The Blog Has Moved Locations!

While the prior posts in this blog will remain, the blog has moved to http://venturabankruptcylawyer.blogspot.com. 

Mixed News and Multiple Economic Viewpoints

It is interesting that various news articles play up one side or the other when discussing the economic recovery.  I tend to believe that any recovery in jobs and income is illusory.  Take this MSNBC story from today.

Hopes for a quick economic rebound in the second half of the year seemed more remote on Friday after a glimpse at consumer sentiment showed it at its lowest level in more than two years.

Industrial output also hit the brakes in June, rising a modest 0.2 percent, according to the Federal Reserve. although much of the stall was attributed to auto sector disruptions from the earthquake and tsunami in Japan.

The reports were the latest in a series, including weak retail sales and employment, to suggest that the anticipated step-up in growth in the second half of the year might not be as strong as initially thought.

Will more people need to file Chapter 7 and Chapter 13 bankruptcy in Ventura?  This makes me believe it will be so.

On the other hand, we have articles like this one.

The average U.S. credit score — a predictor of the likelihood lenders will be paid back — rose to 696 in May, the highest in at least four years, according to credit reporting bureau Equifax. Delinquencies on consumer loans have dropped 30 percent in two years, according to Federal Reserve data.

 Again, I believe that the combination of the continuing decline in housing prices and the loss of jobs will hurt many of us.  I sense that the positive articles are meant to encourage consumers to spend again.  With enough spending, we can  perhaps fuel another bubble or at least temporary recovery. 

New York Times: More Borrowers will Lose Homes under Bank Deal

There is a very interesting article from the New York Times that describes the unintended consequences of the large bank deal under discussion.  Countrywide / Bank of America homeowners are the furthest behind on their mortgages.  Many borrowers have lived in their home without paying the mortgage for over a year.  Under the new bank rules, many of those borrowers will be foreclosed upon and it will be more quickly.

The full story is here.  Mansfield Law Office is always ready to help Ventura County homeowners who may benefit from bankruptcy protection. 

Unexpected Employment Numbers Signal Need for More Ventura County Bankruptcy Protection

This is truly bad news for all of us. I am certain Chapter 7 and Chapter 13 filings will increase again with rising unemployment. Mansfield Law Office is here to help. Here is a link to Reuters:

http://reut.rs/mTWeUF


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Incredible News for Ventura County Residents: Possible Increase in California Bankruptcy Exemptions

The following summary is not authored by me.  These materials were prepared by Elissa D. Miller of Sulmeyer Kupetz, P.C. in Los Angeles, California.  I have copied them here to reproduce the excellent communication from Ms. Miller on behalf of all consumer bankruptcy attorneys.

June 22, 2011

Dear Insolvency Law Committee Constituency List members:

The following is an Ebulletin prepared on a case of interest by a member of the Insolvency Law Committee:  

A bill to again revise California Exemptions, introduced by Assembly Member Wieckowski, has recently passed the Assembly without opposition and is now in the Senate.  On June 14, 2011 the bill was favorably reported out of the Senate Judiciary Committee and is slated to be taken up by the Senate Appropriations Committee within the next few weeks.  It appears to be on a fast track.

The Bill, AB 929, results in the second substantial increase in the homestead exemption in the last year and includes major revisions to the exemptions applicable if no homestead is taken.  A copy of the bill can be found at http://www.leginfo.ca.gov/cgi-bin/postquery?bill_number=ab_929&sess=CUR&house=B&author=wieckowski

The stated purpose of the bill is as follows: 

This bill would revise and recast those alternative exemption provisions and would, among other things, increase the exemption available for the debtor's interest in motor vehicles; jewelry, heirlooms, and works of art; and tools and other items used in the debtor's trade, business, or profession or in the trade, business, or profession of the debtor's spouse. The bill would revise the alternative exemption provisions relating to household furnishings, life insurance contracts, wrongful death and personal injury actions, unemployment compensation payments, and cemetery plots and would add to those alternative exemption provisions exemptions for workers' compensation benefits, specified aid payments and relocation benefits, and financial aid for higher education.
Existing law provides an exemption from enforcement of a money judgment for a homestead, as defined, in specified amounts.
With regard to the homestead exemption in CCP section 704.730, the bill results in the increase in the exemption amounts as follows:

	Current Law	Proposed Change
Individual	$75,000	$150,000
Family Unit	$100,000	$250,000
Over 65/Disabled/Low Income	$175,000	$350,000

The bill also increases the maximum income allowed to qualify for the low income homestead exemption for people from $15,000 to $22,000 for an individual and $20,000 to $29,000 for a married couple.

With regard to the exemptions applicable if no homestead is claimed,  CCP section 703.104(b), the bill does not increase the wildcard, per se, but does increase other provisions and also creates new exemptions such that the total amount exemptible has now increased substantially.  .  The stated purpose of these amendments is to conform the CCP Section 703.140(b) exemptions to the CCP Section 704.010 et seq. exemptions to protect those without homes in the event they file for bankruptcy protection.   While the language of the changes to the CCP Section 703.140(b) exemptions would appear to parallel the CCP Section 704.010 et seq. exemptions, the amounts are not the same.  The exemptions available under CCP Section 703.140(b) are substantially higher than those in CCP Section 704.010 et seq.

For example, a burial plot which previously was included under CCP section 703.140(b)(1) now has its own separate section, new CCP section 703.140(b)(17) and is exempt without regard to value.

A chart of certain of the increases follows:

Property Exempt	Current Law	Proposed Change
Vehicles	$3,525 (one vehicle only)	$4,800 of aggregate equity
Jewelry, heirlooms and works of art	$1,425	$5,000
Tools of the Trade	$2,200	$6,075 (and if married both spouses entitled to claim exemption)
Unmatured life insurance including annuities but not the loan value	$11,800	unlimited
Loan value of unmatured life insurance	included in $11,800 above	$9,700 (and if married both spouses entitled to claim exemption)
Personal Injury	$22,075 (for actual pecuniary loss)	unlimited

The author has been advised that the Bill has been opposed by the California Bankers Association.  The Bill will result in a reduction in the number of bankruptcy cases administered with assets.  In other words, Debtors, without homes to protect in Chapter 7 bankruptcies, will be able to protect more assets.

