http://www.lawjobs.com/newsandviews/LawArticle.jsp?hubtype=Tips&id=1202484405603&src=EMC-Email&et=editorial&bu=Law.com&pt=LAWCOM%20Newswire&cn=nw20110307&kw=Working%20Smart%3A%20Boosting%20Your%20Business%20Acumen&slreturn=1&hbxlogin=1
Law school teaches you to think like a lawyer but, to succeed in today's legal marketplace, you must also think like a businessperson. As the profession becomes increasingly bottom-line-oriented, business and management skills are essential to advancement within your organization and for optimally servicing your clients' needs. Each case or transaction involves money in some way, and every lawyer in private practice is running a business.
Tuesday, March 8, 2011
Bankruptcy Means Test Figures Changing March 15, 2011
The Bankruptcy Means Test figures are changing again on March 14, 2011 and I am once again reminded of how absurd the means test is. When the US Trustee posts new means test figures, I alway take a careful look at the numbers and compare them to determine how it will affect my clients. Increases in deductions or changes in median income can make be the difference between passing or failing the test.
http://www.justice.gov/ust/eo/bapcpa/20110315/meanstesting.htm
I don’t understand how anyone is expected to live on these made up figures. They don’t reflect reality or adjust for what a family really spends. The distance someone has to drive to work has no bearing on the case, nor the cost of their actual car or home maintenance. There was no increase in the operating costs for automobiles, despite the fact that the price of gas is rising.
Just to show you how absurd it is the allowance for housekeeping supplies for two people is a dollar more than for three people. Does the government think that three people need less cleaning products or use less toilet paper than two? The person setting this obiviously doesn't have a 5 yr old!
As people are loosing their jobs and the median income drops, more will be required to take the means test which could say that Chapter 7 bankruptcy is presumed to be an abuse of process. The bankruptcy Means Test will apply to, and potentially hurt, more people as unemployment rises and salaries drop.
If the median income figures for a state drops, it lowers the bar for debtors who will be subjected to the means test and the possibility of being denied help in Chapter 7 bankruptcy.
If debtors fail the means test, they often have to file a Chapter 13 repayment plan if they want to file bankruptcy. If a debtor is above median income, that Chapter 13 repayment plan will last for five years. Unfortunately, even though the means test says there is money available to make the Chapter 13 plan payments, real income and expense comparisons show that there is less or even no funds left once regular living expenses are paid.
Families who might not have had to take the means test prior to November 1st, 2009 may now subject to take, and maybe fail the test. My experience with the means test has been that it is most unfair to people just above median income since many necessary, common, reasonable and/or actual expenses are not allowed as deductions on the means test.
In Florida the new figures are as follows:
one household member $40,029
two $50,130
three $54,595
four $65,135
add $7,500 for each member in excess of four
National out of pocket healthcare costs per person
under 65 $60
over 65 $144
ARE THEY FRICKING KIDDING ME!
Administrative Expenses Multipliers
11 U.S.C. § 707(b)(2)(A)(ii)(III) allows a debtor who is eligible for chapter 13 to include in his/her calculation of monthly expenses the actual administrative expenses of administering a chapter 13 plan in the judicial district where the debtor resides. The chapter 13 multiplier (for the State of Florida) needed to complete Official Bankruptcy Forms 22A and 22C (Statement of Current Monthly Income and calculations) is set forth below. Form 22A is the form most chapter 7 debtors will complete and the multiplier is
entered on Line 45.b; Form 22C is the form most chapter 13 debtors will complete and the
multiplier is entered on Line 50.b.
Florida
FLM Middle District of Florida 7.4%
FLN Northern District of Florida 10.0%
FLS Southern District of Florida 9.8%
Collection Financial Standards for Food, Clothing and Other Items
Expense One Person Two Persons Three Persons Four Persons
Food $300 $537 $639 $757
Housekeeping supplies $29 $66 $65 $74
Apparel & services $86 $162 $209 $244
Personal care products & services
$32 $55 $61 $67
Miscellaneous $87 $165 $197 $235
Total $534 $985 $1,171 $1,377
More than four persons Additional Amount Per Person
For each additional person, add to four-person total allowance: $262
Bankruptcy Allowable Living Expenses – National Standards (See 11 U.S.C. § 707(b)(2)(A)(ii)(I))
Housing CostsA family of 2 in Pinellas w/ a mortgage or rent = $874 housing
A family of 4 $1026
Hillsborough $967 family 4 $1136
Pasco $746 $875
Operating Costs for Car
one car $244 two cars $488
Ownership Costs for Car
one $496
two $992
http://www.justice.gov/ust/eo/bapcpa/20110315/bci_data/median_income_table.htm
http://www.justice.gov/ust/eo/bapcpa/20110315/meanstesting.htm
I don’t understand how anyone is expected to live on these made up figures. They don’t reflect reality or adjust for what a family really spends. The distance someone has to drive to work has no bearing on the case, nor the cost of their actual car or home maintenance. There was no increase in the operating costs for automobiles, despite the fact that the price of gas is rising.
