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successors-in-interestBack in the 2008 foreclosure crisis, one of the biggest problems was the lack of assistance for those who were not on the deed (such as following a death or divorce).  Now there are new rules in place for successors in interest for instances where the homeowner may have died or transferred the home via a divorce decree of some sort.  These new laws allow the “new” homeowner to unilaterally assume the role as successor in interest.  Importantly, it does not require consent by the lender.  In some cases, the “new” homeowner does not have to assume the mortgage loan.

Successor in interest means a person to whom an ownership interest in a property securing a mortgage loan subject to this subpart is transferred from a borrower, provided that the transfer is:

(1) A transfer by devise, descent, or operation of law on the death of a joint tenant or tenant by the entirety;

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arkovich_law-narrow“When do you need a foreclosure attorney?” was one of our highest performing videos last month.  That has motivated me to prepare a series of blogs, guides and new videos to help consumers learn about their options and what they should be aware of when they are behind in their mortgage payments.  This information is not intended to help someone represent themselves in a foreclosure action.  That can get complicated and most people are not well suited to litigation.  But this information should help a homeowner know what options are available, where to turn, timelines, and likely outcomes.  All of that is necessary whether you are planning to keep a home or letting it go.

So why is this coming up now?

As of August 2023, many covid-19 related moratoriums have expired and have unplugged the pipeline of distressed properties.  We are now at about 100,000 foreclosures nationwide, where in 2008 through early 2010 we had over 900,000 homes in foreclosure nationwide.

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Christie_1I ran across this statistic and wanted to share with you about the DOJ attestation process to discharge federal student loans. A great many are still pending.
From 12/5/2022 through 7/15/2023 nationwide:
409 new complaints
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Christie_1Say you have a private student loan and you have previously filed a bankruptcy.  Was your private student loan discharged?  I’m presuming you did not file an adversary case to obtain a specific ruling as to dischargeability of these loans.

  • What is Homaidan?

Loans that could have been discharged as beyond the cost of attendance, that portion that was over and above tuition, books, room and board etc. may be the subject of Homaidan.  My understanding is that you can remain a class member for a discharge of any amounts that are outside of the cost of attendance and you’d remain responsible for anything else.  You can also opt out and pursue relief on your own of that or the remainder of the loans, or seek alternative grounds for relief such as ineligible institution, non-dependent borrower or undue hardship.

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Christie_1We also would want to take advantage of any other programs out there such as the IDR recount going on right now. Normally, we walk borrowers through the process for that during our strategy session and get it done then. The IDR recount is huge – it’s allowing forgiveness for people with older loans, counting extended forbearances and other things to get to 20/25 yrs – the only requirement is that a borrower consolidate to Direct loans which would allow re-dating all of the loans for IDR purposes to the earliest repayment date of ANY loan contained with the consolidations. It works really well especially for those with older loans, or gaps between education. For instance someone who went to grad school during covid, can consolidate now with their undergrad loans perhaps in 1990s and their IDR start date for ALL loans would be six months after graduation from undergrad. Borrowers could obtain a full forgiveness of even the grad loans as soon as the consolidation finishes and the loan is reviewed under the IDR recount.
For our attorney followers in the Middle District Tampa Division, I’m speaking at the TBBBA Sept consumer luncheon September 12 about student loans including this IDR recount if you’d like to listen in.
For borrowers, we offer strategy sessions where we go over your specific loans and figure out your options, often doing it right then with you on the phone or via shared screen on Zoom.
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Christie_1For people granted TPD, who are also eligible for IDR AUDIT Forgiveness, Dept. is moving TPD people from TPD forgiveness to IDR Audit forgiveness.  While there is no 3 year income monitoring on TPD anymore, there still is a three year monitoring on TPD for things such as returning to school so moving them to IDR Audit forgiveness will give these people faster forgiveness.  

Forgiveness before 12/31/25 is very good!  That’s when the stimulus bill expires allowing for federal tax waiver on any student loan forgiveness (private or federal).  It’s also when the TPD discharge provision providing for tax free forgiveness has to be re-funded by Congress.  So forgiveness now is Great News!  Even if the IDR Waiver is somehow stopped due to someone filing a court case down the road, it is unlikely to unravel a forgiven loan.  Rather it would most likely stop anyone in the future from obtaining forgiveness.  Of course, someone who has already consolidated their loans for the IDR recount can argue that they relied upon the program’s rules when doing the consolidation, and that laches (a fancy legal term for delay) prevents the creditor from asserting that now.

This information will be processed soon.

