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Entries tagged as bankruptcy

Bankruptcy: Chapter 13, RISING PRICES and Foreclosure Defense

May 12, 2008 · No Comments

OBAMANOMICS VS NO ECONOMICS AT ALL

the government is charged with reporting on inflation when it has a vested interest in keep the reported inflation low both for political and financial reasons

The job of the Petitioner in bankruptcy to get a modification of the Chapter 13 plan is therefore double-whacked because of (1) a presumption against him which requires him to show a significant change in circumstances and (2) inaccurate government statistics which call you a liar when you say your basic expenses have shot up 25% just because of inflation.

Homeowners with ARM financing on their homes are triple whacked when the resets kick in. Those people in bankruptcy already should tell their lawyers to file an adversary proceeding based upon violations of TILA and RESPA. There are a number of steps you need to follow (see many posts and links on this blog) before you can file suit.

BKR attorneys are struggling with clients who are complaining that their payment plan is being negatively impacted by the surge in the cost of living. This surge has been understated by, for example, publication of the Consumer Price Index and other indices that are used to set increases in government and pension benefits like social security.

Thus the government is charged with reporting on inflation when it has a vested interest in keep the reported inflation low both for political and financial reasons. If they report it accurately, the government expenses will go up. Up until now, the fact that this was at the expense of the recipients of those benefits (which they paid into and are now being short-changed) has been felt, talked about but largely ignored. That too is coming up front and center. McCain’s statement “I’m not very good on economics” better change to “I just studied up on economics and it is very interesting, Here is what I learned.”

When inflation was comparatively low, even though understated. there wasn’t much conflict. Now, however, the basket of items used for the CPI is literaly out of touch with the real life experience of most Americans — something that Obama has started talking about and which McCain unfortunately doesn’t seem to know or care to know. 

The job of the Petitioner in bankruptcy to get a modification of the Chapter 13 plan is therefore double-whacked because of (1) a presumption against him which requires him to show a significant change in circumstances and (2) inaccurate government statistics which call you a liar when you say your basic expenses have shot up 25% just because of inflation. 

Homeowners with ARM financing on their homes are triple whacked when the resets kick in. Those people in bankruptcy already should tell their lawyers to file an adversary proceeding based upon violations of TILA and RESPA. There are a number of steps you need to follow (see many posts and links on this blog) before you can file suit.

MOST BANKRUPTCY LAWYERS ARE LARGELY UNFAMILIAR WITH TILA, RESPA AND OTHER CONSUMER PROTECTIONS AND THUS MISSING THE LARGEST POTENTIAL BENEFITS TO THEIR CLIENTS. If YOUR lawyer does not know this field then get help elsewhere. For example: www.repairyourloan.com, where you can get help on all the steps before filing suit and even get a referral to someone who can assist your attorney in filing the adversary proceeding. 

From another site where the attorneys appear to be knowledgeable but I know nothing about them —-

Rising prices give rise to chapter 13 plan modifications

By Andy Miofsky, Illinois Bankruptcy Attorney on May 11, 2008 in Bankruptcy Practice and Procedure, Chapter 13 Bankruptcy, Illinois

What do rising gas and food prices have in common? They both eat up a substantial part of your monthly budget. And if you filed chapter 13 within the past few years, you submitted a plan of monthly payments based on a budget before gas and some food prices doubled. It may be time to modify that old plan. How so, follow this.

Your Schedule J lists your projected monthly expenses. Your monthly plan payment is calculated based as a factor of those expenses. It may be possible to file an amended Schedule J to account for today’s increased costs. As your expenses rise, your monthly disposable income decreases and your monthly plan payment may decrease as well. So, instead of paying money to your unsecured creditors, you might be able to free up some cash to use for your personal monthly expenses.

Your bankruptcy attorney can advise you whether you qualify for a lower payment. Dial that number before the cost of a phone call goes up

Categories: CDO · CORRUPTION · Eviction · GTC | Honor · McCain · Mortgage · Obama · bubble · credit unions · currency · education · foreclosure · inflation · interest rates · politics
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FORECLOSURE DEFENSE: A COMMENT WORTH REPEATING

May 10, 2008 · No Comments

we received the following comment which I think is very good for people to read. I edited it slightly to make it more readable. The original is in the comments below this post.

Jose; You have one year from the date of rescission notice to file a lawsuit in the courts to enforce the rescission but, if you are under foreclosure now, you must move fast!

If you have received the notice of sale, you must consult your local court law library for the laws, talking with the law clerks who should be able point you to your local laws.

Then contact the courts and notify them immediately of your intent to defend against the action and at that time, present the complaint onto the court as your defense or file the complaint as soon and as quick as you can.

