Sunday, February 26, 2012

BofA mortgage move not likely to have big consumer impact

Bank of America Corp appears to be going it alone in not selling mortgage loans to Fannie Mae, a move that, while sending an angry signal to the nation's largest mortgage-buyer, could force the bank to charge less attractive mortgage rates.

Some major competitors indicated on Friday they are not following Bank of America's decision to stop selling most of its new loans to the government-controlled buyer of home loans.

Bank of America's decision, which follows years of legal wrangling with Fannie , could drive up the bank's own mortgage costs because it would have one less bidder for its loans.

"It could make them a little less competitive," said Guy Cecala, publisher of industry publication Inside Mortgage Finance.

Lenders typically like to sell loans to both Fannie and sister agency Freddie Mac to play them off each other. So Bank of America's decision could mean it can't offer the best rates, Cecala said.

Bank of America said on Thursday it stopped selling home-purchase loans and some refinanced mortgages to Fannie Mae, a government-sponsored entity that buys loans to replenish the liquidity of banks. The move sparked concern that funding for mortgages could tighten if more banks refused to sell their loans to Fannie and Freddie.

The move does not mean a lot to the mortgage market, because Bank of America provided only 3 percent of the loans Fannie bought in the fourth quarter of 2011 and the bank still plans to sell mortgages to Freddie, or hold them on its own books.

It also does not mean much to Fannie, which can buy loans elsewhere.

Read the rest of the article at the Chicago Tribune

Phony deeds, many mortgages key to massive mortgage fraud

For fugitives Victor and Natalia Wolf, the police poster tells the story: hundreds of victims from land fraud swindles across Florida totaling millions in losses.

But the couple's lasting legacy may be found in their most prized possession: their home.

In their final desperate days, the Wolfs managed to get a spate of sham mortgages slapped on their North Miami Beach house — creating 21 fake transactions — to squeeze millions from lenders before vanishing.

The wheeling and dealing — phony deeds, forged signatures and a straw buyer — has left investors fighting over who owns the stately waterfront house at the center of the couple's real-estate empire.

"It is mind boggling," said Fort Lauderdale attorney Roman Groysman, representing a burned lender in a battle over the home. "They did everything imaginable in the realm of fraud."

Read the rest of the article at The Orlando Sentinel

Mortgage relief faces a nightmare

If the Mortgage Forgiveness Debt Relief Act expires Dec. 31, homeowners may have to pay taxes on any reduction in their principal.

Given the huge public and private resources now being devoted to helping financially distressed homeowners — including the recently announced $25 billion national mortgage settlement with five major banks — you might assume that a key federal tax law benefit underpinning these efforts would be a shoo-in for renewal.

But it’s not. The Mortgage Forgiveness Debt Relief Act is set to expire in 10 months, and there are early indications on Capitol Hill that it might not make the cut. The law, first enacted in 2007, allows homeowners who have received principal reductions on their mortgages as the result of loan modifications, short sales or foreclosures to avoid income taxation on the amounts forgiven.

Read the rest of the article at The Miami Herald

Beware: Mortgage Fees Are Rising

Increased fees are sneaking into the overall cost of most mortgages. But given the ultralow interest rates these days, it's likely few borrowers will notice.

Mortgage rates are clinging near record lows, with the 30-year fixed-rate mortgage averaging 3.95% for the week ended Feb. 23, according to Freddie Mac's weekly survey of rates for conventional mortgages.

Still, consumers should pay attention to any fee increases because they could very well be a sign of what's to come: increasingly higher costs to get a government-backed mortgage, whether it's a conforming loan sold to government-sponsored entities Freddie Mac and Fannie Mae or a loan backed by the Federal Housing Administration, says Guy D. Cecala, publisher of Inside Mortgage Finance, a trade magazine for the residential mortgage business.

Read the rest of the article at the Wall Street Journal

Arizona gets $1.6 billion in mortgage settlement case

Arizonans will divide up about $1.6 billion from a nationwide settlement announced Thursday with five major mortgage lenders.

The cash is part of a $26 billion pact to settle claims that the lenders acted improperly and illegally in dealing with homeowners who sought mortgage relief. The allegations range from refusing to work in good faith with borrowers to outright fraud in offering up documents to courts to foreclose on homes.

Thursday's settlement came after California and New York finally agreed to become part of the settlement. That left only Oklahoma to deal on its own with the lenders.

But it also was waiting on Arizona Attorney General Tom Horne finally settling a separate lawsuit the state had filed in 2010 against Bank of America alleging various types of fraud.

Bank of America has agreed to pay the state another $10 million. Some of that will go to individuals who were harmed by the bank's foreclosure activities.

The biggest chunk of Arizona's share of the settlement -- $1.3 billion -- is earmarked to directly help those who are "underwater' with their mortgages, owing more than the property is worth.

Read the rest of the article at Verde News

Committee: Homeowners facing foreclosure should know what banks paid for mortgages

Hoping to place Nevadans facing foreclosure in a better negotiating position with their lenders, a state panel recommended Thursday that banks be required to disclose how much they paid for homeowners’ mortgages.

Banks have purchased many mortgages for far less than the original loan amount — sometimes with the assistance of a federal bailout — according to attorneys for homeowners, real estate agents and consumer advocates. Even so, banks in Nevada have rarely agreed to lower the value of mortgages — the principal.

In an attempt to force banks to modify more loans, the state advisory panel recommended a series of changes to the Nevada Foreclosure Mediation Program on Thursday. Some of the recommendations divided the committee between those allied with banks and consumer groups.

Read the rest of the article at the Las Vegas Sun

Foreclosure delays leave homeowners in limbo

Foreclosures across the nation slowed in the wake of the 2010 robo-signing scandal, in which lenders were accused of rushing through foreclosure documents without proper review, an issue recently settled by banks, the federal government and 49 states.

Delayed foreclosures create an ambiguous situation for homeowners and lenders. Homeowners are free of monthly housing payments while they await eviction, allowing many to pay other bills. But they live with the stress of knowing they ultimately will lose their homes, and the knowledge that their credit rating has been badly damaged. At the same time, lenders are stuck with assets that are losing value and are not producing any income.

