Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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                    THE BANKRUPTCY OPTIONS
     Bankruptcy is a powerful option.  Bankruptcy is provided for by the United States Constitution - Article 1, Section 8, Clause 4.  Corporate capitalists make decisions that financially benefit their shareholders.  When a situation arises where it becomes more profitable to breach a contract than to perform under the contract, the corporation owes its stockholders the duty to make the better economic decision and breach the contract.  When that happens, no one blinks - it is expected and encouraged as a model of efficiency in the marketplace.  This is something good for the particular business and society in general as the fittest corporations survive and grow, spreading wealth through commerce. 
     When a person contemplates bankruptcy, he or she often goes through the mental anguish associated with the misplaced concept that it is morally wrong to do so.  Most likely, corporations are at the root of fostering that concept as a capitalist method of protecting their financial interests from borrower default.  Somehow, religions sometimes wrongly intrude into that belief as well.  Having handled hundreds of family law cases, I have seen that overwhelming debt is destructive to family cohesiveness.  It leads to depression, interpersonal disputes between hubands, wives and children, often results in divorce and sometimes suicide.  No marriage - or life - should be sacrificed for the sake of the corporate shareholders wealth.  If bankruptcy could save marriages, then churches and pastors should encourage its' use when financial burdens are overwhelming.  To not do so is derelict of the duties Jesus gave to those leaders.  So what is one to do when faced with unrelenting debt - take your lead from corporations and make a better economic decision and file a bankruptcy!

     Generally, the average person should consider three different chapters of bankruptcy - chapter 7, chapter 11 and chapter 13. 
Chapter 7 is a "liquidation" bankruptcy where you liquidate your unexempt property and wipe out your debts.  Chapter 13 is a restructuring of your debt where you pay off your debt over 5 years on a very limited budget.  Chapter 11 is a powerful bankruptcy usually thought of as a business bankruptcy, but it is available to you too.  It can restructure debt also.  You are probably aware that our corporate controlled government has been slowly eliminating our rights.  Corporations rights are increasing as ours decrease.   It used to be that anyone could file a chapter 7, but in 2005 the bankruptcy code was changed at the behest of the credit card lobby so that rich people could not file a chapter 7.  "Rich" is defined by the United States Trustee through a "means test".  The U.S. Trustee periodically reports income limitations on a state-by-state basis.  If you live in a particular state where your income is above the median income for that state, you're rich and you can't file a chapter 7 bankruptcy.  As of February 1, 2010, the test says that $41,226 per year is the limit in Florida for a single person.  The test says that $48,140 per year is the limit in California.  A "year" of income is calculated this way - take what you made in the prior six months and multiply it by 2. 

     The filing fee for a chapter 7 is $299.  There are two classes you need to take that can be done online or over the phone that cost about $80 total. (Google "bankruptcy classes")  Your credit report needs to be run also - you can get a free credit report at  You run that report to make sure you list everyone on your bankruptcy.  There are people who are non-lawyers who may be qualified to prepare your bankruptcy petition for you at a very low fee, typically around $113.00.  They are called "bankruptcy petition preparers".  Cost for a chapter 7   is about $1,500 for a single person and $2,000 for a married person.  That is the total costs with no other costs to them.  If an attorney is charging a total cost more than that, you may be paying too much.  You may want to file the bankruptcy yourself.  If so, you can get the forms from the USCourts website here.  Your bankruptcy court has materials to assist you that are on-line.

     In Florida, homestead has a constitutional meaning with protection and homestead also has a statutory meaning with protection.  But for bankruptcy purposes, currently the equity in your homestead is protected for the first 40 months after ownership up to $137,000, after that, the entire equity is protected.    California doesn't protect homesteads to the extent that Florida protects it - that's why rich people move to Florida, buy a multimillion dollar property, wait 40 months and file bankruptcy.  How do they get under the income limits? They just don't make any money "personally".  Their corporations withhold dividends for awhile.  California only protects $50,000 of equity for a single person and $75,000 for a married couple.  If you think you know why the government treats married people more harshly than single people, please email me and let me know.

     A chapter 13 bankruptcy has some debt ceilings listed in 11 USC 109(e) -
currently, you cannot have more than $336,900 in unsecured debts or $1,010,650 in secured debts or you don't qualify for a chapter 13. (That statute isn't updated yet.)  If you are "rich" or have too much debt, you can't file a chapter 7 or chapter 13 bankruptcy - but you can use a chapter 11.  It used to be that you could do a "cramdown" on a mortgage - which is to say that you could have the bankruptcy court reduce your mortgage principal to market value.  That seemed reasonable because when you file bankruptcy and if you lose the home, the creditor then sells it and doesn't get any more than market value for it anyhow.  The cramdown was forced out by the corporations who control the government - they didn't want you to be able to reduce their mortgage principal.  But, the corporations kept it for themselves - in a chapter 11.  So if you use a chapter 11, you too may be able to cramdown your mortgage.  It is complicated and way more involved than this website will get.  But if you can do it, it may be worthwhile.  Chapter 13's typically run about $3,500 by most lawyers and chapter 11's start at about $8,000 and go up.


