NJBills

Iceland: A place where commonsense may actually prevail.

2011-08-02T12:10:00.000-07:00

As one European country after another fails or risks failing, imperiling the Euro, with repercussions for the entire world, the last thing the powers that be want is for Iceland to become an example. Here's why:

Five years of a pure neo-liberal regime had made Iceland, (population 320 thousand, no army), one of the richest countries in the world. In 2003 all the country’s banks were privatized, and in an effort to attract foreign investors, they offered on-line banking whose minimal costs allowed them to offer relatively high rates of return. The accounts, called IceSave, attracted many English and Dutch small investors. But as investments grew, so did the banks’ foreign debt. In 2003 Iceland’s debt was equal to 200 times its GNP, but in 2007, it was 900 percent. The 2008 world financial crisis was the coup de grace. The three main Icelandic banks, Landbanki, Kapthing and Glitnir, went belly up and were nationalized, while the Kroner lost 85% of its value with respect to the Euro. At the end of the year Iceland declared bankruptcy.

Contrary to what could be expected, the crisis resulted in Icelanders recovering their sovereign rights, through a process of direct participatory democracy that eventually led to a new Constitution. But only after much pain.

Geir Haarde, the Prime Minister of a Social Democratic coalition government, negotiated a two million one hundred thousand dollar loan, to which the Nordic countries added another two and a half million. But the foreign financial community pressured Iceland to impose drastic measures. The IMF and the European Union wanted to take over its debt, claiming this was the only way for the country to pay back Holland and Great Britain, who had promised to reimburse their citizens.

Protests and riots continued, eventually forcing the government to resign. Elections were brought forward to April 2009, resulting in a left-wing coalition which condemned the neoliberal economic system, but immediately gave in to its demands that Iceland pay off a total of three and a half million Euros. This required each Icelandic citizen to pay 100 Euros a month (or about $130) for fifteen years, at 5.5% interest, to pay off a debt incurred by private parties vis a vis other private parties. It was the straw that broke the reindeer’s back.

What happened next was extraordinary. The belief that citizens had to pay for the mistakes of a financial monopoly, that an entire nation must be taxed to pay off private debts was shattered, transforming the relationship between citizens and their political institutions and eventually driving Iceland’s leaders to the side of their constituents. The Head of State, Olafur Ragnar Grimsson, refused to ratify the law that would have made Iceland’s citizens responsible for its bankers’ debts, and accepted calls for a referendum.

Of course the international community only increased the pressure on Iceland. Great Britain and Holland threatened dire reprisals that would isolate the country. As Icelanders went to vote, foreign bankers threatened to block any aid from the IMF. The British government threatened to freeze Icelander savings and checking accounts. As Grimsson said: “We were told that if we refused the international community’s conditions, we would become the Cuba of the North. But if we had accepted, we would have become the Haiti of the North.” (Cubans see the situation in Haiti, they count themselves lucky.)

In the March 2010 referendum, 93% voted against repayment of the debt. The IMF immediately froze its loan. But the revolution (though not televised in the United States), would not be intimidated. With the support of a furious citizenry, the government launched civil and penal investigations into those responsible for the financial crisis. Interpol put out an international arrest warrant for the ex-president of Kaupthing, Sigurdur Einarsson, as the other bankers implicated in the crash fled the country.

But Icelanders didn't stop there: they decided to draft a new constitution that would free the country from the exaggerated power of international finance and virtual money. (The one in use had been written when Iceland gained its independence from Denmark, in 1918, the only difference with the Danish constitution being that the word ‘president’ replaced the word ‘king’.)

To write the new constitution, the people of Iceland elected twenty-five citizens from among 522 adults not belonging to any political party but recommended by at least thirty citizens. This document was not the work of a handful of politicians, but was written on the Internet. The constituent’s meetings are streamed on-line, and citizens can send their comments and suggestions, witnessing the document as it takes shape. The constitution that eventually emerges from this participatory democratic process will be submitted to parliament for approval after the next elections.

Some readers will remember that Iceland’s ninth century agrarian collapse was featured in Jared Diamond’s book by the same name. Today, that country is recovering from its financial collapse in ways just the opposite of those generally considered unavoidable, as confirmed yesterday by the new head of the IMF, Christine Lagarde to Fareed Zakaria. The people of Greece have been told that the privatization of their public sector is the only solution. And those of Italy, Spain and Portugal are facing the same threat.

They should look to Iceland. Refusing to bow to foreign interests, that small country stated loud and clear that the people are sovereign. The people of Iceland took a stand against fraudulently created debt and refused to pay it. The United States placates to our creditors as if they have the capabilities to "get" their money by force. Most of our "so-called" deficit was created by Credit Default Swaps, Junk Bonds and Speculation. Now the New Debt Deal is cutting much needed social programs so that the United States can pay back some of this fraudulent debt to the same Banking Conglomerates that created this mess in the first place. Iceland is refusing to bow to the International Banking Bullies like the rest of the world. I don't think that it is a coincidence that no news outlet is reporting this story, they don't want citizens of other countries to get the same idea. The IMF is just a Puppet of the International Banking Community, The loans they give never work and usually leave the country who undertakes an IMF loan in worse shape, these loans are usually cannot be paid back and the country is often forced to sell its Utilities, natural resources or inexpensive labor to foreign interests. The foreign Interests maximize their profits and leave the country in even worse shape than before. Iceland should consider itself lucky because an IMF loan would only exacerbate their situation. Other European countries with financial difficulties are taking on austerity measures that punish the working class but do not effect the banking conglomerates that torpedoed the countries' finances in the first place. These Austerity measures will ostracize the working class/middle class even further and lead to large scale protests and work stoppages. Countries like Spain, Greece and Portugal are demonstrating that they care about their relationships with the banking conglomerates more than the relationship with their own citizens. This is why I applaud Iceland for giving the IMF and their cronies the cold shoulder.

State Officials and Federal Regulators at odds about Foreclosure Reform

2011-04-12T12:44:00.000-07:00

The rift continues to widen between state and federal officials over foreclosure reform.

Since the 50 state attorneys general first issued their proposal to aggressively overhaul the foreclosure process and penalize servicers, the two sides have clashed over the specifics, with states reportedly advocating for stricter measures than federal regulators.

Disagreements have now become pronounced enough to leave open the prospect that the states could eventually issue their own orders for reform, independent of the Comptroller of the Currency and Federal Reserve -- two government agencies charged with reforming the foreclosure process, according to the Wall Street Journal.

In a letter sent on Monday to the Federal Reserve, the WSJ reports, 22 current and former board members of the Fed's Consumer Advisory Council said federal regulators' potential proposal appears to be "profoundly disappointing," leaving "too much discretion" to mortgage companies without imposing strict enough penalties for foreclosure abuses.

America's five largest mortgage firms have saved over $20 billion since the start of the housing crisis by shortcutting the home loan process of struggling borrowers.

In a report last month that drew the ire of housing and consumer advocates, the Fed found no evidence of wrongful foreclosures.

Still, other regulators have advocated hitting the 14 largest mortgage firms with upwards of $30 billion in penalties for past abusive practices.

Amid the debate, a new paper entitled "The Economics of the Proposed Mortgage Servicer Settlement," funded in part by the financial services industry, disputes the notion that the state attorneys generals' proposal will protect homeowners, arguing that it would instead "generate significant unintended negative consequences" by raising "the number of defaults and servicing costs." Most consumer advocates agree that this is a ridiculous notion and that the federal agencies involved are only working to protect the Mortgage Industry.

The federal debate over the foreclosure process has heated up in recent weeks, with the Obama administration backtracking on an earlier, more dramatic proposition more in line with that of the states attorneys general. The president's earlier proposal would have required mortgage lenders to reduce monthly payments for millions of U.S. homeowners.

This is another case where the federal Government is placating to large financial institutions while state regulators are trying to impose tougher standards. A scenario similar to this has already played out in the financial sector, where state and community banks who were held to stricter regulatory standards than national banks. This allowed National Banks to participate in risky financial dealings like credit-default swaps, hedge-fund operations and other shady financial practices. State Regulators and the FDIC tend to be tougher on banks than the Office of the Comptroller of the Currency and Bank Holding companies which is a part of the Federal Reserve, which tends to be more favorable to the banks because the Federal Reserve is actually a privatively held company whose board members are members of the international banking community.

The decision here is clear, Individual states should be put in charge of overseeing foreclosure reform because for the most part their findings make sense, because if the banks did not do anything unlawful, why are we seeing a record number of foreclosures?

Secondly, the federal reserve is a privately owned bank based in Delaware, the board members are prominent bankers from all over the world, this is a conflict of interest in my opinion because the Federal Reserve which comprised of Bankers is not going to be critical of other bankers. State regulators are more likely to take a more objective approach when investigating such matters.

