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ownership

From Bankruptcy
To Unemployment

'm considering filing for bank-
ruptcy and have heard that my
second mortgage will go away
completely and I can modify my
first mortgage while in bankruptcy.

the banks in reducing mortgage
payments, banks are still utiliz-
ing reduction in interest rates and
extension of mortgage term rather
than reducing principal.

Is this true? Can I reduce my mort-
gage and still stay in my home?
While the first step regarding
bankruptcy should be to check with
a bankruptcy attorney to answer
your questions about the effect of
filing bankruptcy and your home, it

New guidelines coming out in
June will give more guidance to
banks to hopefully begin utilizing
this avenue, particularly for second
mortgages. However, until the pro-
gram is fully implemented by the
banks and loan modification appli-

is possible that a loan modification
may be filed while you are in bank-
ruptcy proceedings.

cations are processed under these
new guidelines, it will not become
clear how reduction of principal will

Usually if, however, your home is
under water (you owe more than the
home is now worth), the mortgage
servicer would determine whether

be offered.
I've been unemployed and receiv-
ing unemployment benefits for a
while and have tried obtaining a
loan modification with my mortgage

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or not they would allow you to file
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me?
Part of the new guidelines com-
ing out in June will provide special
forbearance programs for the unem-
ployed. For current programs as
well as those soon to be rolled out,

however, unemployment income
will not be counted as household
income for a loan modification

application.
That means that if the only house-

hold income is unemployment com-
pensation, no loan modification will

be approved by certain banks.
However, if there is other income
in the household, then it would be
worthwhile to obtain the assistance

gage?
While the Making Home
Affordable Program recent guide-

of the Jewish Housing Association
of Metropolitan Detroit or another
housing counseling agency to
review your situation and see if you
actually do qualify under any of the

lines allow this as an option for

loan modification programs. E

JHA

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company. I seem to be getting the
run around? Is there any help for

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homeowner.

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to address modifying the mortgage
while a borrower is in bankruptcy.
The borrower will still have to show

adequate income to support making
the new, lower mortgage payment in
order to apply for the modification.
Again, we will work with your

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your mortgage while you are in
bankruptcy or after the bankruptcy
has been discharged.
New guidelines being released as
of June 1 will offer new procedures