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Showing posts with label foreclosure. Show all posts
Showing posts with label foreclosure. Show all posts
Monday, April 16, 2012
Flood of foreclosures to hit the housing market
NEW YORK (CNNMoney) -- The golden age for foreclosure squatters may soon be coming to an end now that the $26 billion mortgage settlement has been approved.
The settlement, agreed to by the nation's five largest mortgage lenders, is expected to speed up the foreclosure process by providing stricter guidelines for the banks to follow when repossessing homes.
The banks involved include Read the full article here
Wednesday, February 29, 2012
Are foreclosures easing in San Diego County?
Both completed foreclosures and the number of San Diego property owners who started the foreclosure process increased in January from the end of 2011, but those numbers are down compared to figures from a year ago, real estate tracker DataQuick reported Tuesday.
San Diego County recorded 726 foreclosures in January, up 2.3 percent from December but down 24.3 percent from January 2011, the latest numbers show. The county's peak was 2,004 in July 2008.
The movement of foreclosures, which depend on the banks, have long been erratic. But by analyzing the average number of foreclosures in certain time increments, it appears that foreclosures may be easing. (Please refer to the first table.)
The same thing may be happening with notices of defaults, the document that signals the start of a foreclosure. (Please refer to the second table.)
There were 1,407 default filings in January, up 13 percent from December but down 9.1 percent from January 2011. The county is about 63 percent below its default-notice peak of 3,832 in March 2009.
DataQuick analyst Andrew LePage said the short- to mid-term view of the distressed market in San Diego is "cloudy."
The long-term picture, however, "continues to brighten slowly" alongside slight job growth and fewer mortgage delinquencies.
Another new factor in the world of foreclosures is a recently announced settlement involving 49 state attorneys general and the country's Top 5 banks over questionable foreclosure practices, LePage added.
The $25 billion mortgage settlement, which still needs judge approval, could help about 466,000 Californians by reducing principal balances, refinancing mortgages and offering restitution in cash.
San Diego County recorded 726 foreclosures in January, up 2.3 percent from December but down 24.3 percent from January 2011, the latest numbers show. The county's peak was 2,004 in July 2008.
The movement of foreclosures, which depend on the banks, have long been erratic. But by analyzing the average number of foreclosures in certain time increments, it appears that foreclosures may be easing. (Please refer to the first table.)
The same thing may be happening with notices of defaults, the document that signals the start of a foreclosure. (Please refer to the second table.)
There were 1,407 default filings in January, up 13 percent from December but down 9.1 percent from January 2011. The county is about 63 percent below its default-notice peak of 3,832 in March 2009.
DataQuick analyst Andrew LePage said the short- to mid-term view of the distressed market in San Diego is "cloudy."
The long-term picture, however, "continues to brighten slowly" alongside slight job growth and fewer mortgage delinquencies.
Another new factor in the world of foreclosures is a recently announced settlement involving 49 state attorneys general and the country's Top 5 banks over questionable foreclosure practices, LePage added.
The $25 billion mortgage settlement, which still needs judge approval, could help about 466,000 Californians by reducing principal balances, refinancing mortgages and offering restitution in cash.
Halt to Fannie, Fredie Foreclosures Sought
From the San Diego Union Tribune February 29,2012
http://www.utsandiego.com/news/2012/feb/27/calif-ag-asks-freddie-fannie-stop-foreclosures/
California Attorney General Kamala Harris has asked the regulator of mortgage giants Fannie Mae and Freddie Mac to stop foreclosure sales in the state until it reviews whether principal reductions could help homeowners with Fannie- and Freddie-backed mortgages.
Harris made the request to Federal Housing Finance Agency Director Edward DeMarco in a Feb. 24 letter, roughly two weeks after Harris announced her involvement in a historic mortgage settlement between 49 attorneys general and the nation's largest lenders.
The settlement, which still needs judge approval, could help an estimated 466,000 borrowers in California. However, loans backed by Fannie Mae and Freddie Mac would not be affected by the attorney generals' mortgage deal.
"You have consistently declined to authorize principal reduction programs by those government-sponsored enterprises," said Harris in the letter to DeMarco.
Harris' office estimates more than 60 percent of home loans in the state are owned or held by Fannie and Freddie, a significant portion of borrowers who could benefit from having their principal balances reduced.
The Federal Housing Finance Agency could not immediately be reached for comment.
DeMarco, during an oversight committee hearing hearing on Nov. 16, said the FHFA has concluded that reducing principal balances is "not going to be the least-cost approach for the taxpayer" when compared to other alternative-foreclosure programs including principal forbearance, which "zeroes out the interest rate charged on the underwater portion of the mortgage."
http://www.utsandiego.com/news/2012/feb/27/calif-ag-asks-freddie-fannie-stop-foreclosures/
California Attorney General Kamala Harris has asked the regulator of mortgage giants Fannie Mae and Freddie Mac to stop foreclosure sales in the state until it reviews whether principal reductions could help homeowners with Fannie- and Freddie-backed mortgages.
Harris made the request to Federal Housing Finance Agency Director Edward DeMarco in a Feb. 24 letter, roughly two weeks after Harris announced her involvement in a historic mortgage settlement between 49 attorneys general and the nation's largest lenders.
The settlement, which still needs judge approval, could help an estimated 466,000 borrowers in California. However, loans backed by Fannie Mae and Freddie Mac would not be affected by the attorney generals' mortgage deal.
"You have consistently declined to authorize principal reduction programs by those government-sponsored enterprises," said Harris in the letter to DeMarco.
Harris' office estimates more than 60 percent of home loans in the state are owned or held by Fannie and Freddie, a significant portion of borrowers who could benefit from having their principal balances reduced.
The Federal Housing Finance Agency could not immediately be reached for comment.
DeMarco, during an oversight committee hearing hearing on Nov. 16, said the FHFA has concluded that reducing principal balances is "not going to be the least-cost approach for the taxpayer" when compared to other alternative-foreclosure programs including principal forbearance, which "zeroes out the interest rate charged on the underwater portion of the mortgage."
Wednesday, January 18, 2012
As home prices fall, more borrowers walk away
Link to article: http://bottomline.msnbc.msn.com/_news/2012/01/09/9614305-as-home-prices-fall-more-borrowers-walk-away
By John W. Schoen, Senior Producer
When David Martin and his wife bought their north Seattle condo five years ago, they figured they had plenty of time to downsize if they needed to before they retired.
Now, with the property worth roughly $60,000 less than the balance of their mortgage, Martin, 68, has been giving serious thought to just walking away, a process lenders call "strategic default."
"Guilt and morality are one side, and objective financial analysis are on the other side," Martin said. "They're coming to two opposite conclusions. I wonder how many other people are struggling with the same question."
Strategic defaults like the one contemplated by Martin are on the rise. A survey last year by two Chicago-area finance professors, Paola Sapienza at Northwestern University and Luigi Zingales at the University of Chicago, found that roughly three out of 10 mortgage defaults in 2010 were by homeowners who could afford to make their payments, up from 22 percent in 2009.
"It's a looming problem that's in the shadows," said Jason Kopcak, a mortgage trader at Cantor Fitzgerald who advises lenders on how to value the loans on their books. "It's very worrisome to mortgage lenders."
Researchers point to a number of forces that are driving borrowers to walk away from their mortgages. At the top of the list is the estimated 12 million homes that are underwater, meaning the owners owe more than they are worth.
Until recently, borrowers like Martin and many industry analysts held out hope that a housing recovery would reverse the rising tide of "negative equity." But after stabilizing this summer, home prices began falling again, dropping 7.5 percent in the third quarter alone and leaving more homeowners underwater.
Even if prices stabilize this year, millions of underwater borrowers face a long wait before they can sell their homes without having to write a big check to their lender to cover the shortfall. Economists at Goldman Sachs recently forecast that after bottoming in 2013 house prices won't recover their 2006 peak until 2023. (No, that's not a typo.)
Many homeowners simply can't wait that long.
In the early stages of the housing bust, the main causes of defaults included unemployment or other financial setbacks and adjustable mortgages that reset to unaffordable levels, according to researchers. Now, five years into the housing recession, strategic defaults are growing as financially healthy borrowers learn of friends or family who have decided to walk away.
A recent study commissioned by the Mortgage Bankers Association likens the rise in the rate of strategic defaults to the spread of a disease. The longer the crisis drags on, the more homeowners will be exposed to someone who has successfully walked away, making the decision easier, the study suggested. "As fundamentally social animals, humans consciously (and subconsciously) look to their peers when forming opinions, habits and behaviors," the report said.
"Most people who own a home know of someone -- a friend, a colleague a family member -- who has defaulted, especially in housing markets that have taken a big hit," said Jon Maddux, CEO and co-founder of youwalkaway.com, a service that advises homeowners on walking away from their mortgage. "They realize these are not bad people. They're not deadbeats. They're just like them."
Researchers say strategic default is also more common among borrowers who feel no personal connection to the party on the other end of the transaction. Gone are the days when you walked into a bank and met with a lender who shepherded your application and congratulated you when the loan was approved, said Michael Seiler, a finance professor at Old Dominion University and a co-author of the MBA study.
"If you defaulted, it was like you were defaulting on your friend," he said. "Your kids might go to the same school. You all might go to the same church. And you're constantly reminded of who you're defaulting on."
That scenario is a far cry from the modern system of mortgage finance, where loans are sold over the phone or online, chopped up into pieces and then sold to multiple, anonymous investors. Many underwater homeowners who try to negotiate with their lender can't even find out who owns their loan.
"We're finding that people are much more willing to walk away when the other party is unknown or what you might call a 'bad bank,'" said Seiler. "Those are the ones that received a lot of bailout funds or were active in the subprime market, giving loans to people who couldn't afford them and they knew that."
The mortgage lending industry's widespread reluctance to modify loan terms has also changed homeowner attitudes about walking away, according to Maddux.
"They feel much better about doing it if they've tried to contact the lender and the lender won't budge," he said. "They feel justified about it because they've tried to do their best to work it out."
Shifting attitudes about the causes of the housing bust are also playing a role, say researchers. In their surveys, Sapienza and Zingales found that 48 percent of Americans said they would be more likely to default if their bank was accused of predatory lending, even if they are morally opposed to strategic default. Some 11 percent said they’d be less likely to pay their mortgage, and more likely to walk away from their loan, if their lender was cited for using false foreclosure documentation.
The government's ineffective response to the housing crisis, even as it went to extraordinary lengths to backstop banks, has also propelled walkaways, say researchers. Since the housing bubble burst in 2006, some $7 trillion in home equity has evaporated, according to Federal Reserve data. Now, as home prices resume their fall, some homeowners believe lenders should bear at least a portion of the losses inflicted by a housing bust the industry helped create.
"The money didn't disappear," said Martin. "We still owe it to the bank, so the bank will end up getting all of its money back on a loan that no longer has its original value. They're taking no part in the loss."
Widespread reports of lenders' bad behavior, from filing defective paperwork to selling investors bad loans, have begun to erode one of the strongest deterrents to walking away: the sense that skipping out on a debt is morally wrong. University of Arizona finance professor Brent White interviewed hundreds of homeowners for his research on strategic default. He found that, in the eyes of many homeowners, mortgage bankers have lost the moral high ground.
"The reality is: for the bank it is simply an economic transaction," he said. "They have no moral qualm about taking your house, and they feel no moral obligation to modify your mortgage even if you're in a difficult financial situation."
Still, there are much more serious consequences to strategic default than pangs of guilt. Any loan default will damage a borrower's credit score. But some strategic defaulters are finding that the impact isn't as long-lasting as widely believed, according to Maddux.
"You don’t destroy your credit, you wound your credit," he said. "Just like a wound, it heals over time."
Maddux said surveys of the roughly 8,000 customers who have signed up for his service in the last four years found that some strategic defaulters are able to restore their credit in as little as a year and a half.
The bigger risk for walkaway borrowers is that their lender will pursue them in court and win a so-called "deficiency judgment," a court-ordered, full repayment of the mortgage balance. That process is governed by state laws; some so-called "non-recourse" states bar lenders from pursuing such judgments.
But the force of that deterrent is also weakening, according to Sapienza.
"(There's an) increasing perception that lenders are not going after borrowers who walk away," he said.
That perception may be dangerously misplaced, as many lenders continue to aggressively pursue judgments against homeowners who strategically default. That's why there's widespread agreement that homeowners considering it need to get solid legal advice from an experienced real estate attorney in their state.
"There's a process to strategic default and a lot of people don't know how to do it," said Kopcak. "They don't really know what their options are. People really need to talk to a lawyer who knows the process."
For now, Martin is electing to stay in his home and continue paying the mortgage.
"We intend to continue as we are on the basis that we gain nothing from acting at this point," he said in a note. "We think that the real estate market in Seattle will rise by 2013 enough to offer better alternatives. There is a small chance that the federal government will act to offer more rational choices. The real possibility is that the debt might be refinanced in 2013 at a level that might offer enough reduction in payments to allow us to hang on long enough to shore up our financial position."
In short, giving up at this point may be worst of all alternatives. Giving up seems to run counter to our value system, no matter how financially wise experts seem to believe it may be."
By John W. Schoen, Senior Producer
When David Martin and his wife bought their north Seattle condo five years ago, they figured they had plenty of time to downsize if they needed to before they retired.
Now, with the property worth roughly $60,000 less than the balance of their mortgage, Martin, 68, has been giving serious thought to just walking away, a process lenders call "strategic default."
"Guilt and morality are one side, and objective financial analysis are on the other side," Martin said. "They're coming to two opposite conclusions. I wonder how many other people are struggling with the same question."
Strategic defaults like the one contemplated by Martin are on the rise. A survey last year by two Chicago-area finance professors, Paola Sapienza at Northwestern University and Luigi Zingales at the University of Chicago, found that roughly three out of 10 mortgage defaults in 2010 were by homeowners who could afford to make their payments, up from 22 percent in 2009.
"It's a looming problem that's in the shadows," said Jason Kopcak, a mortgage trader at Cantor Fitzgerald who advises lenders on how to value the loans on their books. "It's very worrisome to mortgage lenders."
Researchers point to a number of forces that are driving borrowers to walk away from their mortgages. At the top of the list is the estimated 12 million homes that are underwater, meaning the owners owe more than they are worth.
Until recently, borrowers like Martin and many industry analysts held out hope that a housing recovery would reverse the rising tide of "negative equity." But after stabilizing this summer, home prices began falling again, dropping 7.5 percent in the third quarter alone and leaving more homeowners underwater.
Even if prices stabilize this year, millions of underwater borrowers face a long wait before they can sell their homes without having to write a big check to their lender to cover the shortfall. Economists at Goldman Sachs recently forecast that after bottoming in 2013 house prices won't recover their 2006 peak until 2023. (No, that's not a typo.)
Many homeowners simply can't wait that long.
In the early stages of the housing bust, the main causes of defaults included unemployment or other financial setbacks and adjustable mortgages that reset to unaffordable levels, according to researchers. Now, five years into the housing recession, strategic defaults are growing as financially healthy borrowers learn of friends or family who have decided to walk away.
A recent study commissioned by the Mortgage Bankers Association likens the rise in the rate of strategic defaults to the spread of a disease. The longer the crisis drags on, the more homeowners will be exposed to someone who has successfully walked away, making the decision easier, the study suggested. "As fundamentally social animals, humans consciously (and subconsciously) look to their peers when forming opinions, habits and behaviors," the report said.
"Most people who own a home know of someone -- a friend, a colleague a family member -- who has defaulted, especially in housing markets that have taken a big hit," said Jon Maddux, CEO and co-founder of youwalkaway.com, a service that advises homeowners on walking away from their mortgage. "They realize these are not bad people. They're not deadbeats. They're just like them."
