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Thank you for visiting my Florida Bankruptcy Blog!

My name is Hunter Goff and I am attorney with offices in Orlando and Tampa.  I limit my practice to the representation of consumer debtors filing for Bankruptcy in the Middle District of Florida.

Feel free to post any comments or questions related to consumer bankruptcy here.

Thank You,

K. Hunter Goff, Esq.
K. Hunter Goff, P.A.
1215 E. Livingston Street
Orlando, FL 32803
407-898-8225 T
1-866-442-3238 T
407-898-8226 Fax
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Getting Rid of that Second Mortgage (HELOC) by Filing a Chapter 13 Bankruptcy
Posted by: Hunter Goff
January 02, 2009
Topic: Getting Rid of that Second Mortgage (HELOC) by Filing a Chapter 13 Bankruptcy

Many homeowners in Florida have experienced an unprecedented loss of value in their homes. In the years leading up to what the media likes to call the "Mortgage Meltdown" many homeowners were enticed to tap in to the seemingly abundant and always increasing equity in their home to consolidate credit card debt, do home improvements, or simply take some cash out of their home to pay for a vacation. 

The temptation to take out a Home Equity Line of Credit (HELOC) or to refinance was fueled by the never ending advertisements on all type of media promising all time low interest rates, small monthly payments, and the ability to "write off" the payments come tax time.  The way these products were packaged and sold to the general public, you would have to be crazy not to take advantage of this, right? 

As we all know the house of cards came tumbling down the second home values stopped increasing.  That's right, these great deals being offered all over the place were based on the tenuous assumption that home values would continue to increase.  When home values dropped, many lenders "froze" the line of credit because the home's value was no longer high enough to cover the outstanding debt. 

Every day I meet with homeowners who not only have no equity in their home, but who owe thousands of dollars more than their home is worth because the value of the home has depreciated far below what is owed on both the first mortgage and the HELOC.  Fortunately, a homeowner in Florida may take advantage of the Chapter 13 Bankruptcy law to "strip" off that HELOC.  Here's how it works:

If the value of your home is less than what you owe on your first mortgage as of the day of filing your Bankruptcy, then you are able, through the Chapter 13 Bankruptcy, to "strip" off the HELOC or second mortgage because it is wholly unsecured.  Your attorney would file a Motion with the Court to accomplish this.  Not bad huh?

 There are other advantages to a consumer in a Chapter 13 such as altering the payment on a car loan by lowering the interest rate, eliminating other unsecured debt, and stopping a foreclosure. 

Give me a call to see if stripping off a lien is a good option for you!

Hunter

407-898-8225  

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Mortgage Help in Bankruptcy
Posted by: Hunter Goff
January 02, 2009
Topic: Mortgage Help in Bankruptcy

This recent article from the Wall Street Journal describes the attempts currently being made by Washington lawmakers to allow a debtor in a Chapter 13 Bankruptcy actually reduce the principal amount of his or her mortgage down to the value of the home as of the date the Bankruptcy Petition is filed.

If this legislation passes into law, it would obviously be of great benefit to Florida homeowners who have seen their home values plummet in the last 12-18 months.

 

The Wall Street Journal 
December 31, 2008 

Mortgage 'Cram-Downs' Loom as Foreclosures Mount 

By MICHAEL CORKERY 

Mortgage lenders who wake up Thursday with a New Year's hangover are 
likely to face another headache soon: The effort to give bankruptcy 
judges the power to rewrite mortgages is gaining steam. 

The banking industry hoped the mortgage "cram-down" measure died when 
Congress removed it from the $700 billion bailout bill that passed in 
October. But it has been gathering momentum in Democrat-controlled 
Washington, as evidence emerges that current voluntary foreclosure- 
prevention programs are falling short. 
[With efforts to stem home foreclosures stagnating, mortgage 'cram- 
down' efforts seem destined to re-emerge under the new Congress. Here, 
a foreclosed home for sale in Lakewood, Colo., in September.] 
Associated Press 

With efforts to stem home foreclosures stagnating, mortgage 'cram- 
down' efforts seem destined to re-emerge under the new Congress. Here, 
a foreclosed home for sale in Lakewood, Colo., in September. 

In a cram-down, a judge modifies a loan, often reducing principal so a 
borrower can afford it. Lenders hate it because they have to absorb 
the loss. Bankruptcy judges currently have the ability to modify 
certain personal loans and even mortgages on vacation homes, but they 
can not cram-down mortgages on primary residences. 

Even staunch opponents acknowledge that mortgage cram-downs for 
primary residences are likely to be as part of Congress's economic- 
stimulus package in early 2009. The National Association of Home 
Builders used to reject any bill with a cram-down provision outright. 
Now it is saying the measure is worth a look. 