Read the full article at The Chicago Tribune

Facing foreclosure? Get help for free

Organizations certified by the U.S. Department of Housing and Urban Development should be the first stop for people who have fallen behind on their mortgage or are worried they're about to.

These nonprofit groups are great resources for people who want to know whether they might qualify for a mortgage modification such as an interest-rate reduction. And most of these places keep up with the latest government programs so they can help decipher which borrowers might be eligible.

Read the rest of the article at the Orlando Sentinel

Foreclosure settlement a failure of law, a triumph for bank attorneys

After many months of wrangling, a foreclosure settlement has been reached between 49 state attorneys general and a consortium of banks.

It is an epic failure of law and a triumph for bank attorneys.

It will accomplish little of value, as I’ll explain. First, let’s recall what the “robosigning” foreclosure scandal was all about.

Read the rest of the article at the Washington Post

AG: Foreclosure victims deserve more relief

New Hampshire Attorney General Michael Delaney insisted the federal settlement with five major banks for mortgage fraud will not be the last word on offering help to beleaguered homeowners.
Gov. John Lynch, Banking Commissioner Ron Wilbur, Delaney and the Executive Council met Wednesday to discuss the recent settlement and urge homeowners to contact state agencies if they believe they are entitled to some relief.
Some have criticized the program for not offering much financial help to those who had their homes foreclosed on.

Read the rest of the article at the Nashua Telegraph

Starting over after foreclosure

The passage of time eventually helps smooth the way. Some homeowners who were foreclosed on when the market first started to skid are now looking to buy again and are getting loans.

"They're probably going to pay a little higher interest rate, but with rates so low, a higher interest rate of 4 percent is not a big deal," said Rosa Herwick, a broker and owner of Century 21 JR Realty in Henderson, Nev.

How likely is a bank to approve your mortgage application if you have a real estate-related blemish on your record? And can you do anything to spring yourself from the mortgage penalty box?

It depends on several factors, but largely on whether you had a foreclosure or a short sale.

Foreclosure. Generally, borrowers with one in their credit history can expect to wait two to seven years before a lender will even accept their loan application.

Read the full article at the Philadelphia Inquirer

Past foreclosure means waiting years for new loan

Next to filing for bankruptcy protection, nothing wrecks your chances of qualifying for a home loan like a foreclosure.

And if you got out from under an oppressive mortgage through a short sale — when the bank agrees to accept less than what the homeowner owes — lenders can look upon you just as unfavorably.

It's a reality that the former owners of the more than 4 million homes lost to foreclosure in the six years since the housing bubble burst will have to confront if they want to own again. But the passage of time makes all the difference.

That's because mortgage-lending guidelines that most banks follow prohibit them from making loans to people with foreclosure or a short sale in their credit history, often for years. Never mind the hit that one's credit score takes.

Read the rest of the article at Foster's

Occupy takes foreclosure protest to Wells Fargo CEO's home

The foreclosure protests got personal on Saturday as Occupy protesters gathered in front of the home of Wells Fargo chairman and CEO John Stump in San Francisco's Russian Hill to deliver their version of a foreclosure notice.
"You are in default under a deed of trust held by the American people," according to the protesters' foreclosure notice.
During the speeches and on posters, protesters shared their personal foreclosure experiences.

Read the rest of the article at San Francisco Business Times

Pride, Shame Fuel Consumer Bankruptcies

For years economists and financial advisers have scratched their heads and wondered how so many Americans wound up in bankruptcy. Studies have shown that bankruptcy isn't all that hard to avoid, but it's the human condition, new data says, that is often the main driver.

Tim Tarvin, a legal professor at the University of Arkansas law school, says that the crux of the matter is this: It’s overwhelmingly individuals, not corporations, that fall into bankruptcy. Often, it’s the individual’s own fault, as Americans wait far too long to look into bankruptcy protection, primarily out of shame and wounded pride.

It’s all about shame, Tarvin says, noting that consumers who admit to being in bankruptcy and have a financial plan to deal with it are much more likely to get on their feet again than those who go “underground,” as he puts it.

Read the full article at The Morning Journal

Saturday, February 25, 2012

How low does your income need to be in order to file for bankruptcy?

One thing my clients worry about is whether their income is so high they will not be eligible to file for Chapter 7 bankruptcy. The 2005 changes to bankruptcy laws put in income caps. The truth is, the 2005 changes have made hardly a dent in the number of people filing for bankruptcy. The reason is because there are many exceptions allowed to the income caps. Generally, the law states that if you make more money than the average income for your state, you cannot file Chapter 7. In Arizona, that cap is currently at $41,385. For a couple, it is $53,781. You can include all kinds of things as expenses however in order to get around this. If you and your spouse have four kids, that number bumps up to $76,267. If you have significant medical expenses, they are included. Deductions from your paycheck like payroll taxes will also lower your perceived income. Payments made for alimony, child support, or other kinds of required payments count.

Even if you don't qualify for Chapter 7, you can still file for Chapter 13 bankruptcy, where there are no income caps. The reality is in today's dismal economy, even families making close to six figure incomes are having difficulties. Large amounts of money must go to pay for things like huge credit card bills, court-ordered child support, and unexpected medical bills. At the Alexander Bankruptcy Law Firm, we understand that and for that reason offer very low prices at this time.

Thursday, February 23, 2012

Bonuses given after raises at Solyndra; authorized by bankruptcy court

Several of the nearly two dozen employees at bankrupt solar panel maker Solyndra LLC who were approved for bonuses Wednesday had months earlier received pay raises as high as 70 percent, a fact the company never disclosed in its request for bonus cash.

Solyndra attorney Bruce Grohsgal defended not including that information in the bonus request, saying the raises were given as part of the company’s ordinary course of business since the employees had taken on more responsibilities.

“There was no thought we were hiding something,” he said.

He also said the employee who received a 70 percent raise was earning less than $70,000 in base salary but had taken on many new responsibilities.

Solyndra sought the bonuses weeks ago, raising the ire of Republican members of Congress who called on the Obama administration to oppose the extra payments. The Justice Department filed no opposition to the request.