Researchers say strategic default is also more common among borrowers who feel no personal connection to the party on the other end of the transaction. Gone are the days when you walked into a bank and met with a lender who shepherded your application and congratulated you when the loan was approved, said Michael Seiler, a finance professor at Old Dominion University and a co-author of the MBA study.
"If you defaulted, it was like you were defaulting on your friend," he said. "Your kids might go to the same school. You all might go to the same church. And you're constantly reminded of who you're defaulting on."
That scenario is a far cry from the modern system of mortgage finance, where loans are sold over the phone or online, chopped up into pieces and then sold to multiple, anonymous investors. Many underwater homeowners who try to negotiate with their lender can't even find out who owns their loan.
"We're finding that people are much more willing to walk away when the other party is unknown or what you might call a 'bad bank,'" said Seiler. "Those are the ones that received a lot of bailout funds or were active in the subprime market, giving loans to people who couldn't afford them and they knew that."
The mortgage lending industry's widespread reluctance to modify loan terms has also changed homeowner attitudes about walking away, according to Maddux.
"They feel much better about doing it if they've tried to contact the lender and the lender won't budge," he said. "They feel justified about it because they've tried to do their best to work it out."
Shifting attitudes about the causes of the housing bust are also playing a role, say researchers. In their surveys, Sapienza and Zingales found that 48 percent of Americans said they would be more likely to default if their bank was accused of predatory lending, even if they are morally opposed to strategic default. Some 11 percent said they’d be less likely to pay their mortgage, and more likely to walk away from their loan, if their lender was cited for using false foreclosure documentation.
The government's ineffective response to the housing crisis, even as it went to extraordinary lengths to backstop banks, has also propelled walkaways, say researchers. Since the housing bubble burst in 2006, some $7 trillion in home equity has evaporated, according to Federal Reserve data. Now, as home prices resume their fall, some homeowners believe lenders should bear at least a portion of the losses inflicted by a housing bust the industry helped create.
"The money didn't disappear," said Martin. "We still owe it to the bank, so the bank will end up getting all of its money back on a loan that no longer has its original value. They're taking no part in the loss."
Widespread reports of lenders' bad behavior, from filing defective paperwork to selling investors bad loans, have begun to erode one of the strongest deterrents to walking away: the sense that skipping out on a debt is morally wrong. University of Arizona finance professor Brent White interviewed hundreds of homeowners for his research on strategic default. He found that, in the eyes of many homeowners, mortgage bankers have lost the moral high ground.
"The reality is: for the bank it is simply an economic transaction," he said. "They have no moral qualm about taking your house, and they feel no moral obligation to modify your mortgage even if you're in a difficult financial situation."
Still, there are much more serious consequences to strategic default than pangs of guilt. Any loan default will damage a borrower's credit score. But some strategic defaulters are finding that the impact isn't as long-lasting as widely believed, according to Maddux.
"You don’t destroy your credit, you wound your credit," he said. "Just like a wound, it heals over time."
Maddux said surveys of the roughly 8,000 customers who have signed up for his service in the last four years found that some strategic defaulters are able to restore their credit in as little as a year and a half.
The bigger risk for walkaway borrowers is that their lender will pursue them in court and win a so-called "deficiency judgment," a court-ordered, full repayment of the mortgage balance. That process is governed by state laws; some so-called "non-recourse" states bar lenders from pursuing such judgments.
But the force of that deterrent is also weakening, according to Sapienza.
"(There's an) increasing perception that lenders are not going after borrowers who walk away," he said.
That perception may be dangerously misplaced, as many lenders continue to aggressively pursue judgments against homeowners who strategically default. That's why there's widespread agreement that homeowners considering it need to get solid legal advice from an experienced real estate attorney in their state.
"There's a process to strategic default and a lot of people don't know how to do it," said Kopcak. "They don't really know what their options are. People really need to talk to a lawyer who knows the process."
For now, Martin is electing to stay in his home and continue paying the mortgage.
"We intend to continue as we are on the basis that we gain nothing from acting at this point," he said in a note. "We think that the real estate market in Seattle will rise by 2013 enough to offer better alternatives. There is a small chance that the federal government will act to offer more rational choices. The real possibility is that the debt might be refinanced in 2013 at a level that might offer enough reduction in payments to allow us to hang on long enough to shore up our financial position."
In short, giving up at this point may be worst of all alternatives. Giving up seems to run counter to our value system, no matter how financially wise experts seem to believe it may be."
Tuesday, December 20, 2011
Preparing For Bankruptcy
by Adrian Lapas, Eastern North Carolina Bankruptcy Attorney
Link to article: http://www.bankruptcylawnetwork.com/preparing-for-bankruptcy/
When you are considering a trip, usually, you make substantial preparations in anticipation of that trip. You make travel arrangements; you make sure you have a place to stay; you make reservations for any activities in which you wish to participate. You will often make significant plans and preparations for any “big” event. Bankruptcy is no different. It is a significant life event that demands some thought and preparation before you embark on it.
In talking with potential bankruptcy clients, it seems that a lot of them wait until the last minute before contacting a bankruptcy lawyer to find out how bankruptcy may help them. While visiting a bankruptcy lawyer most likely does not rank high on most people’s “bucket list,” if you are struggling financially, it most likely makes sense to determine if and how bankruptcy can help you sooner rather than later.
So, how can “preparing” for bankruptcy help? First, you will need to have the fees for the lawyer and for the court available. For now, for a chapter 7 filing, just the filing fee is $306.00. Additionally, before you file, you must complete a consumer credit counseling session and get the certification that must be filed with the court. If you “fail to plan” for your bankruptcy filing by finding out what you need ahead of time, when your car is on the verge of getting repo’d, you may not have the time and/or money to retain a bankruptcy lawyer.
Second, you can carefully go over your income and expenses and see where the trouble lies. Certainly a bankruptcy lawyer can help you identify the problem (with appropriate information) but you also need to know how you got into this financial mess. Some problems are easy to identify–temporary loss of income; extraordinary medical bills; overspending for a bit, etc. Bankruptcy can assist in overcoming those past problems but you need to be aware of the problem so that you can avoid it in the future. Bankruptcy is designed to be a “fresh start.” You can greatly assist in obtaining that “fresh start” by breaking or modifying some of the habits that perhaps got you here in the first place.
Third, make sure you know who you owe and how much. Find out if there is any collateral associated with the debts and gather up loan documents. Your lawyer will need this but, more importantly, you need to know your own financial picture. Credit reports are freely available and can be a big help. Also, if lawsuits or foreclosures have been filed against you, make sure you have that paperwork–all of it! It is important!
Finally, change your mindset. In dealing with individuals facing financial problems, it is often much more difficult instead of dealing with distressed businesses. That is because a business looks at assets and liabilities and can make a rational decision as to whether keeping an asset is worth the corresponding liability. Understandably, people are attached to their “things.” But, after all, they are just “things” and you have to consider carefully whether retaining a “thing” is worth the potential stress and headache. As an example, if you suffered a decrease in income and you have two relatively late model cars. No one wants to give up one or two cars but sometimes it is better to surrender a vehicle or two in order to keep your house (if that is important to you). There will be some emotional attachment to some “things” but it is imperative that you do this. Determining what is important to you is important for your bankruptcy lawyer in setting achievable goals for your bankruptcy filing.
Finally, do some research. There is a lot of information about bankruptcy that is freely available. However, you should exercise extreme caution in considering the information. Not that the information is inaccurate (some info may be outdated or simply inapplicable) but it takes an experienced profession to know what is appropriate and what is not. But, by familiarizing yourself with some basic bankruptcy information, you will be in a better position to appreciate and assist your bankruptcy lawyer in setting realistic and achievable goals.
After all, the real goal of a bankruptcy filing is a “fresh start.”
Link to article: http://www.bankruptcylawnetwork.com/preparing-for-bankruptcy/
When you are considering a trip, usually, you make substantial preparations in anticipation of that trip. You make travel arrangements; you make sure you have a place to stay; you make reservations for any activities in which you wish to participate. You will often make significant plans and preparations for any “big” event. Bankruptcy is no different. It is a significant life event that demands some thought and preparation before you embark on it.
In talking with potential bankruptcy clients, it seems that a lot of them wait until the last minute before contacting a bankruptcy lawyer to find out how bankruptcy may help them. While visiting a bankruptcy lawyer most likely does not rank high on most people’s “bucket list,” if you are struggling financially, it most likely makes sense to determine if and how bankruptcy can help you sooner rather than later.
So, how can “preparing” for bankruptcy help? First, you will need to have the fees for the lawyer and for the court available. For now, for a chapter 7 filing, just the filing fee is $306.00. Additionally, before you file, you must complete a consumer credit counseling session and get the certification that must be filed with the court. If you “fail to plan” for your bankruptcy filing by finding out what you need ahead of time, when your car is on the verge of getting repo’d, you may not have the time and/or money to retain a bankruptcy lawyer.
Second, you can carefully go over your income and expenses and see where the trouble lies. Certainly a bankruptcy lawyer can help you identify the problem (with appropriate information) but you also need to know how you got into this financial mess. Some problems are easy to identify–temporary loss of income; extraordinary medical bills; overspending for a bit, etc. Bankruptcy can assist in overcoming those past problems but you need to be aware of the problem so that you can avoid it in the future. Bankruptcy is designed to be a “fresh start.” You can greatly assist in obtaining that “fresh start” by breaking or modifying some of the habits that perhaps got you here in the first place.
Third, make sure you know who you owe and how much. Find out if there is any collateral associated with the debts and gather up loan documents. Your lawyer will need this but, more importantly, you need to know your own financial picture. Credit reports are freely available and can be a big help. Also, if lawsuits or foreclosures have been filed against you, make sure you have that paperwork–all of it! It is important!
Finally, change your mindset. In dealing with individuals facing financial problems, it is often much more difficult instead of dealing with distressed businesses. That is because a business looks at assets and liabilities and can make a rational decision as to whether keeping an asset is worth the corresponding liability. Understandably, people are attached to their “things.” But, after all, they are just “things” and you have to consider carefully whether retaining a “thing” is worth the potential stress and headache. As an example, if you suffered a decrease in income and you have two relatively late model cars. No one wants to give up one or two cars but sometimes it is better to surrender a vehicle or two in order to keep your house (if that is important to you). There will be some emotional attachment to some “things” but it is imperative that you do this. Determining what is important to you is important for your bankruptcy lawyer in setting achievable goals for your bankruptcy filing.
Finally, do some research. There is a lot of information about bankruptcy that is freely available. However, you should exercise extreme caution in considering the information. Not that the information is inaccurate (some info may be outdated or simply inapplicable) but it takes an experienced profession to know what is appropriate and what is not. But, by familiarizing yourself with some basic bankruptcy information, you will be in a better position to appreciate and assist your bankruptcy lawyer in setting realistic and achievable goals.
After all, the real goal of a bankruptcy filing is a “fresh start.”
Thursday, December 8, 2011
Bankruptcy is the Best Way to Save Your Home
Bankruptcy is the Best Way to Save Your Home
by Brett Weiss, Maryland Bankruptcy Attorney
Link to article: http://www.bankruptcylawnetwork.com/bankruptcy-is-the-best-way-to-save-your-home/
You want to save your home. Which is the best way to stop a foreclosure, get caught up on your monthly payments, and save your home? Is it loan modification? A workout? Or a bankruptcy?
A recent article, “The Home Ownership Experience of Households in Bankruptcy” by Professor Sarah W. Carroll, of the University of Pennsylvania Law School and Wenli Li, of the Federal Reserve Bank of Philadelphia, provided the first in-depth analysis of the home ownership experience of home owners in Chapter 13. Its conclusions mirror what most bankruptcy attorneys’ personal experience has been: Chapter 13 is one of the most effective ways to let you save your home.
The study followed homeowners who filed for Chapter 13 between 2001 and 2002 in New Castle County, Delaware, from the time of their filing to October 2007. (Since most Chapter 13 plans last five years, this was a fair trial period.) After analyzing the data, it found two important results:
First, the Chapter 13 filing was not always the solution: 27.9 percent of filers lost their houses in foreclosure despite filing for bankruptcy. This is typically a result of poor cashflow. If job loss, or illness continues and there is not enough money coming into the household, the house will be lost regardless of filing bankruptcy or not. Many of the homeowners in this group will end up converting their cases to one under Chapter 7, so that they can wipe out any personal liability for the mortgage(s), as well as most of their other debts.
However, when compared with homeowners who did not file, debtors who filed for bankruptcy were able to stay in their homes for, on average, 27.7 additional months, over two years. This figure includes those who ended up losing their homes.
So, if you’re behind on mortgage payments, consider a Chapter 13–it may let you stay in your home a lot longer than other options.
by Brett Weiss, Maryland Bankruptcy Attorney
Link to article: http://www.bankruptcylawnetwork.com/bankruptcy-is-the-best-way-to-save-your-home/
You want to save your home. Which is the best way to stop a foreclosure, get caught up on your monthly payments, and save your home? Is it loan modification? A workout? Or a bankruptcy?
A recent article, “The Home Ownership Experience of Households in Bankruptcy” by Professor Sarah W. Carroll, of the University of Pennsylvania Law School and Wenli Li, of the Federal Reserve Bank of Philadelphia, provided the first in-depth analysis of the home ownership experience of home owners in Chapter 13. Its conclusions mirror what most bankruptcy attorneys’ personal experience has been: Chapter 13 is one of the most effective ways to let you save your home.
The study followed homeowners who filed for Chapter 13 between 2001 and 2002 in New Castle County, Delaware, from the time of their filing to October 2007. (Since most Chapter 13 plans last five years, this was a fair trial period.) After analyzing the data, it found two important results:
First, the Chapter 13 filing was not always the solution: 27.9 percent of filers lost their houses in foreclosure despite filing for bankruptcy. This is typically a result of poor cashflow. If job loss, or illness continues and there is not enough money coming into the household, the house will be lost regardless of filing bankruptcy or not. Many of the homeowners in this group will end up converting their cases to one under Chapter 7, so that they can wipe out any personal liability for the mortgage(s), as well as most of their other debts.
However, when compared with homeowners who did not file, debtors who filed for bankruptcy were able to stay in their homes for, on average, 27.7 additional months, over two years. This figure includes those who ended up losing their homes.
So, if you’re behind on mortgage payments, consider a Chapter 13–it may let you stay in your home a lot longer than other options.
Tuesday, November 15, 2011
San Diego Bankruptcy Law Firm to Offer Free Bankruptcy Services to San Diego Veterans.
Link: http://news.yahoo.com/san-diego-bankruptcy-law-firm-offer-free-bankruptcy-160845474.html
San Diego Bankruptcy Law Firm to Offer Free Bankruptcy Services to San Diego Veterans.
PRWeb – Wed, Nov 9, 2011...
San Diego Bankruptcy Law Firm is proud to announce that it has agreed to offer free bankruptcy services to San Diego veterans by partnering with Thomas Jefferson School of Law Veterans Legal Assistance Clinic.
San Diego, CA (PRWEB) November 09, 2011
San Diego Bankruptcy Law Firm, located in Mission Valley, is proud to announce that it has agreed to offer bankruptcy services to San Diego Veterans free of charge. San Diego Bankruptcy Law Firm has partnered with Thomas Jefferson School of Law Veterans Legal Assistance Clinic. The Veterans Clinic will pre-screen eligible veterans and refer those who qualify to San Diego Bankruptcy Law Firm.
