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Protections against mortgage fraud could cost New Yorkers

New York may be one of the best states for homeowners facing foreclosure because of legal protections against mortgage fraud. However, those protections are costly to lenders and may end up costing New York borrowers more money, too.

The foreclosure process in New York is the longest in the nation, taking on average 1,089 days to complete. A backlog of foreclosures has stalled the state's housing recovery and has kept housing prices low. Now, the Federal Housing Finance Authority is considering fee increases for New York borrowers to compensate Fannie Mae and Freddie Mac for costly foreclosure delays.

The good news is that the state's lengthy foreclosure process means New Yorkers in default of their mortgages have multiple opportunities to try to save their homes from foreclosure. These options include filing for Chapter 13 or other forms of bankruptcy, a mortgage loan modification or a short sale.

Chapter 13 bankruptcy allows a homeowner to reorganize debts into a court-supervised repayment plan and make manageable payments over time. For individuals with a steady source of income, Chapter 13 can be an excellent option for eliminating some debt, reducing interest payments and making a fresh financial start. By sticking to the Chapter 13 repayment plan and making timely monthly mortgage payments, the homeowner may be able to stop foreclosure proceedings.

If you have fallen behind on your monthly mortgage payments or have received notice that you are in default of a mortgage, it may be helpful to speak to an attorney experienced in both bankruptcy law and foreclosure defense, who can outline your options for saving your home and help protect your rights.

Source: Bloomberg News, "New York protecting defaulters stalls rebound: mortgages," Prashant Gopal, Jan. 23, 2013

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