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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How is the fair market value (FMV) determined in foreclosure and how can we be sure it is accurate? According to the following, it is important to know the actual FMV of your home, especially in the case of a junior mortgage.

This is from a site that supports the mortgage banking industry. Go to the site for more of the mortgage banking industry's perspective about lien stripping and how it relates to the different BK chapters. In fact, this site is a groundswell of information that might be helpful in foreclosure defense.

Pursuant to 11 U.S.C. § 506 (a), a borrower may modify the rights of a secured claim by seeking to bifurcate the claim into secured and unsecured portions, based upon the current fair market value of the subject property. Under this bankruptcy code section, a creditor’s claim is secured to the extent of the value of its collateral, and unsecured for the balance of the claim. Junior liens can be deemed as wholly unsecured, in which case the borrower will ultimately seek to “lien-strip” the claim in its entirety. Once a junior lien is determined to be partially unsecured, a borrower will then move under § 506(d) to “void” the lien to the extent of the unsecured portion of the claim.

Servicers should note that while a borrower may modify a secured claim when the property is income-producing, if the property is a single-family principal residence a first mortgage claim cannot be modified pursuant to the anti-modification provision under 11 U.S.C. § 1322(b)(2). Any junior mortgage claim on the debtor’s single-family residence can only be modified upon a showing of zero equity. This means that a junior mortgage claim, with as little as $1 in equity, is held to be fully secured.

     Income Producing Property
     FMV – $500,000
     1st mortgage debt $550,000
     Secured portion of the debt is $500,000. Unsecured portion is $50,000.

     FMV – $500,000
     1st mortgage debt $400,000
     2nd mortgage debt $150,000
     1st mortgage secured in full. 2nd mortgage secured to the extent of $100,000; unsecured for the $50,000 balance.

     Single Family Residence – Non-income producing
     FMV – $500,000
     1st mortgage debt $498,000
     2nd mortgage debt $100,000
     3rd mortgage debt $100,000
     1st mortgage secured in full
     2nd mortgage deemed secured in full (There’s at least $1 of equity.)
     3rd mortgage unsecured in full

In a Typical Chapter 13 Case
Once a borrower successfully obtains an order modifying a claim under 11 U.S.C. § 506 (a) and (d), a chapter 13 plan is proposed. The plan will seek to make payments on the secured claim directly to the trustee. The unsecured portion of the debt is then grouped in with all other unsecured debt, and paid pro-rata with the unsecured claims pursuant to the plan. Despite plan confirmation, however, it is only upon the entry of a discharge that the order deeming the lien void becomes valid.

When is a Lien Not Voided?
Servicers should take heed that a determination of the extent of a secured claim under 11 U.S.C. § 506(a) establishes the extent of a creditor’s secured claim only. As mentioned above, a debtor must also move under 11 U.S.C. § 506(d) in order to deem the unsecured portion of the lien voided. Pursuant to section 506(d), to the extent that a lien secures a claim that is not an allowed secured claim, such lien is void. Consequently, borrowers must utilize section 506(a), together with section 506(d), to void an unsecured claim. Furthermore, and most importantly, it is only upon the entry of a bankruptcy discharge that the order becomes effective. Accordingly, servicers should not write-off claims until the debtor receives a discharge — something that may not occur for up to five years from the date of plan confirmation.

Additionally, a bankruptcy case that is dismissed prior to a discharge entering will void all previous section 506 orders that may have been entered in the case. This will allow all claims to be fully reinstated to the pre-petition status.
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Hi Sandy.  There isn't an absolute standard of determining FMV.  In my chapter 13, I just pulled a guess out of thin air and it wasn't contested.  Oh look!  A FACT    I can then use this value to strip off junior liens that are wholly unsecured based on the facts in evidence.

I'm in a power of sale state so...

The bankster's foreclosing on you have a duty to you to get the best reasonable price under the circumstances.

Case law is riddled with foreclosure sales that were voided because the sale was wildly below FMV according to real estate appraisals.

I know of one case where the directions given to the property location were sneakily designed to make the property appear far off the beaten path and out of the way, where in reality the property was minutes from several state highways.  The sneaky directions were used to support allegations of bad faith and the sale was thrown out.

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