Mortgage Modification can be forced through new rules

One of the constant complaints from borrowers with mortgage issues is that the lenders will not negotiate with them in any reasonable way.  They stall and ignore, and demand more and more copies of paperwork.

Well times just changed.  As of June 1, bankruptcy judges can force lenders to follow the guidelines of the administration’s HAMP program.  This applies only to people who file Chapter 13 bankruptcy, which means that you will pay some portion of your debts, as modified by a judge.  Up until now, however, judges could not do anything about modifying residential mortgages.

This will work as follows:  When you file bankruptcy you list all of your income and your debts.  The mortgage debt, based on the HAMP program, will be reduced to 31% of your income.  So if you make $40,000 a year, your monthly mortgage payment will be slightly over $1,000 a month.

The judge will then add up the rest of your debts, modifying interest and principle as necessary, to create a payment you can cope with.

This will not work in all cases, but it is a lot better than getting stiffed again and again by your mortgage lender.

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