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Thursday, October 28, 2010

RI bankruptcy court foreclosure mediation role praised

RI bankruptcy court foreclosure mediation role praised

12:24 PM Thu, Oct 28, 2010 

PROVIDENCE, R.I. -- For close to a year, the U.S. Bankruptcy Court in Rhode Island has overseen loan modification agreements that helped homeowners avoid foreclosure, but Deutsche Bank is now challenging the authority of the court to conduct its loss-mitigation mediation program, according to U.S. Sen. Sheldon Whitehouse, D-RI.
Whitehouse criticized the bank's action Thursday at Rhode Island Housing's downtown office, where he led a hearing of the Senate Judiciary Committee's Subcommittee on Administrative Oversight and the Courts.
Whitehouse, who last year proposed giving bankruptcy court judges the power to reduce the principal on primary residence mortgages -- an idea that "the large banks have fought against... with their full lobbying might," said that since that proposal failed, "the foreclosure crisis has not relented in Rhode Island or across the nation."
The hearing, which was also attended by U.S. Sen. Jack Reed, D-R.I., included testimony from two Rhode Island homeowners, Robert Cardullo, of Johnston, and Larry Britt, of Riverside, Judge Martin Glenn, a bankruptcy judge in the Southern District of New York, John Rao, of Newport, an lawyer with the National Consumer Law Center in Boston, and Chris Lefebvre, a Pawtucket lawyer and a member of the debtor/creditor committee of the Rhode Island Bar Association.

Saturday, October 9, 2010

In reversal, judge adds Bank of America to fraud case

In reversal,  judge adds Bank of America to fraud case

Saturday, October 9, 2010

A clandestine meeting in a North Carolina hot tub sparked events that led a federal judge in Alexandria to reverse himself Friday, and order Bank of America into a massive real estate fraud case.
The judge previously ruled that the bank should not be a defendant.
The extraordinary ruling by U.S. District Judge Gerald Bruce Lee was a victory for dozens of Fairfax County schoolteachers and administrators, and hundreds of other investors who say they were sold overpriced, vacant lots in North Carolina that later plunged in value from as much as $400,000 to about $20,000 each.
In 2006, the plaintiffs - 129 who sued in federal court in Virginia, and 285 who sued in North Carolina - bought land in two developments in North Carolina being marketed by Total Realty Management, a Woodbridge firm run by Mark Dain and Mark Jalajel. They allege that Dain assured them they could buy the lots with no money down and make no payments for two years, and in the meantime flip the properties for certain profit.
Because TRM was buying the lots for about $150,000 and reselling them immediately for $300,000 or more, the plaintiffs said that TRM couldn't have done it without the help of banks such as Bank of America. They said in court papers that TRM and the banks colluded to inflate the appraised values of the properties, in part by getting second and third appraisals when original appraisals were too low for the sale prices TRM wanted.
In August 2009, Lee dismissed the banks as defendants in the Northern Virginia case, saying there was no evidence or reasons that the banks would issue overpriced loans to people who couldn't afford them.
That's where the hot tub comes in.
In March, after Lee's ruling, a lawyer in the North Carolina case obtained more than 700 pages of e-mails that hadn't been turned over in the Virginia case, during a meeting held in a hot tub so no one could wear a hidden tape recorder, court records state. The e-mails showed a Bank of America loan officer discussing the "recovery appraisals" with Dain and also with Mace Watts, who represented R.A. North Development.
In one case, plaintiffs lawyer Martin C. Conway said Friday, TRM wanted to sell a lot to a Northern Virginia woman for $380,000. But the e-mails showed that Bank of America's first appraiser valued the lot at only $210,000. A second appraisal came in at $220,000. Finally, a third appraisal for the same lot came in at $385,000, and the loan was approved.
"Obviously," the judge said, "these are material to this case and should have been produced in this case, before I spent all this time doing the order."
The judge turned to Andrew J. Trask, Bank of America's lawyer, and said, "What in the world happened here? Why weren't these documents produced?"
Trask said "none of them originated out of Bank of America," and that the judge had dismissed the bank from the case before it had to turn them over.
"It's my fault," the judge said. "I was moving too fast."
Although the buyers in Northern Virginia couldn't afford the loans, and never spoke to the bank - TRM handled all the paperwork, and one of its officers has pleaded guilty to falsifying loan applications - the loan officers stood to profit personally by taking commissions on every loan that was made, Conway said. TRM also made two years' worth of payments to the banks on the interest-only loans, which lawyers said came from TRM's profits.
Lee also noted that Bank of America had obtained mortgage insurance for the loans, which could have provided the bank with a safety net - except that the insurance company later canceled many of the policies because of "misrepresentation" by the bank. The judge also took notice that TRM officer Cari Deuterman, and former TRM employee Aaron Hernandez, have pleaded guilty to bank fraud.
Lee gave the plaintiffs permission to refile their case against Bank of America with the new evidence, but he said "the issue of plausibility still remains. What did the bank have to gain by entering into fraudulent loans?" The case against the TRM defendants is on hold while they are in bankruptcy proceedings.
A number of the plaintiffs were present and applauded Lee's ruling. "I'm extremely happy," said Craig Hanford of Fairfax. "All I want is my day in court and this allows us to get there."

