Johnson Law Firm, P.A.

Guideline’s posted for Obama’s Making Homes Affordable

ehj — Wed, 04 Mar 2009 15:59:32 +0000

On March 4, 2009, the U.S. Department of the Treasury issued a summary of the guideliens for Obama’s Making Homes Affordable. According to the release: “The Home Affordable Refinance program will be available to 4 to 5 million homeowners who have a solid payment history on an existing mortgage owned by Fannie Mae or Freddie Mac. Normally, these borrowers would be unable to refinance because their homes have lost value, pushing their current loan-to-value ratios above 80%. Under the Home Affordable Refinance program, many of them will now be eligible to refinance their loan to take advantage of today’s lower mortgage rates or to refinance an adjustable-rate mortgage into a more stable mortgage, such as a 30-year fixed rate loan.”

Click here to learn more about the program.

Click here to find out if you qualify for the program.

Helping Families Save Their Homes Act of 2009 (HR1106)

ehj — Tue, 24 Feb 2009 15:36:49 +0000

According to an article published in the Congressional Quarterly on February 23, 2009, the Helping Families Save Their Homes Act of 2009 may soon be on the floor of the House or Representatives. It was written that Speaker Nancy Pelosi intends to introduce HR 1106 which, among other things, would allow the bankruptcy court to re-write the terms of a mortgage secured by a debtor’s principal residence. It appears that the new legislation is similar to that of HR 200 and SR 61, but incorporates additional modifications recommended by the House Judiciary Committee. Significantly, HR 1106 still has the “magic language” of HR 200 and SR 61 which allows the bankruptcy court to modify the interest rate and term of a mortgage loan.

The language of HR 1106 can be found here: http://thomas.loc.gov/cgi-bin/query/z?c111:H.R.1106:

Homeowners facing foreclosure may soon find real relief.

ehj — Sat, 31 Jan 2009 06:31:40 +0000

In the wake of declining home values and rising foreclosures rates, two proposed bills, H.R. 200 (House of Representatives) and S.61 (Senate), may offer qualifying homeowners some real relief. The legislation, entitled “Helping Families Save their Homes in Bankruptcy Act of 2009,” would amend key provisions of chapter 13 bankruptcy laws to permit the modification of certain mortgages.

Under current chapter 13 bankruptcy laws, homeowners have the ability to save their principal residence from foreclosure by proposing a plan to cure delinquent mortgage payments. However, current law prohibits homeowners from proposing a plan that modifies the terms of their first mortgage (subordinate mortgages may be modified under certain circumstances). In other words, homeowners may not reduce their regular monthly mortgage payments or convert an “adjustable-rate” mortgage to a “fixed-rate” mortgage. The proposed legislation seeks to change that.

If passed, eligible debtors may soon be able to propose major changes to their mortgage by reducing the outstanding balance to the fair market value of the home, converting an “adjustable-rate” to a “fixed-rate,” and/or lengthening the re-payment period.

Monitor the progress of H.R. 200 here:

http://www.govtrack.us/congress/bill.xpd?bill=h111-200

Monitor the progress of S.61 here:

http://www.govtrack.us/congress/bill.xpd?bill=s111-61

Behind on your mortgage? Know your options.

ehj — Mon, 22 Sep 2008 15:04:26 +0000

It’s no secret that the combination of sky rocketing gas and food prices, high unemployment, and poor consumer confidence, together with the proliferation of adjustable rate mortgages, interest only loans, “pick-a-payment loans”, and tumbling real estate values have caused mortgage foreclosures to climb at an alarming rate. While other parts of Florida have been hit especially hard, Jacksonville and the surrounding areas of Orange Park, Ponte Vedra, Jacksonville Beach, and Atlantic Beach are too being hit hard.

