A Adjustable Rate Mortgage is bad- no matter how you package it. Most of my chapter 13 homes are either purchased between 2005-2009 during the bubble or their ARMS. Just say NO and get a fixed rate.
Two new packagings for ARMS are:
A 2/28 Mortgage is an adjustable rate mortgage loan where interest is paid for two years at a relatively low rate, and then the interest rate “floats,” or changes, upwards.
With a 50 Year Mortgage the lender gives you a fixed introductory rate for five years, followed by an adjustable rate mortgage for the remaining 45 years
Thursday, December 22, 2011
Home Sales
Economists and real estate experts project U.S. home prices to bottom out late next year or in early 2013, according to Zillow's Home Price Expectations Survey. http://zillow.mediaroom.com/index.php?s=159&item=252'
Shadow Inventory
The number of distressed properties not currently listed on multiple listing services stood at 1.6 million as of October 2011, according to CoreLogic. This shadow inventory is approximately half of the industry's visible inventory, the company says, meaning for every two homes available for sale, there is one home in the "shadows." CoreLogic's latest shadow inventory assessment represents a supply of five months and is down from October 2010, when it stood at 1.9 million units, or 7-months' supply. http://www.dsnews.com/articles/for-every-two-homes-sale-there-is-one-in-shadows-2011-12-21 Currently, Florida, California, and Illinois account for more than a third of the shadow inventory, CoreLogic reports. The top six states, which would also include New York, Texas, and New Jersey, are home to half of the shadow inventory.
Pay the Mortgage Before you Shop!
There’s often a balloon in bankruptcy and foreclosures soon after Christmas in part because people “skip a payment” to buy presents. This is never a good idea and now it is even worse. First, if you want to keep your home, the mortgage comes before virtually everything. I tell my clients it comes before they eat!! I know try explaining that to the spouse not handling the budget or the kids.
It may be satisfying to pay several smaller bills first — feels like solving problems, right? — but if the biggest bill you didn’t pay was your mortgage then your problems are getting worse, not better.
It is easy to think “well, I’ll make this up next month, I don’t want to disappoint the kids.” The problem is that you won’t be making more money next month . Your expenses will be the same or maybe higher, given the prices of food, gas and electricity. So where will the “make-up” payment come from? If you are not already in the “Robbing Peter to Pay Paul” cycle, this could start it. Remember the old adage can I pay my Visa with my mastercard?
It is easy for me to sit back and suggest disappointing the kids during the holidays. They’re not my kids. My son would not understand, he's six though and is satisfied with jacks.
Perhaps keeping a roof over their heads is a worthy goal as well. Also teaching the lesson of taking care of “needs” before “wants” could be the best present you can give them this year.
If you do plan on filing bankruptcy in the new year wait three month from your last Holiday shopping and do not use those cards in the mean time.
It may be satisfying to pay several smaller bills first — feels like solving problems, right? — but if the biggest bill you didn’t pay was your mortgage then your problems are getting worse, not better.
It is easy to think “well, I’ll make this up next month, I don’t want to disappoint the kids.” The problem is that you won’t be making more money next month . Your expenses will be the same or maybe higher, given the prices of food, gas and electricity. So where will the “make-up” payment come from? If you are not already in the “Robbing Peter to Pay Paul” cycle, this could start it. Remember the old adage can I pay my Visa with my mastercard?
It is easy for me to sit back and suggest disappointing the kids during the holidays. They’re not my kids. My son would not understand, he's six though and is satisfied with jacks.
Perhaps keeping a roof over their heads is a worthy goal as well. Also teaching the lesson of taking care of “needs” before “wants” could be the best present you can give them this year.
If you do plan on filing bankruptcy in the new year wait three month from your last Holiday shopping and do not use those cards in the mean time.
Do you owe what I owe?
I found this on the web:
St. Louis bankruptcy attorney Wendell Sherk published his riff on a popular Christmas song – Do You Owe What I Owe?
(To the tune of “Do You Hear What I Hear?”)
Said the neighbor to the young man,
“Do you owe what I owe?
Bills up to the sky, young man,
Do you see what I see?
A choice, a choice, waiting in the night
A new start to end the year alright,
A fresh start for a New Year’s Night.”
Said the collector to the young man,
“I know what you owe,
Bills up to the sky, little debtor man,
Do you hear what I say?
Pay what you can’t pay, little debtor man!
With a voice as big as the sea,
With a voice as big as the sea.
Said the young man to the lawyer kind,
“Do you know what I owe?
In your palace warm, lawyer man,
Do you know what I owe?
An arm, a leg, I’ll be out in the cold–
Help me save a little silver, or gold,
Help me save a little silver, or gold.”
Said the judge to the people everywhere,
“Listen to what I say!
Be at peace, people, everywhere,
Listen to what I say!
A fresh start, a new start, waiting in the night
To bring you peace and goodness,
To bring you quiet in the night.”
With apologies to Noel Regney & Gloria Shayne Baker
http://www.bankruptcylawnetwork.com/a-bankruptcy-riff-on-christmas-songs/
St. Louis bankruptcy attorney Wendell Sherk published his riff on a popular Christmas song – Do You Owe What I Owe?
(To the tune of “Do You Hear What I Hear?”)
Said the neighbor to the young man,
“Do you owe what I owe?
Bills up to the sky, young man,
Do you see what I see?
A choice, a choice, waiting in the night
A new start to end the year alright,
A fresh start for a New Year’s Night.”
Said the collector to the young man,
“I know what you owe,
Bills up to the sky, little debtor man,
Do you hear what I say?
Pay what you can’t pay, little debtor man!
With a voice as big as the sea,
With a voice as big as the sea.
Said the young man to the lawyer kind,
“Do you know what I owe?
In your palace warm, lawyer man,
Do you know what I owe?
An arm, a leg, I’ll be out in the cold–
Help me save a little silver, or gold,
Help me save a little silver, or gold.”
Said the judge to the people everywhere,
“Listen to what I say!
Be at peace, people, everywhere,
Listen to what I say!
A fresh start, a new start, waiting in the night
To bring you peace and goodness,
To bring you quiet in the night.”
With apologies to Noel Regney & Gloria Shayne Baker
http://www.bankruptcylawnetwork.com/a-bankruptcy-riff-on-christmas-songs/
Tuesday, December 20, 2011
Termination of the state-wide Residential Mortgage Foreclosure Mediation (RMFM) Program as of 12/20/11
Per the Supereme Court AOSC11-44 signed 12/19/11 the statewide mediation program is cancelled effective today.
Wednesday, December 7, 2011
End of Year Special! - Chapter 7 for $750 plus filing fee
End of Year Special! - Chapter 7 for $750 plus costs!!
Call 727/410-2705 to schedule your free consultation today!!
Must pay in full by 12/31/11.
Must mention this blog, Merchant Association Ad or Google Ad at consultation.
*** No Motions or mediation included***
Call 727/410-2705 to schedule your free consultation today!!
Must pay in full by 12/31/11.
Must mention this blog, Merchant Association Ad or Google Ad at consultation.
*** No Motions or mediation included***
Tuesday, December 6, 2011
Bankruptcy is Not a Dirty Word
While bankruptcy has become business as usual for businesses personal bankruptcies are still highly stigmatized.
I don’t think I’ve met more than a hand-full of people who aren’t troubled, or even traumatized, by the prospect of facing bankruptcy, even if their bankruptcies are the result, of the actions of employers, or health care providers.
Individual debtors facing bankruptcy often feel further traumatized by a system which treats them as inept at best, or criminal at worst. Having learned something from the debtors’ prisons of Europe, as well as the “broken bench” of the guild system, both of which left a debtor’s family dependent on the alms of the church or wards of the state, our founders realized that aallowing a debtor to periodically discharge overwhelming debt, and retain the tools to support his family and rebuild his financial future is a better outcome for us all.
I don’t think I’ve met more than a hand-full of people who aren’t troubled, or even traumatized, by the prospect of facing bankruptcy, even if their bankruptcies are the result, of the actions of employers, or health care providers.
Individual debtors facing bankruptcy often feel further traumatized by a system which treats them as inept at best, or criminal at worst. Having learned something from the debtors’ prisons of Europe, as well as the “broken bench” of the guild system, both of which left a debtor’s family dependent on the alms of the church or wards of the state, our founders realized that aallowing a debtor to periodically discharge overwhelming debt, and retain the tools to support his family and rebuild his financial future is a better outcome for us all.
Of Interest 2
. The organization's analysis of 27 million mortgage loans originated over a five-year period found that 6.4 percent of mortgages made between 2004 and 2008 have ended in foreclosure, and an additional 8.3 percent are at immediate, serious risk. http://www.dsnews.com/articles/foreclosure-crisis-is-only-halfway-over-study-2011-12-05
http://www.mondaq.com/unitedstates/x/155570/Disclosure+Electronic+Discovery/Be+Careful+What+You+Ask+for+Loser+Pays+Prevailing+Party+Electronic+Discovery+Costs+Again&email_access=on
http://www.abajournal.com/blawg100
http://www.mondaq.com/unitedstates/x/155570/Disclosure+Electronic+Discovery/Be+Careful+What+You+Ask+for+Loser+Pays+Prevailing+Party+Electronic+Discovery+Costs+Again&email_access=on
http://www.abajournal.com/blawg100
Law Loans
In 2010, 44,245 ABA
Of Interest
http://tampabankruptcylawyer.info/?gclid=CNXxxtyZ66wCFQKMtgod4xd0XA
http://www.businessweek.com/magazine/county-recorders-vs-the-mers-machine-11032011.html
http://www.nytimes.com/2011/12/02/business/major-banks-face-new-foreclosure-suit.html?_r=1&adxnnl=1&adxnnlx=1323098117-sSAkRrcl/0CtvvlRC3LPGw
http://www.loansafe.org/congresswoman-waters-renews-her-call-for-mortgage-servicer-accountability
http://www.law.com/jsp/law/sign_me_in.jsp?article=http%3A%2F%2Fwww.law.com%2Fjsp%2Fnlj%2FPubArticleNLJ.jsp%3Fid%3D1202534258263&et=editorial&bu=Law.com&cn=Law.com%20newswire%20-%20Dec.%205%2C%202011&src=EMC-Email&pt=LAWCOM%20Newswire&kw=Another%20Attorney%20General%20Takes%20Aim%20at%20Banks%20Over%20Foreclosure%2C%20Mortgage%20Practices&slreturn=1
http://www.law.com/jsp/lawtechnologynews/PubArticleLTN.jsp?id=1202534260112
http://articles.mercola.com/sites/articles/archive/2011/12/04/lobbyists-stealing-government.aspx?e_cid=20111204_SNL_Art_1
http://www.businessweek.com/magazine/county-recorders-vs-the-mers-machine-11032011.html
http://www.nytimes.com/2011/12/02/business/major-banks-face-new-foreclosure-suit.html?_r=1&adxnnl=1&adxnnlx=1323098117-sSAkRrcl/0CtvvlRC3LPGw
http://www.loansafe.org/congresswoman-waters-renews-her-call-for-mortgage-servicer-accountability
http://www.law.com/jsp/law/sign_me_in.jsp?article=http%3A%2F%2Fwww.law.com%2Fjsp%2Fnlj%2FPubArticleNLJ.jsp%3Fid%3D1202534258263&et=editorial&bu=Law.com&cn=Law.com%20newswire%20-%20Dec.%205%2C%202011&src=EMC-Email&pt=LAWCOM%20Newswire&kw=Another%20Attorney%20General%20Takes%20Aim%20at%20Banks%20Over%20Foreclosure%2C%20Mortgage%20Practices&slreturn=1
http://www.law.com/jsp/lawtechnologynews/PubArticleLTN.jsp?id=1202534260112
http://articles.mercola.com/sites/articles/archive/2011/12/04/lobbyists-stealing-government.aspx?e_cid=20111204_SNL_Art_1
Fannie Mae, banks halt foreclosures for the holiday
shttp://money.cnn.com/2011/12/01/real_estate/fannie_mae_foreclosure/
Moratorium will run from Dec. 19 to Jan. 2.
Moratorium will run from Dec. 19 to Jan. 2.
The average loan in foreclosure has been delinquent for 631 days. That’s nearly 21 months
http://moneyland.time.com/2011/12/02/foreclosure-timeline-lengthens-to-record-21-months/
Florida, for example, has gotten slammed in the foreclosure crisis. LPS shows that a whopping 22.8% of loans there — nearly one out of four — are not being kept current. Of those, 8.4% are delinquent and 14.4% are actually in foreclosure.
REO prices for the big Florida metro areas reflect the problem: In Tampa, for instance, prices were down in October by 6.7% from the year before, while in Miami, they were down 4.0% from the previous year. http://www.housingwire.com/2011/12/01/average-time-to-foreclose-sets-new-record-of-631-days
FHA has 7.3 million loans outstanding, a delinquency rate of 17 percent means over 1.2 million loans are delinquent. What's worse is FHA insures 100 percent of the losses on loans it insures, and as a result its loss severities are extremely high. http://www.cbsnews.com/8301-505123_162-57335131/fhas-financial-condition-worsened-in-october/
The national median average price has dropped less but still substantially, from $248,000 in 2006 to $176,000 in this year’s third quarter. Another factor is continued low interest rates. Rates for a 30-year conforming loan (that is, a loan with a balance of $417,500 or less) were 4.23% last week, according to data released today by the Mortgage Bankers Association. http://moneyland.time.com/2011/11/28/home-affordability-near-highest-level-in-20-years/?iid=pf-article-editpicks
Florida, for example, has gotten slammed in the foreclosure crisis. LPS shows that a whopping 22.8% of loans there — nearly one out of four — are not being kept current. Of those, 8.4% are delinquent and 14.4% are actually in foreclosure.