     Have you heard of this? Man gets home for free - Bankruptcy Judge wipes out PHH Mortgage
This is a show-the-note type of argument.  Before the zealots get their socks all bunched up, I need to tell a story.  A friend of mine called me up one day.  He was pretty upset.  He said that he sold his home through a realtor and he used a title company to pay off the bank.  He later was sued for a foreclosure and deficiency judgment on the home he sold.  It seems that he paid off the wrong bank.  The moral of this story is that if you won the lottery today and you took a whole bunch of cash to your bank and stuck it out to them in your right hand, before you let go you need to make sure that they put in your left hand your original promissory note stamped "paid in full" by the lender/payee thereon and every bank, business or person who held it since it was created.  That, is a big order and probably unlikely to be filled.  Otherwise, how can you ever be sure that you have clear title to your property?

     So here is how you do it.  When you file your bankruptcy schedules, you list your mortgage on schedule F.  Schedule F is for unsecured debt.  By listing it on schedule F instead of schedule B, you are representing to the court and the creditor that you don't believe it is secured.  You have to invite a fight with the creditor.  But, you are only half-way there - now you have to mark the box "disputed" on schedule F.  Lawyers typically don't do this - or will avoid it at almost any cost because it triggers a lot of work that they probably won't get paid for.  So if you are using a lawyer, talk about that subject so that you don't get left out in the dark on this issue.

     You can't get ready for this fight without your mortgage document and your promissory note.   If you are in foreclosure, they should be attached to the Complaint (foreclosure lawsuit).  If that isn't the case, go to the county court clerk to get a copy of the recorded mortgage document (in Florida) or to the county recorder (in California) to get a copy of the Deed of Trust and every document relating to that particular Deed of Trust.  If that fails, use one of these Qualified Written Requests (sample 1) or sample 2 to get the documents.   

     The creditor will likely file a proof of claim.  When that happens, you file an objection to the proof of claim.  When the creditor files a motion for relief from stay, you file an objection to motion for relief from stay and notice of hearing.  You follow that document up with a memorandum in support of objection to motion for relief from stay and notice of hearing.    These are just samples from a case in California.  Not all citations have been cross-checked yet and it isn't complete.  They do not directly apply to your case - just read them to get the idea of where you have to go to make it happen for you.  
     The next stop on this fascinating road is to try to strip a security interest (mortgage) from the note in a bankruptcy as an unperfected lien (MERS related).  Here is an Arkansas case where it worked when there was a defective notarial affidavit - In re Mary Stewart.  So the theory (imperfect as it is at this time) goes like this - you obtain an expert title lawyer's affidavit (like attorney Greg Clark) that title has been destroyed and can no longer be deraigned due to the MERS mortgage and the failure of consideration in that MERS promised to keep title in itself (for a fee you paid of $6.95 at closing), but instead it transferred that title to others.  Then, arguing the Kesler reasoning (
Landmark National Bank v. Kesler, 216 P.3D 158 (Kansas, 2009)) and Southwest Homes reasoning in Mortgage Electronic Registration System, Inc. v. Southwest Homes of Arkansas, 08-1299 (Ark. 3/19/2009) (Ark., 2009), the lien is unperfected and must stripped. That would leave just a note which could be discharged.  


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Dear Ann,
    I read somewhere that on investment property, ie a property you rent
to someone else, not your homestead, it is still possible under Chapter 13
to get the mortgage "crammed" down.
    Your article seems to indicate this is possible only in Ch 11. Please clarify.
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Hi Mike,
I am still learning about bankruptcy. The above article was written by Mr. Gingo Esq. I am trying to gather info about bankruptcy and post them in this threat so that we can be informed. If you find other info, please post them here. Thanks
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Quote from 4foreclosurefraud

New York Bankruptcy Lawyer Triumphs Over Shoddy Mortgage Lender Practices

Manhattan condominium owner, victim of shoddy record-keeping at mortgage giant JPMorgan Chase, fights back and wins with the help of New You bankruptcy lawyer David B. Shaev.

New York, NY (PRWEB) March 4, 2010 -- New York homeowners filing for bankruptcy are breathing a sigh of relief, knowing that the courts are on their side. In a scathing opinion issued recently by US. Bankruptcy Court Judge Martin Glenn, JPMorgan Chase Bank was effectively denied payment of their entire alleged mortgage claim because they refused to prove their ownership of the loan. The case is In re Minbatiwalla, Chapter 13 Case No. 09-15693 (MG) (Bankr.S.D.N.Y. 2009).