While disturbed at what she called a lack of disclosure, Judge Walrath approved the bonuses after learning that a creditors committee did not object after negotiating a lower payout than the nearly half-million dollars first sought.

Read the full article at the Washington Times

Sunday, February 19, 2012

Hidden taxpayers costs emerge from mortgage settlement

This might explain why the final terms of the government’s $25 billion mortgage settlement with five big banks hasn’t been filed yet. More than a week after the settlement was announced, the official website set up by the Justice Department still has a “coming soon” sign by the link for the settlement papers.

As I wrote earlier in the week, the long delay without a signed document raises concerns that the terms of the deal could be changing. Under those terms, as described by the Justice Department and the attorneys general for the 49 states involved, the banks agreed to pay $5 billion in fines and to reduce mortgage payments and loan balances for distressed borrowers by anywhere from $20 billion to $35 billion.

Today, the Financial Times reported this little gem. It seems that taxpayers are expected to subsidize the settlement. As the FT reports:

A clause in the provisional agreement – which has not been made public – allows the banks to count future loan modifications made under a 2009 foreclosure-prevention initiative towards their restructuring obligations for the new settlement, according to people familiar with the matter.

Read the rest of the article at the Houston Chronicle

Mortgage Settlement Plan is More Bank Bailout

The whole purpose of a settlement is that a party pays damages to rid themselves of liability, and the amount they pay (and “pay” can include the cost of reforming their conduct) is less than what they expect to suffer if they were sued and lost the case (otherwise, it would make more sense for them to fight).

But in the topsy-turvy world of cream for the banks, crumbs for the rest of us, we have, in the words of Scott Simon, head of the mortgage business at bond fund manager Pimco, in an interview with MoneyNews, lots of victims paying for banks’ misdeeds.

So not only is the settlement designed to shift the costs of the banks’ misdeeds onto already victimized investors, but taxpayers will also be picking up some of the widely touted $25 billion tab. Shahien Nasiripour tells us in the Financial Times that banks will be able to count future mods made under HAMP towards the total.

Read the rest of the article at Global Economic Intersection

Will foreclosure reach the White House?

Take a look at the states with the highest foreclosure rates, how do they match up to the 2008 Red - Blue election map?

The 11 states with the highest foreclosure rates represent a total of 150 electoral votes in the Electoral College. Of those, 53 are in battleground states, 77 are in blue states and only 20 in red states! 130 electoral votes in real jeopardy to Obama, including New York, New Jersey, Florida and Ohio! Illinois is in the list, but we just can't see them voting against their favorite son.

California, which is in its own state of economic distress, is surprisingly not on the list.

How "Big Banks" Settlement Affects Homeowners

What the settlement means to you

Principal reduction: At least $17 billion will go to reducing the principal owed by homeowners who are both underwater and behind on their mortgages.

The agreement calls for principal reduction for as many as 1 million people. But it's unlikely the money will go that far, because many people need more than the $17,000 average reduction that would result if the money is split among 1 million homeowners.

At the same time, total principal reduction could go higher -- to as much as $34 billion -- since the agreement requires deeper principal reductions for the most troubled loans.

Read the rest of the article at Prescott eNews

Housing crisis could play key role in election

Right now, housing is not yet a front-and-center issue for President Obama or any of the Republican presidential hopefuls. But no less than five national surveys indicate that the issue is a top-of-mind topic among voters. Granted, the polls were undertaken by real-estate-centric organizations — Realtor.com, the National Association of Home Builders, HouseLogic, Yahoo Real Estate and Trulia. But the unanimity of their findings underscores just how worried current and future owners are about their homes.

Read the rest of the article at MarketWatch

Florida has one-fourth of nation’s foreclosures

Florida's share of the nation's foreclosure crisis increased during the fourth quarter of last year compared with the same time in 2010 as other hard-hit states, such as California, shed some of their housing burden.
According to a report Thursday by the Mortgage Bankers Association, Florida carried 24.2 percent of the foreclosures nationwide, up a percentage point from the end of 2010, while California's foreclosure share dropped nearly 3 percentage points to 10.2 percent.
Economists from the Washington-based group attribute Florida's stubbornly high foreclosure inventory to its judicial foreclosure procedure, which requires a judge's approval for all cases. California is one of 29 states where repossessing a person's home does not have to go through the courts.
"The housing situation in California is turning around much more quickly, and we attribute that to the non­judicial regime," said Michael Frantantoni, vice president of research for the Mortgage Bankers Association. "A small minority of states is keeping the foreclosure rate much higher than it would be otherwise."
About 14 percent of Florida home loans are in foreclosure, by far the highest in the nation. New Jersey comes in second at 8.2 percent. Of the 16 states with the highest percentages of foreclosures, all but Nevada require a judicial proceeding.

Read the rest of the article at The Palm Beach Post

Homeowners, Advocates Call for Temporary Stop to Foreclosures in California

A week after Attorney General Kamala Harris announced an $18 billion settlement for California’s foreclosure victims, homeowners and housing rights advocates declared the need to temporarily halt all foreclosure related activity.

During a foreclosure roundtable discussion held on Friday at the Mission Economic Development Agency, Alan Fisher, Executive Director of the California Reinvestment Coalition, said that advocate “groups are asking for a pause in foreclosures so people don’t lose their homes [while the settlement is being implemented.]”

John Eller, a senior organizer with Alliance of Californians for Community Empowerment (ACCE), said that by putting a temporary stop to the foreclosures “it would enable borrowers to have some breathing room while they figure out if they qualify for the settlement.”

Read the rest of the article at New America Media

Foreclosure activity edges higher in January

Banks took back more U.S. homes in January than in the previous month, the latest sign that foreclosures are accelerating after slowing sharply last year while lenders sorted out foreclosure-abuse claims.

Foreclosures rose 8 percent nationally last month from December, but were down 15 percent from a year earlier, foreclosure listing firm RealtyTrac Inc. said Thursday.

Despite the annual decrease at the national level, some states posted sharp increases compared to January 2011. In New Hampshire, foreclosures jumped 62 percent. In Massachusetts, 75 percent.