Mortgage Industry to undergo drastic changes but is it too little too late?

2011-03-08T17:47:00.000-08:00

Federal regulators and the top law enforcement officers in all fifty states are eyeing big changes to the dysfunctional home loan industry. If these officials have their way, borrowers who take out home loans and the investors who buy them will work closer together and find common ground to minimize foreclosures, while the middle men who are supposed to be performing that job will see their power diminished.

That's the takeaway from a 27-page proposed settlement agreement a coalition of all 50 state attorneys general and five federal agencies sent last week to the nation's five largest home loan firms. The document details how mortgage companies should treat borrowers who fall behind on their payments.

It's the opening salvo in what will be a months-long negotiation between the nation's largest banks and the officials who oversee them to settle state and federal claims that they abused borrowers and illegally foreclosed on homes.

"Laws were not being followed by the servicers," Illinois Attorney General Lisa Madigan said Monday. "That absolutely has to change."

Regulators, investors and consumer advocates have long complained of a crooked system in which the firms that are supposed to collect payments from borrowers and distribute the proceeds to investors, known as mortgage servicers, have worked to their own advantage rather than working for those they're supposed to represent -- investors.

The proposed checklist of changes, the result of federal and state probes into big banks' foreclosure practices, tries to fix that. The Departments of Justice, Treasury, and Housing and Urban Development support the proposal. So do the Federal Trade Commission and the nascent Bureau of Consumer Financial Protection.

Currently, servicers have wide discretion in how they process payments and treat distressed borrowers and the investors who own those mortgages. If the state attorneys general had their way, that discretion would be narrowed, incentives would be altered, and a new system would emerge in which deserving homeowners would see their payments reduced and investors would experience decreased losses as a result of avoiding foreclosure.

But state and federal officials face an uphill climb. The banking industry and its allies in Congress howl that costs will skyrocket and the housing market will slide again as necessary foreclosures are delayed, threatening the recovery. The uncertainty of the final shape of a settlement also weighs on the market, undercutting efforts to fully investigate banks' loan files and possible wrongful foreclosures. Regulators don't want a dragged-out process. Iowa Attorney General Tom Miller, who's leading the 50-state effort, said Monday that he hopes the negotiations will only take a couple of months.

"We don't want uncertainty to linger too long," said North Carolina Attorney General Roy Cooper.

The preliminary term sheet is just one part of a comprehensive settlement. Fines will be levied, banks have said, and regulators are pushing for additional loan modifications. Those details were not disclosed Monday.

Some regulators are looking to levy up to $30 billion in penalties on the nation's 14 largest mortgage firms for their abusive practices. The penalties would come in the form of civil fines and losses from modifying home mortgages, according to people familiar with the matter. But the national bank overseer, the Office of the Comptroller of the Currency, is fighting that approach. The OCC wants a settlement that would cost the industry just a few billion dollars, sources said.

The state attorneys general want to penalize the industry for past misdeeds, and levy fines and change industry practices to minimize the chances that such transgressions will pop up again.

"We want to remedy losses that have occurred as a result of those problems," John Suthers, Colorado's attorney general, said of restitution due to bank errors.

The changes they're pursuing appear basic to those outside the industry: homeowners shall be afforded basic rights, investors will no longer have to jump through hoops to get the most basic information, mortgage servicers will be required to prove they have the necessary documentation to repossess a home, and banks shall subject themselves to regular audits to ensure compliance.

To those who work inside the industry, or help troubled homeowners navigate through it, the changes regulators seek appear to be the equivalent of a whole new mortgage system. That's how dysfunctional the industry has become.

Instead of an industry geared towards maximizing the value of a mortgage -- like modifying a home loan so investors lose $0.20 on the dollar rather than the $0.50 they'd lose if it was repossessed -- servicers are instead forcing through foreclosures, racking up fees through prolonged foreclosure proceedings, and effectively disregarding the rights of investors and borrowers in pursuit of their own profit.

By bringing investors and homeowners closer together, regulators are trying to minimize the power wielded by servicers.

The nation's five largest mortgage servicers -- Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally Financial -- handle about three out of every five home loans, according to newsletter and data provider Inside Mortgage Finance.

The document was posted online Monday by American Banker. Its authenticity was confirmed by regulators involved in the process who asked not to be named.

Among regulators' proposals:

-Mortgage servicers shall not use incentives that encourage their employees to take shortcuts, like the robo-signing debacle that forced firms to halt home repossessions once evidence emerged that banks were at times breaking the law in their rush to foreclose on distressed borrowers;

-Foreclosure documents will require hand signatures, rather than simple stamps or electronic signatures;

-Mortgage servicers will have to prove they have the original loan files in order to repossess a home (a recent study of foreclosures in bankruptcy by Katherine M. Porter, a visiting professor at Harvard, found that in 40 percent of cases creditors foreclosing on borrowers did not show proper documentation);

-Servicers will have to create divisions separate from their foreclosure units to mediate complaints from aggrieved homeowners, and those units will be subject to audits from other companies, which will then produce reports for regulators detailing servicers' efforts;

-Servicers will be required to create and pay for websites that will allow borrowers to track their individual cases when trying to get their loans modified, as well as websites that will allow borrowers to easily get in touch with housing counselors;

-New incentive structures within servicers will be mandated that encourage loan modifications over foreclosure;

-Servicers will have to operate under strict timelines when processing loans, requests for loan modifications, and pursuing foreclosures;

-Servicers will have to disclose specific reasons why homeowners weren't offered loan modifications;

-Conditional forgiveness of mortgage principal will be required in situations in which balloon payments are due at the end of a modified loan's term;

-Equivalent forgiveness of second mortgages will be required when part of the first mortgage is written off;

-Servicers should consider homeowners' total debt obligations, rather than just their first mortgage, when restructuring their home loans (this would have the effect of lowering borrowers' total debt payments);

-Homeowners should have only one person to deal with at their servicer when trying to modify their loan, a significant change from the present situation in which homeowners are subject to endless phone calls and letters from a variety of bank employees;

-And investors will have access to more information, loan files, and will have a more powerful voice to call for individual loan modifications, rather than being forced to trust that servicers are acting in their best interests. This could be one of the more powerful changes as investors have long called for more loan modifications of troubled borrowers' debt, only to be rebuffed by mortgage servicers. If investors can see individual loan files -- and borrowers can see who the investors are -- this could lead to a significant increase in mortgage modifications.

Banks, though, are already bristling at the proposals, according to people familiar with the matter. Asked about whether the industry would agree to adopt the changes, Miller wondered: "Will enlightened self-interest prevail?"

Mortgage Delinquencies in Decline but a Tough Road Ahead Remains

2011-02-17T16:46:00.000-08:00

Fewer Americans are falling behind on their mortgage payments; in fact, the fewest in two years. Mortgages just one payment past due fell to their lowest level since just before the recession began. Is it delays in paperwork from insufficient paperwork and the foreclosure servicing scandal? No. It's actual fundamentals in the economy and the mortgage market. This may seem like a surprise to many how work in the industry.

It is interesting to note that as we got toward the end of 2010 we began to see another drop in weekly claims for unemployment insurance. I think that's a key driver of the short term delinquencies but many of those figure scan be shewed due to the way unemployment figures are reported. They are based on claims and if an individual doesn't make a claim, it may mean that he or she found employment or it can also mean that they simply ran out of unemployment benefits.

But even more significant is the improved underwriting that began after the mortgage market crashed. We're now past the delinquency peak on loans that were underwritten during the worst phase of the housing boom in 2006 and 2007.

The national delinquency rate fell 10 percent in the fourth quarter of last year to 8.22 percent, according to the Mortgage Bankers Association's latest survey. That's still high by historical standards, but it's a huge improvement. It's also good to see that the FHA delinquency rate improved slightly, from 12.62 percent to 12.26 percent, which is still high based on past years but a step in the right direction.

Beware of Mortgage Modification Scams

2011-01-05T15:31:00.001-08:00

Mortgage Modifications have gained popularity in recent years, but many Mortgage Modifications Company are in legal turmoil due to unfair business practices. Often they will promise to lower Mortgage payments but cannot deliver on those promises and leave Homeowners in a worse situation than before. Currently there are several Attorney Generals in various states who are pursuing Legal actions against these companies.

Advance fees and demands that a homeowner stop making payments are key hallmarks of a scam. A Federal Trade Commission rule that took effect last week makes it illegal for companies to tell consumers to stop paying their mortgage, unless they also tell them that they could lose their home and damage their credit rating by doing so. A federal ban on collecting advance fees under the same rule will take effect at the end of this month.

