Webster Bank To Pay $2.8M To Settle Overdraft Fees Lawsuit

09/30/10

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Waterbury, Conn.-based Webster Bank, which has a presence in the Bay State, has agreed to pay $2.8 million to settle a class-action lawsuit alleging it improperly assessed and collected overdraft fees from checking account customers.
In the lawsuit, the bank is charged with manipulating customers' checking account debits, according to reports. This alleged action would have allowed the bank to maximize the number of overdraft fees it could charge.
Webster Bank is said to have accomplished this by posting checks and ATM withdrawals out of the order they are received. The bank allegedly posted the largest withdrawals first in order to drain the account balance, according to reports.
Webster Bank said it "continues to believe its practices were both proper and lawful," according to a written statement. The bank opted to pay the $2.8 million settlement to "fully and finally to resolve the litigation and avoid any further expense and distraction occasioned" by the lawsuit.
The settlement is subject to approval by the U.S. District Court for the District of Connecticut and would also resolve a similar class-action lawsuit pending against the bank in New York, Webster said.

Analysis: Foreclosure "Mess" Unfolds State By State

09/30/10

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An outcry over questionable foreclosures by GMAC Mortgage and other lenders is likely to hit some states more than others because of major differences in real estate law across the nation.
But ramifications for federal taxpayers and investors will depend on the costs of clearing up the problem, the latest fallout from the bursting of the nation's real estate bubble.
GMAC Mortgage announced last week that it had suspended evictions and post-foreclosure closings in 23 states due to concerns over paperwork. In order for a lender to foreclose on a property, it must prove that it actually checked the borrower's loan agreements, and that the homeowner defaulted.
But the unit of Ally Financial, which is 56.3 percent owned by the federal government after a $17 billion bailout, said employees preparing foreclosures had submitted affidavits to judges containing information they did not personally verify.
"It's a real mess," said Justice Arthur Schack, a jurist on foreclosure issues who sits on the New York State Supreme Court in Brooklyn.
GMAC's announcement has raised doubts about whether some people lost their homes without good reason. Attorneys general in several states, including California, Colorado, Illinois and Ohio, are investigating.
"The law demands that lenders prove their case in foreclosure actions," Illinois Attorney General Lisa Madigan said last week.
But Ally characterizes the problem as merely technical, arguing that the underlying facts in each foreclosure are accurate.
"We are confident that the processing errors did not result in any inappropriate foreclosures," it said in a statement last week.
GMAC landed in its predicament after one of its employees testified in a December 2009 deposition that he signed off on tens of thousands of affidavits containing information he did not verify.
The company said it has "substantially increased" the number of employees to verify documents, provided additional training, and suspended evictions out of an "abundance of caution."
Ally isn't the only firm under the microscope.
JPMorgan Chase & Co is delaying its current foreclosure proceedings and has begun to systematically re-examine related documents after discovering that some employees may have signed affidavits in some cases without personally reviewing the files.
Lawyers in Florida are questioning JPMorgan's practices after discovering one of its executives did not check the details of its claims against a homeowner.
The executive said she had been part of an eight-person team that signs 18,000 documents a month.
Paul Miller, an analyst at FBR Capital Markets, said he didn't think the foreclosure problems were material enough to impact the timing of any initial public offering that Ally has said it was considering.
Ally spokeswoman Gina Proia said the company does not anticipate a "significant adverse affect" related to the document issues.
But last week Moody's said it may cut some GMAC ratings because case resolutions could take longer than expected, which could mean higher costs for borrowing by Ally.
And Miller said he expects more damaging disclosures across the industry.
"This will have big time legal ramifications throughout the foreclosure market," he said.
Judges across the country have been skeptical about homeowner challenges based on arguments that loans were improperly securitized, said O. Max Gardner III, a bankruptcy lawyer in North Carolina.
But evidence of false affidavits might hit closer to home for judges, Gardner said.
"When you're talking about somebody submitting just a false document to the court, knowing it was false, that is something that any judge can understand," Gardner said.
However, states regulate foreclosures in very different ways.
In some, like New York, judges sign off on foreclosure orders. That gives homeowners an automatic courtroom session to air any complaints, making it easier for document problems to gum up foreclosure proceedings.
But other states hard hit by the housing market collapse, such as California, require homeowners to initiate their own separate legal proceeding to raise problems with their documents, an extra hoop which could dampen the impact of problems.
"In California this has been a huge uphill fight," said Walter Hackett, an attorney who represents homeowners in the Golden State.

