You have probably heard about this new mortgage to lease program that Bank of America is touting as the next solution to the foreclosure crisis that is again looming as many more Adjustable Rate Mortgages are coming due. Many people may find this option appealing, in general — to stay in the same home you were in, pay less per month and have the rest of the debt forgiven. However, it results in a worse solution for people than merely just walking away from the home, but allows the bank to continue to profit off of you. You will still have the credit hit of the foreclosure, and instead of living in the house without a house payment, you will be making a monthly payment to the bank. [Read more...]
Arizona Foreclosures Delayed by Backlog
August 6, 2011 By Leave a Comment
The New York Times reports here that the foreclosure system is overwhelmed by the sheer number of houses waiting to be foreclosed upon. In states like New York the backlog would extend for 62 years at current rates of foreclosure. This, of course, is in states where foreclosure is a judicial action. In other states like California (and Arizona) where it is not a judicial action, that backlog is 3 years.
This certainly coincides with my experience as a bankruptcy attorney. As a firm we have had clients that have lived in their house waiting to get foreclosed upon for over five years. You read that right. Five Years. Of course, that’s an atypical case with most of our clients living in houses that they are surrendering for approximately a year. Further, bankruptcy further slows down the process of foreclosure as well. All of which gives homeowners much needed breathing room in this terrible economy.
As an aside, you may have recently heard that it is now what is termed a “seller’s market” in real estate. This mans that there is less than 3 months of inventory for sale currently. While technically true, I believe that this is not taking into account the stealth inventory that the banks have of houses that they are waiting to foreclose upon. You may ask why they are waiting, the primary reasons are that the banks do not want to own a house, risk the liability of injury, pay the HOA fees, or figure out a way to maintain the property. Finally, and primarily, I believe that the banks are waiting to foreclose because they know about the phenomenon of a seller’s market, which is supposed to increase house prices. In essence, they are trying to create a false market for the properties they need to sell, eventually. Just my 2 cents.
Thank you for taking the time to read this article by Tempe, Arizona Bankruptcy Lawyer Glenn Roethler. The views expressed in this article do not represent the views of all members of Greeves, Price & Roethler, PLC.
Homeowner Forecloses on Bank!
August 6, 2011 By Leave a Comment
In a delicious twist of irony, a homeowner in Florida foreclosed on a bank. A quick summary of events indicates that the homeowner had his home wrongfully foreclosed upon by Bank of America. This resulted in a lawsuit that Bank of America eventually lost resulting in the Judge awarding attorneys’ fees against Bank of America. [Read more...]
How Bankruptcy Stops Foreclosure in Arizona
April 23, 2011 By
There are rumors stating that the Doubletree Hotel may be facing bankruptcy. According to the article found here, the hotel located at Reid Park in Tucson, Arizona may soon be foreclosed on. The hotel is behind on approximately $31 Million dollars of debt. Currently, the owners are attempting to negotiate with its creditors to avoid having to file bankruptcy and to prevent a foreclosure in July. However, if they are unable to negotiate with their creditors, the manager of the Doubletree Hotel will have no choice but to file bankruptcy in order to prevent a foreclosure.
This brings us to one of the most beneficial powers of a bankruptcy – the ability to stop a pending foreclosure. In the case outlined above, the threat of bankruptcy may actually be enough to prevent a foreclosure on the property by giving the Debtor, the Tucson Doubletree Hotel, a chance to breathe and make enough money to become current on its debts. The reason creditors are willing to give this time while contemplating a bankruptcy is because they know that once bankruptcy is filed, it is a long and difficult road to get the property out of bankruptcy. This is particularly true in the context of a Chapter 11 filing, as I am sure the owners are contemplating for the Tucson Doubletree Hotel right now.
However, in most cases, as is likely in the scenario with the Tucson, Arizona based Doubletree Hotel, bankruptcy will be necessary because the creditors are just not willing to halt the foreclosure process. If this is the case, bankruptcy can be filed at any time prior to the sale of the property. Once the bankruptcy is filed, the automatic stay goes into effect and prevents any collection actions against the property of the bankrupt estate. However, there is one large caveat here, if the notice of bankruptcy is not filed with the county recorder’s office prior to the foreclosure sale being commenced, and no parties of the foreclosure sale are aware of the bankruptcy, that sale may be valid and complete. That is why the bankruptcy must be filed and the notice of sale must be recorded prior to the actual trustee’s sale taking place.
Thank you for taking the time to read this article by Tempe based Bankruptcy Lawyer, Glenn Roethler partner at Greeves, Price & Roethler, PLC.
Arizona Short Sale Law
April 21, 2011 By
Here’s some information on Arizona Short Sale Law. Many ask, “Should I short sale my house is Arizona?” As attorneys, we usually replay with the short answer is “probably not” — it is usually NOT in the seller’s best interest to do a short sale.
Typically, the only parties to benefit from a short sale are the Realtor, the first mortgage holder (the bank), and the buyer. The Realtor gets a commission, the bank has you working for free to get more money for the bank, and the buyer gets a cheap house.
First, you may ask: what is a short sale? When the amount owed on a home loan (the mortgage) is higher than the sale price of the house, this is called a short sale. The “deficiency” is the amount left over that the seller still owes the bank. Many home owners in Phoenix, Tempe and outlying areas like Chandler, Queen Creek, Mesa, Maricopa, and Apache Junction are faced with the prospect of having to do a short sale or let their home be foreclosed. Of course, other options include bankruptcy, mortgage modification, or to “beg, borrow or steal” to continue paying a mortgage you simply can’t afford.
The disadvantages of an Arizona short sale are many:
(1) It will take a lot of time and energy on your part. First, you must get the bank’s approval which involves submitting tax returns, financial records, and a hardship letter. Then you have to hope the bank doesn’t lose your documents — which it will once or twice. Next, you have to show the house, which, as you know, involves keeping the place immaculate and letting strangers traipse through your home. This entire process will take months.
(2) If the short sale is completed, you run the risk of receiving from the bank a 1099-C tax form that shows debt forgiven. The IRS may consider this forgiven debt to be taxable income – colloquially referred to as ”phantom income.” Therefore, we suggest you have a lawyer review your short sale contract to attempt to avoid this income tax burden.
(3) No one can say exactly what the effect of a short sale in Arizona will be on your credit report. Everyone’s case is different and the credit reporting system is simply too secretive. Suffice it to say, the “ding” on your credit report will be in the neighborhood of 100 to 300 points if you do a short sale.
(4) You cannot stay in your Arizona home after a short sale, unless you rent from the new owner. On the other hand, if you file bankruptcy, you may be able to stay in your home for several months (possibly a year or two) for free.
(5) Will you be able to get a new mortgage loan after a short sale? I’m a lawyer, not a mortgage expert. But here’s what I know. Different people will give you different answers. A quick Google search led me to several Realtor websites that all said “Come on down, do a short sale and we’ll get you a new loan in a few months.” I doubt it. Remember who profits from your hard work in a short sale — the Realtor. ”Official” figures I’ve seen from the government say it takes 2 to 7 years before you can get a new mortgage loan after doing a short sale (depending on the type of mortgage).
As you can see, short sales in Arizona are complicated. Maybe a short sale is right for you, but you need to explore all your options. It may be better for you to “walk away” from the house or reorganize your debt via a Chapter 13 bankruptcy. The lawyers at Greeves, Price & Roethler, PLC can review your situation and help guide you through this complex and critical situation. Please call us at 480-345-8100 to set up an appointment.
