Tuesday, July 20, 2010

More on David Stern



NCUA Issues Alert On HECM Fraud Activities

by MortgageOrb.com on Monday 19 July 2010

The National Credit Union Administration (NCUA) has issued a regulatory alert warning credit unions of potential home equity fraud schemes, with a specific focus on suspicious reverse mortgage activity.

"In the current economic environment, the ability of long-term homeowners to access existing home equity quickly through reverse mortgages may make them vulnerable to predators committing financial fraud," NCUA said. "Law enforcement has identified new schemes where family members, loan officers and others effectively steal money from senior citizens in home equity fraud schemes."

NCUA follows an April alert issued by the Financial Crimes Enforcement Network highlighting reverse mortgage fraud schemes tied to the Federal Housing Administration's home equity conversion mortgage (HECM) program. NCUA urged that credit unions "make sure to review the examples of common fraud schemes and potential red flags for fraudulent activity related to home equity."

NCUA also cautioned credit unions regarding the status of the borrower involved in a potential HECM scam. "In many cases, a senior homeowner is a victim of the scam and therefore should not be listed as a suspect," NCUA added. "However, a homeowner can be listed as a suspect if there is reason to believe the homeowner knowingly participated in the fraudulent activity."


FDIC Sells Pool of AmTrust Nonperformers for 37 Cents on the Dollar

Reprint DS NEWS

A three-party consortium of opportunists has purchased a stake in an $898 million pool of nonperforming residential loans that the FDIC seized from AmTrust Bank when it went under last December.

The procurers – which include mortgage servicer Residential Credit Solutions, hedge fund CarVal Investors, and the Royal Bank of Scotland’s RBS Financial Products subsidiary – picked up the AmTrust portfolio with a winning bid amounting to 37 cents on the dollar.

Ninety-six percent of the residential real estate loans in the portfolio are delinquent, according to the FDIC. More than a third of the collateral in the portfolio is located in Florida, 11 percent in California, and the rest scattered across 45 other states.

In line with the typical structure of the FDIC’s asset sales, the consortium’s investment gives it a 40 percent stake in the AmTrust portfolio. The FDIC retains a 60 percent stake and will share in the returns on the assets. The trio won out over four other bids.

As the managing member of the consortium, Texas-based Residential Credit Solutions will manage, service, and ultimately dispose of the assets. The FDIC says Residential Credit will pursue workouts for the distressed loans, applying the Home Affordable Modification Program (HAMP) protocol for those borrowers that are eligible.

According to the FDIC, this transaction completes the sale of the majority of its remaining holdings from AmTrust Bank’s collapse.


Monday, July 19, 2010

DJSP Enterprises Prospectus

DJSP Enterprises, Inc. (“DJSP”, “we,” “us” or “our”) is a holding company whose primary business operations are conducted through three wholly owned subsidiaries, DJS Processing, LLC (“DJS LLC”), Professional Title and Abstract Company of  Florida, LLC (“PTA LLC”), and Default Servicing, LLC (“DSI LLC”) of DAL Group LLC (“DAL”), a company in which DJSP holds a controlling interest. DAL, through its operating subsidiaries, provides non-legal services supporting residential real estate foreclosure, other related legal actions and lender owned real estate (“REO”) services, primarily in Florida.

What role does Chardan 2008 China Acquisition Corp play?

Why is he incorporated in the British Virgin Islands  when his offices are in Florida?


"We were incorporated in the British Virgin Islands on February 19, 2008 under the name “Chardan 2008 China Acquisition Corp.” as a blank check company for the purpose of acquiring, engaging in a merger or share exchange with, purchasing all or substantially all of the assets of, or engaging in a contractual control arrangement or any other similar transaction with an unidentified operating business which has its principal business and/or material operations in China. When the global financial crisis occurred soon after the completion of Chardan 2008’s initial public offering in August 2008, Chardan 2008’s management believed that US equity markets would be less receptive to a transaction with a Chinese company. "


David Stern Stock



At the July 1 closing price of $5.45, DJSP has a $134M market cap and $233M enterprise value. Current guidance is for ~$60M in EBITDA and ~$33M net income, so the business trades for only 4x EBITDA and also has a P/E of 4x. This fundamentally sound business generated over $40M in free cash flow in 2008 and nearly $46M of FCF in 2009. If DJSP maintains $40M or higher of FCF in 2010 and beyond, the stock currently sports a 30%+ FCF yield.

To see how this could play out, let’s assume $65M-$75M in 2012 EBITDA (relative to $69M in 2009) at a 5x-8x multiple for an EV of $325M-$600M. If DJSP produces $100M in incremental FCF through 2012 and eliminates its current net debt, the implied market cap would also be roughly $325M-$600M, or $11-$20 per share, for a CAGR of 30%-95% over the next 2-3 years. Continued growth combined with multiple expansion could easily produce greater than 50% annual returns.

DJSP also recently acquired Timios, a national title insurance agency operating in 38 states, broadening both its capabilities and geographic footprint. It seems reasonable that DJSP could leverage its existing customer relationships to gain incremental share in Florida and replicate its growth strategy across additional states.

In summary, DJSP appears significantly underpriced relative to its growth prospects and FCF generation. The CEO has been actively buying more shares in the open market over the past several weeks. An added bonus is that DJSP provides a natural hedge against greater than expected economic deterioration, and even if the economy finds its legs, the level of foreclosures will remain elevated, making DJSP shares a compelling opportunity. More aggressive investors could also consider buying the publicly traded warrants which have a $5 strike price. More conservative investors could wait for the Q2 results and updated guidance to get a better handle on whether the earlier issues are abating or mounting.

