Misbehavior And Mistake In Bankruptcy Mortgage Claims

The greatest fear of many families in serious financial trouble is that they will lose their homes. Bankruptcy offers a last chance for families save their houses by halting a foreclosure and by repaying any default on their mortgage loans over a period of years. Mortgage companies participate in bankruptcy by filing proofs of claims with the court for the amount of the mortgage debt. In turn, bankruptcy debtors pay these claims to retain their homes. This process is well-established and, until now, uncontroversial. This paper examines the actual behavior of mortgage companies in consumer bankruptcy cases.