Thursday, April 28, 2011

Applications Flood Florida Program for Unemployed Homeowners

In just one week's time, the Florida Housing Finance Corporation has received nearly 9,500 applications from unemployed homeowners seeking financial assistance through the state's Hardest-Hit Fund (HHF) program. Following a successful six-month pilot run in Lee County, the state housing agency launched the program statewide on April 18, making it available to troubled homeowners in all 67 counties. Florida has received more than $1 billion from the U.S. Treasury to fund the program.

Florida’s effort is two-fold. The Unemployment Mortgage Assistance Program (UMAP) will provide up to $12,000 to pay monthly mortgage and escrowed mortgage-related expenses for up to six months, or until the homeowner can resume making mortgage payments. Homeowners in this program are required to pay 25 percent of their monthly income toward their mortgage payment, with a minimum payment of $70 per month.

The Mortgage Loan Reinstatement Payment Program (MLRP) will provide up to $6,000 to bring the homeowner’s past-due first mortgage current if the homeowner can show the ability to resume making mortgage payments on their own. For a homeowner who received funding from the UMAP program, any unused funds up to $12,000 may be used in addition to MLRP funds to help bring the first mortgage current.

Assistance through both programs will be in the form of a 0 percent, deferred-payment loan. The loan can be forgiven over a five-year period, at a rate of 20 percent each year.

An eligible homeowner:

Must be a Florida resident;

Must occupy property as primary residence (the property cannot be vacant, abandoned or rented);

Borrower/co-borrower must be unemployed or underemployed through no fault of his/her own, which makes the first mortgage unaffordable;

Must have documented total household income at or below 140% of the area median income (AMI), adjusted for household size;

Must have an active checking/savings account that can be debited by the ACH method of funds transfer;

May not have unencumbered assets of $5,000 or more, or three times the current monthly mortgage payment (whichever is greater);

Cannot have a bankruptcy that has not been discharged or dismissed; and

Cannot have been convicted of a mortgage-related felony in the last 10 years.

The current mortgage:

Must be serviced by a participating lender, who agrees to accept payments on behalf of the homeowner;

Must not be more than 180 days past due at the time of application;

Must have been originated on or before January 1, 2009; and

Must have an existing principal balance of less than $400,000.

Homeownership Continues to Fall

The U.S. Census Bureau reported Wednesday that the homeownership rate dropped to 66.4 percent at the end of the first quarter. It’s fallen back to a level not seen since 1998. Analysis of the numbers shows that the housing bust has more than reversed the increase in homeownership gained during the boom.

Wednesday, April 27, 2011

Home Prices Still Adjusting

Home prices are still falling. They are expected to drop another 5% this year and still have a ways to go from the inflated amounts of  2005-2008 before they reach their  value.

Fed Seeks Comment on Bankruptcy Of Financial Firms$File/fedbr.pdf
David P. Goch: "Yesterday, the Federal Reserve Board indicated it, in conjunction with the Administrative Office of the United States Courts, will seek commenton two Dodd-Frank required bankruptcy-related studies to determinewhether bankruptcy laws should be modified in light of potential financial firm failures.

According to the proposal , one study will focus on whether changes are needed to Chapters 7 and
11 of the Bankruptcy Code, the other will ask whether more international coordination is needed when the matter involves interconnected firms with operations around the globe.

Comments are due 30 days following the future publication of the proposal in the Federal Register."

Star Chef, Facing a Suit, Files for Bankruptcy

"GEOFFREY ZAKARIAN has made all the right moves for a celebrity chef. He is a fixture on four Food Network programs, including “Chopped.” Over the years, he has operated a number of high-profile restaurants, three of which have won three stars from The New York Times. He now has two places in fashionable New York hotels and a hand in hotels in Miami Beach and Atlantic City.
But his latest step doesn’t follow the script.
He has filed for personal bankruptcy, a move that could help fend off more than $1 million in legal claims from his kitchen staff at Country in the Carlton Hotel, along with a former partner in the restaurant, which closed nearly three years ago.
Of the 179 creditors listed in the Chapter 7 bankruptcy petition he filed on April 6 in federal court in Bridgeport, Conn., 152 are former cooks at Country. They are part of a class action lawsuit against Mr. Zakarian and his management firm that claims that when he was an owner of the restaurant and its chef, he failed to pay the workers time and a half for overtime, falsified pay records to shortchange them and deducted from their paychecks for staff meals they were not given. They are seeking $1 million in damages and $250,000 in penalties."

Tuscaloosa attorney charged with bankruptcy fraud

"BIRMINGHAM, Ala. (AP) — Federal prosecutors have charged a Tuscaloosa attorney with bankruptcy fraud.

