Wednesday, May 4, 2011
NEW FORECLOSURES JUMP 21 PERCENT IN MARCH
Foreclosure activity increased sharply in March, a sign that lenders are coming to grips with the documentation problems that led to the robo-signing scandal last fall, MortgageLoan.com reported yesterday. Foreclosures were initiated on more than 217,000 homes in March, a 21 percent increase over February's rate, according to information released today by the HOPE NOW alliance. Nearly 85,000 properties were forfeited through foreclosure sales during the month, a 35 percent increase over February. The increase in foreclosures occurred despite a declining trend in mortgage delinquencies. There were 2.63 million residential mortgages at least 60 days past due in March, a 6 percent decline from February's level of 2.78 million, which in turn represented a similar decline from 2.95 million in January. Meanwhile, the number of at-risk homeowners obtaining private mortgage loan modifications from their lenders also increased significantly in March. There was no updated information provided for loan modifications performed through the government's Home Affordable Modification Program (HAMP); however, private modifications have recently been outpacing HAMP modifications by about a 3-to-1 ratio.
Credit Cards
FED SAYS CREDIT CARDS EASIER TO GET, BUT DOES ANYONE WANT ONE?
Banks were more willing to approve credit card applications in the first three months of 2011, according to a new survey from the Federal Reserve, but it was less than clear whether consumers really want them, according to a CreditCards.com report yesterday. According to the Federal Reserve's latest survey of senior loan officers—a quarterly poll of U.S. banks regarding their lending practices—credit card issuers were much more likely to approve applicants in the first quarter of this year, as banks are continuing to ramp up the flow of credit after slowing it to a trickle during the economic recession. There were mixed signals when it came to demand, however. The Fed noted that "demand was little changed for credit card loans" in the early months of 2011, ultimately showing a net decrease of about 3 percent. However, when the survey asked about both new credit card accounts and increases in existing credit lines, respondents said demand had gone up substantially (a net 16 percent). Those two results would seem to indicate that while people aren't really looking for new credit cards, they want access to more credit on the plastic they already carry
http://dizzy.abiworld.org/t/1520839/201584/7232/0/
Banks were more willing to approve credit card applications in the first three months of 2011, according to a new survey from the Federal Reserve, but it was less than clear whether consumers really want them, according to a CreditCards.com report yesterday. According to the Federal Reserve's latest survey of senior loan officers—a quarterly poll of U.S. banks regarding their lending practices—credit card issuers were much more likely to approve applicants in the first quarter of this year, as banks are continuing to ramp up the flow of credit after slowing it to a trickle during the economic recession. There were mixed signals when it came to demand, however. The Fed noted that "demand was little changed for credit card loans" in the early months of 2011, ultimately showing a net decrease of about 3 percent. However, when the survey asked about both new credit card accounts and increases in existing credit lines, respondents said demand had gone up substantially (a net 16 percent). Those two results would seem to indicate that while people aren't really looking for new credit cards, they want access to more credit on the plastic they already carry
http://dizzy.abiworld.org/t/1520839/201584/7232/0/
Interest Rates
U.S. Rep. Barney Frank (D-Mass.) today introduced a bill that would let interest rates be set only by Federal Reserve officials picked by the government, a new attempt to move power away from regional Fed officials chosen by the private sector, The Wall Street Journal reported today. The bill would remove from the 12-member policy-setting Federal Open Market Committee the five members who represent regional Fed banks. Only the seven-member board in Washington, which currently has two vacant seats, would get to vote on interest rates. The congressman said this would make the Fed more democratic and increase "transparency and accountability on the FOMC" by eliminating those officials who are effectively picked by business executives. Analysts said Frank's new proposal could hurt the Fed's independence from Congress. "Setting interest rates...that's a public function. And the Federal regional presidents are picked by private citizens," Frank, the ranking member of the House Financial Services Committee, told CNBC. However, not letting regional Fed presidents have a say in monetary policy would be "tragic," Hoenig said today. The banks allow the public around the country to have an input on the Fed's decisions, he argued.
http://www.gpo.gov/fdsys/pkg/BILLS-112hr1512ih/pdf/BILLS-112hr1512ih.pdf
http://www.gpo.gov/fdsys/pkg/BILLS-112hr1512ih/pdf/BILLS-112hr1512ih.pdf
APRIL CONSUMER BANKRUPTCY FILINGS FALL 7 PERCENT FROM LAST YEAR
April consumer bankruptcies decreased 7 percent nationwide from April 2010, according to the American Bankruptcy Institute (ABI).