For those wishing to do more research, DJSP's investor presentation (pre the Q1 miss and forecast reduction) can be found here.


of Interest





Alhambra v. Homeowners Association, Inc. v. Assad, 943 so. 2d 316 (Fla. 4th DCA 2006).

Plaintiff has voluntarily dismissed its complaint and now Defendants are entitled to an award for attorney’s fees. Landry v. Countrywide Home Loans, Inc., 731 So. 2d 137 (Fla. 1st DCA 1999)(award of attorney’s fees to mortgagor is mandatory when mortgagee voluntarily dismisses foreclosure action where claim was raised in answer and affirmative defenses). Defendants are entitled to such an award even if Plaintiff refilled and prevails in a subsequent action.

Hamilton v. Lanning (U.S. 6/7/10)

When a bankruptcy court calculates a debtor’s projected disposable income, the court may account for changes in the debtor’s income or expenses that are known or virtually certain at the time of confirmation.

In re: Johnson Sixth Circuit July 2, 2010

The U.S. Court of Appeals for the Sixth Circuit recently held that the “enabling loan exception” of Section 547(c)(3) of the Bankruptcy Code did not protect an auto finance company’s security interest from avoidance as a preferential transfer during a Chapter 7 bankruptcy proceeding, because under Kentucky law final perfection of a vehicle lien does not occur until physical notation is made on the title, which did not occur within 20 days after the debtor received possession of the collateral.

Plaintiff-Debtor executed an installment sales contract and security agreement with defendant Branch Banking & Trust Company (“BB&T”) to finance an automobile purchase on February 8, 2005, and took possession of the automobile that same day. The title documentation and fees were received by the Letcher County, Kentucky clerk’s office on February 22. However, the county clerk did not stamp the documents as received and upload BB&T’s lien for recordation until March 7. Less than ninety days later, Debtor filed for Chapter 7 bankruptcy, and the bankruptcy trustee filed a complaint to avoid the lien of BB&T as a preferential transfer.

The Bankruptcy Court held that BB&T’s security interest was perfected on February 22, and that the “enabling loan exception” protected BB&T’s interest. The Bankruptcy Appellate Panel disagreed, holding that that BB&T’s interest was not protected by the exception because perfection occurred on March 7. The Sixth Circuit Court of Appeals affirmed.

Under Section 547(b) and (c) of the Code a “trustee may avoid certain transfers of interest in property that occur on or within 90 days preceding the filing date of the bankruptcy petition.” However, the “enabling loan exception” under Section 547(c)(3) protects a purchase money security interest if the security interest is perfected within 20 days after the debtor receives possession of the collateral.

Perfection of a security interest is determined by state law, and therefore the question before the Court was whether perfection of a security interest on a motor vehicle under Kentucky state law “require[s] physical notation on the actual certificate of title as ultimately issued by the county clerk, or is perfection accomplished as and when the required paperwork and fee are submitted to the county clerk?” Upon certification to the Kentucky Supreme Court, that Court concluded that “final perfection of a vehicle lien does not occur until physical notation is made on the title.” Johnson v. Branch Banking & Trust Co., -S.W.3d-, 2010 WL 2470849, at *1 (Ky. June 17, 2010).

Accordingly, the Sixth Circuit held that because perfection did not occur within 20 days after Debtor received possession of the truck, the enabling loan exception of Section 547(c)(3) did not protect BB&T’s interest from avoidance as a preferential transfer.

Fannie, Freddie Transition to Over-The-Counter Trading

As of July 8th, 2010, shares of Fannie Mae and Freddie Mac are trading exclusively on the over-the-counter (OTC) market.

This announcement comes shortly after the Federal Housing Finance Agency directed the companies to voluntarily delist their common and preferred stock from the New York Stock Exchange (NYSE) and any other national securities exchange.

Fannie Mae and Freddie Mac were ordered to delist because their common stock price had hovered near the NYSE minimum average closing price requirement of $1 for more than 30 trading days for most months since the two government-sponsored enterprises (GSEs) were placed into conservatorships in September 2008.

Fannie Mae said its common stock, which previously traded under the symbol “FNM,” will commence trading on the OTC Bulletin Board under the symbol “FNMA.” And shares of Freddie Mac’s common stock, which traded on the NYSE under the symbol “FRE,” will now trade under the symbol “FMCC.”

Shares of each of the GSEs’ preferred stocks will also take on new trading symbols on the OTC market.

In a statement, Freddie Mac noted that the transition to the OTC market will not affect the company’s obligation to file periodic and certain other reports with the Securities and Exchange Commission under applicable federal securities laws.

30-Year Fixed-Rate Mortgages Hit New Record Low

The weekly mortgage rate reports released Thursday by Freddie Mac and Bankrate were mixed. But one thing was certain: the average rate for 30-year fixed-rate mortgages hit a new record low.

According to Freddie Mac’s Primary Mortgage Market Survey, 30-year fixed-rate mortgages averaged 4.57 percent with an average 0.7 point for the week ending July 8, 2010, inching down from last week’s average of 4.58 percent. Freddie Mac said this rate marked yet another all-time low in its 39-year survey.

Bankrate also reported a decline in 30-year fixed-rate mortgages. According to its weekly mortgage survey, rates averaged 4.74 percent with an average 0.39 point this week, falling from last week when 30-year fixed-rate mortgages averaged 4.75 percent.

