If she had filed for bankruptcy she may have been able to keep her house and had her other debts forgiven.
Yet she would have still had to make the payment for a house that is worth far less than she borrowed.
Great...so in essence she lived rent free in the house for 16 months (since sept 08)....I am sure she did not pay taxes either so all she did for 16 months was pay utilities.
Doesn’t seem to be a good option. You can’t get a mortgage mod in bankruptcy. She couldn’t afford the $1450 anyway, so she would be no better off and would still lose the house. The article didn’t say what city she lived in but the fact that the bank hasn’t foreclosed is telling. Normally if there was a market for the house she would have been foreclosed on within 9 months or less. In some places the banks don’t foreclose because they don’t want to pay the back taxes, ie Buffalo. They may never foreclose on the place. In other instances her mortgage is part of a pool that comprises a mortgage backed security. There’s a servicer who’s supposed to handle this, but if a large portion of the pool went bust, there might not be the funds to foreclose out the non-performers. And they may not be paying the taxes either which means the property will eventually go in a tax foreclosure sale, which means the mortgage will be cancelled out anyway. So the point is she needs a real lawyer to advise her, not some scam adviser telling her to just stop paying and hope for the best.
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Nope, that probably would not have happened. The 2005 bankruptcy “reform” law effectively made non-secured credit card debt more difficult to discharge in BK than a mortgage. Student loans are no longer dischargeable at all.
So the net result is that the banking industry set themselves up for this - that mortgages end up being the easiest debt to walk away from.