Friday, November 5, 2010

DC AG Issues Opinion Letter Affecting MERS, DC Nonjudicial Foreclosures

Washington, D.C. Attorney General Peter Nickles issued an opinion letter asserting that certain notices used to commence foreclosures in DC may supposedly mislead homeowners and allegedly violate DC's consumer protection law. According to the DC AG, "a foreclosure may not be commenced against a DC homeowner unless the security interest of the current noteholder is properly supported by public filings with the District’s Recorder of Deeds."

A copy of the opinion letter is available at:§ion=2&release=20673&year=2010&file=file.aspx%2frelease%2f20673%2fforeclosure%2520statement.pdf

According to the DC AG, "[a] noteholder’s security interest in a DC home should normally be reflected in the public land records maintained by the District’s Recorder of Deeds. Under District law, in contrast to the laws of many states, each deed or other document transferring a mortgage interest must be recorded with the Recorder of Deeds within 30 days of execution. This requirement is not satisfied by private tracking of mortgage interests through the Mortgage Electronic Registration Systems (MERS)."

As you may recall, DC has a non-judicial foreclosure process that begins with a Notice of Foreclosure on a form prescribed by the Recorder of Deeds. The form requires identification of a “Holder of the Note” and a “Security Instrument recorded in the land records of the District of Columbia.”

According to the DC AG, “[t]he homeowner who receives such a notice is entitled to presume that the recordation of the security interest complies with District law, and that each intermediate transfer of the security interest between the original maker of the note and the current holder of the note is documented in the public record. ...When a foreclosure sale notice misrepresents to a homeowner that the foreclosing noteholder has a recorded security interest, the homeowner may fail to seek legal help in determining whether there may be a good basis for challenging the foreclosure in court. Misrepresentations of material facts, when made to homeowners or other consumers, violate the District’s Consumer Protection Procedures Act, which is enforced by the attorney general."

The enforcement statement invites “homeowners or their advocates” to inform the Office of the Attorney General (OAG) if foreclosures “continue to be commenced or pursued with deceptive foreclosure sale notices” in order that the Office may consider bringing enforcement actions to stop foreclosure proceedings and seek restitution for consumers.

MERS issued a press release response, which is available at:

Are 401k withdraws income for the Means Test?

My understanding is that withdrawals from qualified retirement plans (pension, IRA) within six months prior to filing bankruptcy are included as income for purposes of the means test. Large amounts of income from retirement accounts may disqualify a debtor from filing Chapter 7 in which case the debtor should postpone filing Chapter 7 until the retirement withdrawals “age” beyond the six month means test look back.

On the other hand, if the debtor chooses to file Chapter 13 bankruptcy the pre-filing pension withdrawals will not be used to calculate available income to fund a Chapter 13 plan. In other words, the pension withdrawals will not increase the plan payment amount.

FDLG Attorney Deposition

Stern Watch

Some articles say he has laid off  70% of his 900 employees within the last month.

Mortgage Rates

The GSE reported that rates for 30-year fixed mortgages averaged 4.24 percent (0.8 point) for the week ending November 4, 2010. That’s up slightly from last week’s average of 4.23 percent, and marks the third consecutive week the 30-year rate has increased in Freddie Mac’s study.

The average rate on 15-year fixed mortgages came in at 3.63 percent (0.7 point), according to the GSE, down from 3.66 percent last week.

Wednesday, November 3, 2010

Free Webinar Explores Appraisal Side Of Dodd-Frank Act

in FYI

by on Friday 29 October 2010

Coester Appraisal Group, based in Rockville, Md., will host a free educational webinar training session on lender requirements mandated in the Dodd-Frank Act. The 45-minute webinar will be held Nov. 23 at 2:00 pm EST, and registration is available on the company's website.

According to Coester Appraisal Group, more than 132 pages of the Dodd-Frank Act are dedicated to appraisal related issues. Among the provisions are fiduciary standards, lender compensation, licensing requirements, disclosure and documentation requirements, new deadlines, and many others. The lender education session will address some of the most important appraisal-related issues within the act that pertain to lenders.

