False Foreclosure on Christmas Eve

You have to love this story (in a compassionate way).  From the Consumerist Blog.

Bank of America told this couple that their house would go into foreclosure on Christmas Eve, which came as something of an anti-Christmas Miracle to them considering they had never missed a single mortgage payment.

The problems started when the couple looked into refinancing their home and asked the BofA loan specialist for the "cheapest" option available. That rep tentatively put them in the Federal government's "Making Home Affordable" program, which was developed to help people who are behind on their mortgages.

The couple decided not to use that refinance option but that rep's action put on their credit report that they were seeking a loan mod and sent out a credit destroying blast to all their creditors. Their credit card limits were reduced to $18,000 from $30,000, all their credit card APRs were jacked up to universal default levels, and other creditors started shutting down their accounts.

Only after escalating through several tiers of Bank of America were they able to get the bank to promise to try to fix their credit lines. The couple will have to go each creditor individually to try to get their lines of credit reinstated. The foreclosure action is still pending. They have hired a lawyer to try to collect damages and prevent foreclosure, thus illustrating the two major principles of resolving hardcore customer service issues: 1. Escalate and 2. Get a lawyer.

Can a Private Employer Discriminate Against You Due to a Bankruptcy?

Many clients ask me if a private employer can refuse to hire them simply because they declared bankruptcy.  The unfortunate answer is, "yes." The National Association of Consumer Bankruptcy Attorneys posted this update today.

Third Circuit Finds No Violation of § 525(b) by Failure to Hire

In Rea v. Federated Investors, No. 10-1440 (December 15, 2010), the Third Circuit upheld the lower court's finding that the anti-discrimination provision, § 525(b), does not extend its protection to debtors seeking employment from private employers. The court was persuaded by the contrast between the language in § 525(a), which specifically proscribes discrimination in hiring by public employers, and § 525(b), which applies to private employers and does not include the language relating to failure to hire. The court found that although § 525(b) was enacted some years after § 525(a) the difference between the two provisions was intentional. In Burnett v. Stewart Title, No. 10-20250, a case involving the identical issue, the Fifth Circuit has scheduled oral argument for January 31, 2011. NACBA filed an amicus brief in that case.

Eliminating Second Mortgages that are Underwater in Chapter 13

The National Association of Consumer Bankruptcy Attorneys brought to my attention this morning that the Fourth Circuit joined the majority of circuits in allowing the "strip off" of unsecured liens in Chapter 13.

Debtors scored a victory in the case of Suntrust v. Millard, No 09-2266 (December 15, 2010), when the Fourth Circuit affirmed the lower courts' grant of debtor's motion to avoid lien in chapter 13. In support of the pro se debtor's position, NACBA filed an amicus brief arguing that pursuant to the Supreme Court decision in Nobelman v. American Sav. Bank, 508 U.S. 324 (1993), as well as the plain language of the Code, and the weight of authority among the circuits, a wholly unsecured lien may be modified in a chapter 13 bankruptcy under §§ 506(a) and 1322(b)(2).

 This concept means that second and third mortgages that are no longer secured (that is, the value of the house is less than the second and third mortgages) can simply be eliminated in a Chapter 13.  This makes Chapter 13 a very good tool for those who can make the first mortgage payment but would benefit from getting rid of the second (or third) mortgage payment.

Home Prices Weaken Further and Consumer Confidence Falls

The media has been playing up the fact that consumers spent more this holiday season. That fact honestly makes no sense.  While consumer spending increased, incomes increased less (they were almost flat).  This means that some are now spending again on their credit cards.  This cannot be a good thing for individual families.

Two stories today show this spending is unwarranted.

Home prices decreased 1.3 percent across the nation's 20 major cities in October from September, according to the just-released S&P/Case-Shiller Home Price Indices. Prices were down 0.8 percent from a year earlier.

Full article here.

Another story shows confidence falling even as spending increased.  This seems, to me, to indicate that people were simply desperate to spend money to feel better, to make it seem like old times.

The widely watched Consumer Confidence Index from the private Conference Board edged down to a reading of 52.5 this month from 54.3 in November, the research group just reported.

 Full article here.

It will be interesting to see how these numbers affect Oxnard and Ventura.

Andrew S. Mansfield
Mansfield Law Office
1000 Town Center Drive, Suite 300
Oxnard, CA 93036

Can You Believe How Fast Virginia Allows Foreclosure?

Virginia, in an astounding act of financial institution submission, has streamlined the foreclosure process to allow homeowners to be kicked out in as little as two weeks.  Here is information from the Washington Post:

Last year, the state legislature overwhelmingly passed a law making it easier for lenders to defend themselves when accused of giving homeowners too little warning of impending foreclosures.
The process moves so quickly in Virginia - one of the fastest states in the nation - that homeowners can receive less than two weeks' notice that their house is about to be sold on the courthouse steps.

We can only be grateful that California has the limited protections we enjoy.  Homeowners in Oxnard, Ventura, and surrounding areas receive about four months total notice from first contact with the servicer.

This is not legal advice for Oxnard and other homeowners.  Please consult an attorney if you face foreclosure.

Mansfield Law Office is located at 1000 Town Center Drive, Suite 300, Oxnard, California.  If you have any questions please call 805-253-3001.

Should the Wagon Wheel Redevelopment Go Forward in Oxnard?

In the 1940's, Bud Smith built a hotel and restaurant in Oxnard called the Wagon Wheel.  For many years, the ranch-style buildings and the large wagon wheel were visible from the 101 Freeway to those driving through Oxnard.  Today, as anyone who has passed by can tell you, the Wagon Wheel is boarded up and falling down.

