Friday, January 14, 2011

Global Warming

Where is it???????

Yesterday the news reported that Florida was the only state in all 50 states without snow on the ground.   (Hawaii - has a mountain top that get's snow.)

Today the news reported New Haven CT had 30 inches of snow in one day.

Sounds more like the ICE AGE to me.


Mortgage rates retreated this week, marking the second week in a row they've headed lower. Interest rates began a sharp ascension in early November, and experts have warned that the trend is likely to continue. The recent change of pace was attributed to last Friday's jobs report, which was weaker than market forecasts. Freddie Mac says 30-year rates this week dropped to 4.71 percent while 15-year rates fell to 4.08 percent. Bankrate says the larger jumbo 30-year fixed rate edged down to 5.57 percent.


It is no wonder the recovery has been so anemic: The U.S. economy has been trying to run on one leg, according to an analysis in the Wall Street Journal today. Large businesses—the good leg—have been growing robustly for at least a year. Production is rising, sales are higher, and profits are through the roof. But the recovery missed the second leg—small businesses, which account for about half of U.S. output and jobs. Encouragingly, there are now tentative signs that the second leg may finally be healing. Since the recession ended in mid-2009, we've been relying almost exclusively on larger businesses for our growth. The problem is, large businesses have been relentlessly cutting costs, especially labor costs, to improve their bottom lines. Profits are up, but employment is flat. However, there are clues that small businesses are finally getting back on their feet. In December, employment in small firms (fewer than 50 employees) rose by 117,000, the biggest gain in nearly five years. The small-business sector has other problems, though. Borrowing is particularly difficult for entrepreneurs starting up a company. Many of them rely not on regular lines of business credit at the bank, but on personal loans backed by their home equity or personal credit cards. If we do not have many new businesses, we will not have very much job creation. Given the reliance on home equity to finance start-ups, further declines in home prices could doom us to more years of high unemployment, even if the rest of the small-business sector gets moving again.

Thursday, January 13, 2011

In Their Fight with Banks over Mortgage Losses, Investors Side with Borrowers

The fight between big banks and investors who lost a fortune on mortgage-backed securities is shifting from private litigation to the public arena, The Washington Post reported yesterday. While the investors have been angry at the banks for several years for the losses, their legal efforts have not gotten far, mostly because of the difficulty of organizing enough peers for class-action lawsuits and of prying information from the lenders, but the recent uproar over the banks' foreclosure practices has given the investors a way to pressure lenders outside the courts. As Congress begins discussing potential mortgage servicing legislation, and as the group of 50 state attorneys general investigating problems with foreclosures continues to hammer out details of a settlement with the banks, the investors find themselves fortuitously aligned with borrowers who are facing foreclosure and who have the sympathy of lawmakers. The Association of Mortgage Investors, a Washington, D.C.-based group that represents hedge funds, state pension funds, charitable endowments and other investors, is calling for improvements to servicing and transparency that the banks have resisted in the past. The team leading the 50-state investigation has been meeting with the country's major servicers in recent weeks and with stakeholders such as the investors. Investors represent what may be the biggest risk to banks that initiated questionable foreclosures. While homeowners may succeed at getting individual foreclosures delayed or even overturned because of paperwork mistakes and other errors, the money at stake in such cases is minuscule compared with the billions in bad mortgages that banks could be forced to buy back if investor lawsuits are successful. The pressure from mortgage investors comes just weeks before the release of two key federal reports about the mortgage industry—a multi-agency report on the foreclosure problems and another by the Treasury Department on Fannie Mae and Freddie Mac.

Home Foreclosures in 2010 Top 1 Million for First Time

Banks seized more than a million U.S. homes in one year for the first time last year, despite a slowdown in the last few months as questions around foreclosure processing arose, Reuters reported today. Banks foreclosed on 69,847 properties in December, bringing the year's total to 1.05 million, topping the prior record of 918,000 homes seized in 2009, real estate data firm RealtyTrac said. The number of foreclosure filings, which includes default notices, auctions and repossessions, was a record 2.9 million last year, including 257,747 filings in December. December filings were 2 percent lower than November and 26 percent lower than December 2009. The firm said Nevada, Arizona and Florida continued to post the highest foreclosure rates in the country. Five states—California, Florida, Arizona, Illinois and Michigan—accounted for more than half of all foreclosure activity. In 2005, before the housing bust, banks took over just about 100,000 houses, according to the Irvine, Calif.-based company.

Consumer Bankruptices Increase 9% in 2010

New data shows that U.S. consumer bankruptcies increased 9 percent nationwide in 2010 from the previous year according to the American Bankruptcy Institute (ABI).

Data from the National Bankruptcy Research Center (NBKRC) showed that the overall consumer filing total for the 2010 calendar year (Jan. 1 – Dec. 31, 2010) reached 1,530,078 compared to the 1,407,788 total consumer filings recorded during 2009. Annual consumer filings have increased each year since the Bankruptcy Abuse Prevention and Consumer Prevention Act was enacted in 2005.

The Middle District of Florida hit a record all time high is 201.
NBKRC’s data also showed that the 118,146 consumer filings recorded in December 2010 represented a 4 percent increase from the 113,274 filings in December 2009. The December 2010 consumer filings also represented a 3 percent increase from the November 2010 total of 114,587. Chapter 13 filings constituted 30 percent of all consumer cases in December, a slight increase from November.

