Mortgage Forgiveness and Bankruptcy
Bank of America mortgage forgiveness and bankruptcy
Recently we have written about Bank of America forgiving second mortgages and the National Mortgage Servicer Settlement. Many homeowners facing foreclosure are anxious to find out if their second mortgage will be forgiven by Bank of America.
Well, it appears that one pattern may have emerged. Many homeowners who have already filed bankruptcy are receiving letters stating that their 2nd mortgage will be forgiven. Great news, right? Maybe. Some of these debtors are in active bankruptcy (chapter 7 & chapter 13). Some debtors have already received a bankruptcy discharge and are no longer personally liable for their mortgages. Other debtors have “stripped” their 2nd mortgages and BOA will likely receive much less than 100% of what is owed on the 2nd mortgage.
Not So Good
- It appears that BOA may receive credit, against the amount it owes under the National Servicer Settlement Agreement, by forgiving mortgages they can could no longer collect or only collect a portion of. This may lead to fewer distressed homeowners actually benefiting from the Settlement.
- There may be tax issues (the advice of a tax professional may be necessary).
Good
- Distressed homeowners who are not in bankruptcy are receiving letters from BOA stating that their 2nd mortgages are being forgiven. This will make it easier for some homeowners to avoid foreclosure.
- Debtors in bankruptcy who are paying back 100% of the arrears on their 2nd mortgages and their full 2nd mortgage payment have received notification that their loan is being forgiven. This could alleviate the need for a chapter 13 bankruptcy altogether.
- Some homeowners may find themselves with instant home equity.
Nassau County Foreclosure Attorney
If you have any questions about this or other legal issues, call The Law Firm of Vaughn, Weber & Prakope, PLLC, at 516-858-2620, for a free consultation!
+This is not tax or legal advice.
Mortgage Relief Scammers
The Federal Government appears to be increasing its efforts to protect homeowners from mortgage rescue scammers. As we reported here, mortgage rescue scammers may attempt to take advantage of homeowners by fraudulent posing as government programs, accepting payments without providing services, or transferring title to the mortgaged premises, among other things. The scale of this lawsuit, along with the fact that the Federal Government seems to be pursuing these types of cases more frequently, should discourage individuals attempting to pursue such practices. But the fact that the Government named so many defendants also means that these practices are still probably quite common. Homeowners should diligently research foreclosure rescue programs before entering any agreements, or making payments. Read more about the lawsuit here.
Foreclosure Attorneys in Mineola
The Attorneys at the Law Firm of Vaughn, Weber & Prakope, PLLC are experienced in Loan Modification Negotiation and Foreclosure Defense. If you have questions about these or other legal issues, call our office at 516-858-2620 today to schedule a free consultation.
Innocent Spouse Doctrine
Tax Fraud and Innocent Spouses
Generally, when spouses file tax returns jointly, each spouse is liable for any understatement on the jointly filed return. This means that, for example, a husband will be held liable if his wife understates her income, and vice-versa. In a sense, this places a burden on each spouse to ensure that the other spouse’s income is reported correctly.
But what if one spouse hides income from the other? Individuals that can convince a court that they did not know of their spouse’s unreported income when they filed the return may be considered “innocent.” Innocent spouses will not be prosecuted by the taxing authority. But if the innocent spouse benefits from the unreported income, that spouse still may have to contribute to the tax debt. Additionally, in a divorce action, a matrimonial court may distribute liability for the debt between the spouses without regard to the innocent spouse rule.
Long Island Divorce Attorneys
If you have any questions about Family Law, Divorce, or other legal issues, the attorneys at the Law Firm of Vaughn, Weber & Prakope, PLLC can help. Call our office at 516-858-2620 today.
Federal Trade Commission vs. Mortgage Relief Companies
Federal Trade Commission sues mortgage relief companies
The Federal Trade Commission recently filed three separate lawsuits against mortgage relief companies – Prime Legal Plans/Reaching U Network, American Mortgage Consulting Group, and Expense Management America. According to the FTC’s allegations, these companies were fraudulently selling mortgage relief services. The companies charged homeowners for various services that were supposed to reduce mortgage payments or otherwise relieve them of mortgage obligations. In reality, the companies accepted payment without providing services. Additionally, the companies violated other laws by, among other things, calling homeowners that were on the do-not-call registry, fraudulently claiming to be associated with government agencies, fraudulently claiming to be attorneys, collecting upfront fees, and claiming to be charities.
It is bad enough that these companies were charging distressed homeowners without providing services. What’s worse is that, by convincing homeowners that their services would be effective, these companies prevented homeowners from pursuing legitimate services and defenses.
According to a recent press release, the FTC has filed more than 40 cases against fraudulent mortgage relief services since 2008. This suggests that such practices might be quite common. Homeowners should always be on guard against potential scams, and should gather as much information as possible about mortgage relief or other debt defense companies before making payments.
The Attorneys at Vaughn, Weber & Prakope, PLLC have experience in Loan Modification Negotiation and Foreclosure Defense. If you have any questions about these areas and would like to schedule a free consultation, call our office at 516-858-2620 today to schedule a free consultation.
Keep in Touch