Alabama Bankruptcy Blog

More Evidence of Indifference of Mortgage Companies

2009-08-04T08:02:00.001-07:00

As I posted before, I have had little positive feedback regarding the home mortgage modification program instituted by the Obama administration earlier this year. Now there is objective evidence to support that. According to the government's recently released progress report on the mortgage modification plan, only about 15% of eligible homeowners were offered assistance under the plan. Some mortgage companies haven't modified a single loan. On Monday, Senator Dick Durbin threatened the banks that if mortgage companies don't get more aggressive with their modification efforts, Congress would re-introduce legislation that would allow a homeowner to modify their mortgage in bankruptcy court. Personally, I don't feel this threat has much teeth. The banking industry lobbied so hard against the legislation the last time. I don't think consumers have a chance against this financial Godzilla.

clipped from www.msnbc.msn.com

In its first monthly progress report on the plan launched in March, the government on Tuesday detailed big disparities among the 38 companies that have signed up. Several loan servicing companies — including American Home Mortgage Servicing and PNC Financial Services Group Inc. — have yet to modify a single loan.

Mortgage Modification is a Fraud

2009-07-28T14:40:00.001-07:00

I represent homeowners from all walks of life who have been hurt by the recent downturn in the economy. Some have lost their jobs as a result of employers trying to cut back in order to stave off foreclosures themselves. Others have high medical bills and are finding it difficult to buy medication and pay their home mortgage. Recently, the federal government initiated a program designed to help homeonwers modify their home mortgages through their mortgage company. The Making Homes Affordable act was part of a $50 to $75 billion government effort to prevent foreclosures. Now it has come to light that many mortgage companies have taken the "who, me?" approach when it comes to approving these modifications. Homeowners are spending hours on the phone with their mortgage companies, sending in voluminous documents with personal information that seem to become lost when it reaches the mortgage companies (even though the homeowner has verification of the delivery) and enduring other sneaky tactics designed to deny homeowners access to this program. Now someone is fighting for these homeowners. See below.

clipped from www.hppinc.org

Making Home Affordable HAMP Litigation

On July 28, 2009, two Minnesota homeowners sued the government alleging that the administration of the federal foreclosure prevention and loan modification program violated their procedural due process rights. Specifically, the Home Affordable Modification Program does not require the government to provide written notice of the specific reasons for a denial and notice of a right to appeal, a uniform procedure for appealing an adverse decision, and a method to undo a foreclosure that was done in violation of program guidelines or otherwise unlawful.

Jobless recovery is no recovery

2009-07-27T10:07:00.001-07:00

Unemployment is a serious concern for anyone in this broken economy. In simple terms, if you don't have a job, you can't pay your bills and you don't spend money at local retailers. Retailers who face decreased sales can't afford to repay business loans, pay for health care for their employees and sometimes can't even make payroll. Almost $165 billion in U.S. commercial real estate [shops, offices, hotels, apartment buildings and land] loans will mature this year and need to be sold or refinanced as rents and occupancies fall, according to First American CoreLogic. Personally I don't understand how a "jobless recovery" can turn the country around. The only people a jobless recovery could possible benefit would be bankers. The ordinary consumer doesn't benefit and continues to struggle.

clipped from www.google.com

Verizon 2Q profit falls, tops view, plans job cuts

By PETER SVENSSON
(AP)
–
1 hour ago

NEW YORK — Verizon Communications Inc., the nation's largest wireless carrier, said Monday its second-quarter profit fell 21 percent as cost-cutting in its wireline business failed to keep pace with falling revenues.

The company will be cutting more than 8,000 employee and contractor jobs before the end of the year in the wireline business, speeding up its efforts to keep costs in line, according to chief financial officer John Killian.