It is already illegal in Florida for a loan modification company to charge a fee up front, and the state attorney general's office confirmed to HuffPost that it is currently investigating NHR, partially based in Florida, for "unfair and deceptive practices with regard to collecting fees and utilizing a client contract."

FTC spokesman Frank Dorman said the volume of loan modification scams has significantly increased with the uptick in foreclosures in the past few years.

"While the scams have existed in some form for awhile, as delinquencies and foreclosure filings have risen the opportunity for loan modification and foreclosure rescue scams has increased," he said. "We advise people to avoid any company or individual that requires a fee in advance, guarantees to stop a foreclosure or modify a loan, or advises the homeowner to stop paying the mortgage company. Many of the complaints received by the FTC include not being able to contact the company after paying for mortgage refinance services, not being able to get their money back and not receiving proper help from the company after paying for services."

It is always recommended to that you get legal advise from an Attorney prior to entering into any Loan Modification agreement. Many Bankruptcy and financial services Law firm offer modification options as well. It is often better to hire an attorney's office to do your Modification because they have the backing of a real Lawyer. Many Loan Modification Companies are only loosely affiliated with an Attorney and many have no legal expertise or backing whatsoever.

The Carbone Law Firm has a Loan Modification Expert on staff and they have a better than average results when it comes to Modifying loans. Most Importantly we have been in business for over 17 years and are based locally in Wall, New Jersey, so you know who you are dealing with and where your money is going. For a free Consultation call us at 732-681-6800 or visit us on the web at www.cerbonelaw.com for more information.

The Complexities of Mortgage Ownership: Can You to Complete the Puzzle?

2010-11-16T13:45:00.000-08:00

We all know the mortgage securitization process is complicated.

But just how complicated? This chart from Zero Hedge shows the convoluted journey a mortgage takes as it morphs into a security. Dan Edstrom, of DTC Systems, who performs securitization audits, and who is giving a seminar in California next month, spent a year putting together a diagram that traces the path of his own house's mortgage. "Just When You Thought You Knew Something About Mortgage Securitizations," says Zero Hedge, you are presented with this almost hilariously complicated chart.

A controversy of allegedly shoddy paperwork has raised doubts about the legitimacy of foreclosures nationwide, eliciting complaints from homeowners and investors alike. The Congressional Oversight Panel, a bailout watchdog, released a statement Tuesday that says the scandal over alleged "robo-signers," foreclosure processors who approve documents without reading them, "may have concealed much deeper problems" in the mortgage industry,

Regulators will have their hands full.

Bank of America Finally Comes to its Senses

2010-10-08T11:56:00.000-07:00

Bank of America will stop foreclosures in all 50 U.S. states. Last week the bank, the country's biggest by assets, announced it was halting foreclosure in the 23 states where foreclosures are processed in court, saying it needed to review foreclosure documents for potential errors. Now, the bank has extended that moratorium to all 50 states as it has decided to stop sales of foreclosed properties, blocking a major step in the foreclosure process.

The decision comes as a foreclosure crisis threatens the nation's housing market and larger economy. Reports of foreclosure processors approving documents without properly reviewing them and bank agents changing locks on the doors of houses that aren't even in foreclosure -- while the residents are inside -- pile ambiguity and scandal on the foreclosure system. Delays in the process further cripple the weak housing market.

Already, foreclosure ambiguities have begun to stall sales of foreclosed properties. The New Yorl Times describes the case of a woman who was about to move into a house when Fannie Mae declared the property's foreclosure might not have been valid, and she was told to wait. While owners of foreclosed homes may be glad to see these proceedings halted, buyers of those homes -- and the larger housing market -- are suffering.

In the years leading up to the housing crash, investors hungered for risky mortgages that banks would bundle and re-package into securities. This arcane market drove banks to initiate more and riskier mortgages at break-neck speeds. Experts say the massive amounts of shoddy paperwork that accompanied this process are now being exposed, wreaking havoc on the banks and on the economy.

Senate Majority Leader Harry Reid (D-Nev.) supports Bank of America's decision to halt foreclosures across the nation, according to a release. "I thank Bank of America for doing the right thing," he said in a statement, calling on other lenders to follow the bank's lead and expand their foreclosure moratoriums.

BofA joins Citi in support of Judicial Mortgage Modification

2010-04-13T16:54:00.000-07:00

Bank of America, the nation's largest lender and its biggest bank by assets, now supports changing the law to give federal judges the power to modify mortgages in bankruptcy.

The bank joins Citigroup, the nation's third-largest bank by assets, in supporting a change to existing law to give homeowners more leverage. Unlike other forms of debt, bankruptcy judges presently lack the power to change mortgage terms. The banking and home mortgage industry want to keep it that way -- by not allowing judges the authority to change the terms, troubled homeowners are at the mercy of their lenders. They take what they get.

But Tuesday, before a nearly-empty Congressional hearing room, Barbara J. Desoer, president of Bank of America Home Loans, said her bank now supports leveling that playing field.

"As we've gone through the lessons that we've learned with modifications and other programs, there probably is some segment of borrowers for whom that would be an appropriate alternative," Desoer said before the House Financial Services Committee.

"So you would support that in some circumstances?" asked Rep. Brad Miller (D-N.C.) in a follow-up to his original question.

"In some circumstances, yeah," Desoer responded.

In December, the House failed to pass an amendment to its financial reform bill that would have given judges this authority, despite the fact that it passed the chamber the previous March. The Senate defeated it the next month after banks and mortgage lenders of all sizes mobilized to kill the measure.

Bank of America, though, is the nation's largest lender and servicer of home mortgages. Desoer oversees a home mortgage unit that accounts for "about 20 percent of the U.S. mortgage origination market, with a $2 trillion servicing portfolio serving nearly 14 million customer loans," according to the bank's website.

Its support now gives homeowner advocates in Congress added ammunition to pressure lenders to either do more to give distressed homeowners sustainable mortgage modifications, or to threaten the rest of the mortgage industry with the possibility of reintroducing a bill that would allow federal judges the authority to unilaterally do it on their own.

Citigroup supported the change last year as Congress debated the proposal. Its position has not changed, bank spokeswoman Molly Meiners told the Huffington Post. Together, Bank of America and Citigroup hold a combined $4 trillion in assets, according to regulatory filings with the Federal Reserve.

After Desoer appeared to qualify her support, committee Chairman Barney Frank (D-Mass.), who supports giving judges the authority to treat home mortgages like other forms of consumer debt, interjected in hopes of getting additional clarification.

"Obviously the law would have to be modified to allow that circumstance," he said. "We should make clear that we can't change the bankruptcy law obviously case by case, so it would have to be an [inaudible] change."

Miller then asked a follow-up question.

"You would support a legislative change in the bankruptcy law to allow the modification of home mortgages in bankruptcy?" he asked Desoer.

"Yes," she replied. "And I believe that there is a segment of borrowers for whom that is the appropriate alternative, subject to them having gone through qualification for HAMP, or something like that, and failed." HAMP refers to the administration's main foreclosure-prevention initiative, the Home Affordable Modification Program.

"There is a segment of borrowers for whom that might be an appropriate alternative, yes," Desoer added.

In an interview after the hearing, Frank told HuffPost that Bank of America's new position was "encouraging."

"We may be able to reopen that," Frank said. "And of course, Citi stayed with it. We now have two of the four [biggest banks in the country]" supporting judicial mortgage modifications.

Frank added that he would tell the House Judiciary Committee about Bank of America's now-public position. Judiciary has jurisdiction over bankruptcy law, he said.

"Maybe we can revisit this," Frank said.

Odds are slim. Banks still wield tremendous influence in the Capitol.

"I'm not confident. I'm hopeful," said Frank. "Look, you've got the credit unions, the community banks -- people tend to overestimate the importance of the big banks. Frankly, it's the smaller entities that have more political clout, and I don't see that this has moved us elsewhere. It's helpful, but it's not conclusive."

The panel was quickly reminded that Bank of America and Citi were alone in their support for homeowners.

Mike Heid, co-president of Wells Fargo Home Mortgage, butted in after Desoer finished responding to Miller, and added his two cents:

"I think you'd have to ask yourself whether a change in bankruptcy law is really the best way -- and the fastest way -- to achieve assistance for homeowners. I think there's other alternatives," Heid said in a response to a question that wasn't asked of him.

Miller quickly retorted, "We're trying to do other alternatives now, and have been for three years, and without much to show for it."

Last year lenders foreclosed on more than 2.8 million homes, according to real estate research firm RealtyTrac. The firm estimates three million homes will get foreclosure notices this year; more than one million of them will be repossessed by lenders

Gov't expands assistance for homeowners with property values under their mortgages

2010-04-05T15:04:00.000-07:00

The government launched a new effort on Monday to speed up the time-consuming, often-frustrating process of selling your home if you owe more than it's worth.