"The Dodd-Frank Act is extensive - there are a lot of new requirements, and several of them are vague and hard to interpret," says Brian Coester, CEO of Coester Appraisal Group. "The general feedback I'm getting from lenders is that they’re either confused or overwhelmed by the mass quantity of detail and information in the bill. With the increasing amount of pressure being put on lenders these days, they're hungry for answers and explanations."

SOURCE: Coester Appraisal Group

Florida Housing Sees Steady Interest In Foreclosure Prevention Pilot Program

by on Monday 01 November 2010

More than 600 borrowers in Lee County, Fla., submitted applications last week for financial assistance from the Florida Hardest-Hit Fund (HHF) pilot program administered by Florida Housing Finance Corp. The online application process opened on Oct. 25, and will remain open until 1,000 applications are received.

"HHF advisors in Lee County already have made initial contact with most of these applicants to determine their eligibility for this assistance," says Steve Auger, executive director of Florida Housing. "The information captured by the advisors is an important part of our ongoing communication with the large banks and loan servicers regarding how they can participate with us to help eligible homeowners.”

The fund was established to help unemployed or underemployed homeowners in Florida who are having difficulty paying their mortgages. Currently, the program is available as a pilot in Lee County only and will expand statewide early next year.

Fannie Mae Retaining Extra Counsel In Florida

After announcing recently that it has suspended all activity on cases handled by Plantation, Fla.-based Law Offices of David J. Stern, Fannie Mae has reached out to additional firms in the state.

Fannie Mae has issued retention letters to nine attorney firms in Florida, spokesperson Amy Bonitatibus confirmed to in an e-mail. The names of the firms will be announced if and when they sign on to the retention letters.

On Friday, The Palm Beach Post reported that Fannie Mae President and CEO Michael Williams explained the expansion of the company's attorney network in a letter to House Democrats who had previously inquired about so-called "foreclosure mills" in the state. According to the report, Fannie Mae solicited the additional firms in late August and early September.

Rumor has it... Freddie Mac was visiting firms in Tampa Bay this week.

Small Business Loans

Small Business Administration (SBA) loans, with their low cost and flexible terms, offer an “excellent choice” for small business owners looking to refinance their existing real estate or to acquire a new property.

Based on CIT Group Inc.’s survey results, one-fifth of respondents indicated that SBA loans were designed to help business owners with less than perfect credit. Small business owners indicated that SBA loans allowed borrowers to make a lower down payment, have a lower monthly payment, and pay off the loan over a longer time period.

But CIT says few are familiar with recent small business legislation and its benefits. Over half – 52 percent – of small business owners indicated that they did not know what the Small Business Jobs and Credit Act was or how it might impact them as small business owners.

The company says the legislation sweetens SBA loan terms for both lenders and borrowers, eliminating borrowers’ fees, raising the loan guarantee to 90 percent from 75 percent, and increasing loan limits.

U.S. small businesses have a significant impact on the American economy. CIT says they employ nearly 59 million Americans – approximately half of all private-sector jobs – and collectively account for more than half of the country’s non-farm private gross domestic product

Fitch Says 7M Homes in the Shadows Will Take 40 Months to Clear

Fitch Ratings puts the industry's shadow inventory - meaning loans that are seriously delinquent, in foreclosure, or REO - at 7 million homes. The agency says based on recent liquidation trends, it will take more than 40 months to clear this distressed inventory. While the volume of newly delinquent mortgages has begun to improve, liquidation rates have been constrained by weak demand and initiatives to modify loans. On top of that, Fitch says the recent discovery of defects in the foreclosure process is prolonging the housing correction.

Data released by the organization Monday shows that the industry completed close to 150,000 permanent loan modifications during the month of September alone – 120,000 of which were through servicers own proprietary programs and 27,840 under the federal government’s Home Affordable Modification Program (HAMP).

HOPE NOW says servicers have been granting permanent loan modifications to struggling borrowers at a steady pace of about 150,000 per month. But many consumer advocacy groups, and even federal watchdog agencies such as the Congressional Oversight Panel, say their efforts are unfortunately overshadowed by the sheer volume of delinquencies.