President-elect Barack Obama and his incoming administration aren't 
disclosing details of the much-awaited foreclosure-prevention plans, 
but during the campaign Mr. Obama called for closing the loophole that 
prevents bankruptcy judges from restructuring mortgages on primary 
residences. Lawrence Summers, a top economic adviser of Mr. Obama, 
publicly voiced support for bankruptcy reform before his appointment. 

"To the extent that nothing else is working, bankruptcy cram-downs are 
becoming more likely," says Rod Dubitsky, head of asset-backed- 
securities research at Credit Suisse. 

The latest embattled foreclosure-prevention program is Hope for 
Homeowners, which was approved by Congress last summer and supposed to 
help 400,000 homeowners. Only 357 people have signed up so far for the 
voluntary program. The Department of Housing and Urban Development, 
which is administering the program, acknowledges that it has been 
encumbered by high fees and narrow eligibility requirements. 

Another government program, FHASecure, was intended to help 80,000 
homeowners who had fallen behind on their payments after their 
adjustable interest rates reset. It has helped only 4,100 delinquent 
borrowers refinance since September 2007 and will stop taking new loan 
applications as of Wednesday. 

Mortgage lenders also are modifying tens of thousands of loans without 
government help. But often this hasn't solved the problem. A report 
last week by the Office of the Comptroller of the Currency and the 
Office of Thrift Supervision found that nearly 37% of mortgages 
modified in the first quarter of 2008 were 60 days or more delinquent 
after six months. 

"It is absolutely clear that voluntary modification is just not 
working," says Rep. Brad Miller, a North Carolina Democrat. "Every 
plan that Congress has passed, we do it and nothing happens." 

Mr. Miller intends to introduce a mortgage bankruptcy-reform bill 
Monday, the first day of the new session. Illinois Democrat Richard 
Durbin plans to introduce a similar bill in the Senate. 

Lenders warn that mortgage cram-downs will lead to higher interest 
rates and down payments, as banks seek to mitigate future losses from 
judicially imposed write-downs. They also are concerned that the 
reform measure would add to the losses they have already sustained 
from the housing crisis. 

"Our members have modified 2.8 million loans," says Francis Creighton, 
chief lobbyist of the Mortgage Bankers Association, which opposes cram- 
downs. "Could we do better? We are trying to do better." 

Proponents of bankruptcy reform say that previous modification efforts 
are falling short because they have focused on spreading out payment 
terms and forestalling delinquent payments. But that hasn't cured a 
big part of the problem: that one in six houses is now worth less than 
its mortgage. Only programs that reduce principal amounts are likely 
to restore equity to millions of homeowners, they say. 

"You have to deal with the systematic problem of underwater mortgages 
or you are not going to stop foreclosures," says Harvard University 
economist Martin Feldstein, who has proposed his own plan to help 
homeowners with negative equity in their homes, which involves 
mortgage principal write-downs and replacing part of the original 
mortgage with a new, lower cost loan. 

Proponents of bankruptcy reform also note that millions of troubled 
loans aren't being addressed by current modification programs because 
they were carved up and sold to investors as securities. Mortgage 
servicers have been reluctant to aggressively modify these loans 
because they have been unsure of their legal rights. 


The mere threat of mortgage cram-downs could break the standoff 
between mortgage servicers and mortgage investors, which has slowed 
aggressive loan modifications. Investors may be more willing to go 
along with industry-driven modifications when facing the threat that a 
judge could ultimately order the amounts of loan principals reduced, 
forcing them to eat bigger losses. 

"The servicers can argue we have to give this to the borrower 
otherwise they will get it in bankruptcy court," Mr. Dubitsky says. 

Lenders argue that loans modified by bankruptcy judges often have high 
rates of default on the new payment plans. "We should be working on 
keeping people out of bankruptcy not pushing people into it,'' says 
Mr. Creighton of the Mortgage Bankers trade group 

Bankruptcy reform is likely to be one of many proposals that Congress 
considers as part of comprehensive foreclosure-prevention effort. 
Another element is likely to be one that FDIC Chairman Sheila Bair has 
been proposing. Under her plan, the government and lenders would split 
the losses on modified loans that go into default. 

Some economists are urging the new administration to go even further. 
Mark Zandi, chief economist at Moody's Economy.com, proposes that the 
government subsidize the bulk of principal write-downs to the tune of 
$100 billion, about four times as much as Ms. Bair's program. 

—Nick Timiraos contributed to this article. 

 

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Citigroup Moratorium on Home Mortgage Foreclosures
Posted by: Hunter Goff
November 11, 2008
Topic: Citigroup Moratorium on Home Mortgage Foreclosures

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Illegal Mortgage related fees in Chapter 13 Bankruptcy cases and Foreclosure Cases
Posted by: Hunter Goff
October 22, 2008
Topic: Illegal Mortgage related fees in Chapter 13 Bankruptcy cases and Foreclosure Cases

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1215 E. Livingston Street
Orlando, FL 32803
407-898-8225

3111 West Dr. MLK, Jr. Blvd.
Suite 100
Tampa, FL 33607
1-866-442-3328