I am not a lawyer but am suing my lender for mortgage loan document forgery and mortgage fraud, the dirty rotten sobs have perpetrated against my once very good credit. RESPA & TILA laws are very complex, you really should try to find an honest lawyer, though, we have had no luck here in Maryland because most are corrupt or work for the creditor behind your back or want to lend you the same creditors money or, if they are not currently working for the creditor, they will be by the time it is all over so be careful if the lawyer takes your case and then does nothing, this is what they do, the corrupt lawyer usually will fleece you for every penny you have so you then have no….money and then, after he strips you of the money, he allow the trustee to sell the property or, encourages you to refinance, never assisting you with the RESA and TILA lawsuit, or, this is what has happened to us! Be careful of corrupt bankruptcy judges and trustees if you are thinking about going this way. [Editor's Note: We have received dozens of stories just like this emailed to us] rather than posted in comments. People are paranoid about being targeted!]

 

There is a more sophisticated consumer scam known as the bankruptcy foreclosure scam wherein your lawyer, the bk trustee and judge conspire to steal your property and force you into a life of high cost credit! How the scam works, you innocently find one of these corrupt lawyers for whom most practicing bk in our area are dirty, rotten and corrupt sobs because they must join the corrupt thing known as the “bankruptcy club”,(do your research, this is a club of corrupt judges, trustees and outside lawyers who serve victims up to these clubs); the would be consumer lawyer generally lends money for your….lender with the lawyer failing to ever tell the consumer they have a conflict of interest.

Once the corrupt lawyer files the stay for you the victim, he then does nothing…..tells you nothing, does not assist with the schedules, files nothing but begins to work with the corrupt trustee wherein they both collude together to harm you under the courts eyes with the corrupt judge presiding over the whole thing but, essentially, they collude to have the case dismissed making you out to be the villain so they have scared you in the judicial eyes of all courts. If you make to the 341 meeting, you are then met by the corrupt trustee who also, without you knowing, works for your same lender or most of your creditors, and this corrupt trustee ignores your TILA and RESPA claims; and, the screwed up BK draconic laws, essentially allow him to ignore your claims; he will have no part of litigating your claim and will shut you up but quick!

The lender now has you where he wants you, in the bk club…..with the judge being placed there to hear a particular lender/investment banks cases exclusively.

The corrupt judge, then works in tandem with your lawyer who is to first get you to refi the loan in order to cause you to waive your legal recourses; should you have figured out what is going on, and refuse the refi, then the lender seeks the lift stay, your lawyer may appoint himself as special counsel to the trustee, to make sure you are silenced, and then the judge orders the property sold; be very, very, very careful because you are dealing with the mafia and consumers and honest lawyers have been killed! If you are already there, or in bk and this is happening, motion to dismiss your case and file lawsuit in your circuit court; the courts cannot force a discharge on you. Good luck, Best R, k

Categories: Eviction · GTC | Honor · Mortgage · bubble · foreclosure · politics
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Foreclosure Defense: Cash for Keys Offer and TILA Defenses

May 9, 2008 · 1 Comment

Cash for keys is an offer from somebody that basically says that you are no longer the owner of the property, we can get an order of eviction, we can get the sheriff to throw you out, or you can accept $1,000 (or whatever the amount is in the offer) and get out on your own.

If you accept such a deal do not sign anything except a document that says you are acknowledging payment and that you will vacate the property. If the offer contains any language that looks like a release of other claims, do not sign it unless you have decided, after consulting local counsel, that you are willing to give up what might be very substantial claims against the lender which can always be brought after the sale. 

Cash for keys is a good option if you are giving up anyway. And nobody can blame you from walking away from a fight that you don’t understand, that you can’t match the resources or power of your adversary, and where you don’t know what to do and have no knowledge of the outcome of fighting this. Being out of money doesn’t help either.

 

So whatever decision you make is understandable and RIGHT FOR YOU because you made it. There is no right and wrong here except that what the lenders did here in conspiracy with Wall Street was clearly wrong.

 

ALL THAT SAID —- MY SUGGESTION IS THAT YOU FIGHT ON AND HAVE AN EMERGENCY PLAN B READY IF YOU NEED IT. AND CONSULT WITH COMPETENT COUNSEL BECAUSE THIS IS GENERAL INFORMATION AND NOT LEGAL ADVICE IN YOUR PARTICULAR CASE.

If you delay the eviction through bankruptcy (you can get one of those do it yourself kits) you should probably send a letter registered mail return receipt requested to the lender and file a Chapter 13, along with an adversary proceeding which says basically that the lender committed many violations of the Federal Truth in Lending Act (TILA), that you are entitled to an accounting for all interest paid, all points paid, and a refund of all out-of pocket expenses associated with finance charges or the costs of closing on the loan, and that you hereby rescind the transaction.

Under TILA (see my recent BLOG posts) this eliminates both the security interest and the debt.