Thank you for your continued support of the Committee.

Best regards,

Insolvency Law Committee

Mansfield Law Office
701 E. Santa Clara St., Suite 13
Ventura, CA 93001
The Bankruptcy Attorney in Ventura with the Broadest Experience

Job Cuts Coming

It appears that more job cuts are planned at US companies. The jobs outlook remains "murky".

Here is the link.

Mansfield Law Office is the number one Ventura bankruptcy law firm in terms of education and large firm training. We are here to help.

701 E Santa Clara St.
Suite 13
Ventura, CA 93001
805-765-1529

Interesting Article on Stock Market Decline Possibilty

Each of the factors listed in this article could lead to many more residents of Ventura County seeking bankruptcy protection. Mansfield Law Office is here to help if we face such a further downturn.

Article from MSNBC here.

If the economy continues to tumble, Chapter 7 and Chapter 13 bankruptcy protection may become even more widespread.

Andrew S. Mansfield is a premier bankruptcy attorney located in the heart of Ventura.

BBB Business Review of Mansfield Law Office - Attorneys - Ventura, CA

Mansfield Law Office receives an A+ rating from the BBB. Full link below.

BBB Business Review of Mansfield Law Office - Attorneys - Ventura, CA

Mansfield Law Office
http://www.venturadebtlaw.com

Unemployment is Increasing. What does it mean for bankruptcy?

Unemployment Rises In More Than Half Of U.S. Metro Areas
WASHINGTON -- Unemployment rates rose last month in more than half of the nation's largest metro areas, driven higher by weak private-sector hiring and natural...

Full story:

http://www.huffingtonpost.com/2011/06/29/unemployment-metros-half_n_887081.html

Mansfield Law
www.venturadebtlaw.com


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The Great Recession or Great Depression?

Can you believe the news?  I feel the pain out in our community.  Mansfield Law Office can help, though.  We provide a great deal of information on bankruptcy protection on these web pages on our main website venturadebtlaw.com for those in trouble.

Bernanke, Fed see economy losing steam

U.S. Home Prices Fell 5.7%

Andrew S. Mansfield

Mansfield Law Office -- Venturadebtlaw.com

Mansfield Law: Mortgage Rates

I find this fairly amazing.

The sales report came out as fixed mortgage rates continued to fall.

Sales of previously occupied homes fell 0.8% in April to a seasonally adjusted annual rate of 5.05 million units, the National Association of Realtors said Thursday. That's far below the 6 million homes a year that economists say represents a healthy market.

Purchases made by first-time homebuyers rose 3% to 36%.... Sales have fallen in four of the past five years before hitting a 13-year low last year. Sales are falling even as prices decline. The median sales price in April rose 2.4% from March, to $163,700. But it's still down 5% from the same month one year ago.

Sales of homes at risk of foreclosure fell 3% in April, to 37% of all purchases. Foreclosure sales likely declined only because a large number of those homes are backlogged in the courts. They have been held up by a state and federal probe into troubled foreclosure practices by lenders.

A record 1 million homes were lost to foreclosures last year and foreclosure tracker RealtyTrac expects 1.2 million more will be lost this year. Homes at risk of foreclosures usually sell at 20% discounts compared to their original listing price.

Because of California's over-restrictive regulation of attorney participation in foreclosure defense work, I typically do not get involved in foreclosures until a Chapter 7 or Chapter 13 is needed to block a trustee sale and, hopefully, provide the consumer with a way to keep the house.

Even as times get worse, Mansfield Law Office is here to help if bankruptcy might be the only answer to a foreclosure.

Interesting American Bankruptcy Institute Headline and Summary on Nevada Bankruptcy

The American Bankruptcy Institute (an organization of which I'm a member) sent the following summary this morning.

Nevada has the highest population-adjusted bankruptcy filing rate in the nation, but even with the highest foreclosure ratio in the nation, Nevadans are not using bankruptcy to skirt foreclosure and keep their homes, according to Columbia Law School professor Ronald Mann, DSNews.com reported today. Mann's analysis shows that Nevada's bankruptcy filing rate so far this year is 5,176 filings per million adults, more than twice the national rate of 2,562 per million. At the same time, Mann notes that while Nevada leads the nation in filings - and has done so by a wide margin all year - its filing rate is actually down 17 percent from the first five months of 2010. Another wrinkle, he says, is that despite the subprime mortgage crisis that ravaged Nevada's economy, the 23 percent of its chapter 13 filings trails the national average of 28 percent. "Whatever Nevada filers are doing, they are not in bankruptcy to save their homes," Mann said.

The full article is here.

Posting by Andrew S. Mansfield (174556)
Mansfield Law Office
http://www.venturadebtlaw.com
http://www.oxnardbankruptcylawyer.com

Please note the disclaimer on this website that all information posted by Andrew S. Mansfield does not constitute legal advice and does not create an attorney-client relationship.  You may need to contact an attorney to protect valuable rights.

Double Dip and Bankruptcy

The economic pessimists have said for some time we may have a double dip recession. Bankruptcy is a legitimate way to start over and get your affairs in order. If this is the start of a double dip it is more important than ever to be out from under debt that cannot be paid. It may be time to consult with an attorney if this is facing you.

More in the Wall Street Journal<

Mansfield Law Office
www.venturadebtlaw.com

Fighting Foreclosure through Litigation Concerning Loan Documents and Ownership

I often have clients come to me and hope to sue the banks and servicer involved with their home loans.  I have reviewed questionable loan documentation.  It appears that actually prevailing in such is becoming a bit more likely.

