Must a homeowner receive notice of a foreclosure sale?

By doug | Published: November 29, 2010

An interesting case brewing in the Bankruptcy Court in Worcester, Massachusetts raises an issue that you would (erroneously) think had been decided long ago:

When a lender decides to hold a foreclosure sale, must the homeowner actually receive notice of the sale?

Here’s what happened in the Bailey case: the homeowner sued Wells Fargo in the bankruptcy court on a number of theories over what she thought was a screwed-up foreclosure process. Among her complaints was her accusation that she had never received papers telling her her house was going to be auctioned off.

Wells Fargo responded by producing papers showing that the sale notice had been sent both by certified and first – class mail. The certified letter had never been signed for.

According to the Debtor, several days after the foreclosure had been conducted, she found the notice of certified mail among the leaves near a little used back entrance to her house.

So is it good enough notice if the lender merely mails letters to the homeowner’s address, or must those letters actually be received and read before a foreclosure sale is valid?

Stand by for an answer from Massachusetts bankruptcy Judge Henry Boroff. This is one of the issues that will be decided when Ms. Bailey and Wells Fargo square off at a trial in the bankruptcy court.

I’ll keep you posted.

 

By Doug Beaton

Posted in Foreclosure | Comments closed

Rangers emerge from bankruptcy court to capture American League pennant

By doug | Published: October 27, 2010

Baseball’s World Series starts tonight, featuring the American League champion Texas Rangers against San Francisco.

We have been following the Rangers all summer, as they are the only North American sports franchise to emerge from bankruptcy protection recently.

And emerge they did, winning the West Division and eliminating the Yankees for the pennant.

It is not just a feel good story for Texas fans, but a good lesson in the advantage of having a well-run bankruptcy court system.

Even though the Rangers went on the auction block in August, and were purchased by a group led by ex-pitcher Nolan Ryan, shown above cradling the trophy, they still managed to have a successful season.

And the prior bankrupt owners even managed to pull off a trade for ace pitcher Cliff Lee in July; Lee was key in defeating the Yankees and will start game one tonight.

Contrast that with the English bankruptcy system. Tom Hicks, the Rangers owner who got into financial trouble, also owned a stake in the Liverpool soccer club in England. Liverpool recently had to be sold at fire-sale prices (to a group led by Red Sox owner John Henry, no less) because entering “administration,” the British bankruptcy equivalent, carries a three-game penalty in the standings.

Our more enlightened bankruptcy code, however, prohibits such discrimination against those who file. So good luck to the Rangers, and we will remember the assist they got from our bankruptcy laws!

 

By Doug Beaton

Posted in Just for fun | Comments closed

The Fed steps in to foreclosure / bankruptcy mess

By doug | Published: October 26, 2010

Complicating already roiled waters, the Federal Reserve yesterday got involved in the foreclosure fiasco, saying it will look into the accusations that mortgage lenders cut corners and used flawed documents to foreclose on homes.

The Associated Press reports that Federal Reserve chairman Ben Bernanke added weight to those efforts yesterday by saying the central bank would look “intensively’’ at policies and procedures that might have allowed banks to seize homes improperly.

The Fed, America’s central bank, usually involves itself with interest rate policy and currency issues. It is unusual for it to step into a situation that could involves substantial litigation in the nation’s bankruptcy courts.

The Fed does have the power to impose penalties on some of the nation’s largest banks. Still, most legal specialists expect an investigation by attorneys general in all 50 states to have a swifter and more lasting impact.

The foreclosure problem surfaced only at the end of September. Industry analysts say fears could keep home buyers on the sidelines for now.

 

By Doug Beaton

Posted in Bankruptcy News, Foreclosure | Comments closed

Tax refunds may not be so easy to get

By doug | Published: October 24, 2010

If you like to file your income taxes early and get your refund as soon as you can — via what’s called a refund anticipation loan, offered by many tax preparation services — you might not find it quite so easy to do come January.

That’s because the IRS has informed tax preparers that it will no longer signal them on whether the whole amount of your refund will be issued. In the past, the IRS had been sending a computer code to preparers to clue them in that there were no liens on the refund, clearing the way for the preparer to cut you a loan check.