Pending Legislation

H.R. 5043, the "Private Student Loan Bankruptcy Fairness Act of 2010."

H.R. 4953, the "Mortgage Servicing Conflict Elimination Act of 2010."

H.R. 4950, the "Chapter 7 Bankruptcy Administration Improvement Act of 2010."

H.R. 4677, the “Protecting Employees and Retirees in Business Bankruptcies Act of 2010.”

H.R. 4506, the “Bankruptcy Judgeship Act of 2010.”

H.R. 4173, the "The Wall Street Reform and Consumer Protection Act."

S. 1927, the "Credit Card Rate Freeze Act of 2009."

H.R. 3890, the "Accountability and Transparency in Rating Agencies Act."

H.R. 3818, the "Private Fund Investment Advisers Registration Act of 2009."

H.R. 3817, the "Investor Protection Act of 2009."

H.R. 3639, the "Expedited CARD Reform for Consumers Act of 2009."

Credit-card debt drops 10.5% in May

by Becky Yerak

Posted Thursday at 2:49 p.m.

Paying down credit-card debt appears to be on the upswing.

Consumers cut their outstanding revolving debt -– overwhelmingly credit cards -– by an annualized, seasonally adjusted rate of 10.5 percent in May, the Federal Reserve reported Thursday. That’s on the heels of an 11.8 percent drop in April. Revolving credit is a line of credit allowing consumers to pay all or part of an outstanding balance, and, as the balance is paid, it becomes available to spend again as credit.

But it might be premature to say that consumers have been scared straight.

The monthly consumer credit numbers tell only part of the story because it’s not yet known how much debt banks or merchants will charge-off, or remove from their books because they’ve deemed it uncollectable. The Fed’s charge-off numbers are released quarterly, and the first quarter’s 10.1 percent rate tied for the highest since the beginning of 1985, the latest period for which figures are readily available.

“Unfortunately we won’t know until the charge-off data comes out for the second quarter whether the reduction was actually due to consumers paying down their debt or the banks writing bad debt off the books,” Odysseas Papadimitriou, a former Capital One executive who is now founder and chief executive of credit-card research Web site Cardhub.com, said.

In the first quarter, for example, about 40 percent of the decline in credit-card debt was due to charge-offs, Cardhub.com said.

And though consumers did pay down $36 billion in credit-card debt in the first quarter, that’s still 23 percent less than they repaid a year earlier, it said.

Another reason for the drop in outstanding revolving debt: lenders have been tighter with credit with existing cardholders, giving them less rope to get in over their heads, a new study shows.

New credit-card limits from banks are just 40 percent of what they were in 2006, according to Equifax. And even year-over-year reductions in average credit limits -– to $4,000 from $4,600 -– means 13 percent less credit available for cards with the same credit score, the credit-data business said.

Finally, consumer bankruptcy filings nationwide totaled 770,117 in the first half of 2010, up 14 percent from a year earlier, according to the American Bankruptcy Institute. The bankruptcy process cancels many debts.

“All these factors suggest there is less credit in the system,” said Equifax, which has credit files on nearly 200 million U.S. consumers.

Indeed, there’s evidence consumers with active cards are paying them down, one study shows.

Though home-equity lines that consumers once used like personal ATMs are shrinking, credit-card debt per borrower is falling nationally, statewide and in the Chicago area, according to TransUnion.

Credit card debt per borrower in the Chicago area averaged $5,119 in the first quarter, down 10 percent from a year earlier and 6 percent from the fourth quarter, the credit-reporting firm found.

“We anticipate the decreasing trend in credit card debt that started in the second quarter last year to continue well past the second quarter this year,” TransUnion director Ezra Becker said.

Meanwhile, personal savings rates as a percentage of disposable personal income were 3.5 percent in the first quarter of 2010, down slightly from 3.7 percent in the year-ago quarter, according to the U.S. Bureau of Economic Analysis. But it’s up significantly from the 1.2 percent rate in the first quarter of 2008.


Equifax, which has credit files on nearly 200 million U.S. consumers.

Circuit Court of Appeals Cases

2nd Circuit Court of Appeals, June 22, 2010
In re Delta Airlines, Inc., --- F.3d --- (2nd Cir. 2010)(sustaining of objections to claims under tax indemnification agreements reversed where: 1) court's construction of "pay" in agreement in error; and 2) the bankruptcy court effectively nullified the agreements by stripping them of their ability to protect the Owner Participant in the event of debtor's default)

5th Circuit Court of Appeals, June 21, 2010
In re Wilborn, --- F.3d --- 5th Cir. 2010)(proposed class in this case did not satisfy the requirements of FRCP 23 and FRBP 7023)

7th Circuit Court of Appeals, June 23, 2010
In re McKinney, --- F.3d --- (7th Cir. 2010)(appeal dismissed for lack of jurisdiction as, although the issue that the tax debt owner cares about may have been resolved, its basic dispute with the bankruptcy estate has not been resolved and therefore the judgment of the bankruptcy court is not final)

10th Circuit Court of Appeals, June 23, 2010
In re Trout, --- F.3d --- (10th Cir. 2010)(trustee, having successfully avoided a preferential vehicle lien under section 547, the trustee was not entitled to a money judgment equal to the value of the avoided liens under section 550(a), where the bankruptcy estate had been sufficiently returned to its pre-transfer status by avoiding the preferential lien at issue and stepping into the lien priority of the avoided creditor under section 551)

