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You're Holding My Mortgage? Prove It!

A new precedent has been set in bankruptcy court. The case, which is being referred to as “the White Plains case,” indicates that the federal government has taken notice to the way borrowers are being treated. The borrower in this case had filed a Chapter 13 bankruptcy in order to save her home. After months of “foot dragging,” her bankruptcy lawyer asked for proof that the lender indeed had a mortgage on the home; no one could have predicted what happened next. Her lawyer discovered that not only did the mortgage company have no official document that indicated who was holding the loan—but the lender had, in fact, charged them a “foreclosure fee” and elevated interest.

The federal bankruptcy judge ruled that the company did not own the mortgage and the mortgage debt was forgiven—all $461, 263.

Lenders have historically had the upper hand in and out of the courtroom. The foreclosure fee and extra interest are just two examples of how lenders take advantage of the average American but, with a Chapter 13 bankruptcy filing, they couldn’t get away with it.

This ruling could mean great things for those looking at foreclosure. While it doesn’t imply that everyone will start getting their mortgages wiped, it does show that courts are starting to recognize the unfair advantage that lenders have over regular folks. Needless to say, it’s a step in the right direction.

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