Banks seized a record 288,345 homes in the third quarter

U.S. homeownership rate was unchanged at a 10-year low in the third quarter as banks stepped up property seizures from borrowers who defaulted on mortgages, Bloomberg News reported today. The homeownership rate was 66.9 percent, matching the second-quarter level, which was the lowest since 1999, the U.S. Census Bureau said in a report today. The homeowner vacancy rate, or the share of properties vacant and for sale, was unchanged at 2.5 percent, according to the report. Banks seized a record 288,345 homes in the third quarter, up 22 percent from a year earlier, according to an Oct. 14 report from RealtyTrac Inc. in Irvine, Calif. There were 18.8 million vacant homes in the third quarter, including foreclosures, residences for sale and vacation homes, down from 18.9 million in the second quarter, according to today’s Census report.


Homeowners being evicted while participating in programs designed to avert foreclosures is a scenario that is being repeated thousands of times at the biggest mortgage firms, according to groups that aid borrowers, Bloomberg News reported today. The government’s Home Affordable Modification Program came under fire at hearings last week for “trial” arrangements that allow late fees and debts to stack up and documents to disappear, triggering seizures. “Many homeowners end up facing foreclosure solely on the basis of the arrears accumulated during a trial modification,” said Julia Gordon, senior policy counsel at the Center for Responsible Lending, in Oct. 27 congressional testimony. “One incomplete payment or one accounting mistake can land you on an apparently unstoppable conveyor belt to eviction.” With as many as 7 million homes facing foreclosure or already seized, according to Zillow Inc., both the government and companies such as Bank of America and JPMorgan Chase & Co., the two biggest U.S. lenders, offered programs to forestall seizures by easing mortgage terms. Changes include cutting interest rates for as long as five years and extending repayment to 40 years. About half the 1.4 million temporary or “trial” modifications granted since the program’s March 2009 inception have been canceled, according to U.S. Treasury Department data. Only 466,708 borrowers have received permanent modifications. About one in five of the canceled modifications is either in foreclosure or bankruptcy, according to a Treasury survey of the nation’s eight largest mortgage servicers, which handle billing, collections and foreclosures.

Bad Faith Lacking, No Sanctions for Creditor's Firm That Bungled Proofs

The 3rd Circuit has refused to apply sanctions against a law firm that, although committing "textbook unprofessional" conduct in a bankruptcy case, did not act in bad faith.

Judge Baileys Foreclosure Bench Book

Monday, November 1, 2010

Written Testimony of Phyllis Caldwell- Homeownership Preservation Office

On October 6th, Treasury issued guidance to servicers reiterating the fact that they are to comply with all applicable federal and state laws, and are also prohibited from conducting a foreclosure sale until the HAMP-required written certifications to foreclosure counsel or the trustees have been issued.

Under MHA guidelines, participating servicers must evaluate all eligible homeowners for a HAMP modification before referring them to foreclosure. For those homeowners that were already in foreclosure proceedings, Treasury guidelines require servicers to stop the foreclosure proceedings while the homeowners are being evaluated for HAMP. Should a homeowner not qualify for HAMP (or if the homeowner fails or cancels the modification), participating servicers are required to evaluate that homeowner for alternative loss mitigation modifications, such as HAFA, or one of the servicer's own modification programs. If a homeowner proves ineligible for an alternative modification, servicers are required to evaluate that homeowner for a short sale or deed-in-lieu of foreclosure...

If all of these efforts are unsuccessful, participating servicers may not proceed to foreclosure unless they have issued a written certification to their foreclosure attorney or trustee stating that "all available loss mitigation alternatives have been exhausted and a non-foreclosure option could not be reached." Only after these steps are taken and the certification delivered, may the foreclosure process proceed...

Wells Fargo Affvdts

Wells Fargo Owns Up to Finding Errors in 55,000 Foreclosure Affidavits

For weeks, Wells Fargo has insisted that it's not a part of the robo-signing debacle, but that changed with an announcement late Wednesday that it will submit new affidavits for approximately 55,000 pending foreclosures in 23 judicial states. Wells Fargo says it has identified instances where employees did not adhere to legal procedures in conducting final reviews and did not execute notarizations properly. The bank reaffirmed that it does not plan to institute a moratorium on foreclosure sales.