 

You must allege that the lender procured title through trickery and fraud, that they have no security interest, that they have no entitlement to payment, and that they are NOT the owner of the actual security instrument nor the debt which has been sold as a collateralized mortgage obligation to a third party investor who has never been joined in the prior proceedings; thus they failed to join an indispensable party which means that the prior procedures which resulted in transfer of title were not only procured by trickery, fraud on the court, and overreaching, they did so without properly or legally invoking the jurisdiction of the local government that authorizes judicial and non-judicial sale.

 

Thus the taking of the title was an unconsitutional denial of due process, void ab initio (at inception) and therefore unenforceable by any court.

Hence when they (the lenders) move for relief from stay, you can point to their lack of standing because they did not legally or properly obtain title and you have rescinded (attach copy of your letter) so they don’t have the option of clearing it up.

Now here is the kicker.

Under TILA, when you are NOT REPRESENTED By COUNSEL the Judge, especially if it is in Federal Court (which is the case in all bankruptcies) MUST in essence act as your lawyer and review the facts, the allegations, the case law and the circumstances to determine if there is ANY basis to support the relief you are asking for or to deny the relief the lender is asking for.

In other words you are better off not having a lawyer than having one who barely knows what he or she is doing. The bankruptcy judges are almost universally well-schooled in the law and very sharp. You couldn’t have a better lawyer! Of course if you DO know a very competent attorney who is familiar with these concepts, then you are better off going with the lawyer than without one.

Categories: CDO · Eviction · GTC | Honor · Mortgage · Obama · bubble · currency · foreclosure · interest rates · securities fraud
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Foreclosure Defense: Opposing Motion for Relief from Stay in Bankruptcy

April 20, 2008 · 2 Comments

TRANSFERS OF “OWNERSHIP” OF DEBT OBLIGATIONS GIVES RISE TO THE LEGAL ISSUE OF STANDING IN STATE COURT, BANKRUPTCY COURT IN FORECLOSURES AND EVICTIONS AND OTHER ACTIONS RELATING TO THE MORTGAGE MELTDOWN.

 

See also Foreclosure Defense: Cash for Keys Offer and TILA Defenses

May 9, 2008

This is where the shell game played by lenders starts being used in your favor.

Nail them with their own behavior.

More and more Federal, Bankruptcy, and state courts are adopting this view for both legal reasons and practical reasons — the system can’t absorb this number of foreclosures and bankruptcies, and the communities can’t afford to enforce use restrictions where houses are abandoned.

  • As to pursuing the foreclosure defense and counterclaim market, it demonstrates the confusion created by the scheme of the lenders, the intentional obfuscation of the real parties and the very real possibility that they simply don’t have or won’t be able to find the paperwork to back up their claims as to who is in fact the real party in interest. 
  • The volume was so huge that it is doubtful that these predators all crossed their t’s. This leads to the very real possibility that is arising in courts across the land (Federal and State) that their failure to come up with the real holder of the note and mortgage, once the litigation has commenced, might lead a dismissal with prejudice or a dismissal without prejudice. 
  • In either case, it is a finding that the party to whom the borrower was directing their payments is not the proper party.
  • This leads to the possibility that the borrower could, with or without filing a lawsuit, either stop paying mortgage payments altogether (but not stop insurance or tax payments) or can put the money in some interest bearing escrow account, waiting an appropriate period of time for the lender to either show up or not. 
  • And the amount put in escrow can be in accordance with the allegations of the borrower:
  1.  that they were defrauded and 
  2. that the mortgage, note, payments should be reduced to reflect 
  • a reduction in the total mortgage obligation due to the artificially and fraudulently inflated appearance of fair market value (benefit of the bargain), 
  • the down payment and points and closing fees and interest paid to date, 
  • costs of closing, and 
  • money invested in a house that is not worth what the borrower thought who relied upon his fiduciaries — the lender, the underwriter, the auditor for the lender, the appraiser, the title agent, the mortgage broker, etc. 

The Real Party in Interest and Motions for Relief From the Automatic Stay

By Brett Weiss, Maryland Bankruptcy Attorney on Apr 20, 2008 in Lawyer to Lawyer, Chapter 12 Bankruptcy, Chapter 11 Bankruptcy, Maryland, Foreclosure Issues, Chapter 13 Bankruptcy,Automatic Stay, Bankruptcy Cases of Interest, Chapter 7 Bankruptcy

A recent bench decision by Maryland Bankruptcy Court Judge Thomas J. Catliota was an important ruling regarding the real party in interest requirement of FRBP 7017.

Americredit Financial Services, Inc., an auto loan servicer, filed a MLS in its own name. Its name appears on the car title as the sole lienholder, it represented that it “has a validly perfected, first priority purchase money security interest in the Collateral…” and it was listed as a secured creditor in both the Schedules and the Chapter 13 Plan.

