california mortgage loan

In California, Homeowners at Risk Struggle to Find Lawyers - NYTimes.com

2011-01-25T23:16:00.001-08:00

Homes at Risk, and No Help From Lawyers
By DAVID STREITFELD
In California, where foreclosures are more abundant than in any other state, homeowners trying to win a loan modification have always had a tough time.

Now they face yet another obstacle: hiring a lawyer.

Sharon Bell, a retiree who lives in Laguna Niguel, southeast of Los Angeles, needs a modification to keep her home. She says she is scared of her bank and its plentiful resources, so much so that she cannot even open its certified letters inquiring where her mortgage payments may be. Yet the half-dozen lawyers she has called have refused to represent her.

“They said they couldn’t help,” said Ms. Bell, 63. “But I’ve got to find help, because I’m dying every day.”

Lawyers throughout California say they have no choice but to reject clients like Ms. Bell because of a new state law that sharply restricts how they can be paid. Under the measure, passed overwhelmingly by the State Legislature and backed by the state bar association, lawyers who work on loan modifications cannot receive any money until the work is complete. The bar association says that under the law, clients cannot put retainers in trust accounts.

The law, which has few parallels in other states, was devised to eliminate swindles in which modification firms made promises about what their lawyers could do, charged hefty fees and then disappeared. But foreclosure specialists say there has been an unintended consequence: the honest lawyers can no longer afford to assist Ms. Bell and all the others who feel helpless before lenders that they see as elusive, unyielding and skilled at losing paperwork.

The revelations three months ago that large banks were sloppy and negligent in preparing foreclosure documents underscore just how important it is for distressed homeowners to have representation, lawyers and consumer advocates say. Homeowners whose cases were handled improperly have little way of knowing it. Even if they found out, they would be hard-pressed to challenge a lender without a lawyer.

“Consumers just don’t know what is going on,” said Walter Hackett, a former banker who is now a lawyer for a nonprofit service in Riverside. “They get a piece of paper saying they are going to lose their homes and they freak out.”

The problem for lawyers is that even a simple modification, in which the loan is restructured so the borrower can afford the monthly payments, is a marathon, putting off their payday for months if not years. If the bank refuses to come to terms, the client may file for bankruptcy. Then the lawyer will never be paid.

Alice M. Graham, a lawyer in Marina del Rey, said a homeowner in default recently tried to hire her. When Ms. Graham declined, the despairing owner begged her in vain to accept payments under the table.

“The banks have all the lawyers they want, and the consumers are helpless,” Ms. Graham said.

In some states, including New York and Florida, foreclosure proceedings are overseen by courts. In California, the process is more of a private matter between the bank and the homeowner. Through Sept. 30, lenders filed notices of default on 229,843 homes in California this year, according to the research firm MDA DataQuick.

The length of time California households spend in foreclosure, which was rising as owners pursued modifications, fell in the third quarter to 8.7 months, from 9.1 months in the second quarter. That could indicate that the absence of defense lawyers is beginning to accelerate the process.

While lawyers for nonprofits like Mr. Hackett continue to represent clients, they are too overwhelmed to help everyone. “A homeowner in California is going to have an extraordinarily difficult time finding an attorney,” he said.

That group includes Ms. Bell, who owned two properties free and clear and then gave in to a friend’s urging to “put your money to work.” That friend was an agent, and soon Ms. Bell owned two more properties and was making unsecured loans.

The loans went bad, the investments went bust, and Ms. Bell is trying to salvage her home. She wants an advocate but is reluctant to respond to any of the solicitations that fill her mailbox. “I know better,” she said.

Many people did not. Defaulting owners saw television commercials or heard radio ads where a lawyer promised relief. They handed over a few thousand dollars and heard no more.

Two years ago, the state bar association had seven complaints of misconduct in loan modifications. By March 2009, there were more than 100 complaints, and a task force was formed to deal with the problem. Soon, there were thousands of complaints.

It was a public relations disaster. The president of the bar association wrote in a column last year that “hundreds, and perhaps thousands, of California lawyers” were victimizing people “at the most vulnerable point in their lives.”

Politicians heard complaints, too. Ron Calderon, a state senator who represents several communities east of Los Angeles, sponsored a bill that prohibits advance payments for modifications and required lawyers to warn clients that they could do the job themselves without professional assistance. Lenders were supportive of the bill, Senator Calderon said.

It passed 36 to 4 in September 2009. The maximum punishment is a $10,000 fine and a year in jail.

The law is working well, Senator Calderon said. “You do not need a lawyer,” he said.

Mark Stone, a 56-year-old general contractor in Sierra Madre, feels differently. A few years ago, he got sick with hepatitis C. Unable to work full time, he began to miss mortgage payments. The drugs he was taking left him “a little confused,” he said.

Mr. Stone knew that his condition put him at a disadvantage in negotiations with his bank. So he hired Gregory Royston, a real estate lawyer in Redondo Beach. It took Mr. Royston nearly a year, but he restructured the loan.

Without the lawyer, Mr. Stone said, “I’d be living under a bridge.”

The legal bill, paid in advance, was $3,500. “Worth every penny,” said Mr. Stone, who is now back at work.

Mr. Royston said winning modifications was never easy and often impossible. “The banks stymie the borrower, and they really stymie any third party who works on behalf of the borrower,” he said.

A spokesman for the Mortgage Bankers Association said it simply wanted to protect homeowners from fraud. “Be very careful about anyone who wants you to pay them to help you get a loan modification,” said the spokesman, John Mechem.

That advice has never been more true. If any honest lawyers still do modifications, they are lost in a sea of swindles. “This law,” Mr. Royston said, “took the wrong people out of the game.”

Suzan Anderson, supervising trial counsel of the California bar’s special team on loan modification, defended the law, saying that in other types of cases, including personal injury and medical malpractice, the lawyers do not get paid until the end. She acknowledged, however, it was “a very problematical situation.”

As for the swindlers singled out by the law, they appear unfazed. The state bar is investigating 2,000 complaints of modification fraud.

“I wish the law had worked,” Ms. Anderson said.

Wells Fargo to Modify Mortgages

LOS ANGELES (AP) — Wells Fargo agreed to modify about 14,900 adjustable-rate loans made by banks it acquired, according to filings released on Monday.

The agreement with the state attorney general will result in more than $2 billion in principal write-downs, interest-rate reductions and other concessions through June 2013, said Franklin Codel, chief financial officer of Wells Fargo Home Mortgage.

The deal applies to mortgages marketed as “pick-a-payment” loans by Wachovia and World Savings Bank, a subsidiary of the Golden West Financial Corporation.

Wachovia bought World Savings in 2006, and Wells Fargo bought Wachovia in 2008.

The mortgages were so named because their terms allowed borrowers to make payments at various levels each month, including a payment option that increased the loan’s principal by covering less than the monthly interest owed.
In California, Homeowners at Risk Struggle to Find Lawyers - NYTimes.com

California Mortgage Foreclosure Case May Become Class Action Lawsuit: Hearing January 25, 2011 Los Angeles Superior Court

2011-01-25T23:16:00.000-08:00

FOR IMMEDIATE RELEASE

Media Contact:
The Wroan Law Firm, Inc.
Telephone: 310-973-4291

LOS ANGELES, CA (January 5, 2011)

One of the longest running cases involving the lending crises in California has just become more interesting and potentially even more complex.

The case is little known and has not been reported on but is unusual because it was initially filed nearly three years ago in March of 2008 but until recently had been stayed by the court. Now, on January 25th the Los Angeles Superior Court will hear a motion by the Plaintiffs to amend their complaint in order to pursue their case as a class action.

Case No. BC 386920 has all the familiar facts and allegations of other similar cases around the country including forged loan documents, misrepresentations and fraud but is noteworthy because it also includes a dispute over the interpretation of a Master Repurchase Agreement (“MRA”) between two of the defendants Accredited Home Lenders, Inc. and Wachovia Bank, N.A. These so called ‘repurchase agreements’ have recently come under scrutiny with the revelation last month by the New York State Attorney General’s office that it has filed a complaint against the accounting firm Ernst & Young for failing to properly characterize such transactions as loans rather than as ‘purchases or sales’.

In addition, the case is also significant because it calls into question the validity of a foreclosure services agreement (“FSA”) in which legal services were performed and provided by non licensed entities and individuals conducting foreclosures in the states of Washington, Nevada, Virginia and California. The claims of unauthorized practice of law, unfair competition and trade practices are the first of its kind in California but have been raised in other cases most notably In re Thorne v. Prommis Solutions Holding Corporation, Lender Processing Services, Inc., LPS Default Solutions, LLC et al. in the United States Bankruptcy Court for the Northern District of Mississippi Case No. 09-11763-DWH.. In that case the U.S. Department of Justice recently joined in as a plaintiff in November 2010.

For a copy of the proposed complaint see:
http://www.wroanlawfirm.com/CLASS_ACTION_COMPLAINT.pdf

For a copy of the Exhibits including the MRA and ‘Foreclosure Services Agreement’ see:
http://www.wroanlawfirm.com/Ex_1-2_%20of_3rd_Amended_Comp.pdf

Scandal-hit Calif. city near bankruptcy - UPI.com

2011-01-07T13:53:00.000-08:00

BELL, Calif., Jan. 7 (UPI) -- The small city of Bell, Calif., notorious for its officials' extravagant pay, is going broke, an audit warns.

A review by Los Angeles County, released Thursday, estimates if the city keeps spending at current rates, it will run a $2.2 million deficit by the end of the fiscal year, the Los Angeles Times reported.

The audit called for laying off employees, cutting city salaries, benefits, supplies and services, offering only "core services" and possibly disbanding the police force.

Pedro Carrillo, Bell's interim chief administrative officer, said Thursday he will present the city council with ways to balance the budget.

"All options are on the table," he responded when asked if bankruptcy was a possibility.

The city, one of the county's poorest, was engulfed in scandal last year when the Times revealed its leaders' astronomical salaries.

In September, former city manager Robert Rizzo, Mayor Oscar Hernandez, a former assistant city manager and five council members were arrested and charged with misappropriation of public funds.

Read more: http://www.upi.com/Top_News/US/2011/01/07/Scandal-hit-Calif-city-near-bankruptcy/UPI-11641294419013/#ixzz1AOAkWjcu
Scandal-hit Calif. city near bankruptcy - UPI.com

S.E.C. Said to Be Investigating Calpers on Disclosures - NYTimes.com

2011-01-07T10:54:00.000-08:00

Federal regulators are investigating whether California violated securities laws and failed to provide adequate disclosure about its giant public pension fund, according to a person with knowledge of the investigation.

The Securities and Exchange Commission normally polices companies, but last year it brought its first enforcement action ever against a state, accusing New Jersey of securities fraud for misleading bond investors about the condition of its pension fund. The commission signaled, in its settlement with New Jersey, that it was going to look more broadly at the pension disclosures of states and cities.

The fund, the California Public Employees’ Retirement System, known as Calpers, lost about a quarter of its total investment portfolio during the financial crisis, leaving the state responsible for replacing billions of dollars each year and contributing to its huge deficit. The question is whether California adequately disclosed in the preceding years how risky the pension investments were and how much money it might need to cover any shortfall.

But it is unclear whether investigators are focusing on those risks or on possible conflicts of interest in steering investments to related parties, the subject of a separate investigation by the attorney general of California.

S.E.C. officials declined to confirm an investigation, citing agency rules. But the person with knowledge of the investigation said it was among the agency’s top priorities. A spokeswoman for Calpers, which is America’s largest pension fund with assets of about $220 billion, said it had not been contacted by the S.E.C. about its accounting or about financial disclosures.

“The SEC has an ongoing look at pension funds in California” because of revelations about the use of placement agents who recommended investment managers, said Patricia Macht, a spokeswoman for Calpers.

Along with concerns about the use of placement agents, regulators have grown increasingly concerned about whether states may have hidden financial weaknesses, particularly in their pension portfolios, and whether investors who buy municipal bonds can fully appreciate the risks.

A spokesman for the California state treasurer’s office, which is responsible for disclosures to bondholders, said “we provided all material information about pension fund issues at all times.”

California has not defaulted on any debts and says its bonds are safe. But the state has been grappling with big, structural budget deficits every year, and cannot easily increase revenue because of voter-approved tax caps. The state’s credit has been downgraded as these financial problems have intensified, and the downgrades have in turn lowered its bonds’ value. Had investors been able to clearly see the pension risks, they might have steered clear of California’s debt or demanded a higher yield.

If federal investigators are able to make a case that California misled investors about the risk in its pension fund, it would send a powerful signal to other public funds, which almost without exception base their financial reporting on average annual investment returns of about 8 percent a year, something hard to defend in today’s markets, no matter what the investment mix.

The S.E.C.’s goal is to force public pension funds to be more open, not just about their investments but about how their risk may affect the finances of the state. It is unlikely that the S.E.C. would impose any penalty because that would force taxpayers to pay for wrongs they knew nothing about. In the New Jersey case, the S.E.C. imposed no penalty but publicized the case in hopes it would be a deterrent.

Any accusation of securities fraud could take years because public finance is a new area for the S.E.C. and any case would rely on novel legal theories. It would be a blow to Calpers, which has used its institutional clout for years to promote good corporate governance and truth in accounting. Calpers has recently pushed for boardroom reforms at JPMorgan Chase, Goldman Sachs, Apple, and BP, among others. And it has sued Moody’s, Fitch and Standard & Poor’s, accusing them of giving “untrue, inaccurate and unjustifiably high” ratings to structured investment vehicles that failed in the mortgage collapse.

Its activism has served as a role model for smaller public pension funds that have also had losses, but might not have been able to challenge corporate governance practices on their own. But now the tables have turned, because S.E.C. investigators hope to use Calpers as an example in a case about of how misleading pension disclosures can amount to securities fraud, according to the person with knowledge of the investigation. Like most public plans, Calpers has maintained that its accounting methods are appropriate and that it is in full compliance.

Calpers has lately been under fire for a big benefit increase in 1999. At that time the fund ran various assumptions on how its investments might do. It discussed them in a public meeting but the state did not put them into its bond prospectus, which was the responsibility of the state treasurer, then Phil Angelides, who also sat on the board of Calpers.

In the years after that, Calpers stepped up its investments in real estate, riding the market up and then crashing when the housing bubble burst. The worst case, created by Calpers’ staff, turned out to be oddly prescient. It said the state might have to come up with $3.95 billion a year in fresh money for the pension fund by the end of 2010. In fact, the state has to contribute $3.88 billion.

Mr. Angelides, now chairman of the Financial Crisis Inquiry Commission, was not available to comment Thursday because the commission was finishing its report.

David Crane, an aide to then Gov. Arnold Schwarzenegger, said last year in legislative testimony that he found it “nothing short of astonishing” that Calpers had “promoted the largest nonvoter-approved debt issuance in California history” without revealing the risks or conflicts of interest involved.

“Frankly, I’ve never seen anything like the Calpers sales document, which makes even Goldman Sachs’s alleged nondisclosure look like child’s play,” said Mr. Crane, who testified at a time when the S.E.C. was suing Goldman Sachs over alleged disclosure violations in connection with mortgage-backed securities.

S.E.C. Said to Be Investigating Calpers on Disclosures - NYTimes.com

Now That It's Out of Bankruptcy, Pasadena Playhouse to produce musical 'Twist,' directed by Debbie Allen | Culture Monster | Los Angeles Times

2011-01-05T10:47:00.000-08:00

As the Pasadena Playhouse continues to work toward full financial recovery, leaders have been gradually announcing new main-stage productions, short of committing to a full season. On Tuesday, the company added another show to its roster -- the new musical, "Twist," based on the Charles Dickens classic, "Oliver Twist." It is set to open June 25.

"Twist" had its world premiere in 2010 at the Alliance Theatre in Atlanta. The musical transposes Dickens' story of an orphan boy who falls in with a gang of pickpockets to New Orleans on the eve of the Great Depression. The score is by songwriters Tena Clark and Gary Prim, and the book is by Tony Award nominee William F. Brown.

Debbie Allen directed and choreographed the Atlanta production and will return for the Pasadena version. The cast for the musical will be announced at a later date.

The musical will begin preview performances on June 14 and is scheduled to run through July 24.

"Twist" has been kicking around regional theaters in various workshop forms since the 1990s, but the musical was reportedly revised for the Atlanta production. A reviewer for the Atlanta Journal-Constitution praised the cast and Allen's direction, but wrote that the musical overall "feels overly politicized and unoriginal."

The Pasadena Playhouse shut down its main stage in February due to crushing debt and other financial pressures. The company emerged from bankruptcy in July and said that it has successfully raised $2 million thanks to a matching grant. Since reopening its main stage, the company has mounted productions of the solo show "FDR," starring Ed Asner, and "Uptown Downtown," starring Leslie Uggams.
In February, the Pasadena Playhouse will start performances of the new musical "Dangerous Beauty," which is based on the 1998 movie of the same name.

-- David Ng Pasadena Playhouse to produce musical 'Twist,' directed by Debbie Allen | Culture Monster | Los Angeles Times

Bankruptcies top 1.5 million - Jan. 3, 2011

2011-01-03T19:06:00.000-08:00

Bankruptcies top 1.5 million - Jan. 3, 2011

Buying or Selling Gold in Pasadena, California? Know the Law!

2010-12-29T14:27:00.000-08:00

Buying or Selling Gold? Know the law!

The Pasadena Police Department would like to inform the public that buying gold is against the law unless you are licensed through the California Department of Justice. Gold buyers are required by law to ask for identification from whoever they buy from and maintain a description of the items they are buying. This information is then reported to local law enforcement.

“Given the current economic constraints, selling excess jewelry has become a viable option for some people,” says Chief of Police Phillip Sanchez. “But we want to caution people that care should be taken to buy from and sell to only licensed second hand dealers. This helps to prevent crime and will prevent people from buying stolen property unknowingly.” Businesses that do not possess a second hand dealer’s license and engage in buying and selling gold and other items are breaking the law, are subject to arrest, a $1500.00 fine and accusations of dealing in stolen property.

Several businesses in the City of Pasadena advertise “We Buy Gold” and these businesses must be licensed as a “Second Hand Dealer”. They are regulated by the Pasadena Police Department. Some businesses may knowingly or unknowingly take in stolen property that belongs to a victim of a crime.

This license also applies to those who are buying other used items that bear a serial number or identifying marks such as laptop computers, iPods, cell phones and gaming devices. These goods have been found to constitute a “significant class of stolen goods” and must be reported to law enforcement.

“By using reputable, licensed businesses, the average citizen can curb the buying and selling of stolen goods,” continues Chief Sanchez. “When we make it harder for thieves to sell their ill gotten gains, there is more of a chance to stem property crimes related to burglary.

For more information or to become licensed by the Department of Justice, please call Detective Sergeant Marie Sell at 626-744-3816.

Student loans leave crushing debt burden - Business - CNBC TV - msnbc.com

2010-12-22T14:40:00.000-08:00

The cost of a college education is rising faster than the cost of medical care and as much as three times as fast as consumer prices in general. But that's just the beginning of the price of admission.
This is the story of a debt crisis few are talking about.
Americans now owe more on their student loans than they do on their credit cards — a debt fast approaching $1 trillion with no end in sight.
Students borrow because they see little choice. A college education, after all, is a key to success. That, it seems, is an article of faith.
For Rick and Tami Tuipers, of the Chicago suburb of Tinley Park, Ill., the world revolves around their kids.
"We've committed to our children's education from day one," said Tami. "That's the commitment we made when they were born."
Zach is a high school sophomore and, at 15, the youngest in the family. Shelby, 18, is a senior and interested in science.
To read more click here:
Student loans leave crushing debt burden - Business - CNBC TV - msnbc.com

WaMu Bankruptcy Judge Keeps Documents Secret - ABC News

2010-12-20T00:25:00.000-08:00

to read the article, click here WaMu Bankruptcy Judge Keeps Documents Secret - ABC News

Loehmann's strikes deal for quick bankruptcy exit

2010-12-16T09:11:00.000-08:00

By Tom Hals

WILMINGTON, Del., Dec 15 (Reuters) - Retailer Loehmann's [ARCABL.UL] said on Wednesday it reached an agreement with unsecured creditors that will allow the department store chain to exit bankruptcy by Feb. 18.