Banks trying to foreclose on homeowners are hitting another roadblock, as some delinquent borrowers are successfully arguing that their mortgage companies can't prove they own the loans and therefore don't have the right to foreclose.

These "show me the paper" cases have been winding through the courts for several years. But in recent months, some judges have been siding with borrowers and stopping foreclosures after concluding that banks' paperwork problems are more serious than previously thought and raise broader ethical questions

This year, cases in California, North Carolina, Alabama, Florida, Maine, New York, New Jersey, Texas, Massachusetts and others have raised questions about whether banks properly demonstrated ownership.

Full article is here (Wall Street Journal subscription required for entire article).

Posted by Andrew S. Mansfield
Mansfield Law Office
http://www.venturadebtlaw.com
701 E. Santa Clara St., Suite 13
Ventura, CA 93001

Banks on the Line

Banks apparently face a huge liability from their foreclosure practices.

State attorneys general told five of the nation's largest banks on Tuesday they face a potential liability of at least $17 billion in civil lawsuits if a settlement isn't reached to address improper foreclosure practices, according to people familiar with the matter.

The full article is from the Wall Street Journal but a subscription is required to read the entire article.

Mansfield Law Office
http://www.venturadebtlaw.com

USA Today Reports that Mortgage-Only Defaulters are Less of a Risk

From USA Today:

People who default on their mortgages — but no other debts — are not as risky as expected, according to a new study from credit monitor TransUnion.

This would, in my opinion, call into question recent attempts to punish or single out "strategic defaulters" for greater credit impact.  

The full story is here. 

Clarification of Blog Post on Local Attorney Pricing and Services

In February, I used the publicly available system known as PACER to compare the first three cases various attorneys had filed in January.  I used the system to list pricing and services excluded.  I have been informed that some attorneys saw this as misleading or deceptive. I posted my findings in a chart linked to the blog.

I apologize if any other attorneys found my collection and presentation of this publicly available information misleading.  I meant only to encourage to transparency in pricing and point out ways consumers could find such information.  I did not mean to disparage my colleagues.

I always encourage clients who call me or come to see me to visit with various local attorneys, compare prices, and compare the personal interaction each has with various potential counsel.

What happens to tenants who live in foreclosed home?

The Protecting Tenants at Foreclosure Act, Pub. L. No. 111-22, §§ 701-704 (2009), which became law on May 20, 2009, applies to California eviction proceedings.

This act requires that a new owner who took title to residential rental property through foreclosure must honor existing leases until the end of the lease term.

There are three exceptions to this rule: 1) if there is an existing term lease and the new owner wants to occupy the foreclosed property as a personal residence before the end of the lease term, 2) if there is an existing term lease with less than 90 days to the end of the lease term, or 3) if the existing lease on the foreclosed property is a month-to-month tenancy or a tenancy at will. In each of these cases, the owner must provide the tenant at least 90 days notice to terminate the tenancy.

The takeaway -- tenants in properties that may soon be foreclosed should sign long-term leases with their landlords.   If the home and the rent is right for the tenant, why not sign a two year lease?

And there is more bad news:

Data through April 2011, released today by S&P Indices and Experian for the S&P/Experian Consumer Credit Default Indices, a comprehensive measure of changes in consumer credit defaults, showed an increase in bank card and second mortgages default rates for the first time in at least five months. Bank Card defaults went up from 5.59% in March to 5.91% in April and Second Mortgages increased from 1.42% to 1.51%.  

People are making the decision to let credit cards and second mortgages fall behind.  This is done to save first mortgages and autos.

Source here.

Mansfield Law Office

Down (and Down) We Go

Just when you think there might be a slight economic recovery, we learn that the National Association fo Realtors reports that previously owned home sales fell unexpectedly to 5.05 million annual pace.  The mdiean price of a home in the U.S. dropped another 5% from a year earlier.

This fact I cannot stress enough -- 37% of all sales were of foreclosed homes or short sales.

Finally, the share of mortgages overdue by one month or more rose in the first quarter to 8.32 percent from 8.25 percent, according to the MBA data.

So where does it end?  What is happening to this nation?  


More soon in this blog on local conditions.


Mansfield Law Office
http://www.venturadebtlaw.com

U.S. Bankruptcy Trustees Find Massive Bank Problems with Mortgages (Still)

From the American Bankruptcy Institute:

Over the past six months, the U.S. Trustee Program has drawn material from 95 field offices covering 88 judicial districts that should dispel any notion that toxic mortgage servicing practices were atypical or have done no harm, according to a New York Times report on Sunday. Banks have repeatedly tried to thwart the program’s actions, filing lawsuits and court motions to prevent officials from compiling evidence. "We have faced consistent opposition by all of the major servicers," said Clifford J. White III, director of the Executive Office for U.S. Trustees. "We are currently facing 200 motions to quash our discovery requests. We also are facing upwards of 20 appeals either in district courts or in circuit courts." The nationwide investigation by the U.S. Trustee's Office represents an aggressive tack that big financial institutions are unaccustomed to. "The bankruptcy system provided an early warning sign of problems in mortgage servicing," White said. "We began looking a few years ago at some of the violations of mortgage servicers, on a case-by-case basis." When the banks have provided information, lawyers for the trustee program have often found extensive errors in amounts owed and charges levied.

Further reiterating yesterday's news, the Americna Bankruptcy Institute brought another article to my attention. 

A set of confidential federal audits accuse the nation’s five largest mortgage companies of defrauding taxpayers in their handling of foreclosures on homes purchased with government-backed loans, four officials briefed on the findings told The Huffington Post.

Article here.  

Mansfield Law Office
http://www.venturadebtlaw.com

VIP List for Correcting Errors on Credit Report

The American Bankruptcy Institute brought to my attention a New York Times article detailing how the Credit Bureaus segregate credit inquiries into two categories. 