That trend is expected to strengthen this year in light of last week's $25 billion settlement between the nation's biggest mortgage lenders and 49 state attorneys general over the industry's handling of foreclosures.

Many banks and mortgage servicers processed foreclosures without verifying documents. Some employees signed papers they hadn't read or used fake signatures to speed foreclosures — a practice dubbed "robo-signing."

Read the rest of the article at Fosters

Romney: Managed bankruptcy is why auto industry came back

Farmington Hills— Mitt Romney returned to his native Metro Detroit on Thursday and said he wouldn't have let the U.S. auto industry disappear in the depths of the recession when government loans were used to keep them afloat.

The former Massachusetts governor also called himself the "underdog" in Michigan's primary, a contest he handily won four years ago but has struggled to secure a stronghold Thursday.

Romney has been dogged in Michigan by his opposition to more than $80 billion in federal loans to automakers he has sharply criticized.

Read the rest of the article at Detroit News

Wednesday, February 15, 2012

Filing bankruptcy: What are the new required classes?

I am a bankruptcy attorney in Phoenix ($995/Chapter 7), and changes to federal bankruptcy law in 2005 added a requirement that people filing for bankruptcy must take two required classes. Fortunately, these classes are inexpensive, easy, and may be taken quickly online. The first is the credit counseling class, which I've found for as cheap as $5 online. This class must be taken prior to filing, and takes at least a few minutes depending on which provider you use. The second class is a financial management class, which I've found for as low as $10 or $12.50 for a married couple. It is a timed test that lasts for one hour. You input information about your finances and the courses will provide you with feedback. They are not difficult at all. The bankruptcy court does not see the results of your classes, they will simply receive an affidavit later indicating that you took them. Relief to know they're not that onerous eh?

Faulty reasoning keeps Fannie and Freddie out of foreclosure deal

You can love or you can hate the recent $25-billion federal-state mortgage foreclosure settlement, but there's no getting around one simple fact: There's a huge, gaping hole right in the middle of it.

The hole is that if your home loan has been bought from your lender by Fannie Mae or Freddie Mac, you're not eligible for the mortgage relief encompassed by the deal.

Since Fannie and Freddie control well more than half of all outstanding mortgages, this shortcoming looks to be what engineers would call "non-trivial."

This is curious, because the settlement, announced last week, had a sizable head of steam behind it. It was endorsed by the Obama administration, including the departments of Justice and Housing and Urban Development, and 49 of the 50 state attorneys general. By my count, the latter group breaks down as 24 Republicans and 25 Democrats; you can't get more bipartisan than that, unless you cut one Democrat in half and cede a piece to Team GOP.

The answer is that the participation of Fannie and Freddie has been blocked by a career civil servant named Edward J. DeMarco.

As acting director of the Federal Housing Finance Agency, DeMarco is the chief regulator and conservator of Fannie and Freddie, which were chartered by the federal government to buy up mortgages, thus encouraging lenders to make home loans.

Read the rest of the article at The Los Angeles Times

Ruling will help some households, but won't put end to housing crisis

The $25 billion foreclosure settlement announced last week among five major banks and 49 states, including Texas, is a modestly positive step out of the housing crisis of the past several years.

The settlement sets aside $287 million for Texas homeowners, including those who are "underwater" on their mortgages — that is, their houses are worth less than what they owe on them. The banks also are required to send $141 million to the state treasury for violations of Texas law.

The deal potentially could help as many as 1.75 million households nationwide hurt by the bursting of the housing bubble in 2007 and the financial crisis that followed in 2008. The drop in home values — the average American home is now only worth what it was nine years ago — put millions of homeowners at risk of foreclosure. As the crisis deepened and the number of foreclosures rose, mortgage-servicing companies signed thousands of foreclosure documents without verifying the information in them — a practice called "robo-signing."

Victims of robo-signing — there are an estimated 750,000 of them — will receive checks of up to $2,000, thanks to the settlement. But the deal primarily helps as many as 1 million households that are at risk of defaulting on their loans, with about $17 billion scheduled to go toward reducing the principal on these households' loans by an average of $20,000.

Read the rest of the article at The Austin Statesman

Will the $26B mortgage settlement help you?

Who can qualify?

To share in the financial benefits of the settlement, you need to have a mortgage that is held by one of the five major mortgage lenders who participated -- Bank of America, Wells Fargo, JP Morgan Chase, Citibank and Ally Financial (formerly GMAC). You can also be a former homeowner who had a mortgage with any of those five lenders and lost your home to foreclosure.

Residents of Oklahoma are excluded from the settlement ment because the state's attorney general reached a separate agreement with the five lenders.

Even if you have or had a mortgage with a different lender than the five major ones, there's still a chance you could benefit. As many as nine smaller lenders might still sign on to the agreement, meaning their borrowers would be eligible as well.

No Fannie Mae, Freddie Mac, FHA

Unfortunately, homeowners whose mortgages are backed by Fannie Mae or Freddie Mac are not eligible to receive financial benefits from the settlement. FHA mortgages are similarly excluded. This greatly diminishes the potential impact of the settlement, because together the three account for the majority of U.S. residential mortgages.

You should already know if you have an FHA mortgage or not. Fannie Mae and Freddie Mac both offer a simple tool on their web sites that will look up whether your mortgage is backed by them.

Read the rest of the article at WAFB

Mortgage settlement leaves out responsible homeowners

A large group of responsible taxpayers has been overlooked. In today's corporate culture many employees are required to (or choose to in order to advance a career) relocate around the country. The conventional wisdom for years was that real estate was an excellent investment and, for many in the disappearing middle class, the primary investment in future funds for retirement.

After selling a house in Florida when the housing market had begun to fall off the bubble in 2008, I did what I thought was most financially sound: I put the proceeds directly into a property in my new city of Baltimore to increase my equity and lower my mortgage payment. Baltimore, as everywhere, has seen a steep drop in housing values since 2008. I have never refinanced, as the general rule of thumb is that it takes from three to five years of payments at a lower rate to offset the costs of refinancing. I have paid my taxes on the property on time and have always been current on the mortgage and homeowners association fees.