New York bankruptcy lawyer David B. Shaev
New York bankruptcy lawyer David B. Shaev

“The homeowner won the battle today. But with so much mortgage servicer abuse in bankruptcy, the war wages on.” - David B. Shaev, New York Bankruptcy Lawyer
Kerman J. Minbatiwalla, a Manhattan homeowner, filed for Chapter 13 bankruptcy to repay his debts over time and save his East Side condominium. Though he was current on his mortgage at the time his case was filed, Minbatiwalla is the poster child for a system gone horrible wrong at the hands of shoddy recordkeeping at his mortgage company.

Minbatiwalla had two mortgages with various JPMorgan Chase entities. On filing of his bankruptcy, Chase Home Finance, LLC filed papers with the court on behalf of U.S. Bank as well as an unknown mortgage trust asking for payment of pre-bankruptcy arrears; a second claim was filed by JP Morgan Chase Bank N.A. also demanding payment of arrears.

Minbatiwalla’s attorney, Manhattan bankruptcy lawyer David B. Shaev, looked on both documents with suspicion. “My client wants to pay his mortgage, but now he doesn't know who is the rightful recipient of the money. There was nothing but a summary attached, with nothing to indicate which party was which, or to whom the monies should be paid,” Shaev said. “A string of mortgage trusts and servicers only confused the situation, and we needed to be sure that the property parties would be paid.”

Though Shaev demanding more information on the transfer of the loans and the relationships of the parties, he was met with no response. Undeterred, he demanded that the claims for payment be denied in full.

Bankruptcy Court Judge Martin Glenn, in a 26-page written opinion, found that Chase’s failure to attach documentation and respond to the Shaev’s information requests is fatal to their claims for payment. “Here it is not clear whether the claim was assigned to Chase, or whether Chase was the original party on the mortgage and the note,” Glenn wrote. “[The Debtor requested additional information from the claimant in October and has received no documents.”

A copy of the full opinion is available from the Court's website here.

This is not the first time Shaev has seen mortgage servicer abuses in the bankruptcy courts. He has recently fought – and won – in cases against a variety of lenders who have refused to treat bankruptcy debtors with the fairness the law demands.

“The homeowner won the battle today,” Shaev said on hearing of the decision. “But with so much mortgage servicer abuse in bankruptcy, the war wages on.”

David B. Shaev is a New York bankruptcy lawyer and partner at Shaev & Fleischman, LLP where he concentrates his practice in the field of protecting consumers in bankruptcy.
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QUOTE from Livinglies

Strategic Comment: There are two ways for you stop foreclosure, sale and eviction dead in its tracks. One is to file bankruptcy under Chapter 13 which is an opportunity for debtors to reorganize their payments to creditors.
  • An automatic stay goes into effect immediately upon filing with the Bankruptcy Court. Creditors who say or do anything in furtherance of collecting a debt are committing a federal crime from the moment it is filed, whether they know about it or not. 
  • However, the payments include fees to the Court and Trustee which exceeds 10% of what you pay into the Court for the benefit of your creditors, so since you are strapped for cash it further impedes your ability to work out a realistic plan.
  • Also for secured debts like mortgages, the lender can come into Bankruptcy court and ask the court to lift the automatic stay which in the past has been routinely granted and for the most part still is, UNLESS YOU DO SOMETHING ELSE.
  • YOU SHOULD ALSO NAME, AS THE CREDITOR, THE ORIGINAL LENDER, and state the amount of the loan as a contingent liability to them. The fact is, in most cases, you have not been presented with proof of transfer of anything, nor seen any assignment, or what rights or obligations were picked up in transactions after your closing by third parties who own the servicing rights, or the mortgage or the note. The Trustee or other party coming into court or posting notices of sale on your property probably is getting his/her marching orders from someone who either doesn’t have or can’t prove they know the amounts you paid, to whom or what is currently due. PLACE THE BURDEN WHERE IT BELONGS — ON THEM.
  • Then you should state the present mortgage servicing entity to whom you are now sending your payments (this applies only where the loan has been sold which is true in 95% of the cases) as a contingent liability in an unknown or unliquidated amount. 
  • Then you should add a creditor “john Doe” as also an unknown unliquidated debt as the possible owner of a security under which he has ownership of the mortgage and note.
  • Then you should file an adversary proceeding or action under TILA, RESPA, fraud etc. making all appropriate claims for rescission, refund of interest, points, loss of value in the property etc. 
If your case is handled in this way there is a higher probability that you will survive the motion for lifting of the stay as the movant will have to prove the chain of title and authority on the mortgage and note, thus giving rise the the issue of legal standing for them to standing in the courtroom at all.
The second option, if you are faced with foreclosure, sale or eviction is just file the TILA action in Federal court and then go the State Court and ask the State Court to issue a stay because there is pending litigation in Federal Court. Usually State Court judges are more than happy to get the matter off their desks and thus grant your motion for stay, but they might not be under no obligation to do so.
Remember that whether you go straight into Federal Civil Court or Federal bankruptcy Court, which is a different division, and you are NOT represented by counsel, the Judge must do the legal research himself to determine the merit of your claims. If you are represented by counsel you need to make damn sure he knows what he is doing. Most bankruptcy lawyers don’t know an adversary proceeding or TILA action from egg on the wall. They have no experience with it. Very few lawyers or judges know this area since it only became important in the last couple of years. 
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I went Chapter 13 about a 1.5 ago.....even though we could have qualified to do a Chapter 7. I am doing a three year repayment at $120 a month.