Oxnard Village Investments LLC is fighting to tear down the old buildings and construct 1500 homes and town homes.  The development includes low income housing.

The fate of the project is in the hands of the Second District Court of Appeal.  Will more housing help Oxnard?  Will preserving the Wagon Wheel add to Oxnard's historical memory?  More information is available from the Ventura County Star.

For help with bankruptcy in Oxnard, contact Mansfield Law Office.  I'm located at 1000 Town Center Drive, Suite 300, Oxnard, California.

http://www.venturadebtlaw.com

California Lawyers Unable to Help in Loan Modifications: New York Times

California's severely over-restrictive prohibition on lawyer's assisting homeowners obtain loan modifications received attention in the New York Times. 

In California, where foreclosures are more abundant than in any other state, homeowners trying to win a loan modification have always had a tough time.

Gregory Royston, a real estate lawyer, said winning modifications to mortgages was never easy and often impossible.

Now they face yet another obstacle: hiring a lawyer.
Sharon Bell, a retiree who lives in Laguna Niguel, southeast of Los Angeles, needs a modification to keep her home. She says she is scared of her bank and its plentiful resources, so much so that she cannot even open its certified letters inquiring where her mortgage payments may be. Yet the half-dozen lawyers she has called have refused to represent her.
“They said they couldn’t help,” said Ms. Bell, 63. “But I’ve got to find help, because I’m dying every day.”

Lawyers throughout California say they have no choice but to reject clients like Ms. Bell because of a new state law that sharply restricts how they can be paid. Under the measure, passed overwhelmingly by the State Legislature and backed by the state bar association, lawyers who work on loan modifications cannot receive any money until the work is complete. The bar association says that under the law, clients cannot put retainers in trust accounts.

The law, which has few parallels in other states, was devised to eliminate swindles in which modification firms made promises about what their lawyers could do, charged hefty fees and then disappeared. But foreclosure specialists say there has been an unintended consequence: the honest lawyers can no longer afford to assist Ms. Bell and all the others who feel helpless before lenders that they see as elusive, unyielding and skilled at losing paperwork.

Full article here.

If you need assistance with bankruptcy in Ventura, Oxnard, Ojai, Carpinteria, or Santa Paula call Andrew Mansfield at 805-765-1529.

Amazing and Disturbing Chart

This chart shows the percentage of home sales that are "REO" (bank owned) and "short sale" (approved for sale below loan price).

Lenders Seek to Take Away Remedies for Ownership Documentation Issues

Caught in the mess of having not kept track of who owns mortgages, lenders are now pressing to have a behind-the-scenes rule issued that borrowers cannot "rescind" such faulty loans.  In essence, borrowers can eliminate these mortgages. In practice, that threat is used to force a modification.  Now, lenders want to put a stop to such remedies.

Full story here.

Mansfield Law Office provides bankruptcy assistance to those in Ventura County in need of protection.

New Credit Categories for Consumers

The New York Times recently disclosed that credit cards are again being offered to so-called "risky" borrowers.  The card companies have realized they make a great deal of money in this market.  From the article, we learn that FICO scores alone are not determinative.  Supposedly, card issuers divide consumers into classes.

One is “strategic defaulters,” whose credit scores were damaged because they walked away from a home when its value dropped below what was owed on the mortgage. These borrowers made a bad bet on real estate but may otherwise be prudent risks because they make a good living.

Similarly, “first-time defaulters” once had a strong credit record but ran into financial trouble during the recession. Typically, these borrowers fell behind on some sort of loan payment after losing a job, not from taking on too much debt.

By contrast, there are “sloppy payers,” who pay only some bills on time; “abusers,” who are defiant about paying; and “distressed borrowers,” who simply do not have the means to pay.

The goal is to weed out the latter groups to identify consumers whose credit scores are blemished but who still have the money to pay their bills.

The full article is here.

If you need bankruptcy assistance in Ventura, Oxnard, Ojai or the surrounding communities, Mansfield Law Office is here to help.

Wall Street Journal Reports HAMP Modifications Putting People Into Foreclosure

The Wall Street Journal ran an article last month documenting cases in which individuals seeking a home loan modification under HAMP were actually pushed into foreclosure. 

The foreclosure-paperwork furor is deepening criticism of the U.S. government's high-profile mortgage-restructuring effort, which has fallen short of its goal of helping three million homeowners. More than half of the 1.4 million borrowers approved for temporary modifications have fallen out of HAMP because they didn't qualify.

The program "has undoubtedly put people into foreclosure," says Neil Barofsky, the special inspector general overseeing the Troubled Asset Relief Program, which funds HAMP. "It's a parade of documentation horrors."

More information here.

Mansfield Law Office
Ventura Debt Law
Oxnard, Ventura, Ojai, Carpinteria Bankruptcy Law

Bankruptcy Filings Per Capita

The United States Courts website has released an interesting map of bankruptcy filings per year per capita.  In other words, in the last twelve months, how many people around you filed for bankruptcy protection?  The answer in Ventura County is 6.43 out of 1,000.  That translates to about 400 people per month in Ventura County.  Santa Barbara County has a slightly lower number of 4.65 per 1,000.  In Clark County, Nevada, that number is 13.09.

Take a look at the interactive maps available at the website.

For more information, see Mansfield Law Office's Ventura Debt Law website.

Andrew S. Mansfield

Judges Dismissing Foreclosures and Erasing Debt

The Washington Post has a story documenting the practice of judges in New York of dismissing foreclosure proceedings based on sloppy documentation.  In one case, the judge erased the debt and transferred the house the homeowners.