San Diego Bankruptcy Law Firm was founded by Thomas Jefferson School of Law alumni Todd F. Williams and Scott M. Schlegel and is managed by Maureen A. Enmark. “We were looking for a way to give back to our community and veterans have been particularly affected by the downturn in the economy. This is our way of saying thank you for their service,” says bankruptcy attorney -Todd Williams.
The Veterans Clinic provides limited legal assistance, as well as full service legal representation, to the residents and alumni of Veterans Village of San Diego. Thomas Jefferson School of Law students represent the veterans under supervision of the law school faculty. Veterans Village is a highly successful, residential program that provides housing, substance abuse, mental health, and job training services to formerly homeless veterans.
Bankruptcy can help veterans by stopping foreclosure, eliminating debt and protecting assets. “Sometimes filing bankruptcy is all it takes to provide a little breathing room that will help veterans get back on track,” says bankrupcy lawyer -Scott Schlegel.
The Veterans Clinic will pre-screen potential candidates and refer those who qualify to San Diego Bankruptcy Law Firm. According to Steve Berenson, a professor at Thomas Jefferson School of Law, who runs the Veterans Clinic: “we hit our capacity fairly quickly each semester and have to turn away some cases that we might otherwise be able to handle.”
“This is not the first time San Diego Bankruptcy Law Firm has stepped up to help San Diegans in need,” says Maureen Enmark. When Kerry Steigerwalt’s Pacific Law Center closed its doors, San Diego Bankruptcy Law Firm offered to take over cases and charge the client only the remainder of what they owed to Pacific Law Center.
San Diego Bankruptcy Law Firm is a Better Business Bureau Accredited Business with an A+ rating. They are located in Mission Valley and can be reached at 877-GOBK619 or 619-260-1800. You can also visit their website at http://www.gobksandiego.com
San Diego Bankruptcy Law Firm to Offer Free Bankruptcy Services to San Diego Veterans.
PRWeb – Wed, Nov 9, 2011...
San Diego Bankruptcy Law Firm is proud to announce that it has agreed to offer free bankruptcy services to San Diego veterans by partnering with Thomas Jefferson School of Law Veterans Legal Assistance Clinic.
San Diego, CA (PRWEB) November 09, 2011
San Diego Bankruptcy Law Firm, located in Mission Valley, is proud to announce that it has agreed to offer bankruptcy services to San Diego Veterans free of charge. San Diego Bankruptcy Law Firm has partnered with Thomas Jefferson School of Law Veterans Legal Assistance Clinic. The Veterans Clinic will pre-screen eligible veterans and refer those who qualify to San Diego Bankruptcy Law Firm.
San Diego Bankruptcy Law Firm was founded by Thomas Jefferson School of Law alumni Todd F. Williams and Scott M. Schlegel and is managed by Maureen A. Enmark. “We were looking for a way to give back to our community and veterans have been particularly affected by the downturn in the economy. This is our way of saying thank you for their service,” says bankruptcy attorney -Todd Williams.
The Veterans Clinic provides limited legal assistance, as well as full service legal representation, to the residents and alumni of Veterans Village of San Diego. Thomas Jefferson School of Law students represent the veterans under supervision of the law school faculty. Veterans Village is a highly successful, residential program that provides housing, substance abuse, mental health, and job training services to formerly homeless veterans.
Bankruptcy can help veterans by stopping foreclosure, eliminating debt and protecting assets. “Sometimes filing bankruptcy is all it takes to provide a little breathing room that will help veterans get back on track,” says bankrupcy lawyer -Scott Schlegel.
The Veterans Clinic will pre-screen potential candidates and refer those who qualify to San Diego Bankruptcy Law Firm. According to Steve Berenson, a professor at Thomas Jefferson School of Law, who runs the Veterans Clinic: “we hit our capacity fairly quickly each semester and have to turn away some cases that we might otherwise be able to handle.”
“This is not the first time San Diego Bankruptcy Law Firm has stepped up to help San Diegans in need,” says Maureen Enmark. When Kerry Steigerwalt’s Pacific Law Center closed its doors, San Diego Bankruptcy Law Firm offered to take over cases and charge the client only the remainder of what they owed to Pacific Law Center.
San Diego Bankruptcy Law Firm is a Better Business Bureau Accredited Business with an A+ rating. They are located in Mission Valley and can be reached at 877-GOBK619 or 619-260-1800. You can also visit their website at http://www.gobksandiego.com
Thursday, October 20, 2011
Number of Californians entering foreclosure jumps in third quarter
Link to article: http://latimesblogs.latimes.com/money_co/2011/10/california-foreclosures.html?source=patrick.net
A big August surge in foreclosure actions by Bank of America and Bank of New York sent the number of California homeowners entering foreclosure to levels not seen in a year.
The third-quarter jump in notices of default, the first formal step in the foreclosure process, came after such filings had dropped to a three-year low earlier this year. Defaults were up 25.9% from the prior quarter, according to according to San Diego-based DataQuick, a real estate information service.
Banks have fired up the foreclosure-processing machinery in recent months after a long lull as they tried to negotiate settlements with regulators over faulty foreclosure practices. That slowdown created a backlog after a slew of investigations were launched following last year’s so-called robo-signing scandal, where banks used improper practices and documents to foreclose on troubled homeowners.
“Obviously, some lenders and loan servicers have begun to plow through their backlogs of delinquent loans more aggressively,” DataQuick president John Walsh said in a statement.
California properties received an estimated 71,275 notices of default during the three months ended Sept. 30, with some properties receiving multiple notices due to more than one loan. The majority of those loans were from the peak bubble years of 2005, 2006 and 2007, when lending practices were at their loosest, DataQuick said.
Separate third-quarter data released earlier this month by the Irvine-based firm RealtyTrac showed the number of homes entering foreclosure surged in states where repossessions take place largely outside of the courtroom. These nonjudicial states include California, Nevada, Arizona, Oregon and Washington.
Experts said that these Western states would experience any foreclosure surge first, as it is easier to get the process rolling again in these places.
While more California homes entered the foreclosure process in the third quarter, the number of homes taken back by banks continued to decline, according to DataQuick. The number of filed trustees deeds -- which are the papers that record the repossession of a home -- declined 8.4% from the prior quarter and dropped 14.3% from the third quarter of 2010. A total of 38,895 trustees deeds were filed in the third quarter.
Experts said that banks are probably waiting for some kind of settlement to be hammered out before really picking up the pace on foreclosures again. The increase in new California proceedings comes as talks over a broad foreclosure settlement by state attorneys general with the nation's five-largest mortgage servicers have experienced setbacks -- dragging on far longer than expected.
California recently stepped out of those discussions, declaring it would pursue its own path.
A big August surge in foreclosure actions by Bank of America and Bank of New York sent the number of California homeowners entering foreclosure to levels not seen in a year.
The third-quarter jump in notices of default, the first formal step in the foreclosure process, came after such filings had dropped to a three-year low earlier this year. Defaults were up 25.9% from the prior quarter, according to according to San Diego-based DataQuick, a real estate information service.
Banks have fired up the foreclosure-processing machinery in recent months after a long lull as they tried to negotiate settlements with regulators over faulty foreclosure practices. That slowdown created a backlog after a slew of investigations were launched following last year’s so-called robo-signing scandal, where banks used improper practices and documents to foreclose on troubled homeowners.
“Obviously, some lenders and loan servicers have begun to plow through their backlogs of delinquent loans more aggressively,” DataQuick president John Walsh said in a statement.
California properties received an estimated 71,275 notices of default during the three months ended Sept. 30, with some properties receiving multiple notices due to more than one loan. The majority of those loans were from the peak bubble years of 2005, 2006 and 2007, when lending practices were at their loosest, DataQuick said.
Separate third-quarter data released earlier this month by the Irvine-based firm RealtyTrac showed the number of homes entering foreclosure surged in states where repossessions take place largely outside of the courtroom. These nonjudicial states include California, Nevada, Arizona, Oregon and Washington.
Experts said that these Western states would experience any foreclosure surge first, as it is easier to get the process rolling again in these places.
While more California homes entered the foreclosure process in the third quarter, the number of homes taken back by banks continued to decline, according to DataQuick. The number of filed trustees deeds -- which are the papers that record the repossession of a home -- declined 8.4% from the prior quarter and dropped 14.3% from the third quarter of 2010. A total of 38,895 trustees deeds were filed in the third quarter.
Experts said that banks are probably waiting for some kind of settlement to be hammered out before really picking up the pace on foreclosures again. The increase in new California proceedings comes as talks over a broad foreclosure settlement by state attorneys general with the nation's five-largest mortgage servicers have experienced setbacks -- dragging on far longer than expected.
California recently stepped out of those discussions, declaring it would pursue its own path.
Monday, October 3, 2011
Facing Foreclosure? How Bankruptcy Can Help
Link to article: http://bankruptcy.findlaw.com/bankruptcy/is-bankruptcy-right/bankruptcy-foreclosure-help.html
Many Americans fall behind on their mortgage payments. Some lenders and mortgage companies may be willing to work out deals with the homeowners, such as a short sale or loan modification. Most lenders are not. In that case, the lender will most likely begin the foreclosure process, as set out in the mortgage contract. The foreclosure process involves the creditor repossessing and usually selling the house at a public auction. The proceeds from that auction are used to repay the mortgage and any legal costs.
The foreclosure process takes time. Most creditors do not begin foreclosing until the homeowner is two to three months behind on their mortgage payments. This gives the homeowner some time to consider alternatives to foreclosure, such as a loan forbearance, short sale, or deed in lieu of foreclosure. Should all of these alternatives fail, bankruptcy may help in several different ways.
How to Delay Foreclosure with an Automatic Stay:
Bankruptcy and foreclosure are both words that the average person dreads hearing. If you are facing foreclosure, however, bankruptcy can become a tool to help you keep your house.
Once you file bankruptcy, either Chapter 13 or Chapter 7, the court automatically issues an Order for Relief. This order grants you an "automatic stay", that directs your creditors to immediately cease their collection attempts, no matter what. So, if a foreclosure sale has been scheduled for your home, it will be postponed, by law, until the bankruptcy is finalized. This usually takes about three to four months.
There are two exceptions to this buying time rule:
If the Lender Files a Motion to Lift the Stay: Unfortunately, the lender can file a motion to lift the stay, which asks permission from the bankruptcy court to continue with the foreclosure sale. If this is granted, you may not receive the extra three to four months of time. However, bankruptcy normally still postpones the sale by about two months or more, or even longer if the lender does not act fast in filing the motion to lift the stay.
If the Foreclosure Notice has Already Been Filed: Most states have laws that require lenders to give homeowners a certain amount of notice before selling their property. A bankruptcy's automatic stay will NOT stop the clock on this advance notice. For instance, California law requires a lender to give the homeowner at least three months notice before selling the home. If a California resident receives this three month notice, and then files for bankruptcy two months later, the three month period would have passed after being in bankruptcy for only one month. As a result, the lender could file a motion to lift the stay and ask the court's permission to schedule the foreclosure.
How to Use Chapter 13 Bankruptcy to Help You:
What Chapter 13 Means for Bankruptcy and Foreclosure: Chapter 13 bankruptcy allows you to set up a repayment plan to pay off the past due payments, or "arrearage". You can propose the length of time for repayment, but keep in mind that you'll need sufficient income to pay BOTH your past due payments AND your current mortgage payments at the same time. So long as you make all of the required payments for the length of the repayment plan, you will avoid foreclosure and be able to stay in your home.
2nd and 3rd Mortgage Payments: Chapter 13 can also help eliminate payments on second or third mortgages. Typically, Chapter 13 entitles bankruptcy courts to recategorize second and third mortgages as unsecured debt. Under Chapter 13, unsecured debt takes last priority and usually does not have to be paid back. This recategorizing process is possible if your first mortgage is secured by the entire value of your home since this means that there is no remaining equity in your home to secure the second and third mortgages.
How to Use Chapter 7 Bankruptcy to Help You:
Chapter 7 bankruptcy also cancels all the debt secured by the home, including mortgages and home equity loans. Furthermore, Chapter 7 goes a step further. Thanks to a new law, Chapter 7 also forgives the homeowner for tax liability for losses the mortgage or home-improvement lender incurs as a result of the homeowner's default. This tax law applies to the 2007, 2008, and 2009 tax years. However, the new tax law does NOT cancel the homeowner's tax liability for the lender's losses at foreclosure if:
* The loan is not a mortgage or was not used for home improvements (like a loan used to pay for a vacation or automobile). The mortgage or home equity loan is secured by property other than your principal residence (like a vacation home or rental property).
Cautionary Notes about Chapter 7:
You Could Still Lose Your Home : All of this debt and tax liability forgiveness is great, but note that Chapter 7 will not keep you from losing your home. Chapter 7 forgives your debt, and that is all it does. When you enter into a mortgage, you are agreeing to use your home as a type of collateral in case you default on your payments. Chapter 13 enables you to pause action on that lien, while you catch up on your payments; hence, you may save your home. Chapter 7 forgives your debt, but it will not lift the lien, and hence will not lift the foreclosure on your home. Therefore, you will probably still lose your home.
You Could Lose Other Valuables: Because the courts typically want to make the creditors whole again from their loss, the bankruptcy trustee may award money from the sale of certain other valuables of yours to the creditors. For example, if you have a valuable wedding ring that's value exceeds the dollar amount you are allowed to keep during bankruptcy, under the "jewelry exemption", you could lose your wedding ring.
You May Not Be Eligible: The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 provides that anyone whose average gross income for the six-month period before the bankruptcy filing exceeds the state median income for the same sized household is ineligible for Chapter 7 bankruptcy. Additionally, if your income is sufficient enough for you to pay your living expenses AND fund a reasonable Chapter 13 repayment plan, you are also ineligible for Chapter 7.
How Bankruptcy Will Affect Your Credit:
Although bankruptcy and foreclosure are both extremely damaging to your credit, sometimes filing bankruptcy can be a wise choice when trying to rebuild credit. A foreclosure not only damages your credit score for years, but you are still left with the mortgage debt. Most mortgage creditors will not consider you for future mortgages if you have a foreclosure on your credit history. In contrast, bankruptcy lets you start fresh. It still is damages to your credit, but because you are debt free, you immediately begin rebuilding good credit sooner.
Although bankruptcy has a few negative consequences, and may not save you from losing your home, it can be the best option in starting fresh with no debt, getting back on your feet, and saving money.
Worst Case Scenario: Losing the House, but Also the Debt
Sometimes bankruptcy can't prevent the loss of your home, so you may start to think that a bankruptcy filing is pointless. There are other benefits to filing for bankruptcy besides the interplay between bankruptcy and foreclosure, however.
Even if you can't keep your home, bankruptcy can help to shovel out from under mortgage debts and tax liability. This is an important first step towards getting back on your feet. Bankruptcy can also help you to put away money for the tough times ahead.
Many Americans fall behind on their mortgage payments. Some lenders and mortgage companies may be willing to work out deals with the homeowners, such as a short sale or loan modification. Most lenders are not. In that case, the lender will most likely begin the foreclosure process, as set out in the mortgage contract. The foreclosure process involves the creditor repossessing and usually selling the house at a public auction. The proceeds from that auction are used to repay the mortgage and any legal costs.
The foreclosure process takes time. Most creditors do not begin foreclosing until the homeowner is two to three months behind on their mortgage payments. This gives the homeowner some time to consider alternatives to foreclosure, such as a loan forbearance, short sale, or deed in lieu of foreclosure. Should all of these alternatives fail, bankruptcy may help in several different ways.
How to Delay Foreclosure with an Automatic Stay:
Bankruptcy and foreclosure are both words that the average person dreads hearing. If you are facing foreclosure, however, bankruptcy can become a tool to help you keep your house.
