I know someone that was successful in having their second mortgage on their primary residence “stripped” after they successfully completed their Chapter 13 Bankruptcy payment plan. GREAT!! The following is my blog of March 15, 2009, written in hopes many would pursue “creative debt solutions.”
Appetizing, isn’t it! ”Proponents call it the crucial missing tool needed to get us out of the national foreclosure morass.” What is it? Who is affected? How is it done?
“Cramdown” became the term used to refer to an action by a judge in a Chapter 13 Bankruptcy. It would give the authority to the Judge to reduce what a person owes on credit cards, auto, boat and student loans – even a second home mortgage. Under current law, they cannot cut the mortgage debt on the principal residence. That allows lenders to foreclose on delinquent homeowners to recover what they are owed. Some political leaders in the house and Senate have been pushing for a change in the bankruptcy law to include principal residence loans, i.e., “judicially modified”. These were considered “crammed down” by the courts.
It has been argued that banks and mortgage companies too often have been unwilling to offer delinquent borrowers serious modifications because they have to foreclosure option.
The final outcome should be interesting, probably unrecognizable!
Your property taxes are based on the value of your home as of the lien date, January 1. The State Constitution allows the Assessor to temporarily lower the assessed value of property under certain conditions. In Contra Costa County there are some of the hardest hit areas of value decline. According to County Assessor, Gus Dramer, there have been "automatic reassessments of value." Out of 150,000 homes reviewed that were purchased back as far as January 1, 2002, about 85,000 were lowered. There will be another "automatic reassessment" done again for the 2009-2010 tax year. Downside — less revenue for County Services.
Beware. Do not pay anyone for a reassessment of your property!
Understandably, fence sitting has many causes. As human fence sitters, we are just thinking through a process or just plain afraid to do anything. The adage of "when in doubt, don’t do anything" comes into play. When home purchasing is being considered, knowledge is the key. Knowledge dispels fear.
Sales Prices haven’t been this low in decades. With the Bank Owned properties in abundance, there are lots of homes to choose from. Prices are going to reflect what is happening in the locale. some neighborhoods are more reasonable than others. Not all Bank Owned properties are old. Some tracts that were built in recent years offered "special financing." Of course, we know what happened! In parts of Northern California, values dropped up to 45% from January 2008. There are more Foreclosures, thus Bank Owned, on the way.
Interest Rates are fantastic! Get off the fence for a moment and take step one. Check out your borrowing power. You may be surprised at what you find. If you have been a responsible borrower and paid your credit card bills, loans, etc. on time, your FICO Score will reflect your actions. The higher your score, the better rate and terms will be offered to you. Cash down payment is essential. If you have saved for this purchase, great! If not, consider approaching a relative for help. The "Down Payment Assistance" programs have been suspended by the State. A great Tax Credit this year for those that don’t wait too long!
Hop Off the Fence and Get Moving!
