Getting a Mortgage after Bankruptcy

Posted on August 7, 2013 by Staff Writer

At one time, going through bankruptcy had a stigma that was hard to shake when trying to move on with your financial life. However, according to SFGate Home Guides, not only is the stigma around bankruptcy lessening, but it is also very possible to get a new home in as little as a couple of years after the discharge of your bankruptcy. Here are a few things that you can do to get there.

Check for Accuracy

Once your bankruptcy has been discharged, check your credit report to ensure that everything that was included in the bankruptcy has been closed and discharged. You want to make sure that you do not have any inaccuracies there to bring down your credit score.

Open New Trade Lines

If you have any debt that was not included in the bankruptcy, such as student loans, make sure that you make timely payments on them. Remember, the point is to show that you are now creditworthy and financially responsible. Now that your bankruptcy is discharged, you will be getting offers for credit cards. Find the one with the lowest interest rate and fees. Once you acquire your new credit card, never use more than 30 percent of your credit line, and pay the balance every month.

Take Out a Larger Loan

About a year after your discharge, take out a larger loan such as a car note. You need to be able to show that you can handle a larger debt. Make sure that you have zero late payments while you are in the process of rebuilding your credit profile. You have to show your creditworthiness.

If you have questions regarding what you can include in your bankruptcy or about the discharge of your bankruptcy, a qualified and experienced Arizona bankruptcy attorney can assist you.

Mortgage Applicants May Be Subject to Gender Bias

Posted on April 18, 2013 by Staff Writer

The Woodstock Institute has recently started a study about joint mortgage applications. Early findings reported in this article show that applications for home purchases and refinances were more likely to be approved if the first name on the application was male.

The study covers six Chicago-area counties and uses facts from the 2010 Home Mortgage Disclosure Act. Woodstock also studied loan data on about 257,000 purchase and refinance mortgages, for applicants with incomes of $20,000 to $999,000 and loan amounts of $20,000 to $800,000. Home purchase applications with a women’s name first were 24 per cent less likely to be approved; on refinance applications, the approval was 39 per cent less likely when a women’s name appeared first.

In addition, the study also showed that if the woman signing the applications is of African-American descent, she is 34 per cent less likely to be approved for home purchases and 44 per cent less likely for mortgage refinances.

The vice president of Woodstock believes that this shows there is some sort of gender bias going on, even if it is unconscious. However, an assistant vice president at Glenview State Bank wouldn’t consider it discrimination. She claims that since loans are being declined to both men and women, it can’t be considered a discriminatory practice.

Although the early findings are only from one year of data, Woodstock does believe these results are troubling. And while they plan to go back to 2007 for the complete study, they don’t think they’ll find any significant changes.

Purchasing or refinancing a home in this economy can be tough. If you’re looking to refinance your home because of money problems, our bankruptcy attorneys can help. Contact us to learn more.

Image courtesy freedigitalphotos.net

Reform of Complicated Mortgage Forms to Help Potential Homeowners

Posted on February 28, 2013 by Staff Writer

On June 20, 2012 the Consumer Financial Protection Bureau (CFPB) testified before the House Financial Services Subcommittee on Insurance, Housing, and Community Opportunity to highlight CFPB solutions to the problems with the current federal law regarding consumer mortgages. In a presentation, CFPB Deputy Director Raj Date explained that the two forms consumers must agree to under federal law have overlapping information and inconsistent language. “Not surprisingly,” he said, “consumers often find the forms to be confusing. It is also not surprising that lenders and settlement agents find them burdensome to provide and explain.”

The first of these developed under the Truth in Lending Act (TILA), and the other by the Real Estate Settlement Procedures Act. (RESPA) According to Date, these forms did not properly detail how mortgages worked with consumers. “For example,” he said, “many consumers select a loan based on their ability to afford the mortgage payments. But some consumers experienced “payment shock” because they did not understand that they payments could include unaffordable amounts a few years or even months after closing.” The Dodd-Frank Act transferred authority of the TILA and RESPA to the CFPB in 2011.

This ultimately means that the convoluted TILA and RESPA will be replaced by the CFPB with easier-to-understand forms “that will make the mortgage process easier for consumers and industry.”