Once you file bankruptcy, either Chapter 13 or Chapter 7, the court automatically issues an Order for Relief. This order grants you an "automatic stay", that directs your creditors to immediately cease their collection attempts, no matter what. So, if a foreclosure sale has been scheduled for your home, it will be postponed, by law, until the bankruptcy is finalized. This usually takes about three to four months.
There are two exceptions to this buying time rule:
If the Lender Files a Motion to Lift the Stay: Unfortunately, the lender can file a motion to lift the stay, which asks permission from the bankruptcy court to continue with the foreclosure sale. If this is granted, you may not receive the extra three to four months of time. However, bankruptcy normally still postpones the sale by about two months or more, or even longer if the lender does not act fast in filing the motion to lift the stay.
If the Foreclosure Notice has Already Been Filed: Most states have laws that require lenders to give homeowners a certain amount of notice before selling their property. A bankruptcy's automatic stay will NOT stop the clock on this advance notice. For instance, California law requires a lender to give the homeowner at least three months notice before selling the home. If a California resident receives this three month notice, and then files for bankruptcy two months later, the three month period would have passed after being in bankruptcy for only one month. As a result, the lender could file a motion to lift the stay and ask the court's permission to schedule the foreclosure.
How to Use Chapter 13 Bankruptcy to Help You:
What Chapter 13 Means for Bankruptcy and Foreclosure: Chapter 13 bankruptcy allows you to set up a repayment plan to pay off the past due payments, or "arrearage". You can propose the length of time for repayment, but keep in mind that you'll need sufficient income to pay BOTH your past due payments AND your current mortgage payments at the same time. So long as you make all of the required payments for the length of the repayment plan, you will avoid foreclosure and be able to stay in your home.
2nd and 3rd Mortgage Payments: Chapter 13 can also help eliminate payments on second or third mortgages. Typically, Chapter 13 entitles bankruptcy courts to recategorize second and third mortgages as unsecured debt. Under Chapter 13, unsecured debt takes last priority and usually does not have to be paid back. This recategorizing process is possible if your first mortgage is secured by the entire value of your home since this means that there is no remaining equity in your home to secure the second and third mortgages.
How to Use Chapter 7 Bankruptcy to Help You:
Chapter 7 bankruptcy also cancels all the debt secured by the home, including mortgages and home equity loans. Furthermore, Chapter 7 goes a step further. Thanks to a new law, Chapter 7 also forgives the homeowner for tax liability for losses the mortgage or home-improvement lender incurs as a result of the homeowner's default. This tax law applies to the 2007, 2008, and 2009 tax years. However, the new tax law does NOT cancel the homeowner's tax liability for the lender's losses at foreclosure if:
* The loan is not a mortgage or was not used for home improvements (like a loan used to pay for a vacation or automobile). The mortgage or home equity loan is secured by property other than your principal residence (like a vacation home or rental property).
Cautionary Notes about Chapter 7:
You Could Still Lose Your Home : All of this debt and tax liability forgiveness is great, but note that Chapter 7 will not keep you from losing your home. Chapter 7 forgives your debt, and that is all it does. When you enter into a mortgage, you are agreeing to use your home as a type of collateral in case you default on your payments. Chapter 13 enables you to pause action on that lien, while you catch up on your payments; hence, you may save your home. Chapter 7 forgives your debt, but it will not lift the lien, and hence will not lift the foreclosure on your home. Therefore, you will probably still lose your home.
You Could Lose Other Valuables: Because the courts typically want to make the creditors whole again from their loss, the bankruptcy trustee may award money from the sale of certain other valuables of yours to the creditors. For example, if you have a valuable wedding ring that's value exceeds the dollar amount you are allowed to keep during bankruptcy, under the "jewelry exemption", you could lose your wedding ring.
You May Not Be Eligible: The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 provides that anyone whose average gross income for the six-month period before the bankruptcy filing exceeds the state median income for the same sized household is ineligible for Chapter 7 bankruptcy. Additionally, if your income is sufficient enough for you to pay your living expenses AND fund a reasonable Chapter 13 repayment plan, you are also ineligible for Chapter 7.
How Bankruptcy Will Affect Your Credit:
Although bankruptcy and foreclosure are both extremely damaging to your credit, sometimes filing bankruptcy can be a wise choice when trying to rebuild credit. A foreclosure not only damages your credit score for years, but you are still left with the mortgage debt. Most mortgage creditors will not consider you for future mortgages if you have a foreclosure on your credit history. In contrast, bankruptcy lets you start fresh. It still is damages to your credit, but because you are debt free, you immediately begin rebuilding good credit sooner.
Although bankruptcy has a few negative consequences, and may not save you from losing your home, it can be the best option in starting fresh with no debt, getting back on your feet, and saving money.
Worst Case Scenario: Losing the House, but Also the Debt
Sometimes bankruptcy can't prevent the loss of your home, so you may start to think that a bankruptcy filing is pointless. There are other benefits to filing for bankruptcy besides the interplay between bankruptcy and foreclosure, however.
Even if you can't keep your home, bankruptcy can help to shovel out from under mortgage debts and tax liability. This is an important first step towards getting back on your feet. Bankruptcy can also help you to put away money for the tough times ahead.
Wednesday, September 28, 2011
Bill to Improve U.S. Trustee’s Power To Protect Homeowners in Bankruptcy Revealed
by Elizabeth Brennon on Sep 23, 2011
Link to article: http://www.newsjunkyjournal.com/bill-to-improve-u-s-trustees-power-to-protect-homeowners-in-bankruptcy-revealed/2519663/
Just last year, more than one million Americans lost homes to foreclosure, and the foreclosure crisis is only expected to worsen. Distressed homeowners facing bankruptcy and foreclosure deserve to be treated fairly. Banks should not attempt to profit from these hard times with improper mortgage fees and other types of fraud. Apparently, however, this is exactly what may have been happening.
The United States Trustee Program and Executive Office of the U.S. Bankruptcy Trustee (EOUST) are part of the Department of Justice. The U.S. trustee oversees the administration of federal bankruptcy cases and works to protect the integrity of the system. Recently, EOUST reviewed 10,000 proofs of claim filed with bankruptcy courts by mortgagees or mortgage servicers.
Errors found in the claims included mortgage servicers charging unsubstantiated fees, overstating the amount homeowners owe on properties, and providing inadequate documentation to the bankruptcy court.
The U.S. trustee discovered that the errors in claims submitted by mortgage providers were both more serious and more frequent than the mortgage servicing industry previously asserted. Specifically, mortgage servicers claimed such errors occurred in less than one percent of bankruptcy cases. EOUST, however, discovered errors were occurring at 10 times that rate.
Although the U.S. Trustee Program attempted to combat these patterns of defective and fraudulent filings, those efforts have been slowed by legal challenges to the trustee’s power and authority to take such actions. Mortgage servicers are challenging the trustee’s ability to act on bankruptcy filers’ behalf by asking for additional documents or requesting sanctions for incorrect or fraudulent filings. Essentially mortgage servicers don’t believe the U.S. Trustee has the power to hold them accountable for their actions.
The Fighting Fraud in Bankruptcy Act
These legal challenges by mortgage servicers prompted three Senators, Patrick Leahy (D-Vt), Richard Blumenthal (D-Conn.), and Sheldon Whitehouse (D-R.I.) to sponsor legislation to strengthen and clarify the U.S. Trustee’s power to protect homeowners in the bankruptcy system from fraud. In late May the Fighting Fraud in Bankruptcy Act of 2011 (S. 1054) was introduced on the Senate floor, and the bill has now been referred to committee.
Senator Leahy explained the importance of the bill this way: “As Congress looks at ways to mitigate the foreclosure crisis to reduce its impact on homeowners and the economy, I hope all Senators can agree that the foreclosure process for Americans should be a fair one and one in which there is accountability for fraud or other misconduct. And I hope we can all agree that the integrity of our judicial system is something worth protecting.”
The Fighting Fraud in Bankruptcy Act has four main goals. First and foremost, it clarifies that the U.S. Trustee has the power and duty to take action when abuse of the bankruptcy process by creditors is detected.
In conjunction with this power, the Act authorizes the trustee to conduct audits and investigations to confirm creditors are acting in accordance with the law. If fraud or misconduct is detected, the Act allows the bankruptcy court to correct errors or impose sanctions for misconduct. These actions can be taken in response to a motion by the trustee, or the bankruptcy court may make its own motion.
Finally, the Act mandates that mortgage servicers certify under penalty of perjury that foreclosure actions against deployed and active duty military homeowners comply with the Servicemembers Civil Relief Act (SCRA). The SCRA serves to protect those in the military by staying foreclosure actions if they are currently deployed, and requiring manageable and stable interest rates for military servicemembers. A report by the Government Accountability Office (GAO) found that among only two of the 14 large mortgage servicing organizations that supplied data to regulators, 50 foreclosure cases violated the protections of the SCRA.
If the Fighting Fraud in Bankruptcy Act passes into law it will hopefully clarify and strengthen the U.S. Trustee Program’s power to remedy creditor abuse. This may prevent mortgage servicers from unfairly profiting from homeowners facing bankruptcy and foreclosure by submitting incorrect or fraudulent claims.
If you are overwhelmed by debt, or struggling to keep your home, contact an experienced personal bankruptcy and foreclosure attorney. A knowledgeable lawyer will work to protect your rights and advocate on your behalf throughout any bankruptcy or foreclosure proceedings.
Link to article: http://www.newsjunkyjournal.com/bill-to-improve-u-s-trustees-power-to-protect-homeowners-in-bankruptcy-revealed/2519663/
Just last year, more than one million Americans lost homes to foreclosure, and the foreclosure crisis is only expected to worsen. Distressed homeowners facing bankruptcy and foreclosure deserve to be treated fairly. Banks should not attempt to profit from these hard times with improper mortgage fees and other types of fraud. Apparently, however, this is exactly what may have been happening.
The United States Trustee Program and Executive Office of the U.S. Bankruptcy Trustee (EOUST) are part of the Department of Justice. The U.S. trustee oversees the administration of federal bankruptcy cases and works to protect the integrity of the system. Recently, EOUST reviewed 10,000 proofs of claim filed with bankruptcy courts by mortgagees or mortgage servicers.
Errors found in the claims included mortgage servicers charging unsubstantiated fees, overstating the amount homeowners owe on properties, and providing inadequate documentation to the bankruptcy court.
The U.S. trustee discovered that the errors in claims submitted by mortgage providers were both more serious and more frequent than the mortgage servicing industry previously asserted. Specifically, mortgage servicers claimed such errors occurred in less than one percent of bankruptcy cases. EOUST, however, discovered errors were occurring at 10 times that rate.
Although the U.S. Trustee Program attempted to combat these patterns of defective and fraudulent filings, those efforts have been slowed by legal challenges to the trustee’s power and authority to take such actions. Mortgage servicers are challenging the trustee’s ability to act on bankruptcy filers’ behalf by asking for additional documents or requesting sanctions for incorrect or fraudulent filings. Essentially mortgage servicers don’t believe the U.S. Trustee has the power to hold them accountable for their actions.
The Fighting Fraud in Bankruptcy Act
These legal challenges by mortgage servicers prompted three Senators, Patrick Leahy (D-Vt), Richard Blumenthal (D-Conn.), and Sheldon Whitehouse (D-R.I.) to sponsor legislation to strengthen and clarify the U.S. Trustee’s power to protect homeowners in the bankruptcy system from fraud. In late May the Fighting Fraud in Bankruptcy Act of 2011 (S. 1054) was introduced on the Senate floor, and the bill has now been referred to committee.
Senator Leahy explained the importance of the bill this way: “As Congress looks at ways to mitigate the foreclosure crisis to reduce its impact on homeowners and the economy, I hope all Senators can agree that the foreclosure process for Americans should be a fair one and one in which there is accountability for fraud or other misconduct. And I hope we can all agree that the integrity of our judicial system is something worth protecting.”
The Fighting Fraud in Bankruptcy Act has four main goals. First and foremost, it clarifies that the U.S. Trustee has the power and duty to take action when abuse of the bankruptcy process by creditors is detected.
In conjunction with this power, the Act authorizes the trustee to conduct audits and investigations to confirm creditors are acting in accordance with the law. If fraud or misconduct is detected, the Act allows the bankruptcy court to correct errors or impose sanctions for misconduct. These actions can be taken in response to a motion by the trustee, or the bankruptcy court may make its own motion.
Finally, the Act mandates that mortgage servicers certify under penalty of perjury that foreclosure actions against deployed and active duty military homeowners comply with the Servicemembers Civil Relief Act (SCRA). The SCRA serves to protect those in the military by staying foreclosure actions if they are currently deployed, and requiring manageable and stable interest rates for military servicemembers. A report by the Government Accountability Office (GAO) found that among only two of the 14 large mortgage servicing organizations that supplied data to regulators, 50 foreclosure cases violated the protections of the SCRA.
If the Fighting Fraud in Bankruptcy Act passes into law it will hopefully clarify and strengthen the U.S. Trustee Program’s power to remedy creditor abuse. This may prevent mortgage servicers from unfairly profiting from homeowners facing bankruptcy and foreclosure by submitting incorrect or fraudulent claims.
If you are overwhelmed by debt, or struggling to keep your home, contact an experienced personal bankruptcy and foreclosure attorney. A knowledgeable lawyer will work to protect your rights and advocate on your behalf throughout any bankruptcy or foreclosure proceedings.
Monday, September 26, 2011
Renting to the Foreclosed
Renting to the Foreclosed
By Marilyn Kennedy Melia
Published September 26, 2011 | Bankrate.com
Article link: http://www.foxbusiness.com/personal-finance/2011/09/26/renting-to-foreclosed/
Investors are buying foreclosed single-family homes and renting them out -- and they often rent them to families who have lost homes to foreclosure.
"Families that have gotten used to single-family property living typically prefer renting a home as opposed to an apartment," says Evan Gentry, president and CEO of G8 Capital, a Ladera Ranch, Calif., private equity fund that has bought 3,000 homes, leasing many to renters.
Investors -- individuals and large-scale funds -- are buying with the aim of offering the houses for rent because selling at a quick profit isn't possible.
Families who have been through foreclosure are not alone in preferring a backyard to an apartment courtyard, says Claire Williams, 2011 president of the Michigan Association of Realtors. "Transferees are looking to rent the home they've left and rent another where they're relocating. They don't want to sell because of the decline in values," Williams says.
Finding Properties
Neighborhoods that have been hit hard by foreclosure or big price drops are especially likely to have single-family homes for rent, says Mike Bowman, owner of Century 21 Mike Bowman, in Dallas.
Moreover, there could be an increase in single-family homes for rent. In August, the Obama administration called for studying how homes owned by Fannie Mae and Freddie Mac could be rented.
One idea being studied, says Josh Fuhrman, senior vice president of the nonprofit Homeownership Preservation Foundation, is for banks to acquire a property and quickly sell to an investor who could then rent it out -- possibly to the family who never left the house, even after foreclosure proceedings began.
Many of the current homes for rent are managed and listed by real estate firms, Bowman says. Additionally, the same channels that list apartments, such as Craigslist.com, are likely to advertise homes for rent, says Aaron Murray, vice president of G8Capital.
Meeting Landlords' Requirements
Investors buying vacant properties often know families recovering from foreclosure are a significant force in the market, and many have adjusted their requirements for eligible tenants. "A careful review of someone's credit history can often help landlords determine the difference between someone caught upside down on a home or who had a temporary job loss versus someone who has a long history of late or nonpayments," Murray says.
Bowman says he advises renters to prepare a letter explaining the circumstances that led to foreclosure and how they have recovered financially.