August Bay State Home Sales Drop To Lowest Level In Two Decades

Single-Family Home Sales Decline 18 Percent, Prices Creep Up

09/28/10

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Tune In

To hear The Warren Group CEO Timothy Warren Jr. explain the low number of home sales, click here.

Sales of Massachusetts single-family homes in August plummeted to their lowest level in more than two decades, according to the latest report by The Warren Group, publisher of Banker & Tradesman.
A total of 3,659 single-family homes sold in Massachusetts in August, an 18.5 percent drop from 4,492 sales in August 2009. It represented the second consecutive month of year-over-year sales declines. This is the first time sales have fallen below 4,000 in the month of August since The Warren Group began tracking data in 1987. Prior to last month, the lowest number of single-family home sales tracked in August was 4,100 in 1990.
Sales of single-family homes edged up from a month ago, when there were 3,590 sales of single-family homes. Year-to-date sales climbed 9.35 percent to 28,567, up from 26,124 a year ago.
"Sales volume in the real estate market remains slow as an after-effect of the expiration of the popular tax credit for homebuyers. Anxiety and uncertainty in the minds of consumers regarding rising foreclosures, the economy, jobs and financial markets all played a role in keeping potential homebuyers on the sidelines this summer," said The Warren Group CEO Timothy M. Warren Jr. "I'm afraid that the slumping real estate market led the country into the recession and the market's continuing malaise is holding back any kind of strong economic recovery."
Year-to-date sales were up in every county.
The median price of single-family homes crept up 3.9 percent to $315,000 in August, up from $303,000 a year earlier. Median prices of single-family homes in Massachusetts dropped from a month ago, when the median price was $320,000. August marked the third straight month of the year that the median price exceeded $300,000. The median price for homes sold January through August was $300,000, up almost 5.26 percent from $285,000 in the prior year.
In August, condominium sales also dropped in the Bay State, declining 23.3 percent from a year earlier. A total of 1,620 condos sold in August, down from 2,113 a year ago.
Year-to-date condo sales were up 9 percent, increasing to 12,830 from 11,764 during the same period last year.
Condo sales increased slightly from a month earlier, when 1,482 condos sold in Massachusetts.
The median condo price also increased in August. The median selling price was $298,500, up 8.5 percent from $275,000 a year earlier. The year-to-date median price of condos in the Bay State is $266,000, up 3.5 percent from $257,000 a year ago.

2 Million In Foreclosure

2 Million In Foreclosure

Supposedly, because of the massive volume of foreclosure cases, currently 2 million in foreclosure, and another 2.37 in serious delinquency, the lenders started to process foreclosures on a wholesale basis. Mid level bank executives, nicknamed robo- signers, would sign thousands of affidavit’s a month, attesting that they knew the particulars of each case. The affidavit’s were then sent to lawyers who were paid a flat fee, also encouraging high volume turn out. Leaving no attention to the details required for legal proceedings.

GMAC Servicing Officer Testimony

GMAC Servicing Officer Testimony

Think About How This Would Play To A Jury.........

“Unfortunately, the servicing officer in question indicated in his testimony that he prepared 10,000 or more affidavits per month”

So lets do the math........ there are about 20 work days per month…so 500 affidavits per day. In an 8 hour day, About 60 or so per hour, or 1 a minute.

Considering all the paper shuffling, retrieving documents, etcetera, not to mention going to get replacement pens as your ink runs out, this was one productive guy!

Chase And Others Freeze Foreclosures

Chase And Others Freeze Foreclosures

In a move that seems to signal that something is really wrong, Chase (NYSE: JPM), and GMAC Mortgage have temporarily put a freeze on foreclosure proceedings of private residences, and said that they will amend paperwork in cases they feel have been improperly done. Bank of America said they are going to amend all affidavits in all foreclosure cases that haven’t yet gone to judgment. A spokesman for Bank of America (NYSE:BAC) said that they didn’t know how many cases were currently pending, but that after review, they would all be resubmitted.
Connecticut Attorney General Richard Bloomenthal, and California Attorney General Jerry Brown have both voiced opinions that foreclosure proceedings should be frozen in their states. The way it looks now, tens of thousands of foreclosure cases could be postponed for months or even years.

