New Restrictive Loss Mitigation Rules Coming to Eastern District of New York Bankruptcy Court
If you own a home in Brooklyn, Queens or Staten Island and you are behind on your mortgage, please read this blog post carefully.
The Chief Judge of the Eastern District of New York Bankruptcy Court - which covers Brooklyn, Queens and Staten Island - is adopting a new rule effective July 1. Instead of simply submitting an application to the court to enter the court's loss mitigation program, your attorney will now have to file a motion explaining why you fell behind on your mortgage and why - based on your income and expenses - you could afford a loan modification if you were given one. The court could deny the motion if it determines that you cannot afford a modification, and you would never get the chance to save your home.
Some might argue that this new procedure saves the court time by cutting down on the amount of "Hail Mary" loss mitigation applications that don't stand much of a chance because the applicant's arrears are too high or their income is too low. The problem is... Hail Mary passes sometimes result in touchdowns. I once got a client a loan modification who hadn't paid the mortgage in eight years and who was $450,000 in arrears. I have had at least three more clients who were given loan modifications despite having over $300,000 in arrears. Under the new procedures, these clients might never have gotten the chance to apply.
If you live in Brooklyn, Queens or Staten Island and you are contemplating filing a bankruptcy petition to take advantage of the court's excellent loan modification program, I suggest you give me a call and let's get your application in before the new rules take effect on July 1.