Some landlords "still insist on a credit score of 720," says Williams. But in some areas, she says, landlords realize the market demands more flexible standards.
Setting Rent Rates
With today's low mortgage interest rates, it's possible foreclosed families could pay more in rent than someone with good credit and cash for a down payment would pay for his or her monthly mortgage payment, says Christopher Thornberg, founding principal of Beacon Economics, a Los Angeles real estate and economic consulting firm.
Many families, not just those who have been through foreclosure, says Williams, find that renting is the only financially viable option for them -- either because they can't sell a former home, have poor credit or fear further home price declines.
Planning to Purchase?
When house prices stabilize, Gentry says, their firm and others might offer plans for renters to buy the houses they occupy.
One such method, called "lease option to buy," involves charging a renter a premium on top of the regular rent rate. The premium, which may be $100 or more monthly, guarantees the renter can buy the home at a certain price at a certain date -- for example, two years after the contract is signed.
Another method is the "contract purchase" whereby the renter pays the investor holding the house a mortgage payment for a few years, with the agreement that in a certain number of years, such as three or four, the renter will get a mortgage from a regular lender and be able to assume ownership from the investor. The mortgage payments paid during the contract period are used to reduce the purchase price when the renter gets regular financing.
"It depends on individual circumstances whether these plans will work for the family," says Barry Zigas, housing analyst for the Consumer Federation of America.
For one thing, "people often misjudge that they'll be in a house for a certain amount of time. In this volatile job market, you could find you need to move," Zigas says. He believes individuals are in a poor position to predict what house prices will be.
Moreover, he likes to see part of the premium on a lease option contract to be put in escrow, allowing the money to be used toward the down payment on the purchase.
Individuals should call a housing counselor, says Fuhrman, to analyze whether these purchase plans are viable for them.
By Marilyn Kennedy Melia
Published September 26, 2011 | Bankrate.com
Article link: http://www.foxbusiness.com/personal-finance/2011/09/26/renting-to-foreclosed/
Investors are buying foreclosed single-family homes and renting them out -- and they often rent them to families who have lost homes to foreclosure.
"Families that have gotten used to single-family property living typically prefer renting a home as opposed to an apartment," says Evan Gentry, president and CEO of G8 Capital, a Ladera Ranch, Calif., private equity fund that has bought 3,000 homes, leasing many to renters.
Investors -- individuals and large-scale funds -- are buying with the aim of offering the houses for rent because selling at a quick profit isn't possible.
Families who have been through foreclosure are not alone in preferring a backyard to an apartment courtyard, says Claire Williams, 2011 president of the Michigan Association of Realtors. "Transferees are looking to rent the home they've left and rent another where they're relocating. They don't want to sell because of the decline in values," Williams says.
Finding Properties
Neighborhoods that have been hit hard by foreclosure or big price drops are especially likely to have single-family homes for rent, says Mike Bowman, owner of Century 21 Mike Bowman, in Dallas.
Moreover, there could be an increase in single-family homes for rent. In August, the Obama administration called for studying how homes owned by Fannie Mae and Freddie Mac could be rented.
One idea being studied, says Josh Fuhrman, senior vice president of the nonprofit Homeownership Preservation Foundation, is for banks to acquire a property and quickly sell to an investor who could then rent it out -- possibly to the family who never left the house, even after foreclosure proceedings began.
Many of the current homes for rent are managed and listed by real estate firms, Bowman says. Additionally, the same channels that list apartments, such as Craigslist.com, are likely to advertise homes for rent, says Aaron Murray, vice president of G8Capital.
Meeting Landlords' Requirements
Investors buying vacant properties often know families recovering from foreclosure are a significant force in the market, and many have adjusted their requirements for eligible tenants. "A careful review of someone's credit history can often help landlords determine the difference between someone caught upside down on a home or who had a temporary job loss versus someone who has a long history of late or nonpayments," Murray says.
Bowman says he advises renters to prepare a letter explaining the circumstances that led to foreclosure and how they have recovered financially.
Some landlords "still insist on a credit score of 720," says Williams. But in some areas, she says, landlords realize the market demands more flexible standards.
Setting Rent Rates
With today's low mortgage interest rates, it's possible foreclosed families could pay more in rent than someone with good credit and cash for a down payment would pay for his or her monthly mortgage payment, says Christopher Thornberg, founding principal of Beacon Economics, a Los Angeles real estate and economic consulting firm.
Many families, not just those who have been through foreclosure, says Williams, find that renting is the only financially viable option for them -- either because they can't sell a former home, have poor credit or fear further home price declines.
Planning to Purchase?
When house prices stabilize, Gentry says, their firm and others might offer plans for renters to buy the houses they occupy.
One such method, called "lease option to buy," involves charging a renter a premium on top of the regular rent rate. The premium, which may be $100 or more monthly, guarantees the renter can buy the home at a certain price at a certain date -- for example, two years after the contract is signed.
Another method is the "contract purchase" whereby the renter pays the investor holding the house a mortgage payment for a few years, with the agreement that in a certain number of years, such as three or four, the renter will get a mortgage from a regular lender and be able to assume ownership from the investor. The mortgage payments paid during the contract period are used to reduce the purchase price when the renter gets regular financing.
"It depends on individual circumstances whether these plans will work for the family," says Barry Zigas, housing analyst for the Consumer Federation of America.
For one thing, "people often misjudge that they'll be in a house for a certain amount of time. In this volatile job market, you could find you need to move," Zigas says. He believes individuals are in a poor position to predict what house prices will be.
Moreover, he likes to see part of the premium on a lease option contract to be put in escrow, allowing the money to be used toward the down payment on the purchase.
Individuals should call a housing counselor, says Fuhrman, to analyze whether these purchase plans are viable for them.
Tuesday, September 20, 2011
If you are facing foreclosure, San Diego Bankruptcy Law Firm can help protect your home.
It is common for people to fall behind on their mortgage payments. If you find yourself in this position, there are ways you can find relief.
Filing for bankruptcy can delay foreclosure.
When a person files for Chapter 13 or Chapter 7 bankruptcy, they usually receive immediate protection from creditors through a special court order known as an “automatic stay”. This means creditors must immediately stop their collection attempts.
If a foreclosure sale has been scheduled for your home, it will be postponed until the bankruptcy is finalized. Sometimes there are exceptions to this rule, so it is important to contact San Diego Bankruptcy Law Firm so we may discuss all of your options. Your initial consultation is free.
Filing for Chapter 13 bankruptcy can help you avoid foreclosure and keep you in your home. Chapter 13 bankruptcy allows you to set up a repayment plan to pay off the past due payments.
A short sale can stop foreclosure.
It is important to remember a short sale can stop foreclosure, but it also has serious tax and credit consequences. In addition, some lenders and mortgage companies will refuse to do a short sale. Filing for bankruptcy can help you keep your house.
A short sale is when lender agrees to take less than the total amount owed on the loan in a voluntary sale to a third party. But a short sale is anything but short—it is usually a very lengthy and complex process.
Contact San Diego Bankruptcy Law Firm to help you through this process or negotiate a short sale settlement.
Filing for bankruptcy can delay foreclosure.
When a person files for Chapter 13 or Chapter 7 bankruptcy, they usually receive immediate protection from creditors through a special court order known as an “automatic stay”. This means creditors must immediately stop their collection attempts.
If a foreclosure sale has been scheduled for your home, it will be postponed until the bankruptcy is finalized. Sometimes there are exceptions to this rule, so it is important to contact San Diego Bankruptcy Law Firm so we may discuss all of your options. Your initial consultation is free.
Filing for Chapter 13 bankruptcy can help you avoid foreclosure and keep you in your home. Chapter 13 bankruptcy allows you to set up a repayment plan to pay off the past due payments.
A short sale can stop foreclosure.
It is important to remember a short sale can stop foreclosure, but it also has serious tax and credit consequences. In addition, some lenders and mortgage companies will refuse to do a short sale. Filing for bankruptcy can help you keep your house.
A short sale is when lender agrees to take less than the total amount owed on the loan in a voluntary sale to a third party. But a short sale is anything but short—it is usually a very lengthy and complex process.
Contact San Diego Bankruptcy Law Firm to help you through this process or negotiate a short sale settlement.
San Diego default filings surge in August
San Diego default filings surge in August
The month-to-month increase was largely due to two major banks
By Lily Leung, Reporter - Real estate
Link to article: http://www.signonsandiego.com/news/2011/sep/19/foreclosure-numbers/
Monday, September 19, 2011 at 12:56 p.m.
SAN DIEGO COUNTY — The number of default notices, the first step in the foreclosure process, ballooned in August, largely due to activity from Bank of New York Mellon and Bank of America, figures from La Jolla-based DataQuick show.
Bank of New York Mellon filings in San Diego County increased from 76 in July to 403 in August, or 430 percent. Meanwhile, Bank of America pushed through more than two times as many defaults during that same time period.
The two lenders, known as beneficiaries in public records, accounted for the bulk of the county’s most recent month-to-month increase. Notices rose from 1,274 in July to 2,094 in August, or 64.4 percent. That’s the largest month-to-month percentage increase since December 2008.
Similar jumps were evident throughout the state, including Los Angeles and Orange counties.
"It appears they're working through their backlogs of delinquent loans," said DataQuick analyst Andrew LePage. "But why and why all of a sudden. It's not clear."
In a statement, Bank of America spokeswoman Jumana Bauwens said the company has been seeing "continued increases" in foreclosure referrals in several parts of the U.S. due to the backlog of foreclosures that were on hold in late 2010 and early 2011.
What does August's sudden upsurge in default notices mean for county home values?
That also is unclear, said LePage of DataQuick.
"We don't know the magnitude and duration" of filings in the months ahead, he said.
The number of trustee deeds, which signal a foreclosure, also increased last month. There were 835 foreclosures in August, up 4.6 percent from July.
The month-to-month increase was largely due to two major banks
By Lily Leung, Reporter - Real estate
Link to article: http://www.signonsandiego.com/news/2011/sep/19/foreclosure-numbers/
Monday, September 19, 2011 at 12:56 p.m.
SAN DIEGO COUNTY — The number of default notices, the first step in the foreclosure process, ballooned in August, largely due to activity from Bank of New York Mellon and Bank of America, figures from La Jolla-based DataQuick show.
Bank of New York Mellon filings in San Diego County increased from 76 in July to 403 in August, or 430 percent. Meanwhile, Bank of America pushed through more than two times as many defaults during that same time period.
The two lenders, known as beneficiaries in public records, accounted for the bulk of the county’s most recent month-to-month increase. Notices rose from 1,274 in July to 2,094 in August, or 64.4 percent. That’s the largest month-to-month percentage increase since December 2008.
Similar jumps were evident throughout the state, including Los Angeles and Orange counties.
"It appears they're working through their backlogs of delinquent loans," said DataQuick analyst Andrew LePage. "But why and why all of a sudden. It's not clear."
In a statement, Bank of America spokeswoman Jumana Bauwens said the company has been seeing "continued increases" in foreclosure referrals in several parts of the U.S. due to the backlog of foreclosures that were on hold in late 2010 and early 2011.
What does August's sudden upsurge in default notices mean for county home values?
That also is unclear, said LePage of DataQuick.
"We don't know the magnitude and duration" of filings in the months ahead, he said.
The number of trustee deeds, which signal a foreclosure, also increased last month. There were 835 foreclosures in August, up 4.6 percent from July.
Friday, June 24, 2011
Kerry Steigerwalt's Broke Law Firm Trying to Make Deals -SAN DIEGO READER
Kerry Steigerwalt's Broke Law Firm Trying to Make Deals
By Don Bauder | Published Wednesday, June 22, 2011 SAN DIEGO READER
link to Article: http://www.sandiegoreader.com/news/2011/jun/22/citylights1-kerry-steigerwalt/
1. David Weil: Former Steigerwalt crony has started a new bankruptcy firm. 2. Kerry Steigerwalt: Thousands of his clients paid but received no service. 3. Gary Sehnert: Local attorney helped stiffed Steigerwalt client.
On March 24, San Diegan Laura Perry received a letter from Kerry Steigerwalt’s Pacific Law Center, once San Diego’s best known, most notorious, and most aggressively advertised law firm. Perry, 73, had paid $2000 to the firm to handle a Chapter 7 bankruptcy for her. She had received no service — one of thousands who allegedly paid money up front but got little or no legal help.
The Steigerwalt law firm, which went out of business last year, offered her a refund amount of $252, to be paid in installments. “The agreed amount will be paid, but [the firm] is financially unable to pay it ‘today,’” lamented the letter, which included a check for $42 signed by Steigerwalt. Perry’s attorney Gary Sehnert, who successfully handled her bankruptcy after Steigerwalt’s lawyers failed to act, advised her not to cash the check. “Once you do that, then they can argue that you agreed to the settlement,” says Sehnert, who did not charge her for any of his work.
On April 18, Perry got a second letter, fretting that the law firm’s “financial condition has worsened.” She would not get the promised April check. She also got a solicitation phone call from one Joe Rivera, representing the law firm, who wanted her to take a lowball settlement of $105. “I said that is a rip-off,” says Perry. “Every time I think of [this] it makes my blood pressure rise.” Rivera would not reply to my questions.
Pacific Law Center was founded by Larry Majors, a nonlawyer convicted felon who vamoosed from Texas after a judge called a law firm he operated “a borderline criminal enterprise,” according to a 2009 San Diego lawsuit, since dismissed. After getting into trouble running several law firms, Majors set up Pacific Law Center in 1993 with his son Austin Majors, also a nonlawyer, as executive director, according to the lawsuit. Steigerwalt, who had been with the public defender’s office for 6 years and in private practice for 18 years, took over the firm in 2008 and attached his name to the front. The firm specialized in drunk driving, personal injury, defective product, loan modification, and bankruptcy cases. Taking over the Pacific Law Center “was the worst decision of my life,” says Steigerwalt, who once again has his own firm. “It cost me millions.”
That April 18 letter to Laura Perry stated, “Vendors and creditors of [the defunct legal institution] claim the firm owes them more than $3 million.”
The sum could be larger than that. Steigerwalt hired the Chicago law office of J. Kevin Benjamin, who set up a Mission Valley office. Steigerwalt pays Benjamin $250 to take over each client who has not been provided service. Benjamin explains to the people that he is not replacing the shuttered law firm. He will take the case himself for a very low fee of, say, $395 for a Chapter 7.
Benjamin says he saw the closed law firm’s records: there were more than 6000 people who had paid some money and not received their service — a number that Steigerwalt, although conceding the firm is insolvent, says is too high. “Some had paid in full, some had not,” Benjamin says. Depending on the average amount shelled out, the money owed to nonserviced clients could exceed $3 million, he says. And that doesn’t include vendors and other creditors.
San Diego attorney Scott Harris feels sorry for “all the people that got screwed, that paid $1500 to $3000 and never got service. Lawyers at [the law firm] had retainer agreements that permitted them to get out of the liability responsibility on the cases they were handling.”
In his frequent trips to San Diego, Benjamin and an assistant handle “70 to 100 people a week who had paid and not gotten services,” he says, asserting that he is losing money on the arrangement. Initially, “people were calling every five minutes. I had to get a separate receptionist and a different line. Some were saying I was a crook. I said, ‘I don’t have your money.’” Clients thought that the up-front fees paid to Kerry Steigerwalt’s Pacific Law Center were paid to Benjamin, and that wasn’t so. He must stress to each cuckolded client that he is not taking over the Steigerwalt firm or the clients’ files. He has to begin every case anew. “This has been going on for a year, and I am debating if I will do it anymore.”