The Obama administration will give $3,000 for moving expenses to homeowners who complete such a sale -- known as a short sale -- or agree to turn over the deed of the property to the lender. It's designed for homeowners who are in financial trouble but don't qualify for the administration's $75 billion mortgage modification program.

Owners will still lose their homes, but a short sale or deed in lieu of foreclosure doesn't hurt a borrower's credit score for as much time as a foreclosure. For lenders, a home usually fetches more money in a short sale than a foreclosure. And the bank avoids expensive legal bills, cleanup fees and maintenance costs that follow a foreclosure.

"It's very traumatic and embarrassing and frustrating to go through a foreclosure," said Laurie Maggiano, policy director of the Treasury Department's homeownership preservation office. With a short sale, she said, "your financial issues are your own problem and not neighborhood conversation."

Falling home prices and lost jobs have forced many sellers into this position. For example, in Orange County, Calif., short sales made up about 26 percent of the market in March, compared with 17 percent a year earlier, according to data complied by Altera Real Estate, a local brokerage. In the Minneapolis-St. Paul metro area, about 12 percent of all deals since October were short sales, up from about 8 percent a year earlier, according to the Minneapolis Area Association of Realtors.

The expanded incentives will help accelerate short sales, said Mark Zandi, chief economist at Moody's Analytics. He expects 350,000 homeowners nationwide to use the program through the end of 2012, more than double his earlier forecast.

For buyers, though, short sales can be a great opportunity.

Along with the financial incentives, the new government program makes another key change. Mortgage companies will have to set their minimum bid before the house is listed for sale. If the offer is above that, the lender must accept it.

That's a big change from current practice. Lenders generally don't calculate how much money they are willing to accept on a short sale until they have an offer in hand, causing long delays before the sale is approved.

The new program "will give us a degree of efficiency that we have not had in the past," said Matt Vernon, Bank of America's executive in charge of short sales and foreclosed properties.

Under the new process, buyers who submit an offer to purchase a home in a short sale should get a response within two weeks, as opposed to months. If that happens as planned, it would be a big improvement. Real estate agents across the country have complained that lenders are often difficult to reach, sometimes only communicating by e-mail and infrequently at that.

Some real estate agents who specialize in short sales are optimistic. Most borrowers in Las Vegas, owe so much more on their mortgages than their properties are worth they can't qualify for a loan modification.

The Treasury Department outlined the plan last November, but doubled the original $1,500 in relocation money after realizing that many homeowners need more cash to move out. That's because landlords usually want large deposits from people whose credit records have gone sour after missing mortgage payments.

However, there are plenty of restrictions. To qualify, the home needs to be a borrower's primary residence. Homeowners either have to be behind on their mortgages or on the verge of becoming delinquent.

Currently, the program is not available for mortgages owned or guaranteed by mortgage finance companies Fannie Mae and Freddie Mac, though the two government-controlled companies will soon follow suit, said the Treasury's Maggiano.

Obama To Order Lenders To Cut mortgage Payments For Unemployed

2010-03-26T05:42:00.000-07:00

After months of criticism that it hasn't done enough to prevent foreclosures, the Obama administration is expected to announce Friday a plan to reduce the amount some troubled borrowers owe on their home loans.

The effort will let people who owe more on their mortgages than their properties are worth get new loans backed by the Federal Housing Administration, people briefed on the plan said. It would be funded by $14 billion from the administration's existing $75 billion foreclosure-prevention program.

The people briefed on the plan asked Thursday that they not be identified because the details had not yet been announced.

The plan will also require the more than 100 mortgage companies participating in the administration's existing foreclosure prevention program to consider slashing the amount borrowers owe. They will get incentive payments if they do so.

It also will include three to six months of temporary aid for borrowers who have lost their jobs. And there will be additional payments designed to give banks an incentive to reduce payments or eliminate second mortgages such as home equity loans – a problem that has blocked many loan modifications.

The changes "will better assist responsible homeowners who have been affected by the economic crisis through no fault of their own," an administration official said.

To date, the administration's $75 billion foreclosure-prevention program has been a disappointment. Critics have complained the program does little to encourage banks to cut borrowers' principal balances on their primary loans. Nearly one in every three homeowners with a mortgage are "under water" – they owe more than their property is worth – according to Moody's Economy.com.

An expansion of the foreclosure-prevention program has long been expected because only 170,000 homeowners have completed the process out of 1.1 million who began it over the past year.

The program is designed to lower borrowers' monthly payments by reducing mortgage rates to as low as 2 percent for five years and extending loan terms up to 40 years. To complete the program, homeowners need to go through a three month trial period and provide proof of their income, plus a letter documenting their financial hardship.

n spent. Lenders had received $58 million in incentive payments as of last month, according to the Government Accountability Office.

Meanwhile, one long-delayed piece of the government effort is getting off the ground.

Citigroup Inc. on Thursday joined the government's program to modify second mortgages such as home equity loans. With Citi on board, now four big owners of second mortgages have joined. The others are Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co.

Republican Strategist Pens Memo To Kill Financial Regulatory Reform

2010-02-01T14:39:00.000-08:00

Nine months after he penned a memo laying out the arguments for health care legislation's destruction, Republican message guru Frank Luntz has put together a playbook to help derail financial regulatory reform.

In a 17-page memo titled, "The Language of Financial Reform," Luntz urged opponents of reform to frame the final product as filled with bank bailouts, lobbyist loopholes, and additional layers of complicated government bureaucracy.

"If there is one thing we can all agree on, it's that the bad decisions and harmful policies by Washington bureaucrats that in many ways led to the economic crash must never be repeated," Luntz wrote. "This is your critical advantage. Washington's incompetence is the common ground on which you can build support."

Luntz continued: "Ordinarily, calling for a new government program 'to protect consumers' would be extraordinary popular. But these are not ordinary times. The American people are not just saying 'no.' They are saying 'hell no' to more government agencies, more bureaucrats, and more legislation crafted by special interests."

In Republican circles Luntz's words, which have helped the party score win the message wars over health care and other legislative battles, are often treated as gospel. Already, some of the advice he's offered on regulatory reform has found its way into the political discourse -- with a proposed Consumer Financial Protection Agency seemingly on life support under Republican objections.

In addition to tying regulatory reform to a massive government takeover, Luntz's memo includes several other data points and messaging suggestions as a blue print for the legislation's defeat. Opponents, he writes, would be well served to link the package to the financial industry bailout (which, it should be noted, is fundamentally not part of the legislation). According to accompanying polling data, 52 percent of voters said they would be "much less likely" to vote for their member of Congress if they voted for a financial reform bill that contained a fund to bail out banks and Wall Street.

"Public outrage about the bailout of banks and Wall Street is a simmering time bomb set to go off on Election Day," Luntz wrote. "Frankly, the single best way to kill any legislation is to link it to the Big Bank Bailout."

Another effective strategy to kill the bill, according to Luntz, is to make the case that it was written in secret by lobbyists.

"The American people are tired of add-ons, earmarks, and backroom deals - but they are mad as hell at 'lobbyist loopholes,'" Luntz wrote. "You must put proponents of the legislation on the defense, forcing them to attempt to justify the 'lobbyist loopholes' and exemptions placed in the bill... Highlight the exemptions. Broadcast them. Remind them, 'The legislation is filled with lobbyist loopholes that exclude certain wealthy, powerful industries from regulations.'"

On the specific issue of a Consumer Financial Protection Agency, Luntz argued that opponents should stress the high-cost of creating an additional regulatory body in addition to the damaging effects it will supposedly have on "small business owners" (as opposed to, merely, small businesses).

"Owning a small business is part of the American Dream and Congress should make it easier to be an entrepreneur," wrote Luntz. "But the Financial Reform bill and the creation of the CFPA makes it harder to be a small business owner because it will choke off credit options to small business owners."

These lines or arguments are similar to the ones used by regulatory reform opponents in the past, often with some success. What's telling is that they are being trotted out again in this type of economic environment.

Luntz does seem to acknowledge that the climate makes defeating regulatory reform a bit trickier. At the top of his memo he urges opponents (primarily Republican lawmakers) to "acknowledge the need for reform that ensures this NEVER happens again," He insists that "the status quo is not an option" and that members of Congress, when addressing the crisis, "never forget its impact on your audience." Luntz even advise his audience to promote themselves the agents of change.

But for the sake of winning the debate, he adds, it is vital to insist that such change does not include additional Washington-based regulatory powers.