When I filed I was not aware that IndyMac was just the servicer & they never said otherwise. When I fell behind on my mortgage I thought I was protected under the Chapter 13, but because I was paying the mortgage directly to IndyMac & not through the trustee they said I was not proected under the Chapter 13 in regards to my mortgage.

I still don't know where I stand in regard to that. My bankruptcy attorney should have made me aware of this...but all he cared about was that he got paid.

Just a FYI for anyone thinking of Chapter 13.
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How Bankruptcy Can Help With Foreclosure

Avoid or delay foreclosure of your home by seeking bankruptcy protection.

If you are facing foreclosure and cannot work out a deal or other alternative with the lender, bankruptcy may help.

If you get behind on your mortgage payments, a lender may take steps to foreclose--that is, enforce the terms of the loan by selling the house at a public auction and taking payment of your loan out of the auction.

This won't happen overnight. The foreclosure process typically starts after you fall behind on your payments for at least two months, and often three or four. That gives you time to try some alternate measures, such as loan forbearance, a short sale, or a deed in lieu of foreclosure. (For details on these options, see How to Stop Foreclosure.)

But if you've already tried and failed with these measures, now is a good time to consider bankruptcy as a possibility for avoiding or stalling foreclosure. Here are some ways that filing for bankruptcy can help you.

The Automatic Stay: Delaying Foreclosure

When you file either a Chapter 13 or Chapter 7 bankruptcy, the court automatically issues an order (called the Order for Relief) that includes a wonderful thing known as the "automatic stay." The automatic stay directs your creditors to cease their collection activities immediately, no excuses. If your home is scheduled for a foreclosure sale, the sale will be legally postponed while the bankruptcy is pending--typically for three to four months. However, there are two exceptions to this general rule:

Motion to lift the stay. If the lender obtains the bankruptcy court's permission to proceed with the sale (by filing a "motion to lift the stay"), you may not get the full three to four months. But even then, the bankruptcy will typically postpone the sale by at least two months, or even more if the lender is slow in pursuing the motion to lift the automatic stay.

Foreclosure notice already filed. Unfortunately, bankruptcy's automatic stay won't stop the clock on the advance notice that most states require before a foreclosure sale can be held (or a motion to lift the stay can be filed). For example, before selling a home in California , a lender has to give the owner at least three months' notice. If you receive a three-month notice of default, and then file for bankruptcy after two months have passed, the three-month period would elapse after you'd been in bankruptcy for only one month. At that time the lender could file a motion to lift the stay and ask the court for permission to schedule the foreclosure sale.

How Chapter 13 Bankruptcy Can Help

Many people will do whatever they can to stay in their home for the indefinite future. If that describes you, and you're behind on your mortgage payments with no feasible way to get current, the only way to keep your home is to file a Chapter 13 bankruptcy.

How Chapter 13 works. Chapter 13 bankruptcy lets you pay off the "arrearage" (late, unpaid payments) over the length of a repayment plan you propose--five years in some cases. But you'll need enough income to at least meet your current mortgage payment at the same time you're paying off the arrearage. Assuming you make all the required payments up to the end of the repayment plan, you'll avoid foreclosure and keep your home.

2nd and 3rd mortgage payments. Chapter 13 may also help you eliminate the payments on your second or third mortgage. That's because, if your first mortgage is secured by the entire value of your home (which is possible if the home has dropped in value), you may no longer have any equity with which to secure the later mortgages. That allows the Chapter 13 court to "strip off" the second and third mortgages and recategorize them as unsecured debt --which, under Chapter 13, takes last priority and often does not have to be paid back at all. For more information on Chapter 13 bankruptcy, see the Chapter 13 Bankruptcy area of Nolo's website.

How Chapter 7 Bankruptcy Can Help

It may be that you'll have to give up your home no matter what. In that case, filing for Chapter 7 bankruptcy will at least stall the sale and give you two or three more months to work things out with your lender. It will also help you save up some money during the process and cancel debt secured by your home.

Saving money. During a Chapter 7 bankruptcy, you can live in your home for free during at least some of the months while your bankruptcy is pending--and perhaps several more after your case is closed. You can then use that money to help secure new shelter. (For more on this, see the blog post How Bankruptcy Can Be Used to Deal With Foreclosure.)