Just to show you how absurd it is the allowance for housekeeping supplies for two people is a dollar more than for three people. Does the government think that three people need less cleaning products or use less toilet paper than two? The person setting this obiviously doesn't have a 5 yr old!
As people are loosing their jobs and the median income drops, more will be required to take the means test which could say that Chapter 7 bankruptcy is presumed to be an abuse of process. The bankruptcy Means Test will apply to, and potentially hurt, more people as unemployment rises and salaries drop.
If the median income figures for a state drops, it lowers the bar for debtors who will be subjected to the means test and the possibility of being denied help in Chapter 7 bankruptcy.
If debtors fail the means test, they often have to file a Chapter 13 repayment plan if they want to file bankruptcy. If a debtor is above median income, that Chapter 13 repayment plan will last for five years. Unfortunately, even though the means test says there is money available to make the Chapter 13 plan payments, real income and expense comparisons show that there is less or even no funds left once regular living expenses are paid.
Families who might not have had to take the means test prior to November 1st, 2009 may now subject to take, and maybe fail the test. My experience with the means test has been that it is most unfair to people just above median income since many necessary, common, reasonable and/or actual expenses are not allowed as deductions on the means test.
In Florida the new figures are as follows:
one household member $40,029
two $50,130
three $54,595
four $65,135
add $7,500 for each member in excess of four
National out of pocket healthcare costs per person
under 65 $60
over 65 $144
ARE THEY FRICKING KIDDING ME!
Administrative Expenses Multipliers
11 U.S.C. § 707(b)(2)(A)(ii)(III) allows a debtor who is eligible for chapter 13 to include in his/her calculation of monthly expenses the actual administrative expenses of administering a chapter 13 plan in the judicial district where the debtor resides. The chapter 13 multiplier (for the State of Florida) needed to complete Official Bankruptcy Forms 22A and 22C (Statement of Current Monthly Income and calculations) is set forth below. Form 22A is the form most chapter 7 debtors will complete and the multiplier is
entered on Line 45.b; Form 22C is the form most chapter 13 debtors will complete and the
multiplier is entered on Line 50.b.
Florida
FLM Middle District of Florida 7.4%
FLN Northern District of Florida 10.0%
FLS Southern District of Florida 9.8%
Collection Financial Standards for Food, Clothing and Other Items
Expense One Person Two Persons Three Persons Four Persons
Food $300 $537 $639 $757
Housekeeping supplies $29 $66 $65 $74
Apparel & services $86 $162 $209 $244
Personal care products & services
$32 $55 $61 $67
Miscellaneous $87 $165 $197 $235
Total $534 $985 $1,171 $1,377
More than four persons Additional Amount Per Person
For each additional person, add to four-person total allowance: $262
Bankruptcy Allowable Living Expenses – National Standards (See 11 U.S.C. § 707(b)(2)(A)(ii)(I))
Housing CostsA family of 2 in Pinellas w/ a mortgage or rent = $874 housing
A family of 4 $1026
Hillsborough $967 family 4 $1136
Pasco $746 $875
Operating Costs for Car
one car $244 two cars $488
Ownership Costs for Car
one $496
two $992
http://www.justice.gov/ust/eo/bapcpa/20110315/bci_data/median_income_table.htm
http://considerchapter13.org/mortgage-morass/
http://considerchapter13.org/mortgage-morass/
New articles
HSBC Joins Bank of America and Chase in Temporary Suspension of Foreclosures pending Review
Regulators Near Agreement on Mortgage Risk Rules
Article on How Much Do I Really Owe on My Delinquent Mortgage? Three Answers Later
MERS Transfers Upheld in Five States
Restitution for Botched Foreclosures as High as $20 Billion
Research Article on BAPCPA and Mortgage Morass
New articles
HSBC Joins Bank of America and Chase in Temporary Suspension of Foreclosures pending Review
Regulators Near Agreement on Mortgage Risk Rules
Article on How Much Do I Really Owe on My Delinquent Mortgage? Three Answers Later
MERS Transfers Upheld in Five States
Restitution for Botched Foreclosures as High as $20 Billion
Research Article on BAPCPA and Mortgage Morass
California Senators Reintroduce Bill to Prevent Wrongful Foreclosures
http://www.dsnews.com/articles/california-senators-reintroduce-bill-to-prevent-wrongful-foreclosures-2011-03-04
With 305,000 California borrowers receiving notices of default and more than 170,000 families losing their homes to foreclosure in 2010, Sen. Mark Leno (D-San Francisco) and Senate President Pro Tem Darrell Steinberg (D-Sacramento) are again pushing for legislation that would help prevent what they deem as "wrongful foreclosures." Their California Homeowner Protection Act would require that borrowers be given a decision on a loan modification before the foreclosure process can begin.
