and the judges therein. In particular Zimmer, 313 F.3d 1220 and Lam, 211 B.R. 36 (9th Cir.BAP (Cal.). Together these cases establish a potentially massive source of relief for beleaguered homeowners in Chapter 13 by utilizing a simple formula:

If the value of your home is less than the amount of your first mortgage, and you have a second, third or more mortgages mortgage on your home, those junior mortgages can be reclassified as an unsecured debt and treated essentially like credit card charges.

They can be discharged and “stripped off” in a Chapter 13 Bankruptcy proceeding for pennies on the dollar over the period of the repayment plan.

There is no way out of this for the lender and no adverse debt relief tax for the debtor due to the bankruptcy exception provided in Internal Revenue Code Section 108.

For once the lender has to do something they’ve been making California homeowners do for the last 7 years: they gotta stand there and take it.

They who destroy equity in the homes of the people shall in turn have their liens destroyed.  So sayeth the law.

Guest author Bill Purdy practices real estate and tax law in Soquel, California specializing in foreclosure relief, predatory lending, and short sales.  Bill has written on 1099’s and foreclosure and The Don’t Do List for Troubled Mortgages.

Image courtesy of MGChan.