HAMP:  An Overview
The Home Affordable Modification Program (HAMP) is a government sponsored mortgage 
modification program that may allow homeowers to stay in their homes.  HAMP allows eligible participants to lower their mortgage payment to 31% of their gross income.  They payment includes principal, interest, property taxes, and insurance. 

Qualifications for HAMP:

The property must be used as your homestead or rental property.  Vacations and second homes are not eligible for HAMP modifications.

You obtained your mortgage on or before January 1, 2009.

The home must be 1 to 4 units. (i.e. duplexes and triplexes are eligible for HAMP).

The loan amount cannot exceed the current Fannie Mae and Freddie Mac loan limits, which

is currently $729,750 for a single family residence, $934,200 for a duplex,
$1,129,250 for a triplex, or $1,403,400 for a fourplex.

The property has not been condemned.

You must not have been convicted within the last 10 years of felony larceny, theft, fraud, forgery, money laundering or tax evasion in connection with a mortgage or real estate transaction.

You have a financial hardship and are behind on your payments or in danger of falling
behind on your payments. (If you are applying for HAMP for your rental property, your must be behind on your payments).

You must have income sufficient to modify the loan.  Income can be in the form of employment, self-employment, unemployment benefits, disability, social security income, rental income, or a 
combination of any of the above.

Your lender must participate in HAMP.  All loans owned by Fannie Mae and Freddie Mac are required to participate in HAMP. Loans that are not owned by Fannie or Freddie can still participate in HAMP.  Click this link to find lenders currently participating in HAMP.  Click this link to see if your loan is owned by Fannie Mae.  Click this link to see if your loan is owned by Freddie Mac. This list changes frequently.

Recent Changes to HAMP
In June of 2012, the government expanded the eligibility requirements to participate in HAMP.  You can now reapply for HAMP if you fall under these categories:

 You were previously denied for HAMP because your income to debt ratio was below 31%.

You qualified for HAMP but defaulted on your payments during the trial period.

Your HAMP modification was accepted but you defaulted on the regular HAMP payment.

The Application Process

Fill out the application for HAMP modification.  Contact your lender and ask them for a HAMP
modification packet.  If they are taking too long, contact a HAMP Housing Counselor to assist
you with the process.  These counselors are free.  You can also contact an attorney to fill out the packet.  Attorneys will charge you for the service but might get your packet approved faster depending on their case loads.

If the lender approves you for HAMP, you will make three trial payments.  If you pay them on time, the lender will send you closing documents to finalize the modification.  Your mortgage will be modified for 30 to 40 years.  The interest rate will not change the first five years.  After
that, it will increase by 1 per cent.  There are no closing fees for HAMP and you do not need to pay the arrears (the amounts that you are behind) in order to qualify. The arrears will be added to the back of your loan. 

HAMP does not guaranty principal reduction but it does allow for it.

Give your lender two to three weeks to process your loan.  After two to three weeks, call or e-mail your lender every week for weekly updates.  If you do not follow up on this step, your loan
will likely be lost.  If the lender still won't communicate with you, contact your housing counselor for further assistance.

Click this link for updated information on HAMP and changes to HAMP

If you are looking for a mortgage modification attorney in Naples, call the Rothrock Law Firm
at (239) 206-1948.
Will I be liable to the bank for a deficiency if the bank provides me a satisfaction of mortgage in a short sale?  Yes, you might be.

In a short sale, a seller sells the property to a buyer for less than the amount owed to the bank. The bank, along with any other second mortgage company or lien holder (such as the IRS, judgment lien holder, etc) must approve the sale before it is complete.  Specifically, all these
lienholders must file a satisfaction before the sale is complete.  Short sales have become the norm in Southwest Florida because the valuation of real estate has declined heavily.  The short sale allows the property owner to sell the home and be free of future mortgage payments, property taxes, and liability.  But what happens to the loan balance to the mortgage company, the second mortgage company, or the judgment holder?   Is the seller responsible for these amounts owed? The balance of the amount owed on the note minus the amount received
through the sale is called the "deficiency."