But that won’t happen for the 2010 returns, says the IRS. They could seize refunds for unpaid back taxes, defaulted student loans, child support arrears, or any number of other reasons. And if the tax preparer isn’t 100% sure the refund is coming in as advertised, they ain’t cutting you a check.

This has already sparked a law suit between H & R Block and HSBC bank, which processed the refund loans for them. HSBC has announced they are quitting the refund loan business because of the IRS decision. H & R Block in turn has sued them for breach of contract, because a substantial portion of their income comes from issuing these loans.

What has this to do with bankruptcy, you might ask? Well, refunds are one of the most popular sources for low and middle income people to fund their bankruptcy case; they use the checks to pay lawyers and filing fees so they can start they new year on a new note. If refunds are harder to come by, it may delay a fresh start through bankruptcy for some needy people.

On the other hand, many use their refunds to catch up on bills, too. These folks could actually be pushed toward bankruptcy quicker if they find out there is going to be a long wait for that annual tax refund income boost.

 

By Doug Beaton

Posted in Taxes | Comments closed

Debtor has trouble keeping vacation property in Mass. bankruptcy case

By doug | Published: October 21, 2010

A bankruptcy case heard in Boston this past summer might make it more difficult for Massachusetts debtors to hold on to vacation property if they are filing a Chapter 13 bankruptcy case.

In the Turner case, bankruptcy judge William C. Hillman ruled that the married debtors couldn’t make $430 in monthly payments on thier hunting cabin in Maine, because their Chapter 13 plan didn’t pay anything to unsecured creditors, and a hunting cabin isn’t necessary for the financial rehabilitation of the debtors.

In other words, if the Turners want to get the benefits of a Chapter 13 case, they are going to have to let go of the vacation property.

Judge Hillman says this is so even considering the rather decrepit state of the cabin, which lacked amenities like running water and phone service.

The result might be different in a different case, however, where they debtor could show the vacation property was capable of being rented out for income, or where the debtors are able to propose a plan that pays a substantial dividend to unsecured creditors.

 

By Doug Beaton

Posted in Chapter 13 | Comments closed

Crystal Catherdral files for bankruptcy

By doug | Published: October 20, 2010

Hey, a bankruptcy lawyer would never be sad to hear about a new bankruptcy case, right?

Not so, at least for me, for today brought the news that the Crystal Cathedral, the Garden Grove, Calif. megachurch founded by Rev. Robert Schuller, has filed for reorganization under Chapter 11 of the bankruptcy code.

Rev. Schuller started his ministry at a drive-in movie theatre in the 1950’s, and built up a large congregation, an iconic glass-walled church building in Orange County (which filed for bankruptcy itself a few years back), and millions of viewers world-wide who watched the televised “Hour of Power” services.

As a leading proponent of the benefits of positive thinking, I have always been an admirer of Rev. Schuller and his enthusiasm, so I do feel sad to see his ministry in financial difficulty.

The basic problem is neither complicated nor scandalous; it simply seems that contributions are down at the same time need among the 10,000 parishioners is up. Simply put, the great recession has dealt the church a setback; lets hope the bankruptcy filing can buy enough time to see a Schuller comeback.

“Budgets could not be cut fast enough to keep up with the unprecedented rapid decline in revenue due to the recession,’’ Senior Pastor (and daughter of the founder) Sheila Schuller Coleman said in a statement.

Many other religious groups find themselves in a similar bind. US churches are struggling financially because high unemployment has cut weekly offerings, according to Wayne Bradshaw, president and chief operating officer of Broadway Federal Bank. The Los Angeles-based lender does about 25 percent of its lending business with churches.

 

By Doug Beaton

Posted in Bankruptcy News | Comments closed

Supreme Court to hear two bankruptcy cases

By doug | Published: October 20, 2010

It’s October, the time of year when the United States Supreme Court re-opens for business. The Court’s 2011 term will run through the end of June, and it is already known that two bankruptcy cases will be decided. More could be added to the docket as the term progresses.

Because bankruptcy is a federal law, the Supreme Court has the final sayon interpretations of the bankrutpcy code.

The first bankruptcy case, In re Ransom, has already been argued on October 5th, and it was actually the very first case ever heard by new Justice Elena Kagan.

