Wednesday, November 30, 2011
Judge Young's ruling is both positive and negative. A potentially influential ruling issued by the U.S. District Court in Boston this week both endorses the Mortgage Electronic Registration System (MERS) - and supports the notion that in order to properly foreclose the lender or its servicers must possess both the mortgage and the note. the question remains as to whether the Supreme Judicial Court will agree with him in its upcoming ruling in Eaton vs Fannie Mae.
The federal ruling, Culhane v. Aurora Loan Services of Nebraska, grants summary judgment to the servicer, saying that the law is so clear in the case that Milton homeowner Oratai Culhane was not entitled to a trial on the matter of whether Aurora could foreclose on her home. But over 59 precisely argued pages, District Judge William G. Young took the opportunity of the Culhane case to take a panoramic view of the current state of mortgage law in the commonwealth.
On the one hand, the ruling's ringing endorsement of MERS will be of tremendous comfort to the industry.
"It is as if by clever design that the MERS system fits perfectly into the Massachusetts model for the separation of legal and beneficial ownership of mortgages," Young wrote in the decision.
Young had some criticisms of how MERS works in practice and in law, saying that the power of sale written into the standard MERS mortgage contract was null and void under Massachusetts law, and saying he was "deeply troubled that, with little to no oversight, individuals without any tie to or knowledge of the company on whose behalf they are acting may assign mortgages."
But, according to MERS "The bottom line in this case is clear: MERS complies with the letter of the law, MERS held legal title to the mortgage, and, its assignment to the servicer was valid," MERSCORP's Vice President for Corporate Communications Janis Smith said in a statement. Other courts have also endorsed MERS' standing in the state, including U.S. Federal Bankruptcy court in the In re Marron case in June.
The decision also touched on another important issue, possession of the note, currently being deliberated by the Massachusetts Supreme Judicial Court in the Eaton v. Fannie Mae case.
Young's discussion of the still-pending Eaton case, however, may cause a lot more anxiety among lenders and servicers than his kind words for MERS will relieve. He is the first to endorse the ruling in Eaton that the note and the mortgage have to be united under Massachusetts law in order for the servicer to be able to foreclose.
"The assignment was necessary to comply with the common law of Massachusetts requiring unity of the note and mortgage in the same entity prior to foreclosing," Young wrote. "Aurora, as Deutsche's loan servicer, has an interest in the underlying debt; Aurora also physically possesses the collateral file, including the note. With the assignment of legal title to the mortgage from MERS, Aurora became the mortgagee of record as well, thus perfecting its standing to bring a foreclosure action against Culhane."
That reading differs from the bankruptcy court, meaning the federal courts have now split on how to interpret the law, making it even more important for the Supreme Judicial Court decision to resolve the issue in its ruling to come.
If the SJC agrees with Young - particularly his notion that the note has to be physically in the possession in of the mortgage holder or its servicer - it could throw an even bigger monkey wrench into the foreclosure works than that introduced by the Ibanez and Bevilacqua decisions.
Unlike the orderly record-keeping of the servicer in Culhane, many loans issued during the boom have seen their notes go astray. And even if the servicers' ducks are in all in a row, "we're going to see an unending number of people bringing in cases, forcing foreclosing lenders to prove that they hold the note," said Joel Aaron Stein, chair of 2011 Title Insurance and National Affairs Committee for the Real Estate Bar Association (REBA).
"Ibanez and Belivacqua will be like a pebble in the heel of your shoe," said Ed Bloom, a partner at Sherin and Lodgen and president of REBA.
* Empty medicine bottles found near body-sources
* No suicide note found
* No sign of foul play-Las Vegas police
By Scot J. Paltrow
Nov 30 (Reuters) - A key witness in a Nevada criminal foreclosure fraud case who was found dead on Monday apparently committed suicide, individuals close to the investigation of her death said.
Reuters reported on Tuesday that police had found the body of Tracy Lawrence, a notary, in her Las Vegas apartment shortly after she failed to appear in court for sentencing on a misdemeanor count related to the case.
On Wednesday people with direct knowledge of what the police found in her apartment said that empty or partially empty bottles of prescription and over-the-counter medicines were located near her body, strongly suggesting that she had committed suicide. No suicide note was found.
The Las Vegas Metropolitan Police Department has said that there was no sign of foul play and that Lawrence's death was not being investigated as a homicide.
The police said that the cause of death wouldn't be determined definitively for six to eight weeks, when results are due back from toxicology tests by the Clark County, Nevada, coroner.
On Nov. 16, Nevada Attorney General Catherine Masto announced a 606-count indictment against two California-based employees of Lender Processing Services, the nation's largest mortgage servicing company. The indictment accuses them of causing thousands of fraudulent foreclosure documents to be filed in Nevada.
Lawrence, who had served as a notary in Nevada for the LPS employees, agreed to plead guilty to a single misdemeanor count of falsely notarizing a signature and to cooperate with prosecutors in the LPS case, the attorney general's office has confirmed.