The credit rating bureaus, whose reports influence everything from credit cards to mortgages to job offers, have a two-tiered system for resolving errors - one for the rich and powerful, and the other for everyone else, according to a New York Times report yesterday. The three major agencies, Equifax, Experian and TransUnion, keep a V.I.P. list of sorts, according to consumer lawyers and legal documents, consisting of celebrities, politicians, judges and other influential people. Those on the list get special help from workers in the United States in fixing mistakes on their credit reports.

Full article from New York Times here.

Mansfield Law Office
701 E. Santa Clara St., Suite 13
Ventura, CA 93023

http://www.venturadebtlaw.com

Banks Still Can't Handle Number of Foreclosures

From the American Bankruptcy Institute today.  How can this still be happening?

The Federal Deposit Insurance Corp. said in a report yesterday that many mortgage servicers have "lax foreclosure documentation, ineffective controls over foreclosure procedures, and deficient loss mitigation procedures and controls,” the TheStreet.com reported today. The FDIC added that many players are failing to commit the necessary resources to handle "the rapidly growing volume of mortgage loans in default or at risk of default." The deficiencies in foreclosure procedures highlighted by the FDIC included "inadequate organization and staffing" of loan servicing staffs, the signing and notarization of documents by staff members who did not review the materials, and the failure to "conform to state legal requirements." Examiners also found that with sloppy recordkeeping, the large servicers were "undercharging fees as frequently as overcharging them." Click here to read the FDIC's report.

In related news, Michael Cembalest, CIO of JPMorgan Chase, said in a research note on Tuesday that U.S. agencies played an even larger role in the housing crisis than originally suspected. "What emerges from new research is something quite different: government agencies now look to have guaranteed, originated or underwritten 60 percent of all 'non-traditional' mortgages, which totaled $4.6 trillion in June 2008," Cembalest said in a research note on Tuesday. "What's more, this research asserts that housing policies instituted in the early 1990s were explicitly designed to require U.S. agencies to make much riskier loans, with the ultimate goal of pushing private sector banks to adopt the same standards." Click here to read Cembalest's note.

Mansfield Law Office
www.venturadebtlaw.com

Foreclosuers Up. Way Up.

From the American Bankruptcy Institute today:

NEW FORECLOSURES JUMP 21 PERCENT IN MARCH
Foreclosure activity increased sharply in March, a sign that lenders are coming to grips with the documentation problems that led to the robo-signing scandal last fall, MortgageLoan.com reported yesterday. Foreclosures were initiated on more than 217,000 homes in March, a 21 percent increase over February's rate, according to information released today by the HOPE NOW alliance. Nearly 85,000 properties were forfeited through foreclosure sales during the month, a 35 percent increase over February. The increase in foreclosures occurred despite a declining trend in mortgage delinquencies. There were 2.63 million residential mortgages at least 60 days past due in March, a 6 percent decline from February's level of 2.78 million, which in turn represented a similar decline from 2.95 million in January. Meanwhile, the number of at-risk homeowners obtaining private mortgage loan modifications from their lenders also increased significantly in March. There was no updated information provided for loan modifications performed through the government's Home Affordable Modification Program (HAMP); however, private modifications have recently been outpacing HAMP modifications by about a 3-to-1 ratio.

Mansfield Law Office
701 E. Santa Clara St., Suite 13
Ventura, CA 93001

ABI Reports on "New" Home Modification Rules to Take Effect in mid-August

Under orders from U.S. regulators, 14 financial institutions have until mid-June to lay out plans to clean up their mortgage-servicing operations - and another 60 days to make the changes, the Wall Street Journal reported today. JPMorgan Chase & Co. said that it would take a $1.1 billion charge related to the consent order and other servicing-cost increases. Citigroup Inc., which services $602 billion of mortgage loans, predicted the changes will boost expenses by as much as $35 million a year. Fannie Mae, Freddie Mac and the Federal Housing Administration yesterday rolled out new guidelines designed to encourage more successful modifications while preventing foreclosures from dragging on. The rules will require servicers to approach borrowers earlier and more frequently after a first missed payment in order to have a better chance at modifying loans. The mortgage titans also will pay more to servicers that meet certain benchmarks and establish timelines for banks to modify loans or process foreclosures.

ABI Wesbite here.

Wall Street Journal article here.

Mansfield Law Office is located at 701 E. Santa Clara St., Suite 13, Ventura, California and 530 W. Ojai Ave., Suite 107, Ojai, California.

805-765-1529

Home Prices Remain in Crisis: Families in Jeopardy

“There is very little, if any, good news about housing,” David Blitzer, chairman of the Case-Shiller index committee at S&P, said in a statement. “The 20-city composite is within a hair’s breadth of a double-dip.”

The stock market and the reality of real-world Americans do not seem connected. The Case-Shiller Index is one of the most widely respected reports on home prices.  And the news isn't good.  This has a ripple effect through bankruptcies.

More information here.

Mansfield Law Office
701 E. Santa Clara St., Suite 13
Ventura, CA 93001

Changes in the Office

I am happy to report that the move from the Oxnard office to the Ventura office is complete.  I truly enjoyed having the second office in Oxnard.  However, the Ventura location is much more convenient to my main office in Ojai. 

The new location is at 701 E. Santa Clara St., Ventura, CA 93001. 

On the Ojai front, we have doubled our floorspace at 530 W. Ojai Ave.  This will allow for a much greater work production area and a new reception area. 

I'll keep you posted of more changes soon.

Loan servicers lobby for rules that won't help stop foreclosures

New Rules for Mortgage Servicers Face Early Criticism
 
Federal banking regulators have not officially imposed their new rules for the top mortgage servicers, but a wide coalition of consumer and housing groups is denouncing the legal agreements, which are likely to be published within a few days, the New York Times reported today. The new rules require the servicers to:

1. Improve their processing systems;
2. Ttop foreclosing while negotiating to modify the loan; and,
3. Give borrowers a single direct means of contact.