REO prices for the big Florida metro areas reflect the problem: In Tampa, for instance, prices were down in October by 6.7% from the year before, while in Miami, they were down 4.0% from the previous year. http://www.housingwire.com/2011/12/01/average-time-to-foreclose-sets-new-record-of-631-days
FHA has 7.3 million loans outstanding, a delinquency rate of 17 percent means over 1.2 million loans are delinquent. What's worse is FHA insures 100 percent of the losses on loans it insures, and as a result its loss severities are extremely high. http://www.cbsnews.com/8301-505123_162-57335131/fhas-financial-condition-worsened-in-october/
The national median average price has dropped less but still substantially, from $248,000 in 2006 to $176,000 in this year’s third quarter. Another factor is continued low interest rates. Rates for a 30-year conforming loan (that is, a loan with a balance of $417,500 or less) were 4.23% last week, according to data released today by the Mortgage Bankers Association. http://moneyland.time.com/2011/11/28/home-affordability-near-highest-level-in-20-years/?iid=pf-article-editpicks
Foreclosure Crisis Isn’t Even Halfway Over, Analysis Finds
http://bucks.blogs.nytimes.com/2011/11/30/foreclosure-crisis-isnt-even-halfway-over-analysis-finds/
While most of those who have lost their homes are white, the report found, African-American and Latino borrowers have been disproportionately affected. Roughly a fourth of all those borrowers have lost their home to foreclosure or are seriously delinquent, compared with just under 12 percent for white borrowers. Certain types of loans have much higher rates of completed foreclosures and serious delinquencies. They include loans originated by brokers; hybrid adjustable-rate mortgages, option ARMs, loans with prepayment penalties and loans with high interest rates (subprime).
While most of those who have lost their homes are white, the report found, African-American and Latino borrowers have been disproportionately affected. Roughly a fourth of all those borrowers have lost their home to foreclosure or are seriously delinquent, compared with just under 12 percent for white borrowers. Certain types of loans have much higher rates of completed foreclosures and serious delinquencies. They include loans originated by brokers; hybrid adjustable-rate mortgages, option ARMs, loans with prepayment penalties and loans with high interest rates (subprime).
Number of US households rated 'economically insecure' hits record high
A record 1 in 5 U.S. households saw their available household income decline by 25 percent or more from one year to the next from 2008 through 2010.
Read more: http://www.mcclatchydc.com/2011/12/01/131863/number-of-us-households-rated.html#ixzz1ffjhu400
Read more: http://www.mcclatchydc.com/2011/12/01/131863/number-of-us-households-rated.html#ixzz1ffjhu400
Case Update
Sikes v. Crager,
2011 WL 4591889 (W. D. La, Sept. 30, 2011) (Hicks)
A Chapter 13 plan proposing to pay only attorney’s fees and with little or no meaningful distribution to creditors is a plan not proposed in good faith.
2011 WL 4591889 (W. D. La, Sept. 30, 2011) (Hicks)
A Chapter 13 plan proposing to pay only attorney’s fees and with little or no meaningful distribution to creditors is a plan not proposed in good faith.
Kindle and ePub Versions of Bankruptcy Code
http://www.creditslips.org/creditslips/2011/11/kindle-and-epub-versions-of-bankruptcy-code.html
University of Illinois College of Law bankruptcy professor Robert Lawless and his research assistant, Scott Cromar, have created electronic versions of the Bankruptcy Code and Federal Rules of Bankruptcy Procedure.
University of Illinois College of Law bankruptcy professor Robert Lawless and his research assistant, Scott Cromar, have created electronic versions of the Bankruptcy Code and Federal Rules of Bankruptcy Procedure.
HOPE Hotline
Applying for a modification through HAMP is free, and homeowners interested in pursuing a modification can call the Homeowner’s HOPE Hotline at 1.888.995.HOPE for more information and to make sure they receive help from a legitimate source.
GMAC stops buuying homes in MASS
Ally Financial Inc.'s GMAC Mortgage unit stopped buying home loans in Massachusetts after the state accused the five biggest mortgage lenders of conducting illegal foreclosures, Bloomberg News reported. http://www.bloomberg.com/news/print/2011-12-02/ally-financial-will-halt-mortgage-purchases-in-massachusetts-after-lawsuit.html http://www.dsnews.com/articles/gmac-counters-lawsuit-with-decision-to-pull-lending-in-massachusetts-2011-12-02
Bankruptcy Filings Down
Saturday, December 3, 2011
Changes to Federal Court Rules Take Effect
Amendments to the Federal Rules of Appellate, Bankruptcy, Criminal Procedure, and Evidence took effect December 1, 2011.
Congress took no action after the changes were approved by Supreme Court more than seven months earlier. That means new amendments to these rules are now in effect:
• Appellate Rules 4 and 40
• Bankruptcy Rules 2003, 2019, 3001, 4004, and 6003.
• Criminal Rules 1, 3, 4, 6, 9, 32, 40, 41, 43, and 49.
• Evidence Rules 101-1103.
In addition, new Bankruptcy Rules 1004.2 and 3002.1 are in effect, as well as new Criminal Rule 4.1.
The text of the amended rules and extensive supporting documents is available.
Congress took no action after the changes were approved by Supreme Court more than seven months earlier. That means new amendments to these rules are now in effect:
• Appellate Rules 4 and 40
• Bankruptcy Rules 2003, 2019, 3001, 4004, and 6003.
• Criminal Rules 1, 3, 4, 6, 9, 32, 40, 41, 43, and 49.
• Evidence Rules 101-1103.
In addition, new Bankruptcy Rules 1004.2 and 3002.1 are in effect, as well as new Criminal Rule 4.1.
The text of the amended rules and extensive supporting documents is available.
of interst
http://www.lawjobs.com/newsandviews/LawArticle.jsp?hubtype=Tips&id=1202534160808&et=editorial&bu=Law.com&cn=Law.com%20Newswire%20-%20Dec.%202%2C%202011&src=EMC-Email&pt=LAWCOM%20Newswire&kw=Tread%20Lightly%20With%20Footnotes&slreturn=1
First United Security Bank v Garner (11th Circuit 2011)
The Eleventh Circuit Court of Appeals affirmed the District Court and Bankruptcy Court's holding that "an over secured creditor is only entitled to the contract rate of interest [on its allowed secured claim], pursuant to 11 U.S.C. §506(b), from the date of the filing until confirmation of the bankruptcy plan" in a chapter 13 case, where the debtor invokes the cram down provision of 11 U.S.C. §1325(a)(5)(B).
http://volo.abi.org/first-united-security-bank-v-garner-in-re-garner?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+volo%2Frss+%28ABI+Volo+Project%3A+RSS+Feed%29
First United Security Bank v Garner (11th Circuit 2011)
The Eleventh Circuit Court of Appeals affirmed the District Court and Bankruptcy Court's holding that "an over secured creditor is only entitled to the contract rate of interest [on its allowed secured claim], pursuant to 11 U.S.C. §506(b), from the date of the filing until confirmation of the bankruptcy plan" in a chapter 13 case, where the debtor invokes the cram down provision of 11 U.S.C. §1325(a)(5)(B).
http://volo.abi.org/first-united-security-bank-v-garner-in-re-garner?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+volo%2Frss+%28ABI+Volo+Project%3A+RSS+Feed%29
State Court Budget Shortfalls
Results of the survey, issued by the National Center for State Courts and released on Nov. 29, indicate widespread recent budget cuts — and the public at large is going to feel the impact. A survey issued by the National Center for State Courts warns of the public impact of recent cuts, including 42 states with substantial court budget decreases; 39 states where clerk vacancies were not filled; 34 states where court staff were laid off; and 23 states with reduced court operating hours. Said one analyst: "It can't get a whole lot worse."
http://www.ncsc.org/Information-and-Resources/Budget-Resource-Center/States-activities-map/.aspx
http://www.ncsc.org/Information-and-Resources/Budget-Resource-Center/States-activities-map/Florida.aspx
http://www.ncsc.org/Information-and-Resources/Budget-Resource-Center/States-activities-map/.aspx
http://www.ncsc.org/Information-and-Resources/Budget-Resource-Center/States-activities-map/Florida.aspx
SIGTARP
The Office of the Special Inspector General for the Troubled Asset Relief Program announced the arrests of three top officers of a California real estate company who took thousands of dollars in up-front loan modification fees and made false promises to lower the mortgage payments of struggling homeowners.
NEWS RELEASE:
http://www.sigtarp.gov/press/2011/Legacy_Home_Loans_Arrests_Press_Release.pdf
SIGTARP HOTLINE:
To report allegations of fraud, waste, abuse, mismanagement, or misrepresentations involving the taxpayer-funded Troubled Asset Relief Program, call (877) SIG-2009 or send confidential information to SIGTARP via an online Hotline form.
GENERAL COMMENTS:
To offer comments or suggestions to SIGTARP, please use one of the following methods:
Phone: (202) 622-1419
Fax: (202) 622-4559
Mail: Office of the Special Inspector General for the Troubled Asset Relief Program
1801 L Street NW
Washington, D.C. 20020
NEWS RELEASE:
http://www.sigtarp.gov/press/2011/Legacy_Home_Loans_Arrests_Press_Release.pdf
SIGTARP HOTLINE:
To report allegations of fraud, waste, abuse, mismanagement, or misrepresentations involving the taxpayer-funded Troubled Asset Relief Program, call (877) SIG-2009 or send confidential information to SIGTARP via an online Hotline form.
GENERAL COMMENTS:
To offer comments or suggestions to SIGTARP, please use one of the following methods:
Phone: (202) 622-1419
Fax: (202) 622-4559
Mail: Office of the Special Inspector General for the Troubled Asset Relief Program
1801 L Street NW
Washington, D.C. 20020
NEW Bankruptcy Forms Effective 12/1/11
For your convenience, below are links that provide information concerning these changes. A brief summary of the amendments to the Bankruptcy Rules and forms may be found at the Court's website at:
http://www.flmb.uscourts.gov/announcements/
Other Links:
Link to Amendments to Federal Rules of Bankruptcy Procedure:
http://www.flmb.uscourts.gov/announcements/documents/amendments_2011.pdf
Link to Information Regarding Supreme Court Approved Rule Amendments (April 26, 2011):
http://www.uscourts.gov/RulesAndPolicies/FederalRulemaking/PendingRules/SupremeCourt042611.aspx
Link to Pending Changes in the Bankruptcy Forms:
http://www.uscourts.gov/FormsAndFees/Forms/BankruptcyForms/BankruptcyFormsPendingChanges.aspx
http://www.flmb.uscourts.gov/announcements/
Other Links:
Link to Amendments to Federal Rules of Bankruptcy Procedure:
http://www.flmb.uscourts.gov/announcements/documents/amendments_2011.pdf
Link to Information Regarding Supreme Court Approved Rule Amendments (April 26, 2011):
http://www.uscourts.gov/RulesAndPolicies/FederalRulemaking/PendingRules/SupremeCourt042611.aspx
Link to Pending Changes in the Bankruptcy Forms:
http://www.uscourts.gov/FormsAndFees/Forms/BankruptcyForms/BankruptcyFormsPendingChanges.aspx
Massachusetts Sues Wells & MERS
JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. were among five banks sued by Massachusetts for allegedly conducting unlawful foreclosures and deceiving homeowners, Bloomberg News reported yesterday. Massachusetts Attorney General Martha Coakley filed the lawsuit yesterday against the three banks, as well as Wells Fargo & Co. (WFC) and Ally Financial Inc., accusing the banks of engaging in unfair and deceptive trade practices in violation of state law. http://www.bloomberg.com/news/print/2011-12-01/ma-sues-bofa-citi-jpmorgan-ally-wells-fargo.html and MERS
http://www.dsnews.com/articles/massachusetts-sues-five-largest-servicers-and-mers-2011-12-01
MASS Complaint
http://www.mass.gov/ago/docs/press/ag-complaint-national-banks.pdf
http://www.dsnews.com/articles/massachusetts-sues-five-largest-servicers-and-mers-2011-12-01
MASS Complaint
http://www.mass.gov/ago/docs/press/ag-complaint-national-banks.pdf
Unemployment Rate Drops to 8.6%
The nation’s unemployment rate fell to 8.6 percent during the month of November, as employers added 120,000 new jobs to their payrolls, the U.S. Department of Labor said Friday morning. By the government’s calculations, the unemployment rate declined by 0.4 percentage point from 9.0 percent reported in October to hit its lowest level since March of 2009. Employment assessments for both October and September were revised upward.
Friday, November 25, 2011
Refinance Program for Underwater Borrowers
http://www.dsnews.com/articles/administration-announces-refinance-program-for-underwater-borrowers-2011-10-24
Under the revised HARP guidelines, the 125 percent loan-to-value (LTV) ceiling has been eliminated. Previously, only borrowers who owed up to 25 percent more than their home was worth could participate in HARP. That limitation has now been removed. The program will continue to be available to borrowers with LTV ratios above 80 percent.
Refinance applications and appraisal complications are holding up home sale closings, according to a HousingPulse survey released Monday. The report states that the normal timeline for a closing is about 30 days. That timeline has been extended to between 45 and 60 days. However, the delay is even more exacerbated among short sales and sales of foreclosed homes - which according to the survey made up 44.4 percent of the market in September. http://www.dsnews.com/articles/home-closing-timelines-increase-especially-in-distressed-market-2011-10-24
http://www.bankruptcylawnetwork.com/what-do-credit-card-companies-demand-for-non-bankruptcy-settlements/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+BankruptcyLawNetwork+%28Bankruptcy+Law+Network%29
Under the revised HARP guidelines, the 125 percent loan-to-value (LTV) ceiling has been eliminated. Previously, only borrowers who owed up to 25 percent more than their home was worth could participate in HARP. That limitation has now been removed. The program will continue to be available to borrowers with LTV ratios above 80 percent.