A response was filed to the MLS arguing that the car loan had been sold to a securitized trust, and that Americredit was therefore not the real party in interest. Americredit responded by agreeing that the note had been transferred to the securitized trust, but argued that the debtor’s failure to object to the POC waived this issue, and that its servicing agreement with the trust allowed it to file the MLS in its own name.

Judge Catliota ruled that since the loan was not owned by Americredit, it needed to file the MLS in the name of the actual noteholder, and denied the MLS (but allowed Americredit to amend to reflect the true owner of the loan).

With the vast majority of loans (home, car, computer, etc.) being securitized, this is an important defense to MLSs, particularly since in a number of these cases, the securitized trust is simply unable to produce the original note or demonstrate that the title records appropriately reflect that it is the proper secured party.

Categories: CDO · Eviction · GTC | Honor · Investor · Mortgage · bubble · currency · foreclosure · inflation · politics
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Mortgage Meltdown and Credit Crisis: News and Comment 4-4-08

April 4, 2008 · 4 Comments

Collateral damage and contributing damage 

From CNN and NY Times: Loss of jobs means loss of income, loss of tax revenue, increased defaults on home loans, credit cards etc. The downward spiral of economics and the upward spiral of inflation are here. They will continue to feed off of each other. It is political cowardice to avoid the obvious — stop the foreclosures, stop the evictions, restore the value of CDOs, and initiate a single payer healthcare system that will save us all money, emphasize better health through fitness and diet, and decrease the wild race for riches in credit, oil, and drugs. 

It was an act of political cowardice for the senate to jettison the one form of relief that would force mediated settlements from which all parties to the frivolous mortgages would get the most benefit — the ability of bankruptcy judges to modify the mortgages. Just leaving that provision in there would have caused a stampede of settlements that were governed by the free market forces that the critics of the plan so ardently advocate. 80,000 jobs lost, unemployment spikes

Employers slash jobs for third straight month while unemployment jumps to 5.1%, a nearly three-year high.

By Chris Isidore, CNNMoney.com senior writer

Last Updated: April 4, 2008: 12:37 PM EDT

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NEW YORK (CNNMoney.com) — U.S. employers slashed jobs for the third straight month in March and unemployment rose to a nearly three-year high, offering the latest signs that the economy has fallen into a recession.

The Labor Department’s much anticipated report, released Friday, showed a net loss of 80,000 jobs last month. That marks the third straight month that jobs have fallen - the longest period of decline since early 2003.

Economists surveyed by Briefing.com had forecast that payrolls would fall by 50,000 in the latest reading.

The new report also pegged job losses in January and February at 76,000 each month.

Those revisions added an additional 67,000 job losses to previous readings. The Labor Department now estimates that the economy has shed 232,000 jobs in the first three months of this year.

“The revisions are the real surprise in the report,” said John Silvia, chief economist for Wachovia. “If we had known it was anything like that, there would not have been any debate going on about whether we were in a recession. It’s pretty stark.”

The job losses were widespread, with the battered construction sector losing 51,000 jobs and manufacturing employment falling by 48,000. But there were also losses in key service sector industries. Retail employment dropped by 12,000 jobs, and business and professional service employers cut staff by 35,000.

Unemployment rate rises

The unemployment rate jumped to 5.1% from 4.8% in February. The new reading is the highest level since September 2005 in the wake of Hurricane Katrina. Economists had forecast that unemployment would rise to 5%.

The unemployment rate is based on a separate survey of households, rather than the employer survey that produces the closely watched payroll number.

The household survey gave an even grimmer view of job losses. It found that the number of Americans saying they were unemployed soared by 434,000, the biggest jump in that reading since October 2001, right after the Sept. 11 attacks.

Economists say the prospect of a quick pick-up in jobs is not good, given current problems in the economy. Silvia estimates there will be job losses every month through at least August.

“It’s not going to be a lot of fun. Recessions are never fun,” he said.

Others say that job losses could continue into next year.

“The job market is a lagging indicator,” said Arpitha Bykere, economic analyst at RGE Monitor.com. “We can expect the picture to get gloomier. We won’t see a positive picture any time soon, even if the economy recovers.”

But some other experts said that while job losses are climbing, the job market is still relatively strong by historic standards, although even they expressed concerns about growing weakness.

“So far the job strength has held up consumer spending when there’s been a lot of other bad news,” said Tig Gilliam, CEO of Adecco Group North America, the unit of the world’s largest employment agency. “If we have serious job deterioration in the job market, that could feed into problems. But as long as we’re at 5.1% unemployment, or even 5.5%, I don’t think that should drive a consumer spending halt.”

Still the 5.1% unemployment rate only describes part of the problem for those struggling to find work in the battered labor market. The number of people outside of agriculture who are working part time who want to work full-time is now up 591,000 compared to a year ago.

