2010 December |

Consumer Bankruptcy Filings Drop in November

December 30th, 2010 Posted in bankruptcy, debt settlement

Dec, 30 2010

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In The Bankruptcy Lawyers Blog posting about consumer bankruptcy filings dropping in November, Kevin Craig reported on a new survey by the American Bankruptcy Institute (ABI). In their press release and as discussed by Kevin, ABI reported the good news that consumer bankruptcies were down more than 10% from October – a big change.

ABI felt this is an indication that consumer debt may finally be coming under some control. Or, as ABI Executive Director Samuel Gerdano put it, “The drop in consumer filings from October is perhaps a positive step that the deleveraging of the U.S. consumer may be underway, after years of expanding consumer debt”.

While encouraging, I’m afraid it may be way to early to start calling this a trend or even an indicator. We are talking about only one month here, after all. If December, January, February all have low numbers, then we could call it a good indication. One thing not noted in Craig’s article is that while November’s numbers are 10% less than October, they reflect a 2.2% increase over November of the previous year and that’s not a good trend.

Time will tell.

Congressional Oversight Panel Says HAMP Failing to Meet Goals

December 15th, 2010 Posted in loan modification, loss mitigation

Dec, 15 2010

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The Congressional Oversight Panel (COP) yesterday, December 14, released its latest report “A Review of Treasury’s Foreclosure Prevention Programs.” The panel cited several flaws in Treasury’s management of the program. The major flaw, of course, is that unless there is a major change in how things are managed, only about 700,000 foreclosures will be prevented. This is much less than the original 3-4 million foreclosures the program was initially supposed to stop and only a fraction of the total 8-13 million expected by 2012.

The Panel also noted that because Treasury’s authority to restructure HAMP has ended, it is very unlikely that there will be any significant improvement to these results in the future.

In addition to this major failing, the COP also listed the following problems:

Treasury failed to collect and analyze data that would explain HAMP’s shortcomings (though repeatedly urged to do so by the COP)
There is no system or process developed to collect data for many of HAMP’s add-on programs
Treasury has refused to specify meaningful goals for measuring HAMP’s progress
The initial goal of preventing 3-4 million foreclosures has been repeatedly redefined and watered down
Treasury has failed to hold loan servicers accountable when they have repeatedly lost borrower paperwork or refused to perform loan modifications
Treasury outsourced HAMP oversight to Fannie Mae and Freddie Mac setting up a conflict of interest situation

Additionally, HAMP will use only about $4 billion of the $30 billion authorized. Because Treasury failed to acknowledge that it could not reach the expected 3-4 million foreclosure preventions before authority to restructure expired, the remaining $26 billion will not be used. This could have been reallocated to more effective programs.

There is still some good that HAMP can provide. The COP recommended that Treasury enable borrowers to apply for loan modifications more easily; for example, by allowing online applications. With only one year left (HAMP expires on Dec. 31, 2010), Treasury needs to do all it can to help people avoid foreclosures.

Foreclosures are a complex process. It is always best to get competent legal advice and assistance. Captaloans can help both the legal firm and the borrower communicate and manage the process better.

Bankruptcy for States – An Interesting Proposition

December 7th, 2010 Posted in mortgage software

Dec, 07 2010

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On his blog Less than the Least, David Skeel talks briefly about the possibility of states (e.g. California and Illinois) needing to file for bankruptcy to avoid, among other things, the need for the federal government to spend billions of dollars, similar to the highly disliked TARP bailout of the financial industry.

The blog post is actually just a pointer to his excellent magazine article in The Weekly Standard where he argues for the addition to bankruptcy law (he recommends making it Chapter 8) procedures for state bankruptcy similar to those now incorporated for municipalities, cities, and similar entities (Vallejo and Orange County being two examples in CA).

He makes excellent, logical arguments as to how this could be accomplished while maintaining state sovereignty and remaining within the bounds of the Constitution.

Additionally he points out that unless some sort of miracle occurs, sooner or later a state (most likely California, though it could be another) will get so inextricably far into debt that it cannot possibly recover and will need a massive handout (bailout) or suffer an total crash. Allowing bankruptcy would prevent this.

So would the state’s attorney general manage the bankruptcy or would it make more sense to have some sort of outside agency/legal firm do so? Most likely the state would have to represent itself. For one thing, initiating a contract is a lengthy and detailed process that can take a very long time. The need to resolve things quickly would not allow this.

But that’s a minor point. Getting these laws initiated will be the big step. I wonder if anyone from CA will take the first steps?

October HAMP Report Shows Numbers Improved But Still Disappointing

December 2nd, 2010 Posted in mortgage software

Dec, 02 2010

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The Making Home Affordable Program (HAMP) October performance report has some good numbers but show that the program is still short of its original aspirations.

As noted in the SIGTARP report to the Treasury Secretary, the initial aspiration of 3-4 million homeowners helped is still far from being realized. The initial goal was only concerned with trial modifications instead of how many people would keep their homes through permanent mods.

The numbers are disappointing still. As of October there were 1,393,543 trials started and only 519,648 permanent modifications started. Truly a very small number compared to the total number of foreclosures and homeowners with delinquent payments in the country.

One interesting note, one of the main reasons listed for trial cancellations and for trials not being accepted is insufficient documentation. While this may primarily be the borrowers fault, as noted in the SIGTARP report, poor communication between the servicer and borrower may also be a factor. Captaloans is designed to improve communication and document processing and can therefore provide significant help in this area.

View the full report here: http://financialstability.gov/docs/Oct%202010%20MHA%20Public%20Final.pdf