I'm now in a position where in the future I will need to sell my property in Baltimore. I stand to lose at least 35 percent to 40 percent of the initial purchase price, and additionally, the not insignificant cost of renovating the property. As it is not an investment property, the four years of homeowners association fees are non-deductible for tax purposes and also are now gone.

Read the rest of the article at The Baltimore Sun

Five Largest Mortgage Servicers Agree to $25B Payout

After more than a year of negotiations, five of the nation's largest mortgage providers agreed last week to pay $25 billion after investigations by the Department of Justice, state attorneys-general and state regulators revealed widespread abuse and fraudulent practices that led in part to the meltdown of the housing market.
This is the largest federal-state civil settlement in U.S. history and sets the stage for the Obama Administration, through the federal government, to put in place safeguards to ensure that consumers and homeowners are protected going forward, said U.S. Secretary of Housing and Urban Development Shaun Donovan in a conference call on Thursday, Feb. 9.

Read the rest of the article at Washington Informer

Late payments on mortgages rise again in 4th qtr

Late payments on mortgages ticked up in the last three months of 2011, the second straight quarter-to-quarter increase after nearly two years of steady decline.

Credit reporting agency TransUnion said 6.01 percent of mortgage holders were behind on their payments by 60 days or more in the October-to-December period. That compared with 5.88 percent for the third quarter of 2011.

Read the rest of the article at Boston.com

Citigroup Mortgage Pays $158M in HUD Settlement

Citimortgage unit agreed to pay $158.3 million to settle claims tied to its actions in a federal home-loan insurance program, the Manhattan U.S. Attorney’s office said.
The U.S. settled a lawsuit against the Citigroup unit that alleged more than six years of misconduct in connection with the Federal Housing Administration Direct Endorsement Program, the U.S. Attorney’s office said today in a statement. In the settlement, Citimortgage admitted to falsely stating that some loans were eligible for mortgage insurance through the U.S. Department of Housing and Urban Development, according to the statement.
“For far too long, lenders treated HUD’s insurance of their mortgages like they were playing with house money,” Manhattan U.S. Attorney Preet Bharara said in the statement. “In fact, they were playing with other people’s money and other people’s homes.”

Read the rest of the article at Bloomberg

$25 billion national foreclosure settlement includes relief for soldiers

U.S. military members who were victims of wrongful foreclosures will receive a substantial payout as part of the provisions in the $25 billion nationwide foreclosure settlement reached between states, the federal government and five major lenders last week.

Delaware Attorney General Beau Biden led negotiations that resulted in a payout of $116,785 for each service member who lost their home to illegal foreclosure since 2006 by lenders Wells Fargo, Citigroup or Ally Financial. The three banks also agreed to pay the soldiers any lost equity and interest.

JPMorgan Chase, which agreed to provide compensation in an earlier settlement, will provide victims with either his or her home free and clear of any debt or the cash equivalent of the full value of the home at the time of the sale.

The agreement requires each of the lenders to conduct a full review of their foreclosures to determine whether any service members were foreclosed on in violation of the Servicemembers Civil Relief Act.

Read the rest of the article at Community Pub

Your Questions on Bankruptcy Answered

Bankruptcy is a provision in the bankruptcy code that allows the bankruptcy court the right to declare your personal debts (or business debts) resolved either through liquidation of your assets or gradual payment via a payment plan. With the prolonged economic recession more and more people are contemplating filing for bankruptcy to overcome their tremendous financial debts. For most people, a bankruptcy filing would be a once-in-a-lifetime experience as you would not want to have to do it multiple times. In view of that, if you are contemplating filing for bankruptcy, it would be natural to have some questions about the process. Here are some of the most common questions about bankruptcy.

Can bankruptcy relieve me of all my debts??Most of your debts can be resolved either through payment from the sale of assets or payment plan, but some debts cannot. Some examples are child support and certain tax debts.

What are the types of bankruptcies that apply to individuals??The bankruptcies that apply to individuals are Chapter 7 and Chapter 13 bankruptcies (named according to the sections of the bankruptcy code that govern them).

Read the rest of the article at JD Supra

With Personal Bankruptcy Filings Declining, Bankruptcy Lawyers Speculate Possible Causes

A recent article from the Springfield Business Journal reports that national bankruptcy filings have dropped eight percent in the last year, leaving many bankruptcy law attorneys speculating about the cause of the downturn.

One of those attorneys is Macey Bankruptcy Law Partner Rick Gustafson. Quoted in the Journal's article, Gustafson believes that one of the possible reasons for the decline is the increased burden that the 2005 bankruptcy reforms placed on filers.

Under the new reforms, anyone filing for bankruptcy must complete a "means test," which requires additional paperwork documented proof of disposable income. Gustafson says that it is providing the documented proof and of income that is making the bankruptcy process all the more challenging.

"People, in general, are not good record keepers," Gustafson says. "And whenever there is a law change that requires someone to be a better record keeper that creates burdens."

Read the rest of the article at Market Watch

Student Loan Debt: Next Big Economic Shock

Attorney Billy Brewer is warning that there’s another big economic problem lurking on horizon: student loan defaults.
Back in 2007, Brewer, who also serves as president of the National Association of Consumer Bankruptcy Attorneys (NACBA), testified before Congress that he and fellow attorneys were worried about the sharp rise in the number of homeowners seeking advice about filing for bankruptcy because they couldn’t afford to pay the rising rates on their subprime mortgages. At that time, says Brewer, “The mortgage industry said, ‘We’ve got it under control.’ They were wrong.”
Today, bankruptcy attorneys are sounding the alarm about what they see as another disturbing trend: the rising number of student loan defaults. According to an NACBA survey, half of its members have seen a significant increase in the number of individuals seeking help with crippling college debt. One in four attorneys reports the number of these cases they’re handling jumped by at least 50%.

Read the rest of the article at Fox Business

Hi! Manager: Thoughts on Kodak's bankruptcy

The news on January 19 that Eastman Kodak, the 131-year-old photography pioneer, had filed for Chapter 11 bankruptcy protection was not a big surprise for me because Moody's Investors Service had cut ratings on Kodak's debt since January 5 and cited a negative outlook that there was a heightened probability of a bankruptcy in the near term.

