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
Quincy
I plan to challenge my foreclosing lender in bankruptcy court and make them prove they indeed the "true" creditor (which I know they are not). Now, if all goes well and they cannot prove the debt with the necessary documentation and the judge discharges the debt can I still pursue a quiet title action in State Court or must I also file that suit on the Federal court level as well?

What happens to my home if the judge does discharge the debt in a bankruptcy case? Will the bankruptcy Trustee take it to sell or something of that nature?


Quote 0 0
    Your first question is confusing and impossible to answer since you don't
give enough information.
    Your second question can be answered. The trustee can either keep your
property and sell it to pay off your debts or he/she can "abandon" it, in which
case it gets returned to you.
     What the trustee does with it depends on whether or not it is "homesteaded" and the size of the homestead exemption in your state and the value of the property. If the homestead exemption is greater than or
equal to the value of the property, it will most likely be "abandoned" ie
returned to you. If the homestead exemption is less than the value of the
property, the trustee will sell it and use part of the proceeds to pay off the
debt and return some of it to you. (the amount of the exemption).
     The key point is that 99% of people file for chapter 7 before a judgment
is entered. The plaintiff files a motion to lift the stay, it gets granted, and the property is lost to a foreclosure sale. If one were to file after a judgment
is entered one would have a better chance, since the mortgage lien no longer
exists. List the property as homesteaded and the judgment as unsecured and
disputed. In this way, the stay can't be lifted and the Trustee will either sell
it or abandon it. At least you have a chance of winding up with either the
property or some cash if it is homesteaded.
      I recently helped a guy with a Ch 7 in Florida which has an unlimited HX.
The house was only worth 75k and the judgement was for 240K. The entire
judgement got wiped out and the trustee abandoned the property because
it was covered by the HX. Of course, the bank is fighting it, but I don't think
they can win because he filed post judgement instead of prejudgment.
       Once a judgement is entered the Note and mortgage no longer exist.
They are replaced by the judgement which under Federal law is unsecured.
This is why the HX comes into play. Without the HX, the Trustee would just
sell it and give the proceeds to the judgement holder, similar to a foreclosure
sale.
Quote 0 0
Mike H,

Here's what happened to my BK. The originator was listed as secured (They filed Bk in 2006 and the trust my mortgage is in is also listed in their BK as unsecured. I included proof in the Objection to Stay as well as Motion granted from Bk Judge to destroy all notes, deeds, etc....)

I listed the trust, SEC attn; investors for the mortgage pool, new party of interest and everyone's mother...... I even notified the attorneys in the Bk court for the Originator. No one came forward except for the foreclosing party. Well the objection to lift the stay was well spelled out, that the Judge amended the Order by Granting Motion For Modification Of Automatic Stay. He ordered: "..hereby entered for the sole purpose of allowing Creditor to obtain an in-rem judgement against the property......" ".....Movant shall not seek or obtain an in-personam judgement against the Debtor."

I feel that this may be a small victory. I am still going to fight in civil court to the end. I now have nothing to loose. I want all of this fraud to be spelled out. They will have to knock me down or slap me in the face to shut me up.

cmc
Quote 0 0
John
"The key point is that 99% of people file for chapter 7 before a judgment
is entered. The plaintiff files a motion to lift the stay, it gets granted, and the property is lost to a foreclosure sale. If one were to file after a judgment
is entered one would have a better chance, since the mortgage lien no longer
exists. List the property as homesteaded and the judgment as unsecured and
disputed. In this way, the stay can't be lifted and the Trustee will either sell
it or abandon it. At least you have a chance of winding up with either the
property or some cash if it is homesteaded."

Mike H, can you please explain how exactly this is done?  Sorry if dumb question still learning.  From what I interpert you mean to file ch.7 let the bank file motion to lift stay, let BK judge grant the motion.

What I do not understand is if do all of the above, do we then list the property as homesteaded (how do we do this anyway?) PRIOR to ch.7 BK being discharged or AFTER the discharge has taken place?

Thank you

Quote 0 0
    It goes like this, before a judgement is entered, the Note and mortgage exist and they are a lien against the property. if you file Ch 7 before a judgment is entered, the plaintiff will file a "motion to lift the stay", it will
be granted and you'll be back in State Court and lose the home.
    If on the other hand, you file Ch 7 after the judgment is entered, the money judgment takes the place of the Note and Mortgage and the lien no
longer exists. On the Bk forms, you list the home as homesteaded and the
money judgment as unsecured and disputed.
    If the homestead exemption is greater than the money judgment, you get
to keep the house (it is abandoned by the Trustee).  If the hx is less than
the money judgment, the home must be sold by the trustee but you should
at least recover some cash, the hx exemption or else it gets applied to your
other debts. Every situation is different and needs to be analysed to see if'
Ch 7 is a worthwhile option.
     Before a judgment, on rental property Ch13 is the way to go because
you might be able to get the debt "crammed down". Look into it!
Quote 0 0
t

Quote:
    It goes like this, before a judgement is entered, the Note
and mortgage exist and they are a lien against the property. if you file Ch 7
before a judgment is entered, the plaintiff will file a "motion to lift the
stay", it will be granted and you'll be back in State Court and lose the
home.