With 305,000 California borrowers receiving notices of default and more than 170,000 families losing their homes to foreclosure in 2010, Sen. Mark Leno (D-San Francisco) and Senate President Pro Tem Darrell Steinberg (D-Sacramento) are again pushing for legislation that would help prevent what they deem as "wrongful foreclosures." Their California Homeowner Protection Act would require that borrowers be given a decision on a loan modification before the foreclosure process can begin.
FDIC Announces "Top 10" List of Online Resources for Consumers
Consumers of all ages are increasingly turning to the Internet for help with managing their finances, but knowing where to go online for reliable, practical money tips can be challenging. That's why the Federal Deposit Insurance Corporation has compiled a "Top 10" list of FDIC online resources for consumers on subjects ranging from deposit insurance to shopping for a bank account and avoiding financial fraud.
"FDIC.gov is a great starting point to learn about shopping for a bank account, maintaining a budget, building savings and avoiding financial scams," said FDIC Chairman Sheila C. Bair. "We encourage everyone to check out our Top 10 list and the many other online resources for consumers from the FDIC."
The FDIC's Top 10 list was announced today in observance of National Consumer Protection Week 2011 (NCPW), which is March 6-12. The FDIC home page is www.fdic.gov, but the Top 10 list is featured on a special page for NCPW at www.fdic.gov/consumers/consumer/information/ncpw/index.html.
Chairman Bair added: "The FDIC also is proud to be one of the organizing partners of National Consumer Protection Week and to support this year's theme of focusing on the importance of consumer access to practical financial information on the Internet."
Here are the 10 FDIC online resources the agency is encouraging consumers to use:
• "EDIE," the FDIC's Electronic Deposit Insurance Estimator: An online calculator that assists consumers and businesses in determining their deposit insurance coverage for each FDIC-insured bank where they have deposit accounts. EDIE also provides a printable report showing whether those deposits are fully protected or if some exceed the federal limits.
• FDIC Consumer News: The FDIC's quarterly publication for consumers offers information and tips on credit cards, bank accounts, loans, scams, money management, and much more. Consumers can also listen to articles anywhere, anytime online or by downloading to an MP3 player.
• Bank Find: Our online directory that consumers can use to locate an FDIC-insured institution, learn what happened to a bank that changed names or no longer exists, and more.
• Customer Assistance Form: An easy-to-use form to submit a question to the FDIC or a complaint regarding a financial institution. Of course, consumers with questions or concerns can also call the FDIC toll-free at 1-877-ASK-FDIC, which is 1-877-275-3342.
• Consumer Alerts: Warnings about financial frauds and scams.
• Small Business Web Page: Useful information for small businesses, especially regarding access to loans, plus an online form to ask the FDIC a question or register a concern.
• The FDIC YouTube Channel: Videos on topics such as deposit insurance and Internet fraud and messages from FDIC Chairman Bair.
• Money Smart: A financial education curriculum concentrating on the development of consumers' financial skills and positive banking relationships.
• Foreclosure Prevention Toolkit: A Web page that provides easy access to helpful information for homeowners on avoiding foreclosure and foreclosure "rescue" scams.
• E-mail updates: Sign up to receive e-mail notices of each new issue of FDIC Consumer News, Consumer Alerts, and other announcements and publications from the FDIC. Consumers can also follow the FDIC on Twitter and Facebook.