Refinance applications and appraisal complications are holding up home sale closings, according to a HousingPulse survey released Monday. The report states that the normal timeline for a closing is about 30 days. That timeline has been extended to between 45 and 60 days. However, the delay is even more exacerbated among short sales and sales of foreclosed homes - which according to the survey made up 44.4 percent of the market in September. http://www.dsnews.com/articles/home-closing-timelines-increase-especially-in-distressed-market-2011-10-24
http://www.bankruptcylawnetwork.com/what-do-credit-card-companies-demand-for-non-bankruptcy-settlements/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+BankruptcyLawNetwork+%28Bankruptcy+Law+Network%29
Share Enjoy
http://articles.orlandosentinel.com/2011-10-10/business/os-foreclosure-squatting-20111010_1_florida-foreclosures-realtytrac-foreclosure-process
http://mattweidnerlaw.com/blog/wp-content/uploads/2011/10/HB145-Residential-Foreclosure-Proceedings-22.pdf
http://mattweidnerlaw.com/blog/wp-content/uploads/2011/10/HB-65-Foreclosure-Debt-Relief-2.pdf
http://mattweidnerlaw.com/blog/wp-content/uploads/2011/10/unfairforeclosure.pdf
http://www.scribd.com/doc/38928155/Wells-Fargo-s-Elusive-Robo-Signer-Full-Deposition-of-Superstar-John-Herman-Kennerty
http://www.iiamtrilogy.com/bhcontest/ ends 11/30
http://www.mondaq.com/unitedstates/x/149926/Florida+Appellate+Court+Restricts+Foreclosure+Summary+Judgment+Affidavit+From+Bank+That+Relies+On+Data+From+A+Computer+System+As+Inadmissible+Hearsay&email_access=on
California Restricts Use Of Consumer Credit Reports For Employment Purposes
http://www.totalbankruptcy.com/bankruptcy-news/bankruptcy-laws/new-law-delaware-bankruptcy-popularity-800128475.aspx
http://www.lawjobs.com/newsandviews/LawArticle.jsp?hubtype=Tips&id=1202519920383&et=editorial&bu=Law.com&cn=nw20111025&src=EMC-Email&pt=LAWCOM%20Newswire&kw=Anatomy%20of%20a%20Lateral%20Move&slreturn=1
http://www.law.com/jsp/law/international/LawArticleIntl.jsp?id=1202520057531&et=editorial&bu=Law.com&cn=nw20111025&src=EMC-Email&pt=LAWCOM%20Newswire&kw=Daisy%20Wong%2C%20Would-Be%20Bridget%20Jones%20of%20the%20Hong%20Kong%20Legal%20Scene
http://mattweidnerlaw.com/blog/wp-content/uploads/2011/10/HB145-Residential-Foreclosure-Proceedings-22.pdf
http://mattweidnerlaw.com/blog/wp-content/uploads/2011/10/HB-65-Foreclosure-Debt-Relief-2.pdf
http://mattweidnerlaw.com/blog/wp-content/uploads/2011/10/unfairforeclosure.pdf
http://www.scribd.com/doc/38928155/Wells-Fargo-s-Elusive-Robo-Signer-Full-Deposition-of-Superstar-John-Herman-Kennerty
http://www.iiamtrilogy.com/bhcontest/ ends 11/30
http://www.mondaq.com/unitedstates/x/149926/Florida+Appellate+Court+Restricts+Foreclosure+Summary+Judgment+Affidavit+From+Bank+That+Relies+On+Data+From+A+Computer+System+As+Inadmissible+Hearsay&email_access=on
California Restricts Use Of Consumer Credit Reports For Employment Purposes
http://www.totalbankruptcy.com/bankruptcy-news/bankruptcy-laws/new-law-delaware-bankruptcy-popularity-800128475.aspx
http://www.lawjobs.com/newsandviews/LawArticle.jsp?hubtype=Tips&id=1202519920383&et=editorial&bu=Law.com&cn=nw20111025&src=EMC-Email&pt=LAWCOM%20Newswire&kw=Anatomy%20of%20a%20Lateral%20Move&slreturn=1
http://www.law.com/jsp/law/international/LawArticleIntl.jsp?id=1202520057531&et=editorial&bu=Law.com&cn=nw20111025&src=EMC-Email&pt=LAWCOM%20Newswire&kw=Daisy%20Wong%2C%20Would-Be%20Bridget%20Jones%20of%20the%20Hong%20Kong%20Legal%20Scene
MAGNER V. GALLAGHER- Fair Housing
http://www.supremecourt.gov/Search.aspx?FileName=/docketfiles/10-1032.htm
10-1032 MAGNER V. GALLAGHER
DECISION BELOW: 619 F.3d 823
LOWER COURT CASE NUMBER: 09-1209
QUESTION PRESENTED:
The Fair Housing Act makes it unlawful "[t]o refuse to sell or rent after the making of a bona fide offer ... or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status, or national origin." 42 U.S.C. § 3604(a). Respondents are owners of rental properties who argue that Petitioners violated the Fair Housing Act by "aggressively" enforcing the City of Saint Paul's housing code. According to Respondents, because a disproportionate number of renters are African--American, and Respondents rent to many African--Americans, requiring them to meet the housing code will increase their costs and decrease the number of units they make available to rent to African-American tenants. Reversing the district court's grant of summary judgment for Petitioners, the Eighth Circuit held that Respondents should be allowed to proceed to trial because they presented sufficient evidence of a "disparate impact" on African-Americans.
The following are the questions presented:
1. Are disparate impact claims cognizable under the Fair Housing Act?
2. If such claims are cognizable, should they be analyzed under the burden shifting approach used by three circuits, under the balancing test used by four circuits, under a hybrid approach used by two circuits, or by some other test?
CERT. GRANTED 11/7/2011
From Forbes:
The U.S. Supreme Court has agreed to decide whether aggressive housing-code enforcement in the City of Saint Paul amounts to racial discrimination.
http://onforb.es/rAaRS9
A couple of articles on HUD's view:
http://www.pointoflaw.com/archives/2011/11/proposed-hud-re.php
http://lenderscompliance.blogspot.com/2011/11/empire-strikes-back-hud-fair-lending.html
In a victory for creditor rights, the Michigan Supreme Court overturned a Court of Appeals decision which had previously held that MERS had no statutory authority to foreclose a mortgage by advertisement. In reversing the court of appeals, the justices held that the lower court ruling was inconsistent with well established legal principals and case law in Michigan. Specifically, the Court stated that, although MERS did not own an interest in the underlying Note, "MERS' contractual obligations as a mortgagee were dependent upon whether the mortgagor met the obligation to pay the indebtedness which the mortgage secured." Furthermore, the Court held that the Legislature's use of the phrase "interest in the indebtedness" to denote a category of parties entitled to foreclose indicated the intent to include mortgagees of record.
10-1032 MAGNER V. GALLAGHER
DECISION BELOW: 619 F.3d 823
LOWER COURT CASE NUMBER: 09-1209
QUESTION PRESENTED:
The Fair Housing Act makes it unlawful "[t]o refuse to sell or rent after the making of a bona fide offer ... or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status, or national origin." 42 U.S.C. § 3604(a). Respondents are owners of rental properties who argue that Petitioners violated the Fair Housing Act by "aggressively" enforcing the City of Saint Paul's housing code. According to Respondents, because a disproportionate number of renters are African--American, and Respondents rent to many African--Americans, requiring them to meet the housing code will increase their costs and decrease the number of units they make available to rent to African-American tenants. Reversing the district court's grant of summary judgment for Petitioners, the Eighth Circuit held that Respondents should be allowed to proceed to trial because they presented sufficient evidence of a "disparate impact" on African-Americans.
The following are the questions presented:
1. Are disparate impact claims cognizable under the Fair Housing Act?
2. If such claims are cognizable, should they be analyzed under the burden shifting approach used by three circuits, under the balancing test used by four circuits, under a hybrid approach used by two circuits, or by some other test?
CERT. GRANTED 11/7/2011
From Forbes:
The U.S. Supreme Court has agreed to decide whether aggressive housing-code enforcement in the City of Saint Paul amounts to racial discrimination.
http://onforb.es/rAaRS9
A couple of articles on HUD's view:
http://www.pointoflaw.com/archives/2011/11/proposed-hud-re.php
http://lenderscompliance.blogspot.com/2011/11/empire-strikes-back-hud-fair-lending.html
In a victory for creditor rights, the Michigan Supreme Court overturned a Court of Appeals decision which had previously held that MERS had no statutory authority to foreclose a mortgage by advertisement. In reversing the court of appeals, the justices held that the lower court ruling was inconsistent with well established legal principals and case law in Michigan. Specifically, the Court stated that, although MERS did not own an interest in the underlying Note, "MERS' contractual obligations as a mortgagee were dependent upon whether the mortgagor met the obligation to pay the indebtedness which the mortgage secured." Furthermore, the Court held that the Legislature's use of the phrase "interest in the indebtedness" to denote a category of parties entitled to foreclose indicated the intent to include mortgagees of record.
Articles of Interest
http://www.housingwire.com/2011/10/21/potential-felony-charges-make-servicers-pause-nevada-foreclosures
http://www.tampabay.com/news/business/realestate/floridas-foreclosure-mediation-could-end/1198314
http://www.housingwire.com/2011/10/21/potential-felony-charges-make-servicers-pause-nevada-foreclosures
http://www.palmbeachpost.com/money/foreclosures/panel-kill-foreclosure-mediation-1927455.html
http://www.youtube.com/watch?v=3de8uInH-W0
occupy foreclosures--I donot support this!!!
http://mattweidnerlaw.com/blog/2011/10/wanna-make-the-banks-pay-1occupy-the-ballot-2-occupy-foreclosures/
Atty Gen Foreclosure gate
http://www.scribd.com/doc/69502710/M-Hamilton-to-LPS#source:facebook
http://www.scribd.com/doc/69496980/Butler-Records#source:facebook
http://mattweidnerlaw.com/blog/wp-content/uploads/2011/10/Julian.pdf
http://www.miamiherald.com/2011/10/16/v-fullstory/2458515/crackdown-on-florida-timeshare.html#ixzz1bFwLkZCH
http://sblog.s3.amazonaws.com/wp-content/uploads/2011/11/CA-SCt-ruling-on-Prop.-8-11-17-112.pdf
http://www.tampabay.com/news/business/realestate/floridas-foreclosure-mediation-could-end/1198314
http://www.housingwire.com/2011/10/21/potential-felony-charges-make-servicers-pause-nevada-foreclosures
http://www.palmbeachpost.com/money/foreclosures/panel-kill-foreclosure-mediation-1927455.html
http://www.youtube.com/watch?v=3de8uInH-W0
occupy foreclosures--I donot support this!!!
http://mattweidnerlaw.com/blog/2011/10/wanna-make-the-banks-pay-1occupy-the-ballot-2-occupy-foreclosures/
Atty Gen Foreclosure gate
http://www.scribd.com/doc/69502710/M-Hamilton-to-LPS#source:facebook
http://www.scribd.com/doc/69496980/Butler-Records#source:facebook
http://mattweidnerlaw.com/blog/wp-content/uploads/2011/10/Julian.pdf
http://www.miamiherald.com/2011/10/16/v-fullstory/2458515/crackdown-on-florida-timeshare.html#ixzz1bFwLkZCH
CA Prop 8 Sup Ct Decision
http://sblog.s3.amazonaws.com/wp-content/uploads/2011/11/CA-SCt-ruling-on-Prop.-8-11-17-112.pdf
What’s Involved in Filing for Bankruptcy?
If you owe more money today than, you did yesterday and you cannot pay your bills on time, you need to realize you are going in the wrong direction with your finances.
If you do not have enough money to pay that debt you have to find another way to deal with it.
If your income is insufficient to cover your debts you either need more income or less debt, or both. Bankruptcy won’t help you make more money but it can discharge some types of debt.
You should make a list of the items you can live without, and remove them from your budget. Take a hard look at your expenses -determine where your money goes and you can eliminate money that you spend on impulse or frivolous items.
Life without debt is a goal you can achieve through Chapter 7 bankruptcy.
Come see me today for a free consultation! Weekend and Evening Appointments no need to miss work!
Call 727-410-2705 now.
If you do not have enough money to pay that debt you have to find another way to deal with it.
If your income is insufficient to cover your debts you either need more income or less debt, or both. Bankruptcy won’t help you make more money but it can discharge some types of debt.
You should make a list of the items you can live without, and remove them from your budget. Take a hard look at your expenses -determine where your money goes and you can eliminate money that you spend on impulse or frivolous items.
Life without debt is a goal you can achieve through Chapter 7 bankruptcy.
Come see me today for a free consultation! Weekend and Evening Appointments no need to miss work!
Call 727-410-2705 now.
Past Due Mortgages = 6,298,000
There were 6,298,000 mortgages going unpaid in the United States U.S.
Distressed Homeowner Program Mainly Benefited Three States
Almost half the homeowners aided by the Emergency Homeowners' Loan Program are in Pennsylvania, Maryland and Connecticut, based on preliminary figures from the Department of Housing and Urban Development. http://www.usatoday.com/money/economy/housing/story/2011-11-20/homeowner-aid-program/51323662/1
Fewer than 12,000 applicants were approved before the program expired, short of the 30,000 target.
Funds were allotted for 32 states and Puerto Rico based on population and unemployment
Fewer than 12,000 applicants were approved before the program expired, short of the 30,000 target.
Funds were allotted for 32 states and Puerto Rico based on population and unemployment
HUD new rule
The U.S. Department of Housing and Urban Development recently issued aproposed rule to establish a uniform standard of liability for facially neutral housing practices that have a discriminatory effect in supposed violation of the Fair Housing Act.
Under the proposed rule, liability for "discriminatory effects" or "disparate impact discrimination" under the FHA would be determined by a burden-shifting approach. That is:
(1) the plaintiff or complainant first must bear the burden of proving its prima facie case of either disparate impact or perpetuation of segregation;
(2) the burden then shifts to the defendant or respondent to prove that the challenged practice or policy has a necessary and manifest relationship to one or more of the defendant's or respondent's legitimate, nondiscriminatory interests; and
(3) if the defendant or respondent satisfies its burden, the plaintiff or complainant may still establish liability by demonstrating that these legitimate nondiscriminatory interests could be served by a policy or decision that produces a less discriminatory effect.
