The online payment website for Freedom Mortgage will not accept payments made after 11:00 p.m., in order to allow its cash department to process payments received that day. If a borrower attempts to pay after 11:00 p.m., an error message pops up and the borrower is required to postdate the payment to the next day.
Following the financial crisis, many home mortgage borrowers found themselves living in properties encumbered by debt that far exceeded their value. The result was an increase in mortgage default rates, followed by a wave of foreclosures as lenders scrambled to minimize the financial damage to their investments. From the wreckage, a new creature emerged that threatened to devastate borrowers who believed that foreclosure was their chance for a fresh start: the zombie mortgage.
Abstract:
How did mortgage risk pricing for securitized loans change during the lead-up to the 2008 financial crisis? Using a database from a major American bank that serves as trustee for private-label securitized loans, this paper shows that the decline in underwriting standards was accompanied by a decline in credit spreads on mortgages, after adjusting for loan/borrower characteristics. Observable information, including FICO and LTV, became less influential on mortgage risk pricing over time during the housing bubble.
Summary:
As an initial matter, the 4th Circuit affirmed, in a published opinion, that pursuant to 11 U.S.C. §§ 506(a) and 1322(b)(2), a junior lien against real estate that serves as the debtor’s principal residence can be stripped-off if there is no equity above the senior lien(s).
The Court of Appeals next proceeded to the question of whether a Debtor, who had recently obtained and Chapter 7 discharge and was thus ineligible for a Chapter 13 discharge, could similarly strip-off a junior lien.