Your Discharge Will Be Reprocessed as IDR Forgiveness
Account Number: XXXXX
Dear XXXX,

 

The U.S. Department of Education (the Department) discharged your Federal Family Education Loan (FFEL) Program and/or William D. Ford Federal Direct Loan (Direct Loan) Program loan(s) on the basis of your total and permanent disability (TPD) as of 05/01/2023. The Department has since reversed your TPD discharge because all of your loan(s) will instead be discharged on the basis of your income-driven repayment (IDR) forgiveness. We use the terms “you” and “your” to refer to the disabled individual who applied for discharge, XXXXX.

 

Because your loan(s) have been forgiven as they have accumulated time in repayment of at least 20 or 25 years, we, as your Total and Permanent Disability servicer, will transfer your loan(s) to Nelnet, who will work with you on the income-driven repayment (IDR) forgiveness. Nelnet will inform you by mail once the income-driven repayment (IDR) forgiveness is complete and which loans were included.

 

Please note that you will no longer remain in the TPD discharge program or be subject to the TPD three-year post-discharge monitoring period.
For additional information:
Please visit DisabilityDischarge.com or email us at DisabilityInformation@Nelnet.net. You can also contact us at 888.303.7818.

 

If you have questions about your income-driven repayment (IDR) forgiveness, call Nelnet at 888.486.4722 from 8 a.m. to 9 p.m. (Eastern) Monday, 8 a.m. to 8 p.m. Tuesday and Wednesday, and 8 a.m. to 6 p.m. Thursday and Friday. You may send mail to Nelnet, Attn: Claims, P.O. Box 82505, Lincoln, NE 68501-2505.

 
Sincerely,
Your Total and Permanent Disability Servicer
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arkovich_law-narrowThe Supreme Court decision of United Student Aid Funds v. Espinosa (2010) 559 U.S. 260 is usually cited for the proposition that a court may not make an order on whether student debt is discharged without an adversary proceeding.

In USAF v. Espinosa, the issue was whether confirmation of a chapter 13 plan which provided for discharge of the student loan debt could be reversed. Rafael “Ted” Cruz lost in his quest to convince the Supreme Court to void the plan by means of FRCP Rule 60(b)(4).

But bankruptcy judges and practitioners were cautioned to always use an adversary proceeding for determinations on whether educational debt is discharged by § 523(a)(8).

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arkovich_law-narrowI just put a client together with a reporter doing a story about high interest vehicle loans.  I’ll leave the details to him and post here when the story comes out — but I did want to remind folks that there are ways out of these loans.

This particular loan was for 17.45% interest loan.  The client made low six figures in income from a very reputable employer at the time.  Why such high interest?  I’m not sure what her credit score was at the time, but the incredibly high interest rate caused her to pay $58k for a used vehicle she bought at $35k.  She made payments for approximately two years, but with a mortgage, and everyday expenses going up, she couldn’t keep it up.

Her solution was to file bankruptcy and surrender the car.  This way they couldn’t come after her for the deficiency balance.  Other things were addressed in the bankruptcy as well.  But this vehicle and the 17.45% interest rate was a leading cause.  We assist clients in obtaining other more sustainable vehicles during the bankruptcy – usually with a reasonable interest rate, warranty, sustainable payment.  We get that you need a vehicle.  You just need one that makes financial sense.

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Dear X,

Congratulations! The Biden-Harris Administration has forgiven your federal student loan(s) listed below with Nelnet in full.

This debt relief was processed as part of the Biden-Harris Administration’s one-time account adjustment because your student loan(s) have been in repayment of at least 20 or 25 years. An adjustment to your account updated the number of payments that qualify towards income-driven repayment (IDR) forgiveness. This forgiveness is effective as of 05/15/2020.

Loan Program Disbursement Date Original

Principal Banance
DIRECT CONSOL 05/15/20 $424,214.20

 

Log in to your account for details.

WHAT YOU NEED TO KNOW

Here are some important points on this IDR forgiveness:

  • Due to the American Rescue Plan Act of 2021 the balance of your loans that were forgiven is not considered taxable income for federal income tax purposes. Since state and local tax implications will vary, we recommend you contact a tax advisor for more information.

 

  • Not all your federal student loans may be represented in the table above as you may have begun repaying each loan on a different date. If you have federal student loans that are not included in the table, please continue to make payments on them. Payments are not required until after the payment pause ends at the end of August. Your first payment will be due in October 2023. To find options to help with repayment, visit studentaid.gov.

 

  • We have notified, or will notify by the end of the month, all national credit bureaus of your student loan forgiveness.

 

  • If applicable, we’ll process a refund for any payments made towards the loans listed above after the effective date of this forgiveness.

 
Contact Information
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Tampa, FL 33606
Phone: (813) 258-2808
Fax: (813) 258-5911
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