# # #
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 7,657 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.
FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically (go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information Center (877-275-3342 or 703-562-2200). PR-52-2011
"FDIC.gov is a great starting point to learn about shopping for a bank account, maintaining a budget, building savings and avoiding financial scams," said FDIC Chairman Sheila C. Bair. "We encourage everyone to check out our Top 10 list and the many other online resources for consumers from the FDIC."
The FDIC's Top 10 list was announced today in observance of National Consumer Protection Week 2011 (NCPW), which is March 6-12. The FDIC home page is www.fdic.gov, but the Top 10 list is featured on a special page for NCPW at www.fdic.gov/consumers/consumer/information/ncpw/index.html.
Chairman Bair added: "The FDIC also is proud to be one of the organizing partners of National Consumer Protection Week and to support this year's theme of focusing on the importance of consumer access to practical financial information on the Internet."
Here are the 10 FDIC online resources the agency is encouraging consumers to use:
• "EDIE," the FDIC's Electronic Deposit Insurance Estimator: An online calculator that assists consumers and businesses in determining their deposit insurance coverage for each FDIC-insured bank where they have deposit accounts. EDIE also provides a printable report showing whether those deposits are fully protected or if some exceed the federal limits.
• FDIC Consumer News: The FDIC's quarterly publication for consumers offers information and tips on credit cards, bank accounts, loans, scams, money management, and much more. Consumers can also listen to articles anywhere, anytime online or by downloading to an MP3 player.
• Bank Find: Our online directory that consumers can use to locate an FDIC-insured institution, learn what happened to a bank that changed names or no longer exists, and more.
• Customer Assistance Form: An easy-to-use form to submit a question to the FDIC or a complaint regarding a financial institution. Of course, consumers with questions or concerns can also call the FDIC toll-free at 1-877-ASK-FDIC, which is 1-877-275-3342.
• Consumer Alerts: Warnings about financial frauds and scams.
• Small Business Web Page: Useful information for small businesses, especially regarding access to loans, plus an online form to ask the FDIC a question or register a concern.
• The FDIC YouTube Channel: Videos on topics such as deposit insurance and Internet fraud and messages from FDIC Chairman Bair.
• Money Smart: A financial education curriculum concentrating on the development of consumers' financial skills and positive banking relationships.
• Foreclosure Prevention Toolkit: A Web page that provides easy access to helpful information for homeowners on avoiding foreclosure and foreclosure "rescue" scams.
• E-mail updates: Sign up to receive e-mail notices of each new issue of FDIC Consumer News, Consumer Alerts, and other announcements and publications from the FDIC. Consumers can also follow the FDIC on Twitter and Facebook.
# # #
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 7,657 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.
FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically (go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information Center (877-275-3342 or 703-562-2200). PR-52-2011
2nd Miami Trustee charged with Fraud
http://www.bizjournals.com/southflorida/news/2011/03/03/bankruptcy-trustee-marika-tolz-charged.html
Court-appointed receiver and bankruptcy trustee Marika Tolz has been charged with felony fraud.
Tolz stands accused of misappropriating at least $16 million in several court cases, resulting in about $2.4 million in losses to parties in the cases. The alleged fraud and missing funds had been disclosed in mid-2010 in civil investigations; Tolz had been removed from a federal panel of bankruptcy trustees.
Court-appointed receiver and bankruptcy trustee Marika Tolz has been charged with felony fraud.
Tolz stands accused of misappropriating at least $16 million in several court cases, resulting in about $2.4 million in losses to parties in the cases. The alleged fraud and missing funds had been disclosed in mid-2010 in civil investigations; Tolz had been removed from a federal panel of bankruptcy trustees.
Kansas senator files for bankruptcy
"A state senator who serves on the Ways and Means Committee and other financial panels has filed for personal bankruptcy.
Andover Republican Ty Masterson says most of his debts are from a failed business in 2006. The Wichita Eagle reports Masterson lists more than $800,000 in unsecured debts that aren't tied to assets or collateral."
http://hutchnews.com/Localregional/bankruptcy2011-03-06T20-37-16
See even the powerful and rich file bankruptcy, there is no shame in it.