Canceling debt. Chapter 7 bankruptcy will also cancel all the debt that is secured by your home, including the mortgage, as well as any second mortgages and home equity loans.

Canceling tax liability for certain property loans. Thanks to a new law, you no longer face tax liability for losses your mortgage or home-improvement lender incurs as a result of your default, whether you file for bankruptcy or not. This new law applies to the 2007 tax year and the following two years. (See the blog post New Tax Break for People Who Default on Their Mortgage.)

However, the new tax law doesn't shield you from tax liability for losses the lender incurs after the foreclosure sale if:

  • the loan is not a mortgage or was not used for home improvements (such as a home equity loan used to pay for a car or vacation), or
  • the mortgage or home equity loan is secured by property other than your principal residence (for example, a vacation home or rental property).

This is where Chapter 7 bankruptcy helps. It will exempt you from tax liability on losses the lender incurs if you default on these other loans. For more information on Chapter 7 bankruptcy, see the Chapter 7 Bankruptcy area of Nolo's website.

Chapter 7 Cannot Cancel the Foreclosure

With all this debt being cancelled, you may be wondering why the foreclosure on your home won't be cancelled too. The trouble is, when you bought your home you probably signed two documents (at least)--a promissory note to repay the mortgage loan, and a security agreement that could be recorded as a lien to enforce performance on the promissory note.

Chapter 7 bankruptcy gets rid of your personal liability under the promissory note, but it doesn't remove the lien. That's the way Chapter 7 works. It gets rid of debt but not liens--you'll still probably have to give up the house under the lien since that's what provided collateral for the loan.

Chapter 7 Bankruptcy May Not Be Right For You

Not everyone can or should use Chapter 7 bankruptcy. Here's why:

You could lose property you want to keep. Chapter 7 might cause you to lose property you don't want to give up. As an example, if your wedding ring is particularly valuable, it may exceed the dollar amount of jewelry you're allowed to keep in a bankruptcy (under something called the "jewelry exemption"). In that case, the bankruptcy trustee could order you to turn the ring over to be sold for the benefit of your creditors. For more on what property you can and can't keep in Chapter 7 bankruptcy, see When Chapter 7 Bankruptcy Isn't the Right Choice.

You may not be eligible. Even if Chapter 7 bankruptcy would work for you, you may not be eligible. Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, you are not eligible if your average gross income for the six-month period preceding the bankruptcy filing exceeds the state median income for the same size household. Nor are you eligible if your current income provides enough excess over your living expenses to fund a reasonable Chapter 13 repayment plan. For more information about how the new income eligibility test (the "means test") works, see Chapter 7 Bankruptcy -- Who Can File?

Bankruptcy's Effect on Your Credit Score

Both bankruptcy and foreclosure will damage your credit score. However, sometimes bankruptcy is the preferable option when trying to rebuild credit. Here's why:

A foreclosure will damage your credit score for many years, will not get rid of your other debt, and is particularly harmful if you are house shopping.

In contrast, discharging your debts in bankruptcy will harm your credit score, but can help you rebuild your score quicker than after a foreclosure. This is because bankruptcy will leave you solvent and debt-free--and therefore able to start rebuilding good credit sooner.

Keep in mind that the current mortgage meltdown and credit crunch (which are prevalent at the time this article is being written) may change the way bankruptcy and foreclosure affect credit ratings.

If All Else Fails: Relief From Debt and Tax Liability

If you're certain you won't be able to propose a Chapter 13 repayment plan that a bankruptcy judge will approve, and Chapter 7 will provide only a temporary delay from the foreclosure sale, then what's the point of either?

If you have to lose your home--a bitter result to be sure, but sometimes unavoidable--you can at least view bankruptcy as the best way to get out from under your mortgage debt and tax liability. Bankruptcy also offers a way to save some money, which will help you find new shelter and weather the psychological and economic shocks that lie ahead.

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George Burns
I am diligently researching this issue.

Does anyone know of any updates to the material in this thread?
Does anyone know of any other information on the subject of using Bankruptcy in a foreclosure defense or otherwise such as in a Quiet Title action (if that is possible) ?

