Click here to listen to the Legal Hour on KDWN AM720 from August 24nd, 2011. Managing Partner, Tisha Black Chernine, Esq., discusses commercial leasing, the motivations of banks to foreclose, assets protected from creditors, exposure of co-signers on mortgage loans and statutory defective foreclosures.
Please tune in to AM720 KDWN’s “Legal Hour,” everyday, from 9 AM to 10 AM. Listen live on the radio or online. Feel free to call in with your comments or questions at 702-257-5396.
With the recent election results and the increase in Republican politicians promising to abolish Fannie Mae and Freddie Mac, the topic of what will replace these government sponsored entities is being discussed now more than ever. Fannie and Freddie have been in a state of uncertainty since the government seizure but a recent Wall Street Journal article appropriately asked what would replace them.
Fannie and Freddie played key roles in the prevalence of 30-year fixed rate mortgages by purchasing these loans from banks who liked to have them off their books. Fannie and Freddie guaranteed the loans the loans they purchased and sold them to investors as securities. According to a recent report by Standard & Poor’s, however, the cost to rescue Fannie and Freddie could reach $280 billion. The cash necessary to keep Fannie and Freddie active does not compare to the projected $400 billion in capitalization that would be required for any entities replacing these two failing entities.
Mortgage investors, industry groups, and academics are currently putting their support behind government insurance for mortgages. Treasury Secretary Geithner supports a limited, but explicit, guarantee. Conversely, Representative Jeb Hensarling (R., Texas), disagrees stating that he did not see the reason for continued government guarantees and the use of 30-year fixed mortgages. Furthermore, Hensarling pointed out that other countries have succeeded in producing high-homeownership rates without government guarantees. Many other Republicans call for complete privatization of the housing-finance industry.
Joshua D. Carlson, Esq.
A joint investigation by every state and the District of Columbia could force mortgage companies to settle allegations that they used flawed documents to foreclose on hundreds of thousands of homeowners. To read the full article please click this link.
At the end of August, Lender Processing Services (LPS) reported that mortgages on 4,947,000 properties nationwide were at least 30 days past due but NOT in foreclosure. Of those, 2,374,000 were 90 or more days delinquent. The good news is that the delinquency rate of loans that are 30 days or more past due have declined one percent since last month and 5.1 percent since this time last year.
Even with the high number of delinquencies, the number of bank-owned properties has fallen steadily over the past year. There are several possible reasons for the lack of bank-owned properties even with the near record-high delinquency rates. First, a portion of the delinquent loans ends up being permanently modified. Second, banks are approving short sales with greater regularity even though the short sale process is still filled with frustration and confusion. Lastly, when foreclosures do occur, more investors are buying properties at foreclosure sales preventing these properties from ending up as REO.
Currently, Fannie Mae and Freddie Mac make up a large majority of foreclosure listings. Fannie and Freddie have already taken back nearly as many homes in the first half of the year as they did all of last year. As of June 2010, they owned more than 191,000 homes which is nearly double the total from 2009.
Joshua D. Carlson, Esq.
The phrase “Delinquent Mortgage,” once a foreign concept for many Americans, has now become part of our everyday vernacular. When nearly 4 million homeowners are currently 60 or more days behind on their mortgages, it is actually no surprise that citizens nationwide are buzzing about the housing crisis. That crisis is worse here in Las Vegas than it is in many other areas of the country and Las Vegas citizens are certainly feeling the economic pinch.
More than 60 percent of homeowners nationwide who have seriously delinquent loans are still not involved in any form of loss mitigation with their lenders, probably due to the frustration with the processes available. In fact, a recent performance report indicates that nearly half of the property owners approved for trial loan modifications have fallen out of the program. By the end of July 2010, approximately 616,839 out of the total of 1,307,489 HAMP three-month trial plans have been cancelled since the program began. This tremendous dropout rate may be due to the lengthy process of obtaining a permanent modification. For instance, as a result of the backlog, only 36,695 HAMP restructurings were converted to permanent status during the month of July.
For those who are already involved in loan modifications or short sales, the process may soon become even more difficult and time consuming as Fannie Mae and Freddie Mac have become more aggressive in forcing originating lenders to buy back bad loans. A report by Fitch Ratings illustrates that, in a worst-case scenario, the buybacks may result in a combined loss of between $17 billion and $42 billion for the nation’s four largest banks – Bank of America, JPMorgan Chase, Wells Fargo, and Citi. Considering these numbers, it is safe to assume that the process will become even more tedious.
Despite homeowners’ understandable frustrations with the short sale and loan modification processes, these avenues may preserve some homeowners’ rights down the road. For example, if a lender tries to pursue a deficiency judgment following a foreclosure, the homeowner has the ability to demonstrate efforts to work with the lender to mitigate losses. It is hopeful that the courts will not turn a blind eye to these whole-hearted attempts. As such, underwater homeowners should become informed, seek assistance from a legitimate source, and do their best to stay patient.
