Category Archives: Real Estate

What Is Mortgage Arrearage?

Mortgage arrearage is the amount you are behind in

Mortgage arrearage
Mortgage arrearage

your mortgage payments.  Not behind like in the picture,

Behind as in missed payments, plus late fees, plus, well,

some other things.

Mortgage Arrearage

Interest accrues on the unpaid balance of a loan, so if you cannot make your mortgage payment, the balance goes up, not down, by more than just the payment you missed.

Mortgage companies charge late fees if you are, usually, more than ten days late.

If you did not get insurance, the mortgage company will buy it, and add that amount to your balance, and the arrearage goes up.

Same with property taxes.  Liens for unpaid property taxes trump mortgages, that is, the government can foreclose for unpaid taxes and get your house WITHOUT paying the mortgage company anything.

So, all mortgages, from the banks anyway, allow them to pay the property taxes if you do not, and, add that to the mortgage arrearage.

Mortgage contracts usually allow any cost of collecting the mortgage to be charged to you, which could be BPO (broker price opinion) if they are getting ready to foreclose, title search, “inspections” that are someone driving by to verify the home is occupied, costs of publication in the Legal News, and: (drumroll) the ever popular “attorney fees.”

There are limits, by court, statute, regulation on most of these charges, but, they all get included in the mortgage arrearage.

Chapter 13 Bankruptcy

Chapter 13 is a payment plan bankruptcy, which can give you up to five years to catch up on, yes, mortgage arrearage.

Many courts limit that to three years, but, that is more than a mortgage company will give you.

You have to pay the Chapter 13 trustee, who keeps a percentage to run the office, and she pays the first mortgage, plus, something on the arrearage.

Of course, your budget has to be real, and, show that you have enough left over after living expenses to make your Chapter 13 plan payment to the trustee.

And, in bankruptcy court, you can object to the mortgage arrearage claimed by the mortgage company, if the amounts are unreasonable or otherwise violate the applicable statutes and regulations.

Before the 2007-08 crash, this was the reason for most Chapter 13 bankruptcies.

It is still a good deal, if your house is worth more than you owe on it.

And, if your income went down for a while, but, is back up, so that you do not have the 6 months, or whatever, payments that you missed, but, you can afford to pay more for the house, as that is the only way to pay off the mortgage arrearage.



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Bankruptcy and RESPA

RESPA stands for Real Estate Settlement and Procedures Act. Especially in Chapter 13 bankruptcy cases, you need to know the correct numbers on your mortgage(s). Some provisions relate to how mortgage companies must handle escrow accounts, and various notices they must provide, and the timing for same. My favorite part requires your mortgage company toContinue ReadingContinue Reading

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Mortgage Balance Not Reaffirmed?

  Had a different question last week, from someone who did not reaffirm her mortgage in her Chapter 7 case, kept current on the  payments, but wanted to pay off the balance for less than what was owed on the mortgage balance. REAFFIRMATION Just to review, reaffirmation is the process for you to obligate yourselfContinue Reading

3 Responses to Mortgage Balance Not Reaffirmed?

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