Read the rest of the article at The Nation

Bankruptcy Watch: 5 Risky Energy Stocks

Among energy companies, services stocks are among those whose fortunes are most deeply tied to the general economic activity that drives demand.

With forecasts pointing to continued robust economic growth out of China and various emerging market economies, the Philadelphia Oil Services Sector Index has soared 61% since the the trough of the recession in 2009. TheStreet Ratings Team says that energy demand could grow over 40% in the next two decades, with demand so robust that it almost outstrips supply.

However, generalizing where these economically-sensitive stocks could be going in the forseeable future would be a mistake, given the diversity of their locations and growth strategies.

Read the rest of the article at The Street

Credit crunch forces Faith Center to file for bankruptcy protection

ROCKFORD — The Faith Center, which launched a $7.5 million expansion on South Main Street to great fanfare in 2007 only to see it derailed in the banking meltdown of the Great Recession, filed for Chapter 11 bankruptcy protection in January.

The church owes $5.3 million to Sjostrom & Sons in Rockford for the 82,000-square-foot sanctuary shell that was designed to hold 2,000 people. Faith Center also owes $4.17 million to Evangelical Christian Credit Union of California.

Don Lyon, the senior pastor, read a statement to the church’s congregation before filing Jan. 20. About 1,000 people attend the nondenominational church each Sunday.

Read the rest of the article at Rockford Register Star

Bankruptcy gets a bad rap

Surprise! Providence can’t meet its financial obligations.

#For years its mayors, council members and retirement board members were on “benefit steroids.” City workers were granted contracts that a CEO of a major corporation would envy. Many retirees earn double or triple their salaries with lifetime family health coverage. Now the Kleenex is being passed around to state leaders because these profligate spenders sold the city to its unions and political hacks in exchange for re-election or re-appointment. State taxpayers are expected to bail out Providence once again by rewarding the sins of the past. I say “no.”

#I admit that I have little sympathy for the plight of Providence except for current workers, many of whom actually do work, as opposed to their no-show predecessors, for their benefits. Regrettably, they bear the brunt of the sacrifices yet they stood silent while their union bosses gouged the taxpayers. It’s obvious that the politicians in Providence never learn fiscal restraint. In fact, they have learned just the opposite since the state has bailed them out continuously with disproportionate awards of subsidies. It’s time to teach the city a new repertoire. Taxpayers in East Providence and Woonsocket (who have their own troubles) and Lincoln and Warren shouldn’t have to come to the rescue anew.

Read the rest of the article at East Bay RI

Student Loan Debt Forcing More Borrowers Into Bankruptcy

The National Association of Consumer Bankruptcy Attorneys recently reported that 81 percent of those professionals surveyed said that the number of potential clients with sizable student loan balances has increased either “significantly” or “somewhat” in the last three or four years.

Nearly half—48 percent—said the increase was significant, and 39 percent said the number of student loan cases they handled has risen between 25 and 50 percent in that time. Another 23 percent reported increases of between 50 and 100 percent. In all, 95 percent said they were only able to help a small number of student loan debtors to obtain a discharge of those balances as a result of undue hardship.
As a consequence, there are very real concerns that these outstanding balances could create a debt problem nearly equivalent to that observed during the housing meltdown. The average college graduate carried a debt bill of $25,250 in 2010, up 5 percent, and education debt burden has grown 47 percent for those between 35 and 49 percent.

Read the rest of the article at Business Insider

Obama’s Big, Fat Fib about Romney’s Auto Bankruptcy

Here comes the GOP primary, Michigan edition. And with it, media misinformation.

Exhibit A is the fiction that Mitt Romney “was willing to let (the American auto industry) just die” as President Obama repeatedly puts it in speeches — uncorrected by his MSM allies. Michigan is crucial to Obama’s fall reelection and Romney is a formidable obstacle. Solidifying a narrative that the GOP challenger is anti-autos is crucial, not just to mobilizing blue-collar voters but also swing, white collar voters whose jobs were saved by government intervention.

“Just like Mitt Romney, who wanted Detroit to go bankrupt, Newt Gingrich opposed the rescue loan that saved the U.S. auto industry and 1.4 million American jobs,” Obama spokesman Clark Pettig told the Detroit News this weekend.

Huh? Both Romney and Obama advocated bankruptcy for GM and Chrysler.

Read the rest of the article at National Review

Apple asks bankruptcy court for OK to sue Kodak for infringement

The iPhone maker filed its request with the U.S. Bankruptcy Court in the Southern District of New York. Apple says that it plans to file a complaint against Kodak with the International Trade Commission (ITC), as well as a lawsuit in the U.S. District Court of Manhattan, for allegedly violating patents it holds related to printers, digital picture frames, and digital cameras.
As Bloomberg, which first reported on the request, points out, Apple isn't required to ask the bankruptcy court for permission to sue Kodak. However, in the court filing, Apple said that it was seeking approval "out of an abundance of caution."

Read the rest of the article at CNET

Monday, February 6, 2012

Mortgage relief: Partial solution better than none

As the clock ticks down on year-long negotiations on a sweeping mortgage relief settlement, the architects of the joint state-federal plan believe it would be better for homeowners to get a partial deal than nothing at all, according to sources close to the talks.

Facing a Monday deadline, attorneys general in all 50 states are weighing the terms of a proposed $25 billion settlement designed to force five big lenders to pick up the pace of rewriting mortgages for homeowners struggling to make their payments.

Several states, holding out for tougher terms, have threatened to derail the negotiations, which have included federal officials from the Departments of Justice, Treasury and Housing and Urban Development, along with the five biggest U.S. banks, including Bank of America, JP Mortgage Chase, Ally Financial (formerly GMAC), Citigroup, and Wells Fargo.

Though a deal could come as early as Monday night, ongoing talks with bankers could delay any final announcement until later this week, according to sources who asked not to be named because they weren't authorized to discuss the negotiations publicly.

For months, the holdout states -- including New York, California, Nevada, Delaware and Massachusetts -- have cast doubt on whether a deal could be reached. New York Attorney General Eric Schneiderman, who was dismissed from a negotiating committee in August for allegedly trying to undermine the deal, on Friday filed suit against three of the banks challenging their use of a mortgage registry that is critical to their foreclosure efforts.