"Many of the same members of Congress responsible for the legislation that helped create the housing bubble and the Wall Street financial crisis are now attempting to create another new government agency with an unlimited budget and almost unlimited regulatory powers," wrote the GOP wordsith. "I'm sorry to say this but they don't know what they're doing. They have gotten it wrong time and time again..."

"A new agency with new bureaucrats is not change we can believe in," Luntz wrote. "It's not change at all."

Move Your Money to a Local/State Bank

2010-01-13T14:49:00.000-08:00

People all over the country are choosing to move their money out of bigger banks and into smaller, community-oriented financial institutions that generally avoided the reckless investments and schemes that helped cause the financial crisis.

Fueled by the personal initiatives of thousands, it’s a grassroots effort that has the potential to shift power in the financial system away from Wall Street and to Main Street.

Smaller financial institutions are better equipped to have a cooperative approach with customers because they are less riddled by debt, which means they can more freely lend money.
“Community banks are much more likely to reinvest that money in the community and actually help create jobs,” Huffington Post editor Arianna Huffington said on MSNBC.

No matter the impact, “Move Your Money” is a better public response to national bank bailouts than apathy or boisterous tea parties. It is a promising solution for Americans fed up with how their money is handled.

~ Nico Pitney on MSNBC – January 12, 2010

Bank Foreclosure Filings Often Missing Paperwork

2009-12-14T15:59:00.001-08:00

With skyrocketing foreclosure rates across the nation, homeowners have felt powerless to stop big banks from taking over. Many are turning to bankruptcy to try to save their homes.

Those dreaded legal proceedings are leading to free homes for some.

"We were terrified," homeowner Siwanna Green said. "We didn't know what to do."

Green is talking about the day last spring that she found out her 3-bedroom Harlem apartment was going into foreclosure – not from the bank, but from a notice in fine print in the newspaper.

"I tried to negotiate with the bank, and they wouldn't give me any information," Green said. "I keep hearing my apartment is going to be sold, and they kept saying, 'call back, call back.'"

It's the story of many families, but this one may have a nearly fairytale ending since the Greens could get their apartment for free. After being forced into bankruptcy, Green's lawyer David Shaev dug through reams of paperwork to find the bank that says they own the Green home doesn't have a legal leg to stand on.

"They cant prove they have ownership of the mortgage or the note, and they're filing basically are bogus claims," Shaev said.

These cases are far from isolated. Just a handful of attorneys are finding these foreclosure filings are either missing paperwork or fraudulent, meaning the bank doesn't have claim to the home and the mortgage just disappears.

Judges are now ruling that those mortgages be written off. A Patchogue family had their nearly $300,000 mortgage wiped out, and a Cortlandt Manor homeowner just had her $460,000 mortgage thrown out.

In a scathing court hearing the judge declared the mortgage company had a "lack of evidence" to prove they owned the home.

"The judges are very aware and catching on that the documents presented by these banks are not valid," Shaev said.

Shaev and fellow attorneys estimate there could be $1.1 trillion worth of similar mortgage mix-ups.

"If you want to take my client's house away, you better at least prove you have the right to," Shaev said.

A lack of that proof could lead to a very Merry Christmas for some.

While these homeowners can live in their houses free and clear, selling it is another matter since the title is in question. Those battles are currently being fought in court as well.

Fairness in Bakruptcy act leads to Unfair Housing Market

2009-12-08T15:49:00.000-08:00

The financial crisis of 2008 and the current recession were triggered by the bursting of the housing bubble and the sub prime mortgage crisis that began in late 2006/early 2007. But US personal bankruptcy law also played an important role.

In 2005, major reform of US bankruptcy law sharply increased debtors’ cost of filing for bankruptcy. This caused a sharp reduction in the number of filings. Because credit card debts and other types of unsecured debt are discharged in bankruptcy, filing for bankruptcy loosens homeowners’ budget constraints and makes paying the mortgage easier. Thus the 2005 reform set the stage for an increase in mortgage defaults by making bankruptcy less readily available.

We estimate that the reform caused about 800,000 additional mortgage defaults and 250,000 additional foreclosures to occur in each of the past several years – thus contributing to the severity of the financial crisis.

But over longer periods, bankruptcy filings and mortgage defaults are positively rather than negatively related. To show this relationship, we use a large sample of first-lien mortgages that originated in 2004 and 2005 and are followed each month. Figure 1 shows homeowners’ cumulative probability of defaulting on their mortgages, conditional on filing for bankruptcy. More than 90% of homeowners with subprime mortgages and nearly 80% of homeowners with prime mortgages who file for bankruptcy also default on their mortgages. Most often, default occurs first and bankruptcy second. The reverse relationship (not shown) is similar although less strong: 9% of homeowners with subprime mortgages and 6.5% of homeowners with prime mortgages who default also file for bankruptcy. Figure 2 shows homeowners’ cumulative probability of filing for bankruptcy, conditional on lenders starting foreclosure. More than 70% of homeowners with subprime mortgages and nearly 20% of homeowners with prime mortgages who are subject to foreclosure file for bankruptcy.

We also estimate hazard models explaining homeowners’ decisions to file for bankruptcy following default, controlling for homeowner and property characteristics and local economic conditions. We find that when homeowners default, their probability of filing for bankruptcy over the next several months increases 14- to 16-fold, depending on whether they have prime or subprime mortgages. When lenders start foreclosure, homeowners’ probability of filing for bankruptcy increases around 25-fold, regardless of whether they have prime or subprime mortgages.

Why are homeowners’ decisions to default and to file for bankruptcy so closely related? One reason is that increases (decreases) in income levels increase (decrease) homeowners’ ability to pay both their mortgages and their unsecured debts. Similarly, increases (decreases) in homeowners’ total debt levels decrease (increase) their ability to pay both their mortgages and unsecured debts. In addition, default and bankruptcy are positively related because filing for bankruptcy helps homeowners in financial distress. Homeowners who have fallen behind on their mortgage payments and wish to save their homes gain from filing for bankruptcy, because filing delays foreclosure and gives homeowners more time to repay. Filing for bankruptcy also helps homeowners because bankruptcy trustees may challenge excessive fees and penalties that mortgage lenders frequently impose and bankruptcy judges sometimes discharge second mortgages if they are underwater. Homeowners who do not wish to save their homes also benefit from filing for bankruptcy, because the delay in foreclosure allows them to stay in their homes cost-free for several months during the bankruptcy proceeding. Deficiency judgments – claims on ex-homeowners to pay the difference between the mortgage and the sale price of the home in foreclosure – are also discharged in bankruptcy. All of these factors suggest that homeowners who default on their mortgages also gain from filing for bankruptcy.

Policy implications

These relationships have important public policy implications. Foreclosures have very high social costs, many of which are not borne by either borrowers or lenders. The external costs of foreclosure instead fall residents of neighborhoods that become blighted because of foreclosures and on residents of towns and cities that are forced to cut public services because foreclosures caused property values and property tax revenues to fall.

There is an efficiency gain from using bankruptcy policy to discourage defaults and foreclosures. In particular, the 2005 bankruptcy reform should be at least partially reversed, since lowering the cost of filing for bankruptcy will encourage more homeowners to file and therefore reduce foreclosures. And foreclosure laws should be changed to make the foreclosure process longer and more expensive for lenders – this will encourage them to modify mortgages rather than foreclosing. In addition, reforms such as the credit card legislation recently adopted by the US Congress will affect both bankruptcy and default. The new legislation, which prevents credit card lenders from raising interest rates on existing loans, is likely to reduce the cost and availability of credit card loans and therefore will also reduce both mortgage defaults and foreclosures.

Medical Problems leading cause of Bankruptcy

2009-11-24T16:39:00.000-08:00

While leaders in Washington debate health-care reform, bills for medical care right now are driving more people into bankruptcy.

"It's overwhelming, tragic and overwhelming," said Peter Frank, a lawyer with Legal Services of the Hudson Valley, whose agency is seeing more bankruptcy and foreclosure cases related to health-care costs than ever before.

Frank said his agency handles about 60 to 80 cases of health-care-related bankruptcies a year. A few years ago, that number was only 5 or 10 cases.

The problem is being felt all over the country. A study led by Harvard researchers and published earlier this year by the American Journal of Medicine estimated that nearly two out of every three personal bankruptcies — 62 percent — were due to medical bills.

That study was conducted in 2007, before the current economic crisis, so things actually might be even worse than that at this moment.

And even those with health insurance can be susceptible if they're hit with a very serious illness. Nearly 80 percent of those in the Harvard study who went bankrupt due to health-care costs had health insurance when they first became ill.