Loehmann Capital Corp's current owner, Istithmar, a unit of Dubai World [DBWLD.UL], and Whippoorwill Associates Inc will backstop a rights offering that will invest $25 million in the company when it exits Chapter 11.

The pair will likely end up owning 71 to 85 percent of the company when it exits Chapter 11, depending on the outcome of the rights offering.

Loehmann's, which opened in Brooklyn in 1921, sells designer brands at steep discounts through its stores. It has been unable to meet its debt load even as competitors such as TJX Cos Inc (TJX.N) and Ross Stores Inc (ROST.O) have reported robust sales.

Loehmann's began the year with around 60 stores, but has been closing its weaker locations and currently has about 46.

The company has been trying to restructure its debt for months, but failed to reach an agreement with enough bondholders to prevent a bankruptcy.

The unsecured creditors had opposed the company's original bankruptcy plan, which offered them a recovery of about 4.2 percent.

Under the revised deal reached on Tuesday, the unsecured creditors will get a recovery of about 7.6 percent.

The deal allows Loehmann's to restructure, rather than seek a quick sale, as happens with most bankrupt retailers. The operator Trade Secret beauty salon chain and Urban Brands Inc, which owns the Ashley Stewart clothing chain, both sought quick sales in bankruptcy in recent months.

The Loehmann's agreement is subject to court approval.

The company will also have a $33 million revolving credit facility with Crystal Financial LLC to fund its operations once it exits bankruptcy as well as a $7 million junior facility provided by Whippoorwill. (Reporting by Tom Hals; Editing by Richard Chang)UPDATE 2-Loehmann's strikes deal for quick bankruptcy exit | Reuters

StopFraud.gov - Financial Fraud Enforcement Task Force

2010-12-04T10:28:00.000-08:00

StopFraud.gov - Financial Fraud Enforcement Task Force

FBI — Holiday Shopping Tips and Warnings

2010-11-29T13:02:00.000-08:00

Holiday Shopping Tips

11/15/2010—This holiday season, the FBI reminds shoppers that cyber criminals aggressively create new ways to steal money and personal information. Scammers use many techniques to fool potential victims, including conducting fraudulent auction sales, reshipping merchandise purchased with stolen credit cards, and selling fraudulent or stolen gift cards through auction sites at discounted prices.

Fraudulent Classified Ads and Auction Sales

Internet criminals post classified ads and auctions for products they do not have and make the scam work by using stolen credit cards. Fraudsters receive an order from a victim, charge the victim’s credit card for the amount of the order, then use a separate, stolen credit card for the actual purchase. They pocket the purchase price obtained from the victim’s credit card and have the merchant ship the item directly to the victim. Consequently, an item purchased from an online auction but received directly from the merchant is a strong indication of fraud. Victims of such a scam not only lose the money paid to the fraudster, but may be liable for receiving stolen goods.

Shoppers may help avoid these scams by using caution and not providing financial information directly to the seller, as fraudulent sellers will use this information to purchase items for their schemes. Always use a legitimate payment service to ensure a safe, legitimate purchase.

As for product delivery, fraudsters posing as legitimate delivery services offer reduced or free shipping to customers through auction sites. They perpetuate this scam by providing fake shipping labels to the victim. The fraudsters do not pay for delivery of the packages; therefore, delivery service providers intercept the packages for nonpayment and the victim loses the money paid for the purchase of the product.

Diligently check each seller’s rating and feedback along with their number of sales and the dates on which feedback was posted. Be wary of a seller with 100 percent positive feedback, with a low total number of feedback postings, or with all feedback posted around the same date and time.

Gift Card Scam

Be careful when purchasing gift cards through auction sites or classified ads. It is safest to purchase gift cards directly from the merchant or retail store. If the gift card merchant discovers that your card is fraudulent, the merchant will deactivate the gift card and refuse to honor it for purchases. Victims of this scam lose the money paid for the gift card purchase.

Phishing and Smishing Schemes

In phishing schemes, a fraudster poses as a legitimate entity and uses e-mail and scam websites to obtain victims’ personal information, such as account numbers, user names, passwords, etc. Smishing is the act of sending fraudulent text messages to bait a victim into revealing personal information.

Be leery of e-mails or text messages that indicate a problem or question regarding your financial accounts. In this scam, fraudsters direct victims to follow a link or call a number to update an account or correct a purported problem. The link directs the victim to a fraudulent website or message that appears legitimate. Instead, the site allows the fraudster to steal any personal information the victim provides.

Current smishing schemes involve fraudsters calling victims’ cell phones offering to lower the interest rates for credit cards the victims do not even possess. If a victim asserts that they do not own the credit card, the caller hangs up. These fraudsters call from TRAC cell phones that do not have voicemail, or the phone provides a constant busy signal when called, rendering these calls virtually untraceable.

Another scam involves fraudsters directing victims, via e-mail, to a spoofed website. A spoofed website is a fake site that misleads the victim into providing personal information, which is routed to the scammer’s computer.

Phishing schemes related to deliveries are also rampant. Legitimate delivery service providers neither e-mail shippers regarding scheduled deliveries nor state when a package is intercepted or being temporarily held. Consequently, e-mails informing of such delivery issues are phishing scams that can lead to personal information breaches and financial losses.

Tips

Here are some tips you can use to avoid becoming a victim of cyber fraud:

Do not respond to unsolicited (spam) e-mail.
Do not click on links contained within an unsolicited e-mail.
Be cautious of e-mail claiming to contain pictures in attached files, as the files may contain viruses. Only open attachments from known senders. Scan the attachments for viruses if possible.
Avoid filling out forms contained in e-mail messages that ask for personal information.
Always compare the link in the e-mail with the link to which you are directed and determine if they match and will lead you to a legitimate site.
Log directly onto the official website for the business identified in the e-mail, instead of “linking” to it from an unsolicited e-mail. If the e-mail appears to be from your bank, credit card issuer, or other company you deal with frequently, your statements or official correspondence from the business will provide the proper contact information.
Contact the actual business that supposedly sent the e-mail to verify if the e-mail is genuine.
If you are asked to act quickly, or there is an emergency, it may be a scam. Fraudsters create a sense of urgency to get you to act quickly.
Verify any requests for personal information from any business or financial institution by contacting them using the main contact information.
Remember if it looks too good to be true, it probably is.

To receive the latest information about cyber scams, sign up for e-mail alerts on this website. If you have received a scam e-mail, please notify the IC3 by filing a complaint at www.ic3.gov.

FBI — New E-Scams & Warnings

Dykstra's Calif estate sold at bankruptcy auction - Pasadena Star-News

2010-11-24T10:49:00.000-08:00

The Associated Press
Posted: 11/22/2010 08:22:47 AM PST

VENTURA, Calif.—Former New York Mets outfielder Lenny Dykstra took out $18 million in loans three years ago to buy a California estate overlooking the Sherwood Country Club Golf Course.
It sold at bankruptcy auction last week for $760,712.

A junior lienholder bought the 12,713-square-foot Lake Sherwood home. Index Investors representative Jeff Smith says he was the lone bidder at the Ventura County courthouse on Nov. 17.

There's still a $13.5 million senior mortgage held by J.P. Morgan Chase & Co. The Oregon-based private equity firm is negotiating with J.P Morgan to deal with that debt.

Dykstra filed for bankruptcy protection in July, saying he owed more than $31 million and had about $50,000 in assets.

Dykstra told the Ventura County Star on Saturday that he doesn't know anything about the auction.

Dykstra's Calif estate sold at bankruptcy auction - Pasadena Star-News

Abraham Lincoln's October 3, 1863 Thanksgiving Proclamation

2010-11-22T07:52:00.000-08:00

Abraham Lincoln's October 3, 1863 Thanksgiving Proclamation.
Please circulate it!

"It is the duty of nations as well as of men to own their dependence upon the overruling power of God; to confess sins and transgressions in humble sorrow, yet with assured hope that genuine repentance will lead to mercy and pardon; and to recognize the sublime truth, announced in the Holy Scriptures and proven by all history, that those nations are blessed whose God is the Lord (Psalm 33:12). We know that by His divine law, nations, like individuals, are subjected to punishments and chastisements in this world. May we not justly fear that the awful calamity of civil war which now desolates the land may be a punishment inflicted upon us for our presumptuous sins, to the needful end of our national reformation as a whole people?

We have been the recipients of the choicest bounties of heaven; we have been preserved these many years in peace and prosperity; we have grown in numbers, wealth and power as no other nation has ever grown.

But we have forgotten God. We have forgotten the gracious hand which preserved us in peace and multiplied and enriched and strengthened us, and we have vainly imagined, in the deceitfulness of our hearts, that all these blessings were produced by some superior wisdom and virtue of our own. Intoxicated with unbroken success, we have become too self-sufficient to feel the necessity of redeeming and preserving grace, too proud to pray to the God that made us.

It has seemed to me fit and proper that God should be solemnly, reverently and gratefully acknowledged, as with one heart and one voice, by the whole American people. I do therefore invite my fellow citizens in every part of the United States, and also those who are at sea and those who are sojourning in foreign lands, to set apart and observe the last Thursday of November as a day of Thanksgiving and praise to our beneficent Father who dwelleth in the heavens."

We, as a nation must fall to our knees!

Debt collectors utilize Facebook to embarrass those who owe | Tampa Bay, St. Petersburg, Clearwater, Sarasota | WTSP.com 10 News

2010-11-17T06:55:00.000-08:00

Tampa, Florida -- Debt collectors can be relentless and downright rude on the phone, but now a St. Petersburg woman is filing suit alleging the company that financed her car loan began harassing family members over the social networking website Facebook.

Melanie Beacham says she fell behind on her car payment after getting sick and taking a medical leave from work. She contacted MarkOne Financial to explain the situation but says the harassing phone calls, as many as 20 per day, kept coming. Then one day she got a call from her sister saying the company contacted her in Georgia.

"I was telling her, 'No way, because you're not even a reference,'" said Beacham, who later found out MarkOne contacted her sister and other relatives via Facebook.

Beacham says the company claimed they were doing nothing wrong but, upset over what happened, she contacted Tampa based consumer attorney Billy Howard of Morgan & Morgan.

"Now Facebook does a debt collectors work for them. Now it's not only family members, it's all of your associates. It's a very powerful tool for debt collectors to use," says Howard.

He believes Facebook will soon become a regular method for contact if nothing is done.

"It's getting the desired result, and that is to start a domino effect of panic and embarrassment among family and friends, and people will do anything to stop that."

Howard has now filed a first of its kind lawsuit against MarkOne asking a judge to ban the company from using Facebook and other social networking websites to contact friends and family members over a debt.

10 News was unable to reach MarkOne Financial for comment Monday regarding the suit filed in Pinellas County.

Beacham hopes the lawsuit will keep debt collectors from exploiting consumers on Facebook.

"Nobody should have to go through what I went through," said Beacham. "I was hurt because I just felt I didn't need my family going through that."
Beau Zimmer, 10 News

Debt collectors utilize Facebook to embarrass those who owe | Tampa Bay, St. Petersburg, Clearwater, Sarasota | WTSP.com 10 News

Rancho Cordova lawyer charged with swindling distressed homeowners

2010-11-04T21:01:00.000-07:00

Rancho Cordova lawyer charged with
swindling distressed homeowners

Sacramento-area lawyer James Sandison, already facing State Bar charges of misusing his client trust account and named in a $60 million loan modification fraud suit by the attorney general, has now been charged by the State Bar with “swindling distressed homeowners.”
Principal and founder of U.S. Loan Auditors and general corporate counsel for My U.S. Legal Services, Inc., Sandison, 55, provided forensic loan audits, guaranteed foreclosure prevention and then did nothing to help prevent the foreclosures, according to bar prosecutors. One of 11 homeowners named in the State Bar complaint paid Sandison $56,000 over a nine-month period. Others paid him between $2,000 and $24,000 after he promised to stop foreclosure. Some clients lost their homes.
Sandison [bar number 148812], whose businesses are located in Rancho Cordova, is charged with 11 counts of moral turpitude, dishonesty and corruption. He also was charged Oct. 27 with making untrue or misleading representations, unfair competition, collecting advance fees, failure to provide proper disclosures, collecting advance fees from clients in foreclosure and failure to register his businesses as foreclosure consultants.
“The State Bar continues to aggressively prosecute those lawyers engaging in loan modification misconduct,” said Chief Trial Counsel James Towery. “We have removed from practice 17 of these lawyers with more disciplinary proceedings pending. This small group has caused significant public harm.”
According to the State Bar charges, Sandison defrauded the homeowners by making promises to avoid foreclosure that he never kept. Those allegations are similar to charges filed against Sandison, his companies and four others by Attorney General Jerry Brown on Oct. 6. In that suit, Brown seeks $60 million in civil penalties, restitution for victims and permanent injunctions to keep the defendants from fraudulently marketing forensic loan audits and legal services that have no value. The State Bar assisted Brown’s office and the Department of Real Estate in the investigation.
The attorney general’s suit alleged that homeowners paid thousands of dollars for forensic loan audits, which the companies said could be used as the basis for suits against lenders. Forensic loan audits purportedly show instances in which lenders have violated rules ranging from consumer privacy requirements to calculating mortgage amounts. Many homeowners were persuaded to stop making their loan payments and instead file lawsuits. As a result, they lost thousands of dollars and, in some cases, their homes.
The suit said the lawyers used “a variety of deceptive advertising and marketing techniques to persuade homeowners they had been victims of ‘predatory lending.’” They claimed that suing the lenders would give the homeowners leverage in obtaining a loan modification, staving off foreclosure or collecting damages.
Many clients took the advice “and as a result placed themselves in even greater danger of losing their homes,” the attorney general’s suit said. “Defendants then bilk their clients for months, collecting thousands of dollars in fees for ‘legal services,’ when in reality [they] do little more than file and serve a boiler-plate complaint. In order to keep the monthly payments flowing, Defendants dodge their clients’ phone calls, refuse to provide their clients any accounting of how their money is being spent and/or string their clients along with false assurances that a settlement is in progress, or that litigation takes time.”
Sandison also was named by the State Bar in a separate case in October. He was charged with hiding $300,000 in collections he received on behalf of his client, failing to put funds into a client trust account and stealing money from his partner and client.

http://www.calbarjournal.com/November2010/TopHeadlines/TH9.aspx

Short Sales Resisted as Foreclosures Are Revived

2010-10-25T09:24:00.000-07:00

From the N.Y. Times:

By MICHAEL POWELL

PHOENIX — Bank of America and GMAC are firing up their formidable foreclosure machines again today, after a brief pause.

But hard-pressed homeowners like Lydia Sweetland are asking why lenders often balk at a less disruptive solution: short sales, which allow owners to sell deeply devalued homes for less than what remains on their mortgage.

Ms. Sweetland, 47, tried such a sale this summer out of desperation. She had lost her high-paying job and drained her once-flush retirement savings, and her bank, GMAC, wouldn’t modify her mortgage. After seven months of being unable to pay her mortgage, she decided that a short sale would give her more time to move out of her Phoenix home and damage her credit rating less than a foreclosure.

She owes $206,000 and found a buyer who would pay $200,000. Last Friday, GMAC rejected that offer and said it would foreclose in seven days, even though, according to Ms. Sweetland’s broker, the bank estimates it will make $19,000 less on a foreclosure than on a short sale.

“I guess I could salute and say, ‘O.K., I’m walking, here’s the keys,’ ” says Ms. Sweetland, as she sits in a plastic Adirondack chair on her patio. “But I need a little time, and I don’t want to just leave the house vacant. I loved this neighborhood.”

GMAC declined to be interviewed about Ms. Sweetland’s case.

The halt in most foreclosures the last few weeks gave a hint of hope to homeowners like Ms. Sweetland, who found breathing room to pursue alternatives. Consumer advocates took the view that this might pressure banks to offer mortgage modifications on better terms and perhaps drive interest in short sales, which are rising sharply in many corners of the nation.

But some major lenders took a quick inventory of their foreclosure practices and insisted their processes were sound. They now seem intent on resuming foreclosures. And that could have a profound effect on many homeowners.

In Arizona, thousands of homeowners have turned to short sales to avoid foreclosures, and many end up running a daunting procedural gantlet. Several of the largest lenders have set up complicated and balky application systems.

Concerns about fraud are one of the reasons lenders are so careful about short sales. Sometimes well-off homeowners want to portray their finances as dire and cut their losses on a property. In other instances, distressed homeowners try to make a short sale to a relative, who would then sell it back to them (a practice that is illegal). A recent industry report estimates that short sale fraud occurs in at least 2 percent of sales and costs banks about $300 million annually.

Short sales are also hindered when homeowners fail to forward the proper papers, have tax liens or cannot find a buyer.

Because of such concerns, homeowners often are instructed that they must be delinquent and they must apply for a modification first, even if chances of approval are slim. The aversion to short sales also leads banks to take many months to process applications, and some lenders set unrealistically high sales prices — known as broker price opinions — and hire workers who say they are poorly trained.

As a result, quite a few homeowners seeking short sales — banks will not provide precise numbers — topple into foreclosure, sometimes, critics say, for reasons that are hard to understand. Ms. Sweetland and her broker say they are confounded by her foreclosure, because in Arizona’s depressed real estate market, foreclosed homes often sit vacant for many months before banks are able to resell them.

“Banks are historically reluctant to do short sales, fearing that somehow the homeowner is getting an advantage on them,” said Diane E. Thompson, of counsel to the National Consumer Law Center. “There’s this irrational belief that if you foreclose and hold on to the property for six months, somehow prices will rebound.”

Homeowners, advocates and realty agents offer particularly pointed criticism of Bank of America, the nation’s largest servicer of mortgages, and a recipient of billions of dollars in federal bailout aid. Its holdings account for 31 percent of the pending foreclosures in Maricopa County, which includes Phoenix and Scottsdale, according to an analysis for The Arizona Republic.

The bank instructs real estate agents to use its computer program to evaluate short sales. But in three cases observed by The New York Times in collaboration with two real estate agents, the bank’s system repeatedly asked for and lost the same information and generated inaccurate responses.

In half a dozen more cases examined by The New York Times, Bank of America rejected short sale offers, foreclosed and auctioned off houses at lower prices.

“When I hear that a client’s mortgage is held by Bank of America, I just sigh. Our chances of getting an approval for them just went from 90 percent to 50-50,” said Benjamin Toma, who has a family-run real estate agency in Phoenix.

Bank of America officials also declined interview requests. A Bank of America spokeswoman said in an e-mail that the bank had processed 61,000 short sales nationwide this year; she declined to provide numbers for Arizona or to discuss criticisms of the company’s processing.

Fannie Mae, the mortgage finance company with federal backing, gives cash incentives to encourage servicers, who are affiliated with banks and who oversee great bundles of delinquent mortgages, to approve short sales.