Candidates chime in

The job report reverberated on the campaign trail Friday, as the presidential candidates sounded off on the economy.

“Despite today’s news, the Democrats will continue to advance their anti-growth agenda,” said Sen. John McCain, the presumed Republican nominee.

Democratic frontrunner Sen. Barack Obama called the report “the latest evidence that Washington needs fundamental change because it has failed the American people.” And Democratic hopeful Sen. Hillary Clinton said “it’s time the president and John McCain recognize the r-word: reality.”

The job outlook will be a key factor influencing interest rate decisions by the Federal Reserve when it meets on April 29-30.

Earlier this week, Fed Chairman Ben Bernanke made his bleakest and bluntest assessment on the economy’s condition. The central bank chief told a joint congressional committee that a recession is possible in the first half of this year.

Investors placing bets using Chicago Board of Trade options were already pricing in a 100% chance of at least another quarter-percentage point cut even before the jobs report came out. But the chance of a half-point cut rose to 38% in morning trading following the report, after being at 20% at the end of trading Thursday.  

First Published: April 4, 2008: 8:39 AM EDT

Categories: Bush · CDO · CORRUPTION · Eviction · GTC | Honor · Investor · Medical Treatment · Mortgage · Obama · bubble · community banks · currency · education · foreclosure · inflation · interest rates · medical · medical insurance · politics · securities fraud
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Foreclosure Offense and Defense: Changing the Bankruptcy Laws

March 31, 2008 · 9 Comments

A helpful article:

WASHINGTON (MarketWatch) — For many people, filing for bankruptcy is seen as a scary, worst-case scenario, but consumer advocates say this last resort could be a real help for beleaguered homeowners.

There is no shortage of proposals in Congress to address the housing crisis: the Depression-era Federal Housing Administration is up for a makeover, and there are other plans to ease the stress of pricey mortgages. Under veto threat is a proposal that consumer advocates see as key to helping more people stay in their homes: allowing bankruptcy courts to modify troubled mortgages on primary residences.

Under current Chapter 13 bankruptcy law, courts cannot modify the mortgage on a principal residence, though they may for vacation or second homes. Consumer advocates and others see bankruptcy, which is meant to adjust debt and make it easier for people to repay creditors over time, as an efficient and established method for troubled homeowners to make good.

“The marketplace is designed so that it will protect owners of vacation homes and second homes, but yet a consumer who is struggling to make their mortgage payments cannot include their home,” said David Berenbaum, executive vice president with the National Community Reinvestment Coalition.

A major strength of court-supervised modifications, consumer advocates say, would be their ability to help people who have “piggyback” loans, which are second mortgages taken on homes at the same time as a first mortgage. Struggling homeowners are often urged to seek a loan modification from their lenders, but many second-lien holders won’t allow loans to be modified without being paid out, said Mark Zandi, chief economist of Moody’s Economy.com.

“Second-lien holders are mucking up the process, they don’t want to be subordinated,” Zandi said. “The other limitation is that some mortgage investors are not allowing these modifications to go through because they don’t think it’s in their best interests.”

Generally, a first mortgage gets paid in full, followed by the second, so the holder of the second mortgage has no incentive to support a modification that could cause it to face a 100% loss, said Eric Stein, senior vice president with the Center for Responsible Lending.

“The holder of the second is better off waiting to see if a borrower can make a few payments before foreclosure,” Stein said. And, he said, dealing with two servicers is a “negotiating challenge that most borrowers cannot surmount.”

About 40% of home-purchase mortgages in the first nine months of 2006 involved piggyback loans, according to a report last year from Credit Suisse. That figure jumps to more than 60% in some markets such as Los Angeles, Las Vegas, and Sacramento, according to the report.

Battle over bankruptcy law

 

  • Changing bankruptcy law to enable loan modification faces strong opposition from President Bush and may have a tough time in Congress. ”Amending the bankruptcy code in this manner would undermine existing contracts, leading to contraction in mortgage credit availability and affordability,” according to an administration policy statement. “These and other bankruptcy-related provisions in the bill would rewrite long-standing tenets of bankruptcy law in ways that would fundamentally alter the expectations of parties to hundreds of thousands of home purchases after the fact.”
  • The Mortgage Bankers Association said a bankruptcy proposal currently in the House of Representatives would give “judges free rein to rewrite these contracts without statutory or economic restraint.” The MBA also said the prospect of the bill’s enactment could prompt more foreclosures. “In the short term, lenders will likely move quickly to foreclosure to ensure that they are not covered by the onerous provisions of this bill,” according to MBA.
  • However, CRL’s Stein said bankruptcy changes could act as an incentive for servicers and investors to refinance more loans because they may feel they can get a better deal.
  • “It will induce some investors to go and accept a refinance program, and it will also get others to agree to modifications outside of bankruptcy,” Stein said.
  • Nicolas Retsinas, director of Harvard University’s Joint Center for Housing Studies, said bankruptcy reform should be considered, noting that the infrastructure already exists.
  • “Particularly, if you look at alternatives like a large federal program,” Retsinas said. “For any new initiative, the government rulemaking will take months or longer.”
  • The Congressional Budget Office estimated that the House proposal could encourage some to file for Chapter 13 bankruptcy, resulting in a 4% to 5% increase in annual filings. But there would not be a run to file for bankruptcy, said NCRC’s Berenbaum.
  • “Most American homeowners understand the long-term impact of filing for bankruptcy. You have to wait before you can apply for a mortgage again. It impacts your credit,” Berenbaum said.
  • Speaking Thursday, Sen. Barack Obama, D-Ill., offered his support for the modification of loans to avoid foreclosure or bankruptcy.
    • “It’s also time to amend our bankruptcy laws,” Obama said, “so families aren’t forced to stick to the terms of a home loan that was predatory or unfair.”