U.S. Supreme Court, June 17, 2010

Schwab v. Reilly, --- US --- (2010)(debtor gave “the value of [her] claimed exemption[s]” on Schedule C dollar amounts within the range the Code allows for what it defines as the “property claimed as exempt,” the trustee was not required to object to the exemptions in order to preserve the estate’s right to retain any value in the equipment beyond the value of the exempt interest)

1st Circuit Court of Appeals, June 15, 2010
In re Nosek, --- F.3d --- (1st Cir. 2010)(In a creditor's appeal from a $250,000 sanction issued sua sponte by the bankruptcy court, the sanction is reduced to $5,000 where: 1)creditor's claim that it was the holder of the mortgage at issue was not a deliberate falsehood or intended in any way to mislead the court or debtor or achieve anything for creditor; and 2) the bankruptcy court did not identify any actual prejudice from the inaccurate claim of holder status)(Note: David Souter sat on the panel in this appeal)

2nd Circuit Court of Appeals, June 15, 2010
SEC v. Byers, --- F.3d --- (2nd Cir 2010)(In nonparties' appeal from the district court's order holding that its jurisdiction in rem and its equitable powers provided it with sufficient authority to issue an injunction barring non-parties from filing involuntary bankruptcy petitions against any of the defendants, the order is affirmed where, while it should be sparsely exercised, district courts possess the authority and discretion to enter anti-litigation orders, including those that bar the filing of involuntary bankruptcy petitions absent the district court's permission)

9th Circuit Court of Appeals, June 09, 2010
In re Southern Cal. Sunbelt Developers, --- F.3d --- (9th Cir. 2010)(In actions seeking damages for filing of involuntary bankruptcy petitions against two alleged debtors, judgment for damages is affirmed in part where: 1) 11 U.S.C. section 303(i) permits an award of attorney's fees for a section 303 action as a whole, including fees incurred to litigate claims for fees and damages under section 303(i)(1) and (2); 2) section 303(i) permits an award of punitive damages under section 303(i)(2)(B) in the absence of an award of actual damages under section 303(i)(2)(A); and 3) award against two individual appellants jointly and severally liable for the costs and attorney's fees the debtors incurred in obtaining dismissal of the involuntary petitions is proper. However, the judgment is reversed in part where the bankruptcy court erred by holding the individual appellants liable for the debtors' costs and fees incurred on the section 303(i) motions themselves)

Thanks to Findlaw.com

Schwab v. Reilly, --- U.S. ---, 2010 WL ------- (2010)

Schwab v. Reilly, --- U.S. ---, 2010 WL ------- (2010)

Issue: Is a chapter 7 trustee required to object to the valuation of property claimed exempt by a debtor on schedule C within the 30 day time limit proscribed under FRBP 4003?
Holding: No.
Justice Clarence Thomas for a 6-3 court,

Ginsburg dissented with Roberts and Breyer joining

Debtor valued property for less then it's value.  Trustee failed to object.  Trustee asked court to allow him to sell property and give the Debtor her exempted value. The debtor objected arguing that, by the time of the hearing on the sale motion, it was too late to sell the property since the trustee had not objected to the exemption. “She argued that by equating on Schedule C the total value of the exemptions she claimed in the equipment with the equipment’s estimated market value, she had put [the trustee] and her creditors on notice that she intended to exempt the equipment’s full value, even if that amount turned out to be more than the dollar amount she declared, and more than the Code allowed.” She indicated that she would prefer her case be dismissed rather than have the equipment sold. The bankruptcy court agreed with the debtor and denied the motion to sell the property. The district court and the court of appeals both affirmed. The court of appeals ruled that by using the same amount to value the property and claim the exemption, she “indicated” an intent to claim all of the property as exempt. “Such an identical listing put [the trustee] on notice that [the debtor] intended to exempt the property fully.” This triggered the trustee’s duty to object within the statutory period.
The Supreme Court reversed.

The debtor is entitled under section 522(b) to exempt property listed in section 522(d). Section 522(l) states, “[u]nless a party in interest objects, the property claimed as exempt on [Schedule C] is exempt.” But under 522(l) the debtor may only claim exemptions under section 522(b) and therefore the trustee has a duty to object only if the exemptions claimed are improper under 522(b). Since the debtor had the right to claim $10,718 exempt, there was no requirement that the trustee object. Most exemptions “define the ‘property’ a debtor may ‘clai[m] as exempt’ as the debtor’s ‘interest’—up to a specified dollar amount—in the assets described in the category, not as the assets themselves.”

“[T]he Code’s definition of the ‘property claimed as exempt’ in this case is clear. As noted above, §§522(d)(5) and (6) define the ‘property claimed as exempt’ as an ‘interest’ in [the debtor’s] business equipment, not as the equipment per se. Sections 522(d)(5) and (6) further and plainly state that claims to exempt such interests are statutorily permissible, and thus unobjectionable, if the value of the claimed interest is below a particular dollar amount.”

The decision also discusses the relationship between this case and the earlier Supreme Court case of Taylor. In Taylor, the debtor listed the value of the exemption as “unknown.” This made the claimed exemption objectionable on its face because the statutory exemption was limited to a certain amount. When the trustee did not object, his right to object was lost. There is also a discussion about the practical effect of the ruling, that is, the delay and uncertainty to the debtor caused by the failure of the trustee to timely object. The decision states that if it is important to the debtor to claim the asset itself exempt, the debtor may list the “exempt value as ‘full fair market value (FMV)’ or ‘100% of FMV.’"

