February 10, 2012 - More Ineffective Mortgage Rescue Programs On The Horizon?

Undoubtedly to have heard that after months of talks, government authorities and five of the nation’s biggest banks have agreed to a $26 billion settlement that (in theory) could provide relief to nearly two million current and former American homeowners harmed by the bursting of the housing bubble. It is hailed as part of a broad national settlement aimed at halting the housing market’s downward slide and holding the banks accountable. However, as more information is disclosed, it appears the aid will help a relatively small portion of the millions of borrowers who are delinquent and facing foreclosure. It is reported Fannie Mae and Freddie Mac loans are not eligible.

The settlement money is to be doled out under a complicated formula that gives banks varying degrees of credit for different kinds of help. As a result, banks are "incentivized" to help harder-hit borrowers with homes worth far less than what they owe.

About one in five Americans with mortgages are underwater, which means they owe more than their home is worth. Collectively, their negative equity is almost $700 billion. On average, these homeowners are underwater by $50,000 each. A recent estimate from the settlement negotiations put the average aid for homeowners at $20,000. We will al have to wait and see just how that pans out. Cash payments to foreclosure victims, estimated to be less than $2,000, will certainly not restore the financial well being of people improperly foreclosed as a result of robo-signings. Most of the money will go to states’ attorneys general to create "services" like mortgage counseling and future investigations into mortgage fraud. Once again the politicians will get there hand in the piggy bank leaving little for the people who have been wronged. Hope I am wrong.

January 30, 2012 - More Hope For Underwater Homeowners (At Least In The Boston Area)

A Boston nonprofit, Boston Community Capital, is teaming up with some financial institutions, in particular Bank of America, in a pilot program that has the effect of writing down mortgages to close to home value. http://www.npr.org/2012/01/02/143601604/in-mortgage-crisis-some-banks-agree-to-cut-losses

BCC says it works with qualifying homeowners and banks to buy underwater homes, either in short sales or at foreclosure, and then sells them back to owners at just above current market value. The nonprofit takes the risk of making the resale and allows those buying back to use their own lender or a mortgage company that BCC works with. See the program’s FAQs: http://www.sunhomehelp.org/faq/sun

BCC is playing a gatekeeping role as far as who qualifies (there must be an ability to pay the written-down loan but an inability to pay the original loan). Also, BCC may have better credibility with distressed homeowners than financial institutions such as B of A do. The pilot is supposed to test whether such a program can be run without promoting "strategic default," according to the NPR story.

October 25, 2011 - Hope For Underwater Homeowners?

 

September 13, 2011 - Student Loan Default Rates Rise

According to Department of Education 8.8 percent of borrowers over all defaulted in the fiscal year that ended last Sept. 30, the latest figures available, up from 7 percent the previous year. At public institutions, the rate was 7.2 percent, up from 6 percent, and at not-for-profit private institutions, it was 4.6 percent, up from 4 percent.

"Borrowers are struggling in this economy," said James Kvaal, deputy under secretary of education. "We see a strong relationship between student default rates and unemployment rates."

Although the new overall rates are the highest since the 1997, when they were also 8.8 percent, default rates peaked in 1990 at more than 20 percent.

The new rates represent a snapshot in time, covering the 3.6 million borrowers whose first loan payments came due between Oct. 1, 2008, and Sept. 30, 2009, and who defaulted before Sept. 30, 2010. More than 320,000 of those borrowers defaulted during that period.

Although for-profit colleges, which typically serve low-income students, enroll only about 10 percent of the nation’s undergraduates, Mr. Kvaal said, their students made up 150,000, or almost half, of the defaults.

The problem may be even greater. "Some research has shown that as few as one in five defaults at a for-profit college occur in the two-year window," said Debbie Cochrane, program director at the Institute for College Access & Success, which runs the Project on Student Debt. "The extent of borrower distress is barely touched upon with these rates."

A recent study by the Institute for Higher Education Policy found that for every borrower who defaults, at least two more fall behind in payments. The study found that only 37 percent of borrowers who started repaying their student loans in 2005 were able to pay them back fully and on time.

Student loan debts are not easily dischargeable in bankrutpcy.

August 26, 2011 - Reverse Mortgage Companies Fail To Register In Massachusetts

The Massachusetts Division of Banks has ordered five companies to stop peddling reverse mortgages to elderly homeowners, charging they are not properly licensed to sell the product in Massachusetts

Reverse mortgages allow seniors to take a loan on their homes to be paid back when they sell the property or die - a helpful financial instrument for some seniors. But such loans are sometimes used as tools for fraud that leave elderly property owners without the money or their homes.