Debt Collectors Now Using MySpace and Facebook

2009-06-10T11:55:00.000-07:00

In the most audacious move yet, collections firms are now using MySpace and other social media sites as a way to track down debtors and even posting messages on MySpace asking the user in some instances to 'contact our office immediately so we can discuss the peaceful recovery' of the collateral. Consider one Michigan debtor who fell behind in her car payments and suffered repeated, harassing phone calls from three companies -- including 15 calls on one Saturday and claims that phone calls were "concerning a 'family emergency' ". The debtor was told that if she did not pay up, her car would be reported stolen, and she would be arrested and the collector threatened the debtor that they would even camp out in front of her house. As if all this weren’t enough, the fact there were overdue payments for her 2005 Chevy Impala was broadcast on her MySpace account. The key word here is "broadcast". Messages posted on MySpace, Facebook and other social networks are not private and any information posted by debt collectors on a public forum is obviously intended to embarras and humilate a person rather than recover the debt. Be careful who you "friend"

Check out the story.

Overview of New Credit Card Legislation

2009-05-21T07:57:00.001-07:00

The following are some of the major changes coming to credit card consumers as a result of legislation passed this week in Congress. The law will go into effect nine months from the date of enactment. I'm struck with how we have to legislate fair treatment and honesty.

WHAT CONSUMERS NEED TO KNOW ABOUT THE NEW CREDIT CARD LAWS:
• Creditors cannot increase the annual percentage rate (APR) during the first 12 months of opening up an account.
• Creditors are required to provide consumers with a 45-day advance notice of changes in rates and significant contract changes. Rates that change due to a change in the index that the rate is based on are excluded from this 45-day notice requirement.
• Promotional rates need to be in effect for at least six months from the beginning date of that promotion.
• Creditors need to provide a 30-day advance notice of an account closure.
• With certain exceptions, credit card issuers are prohibited from charging a finance charge based on the double billing cycle method.
• Creditors are prohibited from charging a fee on an outstanding credit card balance at the end of the billing period if the fee is attributed to the interest accrued on an outstanding balance that was fully repaid during that preceding billing period.
• Consumers have the right to reject a new credit card after the creditor notifies a consumer reporting agency of its corresponding account.
• Creditors are required to remove information provided to a consumer reporting agency about newly established credit card accounts if the consumer has not used or activated the account and and if the consumer contacts the creditor within 45 days of its establishment to close it.
• If two or more different APRs apply to different portions of an outstanding balance, the amount of any payment above the required minimum payment needs to be applied to the balance with the highest APR first and then to lower APR balances.
• Creditors are required to provide a grace period for payments even if the cardholder takes advantage of a promotional rate balance or deferred interest rate balance.
• Creditors are required to send credit card statements at least 21 days before the due date of the outstanding balance.
• Creditors are prohibited from providing credit to consumers under age 18 (unless they are emancipated under state law, or the consumer's parent or legal guardian is designated as the primary account holder).
• For college students who do not have a co-signer, the maximum amount of credit extended will be limited to the greater of 20 percent of the student's annual gross income or $500 dollars. The aggregate amount of credit extended from all of their credit cards will be limited to 30 percent of the student's annual gross income (for the recently completed calendar year).
• Creditors are prohibited from opening a credit card account for any college student who does not have any verifiable annual gross income or already maintains a credit card account with that creditor, or any of its affiliates.
• Creditors are prohibited from charging a fee to make telephone and web-based payments. However, a fee may be charged for expedited telephone payments made on the due date or the day before the due date.
• Creditors are required to post their written credit card agreements on the internet.

If you need to buy a gun with a credit card....

2009-05-20T07:30:00.001-07:00

I remember when Obama told the country it wouldn't be politics as usual in the United States. I am disappointed in myself for buying into Obama's insincerity.

clipped from www.nytimes.com

Advocates of Gun Rights Are Poised for a Victory

WASHINGTON — Advocates of gun rights are poised to win a Congressional victory that eluded them under a Republican president.

To the frustration and discouragement of many Democrats, House and Senate lawmakers and aides say it now appears likely that President Obama will this week sign into law a provision allowing visitors to national parks and refuges to carry loaded and concealed weapons.

The White House is lukewarm at best on the gun provision, which was added to a popular measure imposing new rules on credit card companies. But the Democrats who now control both Congress and the White House appear ready to allow it to survive rather than derail a consumer-friendly credit card measure that Mr. Obama is eager to sign as Congress heads off for a Memorial Day recess.