To that end, we are finding that clients are unaware of their options when it comes to dealing with their mortgage company. For this reason, we want to provide prospective clients with a list of options and methods for avoiding foreclosure. It is important to note that if you have already been served with a foreclosure lawsuit, some of these options may no longer be available to you. If you have already been served with a foreclosure lawsuit, then you should immediately contact an attorney to learn what your options are and whether a Chapter 13 bankruptcy can save your home from foreclosure. Chapter 13 is a valuable tool that allows you catch up overdue mortgage payments, real estate taxes, and home owner’s association fees over time, typically 3 to 5 years. If however, you are not a party to a foreclosure lawsuit and have little or no other debt, then it may make sense for you to explore the following options with your mortgage company:

Repayment Plan/Forbearance – The most common method to cure a default is to enter a repayment plan. This will allow you to repay part of the past due payments, along with your regular payments. If you are unable to pay your mortgage due to a loss of income or increase in expenses due to circumstances outside your control (e.g., medical bills), then forbearance may make sense. Forbearance is where your mortgage company agrees to suspend payments or accept partial payments for a limited period of time until you are able to resume regular payments.

Reamoritization – If the mortgage company agrees to reamoritize your mortgage loan, the delinquency is added to the principal balance of your loan. This will bring your payments up to date. However, this increases your loan amount and your payments. The amount of the increase will not be as great if the length of the loan is also extended. Most loans are capable of being reamoritized.

Private Sale – Probably the most obvious of all choices is the private sale. If you cannot meet your mortgage obligation, a private sale may enable you to pay off the balance of the loan and receive any excess proceeds after all other lien holders and closing costs have been satisfied.

Short Sale – In essence, a short sale is where you sell your home for less than what you owe to the mortgage company and other lien holders. The mortgage company and any other lien holders must agree to accept less than full payoffs and to release their liens in order for the buyer to receive clear title. Because this process often requires the consent of many parties, it is a good idea to involve a real estate broker/agent that has experience and is familiar with short sales.

Deed in Lieu of Foreclosure – If you are unable to cure a default under any of the foregoing methods, then the mortgage company may consider a deed in lieu of foreclosure. Provided there are other liens on the property (e.g., second mortgage, judgment, homeowner’s association lien, etc.) you may be able to execute a deed transferring ownership of your home to the mortgage company.

It is worth noting that there may be tax consequences through a short sale, foreclosure, or deed in lieu of foreclosure. In these scenarios, the mortgage company rarely receives the full balance on the loan and the amount of the debt that is “forgiven” may be viewed as income for that tax year by the IRS.

For example, if you owed $200,000 on your home and you received an offer for $150,000 and your mortgage company accepted the offer (a short sale) then the IRS would view the $50,000 difference as income in that tax year. The result - you would owe taxes on $50,000. However, you may be able to avoid paying that tax by filing a form 982 with the IRS. Form 982 states: “[g]enerally, the amount by which you benefit from the discharge of indebtedness is included in your gross income. However, under certain circumstances described in section 108, you may exclude the amount of discharged indebtedness from your gross income”. One such “circumstance” is if you were insolvent prior to the triggering event. If you were insolvent, then you may be able to “exclude” the amount forgiven from being added to your gross income for that year. It would appear however, that the exclusion on only applies to your principal residence and not investment or rental property.

If you have questions about foreclosure, bankruptcy, or any other debt related matters, feel free to contact us by telephone at (904) 652-2400 or, by e-mail at info@johnsonlawpa.com.

Middle District of Florida becomes sixth busiest bankruptcy court in the nation

ehj — Mon, 09 Jun 2008 21:25:00 +0000

According to statistics released on February 19, 2008 by the Bankruptcy Court, Middle District of Florida, bankruptcy filings in the district during the year 2007 were up 70% over the prior year. In turn, the Bankruptcy Court for the Middle District of Florida, which includes Jacksonville, Orlando, and Tampa, became the sixth busiest court in the Nation. There are 90 Federal Districts that report bankruptcy statistics.

Topping the list was the Eastern District of Michigan with 33,799 bankruptcy filings for the 12 months ending September 30, 2007. Rounding out the top six were:

The Northern District of Georgia, with 30,768 filings;
The Central District of California, with 29,106 filings;
The Northern District of Ohio, with 26,417 filings;
The Northern District of Illinois, with 26,807 filings; and
The Middle District of Florida, with 23,027 filings.

Despite the rise in the number of filings, the number of court staff in the Middle District of Florida continues to decline. It is projected that the number of staff positions in 2008 will decrease from 134 to roughly 92. Judges in the Middle District carried an average load of 2,878 cases during the reporting period.