According to HUD, neither HUD nor any federal court has ever determined that liability under the Fair Housing Act requires a finding of discriminatory intent, and "[i]t is thus well established that liability under the Fair Housing Act can arise where a housing practice is intentionally discriminatory or where it has a discriminatory effect."
However, there has been some variation in the application of the discriminatory effects standard. HUD uses the three-step burden-shifting approach described above, as do many federal courts of appeals. On the other hand, some courts apply a multi-factor balancing test, other courts apply a hybrid between the two, and one court applies a different test for public and private defendants. The proposed rule would standardize the three-step burden-shifting approach.
Another source of variation is in the application of the burden-shifting test. If the defendant or respondent satisfies its burden to justify its challenged practice as having a necessary and manifest relationship with a legitimate nondiscriminatory interest, courts and HUD administrative law judges have differed as to which party bears the burden of proving whether a less discriminatory alternative to the challenged practice exists.
The majority of federal courts of appeals that use a burden-shifting approach place this burden on the plaintiff, analogizing to Title VII's burden-shifting framework. However, other federal courts have kept the burden with the defendant. HUD has, at times, placed this burden of proving a less discriminatory alternative on the respondent and, at other times, on the complainant. The proposed rule would place the burden of rebuttal on the plaintiff or complainant.
The purpose of HUD's proposed rule is to establish uniform standards for determining when a housing practice with a discriminatory effect violates the Fair Housing Act.
Comments are due 60 days from the date of publication of the proposed rule in the Federal Register, which is expected shortly.
Under the proposed rule, liability for "discriminatory effects" or "disparate impact discrimination" under the FHA would be determined by a burden-shifting approach. That is:
(1) the plaintiff or complainant first must bear the burden of proving its prima facie case of either disparate impact or perpetuation of segregation;
(2) the burden then shifts to the defendant or respondent to prove that the challenged practice or policy has a necessary and manifest relationship to one or more of the defendant's or respondent's legitimate, nondiscriminatory interests; and
(3) if the defendant or respondent satisfies its burden, the plaintiff or complainant may still establish liability by demonstrating that these legitimate nondiscriminatory interests could be served by a policy or decision that produces a less discriminatory effect.
According to HUD, neither HUD nor any federal court has ever determined that liability under the Fair Housing Act requires a finding of discriminatory intent, and "[i]t is thus well established that liability under the Fair Housing Act can arise where a housing practice is intentionally discriminatory or where it has a discriminatory effect."
However, there has been some variation in the application of the discriminatory effects standard. HUD uses the three-step burden-shifting approach described above, as do many federal courts of appeals. On the other hand, some courts apply a multi-factor balancing test, other courts apply a hybrid between the two, and one court applies a different test for public and private defendants. The proposed rule would standardize the three-step burden-shifting approach.
Another source of variation is in the application of the burden-shifting test. If the defendant or respondent satisfies its burden to justify its challenged practice as having a necessary and manifest relationship with a legitimate nondiscriminatory interest, courts and HUD administrative law judges have differed as to which party bears the burden of proving whether a less discriminatory alternative to the challenged practice exists.
The majority of federal courts of appeals that use a burden-shifting approach place this burden on the plaintiff, analogizing to Title VII's burden-shifting framework. However, other federal courts have kept the burden with the defendant. HUD has, at times, placed this burden of proving a less discriminatory alternative on the respondent and, at other times, on the complainant. The proposed rule would place the burden of rebuttal on the plaintiff or complainant.
The purpose of HUD's proposed rule is to establish uniform standards for determining when a housing practice with a discriminatory effect violates the Fair Housing Act.
Comments are due 60 days from the date of publication of the proposed rule in the Federal Register, which is expected shortly.
Living Paycheck to Paycheck?
The problem is that when you are already living paycheck to paycheck, it’s difficult, if not impossible to find the extra income to pay the loan back, forcing you to re-borrow over and over again. Break the Cycle and come see me today for a free consultation.
Articles
Bk Court slows down Foreclosures
http://firstarkansasnews.net/2011/11/bankruptcy-court-ruling-slows-down-foreclosure-sales-in-state/
Appeals court decision allows stripping of second mortgages
http://www.twincities.com/ci_19329793
Foreclosed Houses =Pot Houses
http://www.latimes.com/news/nationworld/nation/la-na-pot-homes-20111113,0,574959.story
Banks Offer Payday style loans
http://www.daytondailynews.com/news/dayton-news/banks-offering-customers-loans-against-their-paychecks-1281077.html
http://firstarkansasnews.net/2011/11/bankruptcy-court-ruling-slows-down-foreclosure-sales-in-state/
Appeals court decision allows stripping of second mortgages
http://www.twincities.com/ci_19329793
Foreclosed Houses =Pot Houses
http://www.latimes.com/news/nationworld/nation/la-na-pot-homes-20111113,0,574959.story
Banks Offer Payday style loans
http://www.daytondailynews.com/news/dayton-news/banks-offering-customers-loans-against-their-paychecks-1281077.html
Bankruptcy Case Update
In re Reed, 2011 WL 3801859 (Bank. D.Or., Aug. 9, 2011) (Perris)
In the Ninth Circuit, when an above-median income Chapter 13 debtor has no (or negative) projected disposable income as calculated using the mechanical approach, there is no applicable commitment period for a debtor’s Chapter 13 plan, so the plan need not last five years.
In the Ninth Circuit, when an above-median income Chapter 13 debtor has no (or negative) projected disposable income as calculated using the mechanical approach, there is no applicable commitment period for a debtor’s Chapter 13 plan, so the plan need not last five years.
MERS- Michigan
The Michigan Supreme Court recently held that MERS, as an "undisputed record holder of a mortgage," has statutory authority to foreclose. (Our prior update regarding the appellate court's opinion in this matter, which the Michigan Supreme Court now reversed, is below.)
A borrower obtained a mortgage loan that provided for rights of foreclosure by the designated Mortgagee, MERS. MERS foreclosed on the property by advertisement, and quitclaimed it to successor lender ("Plaintiff"). The borrower challenged the foreclosure, on the grounds that MERS did not have statutory authority to foreclose under Michigan law.
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 lower court rejected the borrower's argument, and borrower appealed.
A Michigan Court of Appeals overruled the lower court's decision, holding that MERS "only held an interest in the property as security for the note, not an interest in the note itself." Accordingly, the Court of Appeals held that MERS did not have authority to foreclose.
The Michigan Supreme Court reversed the Court of Appeals, holding that MERS held an interest in the indebtedness, and therefore had the authority to foreclose.
In so doing, the Court noted that the interest in the indebtedness held by MERS "does not equate to an ownership in the interest in the Note."
Instead, the Court found that "MERS owned a security lien on the properties, the continued existence of which was contingent upon the satisfaction of the indebtedness." Because MERS had an interest in the indebtedness, the Court held that MERS was authorized to foreclose under Michigan law.
The Court further explained that it found no indication that the Michigan Legislature intended to "establish a new legal framework in which an undisputed record holder of a Mortgage, such as MERS, no longer possesses the statutory authority to foreclose." Instead, the Court held that the Legislature's use of the phrase "interest in the indebtedness" includes mortgagees of record, as well as owners and servicers of the debt.
A borrower obtained a mortgage loan that provided for rights of foreclosure by the designated Mortgagee, MERS. MERS foreclosed on the property by advertisement, and quitclaimed it to successor lender ("Plaintiff"). The borrower challenged the foreclosure, on the grounds that MERS did not have statutory authority to foreclose under Michigan law.
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 lower court rejected the borrower's argument, and borrower appealed.
A Michigan Court of Appeals overruled the lower court's decision, holding that MERS "only held an interest in the property as security for the note, not an interest in the note itself." Accordingly, the Court of Appeals held that MERS did not have authority to foreclose.
The Michigan Supreme Court reversed the Court of Appeals, holding that MERS held an interest in the indebtedness, and therefore had the authority to foreclose.
In so doing, the Court noted that the interest in the indebtedness held by MERS "does not equate to an ownership in the interest in the Note."
Instead, the Court found that "MERS owned a security lien on the properties, the continued existence of which was contingent upon the satisfaction of the indebtedness." Because MERS had an interest in the indebtedness, the Court held that MERS was authorized to foreclose under Michigan law.
The Court further explained that it found no indication that the Michigan Legislature intended to "establish a new legal framework in which an undisputed record holder of a Mortgage, such as MERS, no longer possesses the statutory authority to foreclose." Instead, the Court held that the Legislature's use of the phrase "interest in the indebtedness" includes mortgagees of record, as well as owners and servicers of the debt.
Glarum Revised Decision
The revised Glarum decision that addressed the issue of how an AOI can be authenticated and admitted into evidence when the AOI is based upon business records from a prior servicer. The original decision implied that the affiant must have personal knowledge of how the payment information is entered into the servicer’s system in order to execute the affidavit. This new decision was just release last week. Look specifically at the footnotes for clarification on the issue.
The Illinois Appellate Court for the First District recently confirmed that an attempt to rescind a mortgage loan made more than three years after the borrowers received the mortgage was untimely, and held that the borrower's earlier alleged attempt at rescission within the three-year period was inadequate, as it was not a written communication that clearly stated that the borrower was rescinding the loan.
A copy of the opinion is available at:
The borrowers defaulted on their mortgage loan, and the investor instituted a foreclosure action. In the course of settlement negotiations, the borrowers frequently alleged TILA violations, and threatened to rescind the subject Note and Mortgage. In one letter, the borrowers included an unfiled counterclaim, which stated that "[t]he borrowers, by the filing of this action, elect to rescind the subject transaction." The borrowers provided the investor's counsel with this unfiled counterclaim within three years of receiving their mortgage.
The borrowers filed their counterclaim "exactly three years and one day" after they entered into the loan agreement. In addition to attempting to rescind the loan, the borrowers' counterclaim sought damages under TILA.
The lower court dismissed the counterclaim on the basis that it was untimely.
The borrowers appealed, contending among other things that (1) that their election to rescind was timely; and (2) even if it was not, the election should survive under a "right of rescission in recoupment under state Law."
As you may recall, TILA provides that "[a]n obligor's right of rescission shall expire three years after the date of the consummation of the transaction." 15 U.S.C. Sec. 1635(f) (2006). TILA's implementing regulation provides that "[t]o exercise the right to rescind, the consumer shall notify the creditor of the rescission by mail, telegram, or other means of written communications." 12 C.F.R. Sec. 226.23(a)(2) (2006).
The Court began its analysis by noting that the Supreme Court held that TILA "completely extinguish[es] the right of rescission at the end of the three year period." Beach v. Ocwen Federal Bank, 523 U.S. 410, 412-14 (1998).
Finding that holding unambiguous, the Court turned its attention to the manner in which a borrower must provide notice to the creditor under TILA, which it found to be an issue of first impression in Illinois. Based on the plain language of TILA and its implementing regulation, the Court held that TILA "requires that the written communication clearly state that the borrower is rescinding the mortgage in the present; it nowhere speaks of merely notifying the creditor of an intention to rescind at some unspecified point in the future."
Under the facts at issue here, the Court observed that none of the borrowers' communications contained an unqualified statement of the borrowers' intention to rescind the loan. In particular, the borrowers' counterclaim stated that the borrowers' intended to rescind the loan "by the filing of this counterclaim."
However, the counterclaim was not timely filed. Therefore, the Court held that the borrowers "failed to rescind their loan within the three-year statute of repose" imposed by TILA.
The Court next examined the borrowers' contention that they should be allowed to proceed under a "defense in recoupment" per Illinois law. The Court found that a recent decision held that "Illinois law.does not authorize an action in recoupment in defense of foreclosure actions brought outside of the three-year requisite period." Wells Fargo Bank, N.A. v. Terry, 401 Ill App 3d 18 (2010) ("Terry").
In Terry, the court held that under Illinois law, the right of rescission would only survive the expiration of the three-year period if the relevant portion of TILA were a statute of limitations. Id. at 21.
However, the U.S. Supreme Court in Beach v. Ocwen held that TILA is a statute of repose. See Beach v. Ocwen, 523 U.S. at 417. Therefore, the Court held that the borrowers' argument failed, and their rescission claim was properly dismissed.
The Illinois Appellate Court for the First District recently confirmed that an attempt to rescind a mortgage loan made more than three years after the borrowers received the mortgage was untimely, and held that the borrower's earlier alleged attempt at rescission within the three-year period was inadequate, as it was not a written communication that clearly stated that the borrower was rescinding the loan.
A copy of the opinion is available at:
The borrowers filed their counterclaim "exactly three years and one day" after they entered into the loan agreement. In addition to attempting to rescind the loan, the borrowers' counterclaim sought damages under TILA.
The lower court dismissed the counterclaim on the basis that it was untimely.
The borrowers appealed, contending among other things that (1) that their election to rescind was timely; and (2) even if it was not, the election should survive under a "right of rescission in recoupment under state Law."
As you may recall, TILA provides that "[a]n obligor's right of rescission shall expire three years after the date of the consummation of the transaction." 15 U.S.C. Sec. 1635(f) (2006). TILA's implementing regulation provides that "[t]o exercise the right to rescind, the consumer shall notify the creditor of the rescission by mail, telegram, or other means of written communications." 12 C.F.R. Sec. 226.23(a)(2) (2006).
The Court began its analysis by noting that the Supreme Court held that TILA "completely extinguish[es] the right of rescission at the end of the three year period." Beach v. Ocwen Federal Bank, 523 U.S. 410, 412-14 (1998).
Finding that holding unambiguous, the Court turned its attention to the manner in which a borrower must provide notice to the creditor under TILA, which it found to be an issue of first impression in Illinois. Based on the plain language of TILA and its implementing regulation, the Court held that TILA "requires that the written communication clearly state that the borrower is rescinding the mortgage in the present; it nowhere speaks of merely notifying the creditor of an intention to rescind at some unspecified point in the future."
Under the facts at issue here, the Court observed that none of the borrowers' communications contained an unqualified statement of the borrowers' intention to rescind the loan. In particular, the borrowers' counterclaim stated that the borrowers' intended to rescind the loan "by the filing of this counterclaim."
