Presumably this is the point of an escrow account.
June 4, 2012 8:29 AM   Subscribe

GMAC Mortgage is filing Chapter 11. Is there any reason to hire a lawyer?

We have a mortgage (with our escrow account) and a HELOC with GMAC Mortgage. (They service everything, but I think they've actually sold off the loans)

We received a notice in the mail with dates on bankruptcy proceedings that says we may want to hire an attorney to protect our rights because we may be creditors. What rights could I have beyond the escrow account?

(I know you are not my lawyer. We live in Massachusetts.)
posted by mkb to Law & Government (6 answers total)
Do they owe you money?
posted by empath at 8:31 AM on June 4, 2012

This sounds like you've received an ass-covering form letter. If you have a mortgage with them, aren't they your creditor, not the other way around?
posted by mhoye at 8:34 AM on June 4, 2012

My mortgage company was taken over by the Feds in the bank crash in 2008. I was hoping they might lose my mortgage in the process, but alas it didn't happen. I would pay very close attention to your accounts to make sure something doesn't go wrong, but the actual operational aspect of sending out bills and cashing checks isn't likely to be impacted much. Eventually, you'll probably write your check to a different company as the mortgages are assets that will get sold off as part of the bankruptcy proceeding. I wouldn't bother with the lawyer unless something bad happens - they try to double the size of your mortgage or lose 6 months worth of payments.
posted by COD at 8:39 AM on June 4, 2012

posted by H. Roark at 8:43 AM on June 4, 2012

Best answer: Your local federal district court (if the bankruptcy court is housed there) will have a bankruptcy self-help desk--generally aimed at debtors, but they can help you. If you're close enough to the local bankruptcy courthouse, drop by.

But, as the mortgagee (debtor) on a mortgage (an asset) held by the Chapter 11 debtor, you are most really not a creditor to the Chapter 11 estate (tax escrows notwithstanding) and you most likely do not need an attorney for the proceeding. As a debtor to the debtor, however, they are required to send you notices of the proceedings. Chapter 11 is for reorganizations, not elimination of debts. Chapter 11 exists to help the debtor maintain its business--so it is highly unlikely that the status of your mortgage will be affected, although it is likely to be sold off (if it hasn't been already) or transferred to another servicer (if they shrink their servicing operations or cannot successfully reorganize).

It is always an excellent idea to pay close attention to the servicing of your mortgage (proper application of payments, proper application of over-payments, proper maintenance of escrow). The minute that something goes wrong with that, document every step you take to correct it and get an attorney if it's not corrected quickly.
posted by crush-onastick at 9:27 AM on June 4, 2012 [2 favorites]

I received the same letter\similar letter and it stated that the only real purpose of the letter was to let me know that my obligations to continue paying my mortgage to them were not changing in any way.
posted by zephyr_words at 10:25 AM on June 4, 2012

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