Credit Counseling or Bankruptcy?

When you have more debt than income and you're drowning in late payments, filing for bankruptcy can seem like a tempting way out.


But it may not be the fresh start you think it is. A new report shows nearly one in three people who filed for bankruptcy last month, still had to pay off their debt.


According to the American Bankruptcy Institute, more than 114,000 people filed for bankruptcy in November.
That's a 13-percent drop from the month before, but it's a more than 2 percent increase over consumer bankruptcies filed a year ago.


While bankruptcy can bring relief from creditors, credit counselors caution: consider every other option first.
The truth of the matter is, when you file bankruptcy, some of the effects linger for years and years and years.
Chapter 7 bankruptcy, which wipes out most of your debt, stays on your credit report for 10 years.  Chapter 13 stays on your credit report for up to seven years, and you still must repay many of your creditors on a payment plan.

The average debt management program through a credit counseling agency lasts, roughly about five years and affects your credit rating the same as a chapter 13 bankruptcy.   They may also pay your payments late causing additional marks on your credit report.  Payments through a Ch 13 plan can not be marked late.

By law, you must qualify for bankruptcy. Depending on your circumstances, you may be limited to chapter 13- the kind of bankruptcy that goes on your record, but still results in a court-ordered payment plan for your creditors. That's what happened to nearly a third of the consumers who filed for bankruptcy last in November.

FEDERAL RESERVE PROPOSES TO INCREASE CONSUMER CREDIT, LEASE-PROTECTION LIMITS TO $50,000

The U.S. Federal Reserve proposed two rules that would raise consumer protection coverage limits for credit transactions and leases, Bloomberg News reported yesterday. The rules would increase the limits to $50,000, according to the Federal Reserve, and amounts will be adjusted annually to reflect any increase in the consumer price index. Consumer loans of more than $25,000 are generally exempt from the protections of the Truth in Lending Act, and leases where the consumer’s total obligation exceeds $25,000 are also exempt from safeguards of the Consumer Leasing Act. The $50,000 limit for leases would apply to everything consumers are required to pay under the lease excluding taxes, the Fed said. The financial overhaul bill enacted July 21 included a provision to extend coverage to $50,000 effective July 21, 2011.

http://www.bloomberg.com/news/print/2010-12-13/fed-to-increase-consumer-lease-protection-limits-to-50-000.html

FDIC PROPOSES MINIMUM CAPITAL STANDARDS FOR BANKS

U.S. regulators today proposed new capital standards for all financial institutions, implementing a requirement of the Dodd-Frank financial overhaul, the Wall Street Journal reported today. The standards mandate that the nation's largest banks be subject to the same minimum standards for their capital cushions as smaller institutions, FDIC Chairman Sheila Bair said. The FDIC also voted to gradually boost the amount of reserves that insured banks must hold. The so-called designated reserve ratio would be targeted to rise to 2 percent over the next 17 years, FDIC officials said. The Dodd-Frank law sets a minimum of 1.35 percent by fall 2020. The Federal Reserve and Office of the Comptroller of the Currency are joining the FDIC's proposal

HAMP is A Failure

http://cop.senate.gov/documents/cop-121410-report.pdf

Today's monthly Congressional Oversight report concluded that for all intents and purposes, HAMP is a failure. Link to the report is here: http://cop.senate.gov/documents/cop-121410-report.pdf So, perhaps characterizing the program in last week's webinar as not longer having credibility in many policy circles was not too risky after all. It not only means the continued experimentation of alternative approaches - mediation etc - but a plaintiff's bar even more aggressive in its litigation strategies in the wake of the foreclosure document problem. Despite criticism of program implementation by Treasury, COP basically lays the failure of loan modification efforts at the feet of the mortgage servicers. Not at all surprising in today's environment:

A major reason [for HAMP's failure] is that mortgages are, in practice, far more complicated than a one-to-one relationship between borrower and lender. In particular, banks typically hire loan servicers to handle the day-to-day management of a mortgage loan, and the servicer's interests may at times sharply conflict with those of lenders and borrowers. For example, although lenders suffer significant losses in foreclosures, servicers can turn a substantial profit from foreclosure related fees. As such, it may be in the servicer's interest to move a delinquent loan to foreclosure as soon as possible. HAMP attempted to correct this market distortion by offering incentive payments to loan servicers, but the effort appears to have fallen short, in part because servicers were not required to participate. Another major obstacle is that many borrowers have second mortgages from lenders who may stand to profit by blocking the modification of a first mortgage. For these reasons, among many others, HAMP's straightforward plan to encourage modifications has proven ineffective in practice.