FDIC Report Highlights Review of Foreclosure Practices
http://www.fdic.gov/regulations/examinations/supervisory/insights/sise11/SI_SE2011.pdf
The Special Foreclosure Edition of Supervisory Insights, released today, highlights lessons learned from an interagency horizontal review of the 14 largest residential mortgage servicers. This review resulted in Consent Orders with all entities reviewed.
To date, FDIC reviews of state nonmember banks have not identified instances of "robo-signing" or other serious deficiencies in mortgage servicing operations. Nevertheless, any bank involved in residential mortgage servicing can benefit from understanding the issues identified in the interagency review. To help institutions minimize their legal and reputational risks, this Special Foreclosure Edition provides examples, derived from the lessons learned, of effective residential mortgage servicing practices.
"The best practices outlined in this publication provide important suggestions for avoiding pitfalls in servicing mortgage loans," said FDIC Chairman Sheila C. Bair. "We encourage all residential mortgage servicers to read the article and consider the best practices as they review their own servicing operations."
Supervisory Insights provides a forum for discussing how bank regulation and policy are put into practice in the field, sharing best practices, and communicating about the emerging issues that bank supervisors face. The journal is available on the FDIC's Web site at http://www.fdic.gov/regulations/examinations/supervisory/insights/sise11/index.html. Suggestions for future topics and requests for permission to reprint articles should be e-mailed to supervisoryjournal@fdic.gov. Requests for print copies should be e-mailed to publicinfo@fdic.gov
The Special Foreclosure Edition of Supervisory Insights, released today, highlights lessons learned from an interagency horizontal review of the 14 largest residential mortgage servicers. This review resulted in Consent Orders with all entities reviewed.
To date, FDIC reviews of state nonmember banks have not identified instances of "robo-signing" or other serious deficiencies in mortgage servicing operations. Nevertheless, any bank involved in residential mortgage servicing can benefit from understanding the issues identified in the interagency review. To help institutions minimize their legal and reputational risks, this Special Foreclosure Edition provides examples, derived from the lessons learned, of effective residential mortgage servicing practices.
"The best practices outlined in this publication provide important suggestions for avoiding pitfalls in servicing mortgage loans," said FDIC Chairman Sheila C. Bair. "We encourage all residential mortgage servicers to read the article and consider the best practices as they review their own servicing operations."
Supervisory Insights provides a forum for discussing how bank regulation and policy are put into practice in the field, sharing best practices, and communicating about the emerging issues that bank supervisors face. The journal is available on the FDIC's Web site at http://www.fdic.gov/regulations/examinations/supervisory/insights/sise11/index.html. Suggestions for future topics and requests for permission to reprint articles should be e-mailed to supervisoryjournal@fdic.gov. Requests for print copies should be e-mailed to publicinfo@fdic.gov
South Carolina Halts Foreclosures with out loss Mitigation
The Supreme Court of South Carolina issued an administrative order on Tuesday halting all pending foreclosure actions and foreclosure sales on May 9th, until the lender can demonstrate they have worked with the borrower to pursue a loan modification or other loss mitigation option. Chief Justice Jean Toal says the purpose of the statewide order is to ensure mortgage foreclosures are not inappropriately concluded while an alternative resolution is being negotiated - the practice commonly referred to as dual-tracking.
http://www.dsnews.com/articles/south-carolina-supreme-court-halts-foreclosures-without-loss-mitigation-2011-05-03
http://www.sccourts.org/courtOrders/displayOrder.cfm?orderNo=2011-05-02-01
http://www.dsnews.com/articles/south-carolina-supreme-court-halts-foreclosures-without-loss-mitigation-2011-05-03
http://www.sccourts.org/courtOrders/displayOrder.cfm?orderNo=2011-05-02-01
PMI Expands LTVs and Credit Scores in Distressed Markets
http://www.dsnews.com/articles/pmi-expands-ltvs-and-credit-scores-in-distressed-markets-2011-05-03
PMI Mortgage Insurance Co. is seeing signs of strengthening in markets the firm classifies as “distressed,” enough so that the private mortgage insurer is relaxing its requirements for loan-to-value (LTV) ratios and minimum credit scores.
http://www.pmi-us.com/media/pdf/resourcecenter/uwguides/pmi_uwguideupdate.pdf
The California-based insurer issued a bulletin last week announcing that it is raising the LTV to 95 percent for both purchase transactions and rate-term refinances in distressed markets, as long as the borrower has at least a 720 credit score.