Most of all, Is the material in the thread valid?
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    With regard to quiet title actions, I am working on one now where the
original lender was a "non existent" lender which had gone out of business in
2002 but allegedly made this mortgage loan in 2006!
    What I have determined is that it was a "table funded loan", ie the name
of the lender on the paper work was not the real lender! Why would anyone
do this? The answer is simple, they needed to use a name on the paper work
which would be instantly recognizable to investors on the secondary market
so they could sell the same loan multiple times to different investors.
    If Luigi Legbreaker of Murder Inc. put that on the loan documents, no
investor would want to buy the loan. So, why not put the name of a popular
but defunct lender from the past on the paper work so Luigi could peddle
this $100,000 Note ten times to unsuspecting investors and take in a million!
Then deposit 20% of the proceeds with a big name servicer so payments
to the investors could be made for awhile and sell the "servicing rights" for
2% of the loan. (read foreclosure rights) Since Luigi didn't expect the borrower to make payments very long, he took out mortgage insurance,
TEN TIMES so the investors would get back something and the big mortgage
insurers would take the hit. Does this have a familiar ring?
     Part of this story is true,the rest is speculation. Can you figure out which
is which? Think about it. Then look into the option of a "quiet title action".
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What is the effect of the automatic stay if a homeowner files for Ch. 13 bankruptcy after having lost the home in a sheriff sale but before being evicted by the lender?  Is the court certain to lift the stay, or are there reasons that the stay could be left in place?  What is the status of the occupying former homeowner, are they considered a tenant or something equivalent to a squatter? 
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Hey Jeff... Insert all disclaimers about me not being an attorney right here... 

The BK judge would likely grant MRS because the foreclosure has already happened pursuant to state law and you have rooker-feldman as well as res judicata working against you.  Those doctrines prevent a BK judge from revisiting that decision.  Read Agard.  Your facts are similar.

I think a motion from relief from stay if granted would give the titled owner permission to pursue your eviction in state law.  You'll probably get a 3 or 30 day notice to quit followed up by an eviction or unlawful detainer suit.

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Hopefully, you have an attorney to help you. I would think the automatic stay would be in effect for a minimum of 30 days. Having done the chp 13 will you be able to afford your monthly expenses? The only way the auto stay may not go into effect is if you have filed more than one bk.

There's a good chance if you have the funds you may be able to work thru the chp 13. This would leave the stay on your home. However, without funds they won't listen to anything reasonable at all. Even if you could have them within 5 days or less.

I've even heard of people trying to pay off their balances only to be jailed for trying to certify who exactly should be paid with the way they've done so many things. If your able to stay within the chp 13 to be paid they will have to put in a Proof of Claim(also known as a POC) to be paid. If you have an attorney I would suggest to wait until this happens to see what my need to be objected to depending on evidence they provide.

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Notice "(d)"


Rule 3001. Proof of Claim

(a) Form and content.

A proof of claim is a written statement setting forth a creditor's claim. A proof of claim shall conform substantially to the appropriate Official Form.

(b) Who may execute.

A proof of claim shall be executed by the creditor or the creditor's authorized agent except as provided in Rules 3004 and 3005.

(c) Claim based on a writing.

When a claim, or an interest in property of the debtor securing the claim, is based on a writing, the original or a duplicate shall be filed with the proof of claim. If the writing has been lost or destroyed, a statement of the circumstances of the loss or destruction shall be filed with the claim.

(d) Evidence of perfection of security interest.

If a security interest in property of the debtor is claimed, the proof of claim shall be accompanied by evidence that the security interest has been perfected.

(e) Transferred claim.

(1) Transfer of claim other than for security before proof filed. If a claim has been transferred other than for security before proof of the claim has been filed, the proof of claim may be filed only by the transferee or an indenture trustee.

(2) Transfer of claim other than for security after proof filed. If a claim other than one based on a publicly traded note, bond, or debenture has been transferred other than for security after the proof of claim has been filed, evidence of the transfer shall be filed by the transferee. The clerk shall immediately notify the alleged transferor by mail of the filing of the evidence of transfer and that objection thereto, if any, must be filed within 21 days of the mailing of the notice or within any additional time allowed by the court. If the alleged transferor files a timely objection and the court finds, after notice and a hearing, that the claim has been transferred other than for security, it shall enter an order substituting the transferee for the transferor. If a timely objection is not filed by the alleged transferor, the transferee shall be substituted for the transferor.

(3) Transfer of claim for security before proof filed. If a claim other than one based on a publicly traded note, bond, or debenture has been transferred for security before proof of the claim has been filed, the transferor or transferee or both may file a proof of claim for the full amount. The proof shall be supported by a statement setting forth the terms of the transfer. If either the transferor or the transferee files a proof of claim, the clerk shall immediately notify the other by mail of the right to join in the filed claim. If both transferor and transferee file proofs of the same claim, the proofs shall be consolidated. If the transferor or transferee does not file an agreement regarding its relative rights respecting voting of the claim, payment of dividends thereon, or participation in the administration of the estate, on motion by a party in interest and after notice and a hearing, the court shall enter such orders respecting these matters as may be appropriate.