How Serious is the GMAC Problem? Pretty Serious and Not Just GMAC

How Serious is the GMAC Problem?  Pretty Serious and Not Just GMAC
The news reports on GMAC Mortgage’s decision to halt evictions and foreclosure sales in 23 states, as originally reported by Bloomberg News, has generated keen interest in the mortgage and securitizaion communities. One reason is the oddly abrupt and broad nature of GMAC Mortgage’s action. GMAC Mortgage subsequently issued a rebuttal of sorts to the article. Not only did it fail to clairify matters, it is inconsistent with the actual notice it sent last week.
Various accounts have described how one officer of GMAC Mortgage’s servicing unit has admitted during testimony that, while he signs thousands of affidavits each month in order to affect steps in the foreclosure process, he does not have personal knowledge of certain critical facts in the affidavit which he asserts to be true. Reader Stupendous Man provided the text of Federal Rule 56 on affidavits (although the cases in question are in state courts, the same principles no doubt apply). Boldface ours:

A supporting or opposing affidavit must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant is competent to testify on the matters stated.

The key here is you can’t delegate creating affidavits to parties who weren’t close to relevant matter out of administrative convenience; you need to find people who were directly involved. And evidence in a number of foreclosure suits indicates that this problem not only extends well beyond GMAC, and is not a matter of matter of officers providing affidavits based on a review of copies of the paperwork in a transaction. As one attorney wrote:

It is beyond people signing things when they don’t see the “originals” These people don’t see shit. We have depositions from these folks, the only thing they are able to verify on the documents is what title they are supposed to use, from the particular servicer they are working for – Executive Secretary, Executive Vice President, Asst. Sec., etc…..

So there is evidence to support the notion GMAC was not alone in providing cooked up affidavits. The only question is how widespread this practice was at other servicers.
What are the implications of the GMAC Mortgage actions and how serious are the problems? GMAC Mortgage and similarly situated parties contend that there is nothing fundamentally wrong with their foreclosure process and this is simply a procedural issue which is readily curable. In contrast, advocates for borrowers in foreclosure have indicated that the questionable affidavits are only the “tip of the iceberg” and represent the beginning of the end for the foreclosure mills and the banks, servicers and trustees who have been seeking to exercise foreclosure under false pretenses. The heightened scrutiny and increasing interest by state attorneys general means we may finally get to the bottom of a long-running “he said-she said” dispute.
Let’s review the current state of play:
1. What is the problem with evictions and foreclosure sales that GMAC Mortgage is worried about?
Based on GMAC Mortgage’s press release, the action is limited to evictions and foreclosure sales in certain states, but its new foreclosures are not affected. It isn’t clear exactly what distinction they are making . Presumably, their concern relates to the affidavits they used to initiate the evictions in their foreclosure cases. If the affidavit is flawed, they want to get a new improved one in place before they take title to the property. Similarly, for properties where they have already taken title, if the affidavits which enabled the evictions were flawed, they may need to prepare a new affidavit that would allow them to demonstrate that they have good title prior to selling the property to third parties.
2. Is this problem curable? On the surface, concerns about flawed affidavits used in the eviction process of a foreclosure, seems a technical, legalistic issue. Certainly, GMAC Mortgage’s statements seem to give the impression that the issue is curable and will, in fact, soon be cured. Did GMAC Mortgage prepare the affidavits improperly due to weak procedural controls or economic expediency? If so, then it would seem like they would have to incur some additional cost and take some additional time to have the affidavits properly prepared and then the problem would not be fatal from a legal standpoint. The added expenses and longer time will cost the certificate holders in the MBS more money. Remember, securitizations have come to be modeled and price assuming a streamlined foreclosure process. Actually finding and involving the proper parties in the affidavit process will at a minimum be cumbersome, and could add meaningful costs.
Moroever, it is possible the affidavits were prepared improperly to remedy other problems in the related mortgage loan. If, for the purpose of the foreclosure, the servicer did not have the proper information but stated that they did anyway in the affidavit, this would be a far more serious problem. For instance, if the courts for a foreclosure required a particular party to be pursuing the foreclosure, but GMAC Mortgage did not have documentation supporting such ownership or right, was GMAC Mortgage misrepresenting the facts in the affidavit?
3. Is the problem limited to judicial foreclosure states? That does not seem credible, although GMAC may believe it needs only to remedy it in those states. GMAC Mortgage indicated that the action was only for states that use judicial foreclosure, or similar procedures.
In general, if the issue is limited to improperly documented affidavits, GMAC may be able to limit its response to the 23 states on its list. However, if the underlying documentation for its mortgages have problems in the chain of title, then the improper affidavits are just a manifestation of a deeper issue. By happenstance, I know of cases in a non-judicial foreclosure state not on GMAC’s list where GMAC took similar short cuts. Tom Adams and I have been in touch with a number of attorneys in the foreclosure world who have uncovered problems in non-judicial foreclosure states with inaccurate affidavits, including mis-statements about the parties to the foreclosure, the time of mortgage transfers, the status of the loan file and related issues. There is not good grounds to believe that GMAC had sufficiently different procedures in judicial versus non-judicial foreclosure states to believe their flawed procedures were limited to only judicial foreclosure states.
4. is the problem limited to GMAC Mortgage? GMAC Mortgage and other banks may hope to sell the story line that its problem is limited to a lone “rogue servicing officer.” Unfortunately, the servicing officer in question indicated in his testimony that he prepared 10,000 or more affidavits per month, so it strains credulity to think that GMAC management was ignorant of his actions.
So far, mainstream press accounts have been limited to issues at GMAC Mortgage, which is a large servicer, but only a modest portion of the overall market. However, it is possible, that the root of the problem lies not with the servicer, but started with the sellers and the trustees in the mortgage securitization process. If the mortgage loans were conveyed in the securitization process in a way that clouded the title, the problem could be widespread, and borrower attorneys can provide a large body of evidence from cases in many states. Although GMAC appears to be the party ultimately responsible, it also works very closely with the foreclosure outsourcing firm, Loan Processing Services, so they or the foreclosure mills they retain may also bear some responsibility.
5. Are foreclosure problems limited to this sort of technical issue? The conveyance of real estate has a long legal history and is governed by state law. Numerous checks and balances are written into both the sale and the foreclosure process to ensure that the transfers are conducted properly and disputes over ownership are minimized. Part of the appeal of mortgage loans as an asset, back before the financial crisis, was that the procedures and laws for mortgage loans was well establishes, so owners or investors could take comfort that their interests were well protected.
Unfortunately, there is increasing evidence that the mortgage loan industry went off the rails during the bubble years. And if the issues underlying GMAC Mortgage action are a result of bad origination and closing procedures, rather than poor servicing, the problems may be much larger than inaccurate affidavits.
We will be watching on the GMAC Mortgage situation and related issues. GMAC Mortgage’s remarks today did not clarify matters, and their failure to come clean, and the obvious conflict between the claims in their press release and their own memo suggests other shoes have yet to drop. If these issues extend beyond GMAC Mortgage and inaccurate affidavits, the mortgage industry will be facing some deep and difficult problems.