The Division of Banks this week ordered the following companies to stop doing business in Massachusetts until they obtain a license: Eldervantage LLC in Minnesota; Lender 411 LLC in California; Senior Reverse Mortgage Online in Texas; and in Nevada, Reverse Mortgage Helpdesk and Reverse Mortgage Site. None of these companies are accused of fraud.

August 3, 2011 - Consumers Bankruptcy Filings Are On A Downward Trend

It has been reported that consumers filed 113,470 bankruptcies last month compared with 137,698 in July 2010. Last month’s number continues a series of declines that began this year. In June, 119,768 consumers filed, down from 134,720 in April. This may be an indication that the worst of the economic melt down has already happened.

July 1, 2011 - A Musing - Does White Collar Crime Pay?

Yesterday the federal court in Virginia sentenced a fellow named Lee B Farkas to 30 years in jail for engaging in mortgage fraud estimated to be over $3 billion dollars. If you do the math you will see that that works out to one year in jail for every $100 million dollars. I wonder how much, if any, of the money has been traced down and recovered. Factoring in the likelihood of being caught and the availability of off shore banks to store the cash the odds of engaging in this type of behavior don't seem half bad.

The sentencing of Raj Rajaratnam, a hedge fund manager who has been convicted of 14 counts of insider trading, has been postponed to September 27th by the federal court in New York. I don't know off hand just how much money this fellow "earned" by breaking the law. He certainly has contributed to undermining the integrity of the financial markets (not great to begin with) big time. Makes me wonder if it would be Constitutional to jail his immediate family members as well as they have, albeit passively, benefited from the fruits of his illegal activities over the years. I wonder if they have to surrender the house in the Hamptons or can they stay their until he is eventually released?

I also wonder if it would have made a difference to him knowing that not only he but the lives of the people held most dear would be ruined as well. At the risk of sounding racist, the fact that the guy, as well as the other folks he used in his activities, wasn't born in the US is icing on the cake.

America. Land of opportunity. Give m your tired, your poor, your huddled masses yearning to be free. Excuse me while I go vomit.

May 13, 2011 - Low Cost Bankruptcy Scams  Revealed

Have you noticed the ads in newspapers from law firms claiming to file a bankruptcy for only $300 or $200 or even as low as $150? Did you ever wonder how they can charge this low of an amount and still stay in business? Here are two scams that use these techniques:

Scam 1: Pretending to do a loan modification

A law firm will advertise to do loan modifications for clients. They rent mailing lists of people facing foreclosure and target them with promises of helping to save their home. Once the client has paid $4,000 or $5,000, the law firm will claim the mortgage company would not accept their offer. The only choice left for the client is to file bankruptcy. Of course the law firm will pretend to give the clients a deal and charge them $300 or less for filing the petition. But remember, they just received $4,000 or $5,000 for doing nothing.

Scam 2: The low price is only for a skeleton filing

Some law firms will advertise low prices for filing bankruptcy because this price is only for filing the Voluntary Petition and Creditor's Matrix. This type of filing will stop any legal action against the debtor but they will only have 14 days before they must file the remaining schedules of the petition. Of course the law firm will charge extra for Schedule A, Schedule B and so forth. By the time the clients pay for each remaining schedule, they have more money invested compared to paying an honest bankruptcy attorney the full fee in the beginning.

Summary

There are bad attorneys and good attorneys. There are bad doctors and good doctors. There are bad waiters and good waiters. There are bad people and good people. No one is immune from scams because they exist everywhere.

May 12, 2011 - Loan Modifications - Please Be Really Careful.

I just spent a few minutes on Google looking up loan modifications. There are all sorts of entries out there advertising that they can help you. I suppose some of them might even be able to deliver on their promises? Never pay anyone for a loan modification until they have successfully arranged an actual  modification of your loan. Lots of sites seem to be run by advertisers who promise to match you up with attorneys who can help you. These sites obviously don't necessarily match you with the best attorney or even an attorney who has experience in the area. They only refer to attorneys who pay them for their advertising services. All it takes to get on their panel is a check. Read the small print on the bottom of their ads. I fear these people prey on folks who find themselves in a bad situation and are willing to give their last dollars to anyone who can offer them a glimmer of hope. It is really sad.

We actually have an attorney in our town, who advertises foreclosure rescue services on the web, who has been unable to pay her own bills and has herself had to file for a Chapter 11 bankruptcy. She is having her motor vehicles repossessed by creditors but is still holding herself out as someone who can give sound financial advice. Perhaps she has learned from her own mistakes? Recently, the US Trustee's Office has moved to have her case converted to a Chapter 7 liquidation bankruptcy as she has failed to conform to the requirements of Chapter 11.  

