Friday, April 4, 2008

Mortgage Crisis Leads to a 350% Jump in Instances of Lenders Pursuing Deficiency Judgments; Forces Homeowners to Protect Assets from Lenders

Law firm Klueger & Stein, LLP notes a 350% increase in instances of lenders seeking deficiency judgments or pursuing aggresive collection tactics against defaulting borrowers for the period of September 2007 to March 2008. The increasing rate of mortgage foreclosures and aggresive collection tactics by the lenders is forcing homeowners and real estate investors to seek ways to protect their assets.

Los Angeles, CA (PRWEB) April 4, 2008 -- Law firm Klueger & Stein, LLP notes a 350% increase in instances of lenders seeking deficiency judgments or pursuing aggresive collection tactics against defaulting borrowers for the period of September 2007 to March 2008. The increasing rate of mortgage foreclosures and aggresive collection tactics by the lenders is forcing homeowners and real estate investors to seek ways to protect their assets.

As the political fallout of the mortgage meltdown plays out in Washington, D.C., banks and mortgage lenders are quietly trying to collect as much as they can from defaulting borrowers.

"Banks used to foreclose on defaulted mortgages and eat their losses. Now, if the foreclosure results in a deficiency, many lenders will pursue the borrower and try to collect on the deficiency," states Jacob Stein, an asset protection attorney and a partner at the Los Angeles law firm of Klueger & Stein, LLP.

In many states if the foreclosure sale does not result in a full pay off of the amount owed to a lender, the lender can sue the borrower, obtain a judgment and then use that judgment to collect against the borrower's personal assets. All states allow deficiency judgments for investment real estate.

"We are seeing a lot of clients who have bought investment properties and can no longer make mortgage payments. The properties are upside-down, and these borrowers understand that there is a good chance their bank will try to collect the deficiency amount from them, especially when a personal guaranty has been signed. Before that happens, many of them seek to insulate their other assets from lawsuits," continues Stein.

According to Klueger & Stein, LLP, from September 2007 to March 2008 there has been a 350% increase of instances when lenders would seek a deficiency judgment. In Jacob Stein's estimation, "Banks want to look good to their shareholders and make up for the bad loans and bad decisions of the past few years. So they are aggressively pursuing defaulting borrowers."

Asset protection is a field of law that deals with sheltering assets from claims of creditors. Demand for asset protection generally increases during an economic downturn. As businesses and individuals become unable to satisfy their obligations, they turn to asset protection to protect their assets from eventual lawsuits by creditors.

In many instances it is impossible for borrowers to make their assets completely unreachable to a would-be creditor. Especially when the creditor is a bank; banks tend to make for aggressive creditors. But with an asset protection plan in place assets can be made very difficult and very expensive to reach, forcing banks and lenders to agree to much lower payoff amounts.

"When defaulting borrowers structure an asset protection plan, we generally see lenders a lot more receptive to settlements that are favorable to borrowers," states Stein, "frequently, they will even abandon their collection efforts."

The asset protection industry has never experienced such a wide-spread demand for its services as it is experiencing now from the mortgage sector. "We generally see clients from all walks of life and all industry groups. But over the past 8 months we have represented well over a hundred borrowers and real estate investors who are anticipating defaulting on their mortgages in the near future."

Attorney Jacob Stein and the law firm of Klueger & Stein, LLP provide asset protection services to high net-worth clients, nationwide. Klueger & Stein, LLP is the nation's leading asset protection law firm, with over 30 years of experience and successful representation of over 3,000 clients. The firm has set up an educational website about asset protection services and structures. The website can be found at www.maximumassetprotection.com.

Source: PRWeb: Legal / Law


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