Here is an excerpt from a recent article in the Mortgage Law Network Blog. Regardless of whether you have filed a Chapter 7 or Chapter 13 bankruptcy you can receive a Motion to Lift Stay on your home. This will occur if your mortgage payments are behind or perceived to be behind.
A Motion to Lift Stay is a request from the mortgage company to the court to asking permission to remove the protection of the automatic stay. Once the house loses this protection the mortgage company will begin foreclosure proceedings. How do you go about fighting this?
If you receive a Motion to Lift Stay gather all your canceled checks for the mortgage payments. I recommend that you gather all the canceled checks going back to the date of your bankruptcy petition. Make a spreadsheet. List out the check number, the amount of the check, the date your mailed it and where the payment was sent. Now look at your contract. What date is the payment due?
Your first mortgage payment that is due after your bankruptcy is the first month where the contractual date occurs. Meaning that if you file bankruptcy on April 1, 2009 and your contractual due date on the mortgage is the 15th then your first mortgage payment post filing is April 15th, 2009. If you contractual due date is the 1st of each month than your first mortgage payment is due May 1, 2009. The dates of the payments become critical when you are looking at the mortgage history.
Then count up how many payments are due post-petition. Then count how many payments you have paid. Keep in mind if you cannot prove the payment with a cancelled check or money order than the payment has not been made. You have to able to prove that the payments have been made. If you have sent a payment and the mortgage company has not cashed it then the money should be in your account.
Once you have determined the number of payments made, determine if the payments were made on time. If a payment or several payments have not been made on time a late fee will be assessed against the account. This is when the accounting gets harder. Why? Because the mortgage company will then take your payments and place them into a suspense account. This account does exactly what the name indicates. The money sits in this suspense account until there is enough money to bring the account current. The result is that the arrears continue to grow because the payments will be late each month even though you are making the regular mortgage payment until the account is brought totally current.
Totally current means that all fees and costs must be paid along with any mortgage payments due and owing. Until this is done your account is technically not current. What if you have an escrow?
Escrow accounts only serve to complicate things. Let’s say that you are paying taxes and insurance through the mortgage. The mortgage is now behind and the insurance payment becomes due. The mortgage company is not going to allow the property to go uninsured. As a result the mortgage company will purchase what is called hazard insurance to protect the property if there is not enough money on hand to pay your insurance company. So now you are behind on the mortgage payment, late fees and costs of the hazard insurance plus the escrow will need to be funded so that there is on average a 2 month cushion towards the upcoming taxes and insurance payments.
As you can see, mortgages can quickly become an expensive nightmare. The best way to avoid this nightmare is to make the mortgage a priority and keep everything related to the mortgage. Keep a spreadsheet of the payments, all canceled checks, keep a copy of every mortgage statement, real property tax statement, insurance statements and any notices from the mortgage company.
Read your mortgage statement each month. If something does not look right, call and question the charges. Do not ignore anything that looks out of place. To take a proactive step with your mortgage and request a payment history at least once a year. Some attorneys recommend at least once a quarter.
You can request a payment history through RESPA. Andy Miofsky explains what RESPA is and provides a sample letter to request this payment history. After you receive this payment history go over it with a fine tooth comb. Question everything whether it is a penny or a thousand dollars off. It is your right to have your questions answered. The payment history will also help you account for whether or not the Motion to Lift Stay is valid or not.
If the Motion is not valid based on your evidence then your attorney will be able to fight this motion in court. If the Motion is valid then you will have to work out a deal through your attorney with the mortgage company. This is usually a six month stipulated order that allows you to bring the account current over six months.
However it is not as easy as all that. You have to make your regular payment on time then 1/6 of the arrearage of the mortgage payments that are due and owing the date of the order. These two payments have to made on time each month for six months.
The best way to avoid this mortgage snowball nightmare is to make sure you make your house payment on time each and every month. If you cannot do this then it might be time to let the house go.