Tuesday, November 29, 2011
The sponsors of Mass Save can help Massachusetts homeowners keep their homes more comfortable, while lowering energy costs and saving money. In addition to incentives and rebates offered through the Mass Save programs, homeowners who act by Dec. 31 may also qualify for Federal tax credits to help subsidize improvements.
Mass Save programs provide expert advice and incentives to help Massachusetts residents improve their homes' energy efficiency. For instance, by improving a home's insulation, homeowners will use less energy throughout the year which equates to savings - not only in the winter - but year round. Homeowners who upgrade their home's insulation may be eligible for an incentive of up to 75 percent of their investment up to $2,000 for the installation of approved insulation improvements.
Mass Save services also include discounts and rebates on Energy Star lighting and appliances, access to the Energy Star New Homes Program for customers building a house or undertaking a renovation, and assistance through the income-eligible programs, which enable families in need to take advantage of energy efficiency services and supplementary incentives and support.
Customers can also apply for 0 percent loans for up to $25,000 and terms up to seven years to help with the cost of installing qualified energy-efficient improvements in their homes or rental properties, after receiving a home energy assessment.
Mass Save is an initiative sponsored by Massachusetts' gas and electric utilities and energy efficiency service provider, including Berkshire Gas, Cape Light Compact, Columbia Gas of Massachusetts, National Grid, New England Gas Company, NSTAR, Unitil and Western Massachusetts Electric Co.
Saturday, November 5, 2011
Finding the Right Type of Consumer Bankruptcy For You
In 2010, more than 1.5 million Americans filed for bankruptcy protection- a 9% increase over the previous year and the highest rate of filings since the new bankruptcy laws went into effect in 2005. While the states with the highest rates of bankruptcy remained in the Southwestern and Southeastern parts of the country, states in the Northeast still saw increases in the number of bankruptcy filings in 2010. For example, in Rhode Island more than 4,100 people filed for consumer bankruptcy protection last year and Massachusetts added another 17,700 filers.
High rates of unemployment coupled with soaring credit card debt and a sluggish housing market have been cited as the primary contributing factors for the record bankruptcy rates across the country. As the economy slowly begins to recover, the overall number of bankruptcy filings in 2011 is expected to decrease. But for many individuals, the recovery may not come fast enough and bankruptcy may be their best option for returning to financial stability in the new year.
Below you will find some information on the two types of consumer bankruptcy: Chapter 7 and Chapter 13. For help determining which type of bankruptcy best fits your financial situation, contact an experienced bankruptcy attorney.
Chapter 7 - Liquidation Bankruptcy
Chapter 7 bankruptcy gives debtors an opportunity to erase their debts and to start rebuilding their credit with a clean slate. In exchange for this opportunity, the debtor may have to sell, or liquidate, some of his or her personal belongings. During a Chapter 7 filing, the bankruptcy trustee will collect any nonexempt property owned by the debtor and liquidate it in order to repay some of the debt owed to the creditors.
However, in most cases, debtors filing for Chapter 7 will not lose any of their personal property, including their family home and car. Under federal and state law, certain types of property are exempt from liquidation in a Chapter 7 bankruptcy. For example, Massachusetts has a generous homestead exemption that allows debtors to exempt up to $500,000 in equity in their primary residence. Rhode Island, in comparison, allows debtors to exempt up to $300,000 in equity in their primary residence. To keep the house in any state, however, the homeowner must continue to stay current on the mortgage payment, before, during and after the Chapter 7 filing.
Other types of property that are exempt from liquidation include the family car, certain household items including clothing and furniture, jewelry and tools of the debtor's trade. After any non-exempt property has been liquidated, the bankruptcy judge will discharge any remaining debts, including credit card debts, auto loans and medical bills.
Under the 2005 changes to federal bankruptcy law, those who wish to file for Chapter 7 are required to meet a means test first in order to file. The means test takes into account the amount of disposable monthly income a debtor has versus the overall amount of his or her debt. If the debtor has sufficient disposable income to pay the debts, then he or she will not be able to file for Chapter 7 bankruptcy, but still may be eligible to file for Chapter 13.
Chapter 13 - Rehabilitation Bankruptcy
Chapter 13 bankruptcy, also known as "rehabilitation" bankruptcy, gives debtors who have a steady income the opportunity to repay some of their debts under a structured repayment plan. The repayment period runs from three to five years. Secured debts, like mortgages and car loans, generally make-up most of the payments in the repayment plan. Typically, debtors pay little to nothing of their unsecured debts, including credit card bills. After successfully completing the repayment plan, the bankruptcy judge will discharge any remaining unsecured debts. Just like in a Chapter 7, once a debt has been discharged in bankruptcy, the creditor cannot make any attempts to collect any remaining amounts from the debtor.
For some debtors, filing for a Chapter 13 bankruptcy may be more advantageous than a Chapter 7 filing. For example, those who would lose nonexempt assets to liquidation in a Chapter 7 can keep those same assets in a Chapter 13. Additionally, homeowners who have fallen behind on their mortgage payments will be able to become current on those payments as part of their Chapter 13 repayment plan. Also, in some cases, lenders may be willing to work with homeowners who file for Chapter 13 protection and allow them to renegotiate the terms of their mortgage to lower their monthly payments.