Andover Republican Ty Masterson says most of his debts are from a failed business in 2006. The Wichita Eagle reports Masterson lists more than $800,000 in unsecured debts that aren't tied to assets or collateral."
http://hutchnews.com/Localregional/bankruptcy2011-03-06T20-37-16
See even the powerful and rich file bankruptcy, there is no shame in it.
Email Ethics
http://www.law.com/jsp/lawtechnologynews/PubArticleLTN.jsp?id=1202484681556&Beware_the_Evolving_Ethics_of_Reviewing_EMails=&src=EMC-Email&et=editorial&bu=Law.com&pt=LAWCOM%20Newswire&cn=nw20110308&kw=Beware%20the%20Evolving%20Ethics%20of%20Reviewing%20E-Mails&slreturn=1&hbxlogin=1
http://dockets.justia.com/docket/california/candce/3:2010cv04647/232966/
http://dockets.justia.com/docket/california/candce/3:2010cv04647/232966/
Wells Fargo Exits Wholesale Reverse Mortgage
Wells Fargo has announced that it is closing its wholesale reverse mortgage business in two weeks. "This move allows us to focus on forward mortgages and our other products and programs," says Kathleen Vaughan, executive vice president, in a statement to its reverse mortgage brokers. "We will accept reverse mortgage applications through close of business on Friday, March 18, and the wholesale reverse pipeline must fund by Saturday, April 30."
Wells Fargo is the nation's largest retail reverse mortgage originator, and this aspect of its business will remain in place. The San Francisco-based institution is the second major lender to wind down its reverse mortgage operations - Bank of America announced last month that it was shutting down its reverse mortgage activities.
SOURCE: Wells Fargo
Wells Fargo is the nation's largest retail reverse mortgage originator, and this aspect of its business will remain in place. The San Francisco-based institution is the second major lender to wind down its reverse mortgage operations - Bank of America announced last month that it was shutting down its reverse mortgage activities.
SOURCE: Wells Fargo
McCalla Raymer
McCalla Raymer, a Georgia-based legal provider in the default servicing space, has opened a Panama City, Fla., office location that will primarily service the firm's recent expansion into Florida.
The office is McCalla Raymer's third location in the state. The company also has offices in Fort Lauderdale and Orlando.
SOURCE: McCalla Raymer
The office is McCalla Raymer's third location in the state. The company also has offices in Fort Lauderdale and Orlando.
SOURCE: McCalla Raymer
Operation Watchdog Entangles 15 FHA Lenders
Fifteen direct-endorsement lenders that failed to underwrite loans to Federal Housing Administration (FHA) standards could face more than $23 million in civil enforcement actions following a recommendation by the U.S. [read more]
http://www.mortgageorb.com/e107_plugins/content/content.php?content.7974
http://www.hud.gov/offices/oig/reports/files/ig11cf1801.pdf
The 15 lenders at the heart of Operation Watchdog included the following:
Lombard, Ill.-based 1st Advantage Mortgage;
West Bloomfield, Mich.-based Birmingham Bancorp Mortgage Corp.;
Flint, Mich.-based Mac-Clair Mortgage Corp.;
Southlake, Texas-based Alacrity Lending Co.;
Millersville, Md.-based Dell Franklin Financial;
Farmington Hills, Mich.-based D&R Mortgage Corp.;
Englewood, Colo.-based Assurity Financial Services LLC;
Arlington, Texas-based Americare Investment Group;
Sugar Creek, Mo.-based American Sterling Bank;
Cheshire, Conn.-based Webster Bank;
Lakeway, Texas-based Alethes LLC;
Edison, N.J.-based Security Atlantic Mortgage Co. Inc.;
Memphis, Tenn.-based First Tennessee Bank NA;
Atlanta-based Pine State Mortgage Corp.; and
Great Neck, N.Y.-based Sterling National Mortgage Co. Inc
http://www.mortgageorb.com/e107_plugins/content/content.php?content.7974
http://www.hud.gov/offices/oig/reports/files/ig11cf1801.pdf
The 15 lenders at the heart of Operation Watchdog included the following:
Lombard, Ill.-based 1st Advantage Mortgage;
West Bloomfield, Mich.-based Birmingham Bancorp Mortgage Corp.;
Flint, Mich.-based Mac-Clair Mortgage Corp.;
Southlake, Texas-based Alacrity Lending Co.;
Millersville, Md.-based Dell Franklin Financial;
Farmington Hills, Mich.-based D&R Mortgage Corp.;
Englewood, Colo.-based Assurity Financial Services LLC;
