Mortgage Forbearance About to End?

Texas Bankruptcy Attorney Explains How to Stop Foreclosure

Video Transcript:

David Shuster:

More than likely foreclosures are going to start spiking at the beginning of the New Year.

Rob Rosenthal:

Do you know what to do if you're facing the end of the mortgage forbearance and you're not able to pay? Well, we're going to find out because that's what we're going to ask the lawyer on today's episode.

Hi again, everybody, I'm Rob Rosenthal with askthelawyers.com. Welcome to my guest, David Shuster, Dallas area attorney. David, good to see again. Thank you for helping us out.

David Shuster:

Great to see you, Rob. Thanks.

Rob Rosenthal:

So, just sum up for us what happened with mortgages during covid, coronavirus time. What happened?

David Shuster:

Well, you heard of that thing called the CARES Act, different forms of relief for people, which is great. One of the functions of the CARES Act was a mortgage forbearance program.

What that means is there's no foreclosures. They put a stop to evictions as well, and they stop creditors from doing certain things. They're not just doing this out of the kindness of their heart, it's because the CARES Act was enacted which prevented foreclosures from going forward during this time, and it's currently in place.

Rob Rosenthal:

So that helped a lot of people who may have lost their jobs or had work reduced because of the virus and couldn't pay their mortgage, but what are you going to tell us? At the end of the forbearance are they going to say that you're good, you don't owe us any back money? How's that going to work?

David Shuster:

Well, that's exactly the tricky part, and that's exactly the purpose of this conversation I think that we're having today, Rob, is that what is going to happen at the end of that period? It currently ends at the end of this year, and so it is a bit of a question mark as to if they are going to foreclose on you or not. There is a possibility that they will continue to work with you, but more than likely foreclosures are going to start spiking at the beginning of the new year.

Rob Rosenthal:

So, what are the options? What can people do if their money situation hasn't changed? What happens?

David Shuster:

Well, the best thing to do is to contact a bankruptcy attorney now. Definitely don't wait until the end of the year. Definitely don't wait until you get a foreclosure notice. That being said, Rob, we do help clients the day prior to a foreclosure, weeks prior to foreclosure; however, your options are just greater if you contact an attorney sooner.

Bankruptcy stops foreclosures from happening in their tracks, and as always with bankruptcy consultations, they're free of charge, and so you can get some really good information by contacting a bankruptcy attorney regarding what your options might be when this folklore forbearance ends.

Rob Rosenthal:

Okay, so there are some options in, but you're saying don't put it off, pre-plan, in other words?

David Shuster:

Pre-plan specific to a jurisdiction. Here in the Dallas/Ft. Worth area is a program that actually exists in a Chapter 13 bankruptcy to reduce the monthly payment that you'll have after you get a confirmed bankruptcy plan. So the special thing about this is that with a car—we're talking about mortgages, but also with cars—if you have the payments that are going away, they can repossess your car right now, but that's different. But you can sometimes reduce the monthly payment on your car in a Chapter 13 bankruptcy based on the value, how long you’ve had the car, things like that. So if you have a high car payment and you file a Chapter 13, it's always been the case that you can reduce that car payment.

The mortgage, however, has been something that has been more difficult to actually adjust the payment of a mortgage in a bankruptcy, and it's the one area that's been frustrating where we can't help the borrower, the client of ours, to reduce that monthly mortgage payment in a bankruptcy. However, there is a program that rolled out that now allows us to get a loan modification in a bankruptcy under certain circumstances, so that's very exciting news.

We've been doing it here for a year or so and, like I said, specific to this jurisdiction, in some cases you can lower your mortgage payment in Chapter 13 bankruptcy.

Rob Rosenthal:

Is it difficult to qualify for that loan modification?

David Shuster:

The loan modification is actually not difficult to qualify for, it's obviously not based on credit. If you're in a Chapter 13 bankruptcy, it’s rather based on specific budget information that you can provide to us, and then we help to provide it through the program to get it approved. And so no, it’s not. It's not difficult at all. Not everyone qualifies, but if you have a large amount of mortgage arrears, which that's the reason why you're here, that's the reason why you're in foreclosure and might have to pay a lot of money to get to preventing foreclosure, it can actually reduce the total amount that you'll owe, putting them on the end of the note, potentially reducing an interest rate. So yeah, it's a straightforward process, not hard to qualify for, not dealing with the lender directly, but rather with an experienced bankruptcy attorney like myself or someone else who's familiar with these programs.

Rob Rosenthal:

Well that could really help a lot of people. So what if someone has lost their income, they don't see any chance of it coming back in the near future? Are there options for them or is it a foregone conclusion that they're going to lose their home?

David Shuster:

Absolutely not. Don't give up. I've seen plenty of situations where it seems destitute and there's not any promise of future income, but talk to an attorney early on because you may have some options. You may have the ability to file to stop the foreclosure, and then, like I said, if you have the promise of something to come in the future, or you have the ability to at least stop the sale in a bankruptcy and then potentially be able to turn around and sell your home if you indeed have some equity in the home. So yeah, don't ever just give up. Talk to a bankruptcy attorney. Even if you're not employed, you don't think you're gonna be able to pay your mortgage again, and you don't think you have time to sell your home, we can help you through all those things.

Rob Rosenthal:

Any last bits of advice for people that have just been caught up in all these pandemic issues, homeowners specifically, David?

David Shuster:

Yeah, I mean just obviously, don't lose hope. This thing is not going to bring us down and certainly not gonna take you down for good. It's a bump in the road, for sure, but there are options out there and it's important that you find out what they are.

Rob Rosenthal:

I love that the initial consultation doesn't cost you anything, and then I love the advice of do it before you get the foreclosure letter. To do it sooner rather than later is great advice, I think.

David Shuster:

Exactly right, Rob.

Rob Rosenthal:

David, thank you as always, super helpful information. I do appreciate you answering our questions.

David Shuster:

Thanks.

Rob Rosenthal:

That's going to do it for this episode of AskTheLawyers™. My guest has been Dallas attorney David Shuster. If you want the best information or you'd like to make sure you can choose a lawyer that lawyers choose, as always, go to askthelawyers.com. Please take a second to subscribe by clicking on the button down in the corner, that way you'll know about future episodes.

Thanks for watching, everybody. I'm Rob Rosenthal with askthelawyers.com.

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