|Katherine:||Hello everyone. Thank you so much for joining us here on This Needs To Be Said. Our friend, Attorney Peter Daigle, is joining us and we’re going to talk about mortgages and bankruptcy. There is a program that he wants to share with you today that you may be familiar with and how it affects you if you find yourself in a situation where you need to determine if you’re staying in your home or not, if bankruptcy is an option for you or not. Welcome back, Peter. How are you?|
|Peter Daigle:||Great Katherine. Thank you for asking.|
|Katherine:||I want to talk about the … Is it mortgage bankruptcy? Let’s see how this affects some people. Let’s talk about it.|
|Peter Daigle:||Up until December of this year, there was a series of government programs, the making home affordable program which is a program where the government subsidized a certain portion of the payments in the trial period that folks were making, waiting for a permanent loan modification on their home. The banks were flush with funds from the government that enabled a trial period to start and see whether or not they would be qualified for a permanent loan modification. This resulted in quite a few loan modifications being approved over time but that program expired in December of this year.
Unless you had an application pending, that hadn’t been acted on yet, this program has expired. Those ones that an application is pending have to be resolved by September of 2017. For those folks that missed out and still want to modify their loans, there’s some help because the banks still have the option to do in-house modifications, not involving government funding, but in-house modifications where they would agree to modify the loans for homeowners who are serious about trying to keep their home and had the ability to pay. It’s always been about the ability to pay. Obviously everybody wants to save their home but without the ability, the banks weren’t approving the loan modification.
You’re still able to apply for the loan through an in-house program. Bankruptcy has always been an option for individuals and families that are unable to modify their loans where without the bank’s approval in a Chapter 13, you can take the mortgage arrears, that amount that you got behind on, and you can build it into a five-year repayment plan. That’s allowed. It’s a matter of law. You don’t need the bank’s approval for that. In the Chapter 13 you could stop the foreclosure process going on and begin repayment of the arrears on a payment that would last for five years.
At the same time you could also apply for a loan modification. If things improve with your job or something happens because usually the reason why the loan modifications are denied is that the individuals don’t have the income to support a payment. What the bankruptcy does is it allow you some time to sort of regroup and then start making payments on a regular basis and then you’d be more of a candidate for a loan modification at that time. It’s one of the tool that you can use. Especially if you have a lot of equity in your home, meaning that you could sell it for more than what you owe on it. It just protects that equity while you get yourself re-organized.
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|Katherine:||Makes sense. Again, Peter, you’re sharing with us options that people have. Let me ask you a little more even though some people have missed this program, if they would have applied in time, what does it do for them? Let me understand that better.|
|Peter Daigle:||What it does is the banks are using the government’s money to assist in bridging the gap during the trial period that they’re making. The government stepped in with funds and said, “We want to help homeowners out.” The banks were able to use those funds to subsidize payments in the short term and allowed the folks a chance to show that they could make those payments, that they’re serious about being able to make a payment each month. That program has expired so there’s no more government funding under what’s called a HAMP program. Now folks are on their own to try to negotiate.|
|Katherine:||The time has passed for people to be able to get that program. Is that what you said?|
|Peter Daigle:||Right. It expired in December.|
|Katherine:||Okay. With that option being gone, for the people who did take advantage of it or they have an application pending, they’re okay with that option. Now, for people who missed that deadline or didn’t know about the program for whatever reason, what their option is now you’re saying, is to talk with their bank but they need to have a way to make their mortgage. Let me make sure I’m understanding you clearly.|
|Peter Daigle:||In the past the government gave a hand and had some funds available to subsidize the banks and the payments that were being made. Those subsidies are gone. The bank can no longer tap into the government to receive assistance. The bank has to make a decision on its own with the homeowner directly whether or not they have any interest in trying to save this home and make payments. The bank then analyzes it and has to make a decision on their own whether or not this is a good loan for them or not. There’s no more funding available to help them with that.|
|Katherine:||Okay. They would definitely have to go straight to their bank and work something out if they’re trying to keep their home.|
|Peter Daigle:||Right, and if that didn’t work out, you always have the bankruptcy option. You always have that option.|
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|Katherine:||They can come and talk with you or call and talk with you to sort that out. I want to make sure that we put this out there that this isn’t a one-size-fit-all solution, so you need to talk with Peter about your specific situation so he can give you more details. We’re talking about mortgages and bankruptcy at this time and you just may have some other elements that we didn’t discuss in this conversation on today that may make things a little different or a lot different for you. Peter, I want to stop for a second just to give people your contact information and then I have a couple of other questions for you. How can they get in touch with you outside of This Needs To Be Said?|
