Home owners file class action against Wachovia over option ARMs
2/19/2009 12:54 PM
By Kelly Holleran
A class action lawsuit has been filed against three financial corporations, including banking giant Wachovia, alleging Illinois homebuyers were forced into negative amortization after the banks deceived them when they issued option adjustable rate mortgages.
Lead class plaintiffs Michael and Jayme Brunkhorst claim the lenders and brokers that sold them an option ARM mortgage on Aug. 18, 2005, touted the minimum payment and downplayed or failed to disclose the negative amortization that could result from making such payments, according to the suit filed Feb. 17 in U.S. District Court.
In option ARM mortgages, borrowers can choose to make mortgage payments one of four ways - to make a minimum payment amount, an interest-only payment, a payment based on a 30-year amortization or a payment based on a 15-year amortization.
The Brunkhorsts chose to pay the minimum monthly payment, believing it would pay both principal and interest due on the loan.
Up to 80 percent of borrowers, like the Brunkhorsts, make only the minimum payment each month, the suit claims. However, the minimum payment does not pay off any of the principal balance and only pays a portion of the interest that accrues on a monthly basis.
The unpaid interest is added to the balance of the mortgage, resulting in negative amortization.
Once that negative balance reaches 125 percent of the original loan, the mortgage is reset and the homeowners are forced to pay a much higher monthly payment than what they had been previously making.
As a result, borrowers are also forced to pay a greater interest rate on the original principal than what was originally set forth in the loan, according to the complaint.
"Option ARM loans have been called 'the riskiest and most complicated home loan product ever created' and have been termed a 'neutron bomb' that will kill all the people but leave the houses standing' by an economist at the Ford Foundation," the suit states.
However, when the Brunkhorsts entered into the pick-a-payment loans, they were not informed of the various risks, including negative amortization and the fact that the minimum payment did not represent the full cost of the loan, they claim.
"Defendants, through the standardized loan contracts they created and supplied to Plaintiffs, stated that negative amortization was only a mere possibility," the suit states. "Defendants also failed to inform the Plaintiffs and the Class Members that when the principal balance increased to a certain level they could no longer select the minimum payment option."
Lenders frequently try to push the ARM loans on borrowers because the loans are profitable to companies, the Brunkhorsts claim.
"Under generally accepted accounting principles the entire interest payment due could be booked as income even when only the minimum payment was made," the suit states. "This accounting practice enabled lendors to use Option ARM loans as a means to generate phantom profits, thereby boosting their stock price."
Because the Brunkhorsts and other class plaintiffs decided to use the Option ARM loans, they are forced to incur additional interest charges that have resulted from negative amortization, they claim.
In addition, they faced an increased chance of losing their homes through foreclosure and have limited ability to make future house payments or obtain alternative home loan financing, according to the complaint.
The Brunkhorsts and the putative class are seeking unspecified declaratory relief, compensatory damages, rescission, restitutionary disgorgement of all profits the banks obtained, plus costs, interest, attorneys' fees and other relief the court deems just.
They are also asking the court grant equitable relief to restructure their loans through rate buy downs, principal reduction and conversion into conventional fixed rate loans.
They are represented by Evan D. Buxner of The Buxner Law Firm in St. Louis. Daniel O. Myers, A Hoyt Rowell, III, Robert S. Wood and Catherine H. McElveen of Richardson Patrick, Westbrook and Brickman in Mt. Pleasant, S.C., will serve of counsel.
U.S. District Court case number: 09-129-GPM
Monday, February 23, 2009
APRILS HITS THE BIG APPLE
Traveling Foreclosure Defense Seminar Featuring Florida Legal Aid Attorney To Make "Broadway Debut" Next Month
The New York Post recently ran a story on Florida foreclosure defense attorney April Charney from Jacksonville Area Legal Aid, who is traveling the country spreading the word on a well publicized strategy(1) for hammering lenders and servicers in foreclosure actions.
[C]harney has held seminars in Ohio, Oregon, South Carolina and throughout Florida to educate lawyers on how to implement the courtroom defense. [...] She is scheduled to [...] hold her first New York seminar next month.
For the story, see THE LOAN RANGER (Lawyer Outwits Banks In Foreclosure Battles).