Friday, October 8, 2010

Bank of America halts all foreclosure sales

Bank of America halts all foreclosure sales

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NEW YORK -- Bank of America is halting foreclosure sales in all 50 states as part of a widening investigation into flaws in the process, the company announced Friday.
The announcement came a week after the nation's largest bank said it was freezing home foreclosures in 23 states where foreclosures must be approved by the courts.
The bank said the foreclosure process on delinquent borrowers will continue, but it will not proceed to judgment or a foreclosure sale.
"We haven't found any problems in the foreclosure process," Bank of America (BACFortune 500) President and CEO Brian Moynihan said in an appearance before the National Press Club in Washington. "What we are trying to do is clear the air, and say 'We will go back and check our work one more time.' "
The review process is likely to last a few weeks, Moynihan said.
Bank of America is not the only bank to freeze foreclosures.
PNC Financial Services Group also suspended sales of foreclosed homes on Friday, for a term of 30 days, according to media reports.
Frederick Solomon, a spokesman for PNC, declined to comment beyond saying that "PNC is reviewing its mortgage servicing procedures to make sure they comply with applicable legal requirements."
JPMorgan Chase (JPMFortune 500) announced last week that it will also halt proceedings for about 56,000 homeowners after learning that its employees may have approved foreclosures without personally reviewing loan files.
JPMorgan Chase had no comment on Friday's announcement by Bank of America.
Ally Financial, previously known as GMAC, the finance arm of General Motors, has also paused foreclosures in the 23 states.
However, Citigroup said it is making no changes in its foreclosure procedures. "At this point, we have no reason to believe our employees haven't been following our procedures, so we do not believe a suspension is necessary," spokesman Mark Rodgers said in an e-mailed statement.
State attorneys general have stepped up pressure on banks in recent days after it was revealed that some bank employees had signed foreclosure affidavits without verifying that the documents were accurate, a process now known as "robo-signing."
Ohio's attorney general has filed a lawsuit against Ally Financial and its subsidiary GMAC Mortgage for allegedly submitting fraudulent documents in hundreds of foreclosure cases across the state.
Ally declined to comment Friday when asked if they would follow Bank of America and expand their freeze.
Senate Majority Leader Harry Reid, D-Nevada, called on major mortgage servicers to consider halting foreclosures in all fifty states in a statement released Friday.
"It is only fair to Nevada home owners to suspend foreclosures until a thorough review of foreclosure processes is completed and home owners can be assured that their documents are being analyzed properly," said Reid.
Sen. Christopher Dodd, D-Conn., the chairman of the Senate Banking Committee, announced Friday that he will hold a hearing to investigate allegations of improper mortgage servicing and foreclosure processing on Nov. 16, the day after the Senate returns from recess.
On Thursday, the White House said that President Obama won't sign a bill that could have made it easier for courts to clear foreclosures. The bill would have required federal and state courts to recognize documents that were notarized in other states. To top of page

Eight steps for a Christian to take when deciding if bankruptcy is your best available alternative

Eight steps for a Christian to take when deciding if bankruptcy is your best available alternative


Bankruptcy is never an ideal, but in some cases is a best available alternative.  Many Christians are finding  that bankruptcy is currently their best available alternative.  Personally, I believe bankruptcy at times is the best available alternative.  Remember, there are financial implications.  A Chapter 7 bankruptcy may remain on your credit bureau report for 10 years. A Chapter 13 may stay for 10 years also, but it is typically removed after  7 years.  There are emotional implications.  People who declare bankruptcy feel remorse, loss, and isolation.  There are relational implications.  There are spiritual implications.


Eight steps to take when deciding if bankruptcy is your best available alternative
  1. Discuss the situation openly with your church leaders.

    Depending on you church structure that might be a pastor, minister, elder, or deacon.  In the conversation, openly disclose the pertinent details about your financial situation.  This discussion can be useful for three reasons.  First, your church leader may be able to provide some spiritual and biblical perspective on the situation.  Tell the church leader you want to be sure you completely understand what the Bible says about bankruptcy.  Second, the church might be able to provide some financial assistance if it appears the bankruptcy could be avoided with some help.  Third, the church leader may be able to refer you to a Christian financial professional who can assist you.
  2. Keep Everything in Perspective.