The Ransom case concerns whether a Chapter 13 debtor can take a deduction on the Chapter 13 “means test” for a car, even when the auto loan has been paid off prior to bankruptcy.

The poor drafting of the bankruptcy amendments added in 2005 leads most lawyers and judges to think the answer is “yes,” although at oral argument Chief Justice John Roberts seemed to think that either answer inevitably leads to “absurd” results.

Justice Antonin Scalia, known for his precise reading of enacted laws, honed in on the exact language of the statute and asked where the law says that deductions can be taken in the “amount specified if applicable.”

If the Supreme Court agrees that debtors can take an auto loan expense deduction even if they own a vehicle free and clear, it will help Chapter 13 debtors by allowing potentially lower monthly payments to their Chapter 13 plans.

The second bankruptcy case accepted by the Supreme Court concerns jurisdiction of the bankruptcy courts, and has not been scheduled for arguments yet.

 

By Doug Beaton

Posted in Bankruptcy News, Chapter 13 | Comments closed

The life of a robo-signer

By doug | Published: October 20, 2010

I found this fascinating tidbit in an article by Alan Zibel on Bank of America’s continuing mortgage and foreclosure woes.

A deposition released by the Florida attorney general’s office revealed that the office manager at a Florida law firm under investigation for fabricating foreclosure documents signed 1,000 files a day without reviewing them. The manager also would allow paralegals to sign her name for her when she got tired, the deposition said.

Cheryl Salmons, office manager at the Law Offices of David Stern, would sign 500 files in the morning and another 500 files in the afternoon without reviewing them and with no witnesses, former assistant Kelly Scott said in a deposition released by the Florida attorney general’s office.

Can you imagine a workday that consisted of nothing but signing foreclosure affidavits? I am sure you can figure out how much personal knowledge Ms. Salmons had of the particulars of each file –most likely, none at all.

If I was facing foreclosure or bankruptcy today, I would think about giving a good once-over to ANY paper served on me during the foreclosure proceeding, asking “exactly what does the person who signed this know about my property or situation?

 

By Doug Beaton

Posted in Bankruptcy News, Foreclosure | Comments closed

A Perceptive take on the “foreclosure fiasco”

By doug | Published: October 17, 2010

Syndicated columnist Michelle Singletary has a theory on the root cause of what she terms a nationwide “forclosure fiasco” — that treating mortgages as the equivalent of trading cards led lenders astray from the fundamental values of home ownership.

Singeltary’s remedy? S-L-O-W D-O-W-N.

She says “Fair would be to slow down. Fair would be to hire even more people, as many as it takes, to spend a fair amount of time reviewing the cases of people in mortgage trouble. Fair would be carefully examining every single sheet of paper in foreclosure files.

There is no easy solution except to give up on mass production of both home mortgages and foreclosures.”

Of course the ultimate brake on the race to foreclosure is found in the bankruptcy code — an automatic stay that halts the foreclosure process in its tracks. Not every homeowner needs that type of emergency protection, but when you do need it, it’s nice to know that there is at least one set of laws that are fair to individual consumers.

 

By Doug Beaton

Posted in Foreclosure | Comments closed

Race Happy

By doug | Published: October 17, 2010

A nice profile of Hamilton – Wenham high school running coach Steven Sawyer by Boston Globe correspondent Doug Saffir shows how the coach stresses the importance of positive thinking instead of the won-lost record.

The result? His teams’ records are truly impressive; the girls team has won 68 Cape Ann league meets in a row over several years, and the boys are undefeated so far this season as well.

According to Saffir, Coach Sawyer’s credo is “I like to make sure my kids are happy and smiling. I tell them to enjoy life: Do well in school, take care of your parents, take care of your teammates, and just enjoy life,’’ said Stephen Sawyer, who has been in charge of the program for more than three decades. “I tell my kids to race happy, and they like that.’’ Sawyer has coached cross country at the high school for three decades.

“The kids have to be happy and feel good about themselves. Winning is important, but it’s not everything in life,’’ Sawyer said.

“Through this program, I hope to make some of these kids better human beings — and we’re doing a pretty good job of that right now.’’

Great advice that we all can heed, especially if we are facing the stress of financial difficulty or other personal problems!

Photo: Doug Saffir

 

By Doug Beaton

Posted in Just for fun | Comments closed
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