Read the rest of the article at MSNBC

Bank Is Victim in Financial Crisis Case, Not Homeowners

Less than a week after the formation of a new federal-state working group that will focus on potential misconduct in the residential mortgage-backed securities market came a case against three traders at Credit Suisse who were charged with inflating the value of mortgage bonds in late 2007. But the case has little to do with the causes of the housing market collapse; at its core, it is really akin to embezzlement from a bank by its employees.

The Justice Department filed charges of conspiracy, false accounting and wire fraud against Kareem Serageldin, who was a managing director at Credit Suisse’s investment bank division in New York. Two subordinates pleaded guilty to conspiracy charges and are cooperating with the prosecution, having admitted to inflating the value of mortgage bonds held by Credit Suisse at Mr. Serageldin’s direction.

According to the indictment, the motive for tinkering with the valuations was to enhance Mr. Seageldin’s job performance and eligibility for a promotion and bonuses at Credit Suisse. At one point, he rejected a proposed markdown of $15 million to $20 million on an investment, telling a colleague, “That’s a lot of money, dude,” and when an internal inquiry raised questions about a particular valuation, he said that the entry had been recorded by mistake.

Read the rest of the article at The New York Times

Is the Robo-Mortgage Scandal the Back-End of Tax Evasion and Fraud?

The terms for the settlement of the robo-mortgage scandal and the states participating in the settlement are expected to be resolved soon. Unfortunately, as this settlement approaches, new and grave questions have emerged. These questions raise the possibility that the government may be turning a blind eye to tax evasion and fraud.

Last week, I wrote an article titled The Proposed Robo-Mortgage Settlement Might Give Banks A Free Pass. At the time the deadline for states Attorney's General to sign on to the settlement was February 3. It has now been pushed back to Monday, February 6.

In the article, I wrote that while the banks have insisted for the past several years that the robo-mortgage violations represented minor technical issues, which harmed no one. Recently, a different explanation has emerged: The possibility that the scandal was the back-end of activities that appear to represent tax evasion, the failure to comply with basic rules in securitizing mortgages, and massive fraud on the purchasers of the securitized mortgage bonds.

Now, I have received numerous requests to clarify this extraordinary alternative explanation.

Read the rest of the article at The Huffington Post

Foreclosure watch: A bombshell on mortgage fraud and Fannie Mae

Turns out, a confidential 147-page investigation into mortgage fraud commissioned by Fannie Mae uncovered some of the very abuses bedeviling homeowners today. Yet Fannie appeared to take no action on the 2006 report. The investigation was triggered by a wealthy businessman's allegations in 2003 that servicers were filing false foreclosure documents and "playing fast and loose with the law."

"It is axiomatic that the practice of submitting false pleadings and affidavits is unlawful," said the report, a copy of which was obtained by The New York Times. "With his complaint, Mr. (Nye) Lavalle has identified an issue that Fannie Mae needs to address promptly."
Mr. Lavalle and Fannie's investigators found lawyers filing "sham proceedings" in eight states on behalf of either Fannie Mae or the Mortgage Electronic Registration System (MERS).

Read the rest of the article at Oregon Live

What The Mortgage Relief Plan Would Do For Homeowners

After more than a year of wrangling over various mortgage relief proposals, influential state leaders seem close to adopting a plan that Pres. Obama announced Feb. 1. Attorney General Eric T. Schneiderman of New York and California’s attorney general, Kamala Harris have indicated they are closer to agreement than in the past.

There are two important elements of the plan and details of both have been a subject of fierce disagreement. One, which could be worth about $25 billion, relates to how much money would be allocated to benefit homeowners and the specific relief they would receive. The other involves the power states would have to investigate past practices by banks, oversee future ones and monitor compliance with the plan.

If the plan is adopted, here’s what it would do for homeowners in specific situations.

Read the rest of the article

Bank of America's Towering Symbol of Foreclosures

You don't need to be a poet to find a metaphor in the foreclosure of Bank of America Plaza in Atlanta.

Bank of America has come to represent the U.S. property bust more than any other institution, so it is only fitting that a 55-story tower that bears its name--the tallest in the Southeast, according to a Bloomberg News report, should end up in foreclosure. The 1.25 million square foot building is to be sold in an open outcry auction on Tuesday.

What may also be seen as fitting is that Bank of America is not be the biggest loser in this story. That misfortune may go to the city of Atlanta, which was booming just a few years ago and is now one of the cities hardest hit by the crisis.

Atlanta recently saw home prices hit a 13-year low, and received the second-lowest ranking among 20 cities tracked in the Case-Shiller home price index--second only to Detroit.

Read the rest of the article at The Street

Renting Out Foreclosures

Throughout metro Atlanta, thousands of vacant homes now owned by the federal government sit languishing  dragging down home values and adding to a mass of housing woes that stunt the region’s economic recovery.

Atlanta’s nearly 4,600 government-owned foreclosed properties is No. 1 in the nation, far outnumbering those in Phoenix, Las Vegas and other major metro areas hit hard by the housing bust, according to a report last month from the Federal Reserve. Statewide, Georgia has more than 6,400 of the homes, second only to California, with nearly 9,000.

But the region now stands to be one of the biggest winners of a federal pilot program to turn the homes nearly 84,000 total nationally into rental housing.

The plan would allow investors to buy up pools of foreclosed homes to rent out. The goal: chip away at the glut of homes and ease pressures on deteriorating prices. Nationwide, declining home values have resulted in an estimated $7 trillion loss in household wealth for Americans significantly dampening consumer spending. Middle-class families have been particularly hard hit since home equity accounts form a larger chunk of their overall wealth.

Read the rest of the article at LoanSafe

Calif. and NY considering foreclosure-abuse deal

California and New York were considering Monday whether to join most other states in backing a long-awaited settlement with banks over foreclosure abuses. The deal would require the five largest mortgage lenders to reduce loans for about 1 million households.
State attorneys general have set a deadline of the end of Monday for states to join the settlement. Homeowners in states that opt out of the deal wouldn't share in the settlement money.