However, the counterclaim was not timely filed. Therefore, the Court held that the borrowers "failed to rescind their loan within the three-year statute of repose" imposed by TILA.
The Court next examined the borrowers' contention that they should be allowed to proceed under a "defense in recoupment" per Illinois law. The Court found that a recent decision held that "Illinois law.does not authorize an action in recoupment in defense of foreclosure actions brought outside of the three-year requisite period." Wells Fargo Bank, N.A. v. Terry, 401 Ill App 3d 18 (2010) ("Terry").
In Terry, the court held that under Illinois law, the right of rescission would only survive the expiration of the three-year period if the relevant portion of TILA were a statute of limitations. Id. at 21.
However, the U.S. Supreme Court in Beach v. Ocwen held that TILA is a statute of repose. See Beach v. Ocwen, 523 U.S. at 417. Therefore, the Court held that the borrowers' argument failed, and their rescission claim was properly dismissed.
Lay Off Rights
For a business with 50 to 99 employees, the federal Worker Adjustment and Retraining Notifications Act mandates notification of layoffs constituting at least 33 percent of the staff. The act provides a 90-day notice period.
http://www.newyorklawjournal.com/PubArticleNY.jsp?id=1202533111098
http://www.newyorklawjournal.com/PubArticleNY.jsp?id=1202533111098
Consumer WARNING
Some fraudsters attempted to disguise themselves as government agencies by displaying government seals or adopting names similar to a government agency. They promise to help borrowers modify their loans through the Home Affordable Modification Program (HAMP).
SIGTARP warns homeowners to seek modifications through their servicers or contact a HUD-approved housing counselor at 1-888-995-HOPE (4673).
SIGTARP warns homeowners to seek modifications through their servicers or contact a HUD-approved housing counselor at 1-888-995-HOPE (4673).
Consumer Warning
Some fraudsters attempted to disguise themselves as government agencies by displaying government seals or adopting names similar to a government agency. They promise to help borrowers modify their loans through the Home Affordable Modification Program (HAMP).
SIGTARP warns homeowners to seek modifications through their servicers or contact a HUD-approved housing counselor at 1-888-995-HOPE (4673).
SIGTARP warns homeowners to seek modifications through their servicers or contact a HUD-approved housing counselor at 1-888-995-HOPE (4673).
Reaffirmation Agreements
A reaffirmation agreement is a brand new legal contract that revives your personal liability on the mortgage note – a liability that will otherwise be wiped out when you receive your discharge in your bankruptcy case.
What this means is if sometime down the road, say, 2 or 5 or 10 years from now, you can no longer afford to make your mortgage payments, your lender would not only be able to foreclose and take your home, but the mortgage company can also file a lawsuit against you for the deficiency from the foreclosure sale (ie, the difference between what you owe on the mortgage loan and the amount the property sold for at the foreclosure sale). For example, if you owe $200,000 on your mortgage loan, and your home is worth only $150,000 at the time of the foreclosure sale, then if you sign a reaffirmation agreement now, you could legally owe your lender $50,000 even though you no longer own your home.
Your lender will give you reasos to try to get you to sign the reaffirmation agreement which will certainly sound enticing: start receiving monthly billing statements again, reestablish automatic debit payments, and have your positive payment history reported to the credit reporting agencies.
But you have to ask yourself whether those are nearly good enough reasons to put yourself back on the hook for a liability of hundreds of thousands of dollars in the future? Just keep making your mortgage payments and comply with all the other terms in your mortgage loan documents (property taxes, insurance, etc), and if you have any problems with your lender, then come talk to us.
Now, if your lender is willing to re-negotiate the loan, lower the interest or the principal owed, or somehow entice you into an offer you cannot refuse, then we may be willing to talk about it.
Note: This does not apply to car loans. You must reaffirm car loans to keep the vehicle. Ride through provisions no longer apply to vehicles.
What this means is if sometime down the road, say, 2 or 5 or 10 years from now, you can no longer afford to make your mortgage payments, your lender would not only be able to foreclose and take your home, but the mortgage company can also file a lawsuit against you for the deficiency from the foreclosure sale (ie, the difference between what you owe on the mortgage loan and the amount the property sold for at the foreclosure sale). For example, if you owe $200,000 on your mortgage loan, and your home is worth only $150,000 at the time of the foreclosure sale, then if you sign a reaffirmation agreement now, you could legally owe your lender $50,000 even though you no longer own your home.
Your lender will give you reasos to try to get you to sign the reaffirmation agreement which will certainly sound enticing: start receiving monthly billing statements again, reestablish automatic debit payments, and have your positive payment history reported to the credit reporting agencies.
But you have to ask yourself whether those are nearly good enough reasons to put yourself back on the hook for a liability of hundreds of thousands of dollars in the future? Just keep making your mortgage payments and comply with all the other terms in your mortgage loan documents (property taxes, insurance, etc), and if you have any problems with your lender, then come talk to us.
Now, if your lender is willing to re-negotiate the loan, lower the interest or the principal owed, or somehow entice you into an offer you cannot refuse, then we may be willing to talk about it.
Note: This does not apply to car loans. You must reaffirm car loans to keep the vehicle. Ride through provisions no longer apply to vehicles.
Bankruptcy Case Law
In re Dumont, 383 B.R. 481, 489 (9th Cir. BAP 2008)
“Ride through” option under pre-BAPCPA law was eliminated in 2005. However, “if a debtor is in compliance with sections 521(a)(6) or 362(h)(1) and (2), then section 521(d) has no effect, and enforcing an ipso facto default clause is still barred by the Code.”
In re Bennett, 298 F.3d 1059 (9th Cir. 2002)
Absent a valid reaffirmation agreement, an agreement to repay a discharged debt is unenforceable under section 524(a)(2), regardless of California law to the contrary
“Ride through” option under pre-BAPCPA law was eliminated in 2005. However, “if a debtor is in compliance with sections 521(a)(6) or 362(h)(1) and (2), then section 521(d) has no effect, and enforcing an ipso facto default clause is still barred by the Code.”
In re Bennett, 298 F.3d 1059 (9th Cir. 2002)
Absent a valid reaffirmation agreement, an agreement to repay a discharged debt is unenforceable under section 524(a)(2), regardless of California law to the contrary
Southern District Flordia Effective 12/1/11
http://www.flsb.uscourts.gov/web_folder/NEWS/11-11-22_Notice_of_Entry_of_Administrative_Order_11-03.pdf
http://www.flsb.uscourts.gov/AdmOrders/AO_2011-03_Order_Adopting_Interim_Local_Rules_and_Clarifying_Status_of_Local_Forms_Related_to_Chapter_13_Case_Matters_Addressed_in_Local_Rule_3070-1_and_Related_to_Local_Rules_2002-1_and_4004-3.pdf
http://www.flsb.uscourts.gov/AdmOrders/AO_2011-03_Order_Adopting_Interim_Local_Rules_and_Clarifying_Status_of_Local_Forms_Related_to_Chapter_13_Case_Matters_Addressed_in_Local_Rule_3070-1_and_Related_to_Local_Rules_2002-1_and_4004-3.pdf
Single Point of Contact and Reviews
The Federal Reserve says all servicers have instituted policies to end dual-tracking and provide borrowers with a single point of contact. Mortgage servicers under the OCC’s jurisdiction include: Aurora Bank, Bank of America, Citibank, EverBank, HSBC, JPMorgan Chase, MetLife Bank, OneWest Bank, PNC, Sovereign Bank, U.S. Bank, and Wells Fargo.
The Federal Reserve has supervisory responsibility over the two other servicers subject to the April regulatory consent orders – Ally Financial and SunTrust.
http://www.occ.gov/news-issuances/news-releases/2011/nr-occ-2011-139a.pdf
The independent consultants for each servicer are:
• AllonHill for Aurora Bank
• Clayton Services for EverBank
• Deloitte & Touche for JPMorgan Chase
• Ernst & Young for HSBC and MetLife
• Navigant Consulting for OneWest PricewaterhouseCoopers for Citibank and US Bank
• Promontory Financial Group for BofA, PNC, and Wells Fargo
• Treliant Risk Advisors for Sovereign Bank
• The engagement letters describe how the independent consultants will conduct their file reviews and claims processes to identify borrowers who suffered financial injury as a result of procedural deficiencies.
• The letters include language stipulating that consultants will take direction from the OCC and specifically prohibiting servicers from overseeing, directing, or supervising the reviews. The OCC says it is working to ensure a consistent process for all servicers.
http://www.independentforeclosurereview.com/
http://www.occ.gov/topics/consumer-protection/foreclosure-prevention/independent-review-foreclosure-letters.html
The Federal Reserve has supervisory responsibility over the two other servicers subject to the April regulatory consent orders – Ally Financial and SunTrust.
http://www.occ.gov/news-issuances/news-releases/2011/nr-occ-2011-139a.pdf
The independent consultants for each servicer are:
• AllonHill for Aurora Bank
• Clayton Services for EverBank
• Deloitte & Touche for JPMorgan Chase
• Ernst & Young for HSBC and MetLife
• Navigant Consulting for OneWest PricewaterhouseCoopers for Citibank and US Bank
• Promontory Financial Group for BofA, PNC, and Wells Fargo
• Treliant Risk Advisors for Sovereign Bank
• The engagement letters describe how the independent consultants will conduct their file reviews and claims processes to identify borrowers who suffered financial injury as a result of procedural deficiencies.
• The letters include language stipulating that consultants will take direction from the OCC and specifically prohibiting servicers from overseeing, directing, or supervising the reviews. The OCC says it is working to ensure a consistent process for all servicers.
http://www.independentforeclosurereview.com/
http://www.occ.gov/topics/consumer-protection/foreclosure-prevention/independent-review-foreclosure-letters.html
Principal Write Downs Coming?
Bank representatives and government officials are working on a broad settlement of most state and federal foreclosure-practices investigations that could move forward without the participation of California
Bank representatives and government officials are working on a broad settlement of most state and federal foreclosure-practices investigations that could move forward without the participation of California
Debt Card Increases Under Justice Dept Review
http://www.bloomberg.com/news/print/2011-11-22/debit-card-fee-increases-under-u-s-justice-department-review.html
The U.S. Justice Department is conducting an antitrust review of statements and actions by banks and their trade associations about imposing fees on customers who use debit cards. The Federal Reserve, acting on a provision of the 2010 Dodd-Frank Act, imposed rules on Oct. 1 limiting fees card networks charge merchants to 21 cents per transaction, about half what retailers had been paying. In response, lenders including Bank of America and Wells Fargo considered new charges for debit customers to make up some of the $8 billion the largest banks may lose under the rules. House Democrats who last month asked Attorney General Eric Holder to investigate whether U.S. banks and their trade groups colluded on whether to impose fees in response to caps on what they can charge for using debit cards.
The U.S. Justice Department is conducting an antitrust review of statements and actions by banks and their trade associations about imposing fees on customers who use debit cards. The Federal Reserve, acting on a provision of the 2010 Dodd-Frank Act, imposed rules on Oct. 1 limiting fees card networks charge merchants to 21 cents per transaction, about half what retailers had been paying. In response, lenders including Bank of America and Wells Fargo considered new charges for debit customers to make up some of the $8 billion the largest banks may lose under the rules. House Democrats who last month asked Attorney General Eric Holder to investigate whether U.S. banks and their trade groups colluded on whether to impose fees in response to caps on what they can charge for using debit cards.
Tuesday, October 18, 2011
Postage Costs to Rise
U.S. Postal Service announced Tuesday that it will increase postage rates on Jan. 22, including a 1-cent increase in the cost of first-class mail, to 45 cents.
Wednesday, October 12, 2011
Bankruptcy Court Filing Fee Increase
On September 13, 2011, the Judicial Conference of the United States voted to increase certain miscellaneous filing fees, effective November 1, 2011. The "administrative fee" portion of the filing fee for each chapter will increase from $39 to $46, which will have the result of increasing the overall filing fee for each chapter by $7.00. Thus, as of November 1, the filing fees for each chapter will be as follows:
Chapter 7--$306
Chapter 11--$1,046
Chapter 12--$246
Chapter 13--$281
Chapter 15--$1,046
In addition, the fee for amending schedules will increase from $26 to $30, the adversary filing fee will increase from $250 to $293, the fee for filing a notice of appeal will increase from $250 to $293, and the fee for filing a motion for relief from stay will increase from $150 to $176.
There are other miscellaneous fee increases for certification, exemplification, audio recording, records searches, record retrieval, and returned checks.
Chapter 7--$306
Chapter 11--$1,046
Chapter 12--$246
Chapter 13--$281
Chapter 15--$1,046
In addition, the fee for amending schedules will increase from $26 to $30, the adversary filing fee will increase from $250 to $293, the fee for filing a notice of appeal will increase from $250 to $293, and the fee for filing a motion for relief from stay will increase from $150 to $176.
There are other miscellaneous fee increases for certification, exemplification, audio recording, records searches, record retrieval, and returned checks.
Thursday, October 6, 2011
Matt Weidner for Office
In case you live under a rock. Matt Weidner is running for State Rep in District 52 against Jeff Brandes.
http://mattweidnerlaw.com/blog/register-to-vote-do-it-now-dont-wait/
http://battlegroundtampabay.com/2011/08/foreclosure-attorney-matt-weidner-files-to-run-against-rep-jeff-brandes/
Brandes is a Republican. Weidner is listed as Independent.
Contributions to:
MATTHEW WEIDNER
329 4TH AVENUE SOUTH
ST. PETERSBURG FL 33701
Weidner is against making Florida a Non-Judicial State. Where does Brandes stand?
http://mattweidnerlaw.com/blog/register-to-vote-do-it-now-dont-wait/
http://battlegroundtampabay.com/2011/08/foreclosure-attorney-matt-weidner-files-to-run-against-rep-jeff-brandes/
Brandes is a Republican. Weidner is listed as Independent.