But less obvious financial incentives can push toward a foreclosure rather than a short sale. Servicers can reap high fees from foreclosures. And lenders can try to collect on private mortgage insurance.

Some advocates and real estate agents also point to an April 2009 regulatory change in an obscure federal accounting law. The change, in effect, allowed banks to foreclose on a home without having to write down a loss until that home was sold. By contrast, if a bank agrees to a short sale, it must mark the loss immediately.

Short sales, to be sure, are no free ride for homeowners. They take a hit to their credit ratings, although for three to five years rather than seven after a foreclosure. An owner seeking a short sale must satisfy a laundry list of conditions, including making a detailed disclosure of income, tax and credit liens. And owners must prove that they have no connection to the buyer.

Still, bank decision-making, at least from a homeowner’s perspective, often appears arbitrary. That is certainly the view of Nicholas Yannuzzi, who after 30 years in Arizona still talks with a Philadelphia rasp. Mr. Yannuzzi has owned five houses over time, without any financial problems. When his wife was diagnosed with bone cancer, he put 20 percent down and bought a ranch house in North Scottsdale so that she would not have to climb stairs.

In the last few years, his wife died, he lost his job and he used his retirement fund to pay his mortgage for five months. His bank, Wells Fargo, denied his mortgage modification request and then his request for a short sale.

The bank officer told him that Fannie Mae, which held the mortgage, would not take a discount. At the end of last week, he was waiting to be locked out of his home.

“I’m a proud man. I’ve worked since I was 20 years old,” he said. “But I’ve run out of my 79 weeks of unemployment, so that’s it.”

He shrugged. “I try to keep in the frame of mind that a lot of people have it worse than me.”

Back in Phoenix, Ms. Sweetland’s real estate agent, Sherry Rampy, appeared to receive good news last week. GMAC re-examined her client’s application and suggested it might be approved.

But the bank attached a condition: Ms. Sweetland must come up with $2,000 in closing costs or pay $100 a month for 50 months to the bank. Ms. Sweetland, however, is flat broke.

A late afternoon desert sun angles across her Pasadena neighborhood.

“After this, I’ll never buy again,” Ms. Sweetland says. “This is not the American dream. This is not my American dream.”

Lawyers got it right on the foreclosure mess

2010-10-22T08:36:00.000-07:00

By Eugene Robinson
Friday, October 22, 2010; A25

Don't blame the lawyers. The crisis over faulty or fraudulent paperwork in mortgage foreclosures -- which is either a big deal or a humongous deal, depending on which experts you believe -- is the fault of arrogant, greedy lenders who played fast and loose with the basic property rights of homeowners.

Banks and other lenders, it seems, made statements in courts of law that turned out not to be true. Because judges have such an underdeveloped sense of humor when it comes to prevarication, this mess may be with us for a while.

The mortgage industry would love to blame the whole thing on predatory, opportunistic lawyers who are seizing on mere technicalities to forestall untold numbers of foreclosures that should legitimately proceed. The bankers are right when they complain that the delays are gumming up the housing market, as potential buyers for soon-to-be-foreclosed properties are forced to bide their time until all the questions about documentation and proper title are answered.

But it's the bankers' fault that there are so many instances of foreclosure documentation with legal loopholes big enough to drive a moving van through. During the years of the real estate boom, lenders cut corners with paperwork to make as many loans -- and sell them to other lenders, which often sliced and diced them into securities that were then sold to investors -- as quickly as possible. This haste and inattention to detail, now coming to light, are partly responsible for the current crisis.

Laws vary from state to state, but all accept the principle that borrowers who fail to meet the contractual obligation to pay their mortgages can be subject to foreclosure and eviction. The process is devastating for families and for neighborhoods. In many cases, I believe, all parties would be better off if some way could be found to avoid foreclosure -- modifying the terms of the loan, say, by lowering the interest rate or even reducing the principal to reflect the fall in housing prices. I recognize, however, that there are many other cases in which foreclosure is the preferable option or perhaps the only option.

But it's also necessary that the mortgage holder have the legal right to foreclose. Anyone who has ever bought a house is familiar with the inches-thick stack of documents that have to be signed, sealed, initialed and notarized. It turns out that financial institutions often didn't dot every "i" or cross every "t" -- meaning that in some cases, it may not be clear that the nominal mortgage holder has the clear and undisputed right to take possession of the property.

These may be technicalities, but there's nothing mere about them. For one thing, if borrowers are expected to play by the rules, lenders should be expected to do the same. For another, there can't be a functioning real estate market without the ability to establish clear title. Lawyers probing this aspect of the foreclosure crisis are doing the system a favor.

The other big problem is that lenders have been processing foreclosures with assembly-line speed, eliminating delay wherever possible -- sometimes substituting electronic signatures for the ink-on-paper kind, for example. In the information age, some of this qualifies as sensible streamlining. But what doesn't make sense is moving the foreclosure documents along so quickly, and in such overwhelming volume, that the people signing them -- whether by computer or quill pen -- couldn't possibly have time to read them. We now know that some individuals, working as processors, have been signing off on up to 10,000 foreclosure documents a month.

In 23 states, every foreclosure must involve a court hearing. Sharp-eyed attorneys, representing delinquent homeowners, have unearthed cases in which high-volume "robo-signers" submitted affidavits attesting that they reviewed all the loan files personally -- when, in fact, they had not. This is just the sort of thing that puts judges in a really bad mood.

The Obama administration has declined to call for an official moratorium on foreclosures. This is understandable: In most cases a moratorium would just delay the inevitable, while impeding any momentum the housing market might otherwise be able to build.

But maybe the crisis will make the banks realize that they ought to be doing fewer foreclosures and more loan modifications -- sensible adjustments that allow deserving families to stay in their homes. And if this happens, we'll have the lawyers to thank.

eugenerobinson@washpost.com

Foreclosure Furor Rises - Many Call for a Freeze - NYTimes.com

2010-10-06T07:04:00.000-07:00

By DAVID STREITFELD and GRETCHEN MORGENSON

The uproar over bad conduct by mortgage lenders intensified Tuesday, as lawmakers in Washington requested a federal investigation and the attorney general in Texas joined a chorus of state law enforcement figures calling for freezes on all foreclosures.

Representative Nancy Pelosi, the House speaker, and 30 other Democratic representatives from California told the Justice Department, the Federal Reserve and the comptroller of the currency that “it is time that banks are held accountable for their practices.”

In a request for an investigation into questionable foreclosure practices by lenders, the lawmakers said that “the excuses we have heard from financial institutions are simply not credible."

Officials from the federal agencies declined to comment.

Texas Attorney General Greg Abbott, a Republican, sent letters to 30 lenders demanding they stop foreclosures, evictions and the sale of foreclosed properties until they could provide assurances that they were proceeding legally.

Both developments indicated that scarcely two weeks after the country’s fourth-biggest lender, GMAC Mortgage, revealed that it was suspending all foreclosures in the 23 states where the process requires judicial approval, concerns about flawed foreclosures had mushroomed into a nationwide problem.

Some of the finger-pointing was also being directed back at Congress. The Ohio secretary of state, Jennifer Brunner, suggested in a telephone interview on Tuesday that a bill passed by Congress last week about notarizations could facilitate foreclosure fraud.

Dubious notary practices used by banks to justify foreclosures have come under scrutiny in recent weeks as GMAC and other top lenders suspended homeowner evictions over possible improper procedures.

Ms. Brunner, who has recently referred possible cases of notary fraud in her state to federal authorities, worries that the legislation would allow the lowest standard for notaries to become a nationwide practice. She said she also worried that the changes were coming in the middle of a foreclosure storm where people could lose their homes improperly.

“A notary’s signature is that of a trusted, impartial third party, whose notarization bolsters the integrity of the document,” Ms. Brunner said. “To take away the safeguards of notarization means foreclosure procedures could be more susceptible to fraud.”

As banks’ foreclosure practices have come under the microscope, problems with notarizations on mortgage assignments have emerged. These documents transfer the ownership of the underlying note from one institution to another and are required for foreclosures to proceed.

In some cases, the notarizations predated the preparation of the legal documents, suggesting that signatures were not reviewed by a notary. Other notarizations took place in offices far away from where the documents were signed, indicating that the notaries might not have witnessed the signings as the law required.

Notary practices vary from state to state and the bill, sponsored by Representative Robert B. Aderholt, a Republican from Alabama, would essentially require that one state’s rules be accepted by others. If one state allows its notaries to sign off on electronic signatures, for example, documents carrying such signatures and notarized by officials in that state would have to be recognized and accepted in any state or federal court.

Ms. Brunner pointed out that some states had adopted “electronic notarization” laws that ignored the requirement of a signer’s personal appearance before a notary. “Many of these policies for electronic notarization are driven by technology rather than by principle, and they are dangerous to consumers,” she said.

Mr. Aderholt had introduced the bill twice before and both times it passed the House of Representatives but not the Senate. Mr. Aderholt reintroduced the bill last October and it passed the Senate on Sept. 29. It is awaiting President Obama’s signature.

Mr. Aderholt’s press secretary, Darrell Jordan, said there was no connection between the timing of the bill and the current notarization problems with foreclosures. In a statement announcing the bill’s passage, Mr. Aderholt said: “This legislation will help businesses around the nation by eliminating the confusion which arises when states refuse to acknowledge the integrity of documents notarized out of state.”

Last week, JPMorgan Chase and Bank of America joined GMAC in suspending foreclosures in the states where they must be approved by a judge. The judicial states do not include California or Texas. But Mr. Abbott, the Texas attorney general, told lenders in letters dated Oct. 4 that if they used so-called robo-signers — employees who signed thousands of foreclosure affidavits a month, falsely attesting that they had reviewed the material — it would be a violation of Texas law.

As a result, he wrote, “the document and therefore the foreclosure sale would have been invalid.”

The three lenders who are at the center of the controversy, GMAC Mortgage, JPMorgan Chase and Bank of America, declined to comment. Other lenders singled out by Mr. Abbott include Wells Fargo, CitiMortgage, HSBC and National City.

Meanwhile, shares of a major foreclosure outsourcing company, Lender Processing Services of Jacksonville, Fla., fell 5 percent on Tuesday, adding to a slide that began last week.

The company’s documentation practices are stirring questions, including how the same employee can have wildly varying signatures on mortgage documents. L.P.S. blamed a midlevel manager’s decision to allow employees to sign forms in the name of an authorized employee. It says it has stopped the practice.

The United States Attorney’s Office in Tampa began investigating L.P.S. in February. An L.P.S. representative could not be reached Tuesday for comment.

Other calls for investigations came from Senators Al Franken, a Democrat from Minnesota, and Robert Menendez, a Democrat from New Jersey.
Foreclosure Furor Rises - Many Call for a Freeze - NYTimes.com

Consumer bankruptcy filings climb 11% - MarketWatch

2010-10-04T16:04:00.000-07:00

By Alistair Barr

SAN FRANCISCO (MarketWatch) -- U.S. consumer bankruptcy filings rose 11% in the first nine months of this year, versus the same period in 2009, the American Bankruptcy Institute said Monday, citing data from the National Bankruptcy Research Center. Filings totaled 1,165,172 nationwide during the first nine months of 2010, compared to 1,046,449 total consumer filings during the same period a year ago. The bankruptcy filings so far in 2010 represent the highest total since 2005. "We expect that there will be nearly 1.6 million new bankruptcy filings by year end," ABI Executive Director Samuel Gerdano said in a statement. Consumer bankruptcies totalled 130,329 in September. That was 3.3% up from August 2010.

Consumer bankruptcy filings climb 11% - MarketWatch

7 major lenders ordered to review foreclosure procedures

2010-10-01T05:09:00.000-07:00

By Ariana Eunjung Cha
Washington Post Staff Writer
Thursday, September 30, 2010; 10:39 PM

A top federal bank regulator said Thursday that he has directed seven of the nation's largest lenders to review their foreclosure processes after learning about the widespread mishandling of homeowner evictions by the industry.

John Walsh, acting director of the Office of the Comptroller of the Currency, told lawmakers during a hearing on the financial regulatory overhaul enacted this summer that some lenders "clearly had deficiencies" in their system for foreclosures.

The banks contacted by regulators include J.P. Morgan Chase, which announced Wednesday that it was freezing 56,000 foreclosures after finding errors in its preparation of documents, according to OCC spokesman Kevin Mukri. Other lenders contacted include Bank of America, Citibank, HSBC, PNC Bank, U.S. Bank and Wells Fargo.

"We both want to see that they fix the processing problems but also to look to see whether there is specific harm [that has been caused] in individual cases," Walsh said.

Revelations about widespread paperwork problems with foreclosures led Ally Financial, another major lender, to suspend evictions last week in 23 states where a court order is required to seize a property. Since then, the industry's handling of foreclosures has come under close scrutiny from regulators, with attorneys general in several other states calling for Ally to halt foreclosures.

The paperwork problems range from potentially forged documents to bank employees who never read borrowers' files before signing off on an eviction.

In J.P. Morgan's case, Mukri said the bank "determined that its affidavit procedures were non-compliant with foreclosure processing requirements in some states." He added that although J.P. Morgan has fixed internal procedures, the "negative impact or harm to customers has not been determined at this point."

"While we don't expect our review to find that consumers were harmed, we will take appropriate action if we find any impact," JP Morgan spokesman Tom Kelly said.

Mukri would not comment about other banks but said that the OCC has teams permanently stationed at each one and that those teams have been in close contact with senior management at the banks to ensure the reviews are completed in a timely manner.

Citibank declined to comment on the OCC's request but said it has strong training to ensure that employees in its foreclosure group are aware that they should have personal knowledge of the information in documents that require this before signing them and that staffing levels are adequate to allow them to review them properly.

There was no immediate comment from the other banks on Thursday.

Walsh made the remarks in response to questions from Christopher J. Dodd (D-Conn.), chairman of the Senate banking committee, about the spreading problem with foreclosure processing.

Referring to a front-page article in The Washington Post, Dodd called the news about lenders initiating improper foreclosures "very troubling." He asked senior bank regulators at Thursday's hearing - including Federal Deposit Insurance Corp. Chairman Sheila C. Bair and Federal Reserve Chairman Ben S. Bernanke - to comment on the matter.

Bair, whose agency insures deposits at thousands of U.S. banks, called the issue of document processing errors "troubling" and said "it's just a further indication of how wrong we went with the mortgage origination process and securitization process."

Bernanke said that "it's been a managerial challenge to the banks to deal with these foreclosure modifications." And, he added, "they haven't always met that challenge.
7 major lenders ordered to review foreclosure procedures

City Workers in Harrisburg, Penn. may not get paid this week

2010-09-28T11:22:00.000-07:00

City workers in Harrisburg, Pa., may not get their paychecks on Wednesday, though the city does have $1.153 million available to pay about 577 employees this week, Dow Jones Daily Bankruptcy Review reported today. Harrisburg owes payroll company Automatic Data Processing Inc. $13,240 for its services because city controller Dan Miller has declined to sign the check for its services. Miller, an elected official outside the administration, said he had not signed any checks for ADP since March because the city has no contract with the company. Miller said that he would allow the payment for ADP if the administration allows him to discuss electronic internal controls with ADP, but he said Mayor Linda Thompson's office has forbidden him to talk with the company. The city narrowly avoided defaulting on a municipal bond earlier this month.

Walking away with less

2010-09-27T08:04:00.000-07:00

By Dina ElBoghdady and Dan Keating
Sunday, September 26, 2010; 4:03 AM

A new wave of distressed home sales is rippling, more quietly this time, through American cities and suburbs.

Its unsettling effects are playing out here in Manassas, along Brewer Creek Place, a modest, horseshoe-shaped street lined with 98 brick townhouses. Several years after the U.S. foreclosure crisis erupted, the U-Hauls are back.

The last time, banks seized nearly every fourth house on the street through foreclosure. This time, homeowners are going another route: a short sale.

"I love this house, but I just have to leave," said Leanna Harris, 27, the owner of a corner unit that used to be the builder's model, with a stone path in the yard and a gourmet kitchen. "I'm at peace with it now."

The original owner bought the home for $400,714 in 2006; Harris and her husband, both bartenders, paid what seemed to be a bargain price, $289,000, in 2008. But they have fallen behind on their mortgage payments, in part because her husband was out of work. Now they have a $246,000 offer for the home, and the balance on their mortgage is more than that. They want to accept the offer. All they need is their bank's okay.

That kind of deal is called a short sale, and it's sweeping the country. In these deals, a lender allows a troubled borrower to sell a home for less than what's owed on the mortgage.

Completed short sales have more than tripled since 2008, and 400,000 of these deals are projected to close this year, according to mortgage research firm CoreLogic. The giant mortgage financier Fannie Mae approved short sales on 36,534 home loans it owned in the first half of the year, nearly triple the number in 2007 and 2008 combined. Freddie Mac, its sister company, approved 22,117 in the first half of 2010, up from a mere 94 in the first half of 2007.

Distressed homeowners are being drawn to short sales in large part because they can help protect a borrower's credit rating and thus the chance of buying another home later on.

"I worked hard for a long time to keep my credit score close to perfect, and I know a foreclosure would be much worse for my credit than a short sale," said Harris, who listed her Brewer Creek Place home as a short sale about a month ago. "If there's a chance we can avoid foreclosure, we'd rather do that."

In a short sale, homeowners must get the go-ahead from the mortgage lender. Sometimes that happens before the property is put on the market, and other times before the deal closes.

In some areas of the country, including the Washington region, lenders can later pursue borrowers for the difference between the proceeds collected from the short sale and the amount owed on the mortgage, also called a deficiency. But lenders say they only do so if they conclude the borrowers skipped out on a loan that they could afford.

For lenders, short sales are less expensive than foreclosures to handle and help ensure that homes transfer in good shape. And for the wider real estate market, these sales could help shore up the floor under housing values because homeowners - unlike with foreclosures - have a vested interest in getting the best price. That's because the higher the offer, the more likely the lender will approve the sale.

But short sales are prone to maddening delays and often fall through because they require the approval of many, often-competing parties - including the primary mortgage lender and in some cases the holders of second and third liens.

Across the Washington region, short-sale listings now far outpace the number of foreclosures available for sale, according to RealEstate Business Intelligence, a subsidiary of the local multiple listing service. About 14 percent of area homes for sale are short sales, more than double the figure for foreclosures, with some of the greatest volume in Prince George's and Prince William Counties, where the drop in housing prices has been especially pronounced.

Brewer Creek Place, which wraps around the back end of the Independence subdivision south of the Prince William Parkway, was first developed five years ago on the eve of the housing market meltdown. Most of the residents bought their townhouses at a time when mortgage lending standards were especially lax, leaving some borrowers saddled with staggering debts when the home-loan market collapsed.

Yet along the street, there are few signs of the turmoil. Kids zip around on scooters. Neighbors primp their flower beds.

But from her driveway, Brenda Holliday has watched the crisis spread. Taking a break from hosing down her convertible PT Cruiser on a recent Saturday, she pointed to the three homes to her right. Each had sold as a foreclosure since 2008.

Then she pointed to the door to her immediate left with a lock box hanging on it.

"That's a short sale," she said. She nodded to the corner unit further down the block. "I think that's a short sale, too."

To Holliday, 60, her townhouse seemed ideal when moved in four years ago shortly after she was widowed. She's been renting the place from the owner with half of each monthly payment credited toward her eventual purchase of the home, which she initially agreed to buy for $365,000.

But as she's grown older, the stairs have gotten harder, she said, and now she feels a bit trapped. If she leaves, she loses the money she put toward the purchase. If she stays, she'll have to pay about $150,000 more than the townhouse is worth. Its value has been eroded by the steady stream of foreclosures and short sales.