Arlington, Texas-based Americare Investment Group;
Sugar Creek, Mo.-based American Sterling Bank;
Cheshire, Conn.-based Webster Bank;
Lakeway, Texas-based Alethes LLC;
Edison, N.J.-based Security Atlantic Mortgage Co. Inc.;
Memphis, Tenn.-based First Tennessee Bank NA;
Atlanta-based Pine State Mortgage Corp.; and
Great Neck, N.Y.-based Sterling National Mortgage Co. Inc
House to Wait for Senate to Act on "Swipe" Changes, Bachus Says
House Financial Services Committee Chairman Spencer Bachus (R-Ala.) said that U.S. House lawmakers will wait for the Senate to introduce changes to the Federal Reserve's proposal that would cap debit card "swipe" fees, Bloomberg News reported yesterday. The House panel's decision to wait for action by the Democrat-controlled Senate may delay the legislative attack on a rule that may cost banks including Bank of America Corp. and JPMorgan Chase & Co. as much as $12 billion in annual revenue. Sen. Richard Durbin (D-Ill.), who fought to require fee caps under the Dodd-Frank Act, said that he will block efforts to change that provision of the regulatory law. Fed Chairman Ben S. Bernanke and Federal Deposit Insurance Corp. Chairman Sheila Bair have questioned the measure, saying that an exemption for banks and credit unions with less than $10 billion in assets might have the unintended consequences of making the smaller firms less competitive.
http://www.bloomberg.com/news/print/2011-03-07/house-to-wait-for-senate-to-act-on-swipe-changes-bachus-says.html
http://www.bloomberg.com/news/print/2011-03-07/house-to-wait-for-senate-to-act-on-swipe-changes-bachus-says.html
Senate Democrats Want SEC, CFTC Funding Restored
Senate Democrats late on Friday unveiled their version of a federal budget that restores funding for the Securities and Exchange Commission and the Commodity Futures Trading Commission to the full levels proposed by the president: $1.26 billion and $286 million, respectively, the Deal Pipeline reported yesterday. On Feb. 19, the House Republicans approved a plan that cut more than $60 billion from Obama's budget, slashing money for health reform, the Environmental Protection Agency, student aid and public broadcasting, along with money for the SEC and the CFTC. The Republican plan would fund the SEC and CFTC budgets at $1.1 billion and $186 million respectively, levels that would force both agencies to cut back on staff and technology at the same time they are assuminig their new Dodd-Frank Act responsibilities. Republicans also moved to bar the Obama administration from using czars to run various programs including the Troubled Asset Relief Program
Attorneys General Push for Loan Reductions, Seek Bank Accord
State attorneys general are pushing lenders to reduce loan balances and said that they hope to reach a final settlement with banks over their mortgage-servicing and foreclosure practices within two months, Bloomberg News reported today. The states along with federal agencies submitted a 27-page settlement proposal last week to the country's five largest mortgage servicers and aim to reach an agreement that leads to more loan modifications for homeowners having trouble making their payments, attorneys general said yesterday. The companies that received the settlement terms service 59 percent of U.S. home loans and include Bank of America Corp., Wells Fargo & Co., JPMorgan Chase & Co., Ally Financial Inc. and Citigroup Inc. The settlement sheet seeks to force procedural changes on servicers, including banning companies from initiating foreclosure proceedings while a loan modification is pending, providing borrowers with a single point of contact, and informing borrowers of denied modifications in writing.
http://www.bloomberg.com/news/print/2011-03-07/foreclosure-settlement-said-to-be-sought-by-states-u-s-within-two-months.html
http://www.bloomberg.com/news/print/2011-03-07/foreclosure-settlement-said-to-be-sought-by-states-u-s-within-two-months.html
AGs' Servicer Reform - The 27 Pages of Proposed Settlement Terms
The proposed 27-page settlement term sheet, provided to the five largest mortgage servicers by a national coalition of state Attorneys General and reportedly also by federal banking regulators.