Just because you see someone's name on the web doesn't mean they are a knowledgeable or reliable provider. Proceed with caution when thinking about engaging anyone to assist you in the mortgage modification process. If you can't be entirely sure of someone in your own neighborhood how can you trust someone who is several states away?

 April 15, 2011 -  Tips For Getting You Through The Mortgage Modification Process.

A. Complete the package. Homeowners need to submit paycheck stubs, a hardship letter, a budget and any other documents the loan servicer wants. If even one document is missing or outdated, the entire file will drop to the bottom of the pile.

B. Ask questions. Make sure you know exactly what to provide to servicers. Servicers often request two paycheck stubs on the assumption that two paychecks represent one month's income. But a homeowner who is paid weekly, bimonthly or monthly may have to submit more or fewer paycheck documents. Similar misunderstandings about other documents can be equally problematic.

C. Stay in touch. Homeowners should call the servicer at least once a week and check on the status of his od her request. Ask whether the file is complete. Review the documents. Explain any special or changed circumstances. A counselor can help, but lenders also want to hear from the homeowner on a consistent basis.

D. Be persistent. Homeowners naturally feel frustrated when they're asked to resubmit documents. But those who realize they are "at the beck and call" of the servicer and "can hang in there long enough" may be rewarded

March 27, 2011 - Possible Hope on The Mortgage Modification Front.

After banks' initial resistance to loan modification programs and refinancing designed to help struggling borrowers, many are now embracing programs for homeowners in trouble. Both GMAC Mortgage and Wells Fargo have started either reducing some mortgage balances, deferring payments or offering subsidized refinancing. Chase says it will open another 30 dedicated "help centers" this year where homeowners can apply for loan modifications. This month, the government also stepped in, extending the period for underwater borrowers to refinance their mortgages at lower rates, which was not possible through standard refinance programs. "All of a sudden, everyone is aware of this growing problem," says Stu Feldstein, president at SMR Research, which tracks the mortgage market.

March 11, 2011 - It Appears As If The Economy is Starting to Rebound.

Net worth for households and nonprofit groups increased at a 16.6 percent annual pace to $56.8 trillion after rising at a 9.1 percent rate in the previous three months, the Federal Reserve said today in its Flow of Funds report. American households also cut debt for an 11th consecutive quarter.

March 7, 2011 - The Myth of Mortgage Modification Has Been Burst!

Let me start out by saying that I used to tell people that the promise of a mortgage modification was a lot like a unicorn. Lovely to dream about but not terribly realistic. The, once in a while I'd hear about people who had had some degree of success. Some people would reduce heir payments by a few hundred bucks and in one case the modification resulted in a reduction of $1 per month! But, hey! A win is a win. Sadly, most people seemed to just get a run around and had the papers they submitted lost several times before entering into "trial" modifications that never got finalized. Today is official. The Inspector General has issued a report  stating that the HAMP program is a failure and actually contributes to the foreclosure of a home. See, today's Boston Globe.

 http://www.boston.com/business/articles/2011/03/07/promised_loan_relief_homeowners_instead_sank_deeper_in_debt/

January 19, 2011 - Massachusetts exemption system revised

Effective April 8, 2011 Massachusetts will officially come into the 21st century with regard to the exemptions available to people filing for bankruptcy and relying on the Massachusetts exemption system. For example, the old $700.00 exemption for a motor vehicle necessary for employment will be replaced with a more realistic $7,500.00 exemption. Homestead up to $500,00.00 and cash up to $2,500.00 in cash will also be exempt. Plus, Homesteads up to $120,000.00 may be allowed without the need for having to file a formal Homestead in the Registry of Deeds. This is a significant development.

January 5, 2011 - Bankruptcy Filings Ease

The growth in bankruptcies around the country slowed significantly in 2010 from its breakneck pace in recent years, with about a dozen states recording a decline in filings from consumers and businesses, according to an Associated Press tally yesterday. Filings collected from the nation’s 90 bankruptcy districts showed 113,000 filings in December, down 3 percent over a year ago. That followed a similar year-over-year decline for October. It had been four years since an individual month showed such an improvement.

October 14, 2010 - Beware Mortgage Rescue Scams

In at least a quarter of loan modification scams reported in the past year to NeighborWorks America, a nonprofit housing group, victims said they were approached by a lawyer or someone posing as a lawyer. In other cases, scam artists turned out to be lawyers who were disbarred or unlicensed.