|Peter Daigle:||They can go on-line at daiglelawoffice.com and there’s all kinds of information that they can receive on-line. They can also e-mail me on the website or they can call me and my phone number is 508-771-7444.|
|Katherine:||All right and I know we’ve had you on many, many, many times before talking about this but it’s been a little while. I think that people think of bankruptcy and they get scared. Then the other thing is maybe they’re late on one or two payments and they think that that’s the time to go into bankruptcy. What is the appropriate time frame to be considering bankruptcy or is there one?|
|Peter Daigle:||You want to do it before the sheriff is at your door, when there’s an auction being held. That’s the last resort you have. You may not want to see your name in the newspaper to being foreclosed on. That’s a couple of months prior to the auction date anyway. At least two to three months before the actual auction to occur would be the latest you want to call. If you know you’re in trouble and you know there’s going to be a problem down the road, you should get the ball rolling and talk to an attorney as soon as possible but certainly not later than two or three months before the auction date.|
|Katherine:||You’re going to have paperwork that’s going to let you know what the next steps are, what the bank is intending to do. You’re not going to be caught by surprise unless you don’t open your mail. I’m not recommending you don’t open.|
|Peter Daigle:||Certified mail and sheriffs, they usually bring the bad news.|
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|Katherine:||You won’t miss that and know what your next steps are. Yeah, absolutely. What I’ve learned from you, Peter, in our conversations is it’s not something to be nervous about. Just give us a couple of benefits. Refresh our memory on a couple of the benefits of having bankruptcy as an option.|
|Peter Daigle:||Bankruptcy is sort of the last resort, obviously. What you really want to do is you want to try to work out all your alternatives first and not go. The loan modification generally takes the mortgage arrears, what you’re behind on, and puts it at the back end of the loan. If your loan were to be fully paid off let’s say in 2030, you may not now get paid off until 2031 or ’32 because whatever you owed in mortgage arrears would go to the end of it. Where a bankruptcy, you have to pay it back over the next five years so whatever you are delinquent on. It’s not the best option to file the bankruptcy. It would be only if you can’t get the loan modification approved. That’s the preferable option.|
|Katherine:||It gives you an opportunity to re-set things if you have to go that way so all is not lost. I know that we get attached to our things, we get attached to the way people perceive us and the lifestyle that we’re living and sometimes life happens where you’re not able to stay in that space. Someone like Attorney Daigle can help you sort things out. He can definitely tell you things that you need to consider so don’t try to do this on your own. I encourage people to talk with an expert. Years ago when I started my business and people told me talk with an expert, the first thing that came in my mind, Peter, was it’s going to be too expensive, they’re going to try to take advantage of me.
It really was fear of me not knowing what could happen. A lot to times I didn’t do anything and it cost me more money to not do anything, to not try to find out what a solution could be for my specific situation. I wasn’t talking about bankruptcy but any particular thing that I didn’t have the knowledge for. You’ve gone to school and you have many years of experience. Why would I try to do this on my own when I don’t have to. That’s what I want This Needs To Be Said audience to understand. You don’t have to try to figure it out on your own. There’s some things we do but this isn’t one of those things. More than likely you have people that depend on you, that are in that home with you or are benefiting from whatever the resources are, cars or finances. That’s going to be affected if you don’t ask somebody who knows their way around being in a tight situation.
I want to say that because as you said, Peter, bankruptcy is the last resort. He wants to help you pick what’s the best option for you, not just have you come in and take advantage of you. That’s not what I have people come on This Needs To Be Said for. They come on to help you, to educate you, and to show you other options because we get nervous. We get nervous and we panic. We scream fire and we just … a knee-jerk reaction. You have someone like Attorney Daigle here that can help you calm down and make the best possible decision for you and your family. Did I sum that up pretty well?
|Peter Daigle:||Well said, well said, well said.|
|Katherine:||I think you’ve taught me well here. I love when you come and share the information with the audience because it takes the sting out of, I made a mistake or I’m doing something wrong or I was bad or I wasn’t responsible. Things happen even when you put your best foot forward. It just happens.|
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|Katherine:||How do you work around that obstacle? Peter, thank you so much for being on This Needs To Be Said. Do you have more you want to share on this topic?|
|Peter Daigle:||I think we covered it. I think we covered it.|
|Katherine:||Awesome. Let’s finish up with letting them know one more time how to get in touch with you outside of This Needs To Be Said.|
|Peter Daigle:||Sure. You can reach me by phone at 508-771-7444 or www.daiglelawoffice.com|
|Katherine:||Awesome. Until next time, Peter, have a wonderful day.|
|Peter Daigle:||Okay. Thanks Katherine. Bye-bye.|