Go here for a diagram of the complicated, convoluted mortgage securitization process that is now making it difficult for foreclosing entities to prove they actually own the promissory notes.
(1) According to the story, she asserts that the loan servicers bringing most of the foreclosure actions in the country don't own the mortgages and have no standing to take away a person's home. The strategy has spread virally around the country and now thousands of foreclosure lawsuits are sitting idly - in legal limbo. "I have one case from 2004 where the bank has not returned to court and where my client now has deposited more money into a trust account than the house is worth," Charney noted. The legal issue is that banks turn the mortgages into bonds, which are put into trusts, like collateralized debt obligations, or CDOs. The bank "sells" the CDOs the right to collect the revenue stream but, according to Charney, not the right of ownership of the loan/promissory note itself. ThetaMissingDocsMtg
The New York Post recently ran a story on Florida foreclosure defense attorney April Charney from Jacksonville Area Legal Aid, who is traveling the country spreading the word on a well publicized strategy(1) for hammering lenders and servicers in foreclosure actions.
[C]harney has held seminars in Ohio, Oregon, South Carolina and throughout Florida to educate lawyers on how to implement the courtroom defense. [...] She is scheduled to [...] hold her first New York seminar next month.
For the story, see THE LOAN RANGER (Lawyer Outwits Banks In Foreclosure Battles).
Go here for a diagram of the complicated, convoluted mortgage securitization process that is now making it difficult for foreclosing entities to prove they actually own the promissory notes.
(1) According to the story, she asserts that the loan servicers bringing most of the foreclosure actions in the country don't own the mortgages and have no standing to take away a person's home. The strategy has spread virally around the country and now thousands of foreclosure lawsuits are sitting idly - in legal limbo. "I have one case from 2004 where the bank has not returned to court and where my client now has deposited more money into a trust account than the house is worth," Charney noted. The legal issue is that banks turn the mortgages into bonds, which are put into trusts, like collateralized debt obligations, or CDOs. The bank "sells" the CDOs the right to collect the revenue stream but, according to Charney, not the right of ownership of the loan/promissory note itself. ThetaMissingDocsMtg
Wednesday, February 18, 2009
FDICIA =HELP
Could little-known banking law fix this mess?
A former director of the Atlanta Fed’s research department says troubled banks should be taken over under a law that dates back to the S&L crisis
By Ronald Fink
February 16, 2009 12:01 AM ET
(Bloomberg) While the Treasury busily fills in the gaps in its latest plan to save the banking industry, a former Federal Reserve official says that regulators should instead apply a law enacted in the wake of the savings and loan meltdown.
The law, the Federal Deposit Insurance Corporation Improvement Act, was signed into law in 1991. In an interview with Financial Week, Bob Eisenbeis, a former research director of the Federal Reserve Bank of Atlanta, said the FDICIA contains more than enough tools for regulators to help stem the current financial crisis.
If regulators had applied FDICIA’s provisions once the solvency of major banks was first called into question, Mr. Eisenbeis said, many would already have been taken over by Uncle Sam.
That would mean that their good assets would have been separated from their bad and sold off to healthy institutions or other investors.
This, he claims, would have gone a long way toward solving the credit crisis.
The most obvious candidate for such a takeover is Citigroup, which is considered by many analysts to be insolvent because its liabilities are worth vastly more than its assets.
Christopher Whalen, principal in the financial consulting firm Institutional Risk Analytics, estimated on Friday that Citi needs roughly $200 billion in additional capital, and that this would become apparent after the bank reports further losses in the first quarter of this year.
“When the Q1 numbers for the financials come out, the children’s hour in DC will end,” Mr. Whalen wrote in a note posted on the blog, The Big Picture. “The markets will react and Washington will finally be forced to have an adult conversation with the global community as to how much we haircut the bondholders.”
Mr. Eisenbeis insists that such a haircut should already have been provided, as FDICIA stipulates that the federal banking agencies “facilitate early resolution of troubled insured depository institutions whenever feasible if early resolution would have the least possible long-term cost to the deposit insurance fund.”
Instead, said Mr. Eisenbeis, the Treasury’s new Financial Stability Plan further delays such resolution.
A spokesman for the Treasury Department did not respond to a request for comment.
The Treasury’s