This type of aggressive policing of the servicers and lenders would be welcome here.

http://www.venturadebtlaw.com

Does Modification Lead to Foreclosure?

MSNBC has an excellent story on how trial modifications, if not extended or turned into long-term modifications, may lead to foreclosure.  This is truly astounding. 

The story is here. 

There were many large bankruptcies announced this week.  It isn't just the common person.

Gulfstream (the maker of the corporate jet is in trouble).
The National Enquirer.
Ambac Financial (bond insurer).
MGM.
Heidi Montag and Spencer Pratt.

For more, see:

http://www.venturadebtlaw.com
http://www.ojaivalleylaw.com

How does the Foreclosure Mess affect Ventura County?

There a couple of good articles today covering the ongoing foreclosure crisis.

Foreclosure mess will take years to clean up
Treasury links foreclosure ills to lower house prices

It seems clear that Chapter 13 bankruptcy must be modified to allow homeowners to adjust their mortgages down to current value.  Would we rather have this mess affect the banks' and investors' bottom line or continue to see housing prices fall?

For more information:


http://www.venturadebtlaw.com

Bankruptcy News Round-Up

Several news sources recently reported that bankruptcy filings by those 65 and over are ballooning.  USA Today has a good, light summary.  The main problem appears to be the required use of credit cards to purchase necessities. The author notes the following disparity:

Although young Americans grew up in a world of easy credit, older bankruptcy filers have 50% more credit card debt, according to Pottow's study. The median credit card debt of older bankruptcy filers in 2007 was $22,562, compared with $13,615 for younger filers, the study said.

For further information and help with starting over, see:

http://www.venturadebtlaw.com

1000 Town Center Drive, Suite 300
Oxnard, CA 93036

805-253-3001

Our Local Ventura County Real Estate Market

The Ventura County Star recently published Ventura County real estate statistics from DataQuick.  The article and link to the data are here.  In short, Ventura County home sales were down 5% from the month before and 13% from the same month one year ago.  Prices are holding steady.  The average price fell one-half of one percent for the month. 

Making Home Affordable Program

The United States released its monthly report on the Making Home Affordable Program today.  As you know, this program provides for "HAMP" modifications.  I describe that program on my website. The news on the program is mixed.  On one hand, the number of homeowners receiving modifications is absurdly low.  Approximately 25,000 homeowners received a trial or "permanent" modification in September.  Considering 1 in 20 American homeowners is in some stage of foreclosure, that number is obviously grossly inadequate.  The report tells us that 2.96 million mortgages qualify for HAMP.  We are on track for 300,000 modifications per year or 10% of eligible loans?

For the lucky few who get a HAMP modification, 90% remain current with the modified mortgage payment after nine months. 

For the full report, click here.

For more information, see:

http://www.venturadebtlaw.com

1000 Town Center Drive, Suite 300
Oxnard, CA 93036
805-253-3001

New Office in Oxnard

In an effort to serve those needing bankruptcy representation throughout Ventura County, I have opened an office in Oxnard.  Ventura and Oxnard have been especially hard hit by the housing downturn and loss of jobs.  It is important to have a low-cost, reasonable bankruptcy attorney nearby.  The new office is located at:

1000 Town Center Drive, Suite 300
Oxnard, CA 93036

You can call my Oxnard phone number for a free consultation at that office: 805-253-3001.

Mansfield Law Office is proud to have a location in Oxnard, California.  We are only a five to ten minute drive in from Ventura, Santa Paula, and Camarillo.

http://www.venturadebtlaw.com
http://www.venturaforeclosurelaw.com
http://www.venturaloanmodificationlawyer.com

As always, our main website is located at http://www.ojaivalleylaw.com.

Can you Believe how Hard it is to Get Loans for a Home Purchase?

Even as banks and servicers come under pressure for improperly foreclosuing on thousands (perhaps millions) of home, it is harder than ever to get a home loan.  This article from Reuters describes a woman with almost no debt and a FICO score over 800 struggling to get a home loan.

We should be doing everything in our power to get qualified borrowers into homes.  Getting a home loan today should not be an "inquisition," as the article states.

http://www.ojaivalleylaw.com
http://www.venturadebtlaw.com
http://www.venturaforeclosurelaw.com
http://www.venturaloanmodificationlawyer.com

Mansfield Law Office Does Not Charge Fees for Loan Modification in Compliance with California Law

Should California prohibit lawyers from charging an up-front flat fee for loan modification services?

California does.  Does that hurt your chance of getting a loan modification, trial mortgage modification, modification in Chapter 13 bankruptcy, or even a good short sale? I think it does.

This is an unfortunate situation.  Many lawyers and "loan modification specialists" (non-lawyers) were collecting fees to help modify a loan and then taking no action.  California stepped in last year to protect consumers. The problem is that attorneys must now work with no compensation all the way through the loan modification process.  Consumers are protected but there is a significant risk the attorney won't get paid.  After all, the client is experiencing extreme financial distress.  Even though the attorney-client fee agreement specifies compensation on completion of the loan modification process, it may be hard (or impossible) for the attorney to collect any fee.

This conundrum protects consumers but also discourages many attorneys from working for consumers.

As I specify on my website, the law provides the following:

California Civil Code section 2944.7(a)(1) prohibits the collection of advance fees by anyone, including attorneys, who work on loan modifications.  Fees may only be collected after the loan negotiator working on your behalf has fully performed each and every loan modification service in your agreement.