Kelle L. Kuebler, Attorney*
*Licensed only in New York and Connecticut
When facing the decision whether or not to file for bankruptcy you want to make sure you have an experienced attorney who will handle your case the way you want. The following is a list of key issues you need to address and ask about when you are searching for a bankruptcy attorney:
Have you asked around?
The number one rule in choosing a lawyer is to ask others who have filed bankruptcy how their attorney treated them. Some attorneys run a “mill” practice that focus on getting as many people in and out of their office doors as possible. These attorneys charge typically charge lower fees but also give the least amount of service. By asking friends and family, you can avoid falling into a “mill”. Find an experienced attorney who will take the time to sit down and answer your questions. Remember, no matter how much an attorney may be well-regarded, unless he or she is experienced in BANKRUPTCY law issues you don’t need them.
Does the attorney have the right experience?
Any attorney you consider using for your bankruptcy must have BANKRUPTCY experience. You don’t want to be some newbie lawyer’s guinea pig. By “newbie” I just don’t mean a new lawyer but also a new bankruptcy lawyer. As I mentioned before, no matter how much an attorney may be well-regarded, unless he or she is experienced in BANKRUPTCY law issues you don’t need them.
Are there communication issues?
Does the attorney explain the bankruptcy process in a way you can understand? Blogging and online publishing is more important now than ever before since professionals share information and educate the public about issues that concern them. Bankruptcy lawyers who maintain their own blogs prove they are knowledgeable enough to help others understand this field of law.
Who will be handling your case?
You must ask which lawyer will be handling your file. The attorney you interview may not necessarily be the one who will handle your bankruptcy issue. Make sure to ask who WILL be doing the day-to-day work on your file. In some firms, a paralegal might be handling the majority of your case so you should make sure you know this as well.
How much will it cost?
You have enough money trouble without worrying about what the fees will be for your bankruptcy. Ask the lawyer for the most detailed estimate he can give as to how much your case will cost.
Don’t make a fee-based decision.
The cheapest lawyer is not always the best lawyer. Hopefully, bankruptcy is a once-in-a-lifetime event. As such, you want to make sure you are getting a bankruptcy attorney who can do the best job for YOU. You want an attorney who will take the time to answer your questions, concerns, and any other fears you may have. An attorney who has his paralegal or assistant returning his phone calls might not be paying attention to your case. Always remember that you hired the attorney to work for you. Don’t settle for anyone else but THAT lawyer to do the work.
The months and days leading up to a bankruptcy filing can make or break your financial future, and possibly stop you from being able to file for bankruptcy. The following six (6) mistakes must be avoided if you are thinking of filing bankruptcy:
Retirement Accounts
Borrowing against or cashing in your retirement accounts to try to solve your debt problem is usually not a good idea. In Nevada, debtors are allowed to keep up to $500,000 per individual during a bankruptcy. By cashing out these accounts you run the risk that these funds will be treated as a non-exempt asset. As such, these funds will not be protected in bankruptcy and you might be forced to turnover these funds to the Trustee. Therefore, before removing any funds from a retirement account, you should speak with a bankruptcy attorney. An attorney can help you determine if, in your circumstances, these funds may be used to avoid bankruptcy or if moving them would be a costly mistake.
Home Equity
Much like your retirement accounts, raiding the equity in your home to service your debts can be a costly mistake. Nevada allows debtors to retain $550,000 in equity in their home when they file a bankruptcy. Borrowing this equity can make it more difficult to stay in your home if you eventually need to file a bankruptcy. Speak with an attorney to determine if the equity in your house is sufficient to avoid bankruptcy or if it should remain in your home.
Incurring Additional Debt
Do not go into additional debt if you are seriously considering bankruptcy as an option. Racking up additional debt when you know you cannot repay and have no intention of ever repaying the debt is considered fraudulent. If you find yourself considering payday loans or high interest title loans to buy groceries, pay the energy bill, or put gas in your car, it is probably time to speak with a bankruptcy attorney about your options.
Ignoring Your Problems
When debts begin to pile up, there is a temptation to bury your head in the sand and hope the problem goes away. Waiting to deal with your problems can cause you irreversible financial harm. In addition, you are not helping yourself by dodging people trying to serve you with papers. Creditors only need to attempt to serve you. The only thing you have accomplished by not receiving service is that you will not know what court proceedings have been filed against you.
Paying Back Relatives or Business Partners
Do not repay a relative, friend, or business partner before filing bankruptcy. The bankruptcy court can make your relative or business partner repay to your bankruptcy estate anything you have paid them for up to a year. If you have any question on whether or not to pay a creditor, contact a bankruptcy lawyer.