In addition, PMI has lowered the minimum credit score requirement to 680 for LTVs at or below 90 percent on one-unit properties and condominiums. The LTV max for co‐ops is 85 percent, and the lower credit score minimum of 680 also applies.
The company says it plans to add the entire states of Arizona and Florida to the list, effective July 1. Attached housing remains ineligible for mortgage insurance in the state of Florida.
PMI Mortgage Insurance Co. is seeing signs of strengthening in markets the firm classifies as “distressed,” enough so that the private mortgage insurer is relaxing its requirements for loan-to-value (LTV) ratios and minimum credit scores.
http://www.pmi-us.com/media/pdf/resourcecenter/uwguides/pmi_uwguideupdate.pdf
The California-based insurer issued a bulletin last week announcing that it is raising the LTV to 95 percent for both purchase transactions and rate-term refinances in distressed markets, as long as the borrower has at least a 720 credit score.
In addition, PMI has lowered the minimum credit score requirement to 680 for LTVs at or below 90 percent on one-unit properties and condominiums. The LTV max for co‐ops is 85 percent, and the lower credit score minimum of 680 also applies.
The company says it plans to add the entire states of Arizona and Florida to the list, effective July 1. Attached housing remains ineligible for mortgage insurance in the state of Florida.
Foreclosures Trapped by a Lack of Lawyers
Moves by banks to ditch law firms snared in the "robo-signing" mess are spreading delays and confusion to borrowers, while angering judges grappling with thousands of foreclosure cases now trapped in limbo, the Wall Street Journal reported today. The trouble began when U.S. banks and government-owned mortgage giants lost confidence in some law firms that handled a huge volume of foreclosures. After controversy erupted last fall over the shoddy review of loan documents known as robo-signing, banks dropped some law firms. Finding replacement lawyers who can pick up the slack quickly has been a struggle. While the resulting slowdown means that fewer houses are being seized, late fees are piling up for homeowners seeking a loan modifications. Investors who own bonds backed by those mortgages could face higher costs from the snags.
http://professional.wsj.com/article/SB10001424052748703703304576300151691529610.html?mod=WSJPRO_hpp_MIDDLE_Video_Third
Fannie has approved 16 law firms to handle its cases in the state, up from nine firms last year. Freddie uses 14 law firms in Florida, up from four. At one point David Stern's office handled 20% of all foreclosures in Florida.
The bottom line they will still lose the house because they aren't paying the mortgage.
http://professional.wsj.com/article/SB10001424052748703703304576300151691529610.html?mod=WSJPRO_hpp_MIDDLE_Video_Third
Fannie has approved 16 law firms to handle its cases in the state, up from nine firms last year. Freddie uses 14 law firms in Florida, up from four. At one point David Stern's office handled 20% of all foreclosures in Florida.
The bottom line they will still lose the house because they aren't paying the mortgage.
Monday, May 2, 2011
US Sup Ct Says FAA Preempts State Law Rule Allowing Invalidation of Class Action Waivers
As widely reported in the news, the Supreme Court of the United States recently held that the Federal Arbitration Act (FAA) preempted a state court rule that class action waivers in consumer arbitration agreements may be invalidated as unconscionable.
A copy of the opinion is available at
http://www.supremecourt.gov/opinions/10pdf/09-893.pdf.
Respondents-consumers (“Respondents”) entered into a contract for cell phones and service with AT& T. That contract provided for arbitration of all disputes between the parties, and disallowed class arbitration. After a dispute arose between the parties, Respondents filed a complaint in federal court in California. AT&T moved to compel arbitration.
Respondents opposed the motion on the grounds that the arbitration agreement was unconscionable.