The rough economy overall sometimes forces people to choose between health care and other necessaries. Take a working couple with two incomes, who suddenly lose one income when one of them is laid off. If they choose to drop medical coverage to help offset the lost income, they might later regret it if one suffers a major illness.

COBRA allows workers who lose their jobs to remain under their employer's health-care coverage temporarily — usually for 18 months — but they have to pay the full cost of premiums. Frank said many middle-class people these days can't afford those payments.

Those who end up in that situation can file under one of two chapters of the federal bankruptcy code.

Frank said if they own a home, they usually can try to save it by filing under Chapter 13. That allows them to arrange to pay off their debt over time.

If they don't own a home, they'll usually opt for Chapter 7. There the basic goal is to wipe out the debt by liquidating all assets.

Frank said his agency also has to step in at least once or twice a month to stop debt collectors' harassing phone calls to debtors on fixed incomes.

Cramdown Bill Revisited

2009-11-10T16:21:00.000-08:00

With foreclosures continuing to climb and midterm elections just a year away, Congress once again is preparing to tackle the mortgage crisis aggressively. High on many a wish list: a renewed push to allow so-called cramdown, which would let bankruptcy judges adjust the terms of home loans to give borrowers relief.

The banking industry hates cramdown from the idea of cramming deals down lenders' throats, but Democrats argue that earlier efforts to fix the housing mess have not done as well as hoped. Moody's Economy.com MCO estimates that 3.8 million homes will enter foreclosure this year, up 41% from 2008. No surprises, then, those lawmakers are getting an earful. "We have folks calling our office every day," says Senator Jeff Merkley D-Ore., who is pressing Treasury to streamline its program to restructure mortgages.

Capitol Hill is now again looking at other options. One bill, introduced by Senator Jack Reed D-R.I. on Sept. 30 and co-sponsored by Merkley and two other senators, would force lenders to pause before they foreclose and to offer borrowers a break on their mortgage bill if they qualify for help under the Treasury program. Under the same proposed law, states could require mortgage servicers to enter mediation with borrowers before being allowed to foreclose. The bill also would give the states $6.4 billion to help homeowners stay put. "We're really trying to light a fire under the Administration," Merkley says.

Others in the Senate are considering the temporary suspension of home-loan payments or brief monthly mortgage subsidies for unemployed homeowners. House Financial Services Committee Chairman Barney Frank D-Mass. is drafting similar legislation.

The Administration is considering new options, too. One would support the broader housing market by extending a homebuyer's tax credit and making it easier for Fannie Mae FNM and Freddie Mac FRE to finance mortgages. Another would fund state housing agencies and independent mortgage banks. A Treasury spokeswoman noted that the Administration's programs have done more than previous efforts but said it "aggressively continues to build on our progress to date."

Many congressional Democrats think mortgage lenders need to feel the lash before they'll speed up mortgage workouts. Those critics, led by Senator Richard J. Durbin D-Ill., figure banks and mortgage servicers will do their best not to cut principal or interest rates on a mortgage. Lenders want to avoid, or at least delay, the loss they take from lowering what homeowners must pay, critics say. And despite an Administration plan that gives subsidies to mortgage servicers who agree to rework loans, many believe the service firms still gain too much from the fees they collect in foreclosure to bother working out a loan.

Durbin and other lawmakers are calling on Democrats to support what is seen as the party's nuclear option: cramdown. The proposal, which sailed through the House last spring, only to stall in the Senate on a 45-51 vote, authorizes bankruptcy courts to adjust mortgages. If Durbin's bill were to pass, a judge could reduce principal or interest rates on home loans and stretch out mortgage payments, something bankruptcy courts can do already with virtually every other kind of debt.

Supporters say cramdown would free homeowners from debt they can't afford while prodding lenders to cut deals before reaching the courthouse. A bankruptcy-court solution would also cost taxpayers little or nothing. Detractors argue cramdown would spook the mortgage market, driving up borrowing costs and making loans harder to get. Undeterred, Durbin, the second-ranking Senate Democrat, is willing to attach a cramdown provision to any convenient bill if it won't get a hearing on its own. The proposal "will always be part of the conversation, if for nothing else than to scare the [daylights] out of everyone," says one senior Senate aide.

The financial industry, which used major muscle to kill the provision last spring, is arming for the fight, too. "The vote in the Senate was so overwhelmingly close, we're always worried," says one lobbyist. The big banks are leaning on community banks for help: These institutions were largely innocent of the worst excesses of the crisis and tend to be viewed much more favorably on Capitol Hill. "We are kind of the white hat," says a lobbyist for smaller financial institutions. "You'll see a lot of the industry try to hide behind us."

Given the industry's stance, supporters of cramdown say a forceful campaign by the White House would help. President Barack Obama supported it during the campaign and soon after his election, while his chief economic adviser Lawrence H. Summers wrote columns in favor of the proposal last year. But congressional sources say the Administration did little to push for passage of the bill last spring possibly because Obama was reluctant to place further stress on already fragile banks. Now one Treasury official says the department has "no immediate plans" to revive the measure. Yet even without stronger White House support, Durbin might attract enough senators to embrace the bill if foreclosures continue to surge.

Foreclosures Vs. Loan Modifications (The Truth)

2009-10-21T09:08:00.000-07:00

Mortgage companies are more likely to foreclose on homeowners than modify their loans because they make more money off foreclosures, argues a new report by a consumer advocacy group.

While homeowners, lenders and investors typically lose money on a foreclosure, mortgage servicers do not, says report author Diane E. Thompson, of counsel at the National Consumer Law Center. Servicers are the companies that manage the mortgages and collect payments.

"Servicers may even make money on a foreclosure," she writes. "And, usually, a loan modification will cost the servicer something. A servicer deciding between a foreclosure and a loan modification faces the prospect of near certain loss if the loan is modified and no penalty, but potential profit, if the home is foreclosed."

Thompson attributes this to a system of perverse incentives created by lawmakers and rulemakers in the market, like credit rating agencies and bond issuers. The private rulemakers typically dictate how a servicer can account for potential losses and profits. They hold enormous sway over securitized mortgages, which are owned by investors. More than two-thirds of mortgages issued since 2005 have been securitized, notes the report, using data from the industry publication Inside Mortgage Finance.

In those cases, the servicer is empowered to handle virtually all aspects of the mortgage, from collecting the monthly payments to initiating foreclosure proceedings. While they're obligated to do what's best for the ultimate owners of the mortgage -- the investors -- servicers have some latitude in deciding what course of action to pursue, be it a foreclosure or loan modification.

When a homeowner is delinquent on a mortgage that's been securitized, the servicer must front the late payment to the investors. When a home is foreclosed, the servicer is typically first in line to recoup losses. But if a mortgage is modified, the servicer typically loses money that isn't necessarily recoverable.

"Servicers lose no money from foreclosures because they recover all of their expenses when a loan is foreclosed, before any of the investors get paid. The rules for recovery of expenses in a modification are much less clear and somewhat less generous," she said.

That's part of the reason why the Obama administration created a $75 billion program to limit foreclosures. The money is to be distributed to servicers who successfully modify home loans, with the hope that the incentives to modify outweigh the incentives to foreclose.

Thompson's report outlines eight specific steps to reverse this trend. They include mandating that servicers attempt to modify a loan before initiating foreclosure proceedings and reforming bankruptcy laws so judges can modify distressed mortgages.

Mortgage Modification Bill Update

2009-02-10T14:32:00.000-08:00

I have written earlier articles denouncing the MBA for standing the way of this ultra neccassery Bill but guess who is in favor of the bill?
Bankruptcy Judges, that's who!
They know a little something about how the law works and I am sure if this proposal was un fair, they would not support it.

Judge Jay Cristol, a federal bankruptcy judge in Miami, said that changing the bankruptcy law would be beneficial because "after foreclosure, families get broken up and lenders hold on to nonperforming assets that they sell at a loss."

Does the MBA(Mortgage Bankers Association) care? No, they still appose the bill and they are joined by the Securities Industry and Financial Markets Association. They claim that they would need to raise interest rates if this bill passes.

Shame on you! Can't you see past your own greed and that people are in real trouble?
That is a Rhetorical Question, obviously you cannot.

Here is a link to the entire article, which was featured in the Wall Street Journal:
http://online.wsj.com/article/SB123170970691971885.html

Mortgage Modifcation Bill may pass after all!!