Ruth Mantell is a MarketWatch reporter based in Washington.

Categories: Eviction · GTC | Honor · Investor · Mortgage · Obama · bubble · community banks · credit unions · currency · foreclosure · foreign relations · inflation · interest rates · politics · securities fraud
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Mortgage Meltdown: Foreclosure Offense and Defense: Cram Down and Adversary Proceedings in Bankruptcy Court

March 23, 2008 · 2 Comments

Here is an email I sent to a victim of the mortgage crisis:

So you are in Chapter 13. Do you have a lawyer?

There are some options in bankruptcy court that might be available under current law. The two that I have in mind for you, without any details, are the availability of “cram down” and the use of an adversary proceeding. “Cram down” refers to a process wherein a creditor has terms crammed down his throat that he otherwise wouldn’t accept. There are many theories and bases for cram down but I can tell you it is used consistently in bankruptcy. 

Cram down is always an option in Chapter 11 so you might have to convert from Chapter 13. I am not an expert on BKR law anymore so I would go to your lawyer or www.bankruptcylawnetwork.com as a starting point. It involves equitable and legal factors and if the right case is made, the Court will order it.

Second is an adversary proceeding in which you sue the lender and include everyone in the pipeline who got you into this mortgage and note and the terms that were presented to you as “good terms.” The counter-argument that you signed the documents, that there was adequate disclosure in the documents etc., will fall flat in the context of the vast mortgage meltdown which the bankruptcy judges, trustees, and trustee’s counsel are now very familiar with. Everyone wants to help you. But YOU have to give them a legal reason to hang their hat on. 

The combination of the adversary proceeding, the conversion to a proceeding that allows cram down and the well written brief to cram down the new terms against the lender, will certainly slow things down if there isn’t already a timeline that can’t be moved. Remember that the proceedings, while designed to protect the debtor are also there for the protection of the creditors. And you must take steps to present your cram down proposal to the creditor(s) for their vote. In most cases their rejection will not be presumed — it must be shown on record. 

So when you submit your proposal, you want to submit something that shows that it is in the best interest of EVERYONE to have it done even if they don’t agree. This can only be done by demonstrating that your proposal is the best one you can come up with given your particular circumstances, that you have rights against the creditor(s), that the creditor(s) might not have legal standing to make a claim (because of the sale using documents that did not perfect the sale), and that the creditor is not being cut out of the process and losing everything (even though under TILA and RICO and other laws he might be at risk for exactly that).

But rather, that you have a plan to reduce the principal amount of the mortgage for purposes of amortization, that the lender has contingent equity rights when the property is refinanced at a higher amount than the cram down amount, and that the creditor and other parties have a right to show the mortgage as reinstated and therefore no requirement of a write-down in value is required on their balance sheet. This will preserve not only the due process and property rights of the lender but might actually go to assisting the lender in staying afloat. 

It is even possible that the lender and the holders of CDOs (CMOs) might see the logic of this which requires no expenditure of new money and gets the conflict off the table. 

Categories: CDO · CORRUPTION · Eviction · GTC | Honor · Mortgage · Obama · bubble · community banks · credit unions · currency · education · foreclosure · politics · securities fraud
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Mortgage Meltdown: For People Already in Trouble

January 7, 2008 · 2 Comments

We received the following plea for help. I have changed the name to protect privacy. But both the plea and the answer are applicable to many people, which is why we are publishing the Garfield Handbooks. I will shortly publish a way for you to down load the books and forms and purchase the book on line or in hard copy. 

“hello my name is John Smith i am currently in chapter 13 bankruptcy countrywide has currently forclosed on my property the bank brought it back and is currently moving to evict me i beleive there were bogus fees and my atorney did not want to argue the issue , my payments went from $1900 to $2800 to $3850 within 18months adjusted twice please send me info so i can fight back”

First thing you need to do is calm down because allowing yourself to be overtaken by anxiety will lead to bad judgment, unclear thoughts and strategies that could make your situation worse.