Benjamin says that investigators from the U.S. trustee’s office in San Diego, which oversees bankruptcy cases, have been looking into Steigerwalt customers who did not get served. The probers went over Benjamin’s files and interviewed one of his assistants. “They have their own investigation going of Kerry Steigerwalt,” Benjamin says. “They were asking us about Kerry and about our own operations.” Also, Benjamin says he talked briefly with an agent of the Federal Bureau of Investigation who later checked with Benjamin’s lawyer. But the subject of those inquiries was loan modifications, in which Benjamin is not involved. Steigerwalt’s firm got into the controversial loan modification business.
Steigerwalt says he is not aware of any Federal Bureau of Investigation probe. As is traditional, the agency will not confirm or deny the existence of a probe. The U.S. trustee’s office, while not confirming a formal investigation, did reveal that it has been actively involved, stating: “The U.S. Trustee’s office responded to inquiries from individuals who had concerns about their legal representation in bankruptcy cases after the closure of Kerry Steigerwalt’s Pacific Law Center.”
“Benjamin is making a grand effort to do what is right,” says Sehnert. However, “It would be really nice to have an accounting of that $3 million.” He notes that the check that Laura Perry received was from “Kerry Steigerwalt’s Pacific Law Center Client Trust Account.” Money in client trust accounts belongs to clients, not to the lawyers, who should follow strict accounting procedures, he says. However, a former member of the firm says that in this instance the money paid up front did not have to go into client trust accounts.
Meanwhile, a firm named Golden State Law Group is now advertising heavily, Ã la Steigerwalt’s deceased enterprise. Golden State’s marketing director is Austin Majors, former executive director of Pacific Law Center. After Steigerwalt’s firm closed, Golden State was launched by two former members of that concern, Don Bokovoy, who is going into semiretirement, and David Weil. On its website, Golden State says it is responding to “unanswered complaints with Kerry Steigerwalt’s Pacific Law Center. Many of Mr. Steigerwalt’s clients have called Golden State Law Group seeking help with their bankruptcy case after complaining to Mr. Steigerwalt that they paid him a retainer to file their bankruptcies and he has, in many cases, failed to do so.” Those who unsuccessfully went to Benjamin’s Chicago law firm “felt cheated and scammed,” says the website.
Steigerwalt says he is disappointed by the criticism, given Weil’s and Bokovoy’s “involvement in the bankruptcy department at [Kerry Steigerwalt’s Pacific Law Center].”
Benjamin is more succinct: Golden State “can go fk themselves
By Don Bauder | Published Wednesday, June 22, 2011 SAN DIEGO READER
link to Article: http://www.sandiegoreader.com/news/2011/jun/22/citylights1-kerry-steigerwalt/
1. David Weil: Former Steigerwalt crony has started a new bankruptcy firm. 2. Kerry Steigerwalt: Thousands of his clients paid but received no service. 3. Gary Sehnert: Local attorney helped stiffed Steigerwalt client.
On March 24, San Diegan Laura Perry received a letter from Kerry Steigerwalt’s Pacific Law Center, once San Diego’s best known, most notorious, and most aggressively advertised law firm. Perry, 73, had paid $2000 to the firm to handle a Chapter 7 bankruptcy for her. She had received no service — one of thousands who allegedly paid money up front but got little or no legal help.
The Steigerwalt law firm, which went out of business last year, offered her a refund amount of $252, to be paid in installments. “The agreed amount will be paid, but [the firm] is financially unable to pay it ‘today,’” lamented the letter, which included a check for $42 signed by Steigerwalt. Perry’s attorney Gary Sehnert, who successfully handled her bankruptcy after Steigerwalt’s lawyers failed to act, advised her not to cash the check. “Once you do that, then they can argue that you agreed to the settlement,” says Sehnert, who did not charge her for any of his work.
On April 18, Perry got a second letter, fretting that the law firm’s “financial condition has worsened.” She would not get the promised April check. She also got a solicitation phone call from one Joe Rivera, representing the law firm, who wanted her to take a lowball settlement of $105. “I said that is a rip-off,” says Perry. “Every time I think of [this] it makes my blood pressure rise.” Rivera would not reply to my questions.
Pacific Law Center was founded by Larry Majors, a nonlawyer convicted felon who vamoosed from Texas after a judge called a law firm he operated “a borderline criminal enterprise,” according to a 2009 San Diego lawsuit, since dismissed. After getting into trouble running several law firms, Majors set up Pacific Law Center in 1993 with his son Austin Majors, also a nonlawyer, as executive director, according to the lawsuit. Steigerwalt, who had been with the public defender’s office for 6 years and in private practice for 18 years, took over the firm in 2008 and attached his name to the front. The firm specialized in drunk driving, personal injury, defective product, loan modification, and bankruptcy cases. Taking over the Pacific Law Center “was the worst decision of my life,” says Steigerwalt, who once again has his own firm. “It cost me millions.”
That April 18 letter to Laura Perry stated, “Vendors and creditors of [the defunct legal institution] claim the firm owes them more than $3 million.”
The sum could be larger than that. Steigerwalt hired the Chicago law office of J. Kevin Benjamin, who set up a Mission Valley office. Steigerwalt pays Benjamin $250 to take over each client who has not been provided service. Benjamin explains to the people that he is not replacing the shuttered law firm. He will take the case himself for a very low fee of, say, $395 for a Chapter 7.
Benjamin says he saw the closed law firm’s records: there were more than 6000 people who had paid some money and not received their service — a number that Steigerwalt, although conceding the firm is insolvent, says is too high. “Some had paid in full, some had not,” Benjamin says. Depending on the average amount shelled out, the money owed to nonserviced clients could exceed $3 million, he says. And that doesn’t include vendors and other creditors.
San Diego attorney Scott Harris feels sorry for “all the people that got screwed, that paid $1500 to $3000 and never got service. Lawyers at [the law firm] had retainer agreements that permitted them to get out of the liability responsibility on the cases they were handling.”
In his frequent trips to San Diego, Benjamin and an assistant handle “70 to 100 people a week who had paid and not gotten services,” he says, asserting that he is losing money on the arrangement. Initially, “people were calling every five minutes. I had to get a separate receptionist and a different line. Some were saying I was a crook. I said, ‘I don’t have your money.’” Clients thought that the up-front fees paid to Kerry Steigerwalt’s Pacific Law Center were paid to Benjamin, and that wasn’t so. He must stress to each cuckolded client that he is not taking over the Steigerwalt firm or the clients’ files. He has to begin every case anew. “This has been going on for a year, and I am debating if I will do it anymore.”
Benjamin says that investigators from the U.S. trustee’s office in San Diego, which oversees bankruptcy cases, have been looking into Steigerwalt customers who did not get served. The probers went over Benjamin’s files and interviewed one of his assistants. “They have their own investigation going of Kerry Steigerwalt,” Benjamin says. “They were asking us about Kerry and about our own operations.” Also, Benjamin says he talked briefly with an agent of the Federal Bureau of Investigation who later checked with Benjamin’s lawyer. But the subject of those inquiries was loan modifications, in which Benjamin is not involved. Steigerwalt’s firm got into the controversial loan modification business.
Steigerwalt says he is not aware of any Federal Bureau of Investigation probe. As is traditional, the agency will not confirm or deny the existence of a probe. The U.S. trustee’s office, while not confirming a formal investigation, did reveal that it has been actively involved, stating: “The U.S. Trustee’s office responded to inquiries from individuals who had concerns about their legal representation in bankruptcy cases after the closure of Kerry Steigerwalt’s Pacific Law Center.”
“Benjamin is making a grand effort to do what is right,” says Sehnert. However, “It would be really nice to have an accounting of that $3 million.” He notes that the check that Laura Perry received was from “Kerry Steigerwalt’s Pacific Law Center Client Trust Account.” Money in client trust accounts belongs to clients, not to the lawyers, who should follow strict accounting procedures, he says. However, a former member of the firm says that in this instance the money paid up front did not have to go into client trust accounts.
Meanwhile, a firm named Golden State Law Group is now advertising heavily, Ã la Steigerwalt’s deceased enterprise. Golden State’s marketing director is Austin Majors, former executive director of Pacific Law Center. After Steigerwalt’s firm closed, Golden State was launched by two former members of that concern, Don Bokovoy, who is going into semiretirement, and David Weil. On its website, Golden State says it is responding to “unanswered complaints with Kerry Steigerwalt’s Pacific Law Center. Many of Mr. Steigerwalt’s clients have called Golden State Law Group seeking help with their bankruptcy case after complaining to Mr. Steigerwalt that they paid him a retainer to file their bankruptcies and he has, in many cases, failed to do so.” Those who unsuccessfully went to Benjamin’s Chicago law firm “felt cheated and scammed,” says the website.
Steigerwalt says he is disappointed by the criticism, given Weil’s and Bokovoy’s “involvement in the bankruptcy department at [Kerry Steigerwalt’s Pacific Law Center].”
Benjamin is more succinct: Golden State “can go fk themselves
Wednesday, May 11, 2011
Foreclosures Crush Home Prices...Down 30% Plus @www.money.cnn.com"
Foreclosures crush home prices
By Les Christie, staff writer May 10, 2011: 5:01 PM ET
Click This Link to Read the Article: http://money.cnn.com/2011/05/09/real_estate/metro_home_prices/index.htm?source=patrick.net#0_undefined,0_
NEW YORK (CNNMoney) -- Home prices continued to plummet during the first three months of 2011, falling 4.6% from a year earlier.
The U.S. median price, according to the National Association of Realtors (NAR), dropped to $158,700 for a single family house. Condo prices fell even harder -- 10.4% to $152,900.
0Email Print The median home price has now slumped 30% from its 2006 high of $227,100, and prices have fallen nearly 7% so far this year.
"We're seeing prices dropping faster than they did in 2010," said Pat Newport, an analyst with IHS Global Insight. "That's troubling. Falling home prices precipitated the recession and are slowing the recovery."
NAR blamed much of the latest price drop on sales of foreclosed properties. These "distressed" property sales accounted for 39% of the market, up from 36% from a year earlier.
Distressed properties, often in poor condition and are priced to move, sell for about 20% less than conventional home sales.
Those sales attract speculators, investors and cash buyers who gravitate toward lower priced homes, said Lawrence Yun, chief economist for NAR. (How to buy a foreclosure)
The market for distressed properties may further expand over the next few months. Falling prices have sent more mortgage borrowers underwater, owing more on their mortgage balances than their homes are worth. That makes them more likely to default on loans.
"That's a key problem," said Newport. "There are a lot of bad loans in the foreclosure pipeline and we don't know how many strategic defaults [people walking away from their mortgages] will result."
Of the 153 home markets covered by the report, Honolulu recorded the highest median price, $579,300. San Jose, Calif., the heart of Silicon Valley, was second at $545,000, and Anaheim-Santa Ana, Calif. was third at $511,800.
The lowest priced markets were in the Rust-Belt: Youngstown, Ohio ($55,400); Lansing, Mich. ($64,400); and Toledo, Ohio ($64,900).
The biggest losers were Gulfport, Miss. (down 22.8% to $99,400); Akron, Ohio (off 21.4% to $74,900); and Salem, Ore.(down 20.6% to $153,500).
Check out prices in your home town
By Les Christie, staff writer May 10, 2011: 5:01 PM ET
Click This Link to Read the Article: http://money.cnn.com/2011/05/09/real_estate/metro_home_prices/index.htm?source=patrick.net#0_undefined,0_
NEW YORK (CNNMoney) -- Home prices continued to plummet during the first three months of 2011, falling 4.6% from a year earlier.
The U.S. median price, according to the National Association of Realtors (NAR), dropped to $158,700 for a single family house. Condo prices fell even harder -- 10.4% to $152,900.
0Email Print The median home price has now slumped 30% from its 2006 high of $227,100, and prices have fallen nearly 7% so far this year.
"We're seeing prices dropping faster than they did in 2010," said Pat Newport, an analyst with IHS Global Insight. "That's troubling. Falling home prices precipitated the recession and are slowing the recovery."
NAR blamed much of the latest price drop on sales of foreclosed properties. These "distressed" property sales accounted for 39% of the market, up from 36% from a year earlier.
Distressed properties, often in poor condition and are priced to move, sell for about 20% less than conventional home sales.
Those sales attract speculators, investors and cash buyers who gravitate toward lower priced homes, said Lawrence Yun, chief economist for NAR. (How to buy a foreclosure)
The market for distressed properties may further expand over the next few months. Falling prices have sent more mortgage borrowers underwater, owing more on their mortgage balances than their homes are worth. That makes them more likely to default on loans.
"That's a key problem," said Newport. "There are a lot of bad loans in the foreclosure pipeline and we don't know how many strategic defaults [people walking away from their mortgages] will result."
Of the 153 home markets covered by the report, Honolulu recorded the highest median price, $579,300. San Jose, Calif., the heart of Silicon Valley, was second at $545,000, and Anaheim-Santa Ana, Calif. was third at $511,800.
The lowest priced markets were in the Rust-Belt: Youngstown, Ohio ($55,400); Lansing, Mich. ($64,400); and Toledo, Ohio ($64,900).
The biggest losers were Gulfport, Miss. (down 22.8% to $99,400); Akron, Ohio (off 21.4% to $74,900); and Salem, Ore.(down 20.6% to $153,500).
Check out prices in your home town
Wednesday, March 9, 2011
Filing for Bankruptcy could save your home from foreclosure
Filing for bankruptcy could save your home
For some struggling homeowners, desperate step could stop a foreclosure
FROM CNBC: http://www.msnbc.msn.com/id/41787682/ns/business-personal_finance/
By the time the foreclosure notice arrives, most struggling homeowners figure they are out of options. But there is one more step, often overlooked but sometimes effective: bankruptcy.
It's not a move to be taken lightly. But the impact — especially on your chances of getting a loan — may not be as dire as many consumers assume. In fact, homeowners facing foreclosure may be able to improve their credit with a bankruptcy filing.
Bankruptcy is not the best first choice for anyone struggling to pay the bills. The first step is to approach lenders or others to whom you owe money and see if you can work out a more affordable payment plan. If you're unable to do so on your own, an accredited credit counselor may be able to intervene with lenders on your behalf.
More must-see stories
Reuters Heroes need not apply
Your Career: There was public outrage recently when four employees at a Walmart lost their jobs for safely disarming a gun-toting shoplifter. But no one should be too surprised
Life Inc.: Yes, smart guy, you have to pay taxes NFL labor dispute is typical, only with way more money ConsumerMan: Fat fingers and phone fraud Homeowners facing foreclosure also have several options to minimize the long-term impact on their credit — even if they ultimately lose the house. If the lender agrees to a short sale, for example, you may be able to sell your home for less then you owe. In a so-called "deed in lieu" of foreclosure, you give the lender the deed to your home and avoid a formal foreclosure proceeding. By doing so, you'll avoid the devastating damage to your credit brought by a foreclosure.
If none of those steps work, bankruptcy may provide relief for the worst case of a foreclosure judgment - and inflict less damage to your credit.
"In the eyes of lenders, you're making an attempt to pay back what is owed and keeping up with your payments," said Raquel Price, a bankruptcy attorney in State College, Pa. "With a foreclosure, you simply just walk away after not paying for a period of time."
Bankruptcy laws, after all, were established to provide an orderly process for people in financial trouble to reorganize their debts, start fresh and rebuild their lives.
Advertise | AdChoicesAdvertise | AdChoicesAdvertise | AdChoices"Most people who file bankruptcy don't file because they are poor managers of credit," said John Ulzheimer, president of consumer education for SmartCredit.com. "Most people file because of some other incident that is out of their control - like a divorce, or loss of job, or the death of an earner in the family or some major medical event that zaps out their savings."