The district court denied At & T’s motion, and the Ninth Circuit affirmed, finding the provision denying class arbitration unconscionable under state law. Both courts based their decision on the rule laid out in Discover Bank v. Superior Court, 36 Cal. 4th 148, 113 P. 3d 1100 (2005) (the “Discover Bank rule”). The Ninth Circuit further held that the Discover Bank rule was not preempted by the FAA. The Supreme Court granted certiorari.
As you may recall, the FAA provides that agreements to arbitrate are “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” See 9 U.S.C. §2.
The Discover Bank rule provides that class waivers in consumer arbitration agreements are unconscionable where the agreement is in an adhesion clause, the amount of damages are likely to be small, and the party with inferior bargaining power alleges a deliberate scheme to defraud. The Court’s decision turned on whether the Discover Bank rule was preempted by the FAA’s provision that agreements to arbitrate are generally valid, or consistent with the FAA’s provision that such agreements may be invalided upon legal or equitable grounds to revoke contracts.
In holding that the Discover Bank rule was preempted by the FAA, the United States Supreme Court began by examining the FAA, noting that it reflects a “liberal policy favoring arbitration” and was intended to allow for “efficient, streamlined procedures” to resolve disputes. The Court then laid out several flaws with class-wide arbitration, describing it as slower, costlier and more complicated than bilateral arbitration. The Court also raised a concern that if the Discover Bank rule were allowed to stand, then agreements to arbitrate might be invalidated on grounds that would effectively eliminate arbitration clauses from contracts (for example, on the grounds that such an agreement did not allow for judicially monitored discovery).
Further, the Court noted that the informal procedures of arbitration are
“poorly suited to the higher stakes of class litigation.” In particular,
the Court expressed doubt that defendants in arbitration matters would consent to class-wide arbitration, due to the risk of error, lack of judicial review, and the size of potential losses. Although the Court noted that defendants are often willing to accept those risks in bilateral arbitrations with smaller stakes, the Court stated that “[w]e find it hard to believe that defendants would bet the company with no effective means of review.”
Because “[r]equiring the availability of classwide arbitration interferes with fundamental attributes of arbitration and thus creates a scheme inconsistent with the FAA,” the Court held that the Discover Bank rule is preempted by the FAA.
A copy of the opinion is available at
http://www.supremecourt.gov/opinions/10pdf/09-893.pdf.
Respondents-consumers (“Respondents”) entered into a contract for cell phones and service with AT& T. That contract provided for arbitration of all disputes between the parties, and disallowed class arbitration. After a dispute arose between the parties, Respondents filed a complaint in federal court in California. AT&T moved to compel arbitration.
Respondents opposed the motion on the grounds that the arbitration agreement was unconscionable.
The district court denied At & T’s motion, and the Ninth Circuit affirmed, finding the provision denying class arbitration unconscionable under state law. Both courts based their decision on the rule laid out in Discover Bank v. Superior Court, 36 Cal. 4th 148, 113 P. 3d 1100 (2005) (the “Discover Bank rule”). The Ninth Circuit further held that the Discover Bank rule was not preempted by the FAA. The Supreme Court granted certiorari.
As you may recall, the FAA provides that agreements to arbitrate are “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” See 9 U.S.C. §2.
The Discover Bank rule provides that class waivers in consumer arbitration agreements are unconscionable where the agreement is in an adhesion clause, the amount of damages are likely to be small, and the party with inferior bargaining power alleges a deliberate scheme to defraud. The Court’s decision turned on whether the Discover Bank rule was preempted by the FAA’s provision that agreements to arbitrate are generally valid, or consistent with the FAA’s provision that such agreements may be invalided upon legal or equitable grounds to revoke contracts.
In holding that the Discover Bank rule was preempted by the FAA, the United States Supreme Court began by examining the FAA, noting that it reflects a “liberal policy favoring arbitration” and was intended to allow for “efficient, streamlined procedures” to resolve disputes. The Court then laid out several flaws with class-wide arbitration, describing it as slower, costlier and more complicated than bilateral arbitration. The Court also raised a concern that if the Discover Bank rule were allowed to stand, then agreements to arbitrate might be invalidated on grounds that would effectively eliminate arbitration clauses from contracts (for example, on the grounds that such an agreement did not allow for judicially monitored discovery).
