Well..we’re seeing changes happening in the BK courts…
Rhode Island BK Judge Arthur N. Votolato, upheld his program that he initiated back in November 2009. This program he labeled the “loss mitigation program” was intended to require lenders to work with homeowners to find a “good faith” solution to avoid foreclosure.
Mortgage servicers, OCWEN and PHH fought Judge Votolato’s program…however the Judge upheld his program.
This program has caught the eyes of the White House with accolades as a viable foreclosure alternative.
Here is the article:
By Christine Dunn
Journal Staff Writer
PROVIDENCE –– In a decision issued Friday, U.S. Bankruptcy Court Judge Arthur N. Votolato upheld the court’s right to establish a mediation program for homeowners facing foreclosure.
Votolato implemented the program, called the loss mitigation program, in November 2009. It does not require lenders to issue loan modifications, but it requires them to engage in good-faith negotiations with borrowers who want to modify their mortgages.
With the decision, Votolato overruled objections to the program filed by creditors in two bankruptcy cases. The creditors are PHH Mortgage Corp., doing business as PHH Mortgage Service Center, and Ocwen Loan Serving LLC as servicer of Deutsche Bank National Trust Co.
The cases involve homeowners Alberto G. Sosa and Jason E. and Bridget L. Lawton.
“Today’s decision by Judge Votolato is a win for Rhode Island homeowners,” said U.S. Sen. Sheldon Whitehouse, D-R.I. “The Rhode Island bankruptcy court’s foreclosure-mediation program helps distressed families to cut through the red tape of our broken mortgage modification process and has already saved at least 100 homes in our state.
“I hope today’s decision will encourage other bankruptcy districts to follow Rhode Island’s lead and adopt similar programs.”
In Friday’s decision, Votolato stated the program “was implemented in response to the home mortgage and foreclosure crisis generally,” and also because the court “repeatedly had to postpone hearings” due to delays that debtors were experiencing in seeking out-of-court mortgage-loan modifications.
“This practice of parties repeatedly seeking more time simply because they had not yet connected was counterproductive, it was a huge waste of time for the parties and the Court, and was forcing needless litigation …” the order stated. “…We decided to break the log jam” by introducing a process that would open “communications between debtors and the lenders’ decision-makers.”
At a hearing in October, Whitehouse praised Votolato’s program, saying it is especially needed because of the documented failures of the federal government’s flagship foreclosure-prevention program, the Home Affordable Modification Program.
Just $4 billion of the $30 billion budgeted for HAMP is likely to be spent, and only a fraction of eligible homeowners will be assisted by the program, according to a December report from the Congressional Oversight Panel.
Whitehouse will chair a Senate Judiciary Committee hearing Tuesday to examine the success of bankruptcy court mediation programs.
The Center for Responsible Lending projects that 31,192 homes in Rhode Island will proceed to foreclosure during the years 2009 to 2012.
I know one of the families that is going through this process and it’s a joke to them. They’ve had 3 children (she’s pregnant AGAIN) in the last 5 years “because she’s always WANTED 4 or 5) and not what they can afford. She LIVES to spend and only the best clothing for HER children. It looks like Toys R Us has thrown up in their yard. NOW because they bought a house they couldn’t afford – and run their credit cards up with their 4 vacations a year (In Mar – Apr they went to Florida and Disney World for 4 weeks) Can you imagine that many vacations when after you file bankruptcy? Now they want out from it all and to start over.
As a Realtor and someone who works for Asset Management companies, I am starting to wonder why people are saying the Delinquent Borrower” instead of the Delinquent Bank”.
The loss mitigation program is not a cure-all for all mortgage delinquencies. It merely improves the communication process between the lender and the debtor. Essentially, it will let the delinquent borrower know faster that his mortgage will not be modified. Even those that may be successful in modifying their mortgage, many of these will have trouble making their payments in the next 12 months. Bottom line: whenever your housing expense consumes more than one-third of your gross income, you are asking for trouble.