Research to come up with the new forms include but is not limited to:

Meeting with consumer advocates, other banking agencies, and credit settlement agents to better understand the issues that consumers and the industry face
Launched the “Know Before You Owe” project—an informative drive on the CFPB website to share prototypes of the disclosure funds and a place for consumer feedback.
A Small Business Review Panel to “gather information from representatives of small lenders, mortgage brokers, settlement agents, and not-for-profit organizations about the costs of the proposals under consideration and potentially less burdensome alternatives.”

While these new procedures won’t help the one in 17 Arizona homeowners who foreclosed in 2010—and those who faced subsequent bankruptcy because of it—it is good new for Arizona residents as the state recovers from its particularly bad housing crash. If you or someone you know does, however need bankruptcy assistance, contact a dedicated Arizona bankruptcy attorney today.

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Federal Tax Exemption for Mortgage Debt Forgiveness Extended Through 2013

Posted on January 26, 2013 by Staff Writer

According to an azcentral.com article, recent news coverage of worries over the “fiscal cliff” have included concerns about the Mortgage Forgiveness Debt Relief Act of 2007, which was set to expire on January 7, 2013. This law originally was passed in 2007 to provide relief to homeowners experiencing financial distress in mortgage foreclosure proceedings through the end of 2009. Under the Debt Relief Act, homeowners were exempt from federal income taxes on mortgage debt forgiven by lenders through foreclosures, short sales, or mortgage loan modifications. In 2008, the Debt Relief Act was extended to provide relief to homeowners for a six year-period rather than the original two-year period.

With the last-minute passage by Congress of the American Taxpayer Relief Act of 2012, which President Obama is expected to sign this week, relief in the form of this federal tax exemption is extended through the end of 2013. Fortunately for Arizona homeowners, however, they are already protected by the state’s “non-recourse” law. In Arizona, mortgage loans generally are designated non-recourse loans, which means that homeowners cannot be sued for remaining mortgage debt that is owed after a foreclosure action. Under federal tax law, the forgiveness of non-recourse loans results in no tax liability to homeowners. Nonetheless, it is debatable whether Arizona law extends similar protections to homeowners who sell their homes in short sales, so the American Taxpayer Relief Act of 2012 will provide protection for those homeowners, at least through the end of 2013.

Mortgage foreclosures, short sales, and loan modifications are all events that may occur when a homeowner can no longer afford to pay his or her mortgage payments. Depending on the income of the homeowner, the desire of the homeowner to remain in the home, and other facts and circumstances surrounding the particular situation, bankruptcy also may be a legitimate and useful option for dealing with an impending foreclosure. Whether the goal is to simply delay or ultimately prevent the loss of one’s home to foreclosure, Chapter 13 bankruptcy proceedings may be a way to cure any past-due mortgage payments and remain in the home. Contact your Arizona and Las Vegas bankruptcy attorneys today for additional information about how a Chapter 13 bankruptcy might benefit you and your family.

I owe more than my house is worth and waiting on the bank to threaten foreclosure, what can I do?

Posted on January 17, 2013 by Staff Writer

If you are delinquent on your mortgage and still want to keep your house then bankruptcy may be able to help you. A Chapter 13 bankruptcy can allow homeowners to file bankruptcy, catch up on their missed payments and possibly even reduce the amount owed the home. In chapter 13 bankruptcies secondary mortgages can be “stripped” or removed during the bankruptcy process. Stripping mortgages can reduce the principal owed and thus reducing the monthly mortgage payments.

Additionally, as soon as a bankruptcy is filed an Automatic Stay of Protection goes into effect. This Automatic Stay of Protection prevents creditors from taking action against any of your property without first asking the court for permission. For example, a creditor cannot foreclose on a property without first “Lifting the Automatic Stay” or asking the bankruptcy court for permission. So by filing a chapter 13 bankruptcy you are able to stop the foreclosure and pay any arrearages during the bankruptcy.

If you are a home owner who does not want to keep your home then “surrendering” the property in bankruptcy may be the right option. Surrendering the property should accelerate the foreclosure. As long as a property is titled in your name then you are responsible for any HOA dues and property taxes, so if you are not living in a property surrendering it in bankruptcy may be the best option for you.

Another option is a short sale. With a short sale a homeowner obtains permission from the bank to sell the home to a third party for less than the balance owed. This is not a quick process, nor is it guaranteed but an experienced real estate agent can increase your odds. Having financial difficulties with an underwater house should not lead you to believe that foreclose is your only option. Our experienced attorneys can help explain what options may be available to you.