Holliday squeezed the hose full throttle.

"A moving van pulls up and another family is gone - that's all I know," she said. "It's plain sad."

Leanna Harris may have been the first on the street to buy a home as a short sale. When she did, in early 2008, such deals were so rare that Prince William County hadn't even started to track them yet.

"I wanted this house really bad," said Harris, who went to settlement on the home the day after their baby girl was born. "It is my dream house."

But before long, she and her husband were looking at a short sale from the other side. The Harrises fell behind on their payments and never regained financial footing, she said.

The couple received temporary relief for six months from Bank of America. But Harris said the bank ultimately rejected them for a permanent loan modification and threatened foreclosure unless they immediately made up the $10,000 in payments that had been deferred, including interest and fees, or sold the house.

Harris said she felt tricked. But she listed her home as a short sale because it seemed to offer a relatively painless way out. She said she doesn't expect the bank's approval to come quickly.

Lenders acknowledge that they are overwhelmed with the volume of short sales coming their way.

"It has taken considerable effort to build up the capacity to do these [short sale and modification] processes and also to connect them together," said David Sunlin, a senior vice president at Bank America. "We're adding staff and vendors and technology."The giant mortgage financier Fannie Mae approved short sales on 36,534 home loans it owned in the first half of this year, nearly triple the number in 2007 and 2008 combined. Freddie Mac, its sister company, approved 22,117 in the first half of 2010, up from a mere 94 in the first half of 2007.

The Obama administration, meanwhile, has been seeking to encourage even more short sales as a way of reducing the nation's inventory of vacant and abandoned properties.

In April, the administration launched a program that financially rewards lenders and borrowers for successfully negotiating a short sale if the borrower's loan could not be modified through the federal government's year-and-a-half-old foreclosure prevention effort. Lenders receive $1,500 and borrowers another $3,000 for moving expenses. Under the initiative, all eligible borrowers must be notified of the option to sell their homes short before their loans are referred to foreclosure.

The Treasury-run program also sweetens the deal for borrowers by relieving them of any obligation to repay a deficiency.

Clearing the way for a short sale has often proved cumbersome because there can be so many parties to a potential deal. Aside from lenders, transactions may also have to be green lighted by investors who own the mortgages, local tax authorities, appraisal firms, escrow companies, homeowners associations, mortgage insurance companies and subordinate lien holders.

That's why the administration cannot simply order a lender to approve a short sale, said Laurie Maggiano, policy director at the Treasury Department's homeownership preservation office.

"We have to give servicers discretion to make intelligent business decisions as to which properties are likely to be successful short sales, rather than say everybody has to get one," she said.

It can also be difficult to persuade lenders to participate, because of the risk. According to Frank McKenna, a vice president at CoreLogic, the industry is on track to incur about $310 million of unnecessary losses on these transactions every year.

Monica Valladares, 29, has been trying to offload her home on Brewer Creek Place for more than a year.

She bought it new for $329,000 in 2006. Keeping up with her mortgage payment was easy when her three roommates - her grandmother and two cousins - were chipping in. But the arrangement fell apart, the family scattered and Valladares, a single mom, said she could not afford the home on her salary as a researcher for a telecommunications company.

In early 2009, Valladares listed the townhouse as a short sale for the first time. The home, overlooking a wooded lot and playground, quickly attracted multiple offers. The highest was $220,000, she recalled. She moved out, thinking the turnaround would be quick. But her agent could not get the bank to review even the most lucrative contract, she said.

When the potential buyers dropped out about six months later, Valladares applied to Bank of America for a loan modification that would reduce her payments. A few months later, Valladeres was told she did not qualify, she said.

Desperate, Valladares tried the short-sale route again.

"I don't know what else to do, what else to try," Valladares said during a recent visit back to the vacant town home. "This house is damaging my credit big time."

Within days, she received a $220,000 offer.

When she called her primary lender to get approval for the deal, however, the bank said she wasn't eligible for a short sale because she had been enrolled in a loan modification program after all, Valladares recalled. Straightening out the confusion took weeks. The lender finally agreed to the sale. But there were more obstacles. For one, the homeowners association said Valladares must pay $4,000 in dues and late fees before it will clear the sale, she said, adding she doesn't have the cash.

Yet another problem is that Valladares had taken out a second mortgage to help her finance the original purchase of her townhouse. The lender on that second loan has yet to approve the short sale, said Roger Derflinger, her current real estate agent.

"The offers come quick," Valladares said. "It's the bank that's slow."

Staff researcher Alice R. Crites contributed to this report.

Bankruptcy for SoCal hospital, but no layoffs

2010-09-19T09:53:00.000-07:00

A Southern California high desert hospital has filed for Chapter 11 bankruptcy protection.

Officials with Victorville's 101-bed Victor Valley Community Hospital blame the California budget impasse in part for their financial woes, saying the state owes it $2.5 million in Medi-Cal reimbursements.

The bankruptcy filing Monday in Riverside says the hospital was $20 million in debt.

Prime Healthcare Services Foundation Inc., owner of Desert Valley Hospital, announced this week it has agreed to acquire Victor Valley Community.

The Victorville Daily Press says the hospital plans to remain open during reorganization and there are no plans for layoffs.

___

Information from: Daily Press, www.vvdailypress.com

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2010/09/16/state/n083129D90.DTL&type=business#ixzz0zzloTtHd

Young Buck Files For Bankruptcy; Items Seized | Young Buck | Rap Basement

2010-09-02T09:07:00.000-07:00

Young Buck Files For Bankruptcy; Items Seized | Young Buck | Rap Basement

Former G-Unit member Young Buck has reportedly filed for bankruptcy just weeks after his home in Tennessee was raided by the Internal Revenue Service (IRS). Better known to the government as David Darnell Brown, Young Buck filed for protection under chapter 13 of the bankruptcy code.

Items the IRS took...
• A "Breitling Bentley Watch with diamond face and band," said to be worth $31,000. • More than $20,000 worth of music-recording gear. • More than a dozen plaques, photos and other memorabilia related to albums by rapper 50 Cent, with who Brown has been in a feud for several years. • A portrait of rappers Lloyd Banks, Tony Yayo, 50 Cent, Eminem and Young Buck. • "G-Unit Beg for Mercy Award pictures." • "Faux fur men's light grey coat w/ 'YB Cashville' stitched inside." • Six televisions, including four with screen dimensions between 43 and 55 inches. • "Ms. Pac Man video game." • "Hand crafted snake skin purse from Nigeria." • "Indigenous Art from Australia." • "X-Box machine." (Brown complained after the raid that "they took my kids' Playstation.")

Rebuilding Your Credit After Bankruptcy

2010-08-11T22:11:00.000-07:00

Rebuilding Your Credit After Bankruptcy

Daniela P. Romero, Esq.

I’ve found that many people are worried about filing for bankruptcy because they are concerned about how long it will take to rebuild their credit. I often tell them that it is easier to rebuild their credit than they think because they will have gotten rid of many of the expenses that they had prior to the bankruptcy. Additionally, if you’re credit is already bad from excessive late payments, then bankruptcy will improve your credit rating after your debts are discharged.

The first thing you should do after your bankruptcy is discharged is get a credit card. You may be able to get an unsecured card, but if not, then you should get a secured card. If you continue to make your payments on time, then your credit rating with the credit bureaus will improve.

Next, you should obtain a secured line of credit, possibly with a store that sells electronics, televisions, refrigerators or other home goods. Make sure that you continue to make your payments on time. After about a year, you can apply for a car loan which will help rebuild your credit even further. Finally, about two to three years after your bankruptcy, you can apply for a home loan.

Rebuilding your credit after bankruptcy is not as hard as it seems. Taking the necessary steps I outlined above and continuing to pay your bills on time should put you on the road to good credit again.

Calif. considers loan for troubled Modoc County

2010-07-23T06:47:00.000-07:00

By CATHY BUSSEWITZ
The Associated Press
Friday, July 23, 2010; 12:43 AM

SACRAMENTO, Calif. -- California finance officials will consider Friday whether to loan as much as $12.5 million to Modoc County as the rural, cash-poor municipality prepares for the possibility of filing for bankruptcy protection.

Other California cities and counties have seen steep slides in tax revenue during the recession, but Modoc County's trouble stems largely from another problem: For more than a decade, the county has been funding its hospital using money that was intended for other purposes, such as education and transportation projects.

An audit last year by the state controller's office determined that the county was violating state law by shifting dollars away from their intended purpose, prompting the current financial crisis. The county has hired a bankruptcy attorney in case it needs to declare itself insolvent, said Dan Macsay, chairman of the Modoc County Board of Supervisors.

"We don't want to go bankrupt," he said Thursday. "It does nothing for us - it doesn't help the state, it doesn't help anybody. But what we're doing is preparing for the worst."

He said it's unclear whether Modoc County will have enough money to pay expenses for the current fiscal year that began July 1, considering it must repay millions in debt. The county borrowed $12.5 million from special funds to support the hospital for about 15 years, but never repaid the money.

Modoc County is in California's far northeastern corner, a sparsely populated region of forests and wind-swept plains that is tucked between the Oregon and Nevada borders. In January, the state listed its population at 9,777.

On Friday, the state treasurer, controller and others will discuss proposals to help the county stay afloat. The county has requested a loan from the state's Pooled Money Investment Board, which oversees a portfolio that was worth $69.4 billion as of June. But California has its own financial troubles and is facing a $19 billion deficit.

State officials say they also want Modoc County to avoid bankruptcy.

"When a local entity files for bankruptcy protection, it has a ripple effect on the reputation of the state," said Tom Dresslar, spokesman for state Treasurer Bill Lockyer. "It creates headlines that do not serve the state well when it, for example, tries to sell bonds."

Municipal bankruptcies are rare in California. The most high-profile one was Orange County's bankruptcy filing in 1994; the San Francisco Bay area city of Vallejo filed for bankruptcy protection in 2008 amid a revenue crisis.

Yet helping Modoc County by providing a loan comes with its own dangers. If one financially strapped municipality gets a loan from the state, it could prompt other local officials to ask for handout, too. Dresslar said if the state does issue a loan, it would want to make clear that it's not setting a precedent.

Dresslar also said a loan would carry strict conditions, such as allowing the state to intercept other tax money destined for the county.

"We don't think any county will be chomping at the bit to place themselves under the scrutiny and conditions that this kind of loan would carry with it," Dresslar said.

One question that must be answered immediately is whether Modoc County can use the money it has to pay its bills or whether it is legally obligated to use that money to repay debts, said state Assemblyman Jim Nielsen, R-Yuba City, who represents the region. It remains unclear whether the county will be able to deliver the next paycheck to its employees until that is resolved, he said.

Meanwhile, Modoc Medical Center has had to stop offering services such as minor surgeries and delivering babies, said Macsay, the county supervisor.

The hospital used to deliver about 35 babies per year, he said, but could no longer do so because it can't afford to keep an anesthesiologist on staff.

"The fact is that they have a limited audience to capture," Macsay said. "They were offering services that they really couldn't afford."

Instead, Modoc County residents will have to drive more than two hours to hospitals in Redding or across the Oregon border to receive those services. Calif. considers loan for troubled Modoc County

House Probe Finds 153 VIP Loans Went to Fannie Employees - WSJ.com

2010-07-21T09:51:00.000-07:00

By JOHN R. EMSHWILLER

Countrywide Financial Corp.'s controversial "VIP" mortgage program made 153 loans to employees of Fannie Mae, the giant federally backed financial institution that helped fuel Countrywide's growth, according to a letter released Tuesday by Rep. Darrell Issa.

Another 20 such VIP loans, which often provided mortgages on terms more favorable than those available to the general public, went to employees of Freddie Mac, another big government-backed buyer of mortgage loans, the Issa letter said.

While it has been reported that VIP loans went to some top Fannie Mae officials, the latest information indicates that the activity was more widespread.

In an interview Tuesday, Mr. Issa, of California, said the new information provides further evidence that Countrywide Financial was improperly trying to "curry favor and get an edge" by passing out financial favors. He says the dealings between Countrywide and Fannie Mae in particular contributed to the downfall of those firms and to the broader problems in the mortgage industry.

In 2008, Fannie Mae and Freddie Mac were taken over by the federal government, which has spent about $145 billion to keep them afloat. Also in 2008, Countrywide was purchased by Bank of America Corp. The House Oversight and Government Reform committee, on which Mr. Issa is the ranking Republican, last fall subpoenaed the records of the now-defunct VIP program.

Mr. Issa's letter went to the Federal Housing Finance Agency, or FHFA, which oversees Fannie Mae and Freddie Mac. It is the latest salvo in a two-year-old investigation of the VIP program spearheaded by Mr. Issa. Last week he released a letter saying that 30 VIP loans had gone to U.S. Senators or Senate employees. He says the investigation is ongoing and is also turning up information on loans to others in government.

A Fannie Mae spokesman declined to comment on the Issa letter. A Freddie Mac spokeswoman deferred comment to the FHFA. An FHFA spokesperson said the agency had received Mr. Issa's letter and "will respond to him promptly."

House investigators Tuesday also released an internal 2001 Countrywide email regarding a loan made to Daniel Mudd, who served as Fannie Mae's chief operating officer and later as its chief executive. The email spoke of the need to "understand the sensitivity of this deal. We already are taking a loss, it would be horrible to add a service complaint on top and lose any benefit we generate." While Mr. Mudd's refinancing of a home loan with Countrywide had been previously reported, the internal details from the company about it hadn't.

Mr. Mudd, now chief executive of Fortress Investment Group, New York, said Tuesday in a statement that he "did not seek any preferential treatment." He said that he had a financial adviser obtain loan quotes from several lenders and that Countrywide was offering "competitive" terms. Mr. Mudd said the loan was obtained through a local Countrywide retail branch.

Mr. Issa's letter to the FHFA said the subpoenaed Countrywide records show that the Mudd loan went through the VIP program. It didn't say whether Mr. Mudd knew which Countrywide unit was handling the matter.

The Issa letter said that a cluster of VIP loans to Fannie Mae employees came in 1998, a year before Fannie Mae agreed to buy billions of dollars of Countrywide loans. If Fannie Mae or Freddie Mac employees accepted discounted loans or other preferential treatment, they might have violated the enterprises' conflict-of-interest policies, Mr. Issa wrote.

The Issa letter listed loans to 42 individuals, but in most cases provided only job titles, including several directors and vice presidents as well as lower-level positions. The only names provided were those of a few former senior officials, such as Mr. Mudd, who had previously been identified publicly as Countrywide borrowers.

The number of individuals receiving VIP loans was less than the number of loans given, sinceSome people received more than one loan. For instance, if a person took out a Countrywide loan and later refinanced it, that would be counted as two loan transactions.

Retirees' Bankruptcy Protection Act Trumps ERISA, 3rd Circuit Rules

2010-07-19T11:21:00.000-07:00

In a huge win for labor, a federal appeals court has ruled that a corporation in bankruptcy cannot terminate its retirees' health and life insurance benefits -- even if its ERISA plan explicitly reserved its right to unilaterally terminate such benefits -- unless it can show that doing so is a necessary part of its reorganization plan.

The 95-page decision from the 3rd U.S. Circuit Court of Appeals in In re Visteon Corp. promises to alter the playing field in big corporate bankruptcies by mandating compliance with Section 1114 of the Retiree Benefits Bankruptcy Protection Act without exception.

It marks the first time that any federal appeals court has squarely addressed the scope of Section 1114 and, by demanding a plain reading of the law, could reverse a strong trend among bankruptcy and district court judges to avoid the requirements of Section 1114 whenever the debtor corporation would have been free to terminate retiree benefits prior to the bankruptcy.

"We hold that Section 1114 is unambiguous and clearly applies to any and all retiree benefits," Chief U.S. Circuit Judge Theodore A. McKee wrote. The lower courts that have refused to apply Section 1114 broadly have reasoned that doing so would produce "absurd" results by giving retirees more rights in the bankruptcy context than they would have enjoyed before.

But McKee found that Congress was setting out to protect retirees during the high-pressure period of a bankruptcy reorganization and that the use of very broad language in the statutory test was designed to provide a wide umbrella of protection.

In Section 1114, Congress provided both procedural and substantive protections for retiree benefits during a Chapter 11 proceeding.

The law says that the bankruptcy trustee must attempt to reach an agreement with the retirees regarding modification of retiree benefits before it can ask the bankruptcy court to modify or terminate them. In doing so, the trustee must also provide the retirees with information about the company's financial situation to allow for informed evaluation of the proposal.

The law also says a bankruptcy court should grant a motion to modify retiree benefits only if it finds that doing so "is necessary to permit the reorganization of the debtor and assures that all creditors, the debtor, and all of the affected parties are treated fairly and equitably, and is clearly favored by the balance of the equities."

Section 1114 also provides additional protection for retiree benefits by giving them priority they would not otherwise have. Any payment for retiree benefits required to be made during a Chapter 11 proceeding has the status of an "allowed administrative expense" rather than the general unsecured status that would otherwise apply.

Visteon's lawyers successfully argued in both the bankruptcy and district courts that applying Section 1114 would make no sense since the company's ERISA plan gave it the power to terminate retiree benefits unilaterally. Giving retirees more rights in bankruptcy court would be absurd, they argued.

But the 3rd Circuit flatly rejected that argument.

"Despite arguments to the contrary, the plain language of Section 1114 produces a result which is neither at odds with legislative intent, nor absurd," McKee wrote in an opinion joined by Judges Marjorie O. Rendell and Walter K. Stapleton.

"Disregarding the text of that statute is tantamount to a judicial repeal of the very protections Congress intended to afford in these circumstances. We must, therefore, give effect to the statute as written," McKee wrote.

McKee said he recognized that "the majority of bankruptcy and district courts that have addressed this issue have concluded that Section 1114 does not limit a debtor's ability to terminate benefits during bankruptcy when it has reserved the right to do so in the applicable plan documents."

But that view is mistaken, McKee found, because Congress made room for no such exceptions.

"Section 1114 could hardly be clearer. It restricts a debtor's ability to modify any payments to any entity or person under any plan, fund, or program in existence when the debtor files for Chapter 11 bankruptcy, and it does so notwithstanding any other provision of the bankruptcy code. There is therefore no ambiguity as to whether Section 1114 applies," McKee wrote.

"By using the word 'any' three separate times, Congress ensured that the statute would apply to all benefits," McKee wrote. "We are, therefore, unpersuaded by the suggestion that failure to specifically address benefits that could be unilaterally terminated outside of bankruptcy somehow breathes ambiguity into the word 'any.'"

The ruling is a victory for attorneys Thomas M. Kennedy and Susan M. Jennik of Kennedy Jennik & Murray in New York, who filed the appeal on behalf of the Industrial Division of the Communications Workers of America.

About 2,100 retirees objected when auto parts supplier Visteon Corp. terminated their health and life insurance benefits without following the procedures set forth in Section 1114.

But U.S. Bankruptcy Judge Christopher Sontchi ruled in March that Visteon was free to do so, and the retirees lost their first round of appeals when U.S. District Judge Michael M. Baylson, on special assignment to the Delaware court, refused to disturb Sontchi's ruling.

An expedited appeal to the 3rd Circuit followed and the retirees have now emerged victorious with a ruling that breathes new life into Section 1114 by mandating that its protective provisions apply in every case where the debtor corporation seeks to terminate retiree benefits.