In her dissent, Justice Ginsburg focuses on the language of section 522(l) and FRBP 4003(b) which says that unless a party in interest objects, the property claimed by the debtor as exempt is exempt. She says that the debtor “made her position plain,” she listed each item of property and a specific value for each and claimed each exempt. “Because an asset’s market value is key to determining the character of the interest the debtor is asserting in that asset, Rule 4003(b) is properly read to require objections to valuation within 30 days, just as the Rule requires timely objections to the debtor’s description of the property, the asserted legal basis for the exemption, and the claimed value of the exemption.” She argues that the trustee is required, as part of his duties, to determine the value of every asset in a case anyway and if he needs more time, he can ask for more time or simply continue the meeting of creditors so that the 30 time limit will be delayed.

Minority Borrowers Disproportionately Damaged by Foreclosure Crisis

The report – Foreclosures by Race and Ethnicity: The Demographics of a Crisis – found that while the majority of families who have lost their homes are non-Hispanic and white, African-American and Latino families have been disproportionately affected relative to their share of mortgage originations. Among recent borrowers, CRL estimates that nearly 8 percent of both African-American and Latinos have lost their homes to foreclosure, compared to 4.5 percent of whites.

These racial and ethnic patterns are likely to continue in the future, CRL said. According to the report, non-Hispanic whites represent the majority of at-risk borrowers, but African-American and Latino borrowers are more likely to be at imminent risk of foreclosure – which refers to the number of borrowers who are two or more payments behind on their mortgage combined with those who are already in the foreclosure process. While 14.8 percent of non-Hispanic white borrowers are considered at “imminent risk,” 21.6 percent and 21.4 percent of African-American and Latino borrowers fall under this category.

When the number of homes that are in imminent danger of foreclosure is combined with homes already lost, CRL estimates that 17 percent of Latino homeowners, 11 percent of African-American homeowners, and 7 percent of white homeowners have already lost or are at imminent risk of losing their home.

Home Equity Loan Delinquencies Fall for First Time in Two Years: ABA

According to ABA’s first quarter Consumer Credit Delinquency Bulletin, home equity delinquencies fell for the first time in two years to 4.12 percent of all accounts, down from 4.32 percent the previous quarter. During the same period, home equity lines of credit delinquencies fell to 1.81 percent from 2.04 percent, and property improvement loan delinquencies fell to 1.4 from 1.63 percent.

GSEs’ Mortgage Guarantee Fees on the Downswing

The average guarantee fee charged by Fannie Mae and Freddie Mac on single-family mortgages fell to 22 basis points in 2009, dipping down from 25 basis points in 2008, according to a report released by the Federal Housing Finance Agency (FHFA).

FHFA said these fees cover projected credit losses from borrower defaults over the life of the loans, administrative costs, and a return on capital.

The decline in guarantee fees reflects reductions in both the average ongoing fee and the average upfront fee. According to the report, the average ongoing fee fell to 13 basis points from 14 basis points, and the average upfront fee dropped down to 9 basis points from 11 basis points.

FHFA said the drop in total guarantee fees in 2009 resulted from a significant improvement in the credit profile of the single-family mortgages the government-sponsored enterprises (GSEs) acquired relative to 2008. On a year-over-year basis, there were improvements across the product, credit score, and loan-to-value ratio spectrums.

These improvements came as 15-year fixed-rate mortgages grew as a share of total acquisitions, borrower credit scores improved, and fewer loans with down payments were acquired. In addition, the share of mortgages with risk layers—multiple features that increase credit risk—fell significantly from one year to the next.

According to FHFA, the positive development in the credit profile of enterprise acquisitions in 2009 also reduced the average expected costs of bearing the credit risk of those loans. The agency said the net effect of lower costs and lower guarantee fees charged was an improvement in the estimated fee gaps for the three major product categories, including 30-year fixed-rate, 15-year fixed-rate, and adjustable-rate mortgages.

For mortgages acquired in 2009, each GSE set the guarantee fees at levels sufficient to cover expected costs and to provide a modest return on capital. The sole exception to this policy was for loans originated under the Home Affordable Refinance Program (HARP), which offers Fannie and Freddie a benefit in the form of reduced credit exposure. Although the fees charged for HARP loans were not expected to achieve the targeted rate of return, FHFA said the new loans should perform better than the mortgages they refinanced.

Hurley v Deutsche Bank. ( 6th Cir App) 2010

The U.S. Court of Appeals for the Sixth Circuit recently held that a delay of over two years before attempting to compel arbitration resulted in waiver of the right to arbitrate.

Plaintiffs filed an action in May of 2007 in federal court against certain mortgage lending defendants for alleged violations of the Servicemembers’ Civil Relief Act. The matter was litigated in federal court for approximately 26 months before the defendants sought to compel arbitration under the terms of the mortgage documents executed by the Plaintiffs. The district court denied the Defendants’ motion and the Defendants appealed.

Agreeing with the lower court the Sixth Circuit found that, the Defendants in this matter waived their agreement to arbitrate by both “(1) taking actions that are completely inconsistent with any reliance on an arbitration agreement; and (2) delaying its assertion to such an extent that the opposing party incurs actual prejudice.”