Authorities say 60-year-old Donald Dionne is charged with making a false oath or account.

Prosecutors say that between December 2008 and August 2010, Dionne included false information in five bankruptcy petitions in order to have those cases assigned to divisions they would not have been assigned to had the correct information been included.

In a plea agreement filed Tuesday, Dionne agreed not to practice law if on probation or supervised release. The maximum penalty for the charge is 5 years in prison and a $250,000 fine."

Fla. Panel Passes Plan To Split State's Top Court

The Florida Senate budget committee signed off on a controversial amendment Monday that would add justices to the state Supreme Court and split it into civil and criminal divisions, in what opponents claim is a politically-motivated attempt to pack the courts.


Blockbuster Wins Final Approval of Sale to Dish Network

Blockbuster Inc., once the largest video-rental chain, won final approval to sell its assets to Dish Network Corp. for $320 million, Bloomberg News reported yesterday. Dish's bid was declared the highest and best offer after an auction April 6. On April 21, the day the sale had been projected to close, Blockbuster told Bankruptcy Judge Burton Lifland that it needed to give Dish more time to decide which of 1,500 leases to keep or reject. The revised offer approved yesterday gives Dish another 90 days to decide on leases and business contracts, which should allow the company to keep more leases and jobs, Blockbuster lawyer Stephen Karotkin said.

HUD's Donovan Suggests Renter's Tax Credit

Housing and Urban Development Secretary Shaun Donovan floated proposals for a new renter's tax credit to relieve the scarcity of affordable housing, CongressDaily reported yesterday. At a conference at which Harvard's Joint Center for Housing Studies reported that renters have become increasingly squeezed over the past decade, Donovan called for a revamp of today's low-income housing credit and for an expansion of the Community Reinvestment Act, which prods banks to make loans in low-income communities. Donovan made a particular plea for ideas on a renter's tax credit, though he did not advocate a specific proposal himself.


Tuesday, April 26, 2011

Bankruptcy = No Job? Well Maybe.

Section 525 of the Bankruptcy Code provides the following (applicable to private, non-government employers):

(b) No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt, solely because such debtor or bankrupt--

(1) is or has been a debtor under this title or a debtor or bankrupt under the Bankruptcy Act;

(2) has been insolvent before the commencement of a case under this title or during the case but before the grant or denial of a discharge; or

(3) has not paid a debt that is dischargeable in a case under this title or that was discharged under the Bankruptcy Act.

In a recent case, the Fifth Circuit Court of Appeals reached a different conclusion and held that discrimination in the hiring process was not prohibited by Section 525(b).

In Burnett v. Stewart Title, Inc., No. 10-20250, 2011 WL 754152 (5th Cir. March 4, 2011) (click here for .pdf of opinion) the issue was whether §525(b) created a private cause of action for a debtor who was denied employment by a private employer.

The Court contrasted the language of §525(a), applicable to government units:
... a governmental unit may not deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise, or other similar grant to, condition such a grant to, discriminate with respect to such a grant against, deny employment to, terminate the employment of, or discriminate with respect to employment against, a person that is or has been a debtor under this title or a bankrupt or a debtor under the Bankruptcy Act...

(emphasis added). The Court noted that Congress included specific language about denying employment in subsection (a), applicable to public employers, but omitted the language in subsection (b), applicable to private employers. Under the rules of statutory construction, it is presumed that Congress "acted intentionally and and purposefully in the disparate inclusion or exclusion" of specific language, and statutes are to be read as a whole. In short, had Congress wanted to include the denial of employment in §525(b), which was enacted several years after subsection (a), they knew very well how to so. We have to assume the omission was intentional.

Therefore, employers in the Fifth Circuit (Texas, Louisiana, Mississippi)  apparently are free to discriminate against applicants based on a prior bankruptcy filing of the applicant or a person associated with the applicant (such as a spouse).

Rebuilding Your Credit After Bankruptcy

Financial: and (free) sites offering information on interest rates for credit cards, autos, mortgages and links to the prime rate and the LIBOR rate. the site also lists offers for low interest credit cards.

Budgeting: – (free) budget creator for managing household expenses (free) calculator designed to help folks save for retirement

Charity: – look up where your money is going (type in the search box “charities”); make sure your donations are going to the right place and then make sure you take the deduction on your tax return.

Continue to Learn: – site offers videos and basic money lessons from Elmo. It is never to early (or late) to learn the basics of money and simple budgeting. PNC Bank also gives out these DVD's for free. – program offered by bankruptcy courts around the country to educate elementary and high school children about money and budgets. If your school doesn’t offer the program, call the principal and ask why?