With home prices falling, unemployment near 9 percent and wages stagnant, the volume of fillings continues to rise. Last year, some 1.5 million consumer filings were reported — up 9 percent following double digit gains in each of the previous three years, according to the American Bankruptcy Institute.
As government mortgage relief programs have fallen well short of their goals and lenders struggle to find solutions, bankruptcy has become a potent weapon for those hoping to save their home from foreclosure.
Last year, foreclosure filings were reported on a record 2.9 million homes in the U.S., up nearly 2 percent from 2009 and 23 percent from 2008, according to RealtyTrac. More than one in five homeowners with a mortgage owe more than their house is worth, according to the latest figures from CoreLogic. That number of so-called "underwater" mortgages is expected to increase if home prices continue the current trend of edging lower.
A bankruptcy filing won't guarantee you'll be able to keep your home. But it stops the process and buys time while the court reviews your finances and tries to work out a payment plan with lenders.
The mortgage industry supports the current bankruptcy process because it frees many borrowers from some unsecured debts, making it easier for them to support a home loan. But the industry has strenuously fought legislative proposals to change the law to allow judges to alter the terms of a mortgage, including writing down the principal owed — a process known as a "cramdown."
Contrary to widely-held belief, bankruptcy doesn't necessarily leave the filer without access to credit.
"I hear that every day from people coming to my office: 'I thought it takes seven years to rebuild your credit,'" said Michael Fakhoury, a bankruptcy attorney in Poughkeepsie, N.Y. "It's not true."
Credit card offers
Though the record of a filing typically remains on your credit report for seven years, many filers begin getting credit card offers within a year or two after the process is completed.
Personal bankruptcy takes two forms. In a so-called Chapter 13 bankruptcy, debts are consolidated and a payment plan is arranged — typically over three to five years. This process allows you to retain assets like a house or car and some savings (the rules vary somewhat state to state). Chapter 13 is required for those whose income falls above a "means test." Once you've filed, you're not allowed to file Chapter 13 again for another two years.
A Chapter 7 bankruptcy discharges most forms of debt — usually within six months. To qualify, you have to be current on secured debt payments such as a mortgage.Some debts, including student loans, alimony or child support, can't be discharged. With Chapter 7, you can't file again for eight years.
Once the process is complete, credit card companies will likely come calling again within a year or two offering credit, according to Fakoury.
Advertise | AdChoicesAdvertise | AdChoicesAdvertise | AdChoices"They know that you don't have any more debt — you just got rid of all your debt," he said. "So you're a good credit risk."
Opening new accounts and establishing a solid record of timely payments will help improve your chances of getting more credit, according to Ulzheimer.
"The most predictive item on your credit report is the item that's less than 24 months old," he said. "So if you can start populating your credit reports with good things, you're going to accelerate your score improvement much more aggressively than if you just sat there and waited for your score to improve as you put time between yourself and the bankruptcy filing."
Getting a mortgage after a bankruptcy filing is a little tougher, largely because underwriting guidelines have tightened for all borrowers since the housing bust. To qualify for a so-called "conforming" loan backed by government mortgage sponsors Fannie Mae or Freddie Mac, you'll need to wait four years after a bankruptcy filing.
But you'll be ineligible for seven years after a foreclosure — another reason it might make more sense for some homeowners to file for bankruptcy rather than wait for a foreclosure.
For an FHA-backed mortgage, you may be able to qualify within three years of a foreclosure, or two years after completing a bankruptcy. For Chapter 7, the clock on FHA eligibility starts when your discharge is complete, usually within six months of the filing. For a Chapter 13, you'll have to wait two years after the payment plan is completed, usually three to five years.
Lenders are also going to want to know why you ended up in bankruptcy court, according to Chad Smith, senior vice president of sales at Lending Tree, a mortgage lender.
"Most underwriters are going to want to know what happened in a detailed letter of explanation," he said. "If it’s a life event, that's going to be reflected differently than if it's excessive spending."
Filling for bankruptcy won't guarantee you'll be able to save your home. For some homeowners, the financial hole is just too deep.
"That is a very hard talk to have with them — explaining that no matter what I try to do they won't be able to sustain their residence," said Price. "For some clients that is a very tough thing to accept."
For some struggling homeowners, desperate step could stop a foreclosure
FROM CNBC: http://www.msnbc.msn.com/id/41787682/ns/business-personal_finance/
By the time the foreclosure notice arrives, most struggling homeowners figure they are out of options. But there is one more step, often overlooked but sometimes effective: bankruptcy.
It's not a move to be taken lightly. But the impact — especially on your chances of getting a loan — may not be as dire as many consumers assume. In fact, homeowners facing foreclosure may be able to improve their credit with a bankruptcy filing.
Bankruptcy is not the best first choice for anyone struggling to pay the bills. The first step is to approach lenders or others to whom you owe money and see if you can work out a more affordable payment plan. If you're unable to do so on your own, an accredited credit counselor may be able to intervene with lenders on your behalf.
More must-see stories
Reuters Heroes need not apply
Your Career: There was public outrage recently when four employees at a Walmart lost their jobs for safely disarming a gun-toting shoplifter. But no one should be too surprised
Life Inc.: Yes, smart guy, you have to pay taxes NFL labor dispute is typical, only with way more money ConsumerMan: Fat fingers and phone fraud Homeowners facing foreclosure also have several options to minimize the long-term impact on their credit — even if they ultimately lose the house. If the lender agrees to a short sale, for example, you may be able to sell your home for less then you owe. In a so-called "deed in lieu" of foreclosure, you give the lender the deed to your home and avoid a formal foreclosure proceeding. By doing so, you'll avoid the devastating damage to your credit brought by a foreclosure.
If none of those steps work, bankruptcy may provide relief for the worst case of a foreclosure judgment - and inflict less damage to your credit.
"In the eyes of lenders, you're making an attempt to pay back what is owed and keeping up with your payments," said Raquel Price, a bankruptcy attorney in State College, Pa. "With a foreclosure, you simply just walk away after not paying for a period of time."
Bankruptcy laws, after all, were established to provide an orderly process for people in financial trouble to reorganize their debts, start fresh and rebuild their lives.
Advertise | AdChoicesAdvertise | AdChoicesAdvertise | AdChoices"Most people who file bankruptcy don't file because they are poor managers of credit," said John Ulzheimer, president of consumer education for SmartCredit.com. "Most people file because of some other incident that is out of their control - like a divorce, or loss of job, or the death of an earner in the family or some major medical event that zaps out their savings."
With home prices falling, unemployment near 9 percent and wages stagnant, the volume of fillings continues to rise. Last year, some 1.5 million consumer filings were reported — up 9 percent following double digit gains in each of the previous three years, according to the American Bankruptcy Institute.
As government mortgage relief programs have fallen well short of their goals and lenders struggle to find solutions, bankruptcy has become a potent weapon for those hoping to save their home from foreclosure.
Last year, foreclosure filings were reported on a record 2.9 million homes in the U.S., up nearly 2 percent from 2009 and 23 percent from 2008, according to RealtyTrac. More than one in five homeowners with a mortgage owe more than their house is worth, according to the latest figures from CoreLogic. That number of so-called "underwater" mortgages is expected to increase if home prices continue the current trend of edging lower.
A bankruptcy filing won't guarantee you'll be able to keep your home. But it stops the process and buys time while the court reviews your finances and tries to work out a payment plan with lenders.
The mortgage industry supports the current bankruptcy process because it frees many borrowers from some unsecured debts, making it easier for them to support a home loan. But the industry has strenuously fought legislative proposals to change the law to allow judges to alter the terms of a mortgage, including writing down the principal owed — a process known as a "cramdown."
Contrary to widely-held belief, bankruptcy doesn't necessarily leave the filer without access to credit.
"I hear that every day from people coming to my office: 'I thought it takes seven years to rebuild your credit,'" said Michael Fakhoury, a bankruptcy attorney in Poughkeepsie, N.Y. "It's not true."
Credit card offers
Though the record of a filing typically remains on your credit report for seven years, many filers begin getting credit card offers within a year or two after the process is completed.
Personal bankruptcy takes two forms. In a so-called Chapter 13 bankruptcy, debts are consolidated and a payment plan is arranged — typically over three to five years. This process allows you to retain assets like a house or car and some savings (the rules vary somewhat state to state). Chapter 13 is required for those whose income falls above a "means test." Once you've filed, you're not allowed to file Chapter 13 again for another two years.
A Chapter 7 bankruptcy discharges most forms of debt — usually within six months. To qualify, you have to be current on secured debt payments such as a mortgage.Some debts, including student loans, alimony or child support, can't be discharged. With Chapter 7, you can't file again for eight years.
Once the process is complete, credit card companies will likely come calling again within a year or two offering credit, according to Fakoury.
Advertise | AdChoicesAdvertise | AdChoicesAdvertise | AdChoices"They know that you don't have any more debt — you just got rid of all your debt," he said. "So you're a good credit risk."
Opening new accounts and establishing a solid record of timely payments will help improve your chances of getting more credit, according to Ulzheimer.
"The most predictive item on your credit report is the item that's less than 24 months old," he said. "So if you can start populating your credit reports with good things, you're going to accelerate your score improvement much more aggressively than if you just sat there and waited for your score to improve as you put time between yourself and the bankruptcy filing."
Getting a mortgage after a bankruptcy filing is a little tougher, largely because underwriting guidelines have tightened for all borrowers since the housing bust. To qualify for a so-called "conforming" loan backed by government mortgage sponsors Fannie Mae or Freddie Mac, you'll need to wait four years after a bankruptcy filing.
But you'll be ineligible for seven years after a foreclosure — another reason it might make more sense for some homeowners to file for bankruptcy rather than wait for a foreclosure.
For an FHA-backed mortgage, you may be able to qualify within three years of a foreclosure, or two years after completing a bankruptcy. For Chapter 7, the clock on FHA eligibility starts when your discharge is complete, usually within six months of the filing. For a Chapter 13, you'll have to wait two years after the payment plan is completed, usually three to five years.
Lenders are also going to want to know why you ended up in bankruptcy court, according to Chad Smith, senior vice president of sales at Lending Tree, a mortgage lender.
"Most underwriters are going to want to know what happened in a detailed letter of explanation," he said. "If it’s a life event, that's going to be reflected differently than if it's excessive spending."
Filling for bankruptcy won't guarantee you'll be able to save your home. For some homeowners, the financial hole is just too deep.
"That is a very hard talk to have with them — explaining that no matter what I try to do they won't be able to sustain their residence," said Price. "For some clients that is a very tough thing to accept."
Wednesday, March 2, 2011
Calif. distressed homes sell at 39% discount. OC Register
Source: http://www.ocregister.com/articles/sell-290148-foreclosure-homes.html?source=patrick.net#ArticleHeader
According to RealtyTrac, there were 211,839 foreclosure-related sales in 2010 in California – a third-party sale of a distressed property that occurs while the property is actively in some stage of foreclosure, from default to bank-owned.
According to the Irvine-based foreclosure tracking firm’s year-end study:
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Is 6.7% unemployment the new normal?
The state’s 2010 foreclosure-related selling pace was 42% below 2009 and 30% below 2008. Nationally, foreclosure sales were 31% below 2009 and 14% less than 2008′s pace.
California foreclosure sales accounted for 44 percent of all sales in 2010, the third highest of any state but also down from a peak of 57 percent in 2009. Fourth quarter foreclosure sales in California accounted for 45 percent of all sales, up from 40 percent in the third quarter. foreclosure homes accounted for nearly 26 percent of all U.S. residential sales during the year, down from 29 percent of all sales in 2009 but up from 23 percent of all sales in 2008.
The average selling price of a California foreclosure-related home was $251,693 – that is a 39% “foreclosure discount,” the percentage difference between average sales price of foreclosure sales vs. average sales price of non-foreclosure sales. Nationally, the foreclosure discount was 28%
These discounts in California ranged in 2010 from 46% for bank-owned properties to 29% for homes sold before lenders seized a property. National foreclosure discount was 36% for bank-owned homes and 15% for homes sold before lenders seized a property.
RealtyTrac notes: “Foreclosures continue to represent a substantial percentage of all U.S. residential sales and continue to sell at an average sales price that is significantly below the average sales price of properties not in foreclosure — the result of a bloated supply of foreclosures and weak demand from homebuyers. The catch-22 for 2011 is that while accelerating foreclosure sales will help clear the oversupply of distressed properties and return balance to the market in the long run, in the short term a high percentage of foreclosure sales will continue to weigh down home prices.”
According to RealtyTrac, there were 211,839 foreclosure-related sales in 2010 in California – a third-party sale of a distressed property that occurs while the property is actively in some stage of foreclosure, from default to bank-owned.
According to the Irvine-based foreclosure tracking firm’s year-end study:
ADVERTISEMENT More from Business
Laguna home has lots of house for price
Hippie Chipotle-style burrito chain lands in O.C.
Is 6.7% unemployment the new normal?
The state’s 2010 foreclosure-related selling pace was 42% below 2009 and 30% below 2008. Nationally, foreclosure sales were 31% below 2009 and 14% less than 2008′s pace.
California foreclosure sales accounted for 44 percent of all sales in 2010, the third highest of any state but also down from a peak of 57 percent in 2009. Fourth quarter foreclosure sales in California accounted for 45 percent of all sales, up from 40 percent in the third quarter. foreclosure homes accounted for nearly 26 percent of all U.S. residential sales during the year, down from 29 percent of all sales in 2009 but up from 23 percent of all sales in 2008.
The average selling price of a California foreclosure-related home was $251,693 – that is a 39% “foreclosure discount,” the percentage difference between average sales price of foreclosure sales vs. average sales price of non-foreclosure sales. Nationally, the foreclosure discount was 28%
These discounts in California ranged in 2010 from 46% for bank-owned properties to 29% for homes sold before lenders seized a property. National foreclosure discount was 36% for bank-owned homes and 15% for homes sold before lenders seized a property.
RealtyTrac notes: “Foreclosures continue to represent a substantial percentage of all U.S. residential sales and continue to sell at an average sales price that is significantly below the average sales price of properties not in foreclosure — the result of a bloated supply of foreclosures and weak demand from homebuyers. The catch-22 for 2011 is that while accelerating foreclosure sales will help clear the oversupply of distressed properties and return balance to the market in the long run, in the short term a high percentage of foreclosure sales will continue to weigh down home prices.”
DataQuick: San Diego foreclosures up 34% in January
From The San Diego Union Tribune: http://www.signonsandiego.com/news/2011/feb/23/dataquick-san-diego-county-foreclosures-34-january/?source=patrick.net#
Foreclosures and mortgage defaults in San Diego County both increased in January, after three consecutive months of drops, Wednesday's DataQuick Information Systems numbers show. The upticks could signal an incoming wave of distressed properties coming onto the market in coming months, experts said.
Foreclosures rose to 959 in January from 715 in December, a 34 percent increase, the largest monthly jump since December 2009. Year-over-year, foreclosures fell from 986 in January 2010, or 2.7 percent.
There were 1,548 mortgage defaults in January, up slightly from 1522 in December, or 1.7 percent. Year-over-year, that number is down from 1,741 in January 2010, or 11.1 percent.
DataQuick spokesman Andrew LePage said the monthly jump in foreclosures could partly be due to "a little catch-up" after some banks froze foreclosure activity following discoveries of robo-signing, the practice of approving loan paperwork without proper review.
LePage added that monthly fluctuations in both data sets are normal given factors such as the role of government mortgage programs, lender log-jams and new housing laws, he said.
"We don't expect any smooth trend lines going forward," LePage said. But there's "more catch-up to come," he said.
Bob Kevane, president of the San Diego Association of Realtors, agrees more foreclosures are in the pipeline.