Further, the Court noted that the informal procedures of arbitration are
“poorly suited to the higher stakes of class litigation.” In particular,
the Court expressed doubt that defendants in arbitration matters would consent to class-wide arbitration, due to the risk of error, lack of judicial review, and the size of potential losses. Although the Court noted that defendants are often willing to accept those risks in bilateral arbitrations with smaller stakes, the Court stated that “[w]e find it hard to believe that defendants would bet the company with no effective means of review.”
Because “[r]equiring the availability of classwide arbitration interferes with fundamental attributes of arbitration and thus creates a scheme inconsistent with the FAA,” the Court held that the Discover Bank rule is preempted by the FAA.
Stern Personal Liability
http://www.dailybusinessreview.com/PubArticleDBR.jsp?id=1202492177139&hbxlogin=1
A federal judge has ruled that former employees of DJSP Enterprises -- a company led by attorney David J. Stern, once known as the foreclosure king of South Florida -- can go after him personally as well as the company for allegedly violating labor laws.
http://blogs.palmbeachpost.com/realtime/2010/12/20/judge-to-david-j-stern-deadlines-are-deadlines/
http://www.abajournal.com/news/article/ex-employees_sue_sterns_foreclosure_law_firm_related_co._over_100s_of_layof/
http://www.cltmag.com/judge-rules-david-stern-company-may-be-held-liable-for-alleged-worker-act-violations.html
Stern Sues Banks
http://dockets.justia.com/search?q=David+Stern
A federal judge has ruled that former employees of DJSP Enterprises -- a company led by attorney David J. Stern, once known as the foreclosure king of South Florida -- can go after him personally as well as the company for allegedly violating labor laws.
http://blogs.palmbeachpost.com/realtime/2010/12/20/judge-to-david-j-stern-deadlines-are-deadlines/
http://www.abajournal.com/news/article/ex-employees_sue_sterns_foreclosure_law_firm_related_co._over_100s_of_layof/
http://www.cltmag.com/judge-rules-david-stern-company-may-be-held-liable-for-alleged-worker-act-violations.html
Stern Sues Banks
http://dockets.justia.com/search?q=David+Stern
1 out of 45 Households in Bankruptcy
About 54,000 households in the federal court district that includes the Sacramento region declared bankruptcy last year, up 20 percent from 2009.
The rate of bankruptcy filings in the eastern district of California is now about 50 percent higher than the national average.
Most filers asked for Chapter 7 protection, a liquidation which addresses unsecured debt like credit cards. About 10,000 filed for debt restructuring under Chapter 13, which is often done to try to save a home from foreclosure
The rate of bankruptcy filings in the eastern district of California is now about 50 percent higher than the national average.
Most filers asked for Chapter 7 protection, a liquidation which addresses unsecured debt like credit cards. About 10,000 filed for debt restructuring under Chapter 13, which is often done to try to save a home from foreclosure
Monk v. LSI Title Company of Oregon (In re Monk), 2011 WL 212381 (Bankr. D. Ore. January 21, 2011)
Monk v. LSI Title Company of Oregon (In re Monk), 2011 WL 212381 (Bankr. D. Ore. January 21, 2011)
Where a mortgage claim is disallowed during a Chapter 13 case, the lien is void and the mortgagee may not pursue rights against the property after the Debtor receives a discharge.
Where a mortgage claim is disallowed during a Chapter 13 case, the lien is void and the mortgagee may not pursue rights against the property after the Debtor receives a discharge.
California Foreclosure Bills Fall Flat with Committees
California legislators have put two bills aimed at addressing the state's foreclosure problem to committee votes. Both failed to pass despite the fact that supporters packed the hearing rooms at the state Capitol, but neither is completely dead. They have both been scheduled for new hearings in the coming week. The Senate bill would have made it unlawful for a lender to move forward with foreclosure while evaluating the borrower for a modification. A second bill in the Assembly would have levied a $20,000 fee on lenders and servicers for every foreclosure initiated.
http://www.dsnews.com/articles/california-foreclosure-bills-fall-flat-with-committees-2011-04-29
http://www.dsnews.com/articles/california-foreclosure-bills-fall-flat-with-committees-2011-04-29
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