The reduced loans would benefit homeowners who are behind on their payments and owe more than their homes are worth. The lenders would also send checks for about $2,000 to hundreds of thousands of people who lost homes to foreclosure.
The money available to homeowners could run as high as $25 billion if all states approve the deal.

Read the rest of the article at Fox News

Foreclosure Mediation Can Save Millions of Homes and Taxpayer Money

Looking for a fix to help the broken housing market? There's already a proven inexpensive solution that can help head off the predicted 10 million homes in the United States that will be lost to foreclosure over the next several years. A new report from the National Consumer Law Center (NCLC), Rebuilding America: How States Can Save Millions of Homes Through Foreclosure Mediation, documents how states with strong programs are preventing foreclosures while saving money for investors and taxpayers.

This nationwide report reviews existing programs in 19 states and makes recommendations for best practices for all states to adopt, using foreclosure mediation data from the last three years to draw its conclusions. The report includes examples of programs that are more successful (Connecticut, Nevada, and New York) and those that are less so; state references per section; tables; and a history, including statistics, of documented servicer problems and the Home Affordable Modification Program (HAMP).

Read the rest of the article at MarketWatch

Credit: The Gift & The Curse! - 5 Ways to Pay Down Debt

1) Pay More Than the Minimum Due
2) Aggressively Attack the Higher Rate Cards
3) Take Out A Second Mortgage (Home Equity Loan)
4) Borrow from your 401K.
5) Negotiate for Lower Rates

Read the full article at The Huffington Post

Sunday, February 5, 2012

Chapter 7 or Chapter 13 bankruptcy, which one is for me?

A client recently asked me what the differences are between a Chapter 7 and Chapter 13 bankruptcy are. I put this information together to provide her with what I thought is the most pertinent information if you intend to file in Arizona.

Chapter 7 will eliminate virtually all of your debt (except things that aren’t dischargeable like most taxes, child support/alimony, and most student loans). Chapter 13 merely lowers and rearranges your debt so that you pay most of it off within 3-5 years (3 years if your income is low, 5 years if it’s higher). You must be working and making a decent level of income to be eligible for Chapter 13.

2nd mortgage/HELOC
For most people, Chapter 7 is the best deal, since it will eliminate all of their debt. But Chapter 13 can be advantageous in certain situations. For example, Chapter 7 cannot discharge a second mortgage/Home Equity Line of Credit. All it can do is stop the lender from contacting you and suing you; the loan will still be stuck to your home as a lien. As long as home values are depressed, this is no big deal for most people, the 2nd lender can’t foreclose on your home since the 1st lender will get all the money. But if you have equity in your home, or plan on staying in your home for awhile and home values start going back up, this could become a problem. A Chapter 13 will allow you to fully discharge that 2nd loan by stripping it.

Vehicles
Chapter 13 is usually better if you have a car with too much equity. Arizona only exempts cars that have up to $5000 equity. If you have more equity than that, you’ll need to take out a title loan in order to get through a Chapter 7 bankruptcy. Whereas a Chapter 13 will let you keep the car and make payments reflecting the extra equity to creditors.
Note that  in a Chapter 13 if you bought a car within the past 2.5 years and are making payments on it, you must fully make the rest of those payments during the bankruptcy, you don’t get to strip them down to the value of the car.

Student loans
Student loans are generally not dischargeable unless you can show undue hardship in a Chapter 7. In a Chapter 13, you can get your payments reduced, but after the Chapter 13 is finished, you will likely have to go back to paying what you were before and you don’t get a break on the balance. But at that point, your lender might be more willing to work with you.

Chapter 13 is more expensive, I charge $2500, but the extra expense is rolled into the payments. You still only pay $995 up front before filing, plus the filing fee.

70% of people never follow through with a Chapter 13, they don’t keep up with the payments.

Additional Resources







The Alexander Bankruptcy Law Firm provides low low cost Chapter 7 and 13 personal bankruptcies. $995 Chapter 7 or $2500 Chapter 13 bankruptcies plus court filing fee. Free consultation with a compassionate attorney who will handle your case personally. Call 24/7, available to meet with you around your schedule. 602-910-6812. Conveniently located in Central Phoenix along the Camelback corridor. AlexanderBankruptcyLawFirm.com

Thursday, February 2, 2012

Filing Chapter 7 bankruptcy in Arizona: What should I be concerned about with my car?


I am a bankruptcy attorney in Phoenix ($995/Chapter 7) and see clients with all different kinds of situations regarding their cars. Generally in bankruptcy you are allowed to keep one car, provided you don't have more equity in it than the allowance granted by the bankruptcy laws (which vary state by state). Ironically, this means if you have a $90,000 Mercedes, but owe more than $85,000 on it, you get to keep it in Arizona. But if you have an older Chevy Tahoe worth $8000, that you have completely paid off, you will lose it! Arizona allows you to keep a vehicle with up to $5000 equity in it.

So what do you do if you have the Tahoe? You could sell it and buy another vehicle with payments. Just make sure you spend the proceeds wisely, not on extravagant things that will raise the eyebrows of the bankruptcy court or by paying off creditors. And you must sell it for a fair price, not trying to sneakily sell it to your mom or close friend for a fake reduced price.

Or, you could take out a lien on it to get your equity down to $5000. In that case, make sure the lien is aboveboard and not a fake. It is considered fraud to make a transaction like this for less than fair market value, and the bankruptcy court will likely ask for your bank statements to see that you really did receive the money and spend it on necessities. Transactions between family members will be scrutinized even more closely.

Bankruptcy law is not a perfect fit when it comes to vehicles. It punishes people who have successfully paid off their vehicles. Don't ask me, I don't make the laws!

The Alexander Bankruptcy Law Firm provides low low cost Chapter 7 and 13 personal bankruptcies. $995 Chapter 7 or $2500 Chapter 13 bankruptcies plus court filing fee. Free consultation with a compassionate attorney who will handle your case personally. Call 24/7, available to meet with you around your schedule. 602-910-6812. Conveniently located in Central Phoenix along the Camelback corridor. AlexanderBankruptcyLawFirm.com