Trying to Beat the System
Do not transfer any assets out of your name prior to filing bankruptcy without consulting an attorney. Unless the transfer is in the ordinary course of business and for fair market value, you run the risk of the transfer being found fraudulent. Do not keep any information from your attorney. Federal bankruptcy crimes are committed by people trying to keep the court from knowing about debts, assets, or transfers and can result in a loss of a discharge and, in some case, fines and prison time.
Randy M. Creighton, Esq.
The instant bankruptcy is filed, for either Chapter 7 or Chapter 13, a protective umbrella called the automatic stay is triggered which protects the debtor and the debtor’s property against the continuance of any action by any creditor. For example, the automatic stay would protect and STOP a pending foreclosure. Additionally, when filing a Chapter 13 bankruptcy, that injunction extends to anyone else who is obligated to repay your debts.
However, the automatic stay is not absolute in that a creditor may restart collection proceedings by asking the court for permission.
Further, there are limits on how long the automatic stay lasts. For example:
What The Automatic Stay Covers
As long as the automatic stay remains in place, the following actions are prohibited:
In other words, the automatic stay is a central and very powerful tool a debtor can take advantage of once the bankruptcy is filed. The goal of any bankruptcy proceeding is to give the debtor a fresh start. The automatic stay allows for the debtor to be protected from all creditor claims while he gets his finances back in order.
What The Automatic Stay Does Not Cover
Unfortunately, not all actions and debts are covered by the automatic stay. The automatic stay does not stop:
If you are thinking of filing for bankruptcy it is always best to talk with an experienced attorney to discuss your individual case. The beauty of bankruptcy is that a debtor has many options to help resolve individual problems. Only an experienced bankruptcy lawyer can help guide you through this difficult and confusing process.
Randy M. Creighton, Esq.
The goal of any bankruptcy proceeding is to obtain a discharge of debts. A discharge releases the debtor from personal liability from most debts and prevents creditors from taking any collection action against you. Nonetheless, there are many exceptions to receiving a discharge in a bankruptcy proceeding. Therefore, debtors should consult competent legal counsel before filing to discuss the scope of the discharge. Not to worry, over 99% of all debtors who file for bankruptcy receive a discharge. An order of discharge is usually granted very early in the case, within 60-90 days after the date first set for the meeting of creditors.
Randy M. Creighton, Esq.
Beginning September 7th, the Federal Housing Authority (FHA) will offer FHA-insured mortgages to qualifying borrowers who have a non-FHA mortgage. To be eligible, the borrower must owe more on the mortgage than the home is worth, be current on the mortgage, occupy the property as a primary residence, qualify for the new loan under standard FHA underwriting requirements, and have a credit score of at least 500. Similar to the under-performing Home Affordable Refinance Program (HARP), the FHA program will have limited affect on the current housing situation because so many borrowers are behind in their payments and lenders are reluctant to write off a portion of the principal.
Lenders are hesitant to write-off mortgage principals because then they would have to pay the investors for the amount of debt forgiven and it might establish a precedent that loan contracts can be changed due to market fluctuations. HUD recommends that borrowers contact their lenders to inquire about eligibility and whether the lenders will write down a portion of the mortgage.
Joshua D. Carlson, Esq.
As Nevada continues to lead the country in per capita bankruptcy filings, many Las Vegans are concerned they might be fired or face other retaliation by their employers if they file bankruptcy.
Nevada, like most states, considers employees “at will” which means that employees can be fired for any reason or even no reason as long as it is not done in violation of certain public policy protections such as race or gender. However, bankruptcy code specifically states that employees may not be fired simply because they filed for bankruptcy. The Bankruptcy Code, at 11 U.S.C. sec. 525(b), states that “No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt.” Employees terminated unlawfully based on filing for bankruptcy may receive back pay including fringe benefits and reinstatement, and may also recover damages for emotional distress.
However, it is highly unlikely that employers or anyone else will ever know who files for bankruptcy unless the employee discloses that information. The only parties that will know are creditors and any co-debtors (co-signers). No one stands outside the court house to read off the names of those who filed for bankruptcy that day and the names of people who have filed for bankruptcy are not published in local newspapers or community newsletters.
In summary, employers will only know if an employee files for bankruptcy protection if that employee tells them. Furthermore, if an employer does somehow learn of the filing and attempts to retaliate against the employee because of the bankruptcy, the employee can turn to the protections provided by the bankruptcy code.
Randy M. Creighton, Esq.
Black & LoBello is an AV® Preeminent rated, locally owned, full service law firm in Las Vegas, Nevada.
tel. 702-869-8801
fax 702-869-2669
10777 West Twain Avenue, 3rd Floor
Las Vegas, NV 89135
For a map of our location, click here
|
Tisha Black Chernine awarded for Mountain States Rising Stars 2011 Michele T. LoBello awarded for Nevada Super Lawyers 2007 |
|
Black & LoBello is an AV® Preeminent rated, locally owned, full service law firm in Las Vegas, Nevada. |
Blog Roll
Events Page
Email Alerts
Facebook
Twitter
RSS Feed