Scams typically lure victims with promises of big payouts. But any preemptive guarantee of a favorable outcome should be a red flag. The prevailing wisdom of the moment is that the unfolding saga will merely delay foreclosures.

Another warning sign is if you get an unsolicited call from a lawyer. American Bar Association guidelines prohibit lawyers from cold calling prospective clients. Written solicitations and prerecorded calls are OK, but need to be marked as advertisements.

For more information on mortgage rescue scams check out the FCC site at http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre42.shtm

September 16, 2010 - Will Student Loans Ever Be Dischargeable In Bankruptcy? Maybe?

Yesterday, the House Judiciary Subcommittee on Commercial and Administrative Law took the first steps in reversing language in the 2005 bankruptcy law related to private student loan debt by approving on a 6-3 party line vote H.R. 5043, the Private Student Loan Bankruptcy Fairness Act.  NACBA has been actively involved in helping to draft and supporting the legislation which will restore fairness in student lending by treating privately issued student loans in bankruptcy the same as other types of private debt.  Under the bill, privately issued student loans will once again be dischargeable in bankruptcy. It's only one Congressional Committee so far but stay tuned for future developments.

August 18, 2010 - Beware of Credit Card Repair and Mortgage Rescue Scams

May 24, 2010 - Credit Card Counseling Agencies

If you have multiple debts to resolve, you can enlist the help of one of the nonprofit credit-counseling firms that have been certified to do bankruptcy counseling. That means they have been vetted by the U.S. Trustee—as are the firms credit-card issuers will provide.

Then there are the many for-profit debt-settlement firms, which have come under fire in recent months. The Federal Trade Commission, the Government Accountability Office, several states and the Better Business Bureau have all singled out the industry for charging consumers large upfront fees, urging them to stop paying their creditors and then failing to resolve their debts. BEWARE OF THESE TYPES OF ORGANIZATIONS!

These firms, unlike the nonprofits, say they will try to cut your debts owed. They generally encourage consumers to build up money in a bank account until enough has been saved to negotiate a settlement with creditors, a process that can take months or years. In the meantime, the consumers may also be paying fees to the company, missing bill payments and contending with bill collectors. And they may have to pay income taxes on any debts that are forgiven.

Meanwhile, more people saddled with debt are turning to the last resort: bankruptcy. About 580,000 people have filed for bankruptcy protection so far this year, up 16% from a year ago, according to the National Bankruptcy Research Center. Last year, the number of personal filings jumped 32% to 1.4 million.

May 19, 2010 - Foreclosures Are On The Increase

The delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 10.06 percent of all loans outstanding as of the end of the first quarter of 2010, an increase of 59 basis points from the fourth quarter of 2009, and up 94 basis points from one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey. The non-seasonally adjusted delinquency rate decreased 106 basis points from 10.44 percent in the fourth quarter of 2009 to 9.38 percent this quarter.

April 8, 2010 - Your Rights When Dealing With The Police

To find out about the rights you have when stopped by the police please check out  the video "10 Rights You Have When Dealing With The Police" which can be found at  www.cato.org/events/100212screening.html.  Unfortunately,  many people unknowingly give up these rights and voluntarily submit to police interrogations and cause extreme harm to their own ability to subsequently mount a criminal defense. The Constitution gives you rights. Shouldn't you know about them?

March 10, 2010 - Credit Cards Scams

Recently a client received a mailing from a purported debt consolidation company called "National Debt Relief". For a fee this company, and others like them, imply that they are somehow related to the government and suggest they can reduce credit card payments. Be very wary in dealing with these types of companies. While they will certainly take a fee from you it is unclear that they can actually do what they say they can do for you. Before entering into any arrangement our suggestion is that you conduct a Google inquiry into the company and see what others have to say about their experiences. For "National Debt Relief" the first place to start is www.debtconsolidationcare.com/settlement/nationaldebtrelief-company.html

March 1, 2010 - New Credit Card Rules

All of the new credit card rules will be coming into effect by July 1, 2010,
and can be summarized as follows:

1. Banks must give consumers a reasonable time to make payments -- that is, banks must allow at least 21 days after sending a monthly credit-card statement for consumers to make payment.

2. Payments exceeding the minimum payment must be applied to the balance with the highest interest rate first.

3. Banks must disclose all interest rates up front when a consumer opens an account and are prohibited from increasing those rates, unless:
    a. If an introductory rate disclosed at the account opening expires after a specified period of time, banks may apply an    increased rate that was also disclosed at account opening.
    b. Banks may increase a rate due to the operation of an index -- in other words, the rate is a variable rate.
    c. After the first year, banks may increase a rate for new transactions only after giving 45-days advance notice.
    d. Banks may increase a rate if the minimum payment is received more than 30 days after the due date.