    A bankruptcy can consume you financially, emotionally, and relationally.  Seek to ensure that your family and your home is not destroyed in the process.  Embrace those who are important to you.  Cling to your relationship with God.  Keep some energy to invest in your family.
  3. Pursue every available alternative with your creditor.

    Bankruptcy is the result of a two party relationship gone bad.  The first is a shortage of cash on your part, and the second is an inability to compromise on the part of the creditor.  In your discussions with your creditor, be truthful and factual.  Let them know what you do have, what you can do, and the implications if they do not work with you.  They want you to avoid bankruptcy as much as anyone because if you declare bankruptcy they don’t get paid.  Frequently ask, “What are my options”?
  4. Postpone speaking to a lawyer for as long as possible.

    Do you think it is in the best interest of the bankruptcy lawyer to advise you against bankruptcy?  No.  They will offer you a sales pitch, not advice.  By the way, if it does become necessary to find a lawyer, find someone who can offer a referral.
  5. Seek the most ethical form of bankruptcy.

    For example, a chapter 13 bankruptcy will allow you to set new repayment plans with your creditors.  In a chapter 7 bankruptcy you give up your rights to what you own (with expectations).  Even during this stage of bankruptcy consider what you can financially do, but also what is best for those who loaned you money in good faith.
  6. Learn your lesson.

    If it is necessary for you to go through a bankruptcy, consider it as the greatest learning opportunity of your life.  The bankruptcy was the result of a broken system.  If that system remains broken then bankruptcy will once again be in your future.  Be sure you can answer the following questions: Why did I go into debt? What needs to change this second time to be sure it never happens again?
  7. Commit to learn everything you can about personal finances.

    This is much like #5, but number five only deals with what you already know.  However, for there to be a real change you need to add some fresh material to how you think about money.  There are a number of great personal finance blogs written from a Christian perspective.  There are some wonderful books written on personal finances.  If you are not much of a reader, consider listening to shows on personal finances.  Regardless of how you learn, the important thing is to learn some new things about personal finances.
  8. Make restoration in the future, if possible.

    If the bankruptcy allows you to pull out of a current financial slump and your financial situation improves I would suggest you do go back and contact those creditors and pay them back.  You may have absolutely no legal requirement (depending on the specifics of your bankruptcy) to this, but morally you still have an obligation when you are able to repay.
While bankruptcy is never a good thing there are situations where it is the best available alternative.

Thursday, October 7, 2010

Do I Need An Attorney To File Bankruptcy?

Do I Need An Attorney To File Bankruptcy?

Do you need an attorney to file bankruptcy?

If you are an individual, technically, no.

Is it a good idea to file a bankruptcy case without an attorney?

No.

Why?

Because bankruptcy law is hard. It is full of arbitrary rules, complex procedures, and odd results.

I have been practicing restructuring law almost exclusively for fourteen years. Have you heard of the 10,000-hour rule and how it takes about 10,000 hours to become and expert in something? I probably am in my fourth set of 10,000 hours. And I still learn something new about bankruptcy law most days. Even the brightest of folks cannot get up to speed on bankruptcy law in one case. So you probably shouldn't try it. 

What will happen if you file your own bankruptcy without an attorney?

Maybe nothing. Maybe you'll still get your discharge and everything will be fine.

Or maybe you won't know which assets are exempt, not schedule them properly, and have the trustee try to take something you could keep.

Or maybe you'll omit a creditor and not have that debt discharged.

Or maybe you'll omit an asset and have the trustee bring an action to deny your discharge. If that action succeeds, you face the prospect of having your debts become permanently barred from discharge. That's a very high price to pay.

Under current bankruptcy law, you are eligible for a chapter 7 discharge only once about every eight years. That's a long time between bites at the apple.

If you enjoy risk and won't mind if you don't get your debts discharged, feel free to try to file your case by yourself. Otherwise, call an experienced, competent bankruptcy attorney.

Friday, October 1, 2010

30-Year Mortgage Rate Sinks To 4.32 Percent

30-Year Mortgage Rate Sinks To 4.32 Percent

10/01/10

Rates on 30-year mortgages have matched the lowest level in decades, while rates on 15-year loans dropped to their lowest point in nearly 20 years.
Yesterday, mortgage buyer Freddie Mac said the average rate for 30-year fixed loans fell to 4.32 percent, the lowest on records dating back to 1971. That's down from 4.37 percent the previous week.
The average rate on 15-year fixed loans fell to 3.75 percent, the lowest on records dating back to 1991.
Rates have been at or near the lowest levels in decades since spring as investors poured money into the safety of Treasury bonds, lowering their yield.
Also, Congress has extended a policy that allows homeowners in pricey real estate markets to secure government-backed mortgages of nearly $730,000.
Lawmakers voted to keep the maximum size of loans guaranteed by Fannie Mae and Freddie and the Federal Housing Administration at the current level through the end of 2011.