Servicers will be required to bring in a consultant to investigate complaints by homeowners who lost money because of foreclosure processing errors in 2009 and 2010.

The problem, said Alys Cohen of the National Consumer Law Center, is the agreements "do not in any way require the servicers to stop avoidable foreclosures, and that is what we need." At the heart of the complaints by Cohen and others is whether the servicers, which are arms of the biggest banks, may be compelled to give households fighting foreclosure a better shot at renegotiating their loans and staying in their properties.

Full article from New York Times here.

Andrew S. Mansfield
Mansfield Law Office
Ventura Debt Law
http://www.venturadebtlaw.com
701 E. Santa Clara St., Suite 13
Ventura, CA 93001

Banks Resist Lowering Loans by Reducing Principal

From the American Bankruptcy Institute this morning:

Showing resistance for the first time against government pressure to write off tens of billions worth of mortgage debt, Bank of America executives said yesterday that the idea was unworkable and warned that it would be unfair to borrowers who had managed to stay current on their loans, the New York Times reported today. "There's a core problem that if you start to help certain people and don't help other people, it's going to be very hard to explain the difference," said Brian T. Moynihan, the chief executive of Bank of America. "Our duty is to have a fair modification process." All 50 state attorneys general, as well as a host of federal agencies, are pushing for a settlement over investigations into foreclosure abuses by major mortgage servicers that could cost the industry $20 billion or more. Industry experts estimate that nearly a trillion dollars worth of mortgage debt is "underwater," a result of house prices having fallen since the original loans were made. Federal officials hope a settlement with the servicers will help individual borrowers and provide a cushion for the weak housing market.

More information here.

Average American Has Over $4,000 on Credit Cards

Very interesting story today tells conflicting story on how much credit card debt we all carry:

While the average debt on credit cards in December decreased by 4 percent compared with the same month a year before, Americans still carried an average of $4,284 on credit card statements in December 2010, according to data released this week by the credit monitoring company Experian.

The data offers conflicting versions of the economy’s already mixed picture. While some consumers spent more during the holidays because the economy was rebounding, others were still unable to cover expenses without leaning on their credit cards. And while holiday spending also appeared to have been more robust than in the last several years, even more recent data has shown a bit of a slowdown in consumption this year.

The full story from the New York Times is available here.

Andrew S. Mansfield
1000 Town Center Drive
Suite 300
Oxnard, CA 93036
805-253-3001

Republicans Want to Roll Back Foreclosure Help?

Yes. 

HOUSE REPUBLICANS MOVE TO END FORECLOSURE AID PROGRAMS

U.S. House Republicans plan to move forward with bills that would end anti-foreclosure programs put in place by the Obama administration, saying that they are doing more harm than good, Bloomberg News reported today. The House Financial Services Committee will consider bills next week to terminate four mortgage assistance programs, including the Treasury Department's Home Affordable Modification Program. "In an era of record-breaking deficits, it's time to pull the plug on these programs that are actually doing more harm than good for struggling homeowners," House Financial Service Committee Chairman Spencer Bachus (R-Ala.) said. The panel also will mark up bills that would terminate the Federal Housing Authority Refinance Program, funding for the Emergency Homeowners Relief Program and the Neighborhood Stabilization Program. Read more.

In related news, data from the Mortgage Brokers Association (MBA) indicate that loans reaching the foreclosure stage almost never avoid default, and that borrowers who become 90 days delinquent cure their default only about 1 percent of the time, according to a commentary by Prof. Joseph R. Mason of Lousiana State University in today's Wall Street Journal. Recent statements by Comptroller of the Currency John Walsh and FDIC Chair Sheila Bair suggest that they remain focused on using a potential settlement with mortgage loan servicers to extend, rather than end, ongoing foreclosure delays. Meanwhile, states including New Jersey and Hawaii are considering imposing their own moratoriums on foreclosure that, if they conflict with federal policy, may lead to protracted litigation. In addition to the MBA data, recent research done for the National Bureau of Economic Research demonstrates that loan-modification programs have mixed effectiveness. Data suggest that many delinquent borrowers have the means to afford their mortgage payments, but are so deeply "under water" on their mortgages that they are simply no longer willing to pay. Others have insufficient income to afford any reasonable mortgage payment. Read more. (Subscription required.)

Are You Worried About Foreclosures? CNN Reports.

Here is the title of CNN's article from today:

Foreclosures are falling - but it's a fake out

The reason?  Should we have hope? No.

"Unfortunately," he added, "This is less a sign of a robust housing recovery and more a sign that lenders have become bogged down in reviewing procedures, resubmitting paperwork and formulating legal arguments related to accusations of improper foreclosure processing."

Full article.

Andrew S. Mansfield
http://www.venturadebtlaw.com

New York Times: Homeowners in Foreclosure Required to Defend Themselves

The New York Times has an article about how homeowners facing foreclosure are now being forced to show u to defend themselves alone and without an attorney. 

Do you think Calfornia's restrictive, paternal law is responsible here?  Who do we think benefits from stripping lawyers from the process?

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.

Who can afford to wait to collect a contingency on such a long shot after the work?  And from nearly bankruptcy clients?

http://www.venturadebtlaw.com

Government backed home loans might be limited to $625,500

This would not be good for housing market and is extremely unfair to Californians.

http://www.venturadebtlaw.com

Borrowing Against your Car to Qualify Under the Means Test

A post I placed on Avvo.com earlier today.

The fact that the Supreme Court held attorneys subject to certain "gag rules" on advising bankruptcy clients has been widely discussed.  That case, Milavetz, Gallop, & Milavetz, P.A. v. United States (2010), interpreted section 526(a)(4) of the Bankruptcy Code as prohibiting attorneys from advising clients to incur debt prior to bankruptcy for the purpose of getting a discharge on that debt.  That is considered a manipulation of the bankruptcy system.