(4) Transfer of claim for security after proof filed. If a claim other than one based on a publicly traded note, bond, or debenture has been transferred for security after the proof of claim has been filed, evidence of the terms of the transfer shall be filed by the transferee. The clerk shall immediately notify the alleged transferor by mail of the filing of the evidence of transfer and that objection thereto, if any, must be filed within 21 days of the mailing of the notice or within any additional time allowed by the court. If a timely objection is filed by the alleged transferor, the court, after notice and a hearing, shall determine whether the claim has been transferred for security. If the transferor or transferee does not file an agreement regarding its relative rights respecting voting of the claim, payment of dividends thereon, or participation in the administration of the estate, on motion by a party in interest and after notice and a hearing, the court shall enter such orders respecting these matters as may be appropriate.

(5) Service of objection or motion; notice of hearing. A copy of an objection filed pursuant to paragraph (2) or (4) or a motion filed pursuant to paragraph (3) or (4) of this subdivision together with a notice of a hearing shall be mailed or otherwise delivered to the transferor or transferee, whichever is appropriate, at least 30 days prior to the hearing.

(f) Evidentiary effect.

A proof of claim executed and filed in accordance with these rules shall constitute prima facie evidence of the validity and amount of the claim.

(g) To the extent not inconsistent with the United States Warehouse Act or applicable State law, a warehouse receipt, scale ticket, or similar document of the type routinely issued as evidence of title by a grain storage facility, as defined in section 557 of title 11, shall constitute prima facie evidence of the validity and amount of a claim of ownership of a quantity of grain.

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Check out this link for info on Bankruptcy
There are some free chapters from the book about BK.
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William A. Roper, Jr.

jeff said:

What is the effect of the automatic stay if a homeowner files for Ch. 13 bankruptcy after having lost the home in a sheriff sale but before being evicted by the lender? Is the court certain to lift the stay, or are there reasons that the stay could be left in place? What is the status of the occupying former homeowner, are they considered a tenant or something equivalent to a squatter?


As I have observed in other threads, Bankruptcy is NOT an area of expertise of mine.  Neither am I a lawyer.

I think that other responses are generally on the right track, but I would observe also that your precise rights and circumstances are somewhat dependent upon the laws of your jurisdiction.

There is more than a little distinction between a judicial and a non-judicial foreclosure.  In most cases, following a non-judicial foreclosure the purchasing entity (usually the servicer or a shill for the servicer) seeks the ejectment of the borrower through an unlawful detainer or similar action.

By contrast, in a judicial foreclosure the purported mortgage investor has already obtained a judgment.  In some jurisdictions, the foreclosure judgment  includes some order requiring the borrower to VACATE.

The precise consequences of failing to timely vacate also VARY WIDELY.  In some places, where a borrower has been ordered to vacate, a sheriff or constable can come around and variously put the borrower's personal belonging on the curb, have the personal belongings hauled away and put in storage redeemable only upon payment of moving and storage fees, etc.

So even BEFORE inquiring about the effects of a Bankruptcy stay, it would be wise to become familiar with the statutes, cases and actual practice of ejectment in your jurisdiction.  IF YOU ARE IN A JUDICIAL FORECLOSURE STATE, READ THE ORDER OF FORECLOSURE VERY CAREFULLY.  Find an attorney EXPERIENCED in consumer debt, mortgage foreclosure and bankruptcy and ASK SOME POINTED QUESTIONS.  Make a list of questions BEFORE you meet with the attorney.

You mention a sheriff's sale.  Most often a sale by a sheriff, commissioner or referee is a court ordered sale, while aprivate sale is more often by a trustee under a deed of trust.  But this is also not universally the case.

Start by fully understanding the nature of the Orders ALREADY IN PLACE.  Next, understand what to expect in your jurisdiction as to the ordinary process going forward.  Then it is appropriate to inquire as to HOW a Bankruptcy will alter the rights of the parties and the sequence of events.

Note that this understanding will also inform your scrutiny of the filings with the Bankrutpcy Court.  Note that it would typically be the entity OWNING the property after a sale that would seek ejectment.  But a foreclosing entity might seek possession in advance of sale pursuant to a court order in some circumstances.


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    Excellent question. I have a case similar to this in Florida where the client
filed for Ch7 AFTER THE SALE, but before the CERTIFICATE OF TITLE was
    The plaintiff filed a MOTION TO LIFT THE STAY and the judge denied it
because the plaintiff failed to record and file a CERTIFIED copy of the judgment.
     Then the plaintiff filed (BUT DID NOT RECORD) a Certified copy of the
judgment and filed a motion for a rehearing. At the second hearing, the
Judge reversed himself and granted the motion to lift the stay! So go figure!
     By the time of the second hearing, the defendant had already been
approved for a complete discharge of the money judgment but had not yet
been formally discharged. (She had a Florida Homestead Exemption which
allows an unlimited exemption on a Florida homestead)
     In my opinion, the issue will boil down to this, "Did the plaintiff have a
valid lien at the outset of the foreclosure case?" In this case there was no
 assignment of the mortgage and the judgment was based on an "open
endorsement" of the Note as though it was a negotiable instrument. The
problem with that is that it was an adjustable rate Note, with late charges
and a prepayment penalty rider so it did not qualify as a "negotiable instrument" and had to be transferred by a lawful assignment (ie witnesses,
notarization and recording of the assignment). This never happened so the
plaintiff had no lien at the inception of the case. Also the plaintiff never
perfected its judgment lien by recording a Certified copy of it BEFORE the
defendant filed Ch 7 so it should not be allowed to perfect its lien after
the debtor filed Ch 7.The automatic stay should have prevented that.
     Only time will determine the final outcome of this whole bruhaha.