Beware of agencies that demand up-front fees in violation of the law.  Mansfield Law Office does not collect advance fees for loan modification work.

Mortgage modification work is subject to great uncertainty.  Some banks are not required to participate in the Federal programs.  Those that do use a formula to determine if it is more profitable to foreclose on your home or agree to modification.  That formula is secret -- the government refuses to disclose it.  Given this difficulty homeowner's expectations must be realistic but the need for an attorney is even greater.

Mansfield Law Office continues to offer loan modification services even in light of this law.  I do not collect any fees until the loan modification work is completed.  We can arrange for a flat fee to paid upon completion of the loan modification or we can arrange a contingency fee agreement based on the outcome.  I trust my clients.  I believe in you.  If you need help, contact Mansfield Law Office today.

California Association of Realtors on Foreclosures

I recieved the following from the California Association of Realtors this week.  I believe, unfortunately, that Association is not taking the best position for consumers but is attempting to stay neutral in the controversey.  Real estate brokers and agents are afraid foreclosure moratoriums will negatively impact housing prices.
    
Brought to you by the CALIFORNIA ASSOCIATION OF REALTORS®

October 12, 2010

Dear C.A.R. member,

No doubt you’ve heard the news recently that a number of major banks have volunteered to temporarily suspend foreclosures in 23 states and Bank of America is temporarily suspending foreclosures nationwide.

While this situation is changing daily, I want to tell you what we currently know to answer any questions you may have.

In late September and early October some lenders and servicers began voluntarily halting foreclosures in select states while they reviewed their foreclosure processes.

So far, only Bank of America has extended its foreclosure moratorium to California, where the vast majority of foreclosures are conducted without a court order.  Foreclosures in the other 23 states are processed through the court system.

Non-judicial foreclosures in California, however, do have legal requirements that lenders must follow.  For example, California law requires that lenders for certain mortgage loans made between Jan. 1, 2003, and Dec. 31, 2007, attempt to make contact with borrowers to discuss options for avoiding foreclosure at least 30 days before filing a notice of default.  Lenders also must sign a declaration in the notice of default stating that they tried to contact the borrower, made contact with the borrower, or fall within an exception (such as a bankruptcy filing).

The lenders and servicers that have placed their foreclosure moratorium on properties in the 23 states where courts are involved in the foreclosure process include:  Goldman Sachs Group Inc’s Litton Loan Servicing, Ally Financial Inc.’s GMAC Mortgage unit, JPMorgan Chase, and PNC Financial.

These lenders/servicers have only temporarily halted their foreclosures while they review their foreclosure process.  This is in response to findings that questioned whether some lenders/servicers were following the correct procedures to foreclose on a property.

This halting of foreclosures is a voluntary action taken on the part of these lenders/servicers and has not been mandated by either the states or the federal government.

Some members have begun to report the immediate impact of this moratorium on transactions that involve foreclosed properties.  Delays in escrow and the removal of listed foreclosures are temporary results of this moratorium.

The immediate impact on the market will be the slowing of home sales, which could put upward pressure on home prices in the short term.  The long-term effect on the market is uncertain at this point as it depends how long the moratorium remains in place.

Assuming the moratorium is lifted in the next month, the flow of REOs to the market should resume, but the uncertainty created by the moratorium may cause hesitation on the part of buyers.

Federal agencies, including the Office of the Comptroller of the Currency, the Federal Housing Administration, and the conservator of Fannie Mae and Freddie Mac, have asked lenders and servicers to review their foreclosure processes.  This review would apply to all states including those like California where the vast majority of foreclosures are non-judicial.

The participating lenders and servicers believe their internal review processes should take anywhere from a few weeks to 30 days to complete.
NAR has sent a letter to regulators expressing their concerns over the foreclosure issue.  Please visit www.realtor.org/foreclosure for the latest developments and additional information.

C.A.R. is supportive of lenders taking action to ensure homeowners are not improperly foreclosed on and that they are following state law.  We hope they are able to conduct their review expeditiously so as to minimize the impact on California’s housing market.

If you have additional questions or are experiencing problems or delays with any foreclosure transactions, please call our Customer Contact Center at (213) 739-8227.

Sincerely,

Steve Goddard
2010 President
CALIFORNIA ASSOCIATION OF REALTORS®

See http://www.venturaforeclosurelaw.com for more information.

Moratorium on Foreclosures

According to the Washington Post today, 61% of online respondents to a poll it presented on its website believe there should be a moratorium on all foreclosures.  Do you face foreclosure in Ventura County? Even if you don't face an immediate foreclosure, should we have a moratorium?  How would it affect us here in our larger cities such as Oxnard and Ventura?

The Post reports:

The financial incentives show that the problems plaguing the foreclosure process extend well beyond a few, low-ranking document processors who forged documents or failed to review foreclosure files even as they signed off on them. In fact, virtually everyone involved - loan servicers, law firms, document processing companies and others - made more money as they evicted more borrowers from their homes, creating a system that was vulnerable to error and difficult for homeowners to challenge.

Lawyers involved in trying to stop foreclosures, modify loans, and engage in short sales indicate that this "machine" made it impossible to help homeowners.  The entire system appears to have been designed for speed.  Speed is accomplished through a lack of personalization and variation.

One law firm processed 70,000 foreclosures in one year using a team of 12 inexperienced people. That comes out to be 24 loan files foreclosed upon per person per work day. The firm was paid a flat fee of $1,300 for pushing a foreclosure through without a challenge.