2009-01-09T14:20:00.001-08:00

If you have not heard the news by now, it is looking as if the Mortgage Modification bill may pass after all. Citigroup has agreed with democratic lawmakers that including this provision in the next stimulus package is a good idea. Offcourse, the Mortgage Industry, Primarily the MBA intends to fight this provision and delay the passing of the stimulus package if it is not removed from the stimulus package. I am very disappointed in the way that MBA and Mortgage Industry is acting, their greed has blinded them and they have no interest in helping ordinary american citizens. I urge everyone out there to read about this deal and if you agree with me, write your local congressman or better yet E-mail the MBA and let them know how you feel.
Here is a link to the article, which explains the "cramdown" deal:
http://news.yahoo.com/s/ap/20090109/ap_on_bi_ge/citigroup_mortgages;_ylt=AvEIaGHBTadZQHyT_QgX4hjs.6F4
E-mail the MBA at:
jmechem@mortgagebankers.org

If your not sure what to write, Here is what I wrote:
Dear MBA Executives,
I am appalled at the way the MBA is acting, unlawful business practices got you into this mess and congress still decided to bail you out. Now you have the gall to appose the cram down bill, even though you know it will help millions of families struggling to pay their mortgage, primarily because of ballooning Interest rates. These are the same Adjustable Rate loans which, you approved, now your surprised people are having trouble paying mortgages with 11% or above interest rates. If Bankruptcy judges are allowed to modify primary mortgages, it would allow millions of people to afford their mortgage payment, stay in their house and allow the housing industry to recover. Your organization should embrace this plan, not be apposed to it. in the long run, you will still make more money if people stay in their homes and pay their mortgages. Instead, you threaten us with higher interest rates in order to scare congress from passing this bill. You should be ashamed of yourselves, in at a time when Americans from all industries and walks of life need to stand together to weather the storm, you are fighting progress. I hope you come to your senses and realize this is a necessary measure.
As an employee of a Bankruptcy law firm, I come across people everyday that simply have trouble paying their mortgage because of high interest rates, allowing Bankruptcy judges to modify these loans in order for them to better reflect the value of the house and decrease unfsir interest rates is a no-brainer and you are foolish to fight it and by being against this bill, you are demonstrating to everyone that you do not have America's interests in mind and that you are overcome by greed.
Begrudgingly,
G.B.
Staten Island, NY

The Mortgage Bankers Association has lost its Damn Mind!

2008-12-19T11:13:00.001-08:00

As many of you know, there is a bill on the table in congress, that would allow Bankruptcy courts and Judges to modify a Mortgage if they feel the terms are unfair. This bill would help out a lot of Homeowners who can no longer afford their mortgage payments on a house that has a greatly reduced value. This would also help the Lenders because more people would be able to make their payments and the Bank's would have less houses going to Sheriff's sale. This would in turn reduce their legal fees and allow them to turn a profit on the home. Because when a home goes to Sheriff's sale the bank usually only recovers their initial investment but don't profit. This would also allow the housing market to stabilize and prices to get back to normalcy.
this bill was included in the Big Bailout from October but was removed prior to it being passed.
That same Bailout bill is now paying for Bonuses being given to crooked CEOs who initially cooked the books and got themselves in to this mess.
The Mortgage Brokers Association actually set up a whole website bashing this Modification Bill as if Homeowners would not benefit from it, don't believe me, check out the link Below:
http://www.mortgagebankers.org/StopTheCramDown
Now, the banks have the Gaul to fight this bill because of greed.
Here is their explanation as to why this is a bad idea:
"We oppose the inclusion of bankruptcy reform in this bill for several reasons. First and foremost, it is a polarizing issue that threatens to bring down a crucial measure this country needs in order to avoid a serious economic downturn. Congress must pass this bill to establish the Treasury program in order to safeguard the American economy. Congress has already debated the bankruptcy issue and the proposal was defeated. This is not the place to have this debate again. We welcome another debate on this issue on its own merits, not in the context of the current issue."
The best they can come up with is that it is a polarizing issue! Lots of things are Polarizing, it does not deem them useless. The second reason is because it was defeated once already. The reason it was defeated was because of lobbyist groups like the MBA that convinced Congress to vote it down by fattening their coffers.
I urge anyone who has read this to call their congressmen and tell them that you won't stand for such behaviour. On top off all that the MBA plans to raise closing costs and Interest rates if they don't get their way. Arrgh!!
Here is a link to the actual bill:
http://thomas.loc.gov/cgi-bin/query/z?c110:S.3690:
I understand that the MBA has different interests in mind then regular people but this bill is not the egregious that it will hurt them, once again GREED has polluted the logical mind.

Celebrities File for Bankruptcy too?

2008-07-15T15:41:00.000-07:00

If you are hesitant about considering Bankruptcy as an alternative to solving your Financial Difficulties, consider that even people who make millions of dollars get into debt and have no qualms about discharging their debt through Bankruptcy Protection. The following is list of famous/infamous people that fell into the same trap that many regular folks fall into. That trap is that Creditors and Credit Card Companies thrive when their clients are stuck in perpetual debt and have no means of escaping the "minimum monthly payment" black hole.

Entertainers:
Burt Reynolds-Movie actor, filed for bankruptcy in 1996 in Florida after his much publicized divorce from Loni Anderson. He had more than $10 million in debt. His dinner theater was foreclosed on by the mortgage lender and his ranch was sold. Since his bankruptcy he has continued to act in movies and was awarded the Golden Globe for Best Supporting Actor in the film Boogie Nights.

Kim Bassinger-Movie actress, earned so much money from her movies that she was able to purchase the town of Braselton, Georgia. After the purchase she was sued for breach of contract for pulling out of the movie, Boxing Helena. She was not able to pay the damages resulting from the suit and filed for bankruptcy in 1993. As part of her bankruptcy she sold the town. She later married Alec Baldwin, had a child and won an Oscar for her role in the movie L.A. Confidential.

Gary Coleman-Television Actor, Coleman filed for bankruptcy in 1999; he attributed his financial problems to mismanagement of his trust by his parents.

Debbie Reynolds-Movie actress, purchased a hotel in Las Vegas in 1992 and called it the Debbie Reynolds Hotel and Casino. She thought she could operate the hotel successfully, however, it was plagued by a weak cash flow almost from the start. In July 1997 the hotel filed for Chapter 11 bankruptcy and Ms. Reynolds filed for personal bankruptcy.

Larry King- Talk show host, filed for bankruptcy in 1960 and then again in 1978. He said each time that he was deep in debt.

Mickey Rooney-Movie actor, blames alcohol and gambling for the financial problems he suffered in the early 1960's. He owed the Internal Revenue Service $1.75 million and filed for bankruptcy in 1962. After the bankruptcy he continued to act and has had many roles in movies and television. He is still preforming live shows today.

Lorraine Bracco-Actress, Her role in the sopranos as Tony's Therapist made her famous. Bracco was engaged in a five-year legal battle with ex-husband, Harvey Kietel. In 1999, the huge legal fees and taxes forced her to file for bankruptcy.

Lenny Bruce-Controversial Comedian, In 1962 Bruce filed for bankruptcy in U.S. District Court in San Francisco due to mounting legal fees and being blacklisted in many nightclubs.

Musicians:
MC Hammer-Hip-Hop Artist, filed for Chapter 11 bankruptcy in 1996 because he did not have the income to support his lavish lifestyle and defend all the lawsuits that were filed against him.

Jerry Lee Lewis-Rock n' Roll star, filed for bankruptcy in 1988 because of huge tax debts. The IRS seized his cars, furniture, baby grand piano and even showed up at his concerts to collect ticket sales. He has since recovered from bankruptcy and still gives live concerts.

Wayne Newton-Las Vegas entertainer, filed for Chapter 11 bankruptcy in 1992 listing more than $20 million in debt. A few years later he signed a new contract with Stardust Hotel which pays him reportedly over $25 million per year for preforming at the hotel 40 weeks a year for 10 years.

Tom Petty-Rock Musician, After the release of their second album in 1978, the band was dragged into a legal dispute when ABC Records was sold to MCA Records. Petty refused to simply be transferred to another record label without his consent. He held fast to his principles for nine long months, which eventually led to him filing for bankruptcy.

George Clinton-Funk Musician, In the 1980s Clinton's career was marred by multiple legal problems which, resulted in financial difficulties primarily due to complex royalty and copyright issues. In 1984, Clinton filed for Bankruptcy, he has since recovered financially because of his music was heavily sampled by Hip-Hop artists throughout the 1990s and 2000s.

Vic Damone-Italian-American lounge singer, he had to declare bankruptcy in the early 1970s due to marital issues but earned enough as a casino performer to clear up his financial difficulties.

Athletes:
Mike Tyson-professional fighter, filed a Chapter 11 case in August of 2003 because he was not able to pay all his bills. According to Tyson, His lifestyle demands $400,000 a month to maintain.

Derek Sanderson-A former football star. In 1972, he signed a contract for a record breaking $2.65 million and lost it all to alcoholism and a string of bad investments. Back on his financial feet, he now advises athletes on how to avoid his mistakes.