McKee's opinion includes a lengthy discussion of the law's legislative history, beginning with a highly controversial bankruptcy in which 78,000 retirees lost their benefits, and shows that Congress was setting out to establish a mechanism that must be followed in any bankruptcy to ensure fairness to workers who often agreed to forgo raises over decades in return for the promise of lifelong benefits.

The widespread trend to ignore Section 1114, McKee concluded, stemmed from misunderstandings of the law's purposes and mandates.

"Courts that have concluded it is absurd to apply Section 1114 to benefits that could be terminated outside of bankruptcy have often misinterpreted the rigidity of the section's protections, and therefore the extent to which the statute is in tension with ERISA," McKee wrote.

"Section 1114 does not prohibit the termination of benefits during a bankruptcy proceeding. Rather, it creates an equitable procedure through which the debtor can argue the economic necessity of doing so, and the retirees can counter with their own arguments about economics, fairness, and equity," McKee wrote.

For the most part, McKee said, "all Section 1114 guarantees retirees is a voice, and some minimal amount of leverage, in a process that could otherwise be nothing short of devastating to them and to their families and communities."

Visteon spokesman Jim Fisher declined to comment except to say that the company was "disappointed by the ruling" and is "assessing an appropriate course of action."

June Foreclosure Report - Mixed for California

2010-07-13T16:07:00.000-07:00

Discovery Bay, CA, July 13, 2010 - ForeclosureRadar (www.foreclosureradar.com), the only website that tracks every California foreclosure and provides daily auction updates, issued its monthly California Foreclosure Report for June 2010. Foreclosure activity was mixed in June after being down across the board in May. Filing of new foreclosure notices rose, while foreclosure sales dropped. The number of foreclosure sales that were cancelled hit an all time record in June, but the increase was primarily driven by just one lender JP Morgan Chase, and it's acquisitions including Washington Mutual. Although the number of properties purchased by 3rd parties at auction dropped significantly, they purchased nearly the same percentage of the total properties sold, and at a better discount to market value then we've seen in months.

Education: More California school districts edging closer to insolvency, state says - latimes.com

2010-07-12T14:51:00.000-07:00

An increasing number of California school districts are edging closer to financial insolvency, state officials reported Tuesday.

One immediate effect has been teacher layoffs — probably in the thousands, although neither state officials nor the California Teachers Assn. have final numbers.

Since the beginning of 2010, the number of school systems that may be "unable to meet future financial obligations" has increased by 38%, according to the state Department of Education.

Read more:

Education: More California school districts edging closer to insolvency, state says - latimes.com

Negotiator in Rangers' bankruptcy case being threatened | Sports News | News for Dallas, Texas | Dallas Morning News

2010-07-12T14:47:00.000-07:00

FORT WORTH -- Frustrated fans have apparently decided to target the negotiator appointed to work out a deal to lift the Rangers out of Chapter 11. William K. Snyder, 51, has suggested that the bidding be reopened at a new auction.

Security at the courthouse was stepped up after Snyder received threatening phone calls, U.S. Bankruptcy Judge Michael Lynn said Monday.

Snyder declined comment on the threats.

Security was stepped up at the federal courthouse Friday, when Snyder attended a Rangers bankruptcy hearing. A Federal Protective Service vehicle was parked conspicuously in front of the entrance, and the number of guards on duty was more than doubled.

"I don't know anything more than that Snyder has received threatening calls," Lynn said in an e-mail relayed from the bench.

Although a source close to the case said the calls were serious enough to alert federal officials, Lynn downplayed any potential danger. No one would describe the content of the threats or say how many have been received.

"I am not particularly worried about them," the judge said. "After all, we do get those e-mails from disgruntled fans who believe -- as, I understand, do some sports writers -- that I should construe the Bankruptcy Code as wished for by the fans.

"I don't expect anyone to shoot at him or me," he said. "A baseball through my window is another matter."

Negotiator in Rangers' bankruptcy case being threatened | Sports News | News for Dallas, Texas | Dallas Morning News

It’s “Chapter 66” as U.S. States Face De Facto Bankruptcy :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website

2010-07-11T15:22:00.000-07:00

A number of U.S. states are facing bankruptcy – in fact if not in name – with Illinois and California leading the way.

When an individual goes bankrupt in the United States, it’s usually a Chapter 7. When a business goes under, it’s Chapter 11. Farmers have a Chapter 12, and there is a more complex individual option known as Chapter 13.

But what do you call it when a U.S. state goes under? There’s no official “chapter” for that. But it’s looking more and more like there should be. Your humble editor proposes “Chapter 66,” in honor of a famed stretch of interstate.

U.S. Route 66, also known as “Will Rogers Highway,” “Main Street of America” and “the Mother Road,” was one of the original routes in the U.S. highway system. Opened up to cars in the year 1926, it originally ran 2,448 miles, from Chicago, Ill., to Los Angeles, Calif.

Route 66 was also a major path for westbound migrants, seeking relief from the “dust bowl” conditions of the 1930s.

It’s fitting that Illinois and California were the termination points of that iconic road, because “Chapter 66” is a dark and looming reality for those two states now – with a number of others on the same path. As America endures a sort of new financial dustbowl, the “state of the states” looks grim.

Amber Waves of Debt

The Globe and Mail describes the situation as “red ink, from sea to shining sea.”

“Forty-eight of 50 states face budget shortfalls this year,” they further report. “Many shortfalls amount to more than 20 percent of planned spending. The plunge in state tax revenue is the worst on record.”

(Budget shortfalls may be in the news, but it's not the only thing moving the market right now. If you’re looking for additional market analysis, sign up to read fellow editor Adam Lass' latest on financial market trends and investment commentary.)

How did we get to this sorry spot? By and large the same way Greece did… by spending money we didn’t have, and ignoring the consequences as long as possible.
Oh Boy, Illinois

Illinois is something of an idiot poster child for how bad things have gotten… and how tough the fix will be.

“It is getting worse every single day,” the Illinois state comptroller laments. “We are not paying bills for absolutely essential services. That is obscene.”

Illinois is facing a $12 billion deficit and a $5 billion budget shortfall. To add insult to injury, the state’s pension system is 50% underfunded by conservative estimates.

It has reached the point where the state has, quite literally, stopped paying bills. This means that jobs are getting cut, paychecks are getting delayed, and businesses are being shut down. There is simply – and again, quite literally – no more money.

Meanwhile, the state’s pension shortfall is no longer a potential catastrophe. It is a guaranteed one. According to Fitch, one of the big three ratings agencies, “Their pension is the most underfunded in the nation… they can’t grow their way out of this.”

So what is the Illinois governor’s response to all this? Why, spending more money of course. Staff members have reportedly received 43 salary increases at an average of 11.4%. And 40,000 union workers in Illinois have successfully rammed through a pay raise of 14%.

The politicians and union bosses running Illinois are not just rearranging deck chairs on the Titanic. They are cheerily giving themselves pay hikes even as the iceberg heads straight for them.
California Dreamin’

California is another poster child for impossible foolishness.

“People think we’re becoming a third world country,” says Arnella Sims, a Los Angeles County court reporter. “We are on the verge of system failure,” warns the executive director of the California Budget Project.

“California’s fiscal hole is now so large,” The Globe and Mail further adds, “that the state would have to liberate 168,000 prison inmates and permanently shutter 240 university and community college campuses to balance its budget in the fiscal year that begins July 1… Mass layoffs, slashed health and welfare services, closed parks, crumbling superhighways and ever-larger public school class sizes are all part of the new normal.”

In an effort to fight back the tide, California governor Arnold Schwarzenegger – the “governator” – took a bold step last week, ordering 200,000 state workers to take a temporary pay reduction to $7.25 per hour, the federal minimum wage. The state comptroller balked.

It would be amusing if it weren’t so tragic. This is the kind of stuff that happens when you run out of money, courtesy of spending what you don’t have for years or even decades at a time.
Growth Won’t Do It

In the past, the prevailing belief was that economic growth would cover all sins. No matter how foolishly federal and local governments spent, no matter how recklessly the money was squandered, a tide of rising prosperity would ensure there would always be more. The great American growth engine would keep the coffers filled.

Sadly, it is exactly that attitude that brought us to where we are now. The terrible debt crisis that America faces was brought on precisely through a mixture of laziness and overconfidence. No matter how much was earned, the belief was always that things could be even better if we just leveraged up that prosperity by a factor of X.

Like the man who thinks that becoming a millionaire entitles him to spend like a billionaire, that mindset was always guaranteed to end in tears. And now we have reached that terrible point in the cycle where economic growth – the very thing we have always relied on in the past – is being choked off by mountainous levels of accumulated debt.

As Hunter Thompson once said: “The Edge... there is no honest way to explain it because the only people who really know where it is are the ones who have gone over.”

We were bound and determined to find the edge. And now we are in the process of going over. Be prepared.

Don't forget to follow us on Facebook and Twitter for the latest in financial market news, investment commentary and exclusive special promotions.

Source :http://www.taipanpublishinggroup.com/tpg/taipan-daily/taipan-daily-070910.html

By Justice Litle
http://www.taipanpublishinggroup.com/

Justice Litle is the Editorial Director of Taipan Publishing Group, Editor of Justice Litle’s Macro Trader and Managing Editor to the free investing and trading e-letter Taipan Daily. Justice began his career by pursuing a Ph.D. in literature and philosophy at Oxford University in England, and continued his education at Pulacki University in Olomouc, Czech Republic, and Macquarie University in Sydney, Australia.

Aside from his career in the financial industry, Justice enjoys playing chess and poker; he enjoys scuba diving, snowboarding, hiking and traveling. The Cliffs of Moher in Ireland and Fox Glacier in New Zealand are two of his favorite places in the world, especially for hiking. What he loves most about traveling is the scenery and the friendly locals.

Copyright © 2010, Taipan Publishing Group

Pasadena Playhouse Emerges From Bankruptcy - ArtsBeat Blog - NYTimes.com

2010-07-08T16:03:00.000-07:00

JULY 8, 2010, 3:45 PM
Pasadena Playhouse Emerges From Bankruptcy

By ROBIN POGREBIN
The Pasadena Playhouse has emerged from Chapter 11 and plans to mount a production this fall, the theater announced on Thursday.Two months after it filed for bankruptcy protection, the playhouse’s reorganization plan was approved on Wednesday by the United States Bankruptcy Court in Los Angeles.

In February, the playhouse laid off its entire staff of 37 and scheduled to close its doors because of deep debt. During its 90 years in operation, the playhouse has presented productions — most recently “Looped,” starring Valerie Harper — that have moved to Broadway, but it has also closed and filed for bankruptcy before. News of the playhouse’s struggles led to a $1 million matching pledge from anonymous donors, which helped to put the theater on better footing.

The city, along with the theater’s board, staff and advisers, “have all combined to create a plan to resurrect the Playhouse from years of unbearable debts,” the executive director, Stephen Eich, said in a statement. “Although we will be moving slowly in the future to ensure financial responsibility and stability, we will in fact be back.”

In the next weeks, the theater will announce plans for at least one production, a spokeswoman said, but there will not be a full 2010-2011 season. “The plans are to get back to work,” the artistic director, Sheldon Epps, said in a telephone interview on Thursday.

Pasadena Playhouse Emerges From Bankruptcy - ArtsBeat Blog - NYTimes.com

CA Update: Foreclosure Is Valid Because MERS Has Power to Designate New Trustee under Deed of Trust

2010-07-08T12:11:00.000-07:00

The following is a recent case update by Professor Dan Schechter, Loyola School of Law.

Foreclosure Is Valid Because MERS Has Power to Designate New Trustee under Deed of Trust,

Even Though It Holds No Interest in Underlying Note.

A district court in California has held that MERS had the power to designate a new trustee under a deed of trust (thus validating the designee's foreclosure), even though neither MERS nor the designee held any interest in the underlying promissory note. [Lane vs. Vitek Real Estate Industries Group, 2010 Westlaw 1956707 (E.D. Cal.).]

Facts: Two borrowers filed suit against their mortgage lenders and Mortgage Electronic Registration Systems, Inc. ("MERS"), claiming that the defendants had wrongfully conducted a nonjudicial foreclosure sale of the borrowers' home. MERS had been initially designated as the "nominal beneficiary" under the deed of trust and had then executed a substitution of trustee in favor of another entity, following the borrowers' default.

As part of the borrowers' wrongful foreclosure claim, they asserted that the foreclosure was improper because none of the parties to the foreclosure were beneficiaries of the underlying note and instead held interests in the deed of trust. MERS moved to dismiss that aspect of the borrowers' claim.

Reasoning: The court ruled in favor of MERS, holding that MERS and its assignees could foreclose on the deed of trust, even though MERS held no interest in the underlying note:

Under California Civil Code section 2924(a)(1), a “trustee, mortgagee or beneficiary or any of their authorized agents” may conduct the foreclosure process. Under California Civil Code section 2924b(4), a “person authorized to record the notice of default or the notice of sale” includes “an agent for the mortgagee or beneficiary, an agent of the named trustee, any person designated in an executed substitution of trustee, or an agent of that substituted trustee.” . . . . There is no stated requirement in California's nonjudicial foreclosure scheme that requires a beneficial interest in the Note to foreclose. Rather, the statute broadly allows a trustee, mortgagee, beneficiary, or any of their agents to initiate nonjudicial foreclosure. Accordingly, the statute does not require a beneficial interest in both the Note and the Deed of Trust to commence a nonjudicial foreclosure sale.

This interpretation is consistent with the rulings of this court, along with many others, that MERS has standing to foreclose as the nominee for the lender and beneficiary of the Deed of Trust and may assign its beneficial interest to another party.

AUTHOR'S COMMENT: Although there is some disagreement across the country on this issue (see below), the emerging trend in California is to validate the role of MERS as a nominee. The court in Lane relied primarily upon the wording of the statute to reach that result. However, Stephen Dyer (one of my four co-authors of California Real Estate Finance) has alerted me to a possible contractual glitch resulting from Paragraph 24 of the standardize Freddie Mac form, used throughout California, which provides: "Lender, at its option, may from time to time appoint a successor trustee to any Trustee appointed hereunder by an instrument executed and acknowledged by Lender and recorded in the office of the Recorder of the county in which the Property is located . . . . This procedure for substitution of trustee shall govern to the exclusion of all other provisions for substitution." [Source:http://www.freddiemac.com/uniform/doc/3005-CaliforniaDeedofTrust.doc.]

The problem, of course, is that MERS is not identified as the "lender" in that form, and the "lender" is defined as the originating lender itself. Therefore, although the statute would appear to empower an agent (such as MERS) to execute a substitution of trustee, the current wording of the contract itself seems more restrictive, empowering no one other than the originating lender to execute a substitution of trustee.

Ideally, the Freddie Mac form should be amended to make it clear that MERS is authorized to appoint a successor. Admittedly, an amendment would not retroactively solve the problem under the existing documentation. My guess is that if a California court were presented with this contractual argument, the court would probably use the wording of the statute to empower MERS, as the agent of the lender, to act on its behalf, even if the document itself did not say so. The only caveat is that there are a few bankruptcy courts, primarily in Southern California, that have subjected MERS transactions to very strict scrutiny; those courts might not rescue the lender from the effect of the Freddie Mac language.

For discussions of other cases involving MERS and its standing as an agent or nominee, see:

-- 2009 Comm. Fin. News. 103, Assignee of Mortgage Lacks Standing to Foreclose Because Assignee Failed to Show That MERS Assigned Underlying Promissory Note, Along with Mortgage.

-- 2009 Comm. Fin. News. 72, Senior Lienholder's Failure to Give Notice of Foreclosure to MERS Did Not Affect Validity of Senior's Foreclosure Because MERS Was Merely a Nominee.

-- 2009 Comm. Fin. News. 59, Assignees of Mortgages Cannot Enforce Unendorsed Notes in Their Possession Because MERS Documentation Does Not Expressly Authorize Assignment of Notes.

These materials were written by Professor Dan Schechter of Loyola Law School for his Commercial Finance Newsletter, published weekly on Westlaw. Westlaw holds the copyright on these materials and has permitted the Insolvency Law Committee to reprint them.

Former Kiss Guitarist Loses Bankruptcy Appeal - Bankruptcy Beat - WSJ

2010-07-08T08:57:00.000-07:00

AP Photo/Dr. Pepper Snapple
A television ad for Dr. Pepper features Kiss band member Gene Simmons.

Former Kiss guitarist Vinnie “Wiz” Vincent has lost his bankruptcy appeal, paving the way for his former band mates to sell his Kiss songwriting copyrights for payment of a judgment they won against him.

A three-judge bankruptcy panel for the 6th U.S. Circuit Court of Appeals has affirmed a ruling by a Tennessee bankruptcy judge that Vincent filed his most recent bankruptcy — his third Chapter 13 bankruptcy filing in three years — in bad faith and barred him from seeking Chapter 13 bankruptcy protection for two years.

Vincent, whose real is Vincent John Cusano, is trying to block Kiss from selling his copyrights in such songs as “Lick It Up” and “Young and Wasted” to pay off an $82,000, according to a judgment in a separate California lawsuit.

That judgment is the result of attorneys’ fees due to Kiss members Gene Simmons, Paul Stanley and others after Vincent unsuccessfully sued them for unpaid royalties and defamation. The band members want to sell Vincent’s copyrights to pay off the judgment.

Last year, Vincent’s lawyer at the time argued such a sale would “absolutely” leave the musician “destitute, as the property sought to be sold constitutes the debtor’s life’s work.”

The appellate panel also shot down Vincent’s argument that any mistakes made in his case were inadvertent and because of the facts that he fired his bankruptcy lawyer and was representing himself pro se, a legal term meaning representing yourself.

“We cannot excuse a lack of good faith based on debtor’s pro se status, particularly when the debtor was in fact represented by counsel or had retained counsel during the vast majority of his time in the bankruptcy court but failed to follow counsel’s advice,” the panel said in court papers.

In 1982 Vincent, a onetime staff writer for the TV show “Happy Days,” was hired by Kiss for $2,000 a week to replace original guitarist Ace Frehley. He served as the lead guitarist for the band from 1982 to 1984, playing on the “Creatures of the Night” and “Lick It Up” albums.

Dubbed the “Ankh Warrior” for his Egyptian-style face paint during the end of Kiss’s original makeup-wearing days, Vincent was also part of the band’s first nonmakeup lineup. But within a year of taking off the makeup, Vincent was out of the band, reportedly fired for “unethical” behavior.

After Kiss, Vincent, formed the over-the-top glam-metal outfit Vinnie Vincent Invasion, which released a pair of albums in the late 1980s. According to court papers Vincent, 56, now lives in the Nashville area. He couldn’t be reached for comment.

Former Kiss Guitarist Loses Bankruptcy Appeal - Bankruptcy Beat - WSJ

Printable version: State's bankruptcies soar despite overhaul

2010-07-06T13:45:00.000-07:00

Printable version: State's bankruptcies soar despite overhaul

State's bankruptcies soar despite overhaul
Tom Abate, Chronicle Staff Writer
Sunday, July 4, 2010

Five years ago, bankruptcies soared to record levels as debt-strapped consumers raced to seek court protection before Congress changed the law to curb what had been considered an epidemic of filings.

For a while, filings dropped, but the recession has forced so many people into dire straits that bankruptcies in California are setting new records.

"The states with the most acute housing crises have had the most elevated filing rates," said Sam Gerdano, president of the American Bankruptcy Institute.

The volume of filings nationwide also is approaching 2005 levels, as the Bush-era reform bill that raised fees and eligibility standards is rendered moot by rising joblessness and sinking home values.

"The laws of economic gravity are more powerful than the laws of Congress," Gerdano said.