Pigs Are Flying

2009-04-01T08:37:00.000-07:00

Every day I have to confront Alabama's meager homestead exemption (Ala Code Sec. 6-10-2). Homestead exemptions across the country differ per state if the state has opted out of the federal exemptions. Mississippi's homestead exemption is $75,000 and there are some states where the homestead exemption is unlimited. Alabama, however, has a meager $5,000 exemption to protect your home. This means that is you own your home and get behind on your bills, if the equity in your house exceeds $5,000 you would lose your house if you file a Ch. 7 bankrutpcy petition or would be forced to file a Ch. 13 repayment bankruptcy in order to protect your home from creditors. The more equity you have in your house the more money you have to pay in a repayment plan, regardless of whether you can afford the payment or not. How does that help the consumer? It doesn't.

Thankfully, now with the help of Alabama Appleseed, a bill has been proposed to the state legislature which would increase the homestead exemption in Alabama to $10,000. I know, not a tremendous increase but it is a start. The sponsor of the bill, Jeff McLaughlin, is at least making an attempt to protect people's property in the midst of one of the most disastrous economic era ever.

2009-01-07T07:49:00.001-08:00

Eighteen months ago, approximately 2 million foreclosures were predicted across the country. Now economists are predicting an additional 8-10 million foreclosures over the next four years. It is painfully obvious that the housing crisis is fueling the downturn in the economy and just as obvious is the Bush administration's refusal to address the problem in a swift an meaningful manner. Finally, legislation has been introduced which will alleviate the problem. The "Helping Families Save Their Homes in Bankruptcy Act of 2009" was introduced in both House and Senate yesterday and seeks to modify the bankruptcy code to allow homeowners to modify their mortgages in a bankruptcy case. Some interesting facts about the bill:

The bill, if enacted, will be effective on the date of the enactment. Previous changes to the bankrupty code provided a 6 month waiting period.
The bill would allow mortgages to be modified in several ways including fixing interest rates on adjustable rate mortgages at reasonable rate and modifying loan terms.
The bill would not only apply to new debtors filing Chapter 13 but also to existing Chapter 13 debtors.
The bill also deals with servicer abuses as well such as improper fees and penalties which, in my experience, can put a homeowner in foreclosure just as quickly as missing payments.

All in all the legislation is encouraging and is the best way to turn the economy around. Keeping people in their homes while at the same time providing lenders and servicers to deal fairly with homeowners sends a message of hope to those struggling in these tough times.

Senator Bunning Not Snowed By Fed

2008-07-16T07:20:00.001-07:00

In an alarming exhibition of honesty and courage rarely seen in elected officials, Senator Jim Bunning (R-KY) blasted Fed Chairman Ben Bernanke, who was testifying before the Senate Banking, Housing and Urban Affairs Committee for asking for more powers to fix what the Senator called "the mess we are in today". Calling the Fed the problem and not the solution, Bunning is a breath of fresh air in government. Below is an excerpt from the speech which apparently is available on the Senator's website, however, it appears the website is down at the moment.

clipped from www.creditwritedowns.com

Now the Fed wants to be the systemic risk regulator. But the Fed is the systemic risk. Giving the Fed more power is like giving the neighborhood kid who broke your window playing baseball in the street a bigger bat and thinking that will fix the problem. I am not going to go along with that and will use all my powers as a Senator to stop any new powers going to the Fed. Instead, we should give them less to do so they can do it right, either by taking away their monetary policy responsibility or by requiring them to focus only on inflation.

Federal Reserve Board Amends Regulation Z

2008-07-15T10:07:00.001-07:00

In an attempt to convince homeowners that the Federal Reserve is indignant about shady loan practices, the Federal Reserve Board today declared they would be approving a rule which would prohibit unfair, abusive or deceptive home mortgage lending practices. This is the same board that allowed these practices to become so prevalent in the home mortgage market to begin with. Had the Federal Reserve stepped in sooner, like say 1998, the U.S. economy would still be strong, our homes would still be safe and we wouldn't be wondering which bank is going to fail next. Below are some of the provisions of the new rule. Take a look at the new rules below and see if it doesn't boggle your mind that these practices were not addressed sooner. This half-hearted attempt at seeming concerned knowing that for the past 10 years they sat on their assets and refused to look out for the consumer is too little, too late.

clipped from federalreserve.gov

Prohibit a lender from making a loan without regard to borrowers' ability to repay the loan from income and assets other than the home's value. A lender complies, in part, by assessing repayment ability based on the highest scheduled payment in the first seven years of the loan. To show that a lender violated this prohibition, a borrower does not need to demonstrate that it is part of a "pattern or practice."