Contributions to:
MATTHEW WEIDNER
329 4TH AVENUE SOUTH
ST. PETERSBURG FL 33701
Weidner is against making Florida a Non-Judicial State. Where does Brandes stand?
Saturday, September 17, 2011
Wednesday, September 14, 2011
DHS to unveil new airport security policy for kids
http://www.msnbc.msn.com/id/44504084?GT1=43001
Children 12 years old and younger soon will no longer be required to remove their shoes at airport security checkpoints, Homeland Security Secretary Janet Napolitano told Congress on Tuesday. The policy also includes other ways to screen young children without resorting to a pat-down that involves touching private areas on the body.
Kids should take there shoes off and go through the screening machine too. hello terrorists do not care about there kids--- Vietnam War- Middle East- ring any bells????
Children 12 years old and younger soon will no longer be required to remove their shoes at airport security checkpoints, Homeland Security Secretary Janet Napolitano told Congress on Tuesday. The policy also includes other ways to screen young children without resorting to a pat-down that involves touching private areas on the body.
Kids should take there shoes off and go through the screening machine too. hello terrorists do not care about there kids--- Vietnam War- Middle East- ring any bells????
Pets as a Medical Expense in Your Ch 13
http://www.feedblitz.com/f/?FBLike=http://lawprofessors.typepad.com/bankruptcyprof_blog/2011/08/pets-and-chapter-13.html
Bankruptcy Filings Down
August consumer bankruptcies decreased 11 percent nationwide from August 2010, according to data from the National Bankruptcy Research Center (NBKRC). The data showed that the overall consumer filing total for August declined to 113,432, down from the 127,028 consumer filings recorded in August 2010. Each month of 2011 has recorded fewer bankruptcies than last year.
9th Cir Allows Oregon UDCPA Claim Based on Failure to Respond Under FCBA, Actual Damages Under FCBA w/o Detrimental Reliance, Multiple Penalties for Multiple FCBA
The U.S. Court of Appeals for the Ninth Circuit recently held that a creditor violated the federal Fair Credit Billing Act ("FCBA"), and Oregon's Unlawful Debt Collection Practices Act ("UDCPA"), when it reported a debt as delinquent to credit agencies and continued its collection activities without first providing an explanation to the debtor who had contested the debt.
According to the Ninth Circuit: (1) these alleged actions by the creditor violated the Oregon UDCPA, based on the alleged violation of the FCBA;
(2) the debtor was entitled to actual damages and attorney fees under the FCBA, regardless of whether the debtor demonstrated detrimental reliance on the representations made by the creditor; (3) TILA's limitation of a single recovery for multiple failures to disclose does not necessarily apply to the FCBA; and (4) the trial court failed to properly apportion an attorneys fee award as to the debtor's successful claims.
A copy of the opinion is available at:
This case arose from a misunderstanding regarding a $645 charge on the credit-card bill of the debtor. The creditor allegedly misidentified the basis for the charge but then allegedly failed to respond to the debtor's requests for information about it. The creditor allegedly continued to seek payment and reported the debt as delinquent to credit agencies, despite the debtor's alleged protest.
In doing so, the Ninth Circuit noted that creditor admittedly violated the federal Fair Credit Billing Act ("FCBA"). After unsuccessfully attempting to get a direct response from the creditor, the debtor filed an action in the District of Oregon, alleging inter alia claims under the FCBA and Oregon's Unlawful Debt Collection Practices Act ("UDCPA").
The trial court dismissed the UDCPA claim and limited the debtor's total recovery under the FCBA to $1000. The Ninth Circuit reversed.
According to the Ninth Circuit, if a credit card holder sends a written notice disputing a charge within sixty days of receiving a bill, FCBA requires a credit-card issuer to acknowledge the dispute within thirty days, investigate the matter, and provide a written explanation of its decision within ninety days. If a creditor fails these requirements, it is subject to civil liability and forfeiture of the disputed amount.
Similarly, the Ninth Circuit held, the Oregon UDCPA prohibits a debt collector from "[a]ttempt[ing] to or threaten[ing] to enforce a right or remedy with knowledge or reason to know that the right or remedy does not exist."
Examining the above statutes, the Court concluded that the trial court erred in holding that the debtor failed to state a claim under the Oregon UDCPA. The Court reasoned, that pursuant to the requirements imposed under the FCBA, the creditor did not have the right to attempt to collect the disputed charge or to report it to credit agencies as delinquent without first providing a written explanation. These allegations, the Court held, also violated the Oregon UDCPA.
The Court also rejected that a detrimental reliance component was required for the debtor's Oregon UDCPA allegations, reasoning that there was simply no relevant disclosure or conduct under these circumstances that the debtor could have relied upon. Thus, the debtor's lack of detrimental reliance was immaterial to a determination of whether the creditor's violations resulted in actual damages. Debtors, explained the Court, cannot rely on unmade explanations. Otherwise, creditors could simply avoid actual damages under FCBA by never responding to billing disputes.
Next, the Court determined that the creditor's collection actions and adverse credit reports were not subject to the single-recovery limitation under 15 U.S.C. 1640(g). Further, the Court also concluded that the debtor was entitled to all reasonable attorney fees, including those incurred for the appeal, related to the debtor's FCBA claims.
NY Banking Dept Reaches Servicing/Foreclosure Practices Agreement with Goldman, Litton, Ocwen
New York's Department of Financial Services and Banking Department entered into an agreement with Goldman Sachs Bank, Ocwen Financial Corp. and Litton Loan Servicing LP regarding certain servicing and foreclosure practices.
A copy of the Agreement on Mortgage Servicing Practices is available at:
df
As part of the Agreement, Goldman Sachs will write down approximately $13 million in unpaid principal, consisting of forgiveness on 25 percent of the principal balance all 60-day delinquent first-lien home loans in New York serviced by Litton and owned by Goldman Sachs and its subsidiaries as of August 1, 2011.
The Agreement is a condition of Ocwen's acquisition of Litton, and does not preclude any future investigations of past practices or release any future claims or actions. In addition, if any party to this Agreement agrees with any other regulator to adopt greater consumer protections or other more rigorous standards than are contained in this Agreement, such other provisions shall be applicable to the party.
Among other things, the Agreement requires servicing and foreclosure practice changes in the following areas:
- Document execution
- Accuracy of documentation
- Standing to foreclose
- Identification and contact information of the note holder, and account/payment history, on request
- Compensation to borrowers, and voiding of third-party sales, in all wrongful foreclosures
- Regular quality assurance audits of foreclosure and bankruptcy proceedings
- Oversight of third-party vendors
- Adequate staffing and training
- Single-point-of-contact notices and related requirements
- Toll-free number set up for new loans upon acquisition or transfer of servicing
- Modification notices
- Independent review of loan mod denials
- Complaint handling and resolution procedures
- Limits on attorneys fees, late fees and delinquency charges, property valuation fees
- Limits on lender-placed insurance
Ocwen and Litton must implement these requirements within 60 days following the acquisition. Goldman, which is exiting the mortgage servicing business with the sale of Litton, has agreed to adopt these servicing practices if it should ever reenter the servicing industry.
Articles of Interest
Foreclosures: Uncle Sam and His 248,000 Homes
U.S. taxpayers are the biggest owners of repossessed homes. For now, they’re stuck with them. http://www.businessweek.com/magazine/foreclosures-uncle-sam-and-his-248000-homes-09012011.html
Robo-signed mortgage docs date back to late 1990s
http://www.google.com/hostednews/ap/article/ALeqM5getrYeAQRv3rG7noQ7QmPQQlnIaw?docId=b6873213020e4758bcd75ad770819850
As county officials review years' worth of mortgage paperwork, in some cases combing through one page at a time, they are finding suspect signatures — either signed with the same name by dozens of different people, improperly notarized or signed without a review of the facts in the paperwork — on all sorts of mortgage documents, dating as far back as 1998, The Associated Press has found.
As county officials review years' worth of mortgage paperwork, in some cases combing through one page at a time, they are finding suspect signatures — either signed with the same name by dozens of different people, improperly notarized or signed without a review of the facts in the paperwork — on all sorts of mortgage documents, dating as far back as 1998, The Associated Press has found.
10.9 million Houses Underwater
Nearly 10.9 million, or 22.5 percent, of all residential mortgages had negative equity at the end of the second quarter of the year, according to a report released Tuesday by the analytics firm CoreLogic. The figure is actually a slight improvement from the 22.7 percent of all mortgages with negative equity in the first quarter of 2011. CoreLogic says nearly three-quarters of homeowners in negative equity situations are also paying higher, above-market interest on their mortgages. Nevada held the top position in terms of negative equity with 60 percent of all of its mortgaged properties underwater, followed by Arizona (49 percent), Florida (45 percent), Michigan (36 percent), and California (30 percent). http://www.corelogic.com/
10.9 million Houses Underwater
Nearly 10.9 million, or 22.5 percent, of all residential mortgages had negative equity at the end of the second quarter of the year, according to a report released Tuesday by the analytics firm CoreLogic. The figure is actually a slight improvement from the 22.7 percent of all mortgages with negative equity in the first quarter of 2011. CoreLogic says nearly three-quarters of homeowners in negative equity situations are also paying higher, above-market interest on their mortgages. Nevada held the top position in terms of negative equity with 60 percent of all of its mortgaged properties underwater, followed by Arizona (49 percent), Florida (45 percent), Michigan (36 percent), and California (30 percent). http://www.corelogic.com/
Tuesday, September 13, 2011
2nd Cir Rejects Borrower's Arguments that Release Provisions Were Obtained by Duress
The U.S. Court of Appeals for the Second Circuit recently affirmed the dismissal of allegations that a lender obtained release agreements from a borrower through economic duress, because no evidence appeared in the record to suggest that the lender made a wrongful threat against the borrower.
Wells Fargo Bank, N.A., ("Wells Fargo") agreed to extend a line of credit to Interpharm, Inc. ("Interpharm"), a drug manufacturer. The line of credit was secured by various assets, including Interpharm's accounts receivable, inventory, and equipment. Interpharm defaulted on the line of credit agreement, and subsequently entered into and defaulted on each of a series of forbearance agreements with Wells Fargo.
Each forbearance agreement included a provision wherein Interpharm released all claims to date against Wells Fargo, as well as a merger clause stating that the written agreement represented the entire agreement between the parties. In addition, one of the forbearance agreements reflected Wells Fargo's decision to exclude certain receivables from the calculation used to determine the amount of money available to Interpharm, as well as to reduce the percentages used for that calculation.
After Interpharm defaulted on the final forbearance agreement, the company was liquidated. Interpharm then sued Wells Faro, alleging numerous causes of action including breach of contract and unjust enrichment.
Interpharm's causes of action were based on the theory that it had been forced to agree to the forbearance agreements through economic duress.
As you may recall, New York law provides that a contract may be voided based on economic duress where the "agreement was procured by means of (1) a wrongful threat that (2) precluded the exercise of its free will. See Stewart M. Muller Constr. Co. v. N.Y. Tel. Co., 40 N.Y. 2d 955, 956 (1976). A threat to exercise a legal right cannot constitute economic
duress. See 805 Third Ave. Co. v. M.W. Realty Assocs., 58 N.Y. 2d 447,453 (1983).
After reciting the relevant case law, the Court had little difficulty in affirming the lower court's decision to dismiss Interpharm's claims.
Wells Fargo had the legal right to terminate the line of credit.
Consequently, the Court held that Wells Fargo's threat to do so was not wrongful, and Wells Fargo's insistence that Interpharm execute various agreements to induce Wells Fargo to forbear from terminating the line of credit did not constitute economic duress.
Interpharm advanced two additional arguments. First, Interpharm argued that Wells Fargo's decision to exclude certain receivables from the calculation used to determine the line of credit was not reasonable, within the meaning of a "reasonable discretion" provision in the contract between the parties. Second, Interpharm argued that Wells Fargo purportedly agreed to maintain a higher percentage of receivables for use in that same calculation, an agreement that did not appear in any of the contracts executed by the parties.
The Court rejected both arguments. The agreement between the parties afforded Wells Fargo "reasonable discretion" in determining both the receivables to be used and the percentages of those receivables to be used to determine the amount of money available to Interpharm. The Court found that Interpharm failed to allege any facts to show that that Wells Fargo's decisions fell outside the bounds of "reasonable discretion." Further, the Court held that as the initial agreement and all subsequent forbearance agreements included merger clauses, any purported agreement that did not appear in the written contracts had no bearing on Wells Fargo's contractual rights.
Thus, the Court affirmed the lower court's judgment of dismissal.
Wells Fargo Bank, N.A., ("Wells Fargo") agreed to extend a line of credit to Interpharm, Inc. ("Interpharm"), a drug manufacturer. The line of credit was secured by various assets, including Interpharm's accounts receivable, inventory, and equipment. Interpharm defaulted on the line of credit agreement, and subsequently entered into and defaulted on each of a series of forbearance agreements with Wells Fargo.
Each forbearance agreement included a provision wherein Interpharm released all claims to date against Wells Fargo, as well as a merger clause stating that the written agreement represented the entire agreement between the parties. In addition, one of the forbearance agreements reflected Wells Fargo's decision to exclude certain receivables from the calculation used to determine the amount of money available to Interpharm, as well as to reduce the percentages used for that calculation.
After Interpharm defaulted on the final forbearance agreement, the company was liquidated. Interpharm then sued Wells Faro, alleging numerous causes of action including breach of contract and unjust enrichment.
Interpharm's causes of action were based on the theory that it had been forced to agree to the forbearance agreements through economic duress.
As you may recall, New York law provides that a contract may be voided based on economic duress where the "agreement was procured by means of (1) a wrongful threat that (2) precluded the exercise of its free will. See Stewart M. Muller Constr. Co. v. N.Y. Tel. Co., 40 N.Y. 2d 955, 956 (1976). A threat to exercise a legal right cannot constitute economic
duress. See 805 Third Ave. Co. v. M.W. Realty Assocs., 58 N.Y. 2d 447,453 (1983).