Defendants acted inconsistently with their arbitration agreement by filing “multiple dispositive and non-dispositive motions,” including a motion to change venue under which, “Defendants proactively selected the forum in which the wished to defend against Plaintiffs’ claims.” In addition to Defendants’ conduct, the Sixth Circuit indicated that the length of time alone likely would have been dispositive. In addition, the Sixth Circuit found that the Defendants’ delay in asserting their right to arbitrate prejudiced the Plaintiffs by causing them to incur costs of over two years active litigation in two federal courts.

Bank of the Prairie v. Picht (In re Picht),2010 WL 1768238 (10th Cir. BAP May 4, 2010) (Rasure

 A lien on an under-secured, modifiable mortgage in a “Chapter 20” case will not be released if the debtor does not receive a discharge in the Chapter 13 case.

Bankruptcy Filings On The Rise

It's tough out there -- no jobs, home values plummeting -- and Americans are reacting by heading to bankruptcy court.

Bankruptcy filings surged 14% during the first half of 2010, according to the American Bankruptcy Institute. Filings totaled 770,117 through June, compared to 675,351 during the same period last year.

In 2005, bankruptcy filings totaled more than 2 million. It is expected that there will be more than 1.6 million new bankruptcy filings by the end of 2010. The institute also said that bankruptcies totaled 126,270 in June, a jump of 8.5% from the same month in 2009, when they totaled 116,365.

There are 15 million Americans who are looking for work. And, the overall unemployment rate, which includes both those who are actively looking for work and those who are not, registered at 16.5 percent. As the number of unemployed workers swell, many Americans are anxious for the immediate passage of the unemployment extension 2010 bill.

The American Bankruptcy Institute, on the other hand, revealed that consumer bankruptcy filings for January to June increased by 14 percent over the same period last year. 770,117 consumer bankruptcy filings were registered during the first six months of 2010, which marks the highest number of filings since the Bankruptcy Abuse Prevention and Consumer Protection Act was enacted five years ago to curb the increase in filings.

The relationship between unemployment rate and the rate of bankruptcy filings is best demonstrated in Nevada. Nevada has the highest unemployment rate in the country (adjusting for households located in the state) and it alshttp://all247news.com/wp-admin/post-new.php#o registered more than double the national consumer bankruptcy filing rate. Nevada registered 15,000 filings per million households compared to the 6,800 filings per million households average at the national level.

Both bankruptcy and jobs statistics do not augur well to unemployed Americans most of whom are pinning their hopes on Congress to pass legislation on the $33.9 billion unemployment extension 2010 bill.

Law Librarians

Firms have many labels for this type of work -- business development, business intelligence, competitive intelligence, business background searches, due diligence, conflicts, and client intake information, among others. But regardless of their names, all of these functions can be supported by the information professionals in the library or research department. Whether the firm needs creditworthiness information regarding a potential client's business partner or seeks to monitor the landscape and identify the major players and projects in a particular industry, law librarians are a powerful asset. In some cases, the need will be "one time" for a particular business background report on a company; in others, the typical workflow involves ongoing, complex project management, and continuous updating and tracking of critical information.

While the J.D./M.L.S. combination is well-known, particularly in academic settings, law librarians working in private firms often hold an M.B.A. or other business-oriented degree. As a result, many are proficient at analyzing the competitive environments in which a given company or industry operates -- sometimes referred to as the Five Forces, or SWOT (strengths, weaknesses, opportunities and threats) analyses.


2010 Annual Report to Congress on White House Staff

The Obama administration has released its annual list of White House salaries, which shows a pay freeze is still in effect. White House counsel Robert Bauer tops the list of legal staff at $172,200, the same salary his predecessor was earning at this time last year. Salaries on the annual list -- the only official public accounting of White House staffing -- contrast sharply with individuals' salaries in the private sector. Bauer made $958,788 in 2009 as head of the political law practice at Perkins Coie.


Matrimonial Firm to Go on Trial for Allegedly Aiding in Child's Abduction


How to Ace Your First Test Managing Real Money in the Real World

Your teenager may be too young to have a checking account or credit card, but an identity thief can use your child's name, address and Social Security number to get one. One of the most important things a teen can do to protect against identity theft is to be very suspicious of requests for their personal information


Foreclosure Mediation in the Forefront

According to Center for American Progress., some states which have already enacted automatic mediation programs-meaning that mediation is automatically scheduled when foreclosure is initiated either through notice of foreclosure sale in nonjudicial foreclosures or through the filing of foreclosure in judicial foreclosures—-include California, Connecticut, and Florida. States such as these are seeing higher participation rates in their mediation programs, as CAP states that opt-in programs see participation rates below 25 percent, while automatic mediation programs have participation rates closer to 75 percent. From these rates, CAP has found that in automatic mediation programs 70 to 75 percent of cases end in a settlement, with 60 percent of homeowners reaching settlements that keep them in their homes.

Mortgage Refinance Applications Increase

The Mortgage Bankers Association (MBA) has released its Weekly Mortgage Applications Survey for the week ending June 25. The Market Composite Index, a measure of mortgage loan application volume, increased 8.8% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the index increased 8.3% compared with the previous week.


Senate OKs Tax-Credit Extension

The Senate has unanimously approved the three-month home-buyer tax credit extension previously okayed by the House of Representatives, the New York Times reports. President Obama is also expected to approve the measure, which gives buyers who have already signed contracts until Sept. 30 to close their transactions.

The legislation was approved after provisions that would extend unemployment benefits was decoupled from the home-buyer tax credit extension.

July 2, 2010, President Obama signed legislation to extend the closing deadline for homebuyer tax credit recipients.