The upward trend in filings rekindles the debates that occurred five years ago over whether irresponsible consumers or predatory lenders are primarily to blame for bankruptcies, and whether the current law is the right fix or an unfair burden for debtors seeking a fresh start.

Scott Talbott, with the Financial Services Roundtable, an industry group that backed the changes, said the recession-induced surge of filings proves that the reforms have not prevented overburdened debtors from getting a court-ordered fresh start.

"The fact that the numbers are up means people still have access to the bankruptcy courts," he said.

ongress' balancing act

Henry Sommer, past president of the National Association of Consumer Bankruptcy Attorneys, which opposed the 2005 law, called the changes unfair.

"There are a lot of people who are in a really bad way who can't come up with the money to file," he said.

The Constitution empowers Congress to establish "uniform laws on bankruptcies throughout the Unites States," putting lawmakers on the teeter-totter between debtors and lenders forever eager to tip the scales of justice toward their cause.

Bankruptcy law tilted toward consumers in 1938 when the Depression-era Congress allowed federal bankruptcy courts to completely absolve borrowers from certain obligations and give them a clean slate.

Congress pushed the balance back toward lenders in 1978 when it differentiated between two types of consumer bankruptcies: Chapter 7 filings that continued to allow eligible debts to be completely erased, and Chapter 13 pleas that required debtors with the ability to make partial repayment to do so under court supervision.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 further favored lenders by raising filing fees and tightening the requirements for getting a clean slate under Chapter 7 with an eye toward steering more applicants toward Chapter 13.

The effects of the new law are debatable given that the recession is thwarting the reformers' goal of capping a long, steady rise in bankruptcy filings.

dded expenses

One thing is clear: It costs more to go belly-up.

The Government Accountability Office, the nonpartisan watchdog agency of Congress, told lawmakers in June 2008 that the 2005 law boosted Chapter 7 expenses from about $914 to $1,477, including legal, filing and counseling fees.

That office did not put a figure on the more complex Chapter 13 filings, but said that in most cases the attorneys fees charged to debtors had risen

55 percent or more.

Lois Lupica, a law professor at the University of Maine, is in the middle of a multiyear study to get a better fix on costs and address an even more important but contentious question - do these changes keep some debtors who may qualify for bankruptcy from seeking the protection of the courts?

Lupica, who refused to speculate before finishing her study in the next year or so, framed her objective this way: "Are there people for whom bankruptcy has become too expensive?"

E-mail Tom Abate at tabate@sfchronicle.com.

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/07/04/BUJP1E7JK5.DTL

This article appeared on page D - 1 of the San Francisco Chronicle

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Bankrupt NBA Star To Face Felony Bad Check Charges | Reed's Bankruptcy Blog

2010-07-05T10:10:00.000-07:00

Interesting post about Antoine Walker. Bankrupt NBA Star To Face Felony Bad Check Charges | Reed's Bankruptcy Blog

Educational Resources U.S. Courts - great for kids

2010-07-03T11:27:00.000-07:00

Enlivening Court Literacy with Real-Life Experiences -- great information for kids

These materials are ready for immediate classroom and courtroom experiences. They are designed to be the focus of a high school class visit to a local federal courthouse, however, they also can be used effectively in classrooms.
The events have the following characteristics in common. They are:

* Participatory, true-to-life courtroom simulations.
* Hosted by federal judges with local attorneys.
* Inclusive of all students as active jurors and lawyers.
* Based on recent Supreme Court cases that have an impact on young people.

Check it out!

Bankruptcy Forces 'Hell's Kitchen' Star Gordon Ramsay to Shut Down London Pub

2010-06-29T23:18:00.000-07:00

Bankruptcy Forces 'Hell's Kitchen' Star Gordon Ramsay to Shut Down London Pub

Fannie-Freddie Bailout Could Cost Taxpayers $1 Trillion - CNBC

2010-06-29T08:45:00.000-07:00

For American taxpayers, now on the hook for some $145 billion in housing losses connected to Fannie Mae and Freddie Mac loans, that amount could be just the tip of the iceberg.

According to the Congressional Budget Office, the losses could balloon to $400 billion. And if housing prices fall further, some experts caution, the cost to the taxpayer could hit as much as $1 trillion.

Two things are clear: Taxpayers don’t want to foot the bill, and Fannie and Freddie, taken over by the government in 2008 to stanch the financial bloodletting, need a major overhaul.

“Some of us who don’t even own homes are paying to support others and their home ownership, and they ask ‘why?’ said Robert J. Shiller, a Yale University economics professor and co-creator of the S&P/Case-Shiller Home Price Indices.

The Housing Fix -- A CNBC Special Report >> See Complete Coverage

The indices measure the US residential housing market by tracking changes in the value of residential real estate both nationally and in 20 metropolitan regions.

Shiller added that the mission of Fannie and Freddie should be severely cut back “so that they’re not helping middle-class homeowners, [but] they’re helping poor people get into the housing market.”

At the crux of the financial crisis, the government took over Fannie and Freddie to avert possible massive losses for banks, money-market funds and, perhaps, most importantly, foreign institutions that purchased billions of Fannie and Freddie debt because of its implied government guarantee.

The Chinese, for example, had invested heavily, and the US decided it didn’t want them to take a loss on their investment.

One possible scenario for the entities is to turn them into utilities, said Sean Dobson, CEO and chair of Amherst Securities, whose company trades as much as $50 billion in mortgages annually.

“Freddie and Fannie could be used to standardize the mortgage product,” Dobson said, “to completely describe what the risks are and then act as a conduit for the capital markets to take the risk.”
© 2010 CNBC.com

Fannie-Freddie Bailout Could Cost Taxpayers $1 Trillion - CNBC

Maywood, California Among Top Five Cities Overwhelmed By Recession - ABC News

2010-06-28T21:22:00.000-07:00

Although this article is about some major American cities that are on the brink of bankruptcy, the article also focuses on Maywood, Calif., which is about to lay off everybody except for a few top positions.

http://bit.ly/cHCtvx

Personal Bankruptcies Rise To Combat Deficiency Judgments | Before It's News

2010-06-27T11:20:00.000-07:00

Personal Bankruptcies Rise To Combat Deficiency Judgments | Before It's News

SCOTUSblog » Credit card holders’ rights

2010-06-26T22:07:00.000-07:00

This is a post from the SCOTUS Blog and it's about a case that the Supreme Court is going to take up this coming October.

SCOTUSblog » Credit card holders’ rights

Credit card holders’ rights
Monday's orders explained
Lyle Denniston | Monday, June 21st, 2010 4:22 pm

The Supreme Court, taking on a case affecting the rights of credit card customers, agreed on Monday to settle banks’ duty to give advance notice before raising the interest rate they will charge when a card user defaults on a payment. The Court granted review despite the advice of the federal government that the case should be returned to lower courts to consider the Federal Reserve’s views. The government suggested the case had little continuing importance, but bank card-issuers disagreed. The case will be heard and decided in the Term starting Oct. 4.

A series of lawsuits, aimed at perhaps half of the entire credit card industry, followed a Ninth Circuit Court ruling that a customer had to be notified in advance if a card-issuer was going to raise a rate due to delinquency or default — even though the contract with the issuer already had indicated that such a change would follow. Chase Bank USA, a card issuer, took the case on to the Supreme Court, saying it was already clear that the Federal Reserve did not require any such notice. (In 2009, the Fed, later backed by a new law from Congress, imposed a 45-day advance notice for implementing a default rate increase, but that only applies to increases that would go into effect after last August, and not the ones at issue in Chase Bank USA v. McCoy, et al., 09-329. (Chase Bank is now a part of J.P. Morgan Chase & Co.)

Last January, the Court asked the U.S. Solicitor General to provide the government’s views on the case. Last month, Acting U.S. Solicitor General Neal K. Katyal suggested that the Court return the case to the Ninth Circuit, to consider a friend-of-court brief that the Fed had filed in the First Circuit Court last October. In response to that suggestion, lawyers for the California cardholders who had sued Chase Bank argued that taking that step would be unprecedented — that is, the Court has never before sent a case back to a lower court to reconsider in the wake of an amicus brief filed in another case in a different court. That response relied upon a series of sharply critical comments that Justice Antonin Scalia has been making , protesting the increasing practice in the Court of granting review of a case and simultaneously wiping out the lower court ruling and returning the case for a new look. Scalia has caustically suggested that the Court is making up a variety of reasons for evading its duty to decide cases on the merits.

It is unclear whether the Court’s decision to grant review, rather than sending the case back to the Ninth Circuit, had come because of Scalia’s views about the so-called GVR process. The Court may have simply decided that enough existing lawsuits, predating the Fed’s new Regulation Z policy on advance notice, were now on file that the lower courts needed an answer to what if any notice was required prior to the revised policy.

The Chase Bank case was one of three cases newly granted for review next Term. The Court also agreed to decide whether one state agency may constitutionally sue another part of the same state government, in order to enforce individual rights that are protected by a federal law. The case is Virginia Office for Protection and Advocacy v. Reinhard, et al. (09-529). That, too, was a case in which the Court had sought advice from the Solicitor General’s office; the SG recommended that the Court hear and decide the case, and then to rule that such lawsuits are not infringements on state sovereignty.

In addition, the Court agreed to decide, in a California murder case, whether a state must have clear-cut deadlines for a prison inmate’s filing of challenges to his conviction, if delay in pursuing such a plea is going to be used to scuttle a later attempt to get legal relief in a federal habeas case. Federal habeas cases are to be dismissed if the state inmate had failed to satisfy a procedural requirement when his case previously was pending in state courts. The new case is Walker v. Martin (09-996).

Among the cases the Court refused on Monday to hear was a test of the constitutionality of holding a partial re-trial of a civil lawsuit, limited solely to a reexamination of punitive damages, when an earlier jury verdict has been overturned on appeal. The case of Wyeth LLC te al., v. Scroggin (09-1123) was a rare attempt to get the Court to clarify the meaning of the civil trial jury right protected by the Constitution’s Seventh Amendment. Wyeth, facing a new punitive damages trial in a case involving women who claimed that they developed breast cancer after prolonged involvement in hormone therapy, contended that the Amendment bars new trials on only partial issues.

The Court’s next opportunity to issue orders granting or denying review of new cases is expected next Monday.

Bailout for the People

2010-06-26T13:10:00.000-07:00

Russia Marvels At America's Bankruptcy Courts - FOXBusiness.com

2010-06-25T11:47:00.000-07:00

Interesting tidbit--did you know that Russia doesn't have bankruptcy courts for individuals?

Russia Marvels At America's Bankruptcy Courts - FOXBusiness.com

Morgan Stanley, Massachusetts Settle Subprime Case - WSJ.com

2010-06-25T07:34:00.000-07:00

Morgan Stanley agreed to pay $102 million to end a probe by Massachusetts into the Wall Street firm's role in the subprime-housing boom and bust.

The New York company neither admitted nor denied wrongdoing, but Massachusetts Attorney General Martha Coakley accused Morgan Stanley of providing billions of dollars to subprime lender New Century Financial Corp., and then continuing to do business with the Irvine, Calif., subprime lender even though some of its loans violated guidelines at Morgan Stanley and lending laws in Massachusetts.

Morgan Stanley, Massachusetts Settle Subprime Case - WSJ.com

Cities: Maywood to hire others to run the city - latimes.com

2010-06-23T16:48:00.000-07:00

Cities: Maywood to hire others to run the city - latimes.com

Battles in California Over Escaping Mortgage Debt - NYTimes.com

2010-06-23T09:38:00.000-07:00

Battles in California Over Escaping Mortgage Debt - NYTimes.com

U.S. reports fewer enrollees, more dropouts in federal mortgage relief program

2010-06-22T16:35:00.000-07:00

By Renae Merle
Washington Post Staff Writer
Tuesday, June 22, 2010; A13

The Obama administration's marquee foreclosure-prevention initiative continues to struggle, as government data released Monday show that fewer homeowners are enrolling in the program and more are losing their federal mortgage aid.

Lenders enrolled homeowners into the mortgage relief effort, known as Making Home Affordable, at a slower pace last month after federal officials tightened the qualification process. Since the program's launch last year, about 340,000 homeowners have received a permanent loan modification that lowers their mortgage payment for five years.

But a growing number of borrowers are failing to move from the program's initial stage into a permanent loan modification. Lenders have said that many homeowners are failing to make the reduced loan payments and others have not been able to prove they qualify for mortgage assistance. The number of borrowers dropped from the program, about 436,000, eclipses those who have been helped, according to Treasury Department data. More than 100,000 borrowers lost their mortgage aid in May.

About half of the those dropped from the federal program received another type of loan modification from their banks, according to the government data. But housing counselors have complained that those alternative loan modifications are typically not as generous as what the government program offers and often come with hefty upfront fees.

"Obviously it's good to know these people haven't gone through foreclosure yet," said Julia Gordon, senior policy counsel at the Center for Responsible Lending. But there is no guarantee that lenders are offering modifications that will be sustainable for homeowners, she said.

Obama administration officials stressed Monday that Making Home Affordable is just one of several efforts to stabilize the housing sector. The administration unveiled a new "housing score card" pointing to the millions of home buyers who have taken advantage of tax credits worth up to $8,000, while noting that home prices have stabilized and mortgage rates are near historic lows.

The "housing market is significantly better than anyone predicted a year ago," Housing and Urban Development Secretary Shaun Donovan said during a conference call with reporters. "Obviously we're not out of the woods. Our housing market remains fragile."

The latest numbers come as lawmakers prepare to consider on Tuesday a provision to offer up to $3 billion in loans for unemployed homeowners who need help paying their mortgage. The proposal seeks to address an issue that has bedeviled foreclosure- prevention efforts for more than a year: An increasing number of borrowers can't make their loan payments because they have lost their jobs. With little or no income, these borrowers struggle to make even the reduced payments offered under the government foreclosure-prevention program.

The loan-assistance provision, which is being debated as part of financial reform legislation, is modeled after a Pennsylvania program that offers unemployed workers low-interest loans to pay their mortgages. Borrowers are eligible for loans of up to $60,000 that can be repaid with payments as low as $25 a month.

The measure could help 500,000 families who have lost their jobs save their homes, said Rev. Lucy Kolin, a spokesman for PICO, a national network of faith-based community organizations.

"Unemployment is the number one cause of foreclosures, and yet little continues to be done to help these struggling families," he said. "If Congress was willing to bail out the very banks that caused the recession in the first place, they owe it to the American people who are bearing the brunt of the recession's impact to include this provision in the final financial reform legislation."

Federal Bureau of Investigation - New E-Scams & Warnings

2010-06-21T12:45:00.000-07:00

New FBI warning about fraudsters accessing consumer financial and brokerage accounts. Beware!

Federal Bureau of Investigation - New E-Scams & Warnings

The New Poor - Peddling Relief, Firms Put Debtors in Deeper Hole - NYTimes.com

2010-06-21T10:07:00.000-07:00

The New Poor - Peddling Relief, Firms Put Debtors in Deeper Hole - NYTimes.com

Mortgage fraud: Feds charge 1,200 people in mortgage fraud crackdown - latimes.com

2010-06-18T11:46:00.000-07:00

latimes.com/business/la-fi-mortgage-fraud-20100618,0,1262422.story

latimes.com

Feds charge 1,200 people in mortgage fraud crackdown

In a nationwide effort, officials file criminal charges against individuals allegedly responsible for $2.3 billion in fraud. 'These schemes are despicable; they are dangerous to our economy,' Atty. Gen. Eric Holder says.

By E. Scott Reckard, Jim Puzzanghera and Nathaniel Popper, Los Angeles Times

June 18, 2010

Reporting from Orange County, Washington and New

Seeking to show victories against the kind of ground-level fraud that contributed to the housing crash, federal authorities said Thursday that they had filed criminal charges in recent months against 1,200 mortgage brokers and others accused of cheating banks and borrowers of $2.3 billion.

White-collar crime experts said the size and scope of what the government presented Thursday — dubbed Operation Stolen Dreams — represented an unprecedented crackdown on mortgage fraud.

The cases, including criminal charges against more than 30 defendants in Southern California, were announced at news conferences in Washington, New York, Ventura and elsewhere.

They were coordinated by the Obama administration's Financial Fraud Enforcement Task Force, a recent collaboration among a host of federal and state agencies including the FBI, the Department of Housing and Urban Development and state attorneys general.

"We know that mortgage fraud ruins lives, destroys families and devastates whole communities, so attacking the problem from every possible angle is vital," Atty. Gen. Eric Holder said in Washington. "These schemes are despicable, they are dangerous to our economy, and they will not be tolerated."

The numbers reflect a steady increase in the last seven years in the number of open FBI mortgage-fraud cases, to more than 3,000 in May from fewer than 500 in 2003.

The charges filed by federal prosecutors in Los Angeles, Orange and Riverside counties included two cases in Ventura County with a total of 14 defendants, said Andre Birotte, the U.S. attorney based in Los Angeles.

The Ventura County defendants are accused of filing fraudulent loan applications, collecting millions of dollars in fees and commissions, and causing millions of dollars in losses when the homes went into foreclosure, Birotte said in Ventura.

The announcements, coupled with the arrest Tuesday of the former chairman of a large Florida mortgage company on charges of engineering a $1.9-billion fraud, illustrate the two levels of misconduct the government is going after.

Cases like those publicized Thursday are relatively easy to investigate and prosecute, former federal prosecutor John Hueston said. But not always that easy: Separate civil charges were announced against 395 people and companies, suggesting to Hueston that the government had decided not to bring criminal charges in those cases.

Holder said $147 million had been recovered in the civil cases, an amount Hueston said was not that big given the magnitude of the abuses.

Nonetheless, Hueston said, the large number of cases unveiled Thursday would send a serious message with a real deterrent value.

The government seemed to stretch to include every case it could in the tally. Of the criminal defendants listed, 336 already have been convicted and 206 have been sentenced.

In one of the New York cases, a tax preparer is accused of selling fake pay stubs and tax documents to mortgage and real estate brokers, who allegedly used the documents to apply for loans. Authorities said 17 people were indicted as a result of that investigation.

In another New York case, prosecutors allege that a company offered to help struggling homeowners around the country but did nothing once the borrowers paid the firm's upfront fees.

"Preying on hundreds of struggling homeowners who were desperate for any kind of relief, the defendants stole from those who could afford it least," said Neil Barofsky, the special inspector general for the Treasury Department's Troubled Asset Relief Program.

Of the cases unveiled nationwide, some relate to conduct during the housing boom, while others deal with behavior after the meltdown.

"Some of these folks have engaged in one kind of mortgage fraud in one financial environment and a different kind of mortgage fraud in another financial environment," said Preet Bharara, the U.S. attorney for Manhattan.

scott.reckard@latimes.com

jim.puzzanghera@latimes.com

nathaniel.popper@latimes.com

Mortgage fraud: Feds charge 1,200 people in mortgage fraud crackdown - latimes.com

Painter Thomas Kinkade arrested near Carmel on suspicion of DUI

2010-06-16T11:44:00.000-07:00

Painter Thomas Kinkade recently filed for chapter 11 bankruptcy protection.