Require creditors to verify the income and assets they rely upon to determine repayment ability.

Ban any prepayment penalty if the payment can change in the initial four years. For other higher-priced loans, a prepayment penalty period cannot last for more than two years. This rule is substantially more restrictive than originally proposed.

Require creditors to establish escrow accounts for property taxes and homeowner's insurance for all first-lien mortgage loans.

Mental Recession Comment Insults American People

2008-07-11T07:05:00.001-07:00

Republican John McCain hired former Senator Phil Gramm to prop up his admitted weakness in economic policy. Instead, the financial guru, as McCain has referred to him, has insulted each and every American who struggle to keep their homes, put food on the table and who vote....yeah, remember Mr. Guru...we vote! I would love to see Mr. Gramm come to Montgomery, Alabama and tell Mr. and Mrs. Consumer that their house is not REALLY in foreclosure but rather this is a "mental foreclosure" and if it is a real foreclosure stop whining about it. Perhaps $4 per gallon of gas is just a mirage and if we rub our eyes it will go away. The audacity of such a comment is a clear indication that Mr. Gramm, McCain and the entire Republican party is in an unreasonable, irrational state of denial. Since when did they have to fill up their own vehicle or buy their own groceries even? The next comment from him will be "let them eat cake"!

clipped from www.nytimes.com

BELLEVILLE, Mich. — Senator John McCain has spent the week trying to tell people that he feels their economic pain. So it was more than a little unhelpful when one of his top economic advisers was quoted Thursday as saying that the United States was only in a “mental recession” and that it had become a “nation of whiners.”

Bankruptcy May Help You Save Your Home

2008-07-10T08:22:00.001-07:00

Just this week my office has had a 100% increase in initial bankruptcy calls. Potential client calls are an informal way to gauge the state of the economy and if accurate, they will indicate we are only seeing the tip of the proverbial iceberg in the housing market. As reported below, the foreclosure problem is only getting worse and consumers who are risking losing their home to foreclosure are turning to the bankruptcy courts to help them save their homes. Filing bankruptcy will stop foreclosures and allow the consumer the ability to cure arrears while they keep their home. Bankruptcy will not change your house payment but it may allow you to take care of the other bills that may make it difficult for you to pay your mortgage. Interestingly, we may soon see a scenario where mortgage companies themselves are going bankruptcy. See the below article on Fannie Mae, a government sponsored mortgage company who is essentially insolvent now. What happens when the government can't bail these upside down lenders out remains to be seen.

clipped from www.bloomberg.com

``The foreclosure problem is getting worse and will stay with
us well into the next decade,'' Mark Zandi, chief economist for
Moody's Economy.com in West Chester, Pennsylvania, said in an
interview. ``The job market is eroding and homeowners have less
equity. Lenders are much less willing to work with you if you've
got negative equity, and you're more likely to give up your house
if you're deeply underwater.''

clipped from www.bloomberg.com

Chances are increasing that the U.S. may need to bail out
Fannie Mae and the smaller Freddie Mac, former St. Louis Federal
Reserve President William Poole said in an interview. Freddie
Mac owed $5.2 billion more than its assets were worth in the
first quarter, making it insolvent under fair value accounting
rules, he said. The fair value of Fannie Mae's assets fell 66
percent to $12.2 billion, data provided by the Washington-based
company show, and may be negative next quarter, Poole said.