Originally, qualifying buyers who were under contract by April 30, 2010 had until June 30, 2010 to close. But as this deadline approached, concerns arose that the backlog of loan applications created by the popularity of the program would leave many buyers unable to claim the credit.

In fact, an estimated 180,000 buyers were at risk of missing the closing deadline, according to the National Association of Realtors (NAR).

These at-risk buyers can now breathe a sigh of relief. President Obama’s approval of the Homebuyers Assistance and Improvement Act of 2010 extends the closing date from June 30, 2010 to September 30, 2010, giving qualified buyers who signed a contract by April 30, 2010 an extra three months to complete their closing.

Servicers Refund Prepayment Penalties In Maryland

Maryland's Department of Labor, Licensing and Regulation (DLLR) has obtained for consumers about $246,000 in refunds related to a series of regulatory examinations of mortgage servicers.

Litton Loan Servicing and Saxon Mortgage Services have each refunded approximately $71,000 to a combined total of 160 Maryland consumers, while Bayview Loan Servicing has refunded approximately $104,000 to 40 Maryland consumers. The refunds followed compliance examinations conducted by the DLLR's Office of the Commissioner of Financial Regulation that uncovered previous violations of Maryland law, primarily related to restrictions on the imposition of prepayment penalties.

The refunds relate to violations of prepayment restrictions in effect prior to the 2008 Maryland mortgage and foreclosure regulatory reforms, Bloom Raskin said. In 2008, Gov. Martin O’Malley signed into law a prohibition against prepayment penalties in connection with residential mortgage loans.

Maryland is one of the few states that maintain licensing and examination authority over independent mortgage servicers. The state does not have authority over those servicers owned by federally chartered banks and thrifts.

Mortgage Fraud

Fraud is lying. Fraud is cheating. When it happens, there are consequences, and far too often, the consequence of fraudulent misrepresentation is a loan default that eventually leads to foreclosure. Servicers usually bear the brunt of dealing with the fraud mess in their modifications, short sales and foreclosures.
For more information on Mortgage Fraud, see the LexisNexis Risk Solutions website.

Servicers are forced to deal with many fraud issues on loans. Based on fraud reports received by lenders and servicers, the most common types of fraud are income and employment misrepresentations, and misrepresentations related to the borrower’s claim of occupancy on the property.

In 2008, CoreLogic studied the impact of fraud on loans that foreclosed with lenders. In one specific lender fraud investigation, it was determined that 25% of loans in foreclosure had evidence of fraud in the application. The types of fraud most commonly perpetrated were borrowers misrepresenting their income or employment, or borrowers lying about their intent to occupy the property (in other words, investors that were masquerading as owner-occupants to get a better rate or terms on the loan). When the lender examined the bottom line (what it had actually lost after the property was sold), the lender determined that it lost 50% more on a property where fraud was involved. The impact of fraud on bottom-line losses was shocking.

Estimates by CoreLogic indicate that one out of every 200 loans contains some fraud that will cause it to default. This means that a high level of fraud is making its way into the modification process. The problem of fraud on loan modifications involves borrowers providing information that is contradictory to what they reported on their initial application. The most common types of loan modification fraud include borrowers underreporting their income; borrowers lying about their occupancy status to qualify for a modification; and borrowers lying about their hardship and not being able to supply documentation.

The Home Affordable Modification Program (HAMP) is a good example of how fraud impacts are felt by servicers. Many servicers are reporting that the primary qualification issues arise because borrowers are unable to or fail to supply documentation of their income, are unable to support their occupancy claim or are unable to provide any documentation to support their hardship.


California Bankruptcy Rates Soar Despite 2005 Overhaul

Five years ago, bankruptcies in California and across the nation soared to record levels as debt-strapped consumers raced to seek court protection before Congress changed the law to curb what had been considered an epidemic of filings, the San Francisco Chronicle reported on Sunday. For a while, filings dropped, but the recession has forced so many people into dire straits that bankruptcies in California are setting new records. "The states with the most acute housing crises have had the most elevated filing rates," said ABI Executive Director Sam Gerdano. The volume of filings nationwide also is approaching 2005 levels, as the Bush-era reform bill that raised fees and eligibility standards is rendered moot by rising joblessness and sinking home values. The upward trend in filings rekindles the debates that occurred five years ago over whether irresponsible consumers or predatory lenders are primarily to blame for bankruptcies, and whether the current law is the right fix or an unfair burden for debtors seeking a fresh start. The Government Accountability Office, the nonpartisan watchdog agency of Congress, told lawmakers in June 2008 that the 2005 law boosted chapter 7 expenses from about $914 to $1,477, including legal, filing and counseling fees. That office did not put a figure on the more complex chapter 13 filings, but said that in most cases the attorneys fees charged to debtors had risen 55 percent or more. Prof.Lois Lupica of the University of Maine, is in the middle of a multiyear study funded by the ABI Endowment Fund to get a better fix on costs and if BAPCPA's changes keep some debtors who may qualify for bankruptcy from seeking the protection of the courts.


You Look Awful!

A lot has been said about attire in the work place. See below:





Recently a law firm I know decided to enact a dress code.   While I may not agree  with  certain provisions of the code such as the foot attire, it comes down to you do what the boss says and shut up.   I personally would like to add a few items, and remove a few  from the code!  I don't see how thong sandles and tennis shoes are a no no but you can have a receptionist full of visible tats and facial piercings.   Hello!  What looks more trashy!
Now having had my own law firm for a  number of years and worked for various organizations this is my basic dress code for you:
No visible tatoos!
No pierced faces!
Long hair- tie it back!
No boobs, No butt, No belly!  COVER IT!
No skirts shorter then 2 inches above your knee (see above)!
Wear a bra!
Wear underwear!
No shorts!
Be clean and neat and groomed.
When in doubt, err on the side of conservative.

