Loan Modification or Bankruptcy? New Law Helps People in New York Keep Their Property

Jan. 5, 2011 - PRLog -- PRESS RELEASE:

Homeowners struggling with increased mortgage payments or the inability to pay because of unemployment or illness have a number of alternatives, some of which are more effective than others, according to Joshua N. Bleichman a partner of Bleichman and Klein, attorneys here in Rockland County.

Mortgage modification can be so difficult and complex that many borrowers give up.   Most lawyers who work on behalf of their clients facing foreclosure are used to simple foreclosure defenses and may not know of the other alternatives out there, Bleichman added.

Now with Governor Paterson signing sorely needed amendments to the New York State exemption laws, home-owners now have new hope.

"These laws have not been amended in 30 years," Bleichman explained.  "Now a person living in Rockland or Westchester may be able to save $250,000.00 of equity in their home," he added.

Mortgage foreclosure is a major problem in the lower Hudson Valley.

Once missed payments have gone on for a number of months, it may be difficult to get the "train back on track".  "It is often easier to take someone facing foreclosure into bankruptcy because the modification process by itself, without the assistance of the bankruptcy court, has no teeth," said Bleichman.

Most of the successful mortgage payment reductions have been with the strong assistance of the bankruptcy court, Bleichman added.  "Bankruptcy in this case does not ruin your credit, it helps improve your credit," Bleichman explained.

Bleichman said that a foreclosure ruins credit, not the Bankruptcy.  "Once a foreclosure or missed payments is reported on a credit report, the credit is ruined.  Late payments or charge-offs also ruin credit, he said.  "A bankruptcy can improve a credit score because it can wipe out  all the negative items which lower the credit score."

Anyone not going to a licensed professional for help with debt is playing "Russian Roulette".  Bleichman said his firm has successfully sued several foreclosure rescue operators who stole tens of thousands of dollars from desperate home-owners.

The best advice is to allow an attorney with experience navigate the federal government programs available.  Government tried to encourage lenders to modify troubled loans in an effort to avert the mortgage crisis, but many borrowers remain tangled n red tape even with help of an attorney.

There is very little incentive for Banks and the loan servicers who collect the monthly mortgage payment to help a struggling home-owner.  They often lose paperwork, the "service" representatives are rude. Borrowers can never talk to the same representative twice and sometimes wind up spending all their resources making payments to save a house while relying on promises lenders make that never come to pass.

"Borrowers hoping to obtain a loan modification through legal counsel will find it gets very expensive," said Bleichman, a partner and business and bankruptcy attorney at Bleichman and Klein.

Even with an attorney, it can only be 50-50.

"Dealing with banks is frustrating," Bleichman said. The application for mortgage payment reduction seems to get passed from one company representative to another.

"It requires the home owner or their attorney to repeat the story every time they talk to the new representative," he said. "The whole process is very frustrating."

However, a Chapter 13 bankruptcy, he said, he could put together a plan that would allow the borrower to catch up on the missed mortgage payments and save the house over the course of time.  It can also obligate the bank to process a loan payment reduction.

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Law Office of Bleichman and Klein specializes in bankruptcy, foreclosure defense, debt collection defense, and consumer law. We can help you get rid of credit report errors, bank account freeze, levy and garnishments, and other debt related problems.