GMAC suspends foreclosure evictions and sales of seized property

GMAC suspends foreclosure evictions and sales of seized property

Foreclosure evictions and homeowner lockouts have been halted by Ally Financial Inc.'s GMAC Mortgage in 23 states including Florida as the nation's fifth-largest home loan servicer addresses legal challenges to its foreclosure procedures.
A two-page memo dated Sept. 17 and marked "urgent" told brokers to immediately stop evictions, cash-for-key transactions, lockouts and to suspend sales of properties already taken back by the bank in foreclosure.
The memo, first reported by Bloomberg news service, comes at the same time the Tampa-based Florida Default Law Group has been withdrawing legal affidavits in its GMAC foreclosure cases under "candor to the court" rules acknowledging previously submitted information may have been inaccurate.
St. Petersburg defense attorney Matt Weidner, who is handling a case in which a GMAC affidavit was withdrawn last week, called the freeze "staggering."
"I suspect they are recognizing they have a really big problem," Weidner said. "I think they are afraid the foreclosure judgments may be voidable."
If that's the case, Weidner said it won't be just GMAC redoing their foreclosure procedures.
"We're not just talking about isolated incidents of problems with foreclosures, we're talking systemic," he said.
Foreclosure defense attorneys say the affidavits withdrawn by the Florida Default Law Group center on foreclosure documents signed by a GMAC employee. The employee, in deposition questioning by West Palm Beach-based law firm Ice Legal, said he did not have personal knowledge of the accuracy of each of the 10,000 foreclosure-related affidavits he signed each month, they say. Some of the documents include assignments of mortgages on which the GMAC employee signed as vice president of Mortgage Electronic Registration Systems. MERS is a company created by the nation's leading banks to ease the process of transferring and selling of home loans.
The legality of whether the nationwide electronic system can determine the owner of a mortgage and then assign it to a bank or investor is being questioned by some attorneys. It's become especially complicated by the real estate boom-time practice of bundling home loans and selling them as securities.
GMAC Mortgage may "need to take corrective action in connection with some foreclosures," this month's memo read.
"We are unable to comment on the specific merits of the legal challenge because some of them are in litigation," GMAC spokesman Jim Olecki said Monday. "Nevertheless, a new process has already been developed and implemented so that though some existing foreclosures may experience delays while corrective action is taken, there will be no interruption in new foreclosures."
Ice Legal attorney Christopher Immel, who deposed the GMAC employee, said after he posted the deposition online, legal teams from other states picked up on it and did their own depositions.
Immel said GMAC isn't the only company that has a single employee signing off on thousands of foreclosure documents each month that he or she is supposed to have personally verified.
"To keep up with the foreclosure volume they need certain documents executed and they don't have time to review them because it's just an assembly line," Immel said. "They've set this up as just part of their business practice."
A report last week by the Irvine-Calif.-based company RealtyTrac showed home repossessions hit an all-time high in August with 95,364 bank takeovers. In Florida, 12,329 homes were repossessed in August, including 509 in Palm Beach County.
It was unkown Monday how many mortgages are held or serviced by GMAC in Florida, but according to Inside Mortgage Finance, an industry newsletter, GMAC ranked fifth among U.S. home-loan servicers as of June 30 with $349 billion worth of loans.
"GMAC has painted this as a momentary problem," said Inside Mortgage Finance Publisher Guy Cecala. "We don't actually know if it's more than that."

