Saving Brooklyn Homes

Time to Rethink Solutions to the Foreclosure Crisis

The foreclosure crisis is playing a major role in the lives of many central Brooklyn residents. According to a 2007 New York University study, “the rate of foreclosure starts… was highest in Bedford Stuyvesant, Bushwick and East New York/Starrett City in Brooklyn and Belmont/East Tremont in the Bronx.”

The NYU study revealed shocking numbers: In Bed Stuy, the rate of pending lawsuits against homeowners was 307 per 1,000 housing units. Pending lawsuits are the first sign of mortgage distress. Compare that to neighborhoods in Manhattan where the rate was between 3.4 & 6.7 per 1,000 housing units.

Now that the Attorneys General have signed off on the national mortgage settlement, many in the industry believe that the rate of foreclosure activity (which had slowed down last year due to several investigations) may soon start to pick up again in New York City neighborhoods.

If you’re a homeowner, it’s decision-making time. We must begin to rethink our “solutions” to saving Brooklyn homes and preventing foreclosure.

Loan Modification Denials = Bad Banks + Lost Paperwork

We’ve all heard the horror stories. Many Brooklyn homeowners try their best to take advantage of loan modification programs. They spend hours gathering up documents & spend money they don’t have to repeatedly fax or mail the documents to their mortgage servicer.

After submitting the documents, homeowners spend weeks & sometimes months going back & forth with the bank, trying in vain to find out the status of their loans. They wait with baited breath just hoping that they will qualify for a modification.

But when they finally do hear from the bank, it is often a representative telling them that either 1) they are missing documents, 2) the documents they submitted months ago are now so old that they need an updated version or 3) their application was denied with no real explanation.

A Better Way to Save Your Home

By the time many homeowners get fed up with applying for a loan modification and contact an attorney – it is often too late to take advantage of one of the government’s most powerful home saving devices out there: saving homes through a chapter 13 bankruptcy.

That’s right I said it: a chapter 13 bankruptcy is one of the most powerful tools that most homeowners can use to keep their homes.

Sadly, many of these homeowners don’t even know how to evaluate chapter 13 as an option. Many people often get so stuck in the “I need a loan modification” mindset that they don’t realize the additional solutions that may be available to them.

Thanks to congress, chapter 13 can often be much better than a simple loan modification. Here are just a few reasons why:

1) Chapter 13 lets you spread out all of your missed mortgage payments & repay them over a 3 to 5 year period.

2) If your home is under water & you have more than one mortgage, chapter 13 will let you to strip off the 2nd and 3rd mortgages.

3) Once those mortgages are stripped away, you are no longer required to repay them in full.

4) Chapter 13 is only allowed under court supervision so banks are forced to play fair when you seek a loan modification.

Each of these benefits adds up to a significant source of help for struggling homeowners & can literally save them thousands of dollars.

Chapter 13: Making it Work

The key to saving your home through chapter 13 is time: you can’t wait until you’ve missed so many mortgage payments that even a 3 to 5 year repayment plan is unaffordable. Instead of putting all of your eggs in the “loan modification” basket, homeowners should speak with an experienced chapter 13 attorney at the same time that they are applying for loan modifications.

A chapter 13 attorney can help you evaluate your options in ways that many housing counselors cannot. A chapter 13 lawyer can help you determine if you can eliminate some of the mortgages on your property. She can help you find out if your mortgage servicer has been playing by the rules – and if they haven’t, your attorney can help protect your rights.

If you are a Brooklyn homeowner facing foreclosure, now is not the time to give up. It is time to get informed and get ready to make some decisions.

If you have questions about chapter 13, or want to speak with someone about your mortgage, do your self and your family a favor and contact a consumer rights and bankruptcy attorney. You owe it to yourself - and to your financial future.