A study released earlier this year found that Americans aged 65 and older are filling for bankruptcy more than any other demographic according to a recent study by John Pottow, professor of law at the University of Michigan Law School. The study showed the number filers age 65 and over doubled from 2.1% in 1991 to 4.5% in 2001. The trend continued in 2007, as the proportion of filers in this age group rose further to 7.0%.

Wednesday, January 12, 2011


The U.S. Supreme Court today held in Ransom v. F.I.A. Card Services, N.A., that a chapter 13 debtor who owns a car outright may not take a means testing ownership deduction.
 The 8-1 opinion by Justice Elena Kagan, with only Justice Antonin Scalia dissenting, focused on the statute's "text, context, and purpose." Ransom attempted to take a standard $471 monthly car ownership deduction despite having no car payment. The Court upheld the decision of the U.S. Court of Appeals for the Ninth Circuit affirming the bankruptcy court's refusal to confirm Ransom's chapter 13 plan. The Supreme court explicitly stated that it was not deciding whether a debtor who has a lower actual payment could deduct the full means testing allowance, only that a debtor with no payment could not take the deduction.

In the wake of Ransom, lower courts will have to decide whether debtors with old, paid-off cars can buy new ones on credit before filing, thus gaining a means testing deduction. The Court did not explicitly state that its analysis applies in chapter 7, but it suggested that it did, in part by its "compare" citation of Fifth and Seventh Circuit decisions to the contrary in chapter 7 cases. However, the Court also relied on the "statutory context" that in chapter 13, means testing deductions fill in "amounts reasonably necessary to be expended" by above-median-income debtors. The opinion noted that bankruptcy law has a "core purpose of ensuring that debtors devote their full disposable income to repaying creditors."

For Now I would say go buy that new car then file!!!!

Justice Kagan's Debut Opinion- Ransom

Supreme Court Justice Elena Kagan announced the first opinion of her tenure this morning, which turned out to decide the first case she heard argued in the current term last October 4.

As often happens for new justices, Kagan was assigned to write her first decision in a less-than-blockbuster case, Ransom v. FIA Card Services, a bankruptcy dispute over which routine expenses debtors can deduct from their monthly income and thereby keep out of the hands of creditors. Kagan managed to make it interesting nonetheless, with the non-technical, very accessible summary she read from the bench for spectators.

Kagan ruled against the debtor, and in favor of the credit card company. She was joined by all her colleagues except for dissenting Justice Antonin Scalia, thus depriving her of the unanimity that the Court tries to achieve for a justice's opinion-writing debut.

Retired Justice Sandra Day OConnor Justice Sonia Sotomayor Justice Ruth Bader Ginsburg and Justice Elena Kagan


Reports have surfaced that the FDIC is contemplating stricter requirements that would force banks to disclose what potential ramifications a loan modification on a first lien they service would have on an underlying lien. Industry analysts have speculated that servicers may be reluctant to modify a primary loan because the bank that services the loan also holds the second lien. Such an arrangement could be considered a conflict of interest and prompts some to wonder if investors would be swayed if they knew of the arrangement beforehand.

Tuesday, January 11, 2011

Report: Consumers Still Struggling with Loans

U.S. consumers continue to struggle to pay back home equity, auto and other loans as high unemployment drags on the economy, Reuters reported today. The American Bankers Association said in a report released today that the overall loan delinquency rate ticked up slightly for the second straight quarter. It had been dropping steadily since hitting 3.35 percent in the second quarter of 2009. The overall rate increased to 3.01 percent in the third quarter of 2010 from 3.00 in the second quarter. The ABA defines a delinquency as a payment that is 30 days or more overdue. The association attributed the lack of downward movement to the unemployment rate, which remains high, but said delinquency rates are likely to improve soon. Among the areas where consumers had a more difficult time repaying their debts was in auto loans. The delinquency rate for loans provided by a bank increased from 1.67 percent to 1.74 percent and delinquencies on loans arranged through a dealer or other third party increased from 3.01 percent to 3.02 percent. The delinquency rate on credit cards issued by banks also increased moving to 3.64 percent in the third quarter from 3.62 percent during the previous time period.

Judges Berate Bank Lawyers in Foreclosures

With judges looking ever more critically at home foreclosures, they are reaching beyond bankers to heap some of their most scorching criticism on the lawyers, the New York Times reported today. In numerous opinions, judges have accused lawyers of processing shoddy or even fabricated paperwork in foreclosure actions when representing the banks. New York judges are also trying to take the lead in fixing the mortgage mess by leaning on the lawyers. More broadly, the courts in New York state, along with Florida, have begun requiring that lawyers in foreclosure cases vouch for the accuracy of the documents they present, which prompted a protest from the New York bar. The requirement, which is being considered by courts in other states, could open lawyers to disciplinary actions that could harm or even end careers. Stephen Gillers, an expert in legal ethics at New York University, agreed that the involvement of lawyers in questionable transactions could damage the overall reputation of the legal profession, "which does not fare well in public opinion" throughout history. "When the consequence of a lawyer plying his trade is the loss of someone's home, and it turns out there are documents being given to the courts that have no basis in reality, the profession gets a very big black eye," Gillers said.