This limit is meant to fight what was common when I began practicing bankruptcy law in 2001.  The practice was called exemption planning.  For example, a debtor could sell certain non-exempt assets and purchase exempt assets several months before filing for bankruptcy.  Likewise, the addition of some debt prior to bankruptcy might be a logical and even necessary step for a debtor.

The Supreme Court left much of our ability to discuss these things intact.  For example, we can clearly talk about the benefits of refinancing a mortgage even though the debtor is contemplating bankrputcy.  The attorney and client can discuss the wisdom of financing a new car shortly before bankruptcy.  Transportation is, after all, essential.  Finally, a debtor can continue to use credit to make purchases necessary for support and maintenance.

The limit, I surmise, is that debt may not be assumed for the very purpose of getting something for nothing.  Obviously, a debtor cannot (or should not) charge a new home theater months before going bankrupt.  This has always been the case.

Now enter the Surpreme Court through Ransom v. FIA Card Services (2010).  In this decision, again widely discussed, the Supreme Court stripped away $471 from many debtors trying to qualify for Chapter 7 under the Means Test.  In short, there are two car "line items" in the means test.  Recall that one needs to show little or negative disposible income under the means test.  While the means test begins with a debtor's real gross income, it allows many "predetermined" budget items based on IRS National and Local Standards. It doesn't really matter under the means test whether it costs you $200 per month or $600 per month to maintain your car.  The means test instructs you to put $388 in that slot.

Since the passage of the "reforms" of 2005, it has been customary to allow debtors to claim another car expense whether or not they financed their car.  This expense was labelled "ownership costs" and allowed the entry of $471.  It has now been limited to only those who have a securitized loan against their car.  If you responsibly own your car free and clear, you lose out on this budget item.  End of story.

The odd thing is that a debtor could have a very small car payment, perhaps $218 per month, yet still qualify for the $471 entry.  Justice Kagan, writing for the Court, stated, "the ownership category encompasses the costs of a car loan or lease and nothing more."  It is triggered by a "car loan or lease."  In addition, "the sum $471 is the average monthly payment for loans and leases nationwide."  One's payment doesn't have to equal the average.

Consider this pre-petition planning.  What if a client would qualify or not qualify for Chapter 7 based on the ability (or inability) to claim the car ownership budget item?  What if that client had the wisdom to own a reasonable car free and clear?  What if the equity in that car was greater than the California automobile exemption?  Finally, and this is not really a question, what if that client needed money to eat and pay the rent?

Could you advise the client to do the following?

1. Go to a "money store" lender and obtain a securitized loan agains the value of the car thereby encumbering the car for the means test.

2. Reducing the equity in the car at the same time to bring the value within the automobile exemption.

3. Free up cash to use for several months while preparing for bankruptcy for essentials.

The payment on such a loan might be only $100 per month.  The interest would be high but the debtor could purchase the car out at a later date.  That $100 payment gains the debtor $471 on the means test.
As I read it, none of this runs afoul of Milavetz, Gallop, & Milavetz, P.A. v. United States (2010).  The new debt is securitized.  It isn't going to be dismissed.  There is no assumption of debt to get something for nothing.

Thoughts?

Bankruptcy Filings Increase 9% in 2010

According to a recent National Bankruptcy Research Center report, bankruptcy filings increased by 9% in 2010 (versus 2009). The total number of bankruptcy filings in 2010 was a little over 1.5 million - which comes out to a whopping 1 in 150 Americans. This is the highest number of bankruptcy filings since 2005, when Congress revamped the bankruptcy laws.

Full blog post here. 

Jobless Claims Surge; Durable Goods Orders Drop

I found the following story on the NPR iPhone App:
http://www.npr.org/2011/01/27/133267111/jobless-claims-surge-durable-goods-orders-drop?sc=17&f=1001
Jobless Claims Surge; Durable Goods Orders Drop
by The Associated Press
The Associated Press - January 27, 2011

First-time applications for unemployment benefits rose by 51,000 last week, likely boosted by weather-related shutdowns. And orders to factories for long-lasting durable goods fell 2.5 percent in December, pushed down by weak demand for aircraft.

Applications surged to a seasonally adjusted 454,000, the highest level since late October, the Labor Department said Thursday.

A government analyst said that a major reason for the spike was the harsh weather in Alabama, Georgia, North Carolina and South Carolina. That forced many companies to shut down temporarily and also prevented many people from applying for benefits in the previous week.

When state offices, which had closed, reopened and people were able to file applications that pushed the number of requests up sharply, the analyst said.

The four southern states reported a large increases in the number of requests for unemployment benefits. Trucking companies, delivery firms, construction companies and others were affected.

Applications had been declining steadily for several weeks. Requests for unemployment benefits fell sharply in the previous week to 403,000.

Many economists consider data in January less reliable because of seasonal fluctuations.

Applications below 425,000 tend to signal modest job growth. But they would need to dip consistently to 375,000 or below to indicate a significant decline in the unemployment rate.

The four-week average, a less volatile measure, also rose last week by 15,750 to 428,750.
The average had hit a two-year low of 411,250 on Jan. 1. That had suggested companies - operating with lean work forces - may need to add more workers as the economy gains momentum.
Even with last week's increase, economists are optimistic that layoffs will slow and that hiring will pick up this year.

Weak Aircraft Demand Hurts Orders
Meanwhile, a separate report showed that U.S. factories saw a 2.5 drop in orders for their products in December, reflecting weakness in demand for commercial and military aircraft.

The Commerce Department said orders excluding transportation rose 0.5 percent last month following a much stronger 4.5 percent November increase. A key category that signals business investment plans rose for a second straight month.

