Just a few weeks ago, the Obama Administration announced a new refinancing plan which will help “millions” of American homeowners refinance their homes. Although any help at this point is welcomed, this new plan seems to be more of the same rhetoric we’ve been hearing for the last few years. First, the plan only borrowers whose mortgages are in good standing (i.e., they are current on their loans). I know many Bankruptcy attorneys here in Orange County, Los Angeles County and the Inland Empire, and I think I speak for all of us when I say that it’s rare to find clients who are current on their mortgages or have not been behind in the last 6 months. Further, the Plan does not account for all the homeowners that are “upside down” on their properties (i.e., they owe more on their mortgages than the house is worth). That said and after all the press releases and speeches by our politicians, we are still really only left with a handful of options. For most Americans, the only way to reduce mortgage debt and/or get their delinquent mortgages current will be to file a Chapter 7 or Chapter 13 bankruptcy.
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