Stripping Second Mortgages
Another important - and little known - advantage of Chapter 13 bankruptcy is the possibility of having a second mortgage discharged. In a Chapter 13 bankruptcy, debtors who have more than one lien against their homes may be able to have the junior liens discharged (also referred to as "stripped") if their house has appraised for less than the first mortgage. For example, if a house appraised for $400,000 and the remaining amount owed on the first mortgage is $420,000 and there is a second mortgage for $100,000, the homeowner can petition the court to discharge the second mortgage as part of their Chapter 13 bankruptcy filing.
If the bankruptcy judge finds that the current fair market value of the home is at or lower than the amount of the first mortgage, then the judge will convert any junior liens, including second mortgages, to unsecured creditors. The reason for this is that there is insufficient value in the home to secure the second mortgage. So long as the debtor successfully completes the Chapter 13 repayment plan, the junior liens against the house will be discharged along with any other amounts owed to unsecured creditors.
Not All Debts are Dischargeable
Before filing for bankruptcy, it is important for debtors to understand that not all types of debt are eligible for discharge in bankruptcy. These debts include:
- Most back taxes
- Most student loans
- Support obligations, including child support and alimony
- Criminal fines and restitution
- Judgments from personal injury and wrongful death suits
Also, neither a Chapter 7 nor a Chapter 13 bankruptcy filing will stop a lender from foreclosing on a home if the foreclosure already has been initiated. At the most, the bankruptcy filing will slow the process down and will give the homeowner more time to try to negotiate a new deal with the lender, such as a lower interest rate.
The automatic stay is a very important protection given to debtors once they file for either Chapter 7 or Chapter 13. The automatic stay prevents creditors from continuing any and all debt collection activities once an individual has filed a bankruptcy petition. This means no more harassing phone calls, letters or notices saying that the creditor is going to take legal action - which can be a huge relief for those who are being tormented by creditors who want their money now. In general, the automatic stay remains in effect until the bankruptcy is finalized.
Work with an Experienced Bankruptcy Attorney
Bankruptcy laws are complex and difficult to understand. An attorney experienced in handling bankruptcy filings can explain the process to you, file the necessary paperwork on your behalf and help you get through the process as quickly and efficiently as possible.
For more information on Chapter 7 and Chapter 13 bankruptcies, contact a knowledgeable bankruptcy attorney today.
Bankruptcy Can Help Save Your Home From Foreclosure!
As the real-estate market lingers in the doldrums caused by the mortgage and banking crises that led to the Great Recession, many people still find themselves on the brink of foreclosure.
Even selling the house may not help, because the mortgage is underwater (when mortgage debt is higher than market value) and there could still be a substantial debt obligation after the sale.
When you have run out of all other options, can a bankruptcy save your home? Like many legal questions, the answer is, "It depends."
What It Depends On
A Chapter 13 bankruptcy may allow you to save your home from foreclosure. ("Chapter 13" refers to the governing chapter of the U.S. Bankruptcy Code.) A Chapter 13 uses a plan that essentially works like a court-ordered budget to pay your bills. For it to work, you must have regular income to fund the plan.
If you have a job and regular income, a Chapter 13 can help you save your house. You can pay your current monthly payments and if you have fallen behind in your mortgage, you can pay your arrearage in up to five years within the plan.
The Automatic Stay
Another useful feature of the Chapter 13 bankruptcy is that when you file it places what is known as the automatic stay on all collection activity against you. This stops the phone calls, collection letters and foreclosures. And it gives you time to create your proposed Chapter 13 repayment plan with your bankruptcy attorney.
While you are paying your mortgage and any arrears, you will also pay some percentage of your unsecured debt (debt with no collateral property to back it). So, if you had accumulatedcredit-card debt as you struggled to pay your mortgage (paying one bill one month and another the next month, for example,) a Chapter 13 filing permits you to discharge some of that credit-card debt.
How much unsecured debt you discharge will depend on how much money you are currently making, and size of your mortgage and mortgage arrears. Your bankruptcy lawyer will help you with the calculations. This relief will help free up funds to put towards your mortgage.
While bankruptcy still carries some stigma and will show on a credit report, debtors often find that it is easier to obtain credit after they have filed a bankruptcy than when they were buried under all their debts.
Debtors may even receive credit offers before their bankruptcies are completed. The reason is simple. Once you have discharged most of your debts, you have more money available for making payments on new credit.
If you start with a reasonable amount, carefully limit your debt and slowly rebuild your credit, the impact on your credit score of the bankruptcy may be much less than you might expect. If you successfully complete your Chapter 13 plan, it is possible your credit report will look better after the bankruptcy than it did before you filed the bankruptcy.
Done right, a Chapter 13 can help you save your house from foreclosure and allow you to rebuild your credit.