Fewer Homes "Underwater" as Foreclosures Increase

Trade-industry data released on Monday showed that the number of U.S. homeowners who owe more on their mortgages than their homes are worth fell in the third quarter, but the decline stemmed from banks getting more aggressive on foreclosures, not from home values going up, the Wall Street Journal reported today. The total of underwater mortgages fell to 10.8 million at the end of September, down from a peak of 11.3 million at the beginning of the year, according to CoreLogic, a real-estate data firm. The latest total accounts for nearly 22.5 percent of U.S. homeowners with a mortgage. Home prices, meanwhile, appear to be declining again after tax credits that spurred sales produced modest price gains during the first half of the year. Home values could drop by an estimated $1.7 trillion this year, a 40 percent increase from a year ago, according to Zillow.com, a real-estate website. Most of the decline is expected in the second half of the year.

 
 

Dress Code

It's winter -people wear clothes- so this should not even be an issue.  But no we have leggings!    If you are  built like a Kardasian or fat NO LEGGINGS with out a dress or sweater to mid thigh or below please! It is just gross!   While we are at it if your are over 25 you should follow the above even if you have the body for it- MLF is just gross.  If you are in an office you should also follow  number one.   Looking like a high price call girl instead of  a legal assistant will not gain  you respect- maybe a date with the  young male attorney or  start of your sexual harrasment case.

Weidner and Forrest attacked in Court by Robo- Signers

http://www.ritholtz.com/blog/2010/12/when-robosigners-attack/


Got copies of the videos removed from You Tube?  Send them to me- I'll post them  here too!

Oh and by the way the Robo-Signers can each  be prosecuted individual per signing under FS 117.105 of a third degree felony and under FS 117.107 they can be fined $5,000 per signature.

Anatomy of Mortgage Fraud, Part I: MERS's Smoking Gun

http://www.huffingtonpost.com/l-randall-wray/merss-smoking-gun-part-1-_b_794713.html

LPS

The reports and investigations will continue to roll in…but will there be any relief for the homeowner who was victimized by such practices? How many more families will be thrown into the streets while these investigations play out?


The first sign of legal problems for LPS emerged earlier this year, when the company disclosed that federal prosecutors in Florida had opened a criminal investigation into apparently forged signatures on foreclosure documents prepared by DocX, the shuttered subsidiary located in a small office park in Alpharetta, Georgia.

Fidelity National Financial, LPS’s former parent, had bought DocX in 2005. The unit soon became a high-speed mill, churning out mortgage assignments — many of which are now known to be of doubtful validity — on behalf of banks and investor trusts, helping them to foreclose on homeowners.

Few firms benefited more from the collapse of the U.S. housing boom than LPS. Spun off as an independent company in 2008, the company has seen its profits, with big help from its mortgage default services business, reach $232 million for the first nine months of 2010. That is a nearly 15 percent increase from the same period in 2009. Its revenue last year was $2.4 billion, up from $1.8 billion in 2008.


http://www.msnbc.msn.com/id/40533358/ns/business-us_business/

Funds for Uncleared Pre-Petition Checks Are Property of the Estate

Recently, in In re Brubaker, 426 B.R. 902 (Bankr. M.D. Fla. 2010), a Florida bankruptcy court held that funds related to checks that had not cleared were property of the estate under section 541(a)(1) of the Bankruptcy Code. In Brubaker, the debtors wrote several checks before filing for chapter 7 relief. As of the filing date, these checks had not cleared, and therefore the funds remained in the debtors’ bank account. The bankruptcy court rejected the debtors’ argument that these funds transferred on the dates that the checks were presented to the recipient, and thus were not property of the estate. Instead, the court noted that funds do not transfer until the checks are honored. Thus, the court held that funds remaining in the account were property of the estate since the debtors’ bank had not honored the checks.

Under section 542(a) all property in “possession, custody, or control” of the debtor at the start of the case must be delivered to the trustee. The court looked at the UCC for guidance in determining “control” under section 542(a). Under the UCC, a check is simply an order for the bank to pay the recipient a stated sum of money on demand. U.C.C. § 3-104(a)(2). Until the bank issues payment, the debtor has the ability to close the account or stop payment of the check. Since the checks in Brubaker had not been cashed at the time of filing, the funds were in debtors’ control and remained part of the estate. In Barnhill v. Johnson (In re Barnhill), 503 U.S. 393, 401 (1992), the Supreme Court held that transfer of funds occurred when the drawee bank honored the check. The court followed this decision and also considered the bankruptcy policy that the trustee must distribute funds among creditors fairly and equitably. The court decided that the best way to accomplish this goal was to determine that the transfer of funds did not occur until the bank honored the check. Holding otherwise would make it too easy for debtors and aggressive creditors to outsmart the system by selecting to pay certain creditors instead of others, knowing that those payments would be honored, thus defeating the goal of equitable distribution. As a result, courts have consistently held that outstanding funds remain property of the estate.