The proposed terms touch on a variety of areas, including:
- Foreclosure and Bankruptcy Information and Documentation, including: (a) standards for affidavits and sworn statements in foreclosures and bankruptcies; (b) verification of borrower account information; (c) documentation of rights to note and chain of title; and (d) quality assurance systems and audits;
- Loss Mitigation Requirements, including: (a) a loss mitigation requirement; (b) prohibition on "dual tracking;" (c) requirements for a single point of contact and single electronic record; (d) outreach efforts for loss mitigation; (e) independent auditing for SCRA compliance; (f) loss mitigation "portals" for borrowers and housing counselors; (g) specific loss mitigation timelines; (h) independent review of loss mitigation denials; (i) required support and funding for state-based foreclosure prevention hotlines; (j) application of the FHA Short Refinance Program to non-FHA loans; (k) staffing and technology requirements; (l) standardization and disclosure of proprietary loan mod programs; (m) principal reductions; (n) second lien loan modifications; (o) free document delivery services through national retailers; (p) consideration of final or "back-end" DTI in loan modification applications; (q) monetary incentives and other provisions for short sales; (r) transfer of servicing issues; and (s) other loss mitigation related matters;
- Restrictions on Servicing Fees, including: (a) requirements that all such fees and bona fide, reasonable, and disclosed in detail to borrowers; (b) maintenance of a fee schedule for disclosure to borrowers; (c) limits on attorneys fees; (d) prohibition on so-called "pyramiding" of late fees and other late fee restrictions; (e) limits on third-party fees; (f) and requirements for lender-placed insurance;
- General Servicer Duties and Prohibitions, including: (a) a duty of good faith and fair dealing to borrowers; (b) a duty to ensure that distressed properties and charged-off loan properties do not become blighted; and (c) a duty not to unreasonably delay foreclosures and transfers of title as to abandoned properties;
- General Prohibitions, including: (a) prohibitions on deceptive conduct; (b) prohibitions on funds payment requirements that are more expensive to consumers than certified checks or attorneys checks; and (c) requirements to communicate with representatives of the borrower who provide written authorization and other reasonable assurances of authorization;
- Monetary Relief, in an unstated amount; and
- Compliance Review and Monitoring, including: (a) data reporting to federal and state regulators as to compliance with the settlement; (b) third-party review by auditor selected by the Ags and the CFPB, and (c) penalties for non-compliance.
The proposed terms touch on a variety of areas, including:
- Foreclosure and Bankruptcy Information and Documentation, including: (a) standards for affidavits and sworn statements in foreclosures and bankruptcies; (b) verification of borrower account information; (c) documentation of rights to note and chain of title; and (d) quality assurance systems and audits;
- Loss Mitigation Requirements, including: (a) a loss mitigation requirement; (b) prohibition on "dual tracking;" (c) requirements for a single point of contact and single electronic record; (d) outreach efforts for loss mitigation; (e) independent auditing for SCRA compliance; (f) loss mitigation "portals" for borrowers and housing counselors; (g) specific loss mitigation timelines; (h) independent review of loss mitigation denials; (i) required support and funding for state-based foreclosure prevention hotlines; (j) application of the FHA Short Refinance Program to non-FHA loans; (k) staffing and technology requirements; (l) standardization and disclosure of proprietary loan mod programs; (m) principal reductions; (n) second lien loan modifications; (o) free document delivery services through national retailers; (p) consideration of final or "back-end" DTI in loan modification applications; (q) monetary incentives and other provisions for short sales; (r) transfer of servicing issues; and (s) other loss mitigation related matters;
- Restrictions on Servicing Fees, including: (a) requirements that all such fees and bona fide, reasonable, and disclosed in detail to borrowers; (b) maintenance of a fee schedule for disclosure to borrowers; (c) limits on attorneys fees; (d) prohibition on so-called "pyramiding" of late fees and other late fee restrictions; (e) limits on third-party fees; (f) and requirements for lender-placed insurance;
- General Servicer Duties and Prohibitions, including: (a) a duty of good faith and fair dealing to borrowers; (b) a duty to ensure that distressed properties and charged-off loan properties do not become blighted; and (c) a duty not to unreasonably delay foreclosures and transfers of title as to abandoned properties;
- General Prohibitions, including: (a) prohibitions on deceptive conduct; (b) prohibitions on funds payment requirements that are more expensive to consumers than certified checks or attorneys checks; and (c) requirements to communicate with representatives of the borrower who provide written authorization and other reasonable assurances of authorization;
- Monetary Relief, in an unstated amount; and
- Compliance Review and Monitoring, including: (a) data reporting to federal and state regulators as to compliance with the settlement; (b) third-party review by auditor selected by the Ags and the CFPB, and (c) penalties for non-compliance.
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