- Bank of America (BAC) had $23.0 billion in residential mortgage loans on its balance sheet with homes in foreclosure, while loans serviced for others in foreclosure totaled a whopping $90.6 billion.
- for JPMorgan Chase (JPM), residential mortgage loans in foreclosure totaled $28.9 billion, while loans serviced for others in foreclosure totaled $54.7 billion.
- For Wells Fargo (WFC), one-to-four family mortgage loans on the balance sheet with collateral homes in some phase of foreclosure totaled $18.1 billion, while loans serviced for others in foreclosure totaled $37.7 billion.
- Citigroup (C) reported $6.9 billion in residential mortgage loans in foreclosure on the balance sheet, and $10.3 billion serviced for others that were in foreclosure.
Chapter 7 BankruptcyAccording to Ward, a Chapter 7 filing "doesn't help if the lender has a lien on an asset," such as a house or a car, since the lien allows the lender to take back the collateral and the Chapter 7 filing "does not get rid of line or security interests." A Chapter 7 filing is a liquidation bankruptcy, where the court-appointed trustee sells nonexempt assets to generate cash to pay creditors a portion of what they are owed. According to Ward, most Chapter 7 filings are "no asset Chapter 7 cases," where "all the consumer assets are exempt and there's no distribution to creditors." The consumer has to fill out schedules listing their assets, which the creditors are allowed to reviews. If you file for Chapter 7 while your home is in foreclosure, the mortgage lien holder can either wait for the bankruptcy process to be completed -- since there is a stay on foreclosure activity during the bankruptcy process -- or since the bankruptcy doesn't discharge the lien on the property, the lien-holder can ask the bankruptcy court to allow the foreclosure to proceed. Generally speaking, the best you'll get out of chapter 7, as it relates to staying in your home, is a delay of several months.
Chapter 13 BankruptcyAccording to Ward, "debtors in chap 13 have more options to deal with secured creditors than they do in Chapter 7," because the debtor files a "Chapter 13 plan" to reorganize their finances and "define how they will handle all of their creditors over a three to five year period." A borrower in Chapter 13 can typically "cure a default in their mortgage" for example, by proposing to pay "an extra amount each month that could be applied to whatever arrearage that's owed the day they file." Of course, this assumes that after the borrower discharges a good portion of their unsecured debt through Bankruptcy, that they will have sufficient income to pay more to the mortgage lender.
Philip van Doorn.