Here are other facts that may have affected so many of us in Ventura County:

• Fannie Mae fined servicers each day a loan was not foreclosed upon
• Credit agencies reward servicers with higher ratings based on the speed with which they foreclose
• Completely untrained individuals -- hair stylists and Wal-Mart clerks -- were given high level jobs in the foreclosure process

I encourage you to hire us as counsel if you face foreclosure.  Let me, as an attorney, take on the servicers for you and make sure they consider modification.  Loan modification programs like HAMPA must be considered before foreclosure.  We have to make the lenders and servicers slow down and listen.

See:

http://www.ojaivalleylaw.com
http://www.venturadebtlaw.com
http://www.venturaforeclosurelaw.com
http://www.venturaloanmodificationlawyer.com

Foreclosures Grown in Face of Moratorium

News continues to build about the foreclosure crisis.  An MSNB news headline tells us today that "Foreclosures hit post-bust peak in third quarter."  Here is the opening paragraph of that article.

Lenders seized more U.S. homes this summer than in any three-month stretch since the housing market began to bust in 2006. But many of the foreclosures may be challenged in court later because of allegations that banks evicted people without reading the documents.  

So what are the numbers?

• 288,345 properties were lost to foreclosure in the July-September quarter. That's up from nearly 270,000 in the second quarter, the previous high point in the firm's records dating back to 2005.
• Banks have seized more than 816,000 homes through the first nine months of the year and had been on pace to seize 1.2 million by the end of 2010.
• Banks have seized more than 816,000 homes through the first nine months of the year and had been on pace to seize 1.2 million by the end of 2010. But fewer are expected now that several major lenders have suspended foreclosures and sales of repossessed homes until they can sort out the foreclosure-documents mess.

If you are in the foreclosure process or need to declare bankruptcy, give Mansfield Law Office a call.  We can help you with foreclosure and bankruptcy in Ojai, Ventura, Oxnard, Santa Paula, and Carpinteria.  Or visit the firm website on foreclosure: http://www.venturaforeclosurelaw.com.

Foreclosure Defense and Loan Modification

Because I offer foreclosure defense and loan modification services, I've developed a new website to explain those services in more details.  To learn more about what an attorney can do for you when you are behind on your mortgage, visit http://www.venturaforeclosurelaw.com.

On that topic, California announced today that it will join a multi-state taskforce to investigate improperly reviewed and signed foreclosure documents.  The Los Angeles Times reports that Ally Financial, Inc. and Wells Fargo are now admitting that they must look further into the way they foreclose on homes.  

Meanwhile, Timothy Geithner indicated the Obama Administration will not support a moratorium on foreclosures.  Geithner explained that he believes a moratorium would hurt real estate values because homes would sit empty longer. 

“In neighborhoods that have been most affected by the foreclosure crisis, where you see lots of houses on the block empty, unoccupied, what it means is those communities would be living longer with houses unoccupied, with more pressure on their house price,” Geithner said."

That comes from Bloomberg.

From that same article we learn, "lenders took possession of a record 95,364 homes in August and issued foreclosure filings to 338,836 homeowners, or one of every 381 U.S. households."

I'll post soon about the foreclosure crisis as it is affecting Ventura County cities.  In the meantime, take a look at the new website.  

Mansfield Law Office serves Ojai, Carpinteria, Santa Paula, Oxnard, and Ventura. 

Two Systems of California Exemptions

California has two statutory systems governing bankruptcy exemptions.  These systems are codified in California Code of Civil Procedure sections 703 and 704.  You will often hear them referenced as "703" exemptions or "704" exemptions.  The California homestead exemption increased on January 1, 2010.  This effected the 704 exemptions.  Those changes are reflected in the table below.

As you can see, it takes great planning to decide which set of exemptions will most protect and preserve your property.  While this table is provided for your information, you are urged to check the code itself and rely only on the code.  We also ask that you call Andrew S. Mansfield, of Mansfield Law Office, for a free consultation today.  We will help you consider and work through these exemption systems.

Mansfield Law Office is at http://www.ojaivalleylaw.com.  We maintain a bankruptcy-specific website at http://www.venturadebtlaw.com and a foreclosure and loan modification website at http://www.venturaloanmodificationlawyer.com.