Student Loan Default on the Rise

While for-profits educate less than 10 percent of students, those colleges' students received close to a quarter of Pell Grant and federal-student-loan dollars in 2008, according to the College Board. And they accounted for 44 percent of defaults among borrowers who entered repayment in 2007, according to the Institute for College Access and Success, a nonprofit organization that advocates making higher education more affordable. When the government can't collect on those loans, taxpayers pick up the tab.

For-profit colleges have long blamed the sector's higher-than-average default rates on the sociodemographics of their students. According to the Career College Association, 43 percent of students attending for-profits are members of minority groups, and almost half are the first in their families to attend college. More than three-quarters are employed.

In the 2009-10 academic year, the average for-profit institution charged $14,174 in tuition and fees, according to the College Board, and the average community college only $2,544.

Thirty percent of loans made to students attending four-year for-profit colleges have defaulted within 15 years of entering repayment, more than twice the default rates at public and private nonprofit four-year colleges, which are 15.1 percent and 13.6 percent, respectively.


Circuit Court of Appeals Cases from Last Week

Third Circuit, 06/29/2010

In re Goody's Family Clothing Inc.
"Stub rent" is administrative expense here, section 365(d)(3) does not supplant section 503(b).

Sixth Circuit, 07/02/2010
In re Johnson
perfection of lender's security interest in truck did not occur until March 7, 2005, when the security interest was actually noted on the certificate of title.

Eighth Circuit, 06/28/2010
US v. Mitchell
fraud sentence is affirmed where, in a complicated proceeding such as this, the district court must reasonably approximate the value of the assets that the defendant fraudulently sought to preserve.

Tenth Circuit, 06/29/2010
In re Graves
section 542 does not empower a trustee to demand turnover from a debtor in this case, where debtors' interest in a 2006 tax refund was irrevocably applied pre-petition to 2007 taxes

Thanks to Findlaw.com

Bankruptcy on the Rise

Across the nation, 770,117 consumers, or one in 150 households, have filed, a 14 percent increase from a year earlier, according to figures from the National Bankruptcy Research Center. The American Bankruptcy Institute estimates there will be 1.6 million-plus bankruptcies by year's end.

Years of super-sized lifestyles on borrowed money, a depressed housing market, persistent high unemployment and stock market losses are fueling the increases. People in industries once considered secure and well-paying -- real estate agents, financial industry workers, tool-and-die makers, plumbers and chiropractors -- are filling attorneys' waiting rooms after being out of work or making do with reduced incomes for too long.

The average U.S. VantageScore is currently 749-- the average for Dallas & Miami-Ft. Lauderdale which are tide for last place out of  the 20 largest metropolitan areas is 719.

Is 'Thompkins' the Death Knell of 'Miranda'?

A recent Supreme Court decision greatly expands the powers of law enforcement officers during custodial interrogations. Berghuis v. Thompkins lessens the government's burden to show waiver of a suspect's right to remain silent, and clarifies law enforcement obligations that were established in Miranda v. Arizona more than 40 years ago. Is Thompkins the death knell of Miranda? Attorney D. Michael Crites and summer associate Anjali P. Chavan examine the meaning and impact of Thompkins.



Freddie Mac to Hold REO Auction in Phoenix

Freddie Mac said Friday that it has teamed up with real estate auction specialist REDC and the asset management firm New Vista to sell off 135 homes the GSE has repossessed through foreclosure at an auction event in Phoenix, Arizona. The HomeSteps REO homes will be auctioned off to individual homebuyers at the Phoenix Convention Center on August 7. Almost a third of the homes are being set-aside specifically for first-time borrowers participating in the federal Neighborhood Stabilization Program (NSP).


Stern Lawyers- Shady Past?

There are  posts all over the web that one of Stern's lawyers is a former Stripper and hooker.  



I ran a Florida Bar search on the 2 names in the article: Rebecca Rand and

Kelly Holsopple.   I did not find either listed on the Florida Bar website : 

I then ran a search of David Stern's attorneys:

Cary, Stephen T.

Evertz, Donna

Glick, Donna Sue

Katz, Robyn Rachel

Little, Sandra Ann

McComas, Beverly Ann

Mendieta, Miriam L.

Pollack, Billi K.

Shum, Elsa Hernandez

Silverglate, Samuel Hy

Steiner, Mark Elliot

Stern, David James

Suglio, James

Turner, Curtis C. Jr.

Wasserman, Wendy Jill

I do not see either of those names listed.   Did this person  ever exists?  Did they have a Florida Bar liscense? Or was it all made up? 

David J. Stern

As lawyer for several major banks, David J. Stern handles 20 percent of all foreclosure cases in the nation's fourth most populous state. It is from Stern's law firm that well over 100,000 Floridians, including many in the Tampa Bay area, have received the dreaded notice to pay up or face losing their homes.

The foreclosure business has been good to Stern, who lives in a $15 million Fort Lauderdale mansion and reaped $58.5 million by selling his back-office operations to a new public company in which he is a major shareholder.

The St. Pete times did an article on him this past week check it out at:

He apparently is camera shy, and pictures of him on the internet are hard to find.   I found one  at:


Other interesting sites with info related to Stern:



David J Stern