Orders for commercial aircraft plunged 99.5 percent in December to $24 million after a 59.6 percent November plunge. Orders for commercial aircraft had been $12.4 billion as recently as October. Analysts said they expected a rapid recovery in what is often a volatile category

Overall transportation demand fell 12.8 percent in December as the big decline in commerical aircraft and a smaller drop in military aircraft was offset somewhat by a 1.7 percent increase in orders for motor vehicles and parts.

The 0.5 percent rise in orders outside of transportation was led by a solid 10.6 percent increase in demand for machinery. Orders for communications equipment posted an increse of 3.6 percent.
Demand for nondefense capital goods excluding aircraft, considered a good proxy for business investment plans, rose 1.4 percent in December following an even stronger 3.1 percent November increase.
Manufacturing activity has been expanding since the recession officially ended in June 2009 as U.S. companies have benefited not only from rising domestic demand but stronger export sales. The export sales have been helped by a declining value of the dollar against many major currencies. A weaker dollar makes U.S. products cheaper in overseas markets.

Businesses are anticipating stronger economic activity in 2011. A tax-cut package should give consumers more money to spend, and help businesses expand and modernize. [Copyright 2011 The Associated Press]
To learn more about the NPR iPhone app, go to http://iphone.npr.org/recommendnprnews

Questions on how this affects you here in Ventura and Oxnard?  Call 805-765-1529 or visit www. venturadebtlaw.com.
Sent from my iPhone

What are the basic steps in a Chapter 7 bankruptcy?

1. Review your debt obligations.

Child support and certain other debts are not discharged in a Chapter 7.  Student loans and taxes may be discharged but only extremely limited circumstances.



2. Analyze exemptions that may apply to your property.

Each state has at least two possible set of "exemptions."  Often, one is Federal and one is state.  California, to the contrary, has two state exemption systems.  Putting property side-by-side with the exemptions will give you a good idea of what property the Chapter 7 Trustee may decide to sell.

3. Pass the "Means Test."

If your average income during the six months before you file is more than the median income for a family of your size in your state, you may not be allowed to use Chapter 7.  When you make more than median, we run further calculations to see if you can still opt for a Chapter 13.

Try this means test caclulator from Nolo press:  calculator.

4. Redeem or reaffirm secured debts.

For debts that were "secured" by property, you will nee to decide if you are going to pay something on the debt or  "reaffirm" the debt (agree on new contract terms with the creditor), or "surrender" the property (let the creditor take it -- if the property is worthless, the creditor may not bother). There are many options that are between these positions.
 
5. Fill out the bankruptcy forms.

You complete a few dozen pages of forms, in which you tell the court about all of your property, debts, income, and expenses. You'll list the names of all your creditors, note which debts are disputed, decide what property you are claiming as exempt, and decide what you want to do about each of your secured debts.

6. File the forms.

Filing your petition (the main bankruptcy form) officially starts your case.

7. Go to a meeting.

In most cases, you'll need to go to court only once, for a short meeting with the trustee (and perhaps a creditor or two) to review your case and answer any questions about the information in your forms.

8. File objections or motions if needed.

If you dispute a creditor's claim against you or you want to eliminate certain liens, you'll need to address these matters before your bankruptcy case is closed.

9. Wind up your secured debts.

When you filed your bankruptcy forms, you completed a form in which you stated how you intended to handle your secured debts. Before your case is closed, you'll need to act on these matters.

10. Get your discharge.

Congratulations! This is what it's all about. At the end of a successful bankruptcy, the court will issue an order saying that your dischargeable debts are officially discharged. Once a debt is discharged, you no longer have a legal obligation to pay it and the creditor has no legal right to demand it.

Supreme Court of the United States on Cars and Means Testing

 The United States Supreme Court has ruled that an owner of a car does not get a car ownership expense allowance under the "means test" required for a consumer Chapter 7 bankruptcy.  This ruling addresses a poorly worded section of the Code but the effect is unfortunate.  A person with an $80 per month car payment now gets a $471 per month allowance.  A person who owns that same car outright gets nothing.  It really doesn't make sense.

A link to another blog with a good article on this is here. 

The case is Ransom v. FIA Card Services.  Full text PDF here.

Another Issue in Ventura: The Rising Ocean

The Los Angeles Times reports that Ventura has begun a "managed retreat" from the rising ocean.  This is, so says the article, a sign of things to come and a model of how to deal with rising sea levels.

The article is here.

Bankruptcies Rise in Ventura County

The Ventura County Star had a good article today on the rising tide of bankruptcies in Ventura County.

The article is here. 

More than 5,000 new bankruptcy cases were filed by Ventura County residents in 2010, up 27.7 percent from the previous year, according to the U.S. Bankruptcy Court in Los Angeles.
The bulk of the filings (4,361) were basic liquidation, or Chapter 7 cases. The remainder were reorganizations under Chapter 13 (861) and Chapter 11 (37). The filing rate in the Ventura County region remains well above the national rate.

Interesting times.

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

http://www.venturadebtlaw.com

Banks to Raise Fees. Again.

According to the Wall Street Journal, banks are creating new fees to remain profitable in the face of financial regulation.  How do you think fees like the ones below will affect low income families? 

1. A fee to simply have a debit card might be established at $30.
2. The size of a debit card transaction might be limited.
3. The number of times a consumer could use a debit card each month might be limited.
4. Raising non-bank-customer ATM fees.
5. Checking accounts may now cost between $8 and $25 per month.

These fees hit those who can least afford them.  If larger customers maintain certain balances, the fees are waived.  Wealthier individuals tend not to need to use their debit cards as much each month due to online bill pay and greater access to credit cards.

When will Elizabeth Warren take further action?  So far, it seems that the Consumer Protection Agency has provided little in the way of protection.

Mansfield Law Office provides bankruptcy services in Oxnard, Ventura, Carpinteria, Ojai and surrounding communities.  1000 Town Center Drive, Suite 300, Oxnard.

Restored 1929 Mansion in Meiners Oaks

A beautiful house in Ojai restored to historical condition.  The Ventura Count Star article is here. 