Type of Exemption	703 Exemptions	704 Exemptions
Homestead	$20,725.00	$75,000 if single and not disabled; $100,00 if family and no other member has homestead; $175,000 if 65 or older or if physically or mentally disabled; $175,000 if creditors are seeking to force sale of your home and you are either (a) 55 or older, single and earn under $15,000 per year, or (b) 55 or older, married and earn under $20,000 per year. Sale proceeds are exempt for up to 6 months after sale.
Motor Vehicle	$3,300.00	$2,550.00
Food, clothing, appliances and furnishings	$525 per item. Actually includes clothing, household goods, appliances, furnishings, animals, books, musical instruments and crops.	Reasonable amount.
Building materials to repair or improve home		$2,700.00
Jewelry, heirlooms, and art	$1,350 (jewelry)	$6,750.00
Health aids	Reasonable amount.	Reasonable amount.
Bank deposits form Social Security or Public Benefits	Fully exempt (Social Security and Public Benefits).	Bank deposits from Social Security Administration up to $2,700 for single payee ($4,050 for husband and wife payees); Bank deposits from other public benefits up to $1,350 ($2,025 for husband and wife).
Personal injury causes of action and wrongful death causes of action	As needed for support (wrongful death only). Personal injury recoveries up to $20,725, not to include pain, suffering or pecuniary loss.	As needed for support.
Burial plot	Up to $20,725, instead of homestead.	Reasonable amount.
Wages		75% of wages paid within 30 days prior to filing bankruptcy.
Public employee vacation credits		Reasonable amount but 75% minimum if receiving installment payments.
Tax exempt retirement accounts	Traditional and Roth IRAs up to $1,095,000 per person.	Traditional and Roth IRAs up to $1,095,000 per person.
Public retirement benefits		Fully allowed.
Private retirements benefits, including IRA and Keogh		Fully allowed.
Unemployment benefits and union benefits due to labor dispute.	Fully allowed (unemployment).	Fully allowed.
Workers' compensation.		Fully allowed.
Aid to blind, aged and disabled or other public assistance.		Fully exempt.
Relocation benefits.		Fully exempt.
Financial aid to students.		Fully exempt.
Tools of trade (tools for work)	$2,075.00	Tools, implements, materials, books, uniforms, instruments, one commercial vehicle, equipment, and furnishings up to $6,750, or up to $13,475 if used by both spouses in the same occupation. Commercial vehicle up to $4,850, or $9,700 if used by both spouses in the same occupation.
Matured life insurance benefits needed for support of unlimited value, or unmatured life insurance policy	Unmatured life insurance policy accrued interest, dividends, loan, cash or surrender value $11,075. Other unmatured life insurnace policy fully exempt.	$10,775.00
Disability or health benefits	Fully exempt.	Fully exempt.
Life insurance	As needed for support.	Life insurance proceeds if policy prohibits use to pay creditors.
Business or professional licenses		Fully exempt.
Trust funds of inmates		$1,350.00
Business partnership property		Fully exempt.
WILDCARD	$16,100 less any claim for homestead or burial plot.	NONE.
ERISA Qualified Benefits	As needed for support.
Crime Victim Compensation	Fully exempt.
Alimony and Child Support	Fully exempt.

Loan Modification Legal Services

To many people, nothing is more important than saving their home from foreclosure.  The first step in this process, if the loan payment is too heavy under the circumstances, is to seek a loan modification.  Negotiating such a modification takes tremendous work and needs to be done with care in order to protect legal rights that might be waived in such a modification.  In addition, a homeowner must consult a tax professional as well as work with an attorney.

Mansfield Law Office not only provides bankruptcy services but also provides loan modification, short sale, deed in lieu of trust, and foreclosure defense legal services.  Don't rely on a "loan modification service."  Get legal advice instead.

A new website describing these services is located at http://www.venturaloanmodificationlawyer.com.

Mansfield Law Office services Ventura, Oxnard, Ojai, Santa Paula, and Carpinteria, California.  Call 805-765-1529 now.

H.R. 3808, the "Interstate Recognition of Notarization Act"

Thanks to President Obama, H.R. 3808, the "Interstate Recognition of Notarization Act," is not law.  It is amazing that this bill passed both the Democratically controlled House and Senate.

I agree wholeheartedly with the following letter proposed by the National Association of Consumer Bankruptcy Attorneys.

October 8, 2010

President Barack Obama

The White House

Washington, DC 20500

Dear Mr. President,

We are writing to thank you for your decision not to sign H.R. 3808, the "Interstate Recognition of Notarization Act." As you have recognized, now is not the time to loosen protections against fraud in the foreclosure process; it is a time to strengthen them.

The bill would have required any court to recognize notarizations that are made lawful by any single state.  While legal experts continue to examine the implications of the proposed language, the concern is that the bill may have permitted a state to loosen notarization requirements to make lawful questionable practices, such as notarizing documents not signed in the presence of the notary or notarizing documents signed by someone with purported authority to sign on behalf of another.  We want to be sure to avoid a situation where a state would be in the position to export bad practices to other states, much as certain states have eliminated usury laws in order to attract the business of the credit card industry, thereby undermining the protections instituted by other states and resulting in a "race to the bottom."

Furthermore, while the language in H.R. 3808 has the potential to undermine the integrity of judicial proceedings, it also appears to be the proverbial "solution in search of a problem." Litigators report that they are unaware of problems with any court accepting out of state notarizations.

In closing, we note that the systemic problems in the foreclosure system require a much greater government response than has been taken thus far. There should be a national moratorium on all foreclosures until regulators and other agencies can ensure that mortgage servicers are complying with all applicable laws, regulations, and contractual requirements, and these problems should lead us to renew efforts to find a more effective way to prevent unnecessary foreclosures. Many powerful solutions have been proposed, such as requiring servicers to evaluate homeowners for loan modifications prior to foreclosure, or permitting bankruptcy judges to modify mortgages for a family's primary home. We hope those solutions can be explored in a serious way to help America's struggling homeowners, housing market, and the economic recovery.

Sincerely,

Americans for Financial Reform

Beyond Housing

Center for Responsible Lending

Consumer Action

Leadership Conference on Civil and Human Rights

Missourians Organizing for Reform and Empowerment

National Association of Consumer Bankruptcy Attorneys

National Community Reinvestment Coalition

National Consumer Law Center (on behalf of its low income clients)

National Council of LaRaza

National Fair Housing Alliance

National People's Action

Neighborhood Economic Development Advocacy Project

PICO

Mansfield Law Office is here to provide exceptional bankruptcy and foreclosure defense representation to residents of Ventura, Ojai, Oxnard, and Santa Paula.  