Four Borrowing Boundaries To Help A Christian Avoid Debt

Four Borrowing Boundaries To Help A Christian Avoid Debt


Some of the best material I have found on this topic comes out of the book Taming the Money Monster by Ron Blue.  The book is a must read for anyone who is constantly finding themselves struggling with debt issues.  In fact, at the time of this writing you can buy a used copy on Amazon for a cent, plus shipping and handling.

Ron Blue’s Four Decision Making Rules for Borrowing

Rule #1 – The Common Sense Rule

“the economic return must be greater than the economic cost.  To state it another way, when money is borrowed, the thing that was borrowed to purchase should either grow in value or pay an economic return greater than the cost of borrowing”.

Unfortunately, common sense, it seems to me, is financially lacking.  Our cultural love of debt is transitioning in the wrong direction and what was once an outrageous interest rate is now a great deal.  To expand on Blue’s thoughts let me simply say if you are upside down on an item, (owe more than it is worth) you are automatically making yourself more susceptible to bankruptcy.

When you are considering borrowing, ask yourself, “Will this item likely be worth more or less in the future?”  The more the item depreciates, the more likely you are to find yourselfupside down and backwards in debt.

Rule #2 – A Guaranteed Way to Repay

Blue introduces three sources to repay a loan – income, sale of whatever was borrowed, liquidation of other assets.  When considering a loan it is essential that you have a plan for a worse case scenario.  If we plan to give our word to repay a debt, there ought to be a way we can ensure that.  For example, when purchasing a house, you should be certain that if necessary you can sell the house and repay the loan.  This way you can protect yourself against a potential bankruptcy.  But, what if the house goes down in value?  This is why it is important to put money down on the house so that you immediately have equity in case something does not go as planned.

Rule #3 – Peace of Heart and Mind

I love this rule.  Many many people borrow to the limits.  The result is worry, stress, and anxiety.  Bankruptcy is often the culmination of years of this type of worry.  This rule, however, prescribes only borrowing money where there is so much margin that it cannot challenge your financial peace.

Rule #4 – Unity

In a marriage context, a couple should not borrow money unless they both agree that it is a ‘good’ choice.

Bankruptcy can be avoided if you have the proper borrowing rules in place.  I like these suggestions from Blue.  If you must borrow, then utilize these conservative guidelines.  Consider changing your vocabulary away from ‘good debts’ to ‘better debts’.  Remind yourself  that the less debt you have, the more likely you are to not only avoid bankruptcy, but also to enjoy real financial peace.

GMAC Stops Foreclosures in 23 States

Zero Hedge has obtained the GMAC Letter referred to earlier by Bloomberg, and contrary to subsequent reports by the bailed out lender that this is merely a procedural adjustment, something does not add up. To wit, note statements such as:

Do not proceed with evictions, cash for keys transactions, or lockouts. All files should be placed on hold, regardless of occupant type.
Do not proceed with REO sale closings. GMAC Mortgage will communicate instructions to the assigned agent regarding the management of the properties in Pending status. If the contract has already been executed by both parties, the Asset Manager will request an amendment to extend the closing date by 30 days or as otherwise designated by the Asset Manager. Please provide appropriate notice to the REO purchaser that, pursuant to Section 1 of the GMAC Mortgage Addendum to Standard Purchase Contract, GMAC Mortgage is exercising its sole discretion to extend the Expiration Date of the Agreement by 30 days at this time. If the REO purchaser wishes to cancel the contract, GMAC Mortgage will terminate the Agreement and return the earnest money deposit.