A 1/3 of all Home Mortgage Notes are Missing


The Federal Deposit Insurance Corporation is moving to exercise its newly granted authority under the Dodd-Frank Wall Street Reform and Consumer Protection Act to become both the trustee and bankruptcy court for future distressed financial firms. Earlier this month the agency issued proposed regulations to structure resolution proceedings under the new law. Unfortunately, most of these regulations are little more than a grand exercise in reinventing the wheel.


ABA Letter re Bankruptcy Technical Amendments (93 pages!)

Bk Case Update

In Jacobsen v. Moser (In re Jacobsen), 609 F.3d 647 (5th Cir. 2010), the Fifth Circuit joined an increasing number of courts in holding Marrama v. Citizens Bank, 549 U.S. 365, 127 S. Ct. 1105, 116 L.Ed.2d 956 (2007) compels the conclusion that a chapter 13 debtor does not have an absolute right to dismiss a case where the debtor has acted in bad faith or abused the bankruptcy process and requested dismissal under §1307(b) in response to a request for conversion.

Bank Fees

Has your bank started charging you a maintenance fee for your checking account? If so, check to see if you can avoid paying a fee by meeting certain requirements, such as signing-up for direct deposit or electronic statements.

GSEs Instruct Servicers to Help Unemployed Through State Programs

Fannie Mae and Freddie Mac have both issued notices to servicers that they must work closely with state housing finance agencies to provide mortgage assistance to homeowners who’ve lost their jobs.

But they said:

Servicers have been instructed that they may not determine borrower eligibility or communicate qualification for a state HFA program to a borrower. Servicers can, however, refer potentially eligible borrowers to the HFA in accordance with relevant state requirements.


Debt Collectors Face "Robo-Signer" Scrutiny

While much attention has been paid to the documentation issues in foreclosure proceedings, lawyers who defend consumers in debt-collection cases say that the banks did not invent the "robo-signer" approach to financial paperwork, but that debt buyers have been utilizing these shady practices for years, the New York Times reported today. "The difference is that in the case of debt buyers, the abuses are much worse," says Richard Rubin, a consumer lawyer in Santa Fe, N.M. The debt in these cases - such as credit cards, auto loans and utility bills - is sold by finance companies and banks in a vast secondary market, bundled in huge portfolios, for pennies on the dollar. Debt buyers often hire collectors to commence a campaign of insistent letters and regular phone calls. Or, in a tactic that is becoming increasingly popular, they sue. Nobody knows how many debt-collection affidavits are filed each year, but a report by the nonprofit Legal Aid Society found that in New York City alone more than 450,000 were filed by debt buyers, from January 2006 to July 2008, yielding more than $1.1 billion in judgments and settlements.

U.S. Trustee Program Probing Law Firms, Mortgage Handlers In Bankruptcy Cases

The U.S. Trustee Program is scrutinizing law firms and a large U.S. mortgage processor to ensure they properly handle foreclosure proceedings, Dow Jones Daily Bankruptcy Review reported today. In recent months, the U.S. Trustee Program has intervened in two cases, in Mississippi and Louisiana. Bankruptcy trustees are examining whether law firms and Lender Processing Services Inc., a Jacksonville, Fla., mortgage technology and information provider, bungled foreclosures and hurt borrowers, according to court documents. The law firms and Lender Processing deny wrongdoing. A trustee in the Louisiana case installed a two-year program to monitor how a law firm handles bankruptcy proceedings, according to a document filed in bankruptcy court last week. Pursuing mortgage servicers for improper filings is an important new "prong" of the trustee program's efforts to oversee the flood of bankruptcy cases following the mortgage crisis, Clifford White III, director of the program, said in an August speech. "We aim to hold mortgage servicers to the same standard of completeness and accuracy in their filings that we do the debtors who owe them money," White said.