R&B singer Tony Braxton recently filed a notice in her Chapter 7 bankruptcy that she hopes to keep her home. But the property, which has a $1.6 million loan attached to it, is only worth $1.2 million. Braxton expressed her desire to negotiate a mortgage modification. But is that realistic?
Here's what Toni Braxton would need to do if she hopes to have any chance of getting a mortgage modification while in bankruptcy:
- She needs to show the mortgage lender, either directly or indirectly that it is in their best interest to modify her mortgage and not foreclose on the property. We have discussed before the fact that many mortgage lenders have very little incentive to modify loans and actually make more money in foreclosure . It's up to Braxton to prove in her Chapter 7 bankruptcy that the lender would benefit from a mortgage modification.
- Toni Braxton, will need to prove that she can pay for any modification that the mortgage lender might agree to during her bankruptcy. This isn't just for the benefit of the mortgage lender; if Braxton cannot afford to pay for the mortgage modification it will not be in her best interest to reaffirm the mortgage debt in Chapter 7 bankruptcy.
- If Tony Braxton is trying to claim her home as a homestead, she will need to prove to the bankruptcy court that she actually used the property as her primary home. This could prove difficult for a celebrity who spends a lot of time on the road and reportedly had another home in Los Angeles which was lost to foreclosure.