Sadly, too many homeowners come into my office after numerous failed attempts
to work with their bank to modify their mortgage. There can be
many different reasons why your bank wouldn't modify your mortgage. Modifications are complicated.
Now, new rules require your servicer to explain why you may not have qualified
for a modification but perhaps you didn't have the benefit of these
disclosure requirements when you were applying for your loan modification.
So, is it possible to take your mortgage into your own hands and modify
it? The answer may be yes if like many New Yorkers, you own a property
which has a mixed use. The most common example of what I mean is a two
or three family home which serves as both a primary residence and a rental
property. Many New Yorkers bought into homes with built in rental income
in the housing boom of the mid 2000s. Many of these homes have lost an
incredible amount of value and are now underwater - that is, they are
worth less than what the mortgage balance is.
In Chapter 13, you may be able to cram down the value of your home, even
if a first mortgage is involved, if your property is more than just your
primary residence. So, let's say you own a two family home that went
from being worth $550,000 to $350,000 and that provides you with rental
income every month. Well, you may be able to cram down the value of your
home to its current value of $350,000 and pay this off over 60 payments
at a reasonable interest rate.
Suddenly, that money you were hoping to allocate to a monthly modification
payment may take you even further than you ever thought possible and make
you debt free in 5 years.
[Photo credit: Mortgage Rates by
How is this possible? Well, I've done it before and Bankruptcy Courts
around the United States have interpreted the "anti-modification"
section of the Bankruptcy Code (11 USC 1322(b)(2)) to only prevent modification
of a mortgage on a property which is solely a person's principal residence
and was originally intended to be that person's primary residence.
The most recent example of a court taking this position is a case coming
out of the Southern District of Florida.
In re Ramirez (Bankr. S.D. Fla. Apr. 4, 2014). We have this case law in New York too.
Questions or interested in a free consultation about your case? Email Natasha
Meruelo, Esq. at email@example.com or call me at (914) 517-7565. The
first consultation is always free.
Natasha Meruelo, Esq. is located at 445 Hamilton Avenue, Suite 1102, White
Plains, NY 10601.
*Natasha Meruelo, Esq., designated as a Federal Debt Relief Agent by an
Act of Congress and the President of the United States, proudly assists
consumers seeking relief under the US Bankruptcy Code.
Prior results do not guarantee a similar outcome.