    If on the other hand, you file Ch 7 after the judgment is entered, the money judgment takes the place of the Note and Mortgage and the lien
no longer exists. On the Bk forms, you list the home as homesteaded and
the money judgment as unsecured and disputed.


    If the homestead exemption is greater than the money judgment, you get
to keep the house (it is abandoned by the Trustee).  If the hx is less than
the money judgment, the home must be sold by the trustee but you should
at least recover some cash, the hx exemption or else it gets applied to your
other debts. Every situation is different and needs to be analysed to see if' Ch 7 is a worthwhile option.


     Before a judgment, on rental property Ch13 is the way to go because you might be able to get the debt "crammed down". Look into it!

 

This is another of the many unanswered posts by notorious swindler Mike H.

 

Mike H. posts various false information to the Forum solely as a means to solicit and obtain additional clients for his fraudulent debt elimination scams.

 

Search other Forum threads for additional information on this criminal.  If you are a victim of one of Mike H.'s swindles, be sure to file a complaint with law enforcement authorities.

Quote 0 0
Mr. T.
   I suppose the "T" stands for Tory or possibly "terrorist". In any case, you
are a total liar and fraud. All your accusations against me are false and you
are not man enough to leave your e-mail address so you can be traced to the cave you live in. One thing the "T" does stand for is "Traitor", so to
summarize, you are a lying Tory Traitor Terrorist who hides behind the inter
net defaming people you don't know and who have never done you or anyone
else any harm.
Quote 0 0
ka

Quote:
Mr. T.
   I suppose the "T" stands for Tory or possibly "terrorist". In any case, you are a total liar and fraud.  All your accusations against me are false and you are not man enough to leave your e-mail address so you can be traced to the cave you live in. One thing the "T" does stand for is "Traitor", so to summarize, you are a lying Tory Traitor Terrorist who hides behind the inter net defaming people you don't know and who have never done you or anyone else any harm.

 

As has been disclosed previously in countless threads, Mike H. is a swindler and a con man who is engaged in the unauthorized practice of law.

 

Mike H. is constantly looking for new distressed borrowers to swindle, and Mike H. attacks those who expose his scams and frauds.  t has been a very thoughtful contributor.  Maybe t is for thoughtful.

Quote 0 0
Frenemy
A Chapter 7 filing never removes a mortgage lien on real property or the judgment of foreclosure and sale arising therefrom.  Specifically with respect to the judgment of foreclosure and sale, a Chapter 7 will only discharge personal liability; the lien on the subject property remains intact.  A Chapter 7 only removes the possibility of a deficiency judgment, which consequently is something someone who has filed an honest Chapter 7 would have to worry about anyways (no strategic default, no assets, etc...).  Once the stay is lifted or the bankruptcy is closed a sale of the subject property will follow.

Readers should be wary of anything posted by Mike H..  If he was working in my state I would not hesitate to drop a dime on him.  If he is providing services outside of this this forum, there is enough incriminating evidence on this site alone to prove violations of a number of statutes. 

Quote 0 0
http://www.nolo.com/legal-encyclopedia/bankruptcy-help-with-foreclosure-29631.html

How Bankruptcy Can Help With Foreclosure

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


If you are facing foreclosure, bankruptcy might be able to help. In many cases, filing Chapter 7 bankruptcy can delay the foreclosure by a number of months. Some people may be able to save their home by filing for Chapter 13 bankruptcy.

What Is Foreclosure?

Typically foreclosure begins after a homeowner falls behind on mortgage payments. The lender begins the legal process of selling the home at auction in order to get payment for the loan. The process involves numerous steps, including notification to the homeowner.

This won't happen overnight. Usually a lender won't begin the foreclosure process until you've missed several payments, 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. (To learn more about these options, see Nolo's article How to Avoid 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. Learn more in our article on Getting Rid of Second Mortgages in Chapter 13 Bankruptcy. For more information on Chapter 13 bankruptcy, see the Chapter 13 Bankruptcy area of Nolo's website.

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 through 2012 calendar years. (See Nolo's article Canceled Mortgage Debt: What Happens at Tax Time?)

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 Nolo's article 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 Nolo's article Chapter 7 Bankruptcy -- Who Can't 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.

Next Steps

To learn more about Chapter 13 bankruptcy and how it can help you avoid foreclosure, get Chapter 13 Bankruptcy: Keep Your Property & Repay Your Debts Over Time, by Robin Leonard and Stephen R. Elias (Nolo).

For information on Chapter 7 bankruptcy, including forms and instructions for filing yourself, get How to File for Chapter 7 Bankruptcy, by Stephen R. Elias, Albin Renauer, and Robin Leonard (Nolo).

If you're having trouble making your mortgage payments or already in jeopardy of foreclosure, see Nolo's Bankruptcy, Debt & Foreclosure Blog or the bestselling Foreclosure Survival Guide, now available online at no charge. Both are written by Stephen R. Elias, president of the National Bankruptcy Law Project.

Previous Page1 | 2

by: , Attorney

Quote 0 0
Write a reply...