Painter Thomas Kinkade arrested near Carmel on suspicion of DUI

Seniors Are the Fastest Growing Population of Consumers Declaring Bankruptcy

2010-06-12T11:23:00.000-07:00

Seniors Are the Fastest Growing Population of Consumers Declaring Bankruptcy

Comparison Chart of the Central District of California BK Filings

2010-06-12T09:37:00.000-07:00

	2008	2009	%	2010	%
Jan	3,694	6,004	63%	9,013	50%
Feb	3,787	6,971	84%	9,659	39%
March	4,381	8,529	95%	12,840	51%
April	5,023	8,512	69%	12,114	42%
May	5,177	8,967	73%	11,906	33%

Banks Face Short-Sale Fraud as Home ‘Flopping’ Schemes Spread - BusinessWeek

2010-06-10T18:25:00.000-07:00

Banks Face Short-Sale Fraud as Home ‘Flopping’ Schemes Spread - BusinessWeek

N.Y. Court Allows Cuomo Suit over Bogus Home Appraisals

2010-06-09T06:48:00.000-07:00

Yesterday, Reuters reported that a New York state appeals court unanimously ruled yesterday that New York Attorney General Andrew Cuomo can proceed with a lawsuit accusing title insurer First American Corp. of colluding with Washington Mutual Inc. to fraudulently inflate home values. This could be BIG! I'll keep you updated.

New Help for Homeowners Facing Foreclosure

2010-06-01T22:15:00.000-07:00

Here's a link to the new directive from the Treasury for the Home Affordable Modification Program (HAMP), which includes guidelines for HAMP modifications in bankruptcy. These guidelines increase the ability to use chapter 13 as a platform to obtain a mortgage modification under HAMP. Now, homeowners in chapter 13 are required to be considered for HAMP upon request. The chapter 13 plan may provide for modified payments at 31 percent of gross income, thus allowing chapter 13 debtors a means to reduce their mortgage to an affordable level. The new rules make a number of other procedural changes to benefit homeowners in bankruptcy. Click here to read more on Treasury’s Supplemental Directive 10-02 to HAMP.

The directive is too long to post here, so I've included a link.

2010-05-26T12:20:00.000-07:00

WaMu Shareholders Want to Investigate JPMorganR

2010-05-26T12:19:00.000-07:00

According to Reuters, WaMu's shareholders want to investigate whether J.P. Morgan Chase & Co. had any role in the bank's failure. Read More

Is it Impossible to Be a Success After Bankruptcy?

2010-05-21T22:29:00.000-07:00

Interesting post by garrickhoeffner

Bankruptcy can not only prevent failure but it can also be a key to success. Can you imagine how much easier it could be to follow your dreams without the burden of debt looming over you?

As soon as you decide to get our from under your debt, you've gotten control over your life again. Asking a St. Louis bankruptcy attorney for credit card debt help, protection from foreclosure, and relief from the harassment of your creditors is a responsible move and can be seen as your first step toward success.

There are actually quite a few pioneers of industry who had to start over with bankruptcy before they could fully follow their dreams. Here are some of history's most famous examples of people who wiped the slate clean and became the massive successes we know them as today.

1. Milton Hershey had to file bankruptcy after his first attempt at opening a candy shop. However, getting rid of his debts allowed him to open up the Lancaster Caramel Company and become one of the biggest candy makers in the world.

2. Walt Disney had to file for bankruptcy protection after many filed attempts at making movies. After filing, he created Mickey Mouse and released "Steamboat Willie," launching him into success and allowing him to become a legend that children still revere.

3. Henry Ford filed for bankruptcy after his Model T prototype failed. Getting rid of his debts allowed him to reorganize his finances and start the Ford Motor Company.

Though these three people are all incredibly different, they share a common beginning. They all knew that in order to succeed, they must first get help with their debts. Simply asking for help and getting rid of their debts allowed them to become some of the biggest successes in American history.

These three aren't the only ones who've seen great success after bankruptcy. Many modern actors, athletes, and entrepreneurs have used bankruptcy protection to start over. Cyndi Lauper, George Foreman, Willie Nelson, and Donald Trump are just a few of these celebrities; but the list doesn't end there. People who've filed bankruptcy, celebrity or not, have some of the greatest success stories this country has seen.

These celebrity bankruptcy stories can really tell us something. You must do whatever you need to do to follow your dreams. If that means asking a St. Louis bankruptcy attorney for credit card debt help, protection from foreclosure, and relief from your creditors, then so be it. Your bankruptcy can be the inspiration for your future success too.

Posted by garrickhoeffner at 9:51 PM

The Consumer's Guide To Ending Debt Collection Harassment | Jay Fleischman - JDSupra

2010-05-21T12:46:00.000-07:00

Thanks to New York Bankruptcy Attorney Jay Fleischman for writing this Consumer Guide!

The Consumer's Guide To Ending Debt Collection Harassment | Jay Fleischman - JDSupra

Recent Review I received on AVVO--Glad when I can help clients

2010-05-20T00:15:00.000-07:00

A recent review I received on AVVO:

Finally an Honest Lawyer! Posted by: Rick W., 2010-05-17 3 days ago. Flag as objectionable Overall rating Trustworthy Responsive Knowledgeable Kept me informed I recommend Daniela Romero.I used Daniela 1-6 months ago.Daniela handled my Bankruptcy / Chapter 13 matter.I have previously worked with 3-5 lawyers. Client Review: I went in to this at the last possible minute with no time to prepare, hours from losing my house and having no clue what Bankruptcy was all about it. I was so frustrated and angry I wanted to cut my wrists and pour vinegar on them. Ms. Romero was nothing but patient. Ms. Romero was nothing but patient, thorough, took my calls at any hour, acted as even a therapist to calm my craziness. She responded to emails super fast and put up with me the entire way. We have now got my plan to exactly where I need it and now I can make my way through this thing. I am making my payments, I don't feel like an inadequate loser which is what I thought anyone who went through bankruptcy was. I've also learned that Ch 13 is not that big of a big bad evil deal like many might think once you understand it's purpose and how it works. I highly recommend this attorney.

Press release

2010-05-16T18:25:00.000-07:00

The Pasadena Playhouse Files Chapter 11 Bankruptcy--Doners Will Fund Its Exit From Banruptcy

2010-05-15T21:39:00.000-07:00

Below is a link from the Wall Street Journal about the Pasadena Playhouse's Chapter 11 Bankruptcy. It should be very interesting to follow this restructuring.
http://blogs.wsj.com/bankruptcy/2010/05/14/pasadena-playhouse-says-donors-will-fund-its-bankruptcy-exit/

Also, below is a reprint of an article from the Pasadena Star News about California's Official Theater's Chapter 11 bankruptcy filing.

Pasadena Playhouse files for bankruptcy

Posted: 05/11/2010 11:24:26 AM PDT

PASADENA - The Pasadena Playhouse announced today that it has filed for bankruptcy. "This is a necessary step in our strategy to reorganize the Playhouse for the benefit of our creditors and the Pasadena Community at large," wrote Pasadena Playhouse Executive Director Stephen Eich in a prepared statement.
The Pasadena Playhouse has filed for bankruptcy twice since its 1917 founding. In 1969 the historic building came close to being demolished but was rescued by the city, which now leases it to the playhouse for $1 a year.
The theater went dark in February when the Playhouse's director announced it could no longer afford to stay open. All staff, except for Eich, Artistic Director Sheldon Epps, an accountant and an assistant were laid off.
Eich has said that the goal is to find a way to work with the Playhouse's creditors to find a way to re-open.

US faces same problems as Greece, says Bank of England

2010-05-13T23:18:00.000-07:00

US faces same problems as Greece, says Bank of England

Predatory Loan Modifications

2010-05-11T21:03:00.000-07:00

Such a great article that I'm posting it here from http://blog.ml-implode.com/2010/05/predatory-loan-modifications/

“Yes Virginia……………… there is a Predatory Loan Modification.”
For three years, the US has been subjected to all manner of communications from the government, the media, and lenders about loan modifications. For two years, I have, with increasing frequency, been reviewing actual loan modifications granted to borrowers, and loan modification offers. Over the past six months, I have been doing exams with paperwork included about loan modifications. And March 30, I wrote an article about the results of the HAMP loan modifications.
With what I have learned and know, it is time to finally put words to paper (or to the internet) about what is really going on. If attorneys and homeowners are going to fight to save homes, it is time to present to all the facts concerning the loan modifications efforts and offers. Many have seen portions or parts of the whole, but few have actually put it all together. Some have actually used the term Predatory Loan Modification, but they have applied it to companies that were trying to scam homeowners, by offering to negotiate loan modifications for homeowners, but with no real intent. It was those companies that resulted in SB-94 in California being enacted, with a lot of help from the banks, and that put loan modification companies out of business, and stopping large number of attorneys from engaging in loan modification efforts.
Predatory loan modifications come in many disguises and may include the actual offer, or just the negotiations of the loan modification. The purpose of the modification is to whether now or in the future, to cause the borrower to lose the home. It has no other purpose than that. I shall endeavor to explain many different ones, and then I shall offer an insight into where the next “Battle for California” and the rest of the US must take place.

Same Rate – Higher Payment-Taxes Included

Throughout 2008, this was the most common Predatory Loan Modification. It was seen quite often with Sub-Prime loans, but other loans as well. It is still seen today.
The modification featured an interest rate which was the same as the current rate, but a higher monthly payment. The payment increased because arrearages were packed onto the back of the loan which resulted in the payment increasing. To add insult to injury, taxes were included as well.
The net effect of this “modification” was to induce the borrower to walk away from the home because they knew that the payments could never be made. Those that did accept the modification would end up losing the home anyway, since they could not make the payments.

Forbearance Disguised as a Loan Modification

A common practice used in 2008 and also today is to present a borrower with a letter identifying a “loan modification” offer. The terms of the offer are for a period of time, usually from 4 months to a year, whereby the borrower will usually bring in a lump sum to pay a portion of the arrears, and then over a period of time, make higher monthly payments to “catch up” a portion of the arrears and at the end of the term, bring the loan up to date. The lure of this program is that it implies that successful completion would result in a loan modification.
The fact of the matter is that I have NEVER seen one of these plans result in a successful modification. Once the payments are made, the lender denies the modification and demands the arrearages. When the borrower can’t pay, the lender forecloses. With this program, the borrower has “proven” that he could make the payments, so there is no need to modify, in the minds of the lender.
America’s Servicing Company, aka Wells Fargo, is famous for this program.

Option ARM Loan Modification

This is a different loan modification that I have seen offered numerous times, often by First Federal of Ca. The client is in an Option ARM mortgage.
First Federal contacts the borrower, offering to modify the loan. The modification will put the borrower into a 30 or 40 year fixed rate mortgage. The problem is that the interest rate will be 5.5%. In fact, they told a friend that 5.5% was the lowest that they could go by law. This was a portfolio loan that they owned.
Review of the loan revealed that at the time of the offer the borrower was in a loan with a 2.45 Margin. With the Index at 1%, this meant that he was paying a 3.45% interest rate. First Federal would modify his loan to 5.5%, over 2% higher than what he was currently paying. Of course, it resulted in the borrower declining the offer.
BTW, under the FDIC program, the borrower could have been offered down to 3%, and not 5.5%. Glad to see First Federal gone, but since OneWest took them over, it will be just as bad.

Lower Rate – Two Year Term

This is a common offer. With it, the interest rate will be lowered for a two year term, and as low as 2%. However, after two years, the modification ceases and the loan program returns to its original terms. Of course, this only delays the inevitable.

World Savings Modification

World Savings had a “wonderful” modification program. They would contact a borrower and offer a modification for $299. The offer generally dropped the interest rate by .5%. This lasted for one year. At the end of the year, World would contact the borrower with another modification offer. This offer would cost the borrower $499, and would last a year.

HAMP

Surprised to see HAMP in this list? Why should you be? The lenders and Treasury administer the program.
HAMP modifications offer to qualified borrowers a modification of the loan terms. The terms allow for an interest rate as low as 2%, for five years. After the fifth year, the rate will increase by 1% yearly, until it reaches the Freddie Mac rate at the time of the modification. This is usually about 5%. There it stays until the loan is paid off. Other terms are available with the modification, but to keep things simple, I shall not bother with those terms.
Sounds great with this modification, but here is the catch. I recently evaluated the HAMP program and found that the Mean Debt Ratio for all loans as of Feb 2010 was 59.8%. For March, this Debt Ratio was 61.3%. For the non-lending reader, this means the following:
• If a homeowner has a $10,000 per month Gross Income, and he has a great accountant and tax guy, he is in a 33% bracket for Federal and State Taxes, Social Security, Disability and other Deductions.
• After deductions, his income is $6,667 per month, take home pay.
• Subtract out the 61.3% Debt Ratio and he has $537 per month to live on.
• From the $687, he must cover food, fuel, utilities, medical insurance, clothing, phone, cable and other miscellaneous expenses. And, if he has several children, these expenses continue to mount.
Take into consideration now that the Mean Debt Ratio is the midpoint. 50% of all HAMP mods are over that Debt Ratio, and 50% are under. Subprime loans were for the most part a 50% Debt Ratio, and HAMP is approving them at 61.3% and above. Plus, how many are between 50% and 61.3%, we do not know.
The borrowers are going to face a decision relatively early in the payment process. Do they continue to make the loan payment, and end up having to stop making payments on all consumer debt? Or do they abandon the home, and pay consumer debt? Or do they just file bankruptcy and walk away from everything.
The end result is that most if not all of these modifications will likely fail.

NEWS: Bankruptcy Filings in the Central District of California are Still on the Rise

2010-05-11T11:02:00.000-07:00

The Central District of California has had 43,626 bankruptcy petitions filed through April 2010.

Mortgage Fraud - Part 6 of 6 - Dateline NBC - Inside the financial fiasc...

2010-04-28T23:41:00.000-07:00

LEARNING HOW TO FIGHT THE COLLECTOR

2010-04-27T19:09:00.000-07:00

By ANDREW MARTIN

Among debt collectors, Steven Katz is known as a “credit terrorist.” For years, he has run what he calls the Steven Katz School of Bill Collector Education, otherwise known as the “credit terrorist training camp.”
Mr. Katz, a 58-year-old accountant in suburban Tucson, spends his free time schooling debtors on the finer points of consumer protection law to help them turn the tables on debt collectors. On occasion, he thumbs his own nose at them too.
“How many times can I sue you? Let me count the ways,” he wrote under his pseudonym, Dr. Tax, in a March posting on Inside ARM, a debt collectors’ Web site.
A former bill collector himself, Mr. Katz rebelled after a debt buyer damaged his credit score with what he says was a bogus bill. Mr. Katz sued, and in 2003 he collected his first damage award, a $1,000 check that he now keeps framed behind his desk.
“The bill collectors, when they call, make you feel like the only option you have is to lay down and play dead. That’s not true,” said Mr. Katz said, who does not charge for his advice. “Nothing validates this more than getting a check.”
Call this movement revenge of the (alleged) deadbeats. Even as collectors try to recoup debts from millions of Americans struggling to pay their bills, a small but growing number of lawyers and consumers are fighting back against what they describe as harassment, unscrupulous practices — and, most important to their litigiousness, violations of the Fair Debt Collection Practices Act.
In fact, 8,287 federal lawsuits were filed citing violations of the act in 2009, a 60 percent rise over the previous year, according to WebRecon, a site that tracks collection-related litigation and the most litigious consumers and lawyers on behalf of debt collectors.
On Wednesday, the Supreme Court made it even easier for consumers to use the courts to fight debt collectors, ruling that collectors cannot be shielded from suits by claiming they made a mistake in interpreting the law.
When a consumer stops paying a bill, creditors often try to collect on their own for a few months. In many instances, the creditor hires another company to collect the debt. In other cases, they may dispose of the debt by selling it to a debt buyer for a steep discount.
Debt collectors and debt buyers are the targets of litigious consumers, since the debt collection law primarily applies to third-party collectors.
Peter Barry, a Minneapolis trial lawyer, is so bullish on the future of debt collection litigation that he holds several “boot camps” each year to share his secrets with other lawyers who want in on the action. If the debtor wins a court case under the act, the debt collector must pay the lawyer’s fees.
The next boot camp is being held in early May in San Francisco, at a cost of $2,495 a person for two and a half days of instruction.
“I can’t sue every illegal debt collector in America, although I’d like to try,” Mr. Barry said.
Mr. Katz can also claim some credit for the increase in lawsuits. For six years, he has run a free Web site called Debtorboards.com, where people share tips on topics like keeping a paper trail and recording calls from collectors.
He said the site received two million hits in 2009, a 60 percent increase over the previous year.
“Debtorboards is geared to help people use the laws as they are on the books as both a shield and a sword,” said Mr. Katz, who says he has won $36,000 from his own litigation against collection agencies. (Since many of the settlements are confidential, it is difficult to prove the claims of Mr. Katz and others).
Of course, debt collectors are hardly pleased with the litigation trend.
Rozanne M. Andersen, chief executive of ACA International, a trade association for the debt collection industry, said she was “extremely concerned” about the increase in lawsuits, which she said cost her industry hundreds of millions of dollars a year. She said much of the increase was the result of ambiguous language in the Fair Debt Collection Act.
Debt collectors are required, for example, to identify themselves on a voice message left for a consumer, she said. But they are also prohibited from telling a third party — including someone who might overhear a phone message — about a consumer’s debt.
“We are between a rock and a hard place,” Ms. Andersen said.
Ms. Andersen said she had little patience for Web sites that encouraged consumers to thwart debt collectors.
“We believe those types of Web sites are encouraging people to not take responsibility for just debt,” she said.
Jack Gordon, who runs the fee-based WebRecon site, said it was no wonder lawsuits were increasing, because consumers were being bombarded with ads from lawyers when they searched online for information on debt collection. He said the proliferation of discussion sites like Mr. Katz’s had, to a lesser extent, also contributed to the trend.
On the boards, he said, “There’s a lot of hot air, a lot of people who overinflate their accomplishments.”
Regardless, Mr. Gordon’s database has become a badge of honor among the devotees of Debtorboards.com. As Brandon Scroggin, a 37-year-old from Little Rock, Ark., puts it, “That’s one list I’m a proud card-carrying member of.”
Mr. Scroggin, who provides price estimates at a body shop, said he was the type of person who refused to be taken advantage of, even for petty offenses. For instance, years ago, he said he joined in the class-action suit against the pop group Milli Vanilli, accused of lip synching, and collected a $1.25 check.
After a messy divorce, Mr. Scroggin was stuck with a $7,000 bill that he said belonged to his ex-wife. Instead of paying it, he began researching the law and stumbled on Debtorboards.com.
Armed with lessons he learned on the site, he demanded proof of the debt from the collection agency, and the calls stopped. But two and a half years later, they started up again so he sued the collection agency, National Loan Recoveries, for failing to provide proof of the debt, among other things.
The case was settled in 2008. The terms were confidential, but he says he never paid National Loan a dime. “Let’s just say I’m a very happy person,” he said. A lawyer for National Loan, Kathryn Bridges, did not return messages seeking comment.
Mr. Katz said his Web site was not intended to help people avoid paying legitimate debts. But if they do so, so be it — he feels no need to apologize.
He said Congress gave consumers certain rights, and he is simply making people aware of them, sometimes colorfully.
As Mr. Katz says at the bottom of each Dr. Tax posting, “A telephone in the hands of a collector is like a crowbar — it can be used to pry a mouth open wide enough to insert a foot.”
Barbara Thompson, 46, of Atlanta, said she challenged $11,000 in credit card debt using online research about collection laws. She does not dispute the debts but reasons that the credit card company wrote off her charges long ago. By her account, she owes the credit card company, not the debt collector.
“The credit card company, they sell it off, they charge it off, it’s just business as usual,” she said, adding, “I’m adamant about not paying a collection agency.”