After reciting the relevant case law, the Court had little difficulty in affirming the lower court's decision to dismiss Interpharm's claims.
Wells Fargo had the legal right to terminate the line of credit.
Consequently, the Court held that Wells Fargo's threat to do so was not wrongful, and Wells Fargo's insistence that Interpharm execute various agreements to induce Wells Fargo to forbear from terminating the line of credit did not constitute economic duress.
Interpharm advanced two additional arguments. First, Interpharm argued that Wells Fargo's decision to exclude certain receivables from the calculation used to determine the line of credit was not reasonable, within the meaning of a "reasonable discretion" provision in the contract between the parties. Second, Interpharm argued that Wells Fargo purportedly agreed to maintain a higher percentage of receivables for use in that same calculation, an agreement that did not appear in any of the contracts executed by the parties.
The Court rejected both arguments. The agreement between the parties afforded Wells Fargo "reasonable discretion" in determining both the receivables to be used and the percentages of those receivables to be used to determine the amount of money available to Interpharm. The Court found that Interpharm failed to allege any facts to show that that Wells Fargo's decisions fell outside the bounds of "reasonable discretion." Further, the Court held that as the initial agreement and all subsequent forbearance agreements included merger clauses, any purported agreement that did not appear in the written contracts had no bearing on Wells Fargo's contractual rights.
Thus, the Court affirmed the lower court's judgment of dismissal.
The FDIC Offers Tips on Preparing Financially For a Natural Disaster or a Fire
Hurricane Irene, the earthquake that shook the East Coast and the deadly tornado that hit Joplin, Missouri are recent reminders that disasters rarely give advance warning and can happen anytime. The Summer 2011 issue of FDIC Consumer News features tips on how to prepare financially for a natural disaster, a fire or another tragedy, especially one that requires people to evacuate their home and not return for days or weeks. Other timely topics in the latest issue include what to know before signing up for person-to-person, or “P2P,” electronic payment services using a smartphone or mobile computer; how to solve mysteries of old bank accounts; and an update on new standards for and disclosures by mortgage loan professionals.
The latest issue can be read or printed online at www.fdic.gov/consumers/consumer/news/cnsum11.
The latest issue can be read or printed online at www.fdic.gov/consumers/consumer/news/cnsum11.
Changes to Federal Bankruptcy Rules and Forms
Changes to Federal Bankruptcy Rules and Forms
Effective December 1, 2011
The following changes to and/or new Federal Rules of Bankruptcy Procedure and Official Bankruptcy Forms take effect December 1, 2011:
Rule 1004.2 - Republication of a new rule requiring entity filing a chapter 15 petition to state the country of the debtor’s main interest, filer to list each country in which a case involving debtor is pending, and setting deadline for challenging the statement asserting the country of the debtor’s main interest.
Rule 2003 - Requires the filing of a statement upon adjourning a meeting of creditors or equity security holders.
Rule 2019 - Expands the scope of the rule’s disclosure requirements by requiring disclosure in chapter 9 and 11 cases by all committees or groups that consist of more than one creditor or equity security holder, as well as entities or that represent more than one creditor or equity security holder. It also authorizes the Court to require disclosure by an individual party in interest when knowledge of that party’s economic stake in the debtor would assist the Court in evaluating the party’s arguments.
Rule 3001 - Prescribes in greater detail the support information required to accompany a proof of claim.
Rule 3002.1 - New rule implements § 1323(b)(5) of the Bankruptcy Code which permits a chapter 13 debtor to cure a default and maintain payments of a home mortgage.
Rule 4004 - Permits a party under limited circumstances to seek an extension of time to object to a debtor’s discharge after the time for objecting has expired.
Rule 6003 - Clarifies that the requirement of a 21-day waiting period before a Court can enter certain orders at the beginning of a case, including an order approving employment of counsel, does not prevent the Court from specifying an effective date for the order that is earlier than the date of its issuance.
A complete list of the changes to and/or new Rules (Appellate, Bankruptcy, Criminal and Rules of
Evidence) that take effect December 1, 2011, is located on the U.S. Courts’ web site at:
www.uscourts.gov/RulesAndPolicies/FederalRulemaking/PendingRules/SupremeCourt042611.aspx.
Form 1 (Voluntary Petition) - Implements new Bankruptcy Rule 1004.2.
Forms 9A - 9I (Notices of Bankruptcy Case, Meeting of Creditors & Deadlines *341 Meeting Notice+) -Conforming to amendments to Bankruptcy Rule 2003(e).
Form 10 (Proof of Claim) - Clarifies that, consistent with Rule 3001(c) and new Rule 3002.1, writings supporting a claim or evidencing perfection of a security interest—not just summaries—must be attached to the proof of claim. Three new forms have been created for claims secured by a security interest in the debtor’s principal residence.
Form 10 (Attachment A) - Mortgage Proof of Claim Attachment
Form 10 (Supplement 1) - Notice of Mortgage Payment Change
Form 10 (Supplement 2) - Notice of Postpetition Mortgage Fees, Expenses, and Charges
Form 25A (Plan of Reorganization in Small Business Case under Chapter 11) - Changes the effective date consistent with 2009 time-computation rules amendments.
You may view the proposed forms or obtain more information on the “Bankruptcy Forms
Pending Changes” page of the U.S. Courts’ web site at
http://www.uscourts.gov/FormsAndFees/Forms/BankruptcyForms/BankruptcyFormsPendingChanges.aspx
Effective December 1, 2011
The following changes to and/or new Federal Rules of Bankruptcy Procedure and Official Bankruptcy Forms take effect December 1, 2011:
Rule 1004.2 - Republication of a new rule requiring entity filing a chapter 15 petition to state the country of the debtor’s main interest, filer to list each country in which a case involving debtor is pending, and setting deadline for challenging the statement asserting the country of the debtor’s main interest.
Rule 2003 - Requires the filing of a statement upon adjourning a meeting of creditors or equity security holders.
Rule 2019 - Expands the scope of the rule’s disclosure requirements by requiring disclosure in chapter 9 and 11 cases by all committees or groups that consist of more than one creditor or equity security holder, as well as entities or that represent more than one creditor or equity security holder. It also authorizes the Court to require disclosure by an individual party in interest when knowledge of that party’s economic stake in the debtor would assist the Court in evaluating the party’s arguments.
Rule 3001 - Prescribes in greater detail the support information required to accompany a proof of claim.
Rule 3002.1 - New rule implements § 1323(b)(5) of the Bankruptcy Code which permits a chapter 13 debtor to cure a default and maintain payments of a home mortgage.
Rule 4004 - Permits a party under limited circumstances to seek an extension of time to object to a debtor’s discharge after the time for objecting has expired.
Rule 6003 - Clarifies that the requirement of a 21-day waiting period before a Court can enter certain orders at the beginning of a case, including an order approving employment of counsel, does not prevent the Court from specifying an effective date for the order that is earlier than the date of its issuance.
A complete list of the changes to and/or new Rules (Appellate, Bankruptcy, Criminal and Rules of
Evidence) that take effect December 1, 2011, is located on the U.S. Courts’ web site at:
www.uscourts.gov/RulesAndPolicies/FederalRulemaking/PendingRules/SupremeCourt042611.aspx.
Form 1 (Voluntary Petition) - Implements new Bankruptcy Rule 1004.2.
Forms 9A - 9I (Notices of Bankruptcy Case, Meeting of Creditors & Deadlines *341 Meeting Notice+) -Conforming to amendments to Bankruptcy Rule 2003(e).
Form 10 (Proof of Claim) - Clarifies that, consistent with Rule 3001(c) and new Rule 3002.1, writings supporting a claim or evidencing perfection of a security interest—not just summaries—must be attached to the proof of claim. Three new forms have been created for claims secured by a security interest in the debtor’s principal residence.
Form 10 (Attachment A) - Mortgage Proof of Claim Attachment
Form 10 (Supplement 1) - Notice of Mortgage Payment Change
Form 10 (Supplement 2) - Notice of Postpetition Mortgage Fees, Expenses, and Charges
Form 25A (Plan of Reorganization in Small Business Case under Chapter 11) - Changes the effective date consistent with 2009 time-computation rules amendments.
You may view the proposed forms or obtain more information on the “Bankruptcy Forms
Pending Changes” page of the U.S. Courts’ web site at
http://www.uscourts.gov/FormsAndFees/Forms/BankruptcyForms/BankruptcyFormsPendingChanges.aspx
Ill App Ct Rejects Borrower's Untimely Challenge as to Service of Process
The Illinois Appellate Court for the First District recently held that a borrower or other defendant waives his right to challenge jurisdiction where he files a motion to stay a foreclosure sale without first or simultaneously filing a motion challenging jurisdiction, or moving for an extension of time to do so.
A copy of the opinion is available at:
http://www.state.il.us/court/Opinions/AppellateCourt/2011/1stDistrict/Sept
ember/1102632.pdf
Plaintiff Deutsche Bank National Trust Company ("Deutsche Bank") filed a mortgage foreclosure action against defendants Carolyn A. Hall-Pilate and John J. Pilate. The special process server executed two returns of service indicating that John was served with a summons and complaint for himself and on behalf of his wife, Carolyn.
When the borrowers did not appear and answer, Deutsche Bank filed a motion for default. The trial court continued the motion on March 18, 2008, because John Pilate had appeared pro se before the court and requested time to consult with an attorney. The borrowers were granted 28 days to file an appearance and answer or otherwise plead to the complaint.
After the borrowers still failed to file an appearance or response to the complaint, the trial court granted Deutsche Bank's motion for default judgment, and entered orders appointing a foreclosure sale officer and for judgment for foreclosure and sale. Deutsche Bank filed a motion for an order approving the report of sale and distribution following the judicial sale.
On September 12, 2008, an "additional" appearance was filed by a law firm, as counsel for the borrowers. The law firm also filed an emergency motion to stay approval of the property sale. The trial court denied the borrowers' emergency motion for a stay, and entered an order approving the report of sale and distribution, confirming the sale and order of possession.
On May 29, 2009, the borrowers filed a motion to quash service through new counsel, asserting that John was out of state when the service of process allegedly occurred. The trial court denied the motion to quash service.
On appeal, the borrowers argued that the trial court erred in denying their motion to quash service because the borrowers did not file any appearance or other pleadings prior to the entry of the default judgment.
Deutsche Bank argued that the borrowers waived their jurisdictional objections when they filed their emergency motion to stay the approval of a judicial sale prior to final judgment in the case.
The Appellate Court noted that section 2-301 of the Illinois Code of Civil Procedure governs challenges to personal jurisdiction. The court held that "[u]nder section 2-301, an objection to the court's jurisdiction must be raised in the first pleading or motion filed, other than a motion for an extension of time to answer or otherwise appear, but such objection may be raised alongside other motions seeking relief on different grounds."
The Court noted that the borrowers "did not comply with the requirements of section 2-301 to preserve their objection to the trial court's jurisdiction because they filed a motion to stay the approval of the property sale without also challenging the court's jurisdiction." In addition, the Court ruled that "by participating in the case without raising an objection to personal jurisdiction," the borrowers "voluntarily submitted to the trial court's jurisdiction and waived any objection."
The borrowers also asserted that any waiver of personal jurisdiction did not apply to Carolyn because she did not appear at the initial hearing.
However, the court was "not persuaded as the relevant action by the defendants was the filing of the emergency motion for a stay which was filed on behalf of both defendants. Thus, [Carolyn], with her husband, sought relief from the trial court and waived any challenge to personal jurisdiction."
The Court held that "[s]ince defendants in the instant case appeared in this case before a final judgment was entered against them by filing a motion seeking relief from the trial court and recognizing its jurisdiction, defendants waived all objections to the trial court's jurisdiction."
A copy of the opinion is available at:
http://www.state.il.us/court/Opinions/AppellateCourt/2011/1stDistrict/Sept
ember/1102632.pdf
Plaintiff Deutsche Bank National Trust Company ("Deutsche Bank") filed a mortgage foreclosure action against defendants Carolyn A. Hall-Pilate and John J. Pilate. The special process server executed two returns of service indicating that John was served with a summons and complaint for himself and on behalf of his wife, Carolyn.
When the borrowers did not appear and answer, Deutsche Bank filed a motion for default. The trial court continued the motion on March 18, 2008, because John Pilate had appeared pro se before the court and requested time to consult with an attorney. The borrowers were granted 28 days to file an appearance and answer or otherwise plead to the complaint.
After the borrowers still failed to file an appearance or response to the complaint, the trial court granted Deutsche Bank's motion for default judgment, and entered orders appointing a foreclosure sale officer and for judgment for foreclosure and sale. Deutsche Bank filed a motion for an order approving the report of sale and distribution following the judicial sale.
On September 12, 2008, an "additional" appearance was filed by a law firm, as counsel for the borrowers. The law firm also filed an emergency motion to stay approval of the property sale. The trial court denied the borrowers' emergency motion for a stay, and entered an order approving the report of sale and distribution, confirming the sale and order of possession.
On May 29, 2009, the borrowers filed a motion to quash service through new counsel, asserting that John was out of state when the service of process allegedly occurred. The trial court denied the motion to quash service.
On appeal, the borrowers argued that the trial court erred in denying their motion to quash service because the borrowers did not file any appearance or other pleadings prior to the entry of the default judgment.
Deutsche Bank argued that the borrowers waived their jurisdictional objections when they filed their emergency motion to stay the approval of a judicial sale prior to final judgment in the case.
The Appellate Court noted that section 2-301 of the Illinois Code of Civil Procedure governs challenges to personal jurisdiction. The court held that "[u]nder section 2-301, an objection to the court's jurisdiction must be raised in the first pleading or motion filed, other than a motion for an extension of time to answer or otherwise appear, but such objection may be raised alongside other motions seeking relief on different grounds."
The Court noted that the borrowers "did not comply with the requirements of section 2-301 to preserve their objection to the trial court's jurisdiction because they filed a motion to stay the approval of the property sale without also challenging the court's jurisdiction." In addition, the Court ruled that "by participating in the case without raising an objection to personal jurisdiction," the borrowers "voluntarily submitted to the trial court's jurisdiction and waived any objection."