4.  Banks must provide written notice to consumers 45 days before the bank increases an annual percentage rate on a credit card account or makes a significant change to the terms of a credit card account.

5. Banks must inform consumers in the same notice of their right to cancel the credit card account before the increase or change goes into effect. If a consumer cancels the credit card, the bank is generally prohibited from
applying the increase or change to the account.

February 19, 2010 - Loan Modification Rules

The Federal Trade Commission has proposed a new rule that would prohibit third parties, including loan modification specialists and loss mitigation attorneys, from collecting payment for foreclosure prevention services until after they obtain a documented offer from a lender or servicer for a modification or other form of mortgage relief.
“Homeowners facing foreclosure or struggling to make mortgage payments shouldn’t have to contend with fraudulent ‘companies’ that don’t provide what they promise,” FTC Chairman Jon Leibowitz said. “The proposed rule would outlaw up-front fees so companies can’t take the money and run.”
The FTC has brought 28 cases against companies suspected of foreclosure rescue and mortgage modification scams, and state and federal law enforcement partners have brought hundreds more. According to the agency, generally these cases charged that companies do not provide the services they promise and that they misrepresent their affiliation with the government and government housing assistance programs, including the Making Home Affordable program.

January 5, 2009 - Massachusetts Bankruptcy Filings Rise in 2009

Consumers and businesses sought bankruptcy protection at a pace that made 2009 the seventh-worst year on record, with more than 1.4 million petitions submitted, an Associated Press tally shows. The 1.43 million cases represent an increase of 32 percent from 2008. In Massachusetts, the rate of increase was nearly 27 percent, with 20,536 cases filed.

December 17, 2009 - Chapter 13 Cram Downs

Ultimately, people may discover that filing bankruptcy is the most cost effective way to deal with a pending foreclosure action. Certain classes of debtors are more likely to find bankruptcy useful in terms of saving a home than others. Those who have high credit card debt, and who can eliminate that debt, in the course of a Chapter 7 bankruptcy filing may find their monthly budget sufficiently restructured such that they can make their mortgage payments in a timely fashion in the future. Sometimes this has to be coordinated with budgetary adjustments such as giving up premium cable television services or canceling gym memberships.

For higher income debtors Chapter 13 bankruptcies may offer some relief. Not only can credit card debts be paid off for pennies on the dollar but totally unsecured second mortgages or home equity loans can also be eliminated upon the completion of a successful Chapter 13 plan in what is commonly referred to as a "cram down.".

Anyone who is having foreclosure problems should probably, at some point in time early in the process, meet with a bankruptcy attorney in order to evaluate their options. They may ultimately choose to move in another direction but they should at least know what their bankruptcy options really are

July 24, 2009  - Mortgage Rescue Scams

June 24, 2009 - Attleboro Courthouse Update

Our office is directly across the street from the James H. Sullivan Court House at 88 North Main Street, Attleboro, Massachusetts.      On May 18, 2009 overloaded electrical circuits caused a fire on the second floor of the 97 year old building. By the time the fire was put under control the Civil Clerk's Office and many of the files they maintained, on the second floor, were destroyed. The Court has been closed for business since the fire.            As a result the criminal business of the Court has been conducted at the Taunton District Court. located at 120 Cohannet Street, Taunton, MA. Civil matters, including evictions and speeding tickets, are being handled at the Wrentham District Court, at 60 East Street, Wrentham, MA. Conditions at the Attleboro Court, while in Taunton, are less than ideal. Inadequate seating, with lines of people stretching out into the hallway, are typical. If you need to appear in Court be sure to give yourself extra time to travel and get oriented once you arrive. The court still begins promptly at 9:00 A.M.             It is not clear, as of this writing, exactly when the, over $600,000, in needed repairs will be begun. Some estimate that the Attleboro Court facility may not reopen for business until after the new year. We accept payment by Master card, VISA card and Discover card Home | About Mr. Koban | Areas of Practice | Fees | Directions | E-mail Us | Links | Law Blog 89 North Main Street | Attleboro, MA 02703 | Phone: 508-222-0700 ©2001-2011 Theodore J. Koban - All Rights Reserved The information contained on this web site is meant to provide some background on the law of the Commonwealth of Massachusetts as of year 2010. It is not meant and cannot possibly substitute for legal advice given by an attorney who has had the opportunity to become fully familiar with the particular facts of your case.