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.
Articles |The FORUM |Law Library |Videos | Fraudsters & Co. |File Complaints |How they STEAL |Search MSFraud |Contact Us
Ed Cage

Is Bankruptcy a "solution" to Foreclosure?


Except for extraordinary short window situations the answer is a

resounding “No.”  For the most part bankruptcy in the face of

approaching foreclosure is quite possibly the worst thing you could do.


Ask anyone who has tried this (har-har) remedy.


It’s a brief stay of execution then you and your spouse sign what amounts

to “a pact with the Devil.”  


·         Your rate does not go down; it all likelihood it quickly escalates.

·         It’s virtually guaranteed that you will sign away all rights to

pursue any future remedies for fraud on the deal you just “solved”

with a bankruptcy.

·         Your credit is permanently ruined.

·         There will likely be a balloon settlement to kick off your new

status as a bankrupt homeowner.  

·         Your monthly payments increase.

·         More legal fees for bankruptcy.


Did I miss anything?  Don’t do it folks unless you love the house you are

in and have a terminally ill wealthy relative who will leave you a bundle in

60-90 days.  Other than that it is the most dreadful thing you could ever do.


Mr Ed  /  /  972-596-4363

Quote 0 0

I would generally agree with your post, Ed, with a couple of caveats.

First, there are situations where borrowers are in a position or could soon be in a position to rectify their default.  Despite that, the servicer is determined to capture the profit from the equity and doom the borrower to a foreclosure sale - knowing full well they have a straw buyer lined up to buy the property at a pre-arranged price with a kick-back that hangs the borrower for the alleged shortfall.

The temporary avoidance of an auction sale on the courthouse steps in those situaitons can be meaningful.

But avoiding that is a kind of complicated scenario that involves the originator/seller of the mortage, the insurer, the trustee and the servicer.

Hopefully, BK counsel are going to become aware of their oppotunities in these situations, but my impression is most of them are satsified with the routine.

In the mean time, until bankruptcy attorneys decide to take off their blinders and recognize they could double or tripple their billings and awards, BK is most often nothing more than a temporary diversion from the ultimate result.


Quote 0 0
Ed Cage
As usual, excellent points Moose.

You are one of numerous people in MSF that have
really helped others.

Ed Cage
Quote 0 0
Write a reply...