Credit Reports: – links to three credit reporting agencies, Experian, Equifax and Transunion. You are able to get one free report from each every year.

My clients are advised to get the three credit reports about 30 days after their bankruptcy is complete and to check the credit reports for outstanding balances and accuracy. If items are reported inaccurately, you should see your bankruptcy attorney.  and – — both are another kind of credit reporting agency.

These provide service to banks and credit unions before a new account is opened. I advise my clients to get these two reports too.

Dunn & Bradstreet- business credit reports

Muppets and PNC Bank teach Finance to Children

Free Videos at PNC Bank.     Someone send me a set as I have no idea where PNC Bank is even located.

Study: Affordable Rental Housing Scarce in U.S.

 Harvard University study released today said that the share of renters who spend more than half their income on housing is at its highest level in half a century, the Washington Post reported today. About 26 percent of renters — or 10.1 million people — spent more than half their pre-tax household income on rent and utilities in 2009. The supply has not kept up with demand in part because of a shortage of apartments, a key source of new rentals. Developers cut back on such projects when the economy deteriorated in 2009, which drove down vacancies and boosted rents. Analysts say they expect rents to keep climbing as developers try to ramp up new projects and catch up with demand. In many areas, the demand is driven by families who lost their homes to foreclosure during the housing bust and ended up searching for rentals. Meanwhile, as the job market recovers, more newly employed young adults appear to be seeking their own apartments instead of living with their parents, putting even more upward pressure on rental rates, according to one of the study's researchers.

Florida  Minimum Wage is $7.25 so moderate income is $14.50-21.75 an hour ( two to three times minimum wage.  Moderate Income families spend more then half of their income on rent.

Monday, April 25, 2011

Process Servicers to handle Eviction

Residential Funding v Saurman

A Michigan Court of Appeals recently held that Mortgage Electronic Registration Systems (“MERS”), the mortgagee under the security instrument for a home mortgage loan, but not the holder of the note evidencing the debt for that loan, could not exercise its contractual right to foreclose by advertisement pursuant to the applicable Michigan law, MCL 600.3204(d)(1).

Defendant-borrower (“Borrower”) obtained a home mortgage loan which included a security instrument that provided for rights of foreclosure by the designated mortgagee, MERS. However, MERS was not the owner of the debt and did not hold or service the subject loan. After the Borrower defaulted on his loan, MERS began non-judicial foreclosure by advertisement, purchased the property and then quit-claimed the property to successor lender (“Plaintiff”). When Plaintiff began an eviction action, Borrower challenged the foreclosure, arguing that MERS did not have authority to foreclose by advertisement because it did not qualify as a mortgagee permitted to do so under MCL 600.3204(d)(1). The lower court rejected Borrower’s arguments and Borrower appealed.

As you may recall, Michigan law allows a party to foreclose a mortgage by advertisement if, among other things, that party owns an interest in the indebtedness secured by the mortgage. See MCL 600.3204(d)(1). The Court first held that where, as here, the “indebtedness is solely based upon the note,” a party “must have a legal share, title, or right in the note” in order for that “party to own an interest in the indebtedness” under MCL 600.3204(d)(1). Further, an “interest in the mortgage” is insufficient because “the note and the mortgage are two different legal transactions providing two different sets of rights, even though they are typically employed together.”

The Court next held that “MERS did not have the authority to foreclose by advertisement on Borrower’s property.” The Court reasoned that “it was the Plaintiff that lent the Borrower money pursuant to the terms of the note,” and not MERS as mortgagee, which “only held an interest in the property as security for the note, not an interest in the note itself.” “Moreover, the mortgage specifically clarified that, although MERS was the mortgagee, MERS held ‘only legal title to the interest granted’ by Borrower in the mortgage.” “Consequently, the interest in the mortgage represented, at most, an interest in Borrower’s property. MERS was not referred to in any way in the note and only Plaintiff held the note.”

The Court also rejected various arguments set forth by the plaintiff mortgage loan investor. First, the Court denied that “MERS was a contractual owner of an interest in the note based on the agreement between MERS and the lenders” because “MERS had no right to possess the debt, or the money paid on it.” In addition, “the fact that the originating lender gave MERS authority to take ‘any action required of the Lender’ did not transform MERS into an owner of an interest in the note.” The “contract language expressly limits the interests MERS owns to those granted in the mortgage instrument and limits MERS’ right to take action to those actions related to the mortgage instrument.”