If the mortgage company files a satisfaction of mortgage, it is releasing any claims it has in the
property, not the claims it has against the seller. In other words, a satisfaction only clears up
title to the property.  In general, the seller is still responsible for the deficiency unless the paperwork  in the short sale states otherwise.  Some short sale documents state "lender reserves the right to collect deficiency." If the closing paperwork has this language, the lender can file a lawsuit in court against the seller to collect the money even though it has filed a satisfaction with the court.  The same is true for second mortgage holders or judgment creditors.  Sometimes the paperwork has no language one way or another about the deficiency.  If the paperwork is silent as to the deficiency, the terms of the original promissory note will control.  In
most cases, the promissory note allows the lender to pursue the deficiency even if the property was sold at a short sale.

The only way to prevent a lender in pursuing a deficiency is to have the lender sign a release at closing that releases its right to pursue a deficiency.  In terms of negotiation, the time to obtain the release is during the negotiations to close the sale.  The lender has more reason to sign a
release during the short sale negotiation because it can avoid the legal fees and time in a foreclosure proceeding if the short sale closes.

If you are selling your property in a short sale, your should hire an attorney to negotiate elimination or reduction of the deficiency.  Your realtor and title agent are compensated at the time of closing, and are financially motivated to close the sale as quickly as possible. Your interest is to walk away from the property owing as little as possible.  Your attorney can negotiate with the lender to completely eliminate the deficiency or to reduce it.  Often times, the lender will allow the seller to repay the negotiated amount without interest for several years. If you are looking for a short sale attorney in Naples, call the Rothrock Law Firm at (239) 206-1948.
Can I refile my bankruptcy case after it is dismissed?

Sometimes, people file for bankruptcy on the eve of foreclosure to delay the foreclosure, but they
have no real plan of action to try to save the home or to liquidate their assets to pay their debt.
They simply file the petition and dismiss it later on.  The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) addressed this situation.  The act provides that if a debtor files a new  bankruptcy within one year after the dismissal of an earlier case, the automatic stay terminates in the second case 30 days after filing the second case, unless
the debtor proves that the filing was in good faith.  Further, if a debtor files a third case within the one year period, the automatic stay does not apply  unless the debtor proves that the third case was filed in good faith.

Example:  You reside in your home.  A foreclosure sale is scheduled next week.  You file your first bankruptcy.  The automatic stay takes effect when you file the bankruptcy.  You do not have to prove anything.  The creditor has to go to court to prove why it should be allowed to go
forward with the foreclosure proceeding.  Now assume that the case is dismissed and you refile the bankruptcy.  Here, the creditor cannot continue with the foreclosure for 30 days but can go forward with it after that time unless you file a motion with the court.  Now assume that you dismiss the case again and file it nine months later for the third time.  The creditor can move forward with the foreclosure immediately unless you file a motion with the court to enact the
stay and stop the foreclosure.  If you are filing your first bankruptcy, the court generally presumes you are filing your bankruptcy in good faith.  If you file your second bankruptcy after dismissing the first one, it is up to you to prove you are acting in good faith.

In all of these examples, it is presumed that the Court did not make any findings of bad faith when the debtor's case was dismissed.  In the event the Court made a finding that a debtor
dismissed a case in bad faith, Section 109(g) of the Bankruptcy Code provides that a debtor is ineligible to re-file bankruptcy for six months after the dismissal of his or her last bankruptcy.  Further, if a creditor files a Motion to Lift the Automatic Stay before a debtor files a Motion to Dismiss his or her case, the debtor cannot re-file the case for six months.

If you are looking for a Naples bankruptcy lawyer because your bankruptcy case was dismissed and you are considering re-filing, contact the Rothrock Law Firm at (239) 206-1948
Whether or not you can keep real estate commissions received after you file bankruptcy depends on when you earned the commissions.  Let's say that a buyer and seller sign a contract in May.  You file bankruptcy in June.  You get your commission in July.  In this case, the trustee will probably take the position that the commission was earned when the buyer and seller signed the contract.  If the court agrees, then the commission received in July will be considered property of the bankruptcy estate.  The trustee will take the money in excess of the property you claim exempt and distribute it to your unsecured creditors.  Now let's say you file bankruptcy in June and the contract is signed in July.  In this case, you probably did not earn the commission before the bankruptcy was signed and you will probably be allowed to keep the money.

If you are thinking about filing bankruptcy in Naples, call the Rothrock Law Firm at (239) 206-1948 for your free initial consultation.