Michael Vick-The former National Football League star quarterback is currently serving a 23-month prison sentence for his role in a dogfighting ring. The filing came after Vick failed to resolve a legal dispute with one large creditor, Joel Enterprises Inc., which is owed $4.5 million for breach of contract.

Johnny Unitas-Hall of Fame football quarterback, each of his business ventures, including bowling alleys, land deals and restaurants were unsuccessful. He filed for Chapter 11 bankruptcy in 1991.

Lawrence Taylor-In an attempt to keep creditors from seizing his $605,000 house in Upper Saddle River, New Jersey. Former NY Giants Great and Hall of Famer filed for Chapter 7 Personal Bankruptcy.

Tony Gwynn-San Diego Padres baseball player and Hall of Famer, files for bankruptcy
in 1989, citing problems caused by his accountant.

Business People:
P.T. Barnum-the greatest American showman, filed for bankruptcy in 1871 due to losses he incurred in unwise business ventures. After bankruptcy he organized his famous circus, "The Greatest Show On Earth." In 1881 he merged his circus with his most successful competitor, James A. Bailey, under the name of Barnum and Bailey Circus.

Donald Trump-Businessman, filed a Chapter 11 bankruptcy case for his casino empire in 2004 to reorganize his business after negotiations with his creditors failed. This was the second bankruptcy case for his casino business, in 1992 he had filed Chapter 11 bankruptcy as well.

Walt Disney-Cartoon creator, filed for bankruptcy in 1920 after his main client of his new business filed bankruptcy. Disney said he could no longer pay his employees or the rent and had no choice but to file bankruptcy himself. In 1923 her formed a new company with a loan from his parents and his brother. In 1928 her created “Mickey Mouse” and the rest is history.

Henry Ford-Automobile manufacturer, his first Automobile company, Detroit Automobile Company filed for bankruptcy in 1901. In June 1903, he created the Ford Motor Company with a cash investment of $28,000.00. By July of 1903 the bank balance had dwindled to $223.65, but then Ford sold its first car and never looked back.

Henry John Heinz-Condiment manufacturer, started his company in 1869 selling horseradish, pickles, sauerkraut and vinegar. In 1875 the company filed for bankruptcy due to an unexpected bumper harvest which the company could not keep up with and could not meet its payroll obligations. He immediately started a new company and introduced a new condiment, tomato ketchup to the market. This company continues to be very prosperous.

Bob Guccione-Magazine Publisher, Numerous unsuccessful investments on Guccione's part, including a never-built nuclear power plant and a casino which, cost him in excess of $100 million. In 2003, He filed a bankruptcy reorganization plan that will put a new group of creditors in charge of his publishing empire.

Other Notable People:

Oscar Wilde-Poet and author, was forced into bankruptcy in 1895. He had earlier been convicted of Solicit activity and was sentenced to two years in prison. He declared bankruptcy on November 12, 1895 and his property was auctioned off. After being released from prison he published his poem, The Ballad of Reading Gaol.

Mark Twain-American author, lost most of his money investing in a worthless machine called the Paige Compositor, an automatic typesetting machine. He filed for bankruptcy in 1894 and discharged all his debts. He wrote several of his more famous books after filing bankruptcy including "Pudd'nhead Wilson" and "Following the Equator."

Rembrandt-Famous Dutch painter, accumulated more debts than he could repay and filed for bankruptcy at the age of 50 in 1656. Many of Rembrandt's paintings and his house were sold at an auction. After the bankruptcy, he continued to paint but was not allowed to sell his works directly to customers. He was able to circumvent this law by having his son take over his business and sell his paintings.

William Fox-American motion picture executive, who founded the Fox Film Corporation in 1915. Although Fox sold his interest in the company in a 1936 bankruptcy settlement, his name lives on as the namesake of the FOX Television Network and the 20th Century Fox film studio.

That list just names a few people who made millions in their lifetime but were left with no choice but to file for Bankruptcy. They should be embarrassed because their transgressions allowed them to squander millions of dollars. For a more comprehensive list visit: http://rjabankruptcy.com/articles/famousindividuals.html

Ordinary people who are struggling to make ends-meat should not feel the same embarrassment because their financial difficulties were not caused by extravagant lifestyles, shady business deals or untrustworthy friends.
Most people's financial difficulties are caused by medical, marital or employment issues which can happen to anybody and should not be a cause for embarrassment. If you feel that you need some to discuss your financial hardships with, contact a certified Bankruptcy attorney in your area and get some straight forward answers on how to resolve your financial struggles with out digging a deeper hole. In the NY/NJ, you could visit www.njbills.com or dial 1(732)681-6800 for additional information.

We Help Good People Through Bad Times!

2008-07-15T15:37:00.001-07:00

Foreclosure Rates in New Jersey Hit an All-Time High

The numbers are staggering; the foreclosure rates in New Jersey have reached astronomical proportions. Now, more than ever homeowners must find a way to protect their home and assets. Mortgage companies and other vendors were all too eager to give out large loans with fluctuating interest rates during the real estate boom that occurred in the last several years. Now, many middle class communities are paying the ultimate price. Recent statistics compiled by CNN Money indicate that as many as 1 in every 9 homes is in danger of being foreclosed on. Some communities have whole blocks where a majority of the homes have ominous “for sale” signs in the front yard. Luckily for residents of New Jersey, the foreclosure process in this particular state is much more thorough than in many other states. Many states the process could be over in less than two months. New Jersey has very specific legislation that makes the foreclosure process somewhat more complicated and on average most homes are not completely foreclosed on for about nine months.
Due to the fact that in New Jersey this process is more drawn out, there are many companies out there who claim that they can find away to compromise with mortgage companies and lenders. Most of these companies simply charge the homeowner a few thousand dollars to file a forbearance agreement. A forbearance agreement can be filed for a variety of reasons. It is important for homeowners to know who is eligible to file a forbearance agreement. People serving in the armed forces, people who are attending school and people who are simply having financial difficulties that can be documented can file a forbearance agreement. The forbearance agreement is usually rejected and the company has no further course of action because they need to have lawyer’s working for them in order to appeal the decision. Most of these companies don’t expect the forbearance agreement to be accepted and they cannot file an appeal because they are simply not attorneys. The odd part about all this is that most Mortgage companies and lenders would rather keep these homeowners and have them pay a monthly payment with interest rather than sell the house at an auction for significantly less money.
The problem with these quick fix mortgage negotiators is that since they are not attorneys they have no idea how to deal with the attorneys of the mortgage companies. It is very important that the forbearance agreement is put together by state certified bankruptcy attorney who has the know-how and expertise that is necessary when dealing with high profile lawyers that represent many of these mortgage companies. A state certified attorney also has the ability to file an appeal if the forbearance agreement is initially rejected. This will at the very least bide some more time for the homeowners to get their finances in order. If the appeal fails as well, many home owners have one last option, which is filing for bankruptcy and although this is not an easy process, most would agree it is better than losing you home.
The American dream is something people work hard to achieve and some bad luck and bad decision-making could cost some people their most prized possession. Their home, where they watched their family come together and their lives change in so many ways. This is a very difficult subject for most people, but it is very important to know what your options are just in case a tragedy like this occurs. It is also important to know that there are people out there who would genuinely like to help. Local bankruptcy attorney, James Cerbone is offering free consultations for people in danger of being foreclosed on. He is even willing to file a forbearance agreement free of charge if the situation warrants it. He has a vested interest in the community because he grew up here and is currently raising his own kids here. He would much rather see Ocean and Monmouth county prosper and thrive. He also feels that for the most part people who are in danger of losing their homes are not totally at fault. There are several other factors, including the stock market, credit cards, the value of the dollar and the job market. Most people who are fiscally responsible but hit a streak of bad luck are given a second chance and are able to recover in the long run. The key is to not be taken advantage by people who claim they can help you but end up hurting you even more. Do not go for the quick fix, make sure you do the research and always make sure to consult an attorney who specializes in this field.
James J. Cerbone is one of only a handful of board certified bankruptcy attorneys in the state of New Jersey. He specializes in Personal Bankruptcy, Business Bankruptcy, Foreclosures and Tax Law. Mr. Cerbone holds a LL.M. (Advanced Law Degree) in Trial Advocacy. He is licensed to practice in both New Jersey and New York. He has a highly respected practice that has helped thousands of families in the central and southern New Jersey areas for over 15 years. His offices are located at 2130 Rt. 35 Building B, Suite 227 in Sea Girt, NJ 08750. A free consultation can be scheduled by dialing (732) 681-6800. You can learn more about the foreclosure and bankruptcy process by visiting www.NJBills.com