He's heard local lenders saying they plan to stop delays in foreclosure processes and complete more of them this year, leading him to believe foreclosures will increase at the rate seen last month.
In DataQuick's previous report in December, foreclosures and default notices in the county fell to their lowest levels in three years. However, industry experts warned not to read too much into that, given the expectations of a shadow inventory of distressed homes and an increase in short sales.
Lily Leung: (619)293-1719; lily.leung@uniontrib.com; Twitter @LilyShumLeung
Foreclosures and mortgage defaults in San Diego County both increased in January, after three consecutive months of drops, Wednesday's DataQuick Information Systems numbers show. The upticks could signal an incoming wave of distressed properties coming onto the market in coming months, experts said.
Foreclosures rose to 959 in January from 715 in December, a 34 percent increase, the largest monthly jump since December 2009. Year-over-year, foreclosures fell from 986 in January 2010, or 2.7 percent.
There were 1,548 mortgage defaults in January, up slightly from 1522 in December, or 1.7 percent. Year-over-year, that number is down from 1,741 in January 2010, or 11.1 percent.
DataQuick spokesman Andrew LePage said the monthly jump in foreclosures could partly be due to "a little catch-up" after some banks froze foreclosure activity following discoveries of robo-signing, the practice of approving loan paperwork without proper review.
LePage added that monthly fluctuations in both data sets are normal given factors such as the role of government mortgage programs, lender log-jams and new housing laws, he said.
"We don't expect any smooth trend lines going forward," LePage said. But there's "more catch-up to come," he said.
Bob Kevane, president of the San Diego Association of Realtors, agrees more foreclosures are in the pipeline.
He's heard local lenders saying they plan to stop delays in foreclosure processes and complete more of them this year, leading him to believe foreclosures will increase at the rate seen last month.
In DataQuick's previous report in December, foreclosures and default notices in the county fell to their lowest levels in three years. However, industry experts warned not to read too much into that, given the expectations of a shadow inventory of distressed homes and an increase in short sales.
Lily Leung: (619)293-1719; lily.leung@uniontrib.com; Twitter @LilyShumLeung
Thursday, February 10, 2011
Foreclosures Ramp Up 30% of mortgages are underwater
San Diego Bankruptcies Sure to Increase says Bankruptcy Attorney from The San Diego Bankruptcy Law Firm.
CNN: Foreclosures Ramp Up, 30% of Mortages Underwater.
According to CNN: http://money.cnn.com/2011/02/09/real_estate/underwater_mortgages_rising/index.htm?source=patrick.net#storyBrandingBanner
By Les Christie, staff writerFebruary 9, 2011: 10:48 AM ET
NEW YORK (CNNMoney) -- Sometime, somehow, the foreclosure crisis will ease. But probably not anytime soon.
Home prices dropped 2.6% nationwide during the last three months of 2010, pushing more borrowers underwater, according to a quarterly real estate market survey from Zillow.com.
273Email Print
Foreclosure Fiasco
Foreclosures are falling - but it's a fake out
30% of mortgages are underwater
Whose house is being saved by Obama?
Las Vegas: Still the foreclosure king
Home price slump deepens
Now 27% of homeowners with mortgages owe more than their homes are worth. That's up from 23.2% a quarter earlier.
That will surely lead to higher foreclosure rates soon. That's because being underwater is second only to unaffordable payments in leading to foreclosure, according to Zillow's chief economist, Stan Humphries.
Additionally, the report found that more than one-third of all homes were sold at a loss in December. That trend has been on a steady uptick for the past six months, as homeowners try to find ways around foreclosure or out from under their homes.
The so-called "robo-signing" events of the fall also forced the number of underwater mortgages higher.
When banks' foreclosure paperwork came under scrutiny, many halted all repossessions until they could straighten things out. With foreclosures no longer being cleaned out of the system, more homes stayed underwater rather than moving on to foreclosure.
10 foreclosure hotspots
The moratoriums have been only temporary, however, and the defaults that had been stopped up in the foreclosure pipeline could come out in a gush over the next few months.
And any bump in the number of foreclosures adds to the likelihood that more homes will be dumped onto an already bloated market. That would just further depress home prices, continuing the vicious cycle that has plagued the industry for several years.
CNN: Foreclosures Ramp Up, 30% of Mortages Underwater.
According to CNN: http://money.cnn.com/2011/02/09/real_estate/underwater_mortgages_rising/index.htm?source=patrick.net#storyBrandingBanner
By Les Christie, staff writerFebruary 9, 2011: 10:48 AM ET
NEW YORK (CNNMoney) -- Sometime, somehow, the foreclosure crisis will ease. But probably not anytime soon.
Home prices dropped 2.6% nationwide during the last three months of 2010, pushing more borrowers underwater, according to a quarterly real estate market survey from Zillow.com.
273Email Print
Foreclosure Fiasco
Foreclosures are falling - but it's a fake out
30% of mortgages are underwater
Whose house is being saved by Obama?
Las Vegas: Still the foreclosure king
Home price slump deepens
Now 27% of homeowners with mortgages owe more than their homes are worth. That's up from 23.2% a quarter earlier.
That will surely lead to higher foreclosure rates soon. That's because being underwater is second only to unaffordable payments in leading to foreclosure, according to Zillow's chief economist, Stan Humphries.
Additionally, the report found that more than one-third of all homes were sold at a loss in December. That trend has been on a steady uptick for the past six months, as homeowners try to find ways around foreclosure or out from under their homes.
The so-called "robo-signing" events of the fall also forced the number of underwater mortgages higher.
When banks' foreclosure paperwork came under scrutiny, many halted all repossessions until they could straighten things out. With foreclosures no longer being cleaned out of the system, more homes stayed underwater rather than moving on to foreclosure.
10 foreclosure hotspots
The moratoriums have been only temporary, however, and the defaults that had been stopped up in the foreclosure pipeline could come out in a gush over the next few months.
And any bump in the number of foreclosures adds to the likelihood that more homes will be dumped onto an already bloated market. That would just further depress home prices, continuing the vicious cycle that has plagued the industry for several years.
Friday, February 4, 2011
Rich, Famous & In Foreclosure (Nickolas Cage, etc.)
Site: http://money.msn.com/home-loans/rich-famous-and-in-foreclosure-bankrate.aspx
Rich, famous . . . and in foreclosureStar status won't pay the mortgage -- and some celebrities have seen the foreclosure epidemic firsthand. Here are 5 who lost their homes.
Related topics: homes, home financing, foreclosure, property taxes, luxury
How does Nicolas Cage get behind on his mortgage payments? The same way other rich and famous people do.
"They've stretched themselves higher than they probably should have," says John Anderson, owner of Twin Oaks Realty in Minneapolis and a National Association of Realtors expert in foreclosures. Some couldn't keep up when the rates on their adjustable rate mortgages shot up, Anderson says. Price drops at the high end of the market were so steep that a sale wouldn't cover the debt. In other words, high-end homeowners face the same problems that plague the rest of us.
Buy a foreclosed home
Find the best home mortgage rates
Here are five of the biggest names on the of list homeowners falling to foreclosure. We've included a bit of info about the current markets where these stars once lived. -- you know, in case you'd like to hunt for a foreclosure deal in one of those tony neighborhoods.
Nicolas Cage
The star: He's an Academy Award-winning actor (for "Leaving Las Vegas"), nephew of multiple-Oscar-winning filmmaker Francis Ford Coppola and the former son-in-law of Elvis (he was briefly married to Lisa Presley).
The house: Make that "houses." In November 2009, Cage lost two New Orleans homes -- one in the French Quarter, the other in the Garden District -- worth a combined $6.8 million, according to a CNNMoney.com report. Cage was behind $5.5 million in mortgage payments, and he owed $151,730 in property taxes to the city of New Orleans. Regions Bank paid $4.5 million for the properties.
MSN Real Estate: Need a zero-down mortgage? Look outside the city
The market: One in 720 homes in Orleans Parish had foreclosure filings in November 2010, according to RealtyTrac. The average foreclosure sales price in the city was close to $110,000.
Erin Moran
The star: She's best known as Richie Cunningham's freckle-faced little sister Joanie on the 1970s sitcom "Happy Days" and co-star of the spinoff "Joanie Loves Chachi."
The house: Los Angeles County court records posted on the entertainment website TMZ.com show that Moran, also known by her married name Erin Fleishmann, owed $315,930 on the Palmdale, Calif., home. The Bank of New York Mellon Trust bought the house at auction for $291,150 in July 2010. According to TMZ, Moran stayed in the home after losing it to the bank and was evicted.
The market: Palmdale, just north of Los Angeles, posted foreclosure filings in November 2010 on one in 80 housing units. The average foreclosure sales price was around $154,000.
Lisa Wu-Hartwell
The star: Viewers of Bravo's "Real Housewives of Atlanta," may remember Wu-Hartwell from the first season as one of the network's touted "six fabulous women from Atlanta's social elite." Hubby Edgerton Hartwell, the former Oakland Raiders linebacker, made frequent appearances.
The house: According to court records posted on TMZ.com, the couple borrowed $2.9 million to buy their suburban mansion in June 2007. Just more than two years later, Bank of America paid $1.9 million for the house at a foreclosure sale at the Forsyth County, Ga., courthouse, after the Hartwells defaulted on their adjustable-rate mortgage.
Is it time to refinance?
The market: RealtyTrac reports there were foreclosure filings on one in 248 housing units in Forsyth County in November 2010. The average foreclosure sales price was around $210,000.
Lenny Dykstra
The star: Nicknamed "Nails," the former Major League Baseball pro was an outfielder for the Mets and the Phillies during the late 1980s and early 1990s. After filing for Chapter 11 bankruptcy in 2009, Dykstra -- in a move many found ironic -- started an online financial advisory firm in 2010 called Nails Investments.
The house: Dykstra bought the 6.5-acre property in Thousand Oaks, Calif., from hockey pro Wayne Gretzky for $18.5 million in 2007, according to the Los Angeles Times. He lost the house in a Ventura County foreclosure sale in November 2010 to a winning bid of $760,712, the newspaper reported. Dykstra owed about $12 million to JPMorgan Chase.
MSN Real Estate: Find a foreclosure
The market: One in 201 homes in Ventura County received a foreclosure filing in November 2010, according to RealtyTrac. The average foreclosure sales price was in the neighborhood of $382,000.
Veronica Hearst
The star: The name is Hearst's claim to fame. She's the widow of newspaper heir Randolph Hearst and stepmother of Patricia Hearst, who was kidnapped by left-wing guerrillas in 1974.
The house: Located Manalapan, Fla., near Palm Beach, the Villa Venezia was originally built for the great-grandson of railroad tycoon Cornelius Vanderbilt. According to The Palm Beach Post, the 52-room, 28,000-square-foot mansion sold to New Stream Capital for $22 million at a Palm Beach County auction in February 2008.
The market: One in 211 housing units in Palm Beach County received a foreclosure filing in November 2010, reports RealtyTrac. The average foreclosure sales price was about $137,000.
Rich, famous . . . and in foreclosureStar status won't pay the mortgage -- and some celebrities have seen the foreclosure epidemic firsthand. Here are 5 who lost their homes.
Related topics: homes, home financing, foreclosure, property taxes, luxury
How does Nicolas Cage get behind on his mortgage payments? The same way other rich and famous people do.
"They've stretched themselves higher than they probably should have," says John Anderson, owner of Twin Oaks Realty in Minneapolis and a National Association of Realtors expert in foreclosures. Some couldn't keep up when the rates on their adjustable rate mortgages shot up, Anderson says. Price drops at the high end of the market were so steep that a sale wouldn't cover the debt. In other words, high-end homeowners face the same problems that plague the rest of us.
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Here are five of the biggest names on the of list homeowners falling to foreclosure. We've included a bit of info about the current markets where these stars once lived. -- you know, in case you'd like to hunt for a foreclosure deal in one of those tony neighborhoods.
Nicolas Cage
The star: He's an Academy Award-winning actor (for "Leaving Las Vegas"), nephew of multiple-Oscar-winning filmmaker Francis Ford Coppola and the former son-in-law of Elvis (he was briefly married to Lisa Presley).
The house: Make that "houses." In November 2009, Cage lost two New Orleans homes -- one in the French Quarter, the other in the Garden District -- worth a combined $6.8 million, according to a CNNMoney.com report. Cage was behind $5.5 million in mortgage payments, and he owed $151,730 in property taxes to the city of New Orleans. Regions Bank paid $4.5 million for the properties.
MSN Real Estate: Need a zero-down mortgage? Look outside the city
The market: One in 720 homes in Orleans Parish had foreclosure filings in November 2010, according to RealtyTrac. The average foreclosure sales price in the city was close to $110,000.
Erin Moran
The star: She's best known as Richie Cunningham's freckle-faced little sister Joanie on the 1970s sitcom "Happy Days" and co-star of the spinoff "Joanie Loves Chachi."
The house: Los Angeles County court records posted on the entertainment website TMZ.com show that Moran, also known by her married name Erin Fleishmann, owed $315,930 on the Palmdale, Calif., home. The Bank of New York Mellon Trust bought the house at auction for $291,150 in July 2010. According to TMZ, Moran stayed in the home after losing it to the bank and was evicted.
The market: Palmdale, just north of Los Angeles, posted foreclosure filings in November 2010 on one in 80 housing units. The average foreclosure sales price was around $154,000.
Lisa Wu-Hartwell
The star: Viewers of Bravo's "Real Housewives of Atlanta," may remember Wu-Hartwell from the first season as one of the network's touted "six fabulous women from Atlanta's social elite." Hubby Edgerton Hartwell, the former Oakland Raiders linebacker, made frequent appearances.
The house: According to court records posted on TMZ.com, the couple borrowed $2.9 million to buy their suburban mansion in June 2007. Just more than two years later, Bank of America paid $1.9 million for the house at a foreclosure sale at the Forsyth County, Ga., courthouse, after the Hartwells defaulted on their adjustable-rate mortgage.
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The market: RealtyTrac reports there were foreclosure filings on one in 248 housing units in Forsyth County in November 2010. The average foreclosure sales price was around $210,000.
Lenny Dykstra
The star: Nicknamed "Nails," the former Major League Baseball pro was an outfielder for the Mets and the Phillies during the late 1980s and early 1990s. After filing for Chapter 11 bankruptcy in 2009, Dykstra -- in a move many found ironic -- started an online financial advisory firm in 2010 called Nails Investments.
The house: Dykstra bought the 6.5-acre property in Thousand Oaks, Calif., from hockey pro Wayne Gretzky for $18.5 million in 2007, according to the Los Angeles Times. He lost the house in a Ventura County foreclosure sale in November 2010 to a winning bid of $760,712, the newspaper reported. Dykstra owed about $12 million to JPMorgan Chase.
MSN Real Estate: Find a foreclosure
The market: One in 201 homes in Ventura County received a foreclosure filing in November 2010, according to RealtyTrac. The average foreclosure sales price was in the neighborhood of $382,000.
Veronica Hearst
The star: The name is Hearst's claim to fame. She's the widow of newspaper heir Randolph Hearst and stepmother of Patricia Hearst, who was kidnapped by left-wing guerrillas in 1974.
The house: Located Manalapan, Fla., near Palm Beach, the Villa Venezia was originally built for the great-grandson of railroad tycoon Cornelius Vanderbilt. According to The Palm Beach Post, the 52-room, 28,000-square-foot mansion sold to New Stream Capital for $22 million at a Palm Beach County auction in February 2008.
The market: One in 211 housing units in Palm Beach County received a foreclosure filing in November 2010, reports RealtyTrac. The average foreclosure sales price was about $137,000.
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