And mostly: “There could be asset level exceptions and you will receive direct communication from GMAC on the handling of those exceptions.”
In other words, the new revision is the de facto new standard, and not the exception to the rule, as GMAC’s subsequent refutation would like to make it seem.
Why the sudden urgency? And why these 23 states in particular?
Once again, we welcome the ABA’s chiming in on this development which could do more to hurt the banking profession’s already abysmal reputation with the Main Street community than even the S&P hitting its fair value somewhere south of 400.

Affidavit problem stalls GMAC foreclosures

Affidavit problem stalls GMAC foreclosures

Thousands of home foreclosure cases in Florida and nationwide might have been stalled by the sworn testimony of one GMAC Mortgage employee.
Jeffrey Stephan, a GMAC foreclosure team leader, admitted under oath last December that he signed tens of thousands of affidavits verifying mortgage note ownership and amounts, even though he never saw original documents in those cases, according to court documents.
Stephan and GMAC have described the process of signing affidavits as a normal and expected routine that the company engaged in.
On Monday, several national media outlets incorrectly reported that GMAC had announced a blanket moratorium on residential foreclosures. The company denied that in a statement.
In fact, about three months ago, GMAC, now a part of Ally Bank, halted evictions and final sales in foreclosure cases in 23 states, including Florida.
The company acknowledged in a statement Monday that the evictions – not foreclosures – were halted because of a problem with affidavits.
GMAC Mortgage spokesman James Olecki acknowledged the following problems with the affidavits:

• May have been executed without direct personal knowledge of all of the information stated in the affidavit.
• In a number of cases, the affidavit was not signed in the physical presence of a notary public.

Olecki, who did not specifically identify Stephan as the person signing affidavits, said whoever signed them relied on the personal knowledge and information of other GMAC Mortgage personnel, and was known to the notary.
Olecki also said the facts of the affidavits are correct, and that GMAC would be working to clear up any problems.
Stephan testified in a deposition that he signed 10,000 affidavits a month.
In an e-mailed response to a request for comment, GMAC said Stephan still works for the company, but he was not available for comment. Efforts to reach his attorney, Alejandra Arroyave of Coral Gables, were not immediately successful.
The problem with affidavits may be a factor in state investigations of foreclosure law firms by Attorney General Bill McCollum.
One of the firms under investigation, Tampa-based Florida Default Law Group, recently told a Palm Beach County circuit judge that information on an affidavit it filed in a foreclosure case may not have been verified.
Florida Default attorney Jeff Gano said in a Sept. 7 notice that it would be filing a new affidavit in the Palm Beach County case, which was filed by another lender, Bank of New York Mellon Trust as successor to JPMorgan Chase Bank.
Meanwhile, U.S. Rep. Alan Grayson, D-Orlando, has called on the Florida Supreme Court to suspend all foreclosure cases filed by the top four foreclosure firms in the state until the attorney general’s investigation is complete.
On Tuesday, Grayson released a letter he wrote to Chief Justice Charles Canady, in which he mentioned a Jacksonville foreclosure case where one of the firms under investigation, Shapiro & Fishman, was found to have committed fraud on the court by filing false documents about who owned a mortgage note.
“Taking someone’s home should not be done lightly,” Grayson wrote. “And it should certainly be done in accordance with the law.”

GMAC Confidential Letter to Preferred Agents

GMAC Confidential Letter to Preferred Agents

Mozilo Settles Countrywide Case With SEC

10/15/10

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Former Countrywide Financial Corp. Chief Angelo Mozilo settled charges today that he duped the home loan company's investors while reaping a personal windfall, ending one of the biggest enforcement actions to come from the financial collapse.
Mozilo reached a last-minute deal with the Securities and Exchange Commission (SEC) before the start of his trial on civil fraud charges on Tuesday.
The settlement with Mozilo and two other Countrywide executives was announced in Los Angeles federal court. The defendants, accused of hiding risks about Countrywide's loan portfolio as the real estate market soured, were not present.
Countrywide, once a titan in the mortgage industry, is now part of Bank of America Corp.
Mozilo will pay a $22.5 million civil penalty, plus $45 million in disgorgement, according to U.S. District Court Judge John Walter. The disgorgement relates to proceeds of Mozilo's sales of Countrywide stock. Mozilo was once one of the best-paid corporate executives in the country.
"In my view the proposed settlement is very reasonable in light of the significant hurdles that both sides would have faced in proving their case at trial," the judge said.
All three defendants settled without admitting or denying any wrongdoing.
David Sambol, former Countrywide president, also agreed to settle the case, the judge said, as did former Chief Financial Officer Eric Sieracki.
The SEC brought the fraud case in June 2009. The former executives were accused of failing to disclose the true state of Countrywide's deteriorating mortgage portfolio. Regulators also contend Mozilo made nearly $140 million by dumping Countrywide stock before the truth emerged.
Bank of America bought Countrywide in 2008 for $2.5 billion, less than 10 percent of what the company was worth in early 2007. Ten months later, Bank of America scrapped the Countrywide name.
The SEC had no immediate comment on the settlement. (Reuters)