The borrowers also asserted that any waiver of personal jurisdiction did not apply to Carolyn because she did not appear at the initial hearing.
However, the court was "not persuaded as the relevant action by the defendants was the filing of the emergency motion for a stay which was filed on behalf of both defendants. Thus, [Carolyn], with her husband, sought relief from the trial court and waived any challenge to personal jurisdiction."
The Court held that "[s]ince defendants in the instant case appeared in this case before a final judgment was entered against them by filing a motion seeking relief from the trial court and recognizing its jurisdiction, defendants waived all objections to the trial court's jurisdiction."
9th Cir Rejects MERS Challenge, Rejects Equitable Tolling Theory Based on Spanish-Language Negotiations, Rejects Borrowers' IIED Claim
The U.S. Court of Appeals for the Ninth Circuit recently ruled in favor of Mortgage Electronic Registration Systems, Inc. ("MERS") in a putative class action challenging the MERS system under common law fraud and state UDAP theories.
The Court also rejected the borrowers' equitable tolling argument as to the TILA and state UDAP statute of limitations, based upon the borrowers speaking only Spanish but their loan documents being only in English. In addition, the Court held that providing an unaffordable loan to a borrower was not "extreme and outrageous" as is required to state a claim for intentional infliction of emotional distress.
A copy of the opinion is available at:
http://www.ca9.uscourts.gov/datastore/opinions/2011/09/07/09-17364.pdf
The three named plaintiffs in the case obtained home loans or refinanced existing loans in 2006. The plaintiffs each executed a deed of trust in favor of their lender, naming MERS as the "beneficiary" and as the "nominee" for the lender and lender's "successors and assigns." The plaintiffs do not speak or read English, and negotiated the mortgage loans with their lenders in Spanish, but were provided with, and signed, copies of their loan documents written in English.
The plaintiffs subsequently defaulted on their loans. Following default, their respective lenders appointed trustees to initiate nonjudicial foreclosure proceedings. MERS's beneficial interests in the deeds of trust were all assigned to a foreclosure trustee.
The plaintiffs filed their putative class action, alleging conspiracy by their lenders and others to use MERS to commit fraud. They also alleged that their lenders violated the federal Truth in Lending Act ("TILA"), and the Arizona Consumer Fraud Act ("ACFA"), and committed the tort of intentional infliction of emotional distress ("IIED") by supposedly targeting the plaintiffs for loans they allegedly could not repay when the loans were extended.
The trial court dismissed the plaintiffs' first amended complaint, without leave to amend. Further, the trial court denied leave to file a proposed second amended complaint, and to add a new claim for wrongful foreclosure.
On appeal, the plaintiffs only addressed the district court's: (1) dismissal of their claim for conspiracy to commit fraud through the MERS system; (2) failure to address their oral request for leave to add a wrongful foreclosure claim; (3) dismissal of the foreclosure trustee from the suit; (4) denial of leave to amend their pleadings regarding equitable tolling of their TILA and ACFA claims; and (5) dismissal of their claim for IIED.
On appeal, the Ninth Circuit noted that the main premise of the plaintiffs' lawsuit was that the MERS system impermissibly "splits" the note and deed of trust by facilitating the transfer of the beneficial interest in the loan among lenders while maintaining MERS as the nominal holder of the deed. The Ninth Circuit rejected this theory.
The plaintiffs' lawsuit was also premised on the fact that MERS does not have a financial interest in the loans, which, according to the plaintiffs, renders MERS's status as a beneficiary a sham. The Ninth Circuit rejected this theory, also.
With respect to the conspiracy to commit fraud claim, the plaintiffs alleged that MERS members conspired to commit fraud by using MERS as a sham beneficiary, supposedly promoting and facilitating predatory lending practices through the use of MERS, and supposedly making it impossible for borrowers or regulators to track the changes in lenders.
In upholding the lower court's ruling that the plaintiffs failed to state a cause of action, the Ninth Circuit held "[t]he plaintiffs' allegations fail to address several of [the] necessary elements for a fraud claim."
Specifically, the plaintiffs failed to identify any false representations made to them about the MERS system, and failed to allege they relied on misrepresentations about MERS in deciding to enter into their home loans.
Moreover, the Ninth Circuit found the plaintiffs' allegations were undercut by the language in the standard deed of trust, which provided that MERS was acting "solely as a nominee for Lender and Lender's successors and assigns" and holds "only legal title to the interest granted by Borrower in this Security Instrument." The Court held that "[b]y signing the deeds of trust, the plaintiffs agreed to the terms and were on notice of the contents." The Court further held that "[i]n light of the explicit terms of the standard deed. . ., it does not appear that the plaintiffs were misinformed about MERS's role in their home loans."
With respect to the wrongful foreclosure claim, the Ninth Circuit held that "[t]he plaintiffs' oral request to add a wrongful foreclosure claim was procedurally improper and substantively unsupported." The plaintiffs based their wrongful foreclosure claim on the novel theory that "all transfers of the interests in the home loans within the MERS system are invalid because the designation of MERS as a beneficiary is a sham and the system splits the deed from the note, and, thus, no party is in a position to foreclose."
The Court rejected this argument, holding "[e]ven if MERS were a sham beneficiary, the lenders would still be entitled to repayment of the loans and would be the proper parties to initiate foreclosure after the plaintiffs defaulted on their loans." The Court further held that "the notes and deeds are not irreparably split: the split only renders the mortgage unenforceable if MERS or the trustee, as nominal holders of the deeds, are not agents of the lenders."
With respect to the allegations against the foreclosure trustee, the Court noted the only allegations the plaintiffs directed against the foreclosure trustee was that the trustee supposedly "failed to recognize that its appointment was invalid." The Ninth Circuit held the plaintiffs failed to state a cause of action, because the trustee had an "'absolute right' under Arizona law 'to rely upon any written direction or information furnished to him by the beneficiary.'"
The plaintiffs also asserted that the district court failed to address the equitable tolling of their purported claims under TILA and the ACFA. The plaintiffs alleged their TILA claim should have been tolled because they only speak Spanish, but received their loan documents in English. The Court disagreed, finding "the plaintiffs have not alleged circumstances beyond their control that prevented them from seeking a translation of the loan documents that they signed and received."
Further, the Court also held that the plaintiffs failed to state a claim for equitable estoppel because they "failed to specify what true facts are at issue, or to establish that the alleged misrepresentation and concealment of facts is 'above and beyond the wrongdoing' that forms the basis for their TILA and [ACFA] claims."
Finally, with respect to the IIED allegations, the Ninth Circuit held the plaintiffs failed to state a cause of action because they "essentially allege that the lenders offered them loans that the lenders knew they could not repay," which was not "extreme and outrageous" as is required to state a claim for IIED.
The Court also rejected the borrowers' equitable tolling argument as to the TILA and state UDAP statute of limitations, based upon the borrowers speaking only Spanish but their loan documents being only in English. In addition, the Court held that providing an unaffordable loan to a borrower was not "extreme and outrageous" as is required to state a claim for intentional infliction of emotional distress.
A copy of the opinion is available at:
http://www.ca9.uscourts.gov/datastore/opinions/2011/09/07/09-17364.pdf
The three named plaintiffs in the case obtained home loans or refinanced existing loans in 2006. The plaintiffs each executed a deed of trust in favor of their lender, naming MERS as the "beneficiary" and as the "nominee" for the lender and lender's "successors and assigns." The plaintiffs do not speak or read English, and negotiated the mortgage loans with their lenders in Spanish, but were provided with, and signed, copies of their loan documents written in English.
The plaintiffs subsequently defaulted on their loans. Following default, their respective lenders appointed trustees to initiate nonjudicial foreclosure proceedings. MERS's beneficial interests in the deeds of trust were all assigned to a foreclosure trustee.
The plaintiffs filed their putative class action, alleging conspiracy by their lenders and others to use MERS to commit fraud. They also alleged that their lenders violated the federal Truth in Lending Act ("TILA"), and the Arizona Consumer Fraud Act ("ACFA"), and committed the tort of intentional infliction of emotional distress ("IIED") by supposedly targeting the plaintiffs for loans they allegedly could not repay when the loans were extended.
The trial court dismissed the plaintiffs' first amended complaint, without leave to amend. Further, the trial court denied leave to file a proposed second amended complaint, and to add a new claim for wrongful foreclosure.
On appeal, the plaintiffs only addressed the district court's: (1) dismissal of their claim for conspiracy to commit fraud through the MERS system; (2) failure to address their oral request for leave to add a wrongful foreclosure claim; (3) dismissal of the foreclosure trustee from the suit; (4) denial of leave to amend their pleadings regarding equitable tolling of their TILA and ACFA claims; and (5) dismissal of their claim for IIED.
On appeal, the Ninth Circuit noted that the main premise of the plaintiffs' lawsuit was that the MERS system impermissibly "splits" the note and deed of trust by facilitating the transfer of the beneficial interest in the loan among lenders while maintaining MERS as the nominal holder of the deed. The Ninth Circuit rejected this theory.
The plaintiffs' lawsuit was also premised on the fact that MERS does not have a financial interest in the loans, which, according to the plaintiffs, renders MERS's status as a beneficiary a sham. The Ninth Circuit rejected this theory, also.
With respect to the conspiracy to commit fraud claim, the plaintiffs alleged that MERS members conspired to commit fraud by using MERS as a sham beneficiary, supposedly promoting and facilitating predatory lending practices through the use of MERS, and supposedly making it impossible for borrowers or regulators to track the changes in lenders.
In upholding the lower court's ruling that the plaintiffs failed to state a cause of action, the Ninth Circuit held "[t]he plaintiffs' allegations fail to address several of [the] necessary elements for a fraud claim."
Specifically, the plaintiffs failed to identify any false representations made to them about the MERS system, and failed to allege they relied on misrepresentations about MERS in deciding to enter into their home loans.
Moreover, the Ninth Circuit found the plaintiffs' allegations were undercut by the language in the standard deed of trust, which provided that MERS was acting "solely as a nominee for Lender and Lender's successors and assigns" and holds "only legal title to the interest granted by Borrower in this Security Instrument." The Court held that "[b]y signing the deeds of trust, the plaintiffs agreed to the terms and were on notice of the contents." The Court further held that "[i]n light of the explicit terms of the standard deed. . ., it does not appear that the plaintiffs were misinformed about MERS's role in their home loans."
With respect to the wrongful foreclosure claim, the Ninth Circuit held that "[t]he plaintiffs' oral request to add a wrongful foreclosure claim was procedurally improper and substantively unsupported." The plaintiffs based their wrongful foreclosure claim on the novel theory that "all transfers of the interests in the home loans within the MERS system are invalid because the designation of MERS as a beneficiary is a sham and the system splits the deed from the note, and, thus, no party is in a position to foreclose."
The Court rejected this argument, holding "[e]ven if MERS were a sham beneficiary, the lenders would still be entitled to repayment of the loans and would be the proper parties to initiate foreclosure after the plaintiffs defaulted on their loans." The Court further held that "the notes and deeds are not irreparably split: the split only renders the mortgage unenforceable if MERS or the trustee, as nominal holders of the deeds, are not agents of the lenders."
With respect to the allegations against the foreclosure trustee, the Court noted the only allegations the plaintiffs directed against the foreclosure trustee was that the trustee supposedly "failed to recognize that its appointment was invalid." The Ninth Circuit held the plaintiffs failed to state a cause of action, because the trustee had an "'absolute right' under Arizona law 'to rely upon any written direction or information furnished to him by the beneficiary.'"
The plaintiffs also asserted that the district court failed to address the equitable tolling of their purported claims under TILA and the ACFA. The plaintiffs alleged their TILA claim should have been tolled because they only speak Spanish, but received their loan documents in English. The Court disagreed, finding "the plaintiffs have not alleged circumstances beyond their control that prevented them from seeking a translation of the loan documents that they signed and received."
Further, the Court also held that the plaintiffs failed to state a claim for equitable estoppel because they "failed to specify what true facts are at issue, or to establish that the alleged misrepresentation and concealment of facts is 'above and beyond the wrongdoing' that forms the basis for their TILA and [ACFA] claims."
Finally, with respect to the IIED allegations, the Ninth Circuit held the plaintiffs failed to state a cause of action because they "essentially allege that the lenders offered them loans that the lenders knew they could not repay," which was not "extreme and outrageous" as is required to state a claim for IIED.
Mortgage rates hit lows
Freddie Mac now puts the average rate for a 30-year fixed mortgage at 4.12 percent and the 15-year rate at 3.33 percent
Freddie Mac Rolls Out New Standard Modification
http://www.freddiemac.com/sell/guide/bulletins/pdf/bll1116.pdf
The Standard Modification replaces Freddie Mac’s classic modification, which is a debt coverage ratio mod, and is part of the Servicing Alignment Initiative underway to bring the two GSEs’ protocol for handling defaulted loans in line with one another.
Freddie Mac says the new formula will help servicers simplify underwriting by using a standard set of modification terms, including a 5 percent interest rate, for all eligible borrowers.
The new Standard Modification is available to borrowers who don’t qualify for the government’s Home Affordable Modification Program (HAMP), and includes a trial period to help ensure borrowers can sustain their modified mortgage payments and reduce re-default rates in servicers’ Freddie Mac portfolios
The Standard Modification replaces Freddie Mac’s classic modification, which is a debt coverage ratio mod, and is part of the Servicing Alignment Initiative underway to bring the two GSEs’ protocol for handling defaulted loans in line with one another.
Freddie Mac says the new formula will help servicers simplify underwriting by using a standard set of modification terms, including a 5 percent interest rate, for all eligible borrowers.
The new Standard Modification is available to borrowers who don’t qualify for the government’s Home Affordable Modification Program (HAMP), and includes a trial period to help ensure borrowers can sustain their modified mortgage payments and reduce re-default rates in servicers’ Freddie Mac portfolios
Subscribe to:
Posts (Atom)
Posts