Obama Proposes Bankruptcy Changes

2008-07-08T11:14:00.001-07:00

Correctly characterizing the 2008 election as the "fat cats vs. struggling families", Barack Obama called for a change in the bankruptcy code to help military families, the elderly and those with extraordinary medical bills. Perhaps Obama is trying to show that he is the candidate for the average working class voter who previously may have been persuaded to vote for Hillary Clinton or John Edwards. Speaking of John Edwards, the former Senator gave a very vice-presidential speech today. As a consumer advocate, it is my belief this may be the best hope for the struggling families that I represent on a daily basis.

clipped from www.ajc.com

Barack Obama moved Tuesday to paint the 2008 presidential election in stark terms of rich vs. poor, fat cats vs. struggling families.

Those families, he said, "are being preyed upon by predatory lenders. If you're protecting America, America should be protecting you from unfair bankruptcy laws."

Did Negative Equity Contribute to GM's Downfall

2008-07-02T07:16:00.001-07:00

The current industry practice of rolling negative equity in new car loans could be a factor in GM's downward spiral. Negative equity occurs when a car buyer owes more on their vehicle than the vehicle is worth or than the dealer is willing to give on trade-in. In the past, dealerships have traditionally added in the negative equity into the total price of the vehicle which the car buyer finances. Of course, this means that not only does the brand new vehicle lose thousands in value when you drive it off the lot, but now the buyer has to pay thousands more for the vehicle because of the negative equity. (Fortunately, Chapter 13 allows the consumer to strip off the negative equity from the contract if the vehicle was purchased in the last 910 days before filing.) However, if the buyer defaults on the loan, the lender is stuck with the negative equity burden. Despite the potential losses, lenders, including GM who is one step away from bankruptcy, continue to pad loans with this non-existent collateral causing analysts to scratch their head.

clipped from market-ticker.denninger.net

We have SIVs, "Covenant Light" (the businessman's version of "no ratio" mortgages), fog-a-mirror mortgages, toggle bonds, securitization with cooked ratings and "errors" in computer programs, negative amortization, rolling balances forward in auto lending and more. We have consumers who have been rolling credit card debt from one zero-interest balance transfer card to another in a desperate attempt to avoid having to make payments they don't have. We have commercial real estate construction loans going out with cap rates that are insanely light - all "on the come" of appreciation in "values", and our Boomers have spent the false appreciation that they never had, destroying the largest store of wealth they owned - their homes. (BTW, GM is still writing negative rollover auto loans! If you're wondering whether GM can or might actually go under, the answer is "yes", and that's why.)

Consumers Blamed for Corporate Greed

2008-06-30T09:41:00.001-07:00

Although consumer advocates tried to warn Congress at the time, only now is it becoming apparent that the 2005 Bankruptcy Reform Legislation (BAPCPA) was an attempt to blame falling corporate revenues on consumers. Mortgage and credit card companies blamed their lack of revenue on consumer bankruptcies while continuing to dole out unsafe and impossible loans to consumers and punishing them with foreclosures and rate increases if they couldn't keep up the payments.

clipped from articles.moneycentral.msn.com

Furthermore, lenders, not consumers, are the ones that seem to be abusing the system these days. According to U.S. Senate testimony, bankruptcy trustees are seeing "systemic problems" with mortgage servicers that:

Tack on exorbitant fees.

Miscalculate how much is owed.

Refuse to communicate with borrowers or the court.

Force homeowners into foreclosure without authority to do so, usually because the servicers can't figure out or prove who actually owns a mortgage, which has typically been chopped up and sold to investors.

If you missed the irony, I'll spell it out. Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 because lenders had alleged that consumers were abusing the bankruptcy system.

Florida Bankruptcy Court denies 523 complaint

2008-01-21T14:09:00.000-08:00

A Florida bankruptcy judge recently took up a 523(a)(2) complaint but denied that the debt in question was a fraud exception to discharge.