The Consumer Strikes Back: Bank of America Backs Off

Due to its use of "robo-signers," Bank of American has halted all foreclosures in all fifty states.  Other major mortgage lenders and servicers -- PNC Financial, Chase, Ally Financial -- have suspended foreclosures in 23 states.  It is a wonderful testament to the law that two pro-bono attorneys blew the lid off this practice.  These lenders recklessly lent money and securitized those reckless loans, selling them to other unsuspecting investors.  Those same lenders now are unwilling to spend the money to properly review the very files they underwrote before foreclosing on Americans homes.  One robo-signer reviewed one foreclosure every 90 seconds he was at work.  Some of these files are hundreds of pages long.  And the affidavits signed by the robo-signers declare that the signer reviewed all the material facts in the file.

The audacity of the lenders and servicers in taking away ordinary Americans homes in this way is astounding.  To me, these are not "technical mistakes."

Of course, the effect of casting doubt on so many foreclosures also will be to unsettle many homeowners who purchased foreclosed homes.  Title companies are now not certain they can or have issued good title to those homes.  If the foreclosure was based on defective documents or practices, the sale to the new owners is open to attack.

Mansfield Law Office is here to help residents in Ojai, Ventura, Oxnard, Santa Paula, and Carpinteria fight to keep their homes or get a fresh start in bankruptcy.  In my opinion, the lending institutions and their servicing companies have thrown morality to the wind.  Consumers should not struggle to meet a perceived moral obligation to make good on loans the payments for which are cutting into families groceries, utilities, and clothing.  This is not acceptable.  America has always been a nation that allows each of us to start over and try again. Strategic mortgage default -- choosing to walk away from an underwater loan even when one can pay -- may be the best economic decision for your family.  Chapter 7, 11, or 13 bankruptcy may also be the best way to move forward.

Several news stories provide fascinating overviews of this foreclosure crisis.

• Bank of America Halts all U.S. Foreclosures
• 
  
• B of A Halts Foreclosure Sales in California
• 
  
• Momentum Builds for Nationwide Freeze on Foreclosures
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• After Foreclosure, A Focus on Title Insurance

Strategic Default

What Are Strategic Defaults? 

Typically, "strategic default" is defined as not paying your mortgage when you can afford to do so.   Most of the time, families that stop paying their mortgage cannot pay the mortgage--they don't have the means and they are heading to foreclosure.  Some home owners decide that the mortgage is so far "underwater" that they would rather surrender the house and default no the loan than continue to pay the mortgage.  If the homeowner is willing to take the consequences of breaking a contract (which is all that a home mortgage is), shouldn't he or she be allowed to?
 
Here in Ventura County, more homeowners who could pay their mortgage are deciding it just isn't worth it.  Last week, I posted information on the foreclosure market and the "heat" of that market in places like Ojai, Ventura, and Oxnard.  Is some of that activity from strategic defaults?

Proposed Government Actions to Discourage Strategic Defaults 

It is not against any law to stop paying your mortgage, whatever the reason. However, the banking industry is pressuring lawmakers and the government housing entities (Fannie Mae, Freddie Mac, and the Federal Housing Administration) to treat those who are deemed to have engaged in a strategic default differently.  Starting October 1, Fannie Mae implemented a policy that those who intentionally default when they had the capacity to pay or those who do not complete a workout alternative in good faith will be ineligible for a new Fannie Mae-backed mortgage for a period of seven years from the date of foreclosure. Fannie Mae says the policy change is designed to encourage borrowers to work with their servicers and pursue alternatives to foreclosure.

This penalty is to be effected by a new set of waiting periods between a distressed real estate event and a borrower's eligibility for a Fannie Mae backed mortgage.

1. Those who sell through a short sale or execute a deed in lieu of foreclosure may be eligible for a new Fannie Mae mortgage in as little as two years.
2. Borrowers who can prove hardship or who sought a workout with the lender may wait as little as three years.
3. Those borrowers who went through a foreclosure will wait five years.
4. Finally, those who are alleged to have engaged in strategic default will have to wait seven years for a new Fannie Mae backed loan.

The press release on the above policy action by Fannie Mae is here.  The actual policy is located here.

There is an even more punitive law on the horizon.  H.R. 5072 would permanently deny FHA loans to those who are alleged to have engaged in a strategic default as follows:

The Secretary may not newly insure any mortgage under this title that is secured by a 1- to 4-family dwelling unless the mortgagee has determined, in accordance with such standards and requirements established by the Secretary, that the mortgagor under such mortgage has not previously engaged in any strategic default with respect to any residential mortgage loan.

STRATEGIC DEFAULT.—For purposes of this subsection, the term ‘strategic default’ means, with respect to a residential mortgage loan, an intentional default having such characteristics or under such circumstances as the Secretary shall, by regulation, provide.’’

Distinguishing Between Strategic Defaulters and Truly Distressed Homeowners

Distinguishing between the "truly distressed" and those who simply decide it is better to get out of a bad agreement by surrendering the security will be difficult, to say the least.  I foresee mountains of paperwork and appeals related to mortgage institution determinations about who engaged in strategic default.

All of this makes it more important than ever to work with an attorney as you consider modifying your loan, engaging in a short sale, pursuing a deed in lieu, or allowing foreclosure.  The way that a homeowner proceeds through these options (in good faith) could have a major impact down the road.  If you are considering one of these actions in Ventura, Oxnard, Ojai or our surrounding areas, contact Mansfield Law Office. 

August Foreclosure Activity

Many people are suffering foreclosure in the area encompassed by the 93023 zip code (which includes Ojai, Mira Monte, Meiners Oaks, and Oak View).  In August, approximately 1 out of every 500 houses received a foreclosure filing.  Compared to California as a whole, Ojai is doing fairly well.  California's rate of foreclose is double that of Ojai.  In hard numbers, the Ojai area saw 19 homes go into foreclosure in August.  That is a home every day and a half -- in our small community.