Second thing is it would be nice if you would order the Garfield Handbook for Borrowers in the Mortgage Meltdown Crisis by sending a money order for $19.95 payable to General Transfer Corporation and address it to Neil F. Garfield, 4980 S Alma School Rd., A-2, Suite 124, Chandler, Az 85248. I will send you via email the  current manuscript and give you free updates for 60 days. If you want it in hard copy, send $29.95 including shipping and handling. Whether you do or don’t buy the book (which helps defray the costs of servicing the thousands of people stuck in your position), I will help you as much as I can right here and right now. 

Third thing you should do is consult a lawyer that is local and knows the ropes. After reading this email a lawyer might be willing to help you without a retainer because of the possibility of getting paid by Countrywide or even in a class action. The lawyer should consider joining one of the many class action lawsuits that have been filed. Make sure you join one that is for borrowers and not for investors in CDOs. If you must proceed on your own, here are some tips that other people are doing:

 

  1. Contact the Office of the Attorney General of your State. Do the same in your county and your city. You might find that an investigation is already underway against Countrywide and lenders in general in this massive fraud — and they might even intervene for you. You are a victim and not a bad guy, so don’t get put off by anyone telling you that you should have known better when you signed the documents. Remember, the largest criminal investigation in the history of economic fraud is currently underway in many states and there is plenty of talk behind the scenes about what to do for people like you. 
  2. Contact the Judge’s office in the bankruptcy case and file a copy of whatever you send to the Judge with the clerk of the bankruptcy court. Use letter sized paper, double-spaced with numbered paragraphs. Make sure you send copies of whatever you have sent to the Judge to the Trustee to whom you were supposed to make your payments. Do not expect the Trustee to intervene for you. Adversarial proceedings are expensive and unless you can offer to pay up front, the Trustee is in all probability not going to help you.
  3. You might want to ask for a conversion to Chapter 11, which is available for individuals and which allows for certain “cram down” features that are more likely to get you relief that you might get in Chapter 13 or Chapter 7. But the filing fee in Chapter 11 cases is very high. You might want to get  request leave of court to spread the payment out over time. 
  4. If the bankruptcy court won’t hear you then try everything below in the State Court in your jurisdiction. The clerk of the court will generally be helpful. 
  5. Generally a good time to contact the Judge in person is on a Friday afternoon when the Judge dispenses advise and punishment to lawyers who screwed up in his court that week. At that time you can present your papers (if the Judge lets you) and literally plead with the Judge to help you. 
  6. The Judge on the other hand is seeing a geometric increase in these cases and most bankruptcy judges are (a) not pleased with the change in bankruptcy laws passed by congress and (b) don’t like these foreclosures based upon crazy payment re-sets and (c) would offer some relief as long as they were not inventing law, just enforcing and deciding it. So don’t get crazy with your demands, because the Judge will probably not be receptive to what you have to say. 
  7. Be respectful and not argumentative withe the Judge. You can show your emotion but make absolutely certain it does not come across that you are angry or ready to fight with the Judge. That can lead to handcuffs and spending a night behind bars to cool off.
  8. Do not assume the Judge knows anything about your case (in terms of who you are, where you live, when this case started, when you bought, or what happened when you bought — these are all things you must say in writing, and if you given the chance, out loud in court); but by all means you can assume that the Judge knows the law — better than you do and better than 99% of the attorneys that appear before him or her. In fact, appearing pro se (without counsel) might put you at an advantage because the Judge is likely to use his own knowledge or her own knowledge, to your advantage.
  9. Do not assume the Judge is against you if he/she asks you questions or says things that seem to favor the other side. A Judge is supposed to be objective, not automatically in your favor because of your good looks or the severity of the penalty you are experiencing. 
  10. Be very scrupulous in obeying all time limits and all other instructions of the court. Don’t think you can play fast and loose with ANYTHING. Bankruptcy Court is Federal Court and Federal Court is a lot tighter on rules than you usually find in State Courts. 
  11. Ask the Judge on paper and orally if you get the chance, for a stay or temporary injunction, preventing Countrywide from enforcing the mortgage, filing eviction, or getting an order that would allow  or order law enforcement to come to your house and literally remove you. Do not remove yourself. You might be surprised how long it can take before a sheriff does the eviction. They don’t like this situation anymore than you do, and they are aware of the criminal investigations going on against Countrywide and other lenders.
  12. Ask the Judge to allow you to file an “Adversary Proceeding”. You will get instructions in the local rules from either the Judge or his clerk. 
  13. Tell the Judge in your paperwork and orally, if you get the chance that you want to challenge the mortgage and the note in that they were not computed properly, that the adjustments were not computed in accordance with law, that the amount demanded from you is wrong (too high) and that you have been defrauded by Countrywide and other co-conspirators) on all of the following grounds:
  14. Fraud in the inducement: Countrywide entered into a conspiracy to defraud you and millions of other people to believe that you could, with their help, afford a house that you otherwise believed you could never pay for. You were presented with terms you were led to believe you could afford, but the entire arrangement amounted to bait and switch because the terms being enforced against you now are the not the same terms you started off with. They inflated the price of the home, enlisted an appraiser to verify the value, enlisted a mortgage broker to guide you into a mortgage you could not afford, intentionally distracted you from disclosures that might have alerted you to problems with the mortgage terms and note, and then led you to believe that you had been approved by a financial institution with far superior  information, and upon whom you reasonably relied to verify the value of the home, the reasonableness of the terms of the mortgage, and the lack of any need for an attorney. [Needless to say, if anything here does not apply to you don’t say it]. As a result, you went to a closing where you presented with a pile of papers that you did not understand but which were explained to you by a title agent that was enlisted to tell you the terms of the mortgage and note in such a manner that you would be distracted from understanding that you could not possibly pay for the house, that the house might not be worth what you were paying for, and that the mortgage terms only benefitted the co-conspirators, none of whom assumed any risk in the transaction because they sold the risk to third party investors who were similarly lied to and defrauded. As a result you have been deprived of living arrangements that you could have afforded but which are no longer available, you have spent money improving and furnishing a house that you cannot afford if the price and mortgage terms are maintained, and are faced with the expense and costs of moving, including the threat of literally moving out onto the street and becoming one of the hundreds of thousands of homeless persons displaced by this massive fraud.
  15. Fraud in the execution: You were led to believe by the co-conspirators and third parties that you were signing papers that were the same as what you were originally told by the developer, who probably received a rebate on the yield spread premium, the mortgage broker who also received a rebate, the title agent who received a high closing fee, and the appraiser who also received a fee in excess of the amount that the marketplace would have awarded if the transaction had not been fraudulent. 
  16. Rescission — only if they can give you back everything they took from you.
  17. Usury: The net effect of this scheme was to acquire title to property and sell it at prices that would allow the lender to secure a return that would otherwise be in violation of usury laws.
  18. RICO racketeering: This was an interstate scheme involving co-conspirators from many states and perhaps other countries as well. The scheme violates criminal statutes and cicll statutes. Accordingly the case should referred for criminal prosecution and you are entitled to treble damages and attorney fees.
  19. TIL (Truth in Lending): The co-conspirators intentionally misled you by distracting you from the real terms of the transaction and as a result violated local, state and federal truth in lending laws.
  20. Discovery: The Clerk might help you with this. You want to file requests for Production, requests for Admission, Interrogatories, and a demand for access to the main and ancillary computers containing emails, correspondence and policies of Countrywide for dealing with your case and cases like yours. Get access to emails, correspondence etc. dating back before the loan and relating to the creation of the loan product the borrower eventually was sold. Same for what they know of the other players — developer/seller, mortgage broker, appraiser, relations with investment bankers showing they knew they would not be carrying he risk of the loan ( shows they had not interest other than closing the deal without concern as to whether the deal went bad for borrower or lender). Get screen shots of websites and see if you have copies of web pages that were printed during the loan and sales process. Check for differences. If someone has been fired at the lender for the events leading up to the CDO and mortgage meltdown, get their deposition. Demand copies of drafts of documentation before it was presented to the borrower along with any emails or inter-office memos. Find out if anyone has consulted counsel for criminal exposure, employment litigation, or civil exposure. You can’t get the content of the conversation but you can get the answer to that question if you phrase it right
  21. See my other posts on livinglies.wordpress.com for more allegations that might be applicable.

Neil F. Garfield, Esq.

ngarfield@msn.com<mailto:ngarfield@msn.com>

This is not a solicitation for legal services nor legal advice in your particular situation. I do not know what jurisdiction you live in, I have not interviewed you, you have not retained me, and I am not your lawyer. These matters are complex and generally require the services of competent legal counsel experienced in bankruptcy, foreclosures and lender liability. You should consult with local counsel before doing anything. The information contained in this email is general information that may or may not apply to your situation. 

This transmission may be protected by attorney client privilege and attorney work product privilege if it contains legal advice or opinions, and it contains information that are private, trade secrets, protected by non-disclosure and non-circumvention agreements between the parties and is therefore confidential and privileged. It may also be for the sole purpose of compromise and settlement only if it contains an offer and may not be used in any judicial or quasi-judicial or administrative proceeding without the express written consent of the sender. 

Categories: CDO · CORRUPTION · Eviction · GTC | Honor · Investor · Mortgage · currency · foreclosure · politics · securities fraud
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