The Court also rejected the plaintiff mortgage loan investor’s argument “that MERS had the authority to foreclose by advertisement as the agent or nominee for the originating lender, who held the note and an equitable interest in the mortgage.” The Court reasoned that the “statute explicitly requires that, in order to foreclose by advertisement, the foreclosing party must possess an interest in the indebtedness,” and “simply does not permit foreclosure in the name of an agent or a nominee.”

The plaintiff mortgage loan investor also argued that the Michigan legislature did not create three distinct categories of entity which could foreclose by advertisement, but rather envisioned a continuum of entities: those that actually own the loan, those that service the loan, and some ill-defined category which might be called “everything in between.” However, the Court found no language in the statute providing for a “continuum,” no analysis from the plaintiff mortgage loan investor of what the “continuum” constitutes, and therefore found no merit in that position.

Prosecuted in France for Book Review! What the F!

As an American writer who typically writes about people in the public eye, you feel comfortable doing it freestyle, particularly in light of the Supreme Court's 1964 decision in New York Times v. Sullivan, which requires a public figure suing you for libel to prove actual malice or recklessness to prevail, even if your writing is false. You feel even more safeguarded by the Supreme Court's 1997 decision in Reno v. ACLU, which held that Internet commentary should receive the highest level of First Amendment protection. From your perspective, you're golden. Surely no American court would ever, in a million years, sustain a defamation complaint given your meticulous and objectively unbiased efforts to get the facts right on your website. What is more, you don't really think you could be sued abroad, where this protective First Amendment jurisprudence doesn't hold sway.

Relatives and Bankruptcy

Service Men's Relief Act

Debtor's Counsel Due Diligence

In re Wintrow, 391 B.R. 505 (1st Cir. BAP 2009)

Florida Floreclosures Drop in April

FICO Profiles the Strategic Defaulter

As home prices began heading further and further south, the term "strategic default" made its way into industry jargon...and into the minds of lending and servicing professionals already struggling to keep up with large volumes of borrowers who actually can't afford their mortgage payments. It's a fairly new phenomenon that the industry agrees needs addressing, but the problem is, how do you pinpoint a strategic defaulter? The credit assessment firm FICO says it's developed a method, using consumer behavior analytics, that will allow lenders to identify borrowers who might walk away.

They say, as a group, strategic defaulters tend to be more savvy managers of their credit than the general population, with higher FICO scores, lower revolving balances, fewer instances of exceeding limits on their credit cards, and lower retail credit card usage.

All factors point to the fact that strategic defaulters display a different type of credit behavior than distressed consumers who miss payments.

Retiring Bankruptcy Judge John Ninfo Still Plans to Educate Youth on Financial Dangers

s he approaches retirement from the U.S. Bankruptcy Court for the Western District of New York, where he has presided over thousands of cases of financial disarray, Bankruptcy Judge John Ninfo II is going to continue to preach his finely honed lessons on financial literacy, the Rochester (N.Y.) Democrat and Chronicle reported yesterday. However, with the recent recession still looming large, Judge Ninfo is adjusting his message: He now says we probably should live below our means, much as many of our parents and grandparents did in the 1950s and 1960s. Judge Ninfo will retire from the bankruptcy court at the end of the year, capping his time on the bench at an even two decades. He will continue on with one of his passions by continuing to volunteer with Credit Abuse Reduction Education (CARE), the national financial literacy program that he started in 2002.

Defendants Find It Tougher to Make Bail as Bond Agents Shun Homes as Collateral

In addition to putting homeowners in debt, damaging credit ratings and devastating property values across the nation, the housing bust has also made it harder to post bail, the Wall Street Journal reported today. For decades, family homes were the ultimate "get out of jail" cards for the accused, providing collateral for people required to pay bail to remain free prior to or during their trial. However, in the past few years, home prices have tumbled by more than 30 percent nationwide, and plunged by more than half in the hardest-hit markets, which include parts of Florida, Nevada, and Arizona.

Federal Reserve Launches Bankruptcy Studies

The Federal Reserve Board on Thursday announced that it is launching two studies examining whether the Bankruptcy Code needs revisions in order to better handle failures of big financial companies, the Deal Pipeline reported on Friday. The Fed is asking for comment on exactly what the studies should cover. While the Dodd-Frank Act established an alternative to the bankruptcy process to wind down systemically important financial firms to be led by the Federal Deposit Insurance Corp., Congress also ordered regulators to take a closer look at the bankruptcy process, as an option for winding troubled financial giants. One study will examine the adequacy of chapter 7 and chapter 11 for facilitating bankruptcies of systemically important financial companies. Another question in that study is whether the Bankruptcy Code should adopt a provision in the FDIC's orderly liquidation process to allow derivative contracts to remain open after a firm is put in receivership, lessening the possibility assets will be sold at fire sale prices.