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Thanks for all the responses.  Just to provide a little more detail on this complicated situation.  Its in michigan and the foreclosure proceeding was non-judicial foreclosure by advertisement, in which MERS acted as the mortgagee.  So at first, it would seem like the recent Residential Funding (Saurman) decision would be spot on.  However, I'm not sure if there are any court options left at this point in time.

The foreclosure sale happened back in 2009.  The foreclosure was challenged in state court at the county level last summer, where the lender won.  This decision was not appealed, but I think the time for requesting reconsideration or appeal has passed.  After the lender won, there was a lender initiated eviction proceeding at the local municipal court.  

In michigan, eviction is a two step process, first there needs to be a judgement for possession.  However, the judgement doesn't actually give the landlord/lender possession.  After the judgement, the tenant/occupant is given 1-2 weeks to move out.  If the occupant does not move out voluntarily after this time period, the landlord/lender must go back to court to have the judge issue a writ of execution, which authorizes the sheriff or other court appointed officer to actually put the occupant out and also authorizes the lender/landlord to change the locks and assume actual possession of the property.  

In this case, the lender got a judgement for possession.  This judgement was appealed to the county-level court prior to the issuance of the writ of execution.  The Appeal was denied about six weeks prior to the Appeals court's Saurman (anti-MERS decision).  Next the lender filed a motion for the issuance of the writ of execution.  Prior to the judge acting on the motion, the bankruptcy petition was filed.

I think the time period for further appealing the eviction decision has passed.  But given the change in law caused by the Saurman, I'm trying to figure out if there is some kind of exception?

Also, I'm trying to figure out how the bankruptcy court will handle the issue given that there have been two substantive state court cases (the foreclosure challenge, and the challenge to the eviction).  It seems like res judicata might apply, but the law has effectively been changed since those prior two decisions, so I'm not sure?

I know the standard response is ask a qualified lawyer, and there was a lawyer involved earlier, but in general I like to know as much as possible so I'm better able at communicating attorneys.
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What is the status of the case that was suspended by the BK?   Will it require them to file a new suit?   If so then maybe you can play some other cards to buy time while you get a lawyer to look at things in light of the recent favorable case law.

For example, start your own suit for quiet title.  While you have this action open I bet you can get any other new suits dismissed due to your litigation already ongoing.

Find something federal (RESPA, FCRA, FDCPA, civil right violations, etc) and remove any actions against you with a federal counter claim.  I know somebody who pulled this trick three or four times..

Just trying to think outside of the box...

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William A. Roper, Jr.
jeff said:
I think the time period for further appealing the eviction decision has passed. But given the change in law caused by the Saurman, I'm trying to figure out if there is some kind of exception?
It had been my impression that the automatic civil stay imposed by 11 U.S. Code §362 also applies to appeals.  I think it might also toll the deadlines for filing appeals.
I would encourage you to study the statute:
Also look at the cases interpretting the statute.
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William A. Roper, Jr.
See also the provisions of 11 U.S. Code §108 (Extension of time) and the cases interpretting §108 :

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William A. Roper, Jr.
Here are some California and Texas cases which discuss the effects of a Bankruptcy Civil Stay on appellate deadlines and which seem to indicate that my impression noted above may have been mistaken:
ECC Construction, Inc. v. Oak Park Calabasas Homeowners Assn., No. B163108, 122 Cal.App.4th 994 (Cal. App. 2nd Dist. 2004)

Raley v. Lile, No. 10-92-274-CV, 861 S.W.2d 102, 105 (Tex. App.-Waco 1993, writ denied).

Gantt v. Gantt, No. 14-03-00969-CV, 208 S.W.3d 27 (Tex. App. Houston [14th Dist.] 2006, reh. overruled, pet. denied) [Substituted Opinion].

Bashaw v. State, No. 03-05-00745-CV (Tex. App. Austin 2007)
But it should also be noted that whether or not a stay is imposed under the Bankruptcy Code, there MIGHT still be some relief under the state statutes or court rules, including appellate rules, with respect to the deadline to file an appeal in respect of a Federal Bankruptcy filing.

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William A. Roper, Jr.

Also take a look at Michigan Rule No. 7.203(B)(5) and the cases elaborating thereon.  It is UNCLEAR whether that Rule now affords any relief.  ASK A REALLY CAPABLE LAWYER!

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