What Bankruptcy Can and Cannot Do

2010-04-27T00:44:00.000-07:00

What Bankruptcy Can and Cannot Do
Copyright 2010 Nolo
Bankruptcy is a powerful tool for debtors, but some kinds of debts can't be wiped out in bankruptcy.
Bankruptcy is good at wiping out credit card debt, but you may have trouble eliminating some other kinds of debts, including child support, alimony, most tax debts, student loans, and secured debts.
What Bankruptcy Can Do
If you are facing serious debt problems, bankruptcy may offer a powerful remedy. Here are some of the things filing for bankruptcy can do:
Wipe out credit card debt and other unsecured debts. Bankruptcy is very good at wiping out credit card debt. Unless you have a special "secured" credit card, your credit card balance is an unsecured debt -- that is, the creditor does not have a lien on any of your property and cannot repossess any items if you fail to pay the debt. This is precisely the kind of debt that bankruptcy is designed to eliminate. Besides credit card debt, you may have other unsecured debts, and bankruptcy can wipe these out as well.
If you file for Chapter 13 rather than Chapter 7, you may have to pay back some portion of your unsecured debts. However, any unsecured debts that remain once your repayment plan is complete will be discharged.
Stop creditor harassment and collection activities. Bankruptcy can stop creditor harassment, but if the "harassment"' is simply phone calls and letters, there are simpler ways to stop it; . If the harassment is more serious -- for instance, if the creditor is about to repossess your car or foreclose your mortgage -- bankruptcy can help; .
Eliminate certain kinds of liens. A lien is a creditor's right to take some or all of your property and will survive bankruptcy unless you invoke certain procedures during your bankruptcy case. For more information, see How to File for Chapter 7 Bankruptcy, by attorney Stephen Elias, attorney Albin Renauer, and Robin Leonard, J.D. (Nolo).
What Bankruptcy Can't Do
Here's what bankruptcy cannot do for you:
Prevent a secured creditor from repossessing property. A bankruptcy discharge eliminates debts, but it does not eliminate liens. So, if you have a secured debt (a debt where the creditor has a lien on your property and can repossess it if you don't pay the debt), bankruptcy can eliminate the debt, but it does not prevent the creditor from repossessing the property.
Eliminate child support and alimony obligations. Child support and alimony obligations survive bankruptcy -- you will continue to owe these debts in full, just as if you had never filed for bankruptcy. And if you use Chapter 13, your plan will have to provide for these debts to be repaid in full.
Wipe out student loans, except in very limited circumstances. Student loans can be discharged in bankruptcy only if you can show that repaying the loan would cause you "undue hardship," a very tough standard to meet. You must be able to show not only that you cannot afford to pay your loans now, but also that you have very little likelihood of being able to pay your loans in the future.
Eliminate most tax debts. Eliminating tax debt in bankruptcy is not easy, but it is sometimes possible for older debts for unpaid income taxes. There are many requirements to be met, however.
Eliminate other nondischargeable debts. The following debts are not dischargeable under either Chapter 7 or Chapter 13 bankruptcy: debts you forget to list in your bankruptcy papers, unless the creditor learns of your bankruptcy case debts for personal injury or death caused by your intoxicated driving, and fines and penalties imposed for violating the law, such as traffic tickets and criminal restitution.
If you file for Chapter 7, these debts will remain when your case is over. If you file for Chapter 13, these debts will have to be paid in full during your repayment plan. If they are not repaid in full, the balance will remain at the end of your case.
In addition, some types of debts may not be discharged if the creditor convinces the judge that they should survive your bankruptcy. These include debts incurred through fraud, such as lying on a credit application or passing off borrowed property as your own to use as collateral for a loan.
What Only Chapter 13 Bankruptcy Can Do
Chapter 7 can't help you with these situations, but Chapter 13 can:
Stop a mortgage foreclosure. Filing for Chapter 13 bankruptcy will stop a foreclosure and force the lender to accept a plan where you make up the missed payments over time while staying current on your regular monthly payments. To make this plan work, you must be able to demonstrate that you will have enough income in the future to support such a repayment plan.
Allow you to keep nonexempt property. You don't have to give up any property in Chapter 13 because you use your income to fund your repayment plan.
"Cram down" secured debts that are worth more than the property that secures them. You can sometimes use Chapter 13 to reduce a debt to the replacement value of the property securing it, then pay off that debt through your plan. For example, if you owe $10,000 on a car loan and the car is worth only $6,000, you can propose a plan that pays the creditor $6,000 and have the rest of the loan discharged. However, under the new bankruptcy law, you can’t cram down a car debt if you purchased the car during the 30-month period before you filed for bankruptcy. For other types of personal property, you can’t cram down a secured debt if you purchased the property within one year of filing for bankruptcy.
For more information on Chapter 13 bankruptcy, see Chapter 13 Bankruptcy: Repay Your Debts, by attorney Stephen Elias and Robin Leonard, J.D. (Nolo).

FORECLOSURE ACTIVITY INCREASES 7 PERCENT IN FIRST QUARTER

2010-04-19T07:51:00.000-07:00

FORECLOSURE ACTIVITY INCREASES 7 PERCENT IN FIRST QUARTER

Posted using ShareThis

NEW DEBT LIMITS FOR CHAPTER 13 BANKRUPTCY DEBTORS

2010-04-08T15:01:00.000-07:00

As of April 1, 2010, the 109(e) debt limits increased to the following amounts:

Unsecured Debt: $ 360,475.00
Secured Debt: $1,081,400.00

11 USC 109(e) defines who can be a debtor under chapter 13. Of course, you can still file bankruptcy if you owe more than these amounts.

FANNIE MAE POLL: CONSUMER FAITH IN HOMEOWNERSHIP DROPS

2010-04-07T02:29:00.000-07:00

Interesting article in the Washington Post about Fannie Mae's recent survey, which found that many people are less likely to take risks related to home-buying. In 2003, 83 percent of those interviewed in a similar Fannie Mae study said real estate was a safe investment, compared with about 70 percent in the most recent survey. About 48 percent of those surveyed said that banks should foreclose on people who are unable to pay their mortgages. A softer attitude was reflected if the homeowners in trouble owed more than their home was worth.
http://www.washingtonpost.com/wp-dyn/content/article/2010/04/06/AR2010040600134_pf.html

Things Debt Collectors Cannot Do

2010-04-05T22:35:00.000-07:00

Here are a list of Things Debt Collectors Cannot Do:
Debt collectors cannot:
• Harass you or people who know you;
• Talk to anyone except you (or your attorney ) about the debt;
• Call people you know for any reason except to locate you;
• Physically or verbally threaten you;
• Swear at you;
• Call you repeatedly;
• Imply they're government employees;
• Say they're attorneys, if they're not;
• Falsely imply you've committed a crime (debts are civil, not criminal);
• Misrepresent the amount you owe;
• Ignore your written denial of the debt--they must show you proof it's your's.

Bankruptcy Filing Statistics Increase

2010-04-05T00:50:00.000-07:00

April 04, 2010
Some Quarterly Filing Statistics
Total 7 11 12 13
3/31/2010 378,400

12/31/2009 366,000 258,100 3,615 145 104,200
9/30/2009 381,500 270,200 3,525 158 107,600
6/30/2009 375,100 270,700 4,338 131 99,900
3/31/2009 330,500 233,500 3,649 102 93,200
Total 2009 1,453,100 1,032,500 15,127 536 404,900

12/31/2008 301,300 202,100 3,175 90 95,900
9/30/2008 292,300 195,200 2,712 89 94,300
6/30/2008 276,500 187,400 1,888 85 87,100
3/31/2008 245,700 158,500 2,012 81 85,100
Total 2008 1,115,800 743,200 9,787 345 362,400

12/31/2007 226,400 137,600 1,793 77 86,900
9/30/2007 218,900 132,000 1,583 71 85,200
6/30/2007 210,400 131,500 1,574 112 77,200
3/31/2007 193,600 117,700 1,406 104 74,400
Total 2007 849,300 518,800 6,356 364 323,700

Statistics from 3/31/09 back come from US Courts.gov;
from 6/30/09 forward from Bankruptcy Data Project

Mortgage Crisis Update: Treasury Tinkers with Failed HAMP Program, Delinquencies and Foreclosures Stubbornly Refuse to Go Away

2010-04-04T21:10:00.000-07:00

Mortgage Crisis Update: Treasury Tinkers with Failed HAMP Program, Delinquencies and Foreclosures Stubbornly Refuse to Go Away

Posted: 03 Apr 2010 09:51 AM PDT
By Alan White

While the stimulus package and bank bailouts have treated the symptoms of the crisis and saved the banking and mortgage finance systems from collapse, the foreclosure crisis itself is about as bad as ever. As the foreclosure crisis enters its fourth year, there are some signs that things are not getting worse, but little evidence they will get better any time soon. New foreclosure starts reached a peak of about 250,000 monthly in the third quarter of 2009, or about quadruple their level in mid-2006 just before the crisis. The fourth quarter saw a significant decline in foreclosures starts, in both the Mortgage Bankers survey and the OCC/OTS report, to something like triple the pre-crisis numbers. On the other hand the inventory of foreclosures remains at their peak of more than three times pre-crisis levels, as do total delinquent mortgages (about one in seven mortgages are now delinquent or in foreclosure, compared to less than one in twenty just before the crisis began.)
Something like 2.2 million foreclosure sales have been completed since July 2007, which should have eliminated almost half a trillion dollars in mortgage debt. On the other hand, an equal number of mortgages have been modified, in the majority of cases resulting in significant increases in mortgage principal through capitalization. Net mortgage borrowing for all Americans has been negative for the past six quarters, but total mortgage debt has declined only slightly, from $10.5 trillion to about $10.2 trillion, from the peak in March 2008 to the Fed’s latest sounding on December 31, 2009. The deleveraging of American homeowners has a long way to go (total mortgage debt was less than $5 trillion at the beginning of 2001.)
Another way to think about it is to compare the drop in mortgage debt to the drop in home values, i.e. just how underwater are we? The Case-Shiller index of home prices has declined about 30% from its peak, and mortgage debt is down by only 3%. This can’t be good. Incidentally, credit card and other consumer debt is down only about 5% from its 2008 peak, after a 30% runup in the five years prior.
The Administration’s HAMP program to address foreclosures by paying servicers to modify mortgages they should be modifying anyway, has failed. It has resulted in a net decline in monthly modifications and no perceptible dent in the foreclosure inventory. The HOPE NOW servicer coalition claims that in January 2010 for the first time HAMP modifications plus modifications servicers did without Treasury help rose to 150,000, significantly higher than the 120,000 monthly total modifications done before HAMP was launched in March 2009. If true this would be good news, but the investor reports I follow are not showing the large increase in modifications HOPE NOW is touting. In any event, 100,000 to 150,000 monthly modifications, even if they were all successful, does not solve the problem of 200,000 new foreclosures filed every month and an inventory of 6 million mortgages delinquent or in foreclosure.
Two weeks ago Treasury announced some tweaks to HAMP that I doubt will have much impact. The tweaks address two important issues, but with inadequate half measures. Servicers are encouraged to assist unemployed homeowners by reducing payments further for three to six months. Most servicers can do this under non-HAMP programs already. A serious program to help the unemployed would subsidize their monthly payments for 12 to 24 months, as Pennsylvania’s HEMAP loan program does.
The second HAMP tweak is an effort to get servicers to include permanent loan principal reduction in their mods. The Hope for Homeowners refinance program already proved that servicers have no interest in voluntarily reducing mortgage debt. Treasury’s new version will offer 10% to 20% subsidies for principal write-down in conjunction with permanent modifications. To date, fewer than 1% of HAMP modifications have included principal write-down. It seems unlikely that a 10% subsidy will change servicer behavior dramatically.
The main difficulty with HAMP has been Treasury’s insistence on being excessively prescriptive in telling servicers how to work out loans. A year into the program, servicers still do two-thirds of their modifications outside HAMP, despite the generous taxpayer subsidies HAMP offers.
Sooner or later banks and investors will realize the absolute necessity of writing down mortgage principal. Instead of nudging, Treasury needs to consider seriously some compulsory write-offs of underwater second mortgages and mandatory principal reduction for owner-occupants who are making modified payments faithfully, often on temporary plans that never seem to become permanent. Unless taxpayer intervention is speeding up the necessary deleveraging process, HAMP expenditures are simply wasted.

February California Foreclosure Report : FORECLOSURE STARTS UP NEARLY 20% IN CALIFORNIA

2010-03-15T22:36:00.000-07:00

February California Foreclosure Report

FORECLOSURE STARTS UP NEARLY 20% IN CALIFORNIA
Despite foreclosure inventories, foreclosure sales drop

Discovery Bay, CA, March 15, 2010 - ForeclosureRadar (www.foreclosureradar.com), the only website that tracks every California foreclosure and provides daily auction updates, issued its monthly California Foreclosure Report for February 2010. After reaching the lowest level in a year last month, Notice of Defaults, the start of the foreclosure process, increased by 19.7 percent in February. The number of properties scheduled for foreclosure sale remained near record levels, yet foreclosure sales, either Back to Bank or Sold to 3rd Parties, dropped by 11.9 percent total.

A New Chapter for Bankruptcy

2010-03-15T01:10:00.000-07:00

An interesting article about the failures of the current bankruptcy system in dealing with the current mortgage crisis

LINK TO THE NATIONAL DEBT CLOCK

2010-03-14T10:27:00.000-07:00

Here's a link to the national debt clock. It's amazing--take a peak

RENTAL AND REAL ESTATE SCAMS WARNING

2010-03-12T16:30:00.000-08:00

POSTED ON THE FBI WEBSITE - RENTAL AND REAL ESTATE SCAMS

03/12/10—Individuals need to be cautious when posting rental properties and real estate on-line. The IC3 continues to receive numerous complaints from individuals who have fallen victim to scams involving rentals of apartments and houses, as well as postings of real estate online.

Rental scams occur when the victim has rental property advertised and is contacted by an interested party. Once the rental price is agreed-upon, the scammer forwards a check for the deposit on the rental property to the victim. The check is to cover housing expenses and is, either written in excess of the amount required, with the scammer asking for the remainder to be remitted back, or the check is written for the correct amount, but the scammer backs out of the rental agreement and asks for a refund. Since the banks do not usually place a hold on the funds, the victim has immediate access to them and believes the check has cleared. In the end, the check is found to be counterfeit and the victim is held responsible by the bank for all losses.

Another type of scam involves real estate that is posted via classified advertisement websites. The scammer duplicates postings from legitimate real estate websites and reposts these ads, after altering them. Often, the scammers use the broker’s real name to create a fake e-mail, which gives the fraud more legitimacy. When the victim sends an e-mail through the classified advertisement website inquiring about the home, they receive a response from someone claiming to be the owner. The “owner” claims he and his wife are currently on missionary work in a foreign country. Therefore, he needs someone to rent their home while they are away. If the victim is interested in renting the home, they are asked to send money to the owner in the foreign country.

If you have been a victim of Internet crime, please file a complaint at http://www.IC3.gov/.

MORTGAGE DELINQUENCIES HIT NEW RECORD

2010-03-04T22:30:00.000-08:00

More news from the American Bankruptcy Institute

MORTGAGE DELINQUENCIES HIT NEW RECORD

TransUnion reported yesterday that customers at least 60 days past due on their mortgage payments rose to a new record in the fourth quarter, the Associated Press reported today. The credit data provider said that 6.89 percent of mortgage borrowers were at least two months behind on payments during the fourth quarter. It was the 12th straight quarter the delinquency rate rose. The delinquency rate, which is seen as a precursor to foreclosures, was 6.25 percent during the third quarter and 4.58 percent during the final quarter in 2008. In addition, customers at least three months late on making a credit card payment rose to 1.21 percent during the final three months of 2009. However, average credit card debt fell to $5,434 from $5,729 during the same quarter a year earlier. While mortgage and credit card delinquencies continued to worsen, auto delinquencies improved. The 60-day delinquency rate on auto loans fell 6 percent in the fourth quarter to 0.81 percent, compared with the same quarter a year earlier. The delinquency rate was unchanged from the third quarter.

TOTAL BANKRUPTCY FILINGS INCREASE 32 PERCENT IN 2009, APPROACH PRE-BAPCPA LEVELS

2010-03-04T22:28:00.000-08:00

News from the American Bankruptcy Institute

TOTAL BANKRUPTCY FILINGS INCREASE 32 PERCENT IN 2009, APPROACH PRE-BAPCPA LEVELS

Total bankruptcy filings in the United States increased 32 percent in 2009 over calendar year 2008, according to data released today from the Administrative Office of the U.S. Courts (AOUSC). Bankruptcy filings totaled 1,473,675 for the 12-month period ending Dec. 31, 2009, a significant increase over the previous year’s total of 1,117,641. Business bankruptcies increased to 60,837 filings during calendar year 2009, representing a 40 percent increase in filings from the 43,533 filings made during the 12-month period ending Dec. 31, 2008. The 12-month business filing total for 2009 was the highest since the 62,304 filings recorded for the 1993 calendar year. The 1,412,838 consumer filings during the 2009 calendar year represented a 32 percent increase over the 1,074,225 recorded during the same period in 2008. The consumer chapter 7 total of 1,008,870 filings during the 12-month period ending Dec. 31, 2009, represented a 41 percent increase over the 714,389 consumer chapter 7 filings during 2008. The 2009 consumer chapter 7 filings comprised 71 percent of the total consumer filings for the 2008 calendar year, up from 67 percent the previous year. Click here to read the press release.

Owners Who Negotiate Debt Reductions Could Face Tax Hits

2010-03-04T22:26:00.000-08:00

Wall Street's Bailout Hustle

2010-02-24T23:05:00.000-08:00

Very interesting article.

http://www.rollingstone.com/politics/story/32255149/wall_streets_bailout_hustle/1

Top six ways to avoid a tax audit

2010-02-21T20:47:00.000-08:00

Bankruptcy Professor Johathan Hayes' son was interviewed on the news regarding ways to avoid a tax audit.

http://www.azfamily.com/news/consumer/Top-six-ways-to-avoid-an-audit-84521327.html

Basic Bankruptcy Videos on the U.S. Bankruptcy Court's Website

2010-02-16T01:16:00.000-08:00

The following link to the U.S. Courts website has 9 interesting short videos on everything you wanted to know about bankruptcy from a consumer's perspective.
http://www.uscourts.gov/video/bankruptcybasics/bankruptcyBasics.cfm?VNAME=chap_01VCODE=bb_01_stop&WT.cg_n=VideoBB&WT.cg_s=BookmarkPart1&WT.clip_t=Flash&WT.clip_n=Bankruptcy_Basics_BookmarkPart1&WT.clip_ev=v

Bankruptcy Basics - Information on the U.S. Courts Website

2010-02-16T01:11:00.000-08:00

http://www.uscourts.gov/bankruptcycourts/bankruptcybasics.html

Foreclosure Rescue Scams: How To Avoid Becoming a Victim

2010-02-16T01:04:00.000-08:00

Below is a link to an informative article on Foreclosure Rescue Scams.

http://files.ots.treas.gov/482037.pdf

The Purpose of This Blog

2010-02-15T07:51:00.000-08:00

Hi all,

I'm starting this blog so that I can publish both interesting and helpful information about bankruptcy here in the Central District of California. I'm also going to post some interesting current events and fascinating stories that effect us here in our local district. I'm a California State Bar licensed attorney and I practice bankruptcy law here in the Central District of California, which covers Los Angeles, Riverside, Santa Ana, Santa Barbara, and Woodland Hills. I hope you find my posts interesting and helpful. If there is any information you'd like to see me report on, or if you have any suggestions, please contact me. Look forward to hearing from you!