In Loud v. Richie, 2007 WL 4644663, Bankr.M.D.Fla (December, 2007), an unscheduled judgment creditor failed to prove by a preponderance of the evidence that the Chapter 7 debtor, from whom they had purchased their 70-year- old home prepetition, made any misrepresentation regarding the condition of the home with the intent to deceive them. Therefore, the judgment debt was not of a kind specified in 11 U.S.C.A. 523(a)(2)(A), the discharge exception for actual fraud, and it did not fall within 523(a)(3)(B), the discharge exception for unlisted or unscheduled debts. Although the judgment creditors presented evidence that the home's original porch had deteriorated, that tie- backs should be installed to stabilize the basement walls, that groundwater had intruded into the basement, and that permits were not obtained for all contracting jobs completed on the property, they failed to show that the debtor was aware of the conditions at the time of the sale, and that he misrepresented or actively concealed them with the intent to deceive the judgment creditors.

House Committee Passes Mortgage Reform Act

2007-12-12T15:04:00.000-08:00

The House Judiciary Committee has passed limited mortgage reform legislation. The bill, H.R. 3609, the Emergency Home Ownership and Mortgage Equity Protection Act, is the first step to giving homeowners with sub-prime mortgages a much needed break.

Maureen Thompson, Legislative Director for the National Association of Consumer Bankruptcy Attorneys, states:

"Though the bill is more limited than we hoped, it nonetheless will provide a bankruptcy remedy for many hundreds of thousands of homeowners where none exists today."

The bill is expected to come before the full House as early as February and even in its watered down form is expected to meet stiff opposition.

Some of the highlights of the bill are:

1. The bill covers only existing loans made after 1/1/2000 and will have no effect on new loans.
2. Covers nontraditional loans and subprime loans only.
3. Applies only to loans where there is a notice of foreclosure.
4. Sunsets after 7 years.
5. Provides guidance to judges so they cannot cramdown value below fair market value and cannot reduce interest rate below conventional mortgage rate.

The Senate Judiciary Committee also is expected to take up S. 2136, Senator Durbin's bill, in February.

Foreclosures in Your Neighborhood May Affect Your Home Value

2007-11-20T07:08:00.000-08:00

As the housing market crash drags on, foreclosures are on the rise due to adjustable rate mortgage payments increasing beyond home owner's budget. Obviously, the foreclosure will affect the home owner's credit report and the ability to purchase another home in the future but what about the home owner's neighbors? Analysts state that 44.5 million homeowners living near foreclosed properties will see a decrease in their home value of up to $5,000 in the coming months. Eric Stein of the nonprofit research group Center for Responsible Lending, estimates that 44.5 million homeowners living near foreclosed properties will see home values drop by an average of $5,000, as foreclosures surge. "The impact of foreclosures on local communities are far worse than any impact these bills would have on the mortgage market." Lower home values mean more trouble for an already doomed home mortgage industry. Less equity in properties makes it more difficult to refinance and cash out equity. That in turn means less money for consumer spending. All this adds up to a very lean holiday season for consumer spending.

See the full article in the Washington Post about pending bankruptcy legislation to help homeowners.

Top 5 Things to Do If You Are Considering Bankruptcy

2007-11-12T08:59:00.001-08:00

Every day I counsel with debtors from all walks of life about their remedies under the Bankruptcy code. The biggest hurdles that most debtors face is meeting the document requirements of the new Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). Below are the Top 5 things that I would recommend to consumers who may be considering bankruptcy now or possibly in the future.

1. Keep all your paystubs. You will need to show six months of paystubs to your attorney. If you haven't been keeping paystubs, start keeping them now and get a report from your employer of the missing stubs.
2. Always keep a copy of any tax returns you file. Too often people rely upon the tax preparer to keep a copy of the return and are disappointed when they realize the preparer has closed up shop until next year. If you don't have copies of the last four years returns, contact the IRS now and request a transcript.
3. Keep track of your household expenses. If possible, keep receipts for household bills such as vehicle expenses, utilities and charitable contributions.
4. Stop getting credit. Sounds like a no-brainer but you would be surprised at the people who continue apply for credit even up until the day they file.
5. Stop using credit cards now. Period. No explanation necessary on that one.

