What if the Bank Can’t Prove They Own My Home in a Bankruptcy Case in New York City?

It might just be your lucky day, but understand first that our bankruptcy clients rarely lose their homes or cars in the bankruptcy process anyway.  There have been some interesting bankruptcy cases since the mortgage meltdown that have paved a new legal defense for people facing the possibility of home foreclosure.  If you file a bankruptcy case in New York City, and are behind on your home payments the bank cannot take any foreclosure action against you unless they can clearly prove ownership of your home.  And as it turns out, this has actually been harder for the banks to do than we realized at the moment of the crisis.

The subprime mortgage fiasco created a number of problems.  Bundling these mortgages as investments turned out to be a pretty bad idea for America.  Big banks needed bigger bailouts, because we were told they were too big to fail.   Regardless of their bailouts, many New Yorkers are still underwater on their homes with looming balloon payments coming on loans that would no longer even be legal to sell.  Some people can seek federal modification, but these programs too have been shown to be arduous and problematic at best.  Other people, while maybe not losing their home, have lost their entire life savings, retirement funds or worse having invested in the overrated bundled mortgage securities.  The meltdown left the average American in pretty bad shape, but these shady mortgage practices also created one very big problem for the banks themselves as well.

When mortgages are sold, bundled, cut up and resold again it turns out that proving the original ownership of these mortgages can be very difficult for the banks or mortgage lenders to do.  To sue or foreclose in any legal case in the United States a plaintiff must prove they have a legitimate stake in the property or a “standing to sue.”  Some astute lawyers in New York have used this as a defense for their bankruptcy clients facing home foreclosure with some real success.

The unethical mortgage practices kept the money rolling in for the big banks while hurting much of the country, and the world for that matter.  But in their greed they never stopped to consider that they might be creating a situation that could hurt them too.  With the quick shuffling of ownership, and the  improper handling of the ownership paperwork many of the big banks have shot themselves in the foot when it comes to their ability to foreclose on a home in mortgage arrears.

Some clients might end up with a free house, it’s happened, but at the end of the day most of our clients will end up settling with their mortgage lenders to reduce the amount of payments or the amount of their mortgage arrears.  Nevertheless a qualified bankruptcy attorney will force a mortgage lender to prove ownership of your home, and will have a number of other tactics and strategies to pursue to keep you in your home when facing a personal bankruptcy.  If you are underwater on your home payments and have questions about how bankruptcy can help you save your home please contact the Law Offices of William Waldner online or at 212.244.2882 to arrange a free bankruptcy consultation today.  We only practice bankruptcy law and have a 99% Chapter 7 bankruptcy discharge record in New York City as of 8/31/16.

This article is intended for educational purposes only.  By reading no attorney-client privilege has been created.