Loan Modification, bankruptcy, debt settlement

Three New Judges Added to CA Bankruptcy Court

January 26th, 2011 Posted in bankruptcy
Jan, 26 2011
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Fossil fuel>>Sign Of Our Time

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Three new judges, Wayne E. Johnson, Scott C. Clarkson, and Mark S. Wallace have been appointed to the U.S. Bankruptcy Court of the Central District of California. The Bankruptcy Court has five locations: Los Angeles, Santa Barbara, Riverside, Woodland Hills in the San Fernando Valley, and Santa Ana. Clarkson and Wallace will serve in Santa Ana while Johnson will be in Riverside.

The judges of the United States Court of Appeals for the Ninth Circuit are responsible for selecting and appointing the Central District of California’s bankruptcy judges. The Ninth Circuit has a panel that recommends bankruptcy judges to the full court when there are vacancies. Bankruptcy judges serve for 14-year renewable terms and handle all bankruptcy-related matters under the Bankruptcy Code.

Alex Kozinski, current Chief Judge of the Ninth Circuit Court, stated, “[w]e have been fortunate to find such knowledgeable and experienced bankruptcy attorneys to serve as judges of one of our busiest bankruptcy courts.”

Johnson has worked as a bankruptcy attorney for law firms in Los Angeles since 1994 and then as a sole practitioner since 2003. Clarkson has spent the last 20 years as the managing attorney of Clarkson, Gore & Marsella APLC. Wallace has been of counsel for the firm of Stutman, Treister & Glatt, P.C. since 1991.

This brings the total number of bankruptcy court judges for the Central District to 18.

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FHFA Moves To Fix Mortgage Program

January 19th, 2011 Posted in debt settlement, loan modification, mortgage software
Jan, 19 2011
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The Fix
Creative Commons License photo credit: Teosaurio

The Federal Housing Finance Agency (FHFA) is the regulator and conservator for Fannie Mae and Freddie Mac. Since Fannie and Freddie hold or guarantee approximately three-fourths of all home loans in the US, any action taken by FHFA to help prevent foreclosures will have a major impact on the home loan industry. Read the rest of this entry »

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US Bankruptcy Filings Up 9% in 2010

January 4th, 2011 Posted in bankruptcy
Jan, 04 2011
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According to the American Bankruptcy Institute, consumer bankruptcies in the US increased 9% in 2010 from the previous year. That’s over 1.5 million bankruptcies filed. This includes Chapters 7, 11, 12 and 13 filings.

The 9% is the nationwide average. In some areas of the country, filings were down, but in others—particularly the southwest—they were up substantially. For example, bankruptcies were up 25% in California and close to 24% in Arizona.

ABI Executive Director Samuel J. Gerdano said, “The steady climb of consumer filings, notwithstanding the 2005 bankruptcy law restrictions, demonstrate (sic) that families continue to turn to bankruptcy as a result of high debt burdens and stagnant income growth. We expect that consumer filings will continue to rise in 2011.”

But there are opposing views. Quoted in a Wall Street Journal article, Robert Lawless, A University of Illinois law professor stated, “Over the course of the year, I think bankruptcies will be going down. The reason for that is borrowing’s down…there’s less of a reason for people to take the legal step of filing for bankruptcy.”

Unfortunately, borrowing is not the only reason people file for bankruptcy. Even though the economy is showing weak signs of recovery, unemployment is still very high and home foreclosures show little sign of decreasing yet.

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Some States Forcing Foreclosure Mediation

January 3rd, 2011 Posted in bankruptcy, loan modification, loss mitigation
Jan, 03 2011
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A recent article in the Wall Street Journal pointed out that while the total number of states that have a foreclosure mediation program has increased to 21 (it was only 10 a year ago), there are now also a few of these how that have mandatory mediation. This article was based on information supplied in a report from the Center for American Progress.

The original report from CAP has a great table showing these 21 states with information about their programs. The 21 states are:

  • California*
  • Connecticut*
  • Delaware
  • Florida*
  • Hawaii
  • Illinois
  • Indiana
  • Kentucky
  • Maryland
  • Maine
  • Michigan
  • Nevada
  • New Jersey
  • New Hampshire
  • New Mexico
  • New York*
  • Ohio
  • Oregon
  • Pennsylvania*
  • Rhode Island*
  • Wisconsin

The states with an asterisk have mandatory programs, all the rest are voluntary where the homeowner has to request to opt-in to the program.

The article points out that the percentage of successful mediations leading to reduced payments and preventing foreclosure is much lower in those states that have a voluntary process than the six that are mandatory. In New Jersey, which is voluntary, 20% of borrowers who entered foreclosure opted for mediation (but of those, 65% successfully received a loan modification). In Connecticut, which is now mandatory, 70% of those entering foreclosure went through the mediation program (with 60% successfully receiving a loan mod).

One has to wonder that with the 60-65% success rates (or better possibly), why are more borrowers not opting for the mediation process in those states that are voluntary. Apparently, either homeowners don’t know about the availability of the mediation or they choose to not bother, perhaps believing it won’t work or they don’t qualify.

While some argue that mandatory mediation should be a federal program so that it could be offered in all states, the failure of the HAMP program (as discussed in our last post) would seem to indicate that keeping this at the state level will be much more effective.

What do you think?

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