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Mortgage Modification in Chapter 13?
Another interesting recent decision on a related issue is In Re Roemer, Bankr. DC 12/23/09.
The court reviewed several 1322(b) decisions from various courts. Some courts hold that "principal residence" status for 1322(b) is determined as of the petition date, other courts refer to the mortgage origination date. But the court in Roemer held that in this case, the property was not the debtor's principal residence under either application of 1322(b), because (1) debtor did not occupy the property on the petition date AND (2) the mortgage only required debtor to occupy the property as a principal residence for one year from the origination date.
The interesting thing about this is that from what I have seen, most mortgages either do not limit use of the property as a rental; or, if they do, then the one year restriction is typical (eg: Fannie Mae conforming mortgages only require 60 days of occupancy as a principal residence, followed by a 10 month period in which borrower must occupy unless they get permission of the lender not to occupy--once the one year period from origination has elapsed, there are no restrictions on renting out the property.) So it seems to me that under the reasoning of Roemer, a debtor who has moved out of their principal residence could modify the mortgage(s) on the property.
Seems to me that this could be helpful on not-completely-underwater HELOCs and second mortgages, if debtor is willing to move and rent out the property, and in the rare instance where debtor has the ability to pay off a first mortgage within 5 years.
>
> Very creative new idea reflected in the attached case.
>
> In short, debtor rented out rooms in their principal residence. The Court
> in the attached case held that this rendered the residence no longer
> debtor's principal residence. As such, the mortgages could be modified.>
> David A. Tilem
> Certified Bankruptcy Specialist*
> Law Offices of David A. Tilem (a debt relief agency)
> 206 N. Jackson Street, #201, Glendale, CA 91206
> Tel: 818-507-6000 Fax: 818-507-6800
>
> * Bankruptcy specialist cert. by State Bar of CA Bd of Legal
> Specialization.
> Business bankruptcy specialist cert. by Amer. Bd. of Certification
>
>
>
>
> Most deeds of trust have an assignment of rents clause. However, If B of A
> is taking this position, the next question is whether the house is the
> debtor's principal residence since it is being used as an income producing
> property. I am attaching a recent decision that Judge Overstreet wrote.
> The opinion says that the the fact that the debtor rented rooms and had done
> so at the time the loan was means that the house is not the debtor's
> principal residence even though it may include the debtor's principal
> residence. Consequently, the loan is modifiable. B of A should be careful
> what they wish for, they might get it.
>
The post was migrated from Yahoo.
I have a current Chapter 13 in Santa Ana that will be put on the consent
calendar and the debtor has always rented the back house out and occupied
the front house. I will be researching this issue further because my client
seeks a modification of her loan! Any seniors want to take the cramdown and
let me sit in?
I do have a question to ask as well. This case will be put on the consent
calendar per my continued 341 yesterday with Amrane Cohen. I did not file
the optional F3015-1.1A Addendum to the Chapter 13 plan. Do I still have
time to file this Addendum and where might I locate the rule pertaining?
Also, the loan servicer [who is not the lender] filed a proof of claim and
is asking for increased payments, above that set forth in the chapter 13
plan that is about to be confirmed.
Any advice would be greatly appreciated. And a big thank you to Steven
Lever for his help on notice and service of my plan!
Thank you!
Christine
On Fri, Jan 8, 2010 at 11:17 AM, wrote:
>
>
> In a message dated 1/8/2010 11:06:26 AM Pacific Standard Time,
> DavidTilem@TilemLaw.com writes:
>
>
>
> Very creative new idea reflected in the attached case.
>
> In short, debtor rented out rooms in their principal residence. The Court
> in the attached case held that this rendered the residence no longer
> debtor's principal residence. As such, the mortgages could be modified.
>
> *David A. Tilem*
> Certified Bankruptcy Specialist** *
> Law Offices of David A. Tilem (a debt relief agency)
> 206 N. Jackson Street, #201, Glendale, CA 91206
> Tel: 818-507-6000 Fax: 818-507-6800
>
> * Bankruptcy specialist cert. by State Bar of CA Bd of Legal
> Specialization.
> Business bankruptcy specialist cert. by Amer. Bd. of Certification
>
>
>
>
> Most deeds of trust have an assignment of rents clause. However, If B of A
> is taking this position, the next question is whether the house is the
> debtor's principal residence since it is being used as an income producing
> property. I am attaching a recent decision that Judge Overstreet wrote.
> The opinion says that the the fact that the debtor rented rooms and had done
> so at the time the loan was means that the house is not the debtor's
> principal residence even though it may include the debtor's principal
> residence. Consequently, the loan is modifiable. B of A should be careful
> what they wish for, they might get it.
>
>
>
> Be careful about the impact on any homestead exemption, and the "best
> efforts" test for chapter 13.
>
> **
>
>
>
Christine A. Wilton
Law Office of Christine A. Wilton
4067 Hardwick Street, #319
Lakewood, CA 90712
Toll Free: 877-207-6013
Cell: 562-824-7563
Fax: 562-804-4028
attorneychristine@gmail.com
Web: www.attorneychristine.com
Blog: www.losangelesbankruptcylawmonitor.com
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I have a current Chapter 13 in Santa Ana that will be put on the consent calendar and the debtor has always rented the back house out and occupied the front house. I will be researching this issue further because my client seeks a modification of her loan! Any seniors want to take the cramdown and let me sit in?
I do have a question to ask as well. This case will be put on the consent calendar per my continued 341 yesterday with Amrane Cohen. I did not file the optional F3015-1.1A Addendum to the Chapter 13 plan. rule pertaining? Also, the loan servicer [who is not the lender] filed a proof of claim and is asking for increased payments, above that set forth in the chapter 13 plan that is about to be confirmed.
Any advice would be greatly appreciated. And a big thank you to Steven Lever for his help on notice and service of my plan!
Thank you!
Christine
On Fri, Jan 8, 2010 at 11:17 AM, <mitnicklaw@aol.com> wrote:
In a message dated 1/8/2010 11:06:26 AM Pacific Standard Time, DavidTilem@TilemLaw.com writes:
Very creative new idea reflected in the attached case.
In short, debtor rented out rooms in their principal residence. The Court in the attached case held that this rendered the residence no longer debtor's principal residence. As such, the mortgages could be modified.
The post was migrated from Yahoo.
Very creative new idea reflected in the attached case.
In short, debtor rented out rooms in their principal residence. The Court
in the attached case held that this rendered the residence no longer
debtor's principal residence. As such, the mortgages could be modified.
David A. Tilem
Certified Bankruptcy Specialist*
Law Offices of David A. Tilem (a debt relief agency)
206 N. Jackson Street, #201, Glendale, CA 91206
Tel: 818-507-6000 Fax: 818-507-6800
* Bankruptcy specialist cert. by State Bar of CA Bd of Legal
Specialization.
Most deeds of trust have an assignment of rents clause. However, If B of A
is taking this position, the next question is whether the house is the
debtor's principal residence since it is being used as an income producing
property. I am attaching a recent decision that Judge Overstreet wrote.
The opinion says that the the fact that the debtor rented rooms and had done
so at the time the loan was means that the house is not the debtor's
principal residence even though it may include the debtor's principal
residence. Consequently, the loan is modifiable. B of A should be careful
what they wish for, they might get it.
Message
The post was migrated from Yahoo.