The people of Ventura County as a whole suffer even more.  In terms of the sheer number of foreclosures in August, these cities lead the way.  Remember, these numbers represent one month of activity.

• Oxnard (280)
• Simi Valley (236)
• Ventura (143)
• Camarillo (140)

If we look at the percentage of homes in foreclosure in a given community, the ranking of cities on that list changes. Again, the numbers are not annualized.  The number represents the percentage of houses that went into foreclosure in August.

• Moorpark (1 in 149)
• Simi Valley (1 in 176)
• Port Hueneme (1 in 186)
• Oxnard (1 in 191)

At the rate Moorpark is preceeding, nearly one in ten families who own their home would go through foreclosure in year.

If you need help, please call Mansfield Law Office.  You can also email me at amansfield@ojaivalleylaw.com.  More information can be found on our website: http://www.ojaivalleylaw.com or, for more specific financial distress information, you can find us at http://www.venturadebtlaw.com.

Bank of America Latest to use "Robo-Signer"

A judicial foreclosure -- mandatory in 23 states -- is one of two options available to lenders in California.  Most lenders pursue non-judicial foreclosure.  It is, typically, a faster process and does not subject the property sold to the possibility of the original owner buying it back for an extended period of time.  Because of these facts, the price a bank can get for a non-judicial foreclosure is usually higher than the price it might get through a judicial foreclosure.

Nevertheless, judicial foreclosure laws exist to protect those who hold mortgages.  Under the law, a lender is supposed to carefully review the facts of a given foreclosure and have an employee sign an affidavit that all of the information is true and correct.  We have learned in the last several weeks that the banks and servicing companies, overwhelmed by the volume of foreclosures, have "robo-signers" doing this work.  This name indicates that the employees did nothing but sign foreclosure affidavits.  There is no possibility the signatory actually reviewed the documents.  Many robo-signers "reviewed" and signed thousands of foreclosure affidavits each month.

Bank of America is the latest lender now admitting that it had mid-level employees sign the affidavits without reviewing the information.  For the Bank of America employee in question to have reviewed each affidavit, she would have had to digest all of the information in a large file in approximately 70 seconds.

In defense of the banks, we have heard a great deal of information on the news about the fact that the lenders are overwhelmed with foreclosures.  The New York Times reported today that 2 million households are in foreclosure and 2.37 million households are on the precipice.

What is the effect of these violations of the law?  Bank of America, like Chase and GMAC, have suspended foreclosure proceedings until they can re-review those files.  The outcome might be the same for almost all property owners who are subject to foreclosure by these banks.  But the process could take up to five months to complete.  In the meantime, foreclosure efforts are in abeyance.

Regardless of the volume of work, when taking someone's home in a foreclosure, one would hope the banks would follow the letter and the spirit of the law.

For more information, contact Mansfield Law Office http://www.venturadebtlaw.com.

What are the advantages of seeking bankruptcy protection?

A bankruptcy "discharge" makes certain unsecured debts unenforceable against the person who seeks bankruptcy protection.  The legal system in the United States has long held that individuals and even businesses are entitled to a "fresh start" through bankruptcy. We have all been over-optimistic about the future at various stages of our lives.  When things work out, such over-optimism is heralded as courage and bold vision.  But economic circumstances change, forces over which we have no control overwhelm us, and even well-developed plans can fail to produce the results we want.  In 2008, for example, the Small Business Administration reported that approximately 50% of all small businesses fail within the first five years of operation.  Yet we wouldn't want entrepreneurs to stop trying to open and run these businesses.  Small businesses are a crucial part of the economy.

So what are several of the advantages to seeking bankruptcy protection if you find yourself in a financial crisis?

One of the main advantages of seeking bankruptcy protection is called the "automatic stay."  This is an immediate benefit to those in debt who are receiving numerous and sometimes harassing phone calls and letters.  The automatic stay gives the debtor some breathing room while the bankruptcy process proceeds.

What if the collateral to secure a loan is worth less than the loan? In Chapter 11 and Chapter 13 cases, certain liens can be reduced to the value of the collateral rather than the amount of the debt.  This is called "lienstripping."  For example, if a lien secured a $100,000 loan but he security was, several years later, worth only $50,000, the debt can be paid off at $50,000.  There are exceptions, including the most important secured loan most individuals have.  A debt secured only by a lien on the debtor's principal residence cannot be stripped down to collateral value.  If this rule were changed, it would eliminate homeowners leaving bad loans with "deficiency" judgments for the difference between the loan and sale price.  Lienstripping is also prohibited on cars purchased in the prior two and a half years.

Getting good prices for goods or even a business that must be sold to pay debts is crucial.  If assets are to be sold ("liquidated") a sale through a bankruptcy may bring a higher prices.  Businesses, for example, might be sold as going concerns instead of being sold in pieces.  Compared to sales under execution or foreclosure, sales through the bankruptcy estate are often better advertised.

Finally, certain forms of bankruptcy provide a way for individuals, families, and businesses to move forward without closing shop or liquidating.  Under Chapter 11, a business may be able to restructure its debts and reorganize.  Under Chapter 13, an individual or family can consolidate pre-bankruptcy debts and pay them out of future income over a longer period of time.

In future posts, I'll discuss some of the disadvantages of seeking bankruptcy protection.  Whether to seek bankruptcy protection is always a touch choice and involves a serious assessment of the benefits versus the costs.  I suggest seeking experienced legal counsel to help you through this process.