How should a debtor deal with these checks becoming property of the estate? Some options exist for the debtor. First, the debtor could notify his bank that he has filed for bankruptcy protection, his account is part of the estate, and any checks presented for payment should no longer be honored. Debtors should be careful writing checks on the eve of filing. It may be fraudulent if the debtor knows he intends to file for bankruptcy at the time the checks are written and therefore payment will be stopped. See Shake v. County of Buffalo, Neb., 154 B.R. 270, 276 (Bankr. D. Neb. 1993) (allowing criminal complaint against drawer of bad check to proceed as exception to automatic stay of section 362); Johnson v. Lindsey, 16 B.R. 211, 213 (Bankr. D. Fla. 1981) (permitting criminal prosecution for issuing worthless check, but not permitting repayment if found guilty). Second, the debtor can wait until all drawn checks have cleared from the account before filing a petition of relief. It should be noted that this option only relates to “when” a debtor should file bankruptcy. Although a debtor may want his checks to clear, there may be more imminent concerns. For example, the value of outstanding checks is probably not the biggest concern if a debtor’s home is being foreclosed.

Claims Of Discrimination Lead HUD To Investigate 22 Lenders

by MortgageOrb.com on Thursday 09 December 2010

Based on complaints filed by the National Community Reinvestment Coalition (NCRC), the U.S. Department of Housing and Urban Development (HUD) is launching multiple investigations to determine whether 22 banks and lenders discriminated against African American and Latino borrowers.

The NCRC alleges the mortgage originators denied Federal Housing Administration (FHA)-insured loans to African Americans and Latinos with credit scores as high as 640. FHA guidelines allow mortgages to borrowers with credit scores above 580, provided the borrowers have down payments equaling 3.5% of the loan amount, or above 500, provided the borrowers have down payments equaling 10% of the loan amount.

"The decision by some banks to not follow the FHA's policy is cutting qualified borrowers off from accessing credit, and in doing so, causing harm to their ability to prosper, build wealth and for our economy to grow," says John Taylor, president and CEO of the NCRC. "And this decision is arbitrary, because the loans are 100 percent guaranteed, whether the borrower's credit score is 580 or 780. That means the loans with lower credit scores don't pose additional risk to the company, so there's no legitimate business defense for this across-the-board practice."

The NCRC says it conducted "mystery shopping" tests on the nation's top FHA-approved lenders. Of all the lenders tested, 32, or 65%, refused to consider consumers with credit scores below 620. An additional 11, or 22%, refused to extend credit to consumers with credit scores below 640. Only five lenders, or 10%, had policies in place that served consumers with credit scores of 580 and higher.

The NCRC believes the policies of the 22 lenders violate the Fair Housing Act, the Equal Credit Opportunity Act and the Community Reinvestment Act. A complete list of the lenders against which the NCRC filed complaints can be found here.



SOURCES: HUD, NCRC

Fannie Mae Study- Americans more Likely to Rent

Overall, according to Fannie Mae, one-third of Americans (33 percent) would be more likely to rent their next home than buy, up from 30 percent in January 2010. Among renters, 59 percent said they would continue to rent compared to 54 percent in January 2010.


Shifting U.S. demographic and lifestyle trends, including shrinking numbers of married couples and fewer households with children, correlate to housing decisions that may have long-term implications for the housing market, according to Fannie Mae’s research analysis.

Negative Equity

CoreLogic’s market data shows that negative equity remains concentrated in five states. Nevada had the highest negative equity percentage with 67 percent of all of its mortgaged properties underwater, followed by Arizona (49 percent), Florida (46 percent), Michigan (38 percent), and California (32 percent).


Some of these same hard-hit states, however, also saw the largest declines in negative equity during the third quarter. Alaska experienced the biggest decrease, falling 1.8 percentage points, followed by Nevada (-1.6), Arizona (-1.4), California (-1.2), and Florida (-0.9).

Idaho and Alabama are the only states with noticeable increases in their negative equity ratios last quarter. CoreLogic says this comes as no surprise given they are currently the two top states for home price depreciation.