Junk Fees in Mortgage Foreclosures Only Increase Burden on Consumer

2007-11-09T15:17:00.000-08:00

As a consumer bankruptcy attorney I often marvel at the amount of mysterious fees that mortgage companies charge consumers. For instance, I routinely see claims charging hundreds of dollars for inspections fees and appraisals. Recently I requested copies of the so-called inspections and appraisals for which the lender had charged my debtor. I am still waiting for the documents, by the way and question if they even exist. Even still, I find it unconscionable that mortgage companies would charge for payoff statements and fax fees. Only recently has this practice come to the attention of the mainstream media and consumer advocates. Consider a recent article in the New York Times which claims the fees aren't chump change. Countrywide alone raked in $285 million in late fees from customers, a 20% rise from 2005 figures. The article states:

Bankruptcy specialists say lenders and loan servicers often do not comply with even the most basic legal requirements, like correctly computing the amount a borrower owes on a foreclosed loan or providing proof of holding the mortgage note in question.
“Regulators need to look beyond their current, myopic focus on loan origination and consider how servicers’ calculation and collection practices leave families vulnerable to foreclosure,” said Katherine M. Porter, associate professor of law at the University of Iowa.

Mmmm. How do you keep a failing lender from going bankrupt? One late fee at a time.

Alabama House Speaker Creates Task Force to Study Poverty

2007-11-09T13:36:00.000-08:00

House Speaker Seth Hammett has formed a task force to study poverty in Alabama. The House Task Force on Poverty intends to identify conditions that create or worsen poverty and to propose legislation or public policy initiatives to reduce or eliminate poverty. Sorry, Mr. Speaker, but you don't need a task force to figure out why people are poor and getting poorer.
Every day I represent people who can't afford to pay their bills and are forced to file bankruptcy. Of those people that I represent, I would say that 95% are unable to pay their bills due to circumstances beyond their control including divorce, job layoffs and high medical expenses for debtors who are uninsured. Combine that with a state that allows corporations to hide behind "at will" laws and payday lenders to take advantage of the consumers who are most vulnerable. Add in the subprime market fiasco which continues to raise the debtor's house payments and higher prices for necessities such as gas and groceries and you have a recipe for poverty. It's not rocket science Mr. Hammett.

Congress Tries to Help Drowning Homeowners

2007-11-09T08:10:00.000-08:00

Homeowners who risk losing their home in foreclosure now have some hope. Congress is considering a bill to allow homeowners who file bankruptcy to modify or change the terms of their home mortgages the same way they can modify car loans and other secured debts through their Chapter 13 plan.
HR 3609 Emergency Home Ownership and Mortgage Equity Protection Act would change the current law which does not allow a residential mortgage to be modified in a Chapter 13 bankruptcy. The current law only acts as a temporary fix to allow homeowners to catch up the arrears through the Chapter 13 plan but it does nothing to change the payments on the mortgage. So, if a homeowner has been coerced into an adjustable rate mortgage and their payments have reset to an amount which they can't afford, merely stopping a foreclosure and not addressing the high payments will only put them right back where they started from with the added burden of a bankruptcy on their credit report. The legislation can only help lenders because they will not be burdened with foreclosure fees and they would still be receiving what they would have gotten for the home at a foreclosure sale.
See the text of the bill here.
A second bill, H.R. 3915 Mortgage Reform and Anti-Predatory Lending Act of 2007, would establish common-sense standards to prevent the kind of reckless lending that took place in 2005-2006 and now has so many families in danger of losing their homes.
See the text of the bill here.

Mortgage Lenders Misled Consumers

2007-11-08T13:18:00.000-08:00

Many of you heard recently about the push for mortgage companies to refinance or offer workout options for borrowers who risk losing their homes due to skyrocketing adjustable mortgage payments. Some mortgage companies even assured the public that they were in fact offering workout plans to help these homeowner keep their properties. A recent MSN article shows how well mortgage companies keep their promises. The article states:

"A recent survey from Moody's Investors Service of the top 16 subprime loan servicers -- which handle $950 billion in loans, or 80% of the market -- found that they had modified only 1% of their loans that had reset to higher interest rates during January, April and July 2007."

Obviously lenders are not being entirely truthful with the public.

See the article: http://realestate.msn.com/buying/Article2.aspx?cp-documentid=5658441&GT1=10632