Supreme Judicial Court of Massachusetts Rules Foreclosure Did Not Provide Title Where Foreclosing Party Can't Prove Ownership

The Supreme Judicial Court of Massachusetts has just ruled a foreclosure may be deemed invalid if the foreclosing bank or company can't prove the chain of title, called assignments, providing it ownership of the loan or authority to act for a party who owns the loan.

The case is U.S. Bank National Association v. Ibanez, Massachusetts Supreme Judicial Court No. SJC-10894 (January 7, 2011).

You will not believe how complicated the sale, transfer, and packaging of this loan was.  Read this and be amazed.  Rose Mortgage, Inc. provided the loan on the house and recorded the mortgage the day after the sale (December 1, 2005).  The story gets good from here.

"Several days later, Rose Mortgage executed an assignment of this mortgage in blank, that is, an assignment that did not specify the name of the assignee .  The blank space in the assignment was at some point stamped with the name of Option One Mortgage Corporation (Option One) as th eassignee, and that assignment was recorded on June 7, 2006.  Before the recording, on January 23, 2006, Option One executed an assignment of the mortgage in blank."

Let's go over that in plain English.  An assignment of a mortgage is a sale of that mortgage to another party.  Rose provided the money to purchase the house and possessed a mortgage.  Several days after providing those funds, Rose assigned the mortgage to ... blank.  That's right, Rose executed a legal transfer to no one.  We know that another company was after the fact stamped into the blank space.  That company, Option One, executed another assignment of the mortgage to ... blank. 

"According to U.S. Bank, Option One assigned the mortgage to Lehman Brothers Bank, FSB, which assigned it to Lehman Brothers Holdings, Inc., which then assigned it to the Structured Asset Securities Corporation, which then assigned the mortgage, pooled with approximately 1,220 other mortgage loan, to U.S. Bank, as trustee for the Structured Asset Securities Corporation Mortgage Pass-Through Certificates, Series 2006-Z.  With this last assignment, the loans were pooled into a trust and converted into mortgage-backed securities that can be bought and sold by investors--a process known as securitization."

The story gets, better.  Really. There was absolutely no record of the transfer to U.S. Bank.  Further, the U.S. Bank "Private Placement Memo" selling this crazy securitized bundle of mortgages claimed that each mortgage in the bundle was "identified in a schedule appearing as an exhibit to the Trust Agreement."  U.S. Bank was unable to find a document or schedule indicating the loan at issue was in the bundle.

Of course, U.S. Bank foreclosed on the property on July 5, 2007 as trustee for the securitization trust. Recall that U.S. Bank: (1) couldn't prove the mortgage was ever transferred to it; and, (2) couldn't find a record of the mortgage in the securitization papers issued to the public.

More than one year after the foreclosure, a company called American Home Mortgage Servicing, Inc., who allegedly purchased the loan from Option One, executed an assignment of the loan to U.S. Bank as trustee for the securitization trust.  Apparently, someone realized, a year after the foreclosure, that the party foreclosing didn't have anything to do with the ownership of the loan.  This was an attempt to paper over the mistakes after the fact.

Massachusetts, like many states, allows for trustee sales.  Trustee sales don't require judicial oversight.  The company holding the mortgage acts on its own.  Recognizing the substantial power that trustee sales grant to mortgage holders, Massachusetts follows the rule that "one who sells under a power of sale must follow strictly its terms.  If he fails to do so there is no valid execution of the power, and the sale is wholly void."

One of the terms that must be strictly followed is that only the actual, true, owner, or its agents and assigns, can foreclose on a property.  You don't want a company to come at a homeowner "out of the blue" and assert it has the power to foreclose (and recall this is without any judicial oversight). 

Judge Cordy (and note these words come from a judge on the Supreme Judicial Court, the highest court in Massachusetts) concurred (agreed) with the decision and added:

"What is surprising about these cases is ... the utter carelessness with which the plaintiff banks documented the titles to their assets.... Although there was no apparent actual unfairness here to the [homeowners], that is not the point.  Foreclosure is a powerful act with significant consequences, and Massachusetts law has always required that it proceed strictly in accord with the statutes that govern it."

Link to New York Times here.

Full decision on Scribd here.

Commentary and news articles are coming in as I type.  I love this quote:

Analysts said the decision may also threaten banks' ability to package mortgages into securities, and may raise the specter that loans transferred improperly will need to be bought back.
"What they were doing was peddling these mortgages and leaving the paperwork behind," said Michael Pill, a partner at Green, Miles, Lipton & Fitz-Gibbon LLP in Northampton, Massachusetts, who represents homeowners and is not involved in the case.

It will be interesting to see what happens. The Massachusetts Supreme Judicial Court indicated the ruling applies retroactively.  This means thousands of homeowners can sue for foreclosures done over the last three years.  In this particular case, the outcome was wonderful for the homeowner.  One plaintiff was simply allowed to move back into a home and another will be compensated for the price of the deed.

What are other consequences?  The banks with improperly sold and securitized loans will be accused of fraud by investors and may be forced to buy back the loans, making them direct mortgage owners.  In addition, the loans on the homes become unsecured.  The banks can still go after homeowners who default but there is simply no security.

I sincerely hope the California Supreme Court rules as did the Massachusetts Supreme Judicial Court.  If so, foreclosures will proceed more slowly as banks work to be precise in ownership.  If ownership cannot be proven, foreclosures will thrown in disarray.  We are also looking at years of litigation against the banks for such sloppy work.

Mansfield Law Office provides bankruptcy and debt services in Ventura, Oxnard, Santa Paula, Carpinteria, and Ojai California.  Mansfield Law Office is located at 1000 Town Center Drive, Suite 300, Oxnard, CA.  Call 805-253-3001 today.  Chapter 7 and Chapter 13 bankruptcy may assist you in saving your home.