Seven Mistakes To Avoid Prior to Filing Bankruptcy

Seven Mistakes To Avoid Prior to Filing Bankruptcy


 In order for your bankruptcy case to run smoothly through the process, you need to avoid these seven mistakes people make before they file their bankruptcy case. 

1. Do Not Run Up Your Credit Cards:  Once you've decided to file for bankruptcy because any debt in excess of $500.00 incurred within 90 days of filing for bankruptcy are presumed to be non-dischargeable and you may end up holding the bag on this.  Also, cash advances of more that $750.00 made within 70 days of filing are presumed to be non-dishcargeable and may be found due and owing.
2. Don't Repay Any Family Members:  You cannot repay your family members any better than you would any other creditor.  In fact, the bankruptcy trustee can reclaim any amount you paid to a family member within one (1) year of filing bankruptcy.
3. Do Not, I Repeat, DO NOT Cash Out Your Retirement Accounts:  This is one of the biggest financial mistakes you can make EVER.  Retirement accounts are generally exempt from the trustee taking when you file for bankruptcy.  This means that you can usually eliminate your debts and keep whatever you have in an ERISA qualified account. 
4. Do Not Transfer Any Property Out of Your Name:  You have a duty to disclose all  of your assets to the trustee and your estate essentially belongs to the trustee once you file for bankruptcy.  The trustee can, and in most cases, will undo any such transfers made within two (2) years prior to filing for bankruptcy.
5. Do Not Try to Reduce Your Home's Equity:  Right now this should not be an issue here in California since most of us have no equity in our homes.  Just keep in mind that there is a homestead exemption and in most cases, you can keep your home and the equity, and still file for bankruptcy.
6. Do Not Fail to Appear At Court Proceedings:  Until your bankruptcy case is filed with the court, any civil proceedings, or collections case against you will continue and you MUST appear.  Also, you MUST appear at your 341(a) Meeting of Creditors in your bankruptcy case and all other appearances as instructed by your lawyer.
7. You Must Tell Your Lawyer The Truth:  Your lawyer can only provide advice based upon the information you provide.  If you fail to tell your lawyer about your assets you could lose them, your bankruptcy case could be dismissed, you could be fined, and you could end up in prison for bankruptcy fraud.

So, if you've decided to file for bankruptcy, follow these golden rules.  Don't risk your financial fresh start because you deserve a life free from debts that you cannot afford to pay. 

Forgetting to Include a Legal Description in the Mortgage Not Fatal in the Sixth Circuit

Forgetting to Include a Legal Description in the Mortgage Not Fatal in the Sixth Circuit

So does it really make a difference if someone (the closing attorney for your mortgage) messes up and forgets to attach the exact legal description to a mortgage which then gets recorded?  It may depend on how specific the mortgage is in describing the parcel of real property.
Now you would think this was an easy question, but apparently not.  We needed a Sixth Circuit opinion recently issued (and recommended for full publication) to tell us that as long as the property is identified with sufficient precision that you could actually locate it  in real life, the mortgage works as a valid lien on the property.  Thanks to Amy Bower (who represented the winner),  my Managing Partner here in the Columbus office of Plunkett Cooney for sharing this decision with me.
In Argent Mortgage Company, LLC v. Drown, Case No. 08-4508 (6th Cir. August 25, 2009), the Court addressed the question of

whether a recorded mortgage that contains the street address of residential property - but not the legal description - is sufficient to preclude the setting aside of an other-wise mortgage in bankruptcy court.

Judge Hoffman  originally ruled that the Chapter 7 Trustee could avoid the mortgage pursuant to section544(a)(3) of the Bankruptcy Code, relying heavily upon Stubbins v. American General Financial Services, Inc. (In re Easter), 367 B.R. 608 (Bankr. S.D.Ohio 2007), a decision by Judge Preston.  and caselaw discussed in that opinion, Judge Hoffman reasoned:

Under the circumstances of this case, the Court agrees with the Trustee that something more than the street address and permanent parcel number is necessary to provide constructive notice of the Mortgage to a hypothetical good-faith purchaser for value.  This is so because even if a third party had record notice of the existence of this Mortgage, neither the parcel number nor the street address , nor both together, would lead that third party to discover precisely what property is covered by the Mortgage.  Both a street address and a permanent parcel number may refer to a geographic area that contains more or less than what the morgagor intended to encumber.

The district court reversed and the Sixth Circuit upheld the district court's decision.  I agree with the Sixth Circuit in this situation when it notes

Mortgaging part rather than all of a single-dwelling residential subdivision property  is far enough outside the ordinary course of business that a reasonable prospective purchaser should assume that an ambiguous mortgage likely intended to encompass the entire residential lot at issue  

Should a Christian Declare Bankruptcy?

Series on Christian Bankruptcy

Should a Christian Declare Bankruptcy?: The Ideal Level

Many Christians are interested in the relationship between Christianity and bankruptcy.  The question of Christians and bankruptcy can be discussed on two levels.  I’ll call the first the “ideal level” and the second the “sin stained” level.


On the one hand, the Bible does not deal specifically with the word bankruptcy.  On the other hand, the Bible does address borrowing and the importance of vows.  A vow is simply a promise.  In our society, every dollar we borrow we sign a legal document.  That document is our written vow to repay the debt.  Here are a few of many such verses:

The wicked borrow and do not repay, but the righteous give generously. (Psalm 37:21 NIV)

When you make a vow to God, do not delay in fulfilling it. He has no pleasure in fools; fulfill your vow. It is better not to vow than to make a vow and not fulfill it. (Ecclesiastes 5:4-5 NIV)

And do not swear by your head, for you cannot make even one hair white or black. Simply let your ‘Yes’ be ‘Yes,’ and your ‘No,’ ‘No’; anything beyond this comes from the evil one. (Matthew 5:36-37 NIV)

On the theoretical level if we were to invert the question –is it good for a Christian to borrow and not repay, the obvious answer is no. Borrowing and not repaying hinders a positive Christian witness.  It hinders trust and credibility.  It violates the golden rule.  But, that does not mean these verses are the end of a discussion.  They are instead the beginning of our discussion.

Should A Christian Declare Bankruptcy: The Sin Stained Level

I believe God has always been a God who presents the ideals to humanity while recognizing the reality of our sin stained world.  Take, for example, the issue of divorce (for illustrative purposes, not to start a huge theological debate).  The Pharisees ask Jesus if it is “lawful to divorce” (Mt. 19:3).  Jesus says divorce is not lawful – on the ideal level.  You will not find Bible verses that discuss divorce as a good thing (Mt. 19:4-6).  Nevertheless, because of the hardness of peoples’ hearts, there is a certificate of divorce (Mt. 19:8).  The discussion has now moved from ideal to the sin stained level.  Not divorcing is the ideal, yet a certificate of divorce exists because God recognizes a sin stained level where the ideal is no longer possible.  In those cases, the individual must then seek the best available alternative.
The reality is that manyChristians are in positions where they simply do not have the money available to repay loans. Many Christians are in situations where they have creditors who are unwilling to work with them.  So my question, on the sin stained level, is what are they supposed to do?  They cannot make money appear.  They cannot make debt disappear. As a result, bankruptcy may be their only option.  In some cases bankruptcy might just be the next best course of action.
Notice specifically this is not a discussion of declaring bankruptcy out of convenience or because it is an ideal financial decision.  In those cases I believe it would be a violation of Biblical principles to declare bankruptcy.  This discussion, however, does apply to those who do not have an actual means to settle their debt.
If bankruptcy is necessary, it is important that Christians have boundaries in place to help lead them through the process.  In next week’s post we will discuss guidelines to consider when filing bankruptcy.

Conclusion

Often the discussion of bankruptcy is a ‘reactive’ discussion.  A person is in debt, does not have the money necessary, and is not receiving any mercy from a lender.  However, it would be better to devote our energy to discussing the question should a Christian make decisions that might put them in a place where it will be necessary for them to declare bankruptcy? The answer to this question is no.  This is a ‘proactive’ discussion where we can help people avoid getting into a place where the ideal is no longer an option for them.  Bankruptcy is not good.  People often are not blessed by the processes.  Thus, the next important question is what can Christians and churches be doing to help their members and community avoid situations of bankruptcy?