November 25, 2017

Can You Rely on a Verbal Promise that Your Foreclosure Will be Delayed?

Notice of ForeclosureLast month, I met several times with a potential Chapter 13 client who was facing a mortgage foreclosure.  Over the course of the past few months he has been juggling his creditors and bills trying to stay afloat and during that time he fell behind to his mortgage company by more than four months, and found himself in the foreclosure process.

This individual earns over $100,000 annually, but, unfortunately he used to earn more than double this amount.  His problem was not the mortgage, but his other bills, including a very high car payment and a mortgage payment arising from a failing real estate investment.

Not surprisingly the foreclosure notice got his attention.  He immediately took action by calling me to discuss Chapter 13 bankruptcy and by contacting his mortgage company to discuss repayment options.   By the Wednesday prior to the pending foreclosure sale scheduled for the following Tuesday, my client had provided me with enough information so that I could prepare a rough draft of a Chapter 13.   In this case, by the way, my client and I entered into an agreement whereby he paid me around $300 to open a file and to start entering information into my petition preparation program.

On the pre-foreclosure Wednesday he called to say that after a lot of discussion he was expecting a decision the next day from his mortgage company but that if he did not hear from them by mid-day on Thursday, we would be proceeding with the Chapter 13.  A few hours later he called back to say that his mortgage company had agreed to postpone the foreclosure until September and that the Chapter 13 was on hold for now. [Read more…]

Foreclosure Practices in North Georgia Come Under Scrutiny

The New York Times published an investigative report on March 30, 2007 entitled Foreclosure Machine Thrives on Woes.  The article addresses what has become a growing problem in bankruptcy cases:

  • out of control fees and costs added to mortgage loan balances
  • failure of mortgage companies to properly account for payments
  • refusal or failure of mortgage companies and their counsel to resolve disputes amicably

The Times tells the story of a Georgia couple – the Atchleys – who filed Chapter 13 and paid their mortgage but found themselves on the receiving end of multiple motions for relief asserting that mortgage payments had been made.  In addition to the stress and cost of dealing with these inaccurate motions (which would be withdrawn at the last minute), the Atchley’s discovered that their payoff balance was being adjusted higher and higher with questionably fees and costs.  The Atchleys eventually sold their house but now the United States Trustee has sued Countrywide claiming that its pattern of conduct was an abuse of the bankruptcy system.

The Atchleys decided to sell their home, and contend that they lost over $20,000 in equity.  I have seen similar cases in my own practice.   One case in particular comes to mind.  My client filed bankruptcy to stop a property tax sale, and subsequently fell behind in her ongoing mortgage payments.  She then decided to sell her condo (there was significant equity), the closing attorney gave her a payoff figure that seemed extremely high.  I looked at the payment ledger and I saw overcharges and double billing.  One item showed a charge of $650 as attorney’s fees arising from a Motion for Relief.  However the Order on the Motion for Relief provided for only $550 in attorney’s fees and my client had already paid that fee directly when she cured her post petition arrearage.  There was also a $2,500 "analysis charge" that no one could explain.

While Chapter 13 remains the only option to stop a foreclosure, you should realize that there is a good likelihood that if you file, your payoff balance will go up and that you may have limited recourse to challenge these charges.

Thanks to my colleagues at Clark and Washington for bringing the New York Times article to my attention.

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