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How Long Will Bankruptcy Affect Your Foreclosure?

It is no secret that filing bankruptcy is a tool in a borrower’s arsenal that they will not hesitate to use to temporarily drag out or halt a foreclosure sale. A bankruptcy case has become an inevitable headache that nonconventional lenders will face between filing a Notice of Default and recording the Trustee’s Deed Upon Sale.

While borrowers have a range of bankruptcy chapters to choose from, this year has seen an unprecedented increase in Chapter 11 filings, which require a more complex set of procedures for borrowers and creditors alike. As a result, secured lenders have dealt with a longer and more expensive time period before they are paid in full.So how long can a secured lender expect a bankruptcy case to delay their foreclosure sale? While the specific timeframe for each individual borrower varies from case to case, we generally see the following types of cases:The Incomplete Filing. Debtors are required to file several documents with their initial bankruptcy petition. Often times, Debtors do not comply with this requirement because they file the bankruptcy case at the last minute with the sole goal of postponing the foreclosure sale. If a Debtor fails to file all of the necessary documents with the court, they then have two weeks from the date of the bankruptcy filing or the court will automatically dismiss the case. This is the best-case scenario for most lenders as it provides the fastest and most cost-effective way for the bankruptcy case to be dismissed to allow the foreclosure sale to move forward. A surprisingly large number of cases are dismissed this way and lenders can foreclose within three weeks of the bankruptcy petition being filed.The Immediate Motion for Relief from Stay. In some cases, circumstances exist at the time the bankruptcy was filed that allow the lender to immediately prepare and file a motion for relief from stay. These circumstances include multiple prior bankruptcy cases affecting the property, complete lack of equity in the real property collateral, and other bad faith acts by the debtor. Depending on the judge’s schedule and local rules, the motion for relief from stay can be filed and heard as quickly as two weeks after the bankruptcy filing. Often times, lenders can receive relief from stay to proceed with the foreclosure within one to two months of the bankruptcy filing.The Wait and See. When circumstances to obtain relief from stay do not exist at the time of bankruptcy filing, lenders must wait for the debtor to miss monthly payments on the loan or to sell the property and pay them in full. Most judges require at least two, if not three, missed payments before they consider taking action to grant relief from stay or they may order the debtor to make adequate protection payments to the lender in lieu of allowing the lender to foreclose. If a secured creditor finds themselves in this situation, they can expect approximately four to eight months before receiving relief from stay to foreclose or be paid in full by the sale of the collateral.The Lengthy, But Ultimately Ineffective Case. When the debtor is continuing to make monthly payments to a lender through the bankruptcy case and/or there is plenty of equity in the property, most judges will not grant a lender relief from stay. For example, in a Chapter 13 case, a debtor is allowed to repay all pre-petition debt over the course of five years. Unsurprisingly, many debtors fall behind on payments to the Chapter 13 Trustee and/or to the lenders after the first year or so. If a debtor fails to make plan payments or lacks income to continue making the payments, the Trustee often will file a motion to dismiss the case. Many debtors slip up after the first year or two, which results in the case being dismissed.The Long-haul. In extremely rare cases, the debtor will be able to drag out a bankruptcy case for three or more years. As stated above, a debtor in a Chapter 13 case who is consistently making its monthly payments to secured creditors and the Trustee can repay its debt over the course of five years and then receive a discharge at the end of the case. While this delay can last up to five years, the lender will be receiving payments during this time and should not need to proceed with the foreclosure as such.As always, there will be cases that do not fit into these categories, or the case could change from one category to another depending on various factors. A good attorney can work with you to create a strategy specifically suited to your borrower to ensure you’re paid in full in the fastest and least expensive way possible. If you have questions about the best strategy for your borrower and to ensure you are paid in full on your loan, contact the Geraci Law Firm to work out a strategy now.

Seventh Circuit Sends a Warning to Serial Bankruptcy Filers

Often, the homeowner would file a bankruptcy to stay the foreclosure, and then go through the process again and again in an attempt to delay the foreclosure as long as possible. These actions tied up the federal bankruptcy courts and negatively affected creditors who may have been caught up in the bankruptcy. 
A 20-year study performed by the American Bankruptcy Institute investigated bankruptcy filings in Utah, finding that 10.7 percent of debtors studied had filed multiple Chapter 7 bankruptcies and 20.

Declining foreclosures point to normal market


Declining foreclosures point to normal market

Home foreclosures continued to decline in the third quarter to levels not seen for more than a decade. That’s nothing new. Over the past two years, numerous studies have pointed to a declining number of distressed properties. 

What is new is that the time to complete a foreclosure is now also going down, Attom Data Solutions says. That’s an indicator that states have pushed their backlogs of distressed properties through the foreclosure pipeline. It also is a sign that the housing market is returning to normal, said Daren Blomquist, senior vice president with Attom Data Solutions.

How to Spot the Top Problems Home Sellers Try to Hide

Whether you’re a seasoned house hunter or a first-time buyer, the process of purchasing a home has plenty of pitfalls. And while you may assume that sellers are being upfront, it’s not uncommon for them to gloss over some of their home’s shortcomings.
“All homeowners sign a disclosure document about their property so buyers know what they’re getting into; however, it can be very tempting for some to tell white lies or conveniently forget facts,” says Wendy Flynn, owner of Wendy Flynn Realty in College Station, TX.

3 Steps for Calming Your Clients' Fears

Buying, selling, or making renovations to a home is about as emotionally stressful as illness, death, car repairs, marriage, or birth, according to a Texas A&M University study that ranks "high-emotion events" in a person's life.
To help reduce your clients' anxiety, BUILDER recently highlighted the following tips to increase their comfort:
  1. Assume your client is anxious about the transaction. Even if they appear calm about the buying or selling process, operate as though they're not.

How to Buy When You're in Debt

With mortgage rates remaining near historic lows, many financial experts are making the case that student-loan debt doesn't have to hold back millennials from buying a home. But the message isn't getting across: Nearly 70 percent of millennials say they are delaying a real estate purchase because of their student debt load, according to a new survey by CommonBond.
Forbes.com recently highlighted whether a person with student-loan debt was ready to become a home owner with the following assessment:

Passage of Tax Extenders Package


WASHINGTON (December 18, 2015) – A significant piece of tax legislation is now on its way to the President’s desk, and the bill includes the extension of a number of expired tax provisions important to supporting homeowners and real estate investment.Tom Salomone, National Association of Realtors® president and broker-owner of Real Estate II Inc. in Coral Springs, Florida, praised Congressional leaders today after the House and Senate passed a tax extenders package that includes many provisions supported by NAR.

Foreclosures Down 68% From Peak

Foreclosures are falling fast. Since reaching a peak in September 2010, the number of foreclosures has plunged 68 percent – from 117,225 nationwide to 38,000 as of July, according to CoreLogic's July 2015 National Foreclosure Report, released this week.
In the past year alone, foreclosure inventory has fallen by nearly 28 percent and completed foreclosures have dropped about 24 percent. Completed foreclosures are the total number of homes actually lost to foreclosure.
Since the financial crisis began in 2008, about 5.

Apartment Rents Grow Faster than Incomes

The average employee isn’t getting a big raise this year—but apartment rents are growing more quickly than ever.
“Across most markets, renters are paying a higher percentage of their incomes in rent,” says Luis Mejia, director of U.S. multifamily research with the portfolio strategy division of research firm CoStar.
That’s not stopping apartment rents from going up. That’s partly because the average income is surprisingly high for households living in rental housing with unrestricted rents. These households can, on average, afford to pay and they don’t have that many attractive alternatives.

Apartment Markets Survive New Construction, So Far

The cities where developers are opening the most new apartments are handling the new supply pretty well, at least for now.
“Looking at rent growth performances, there’s really only one spot [major metro apartment market] that is having trouble digesting new supply,” says Greg Willett, chief economist for RealPage Inc. “That’s Houston.”
But developers aren’t finished. Even as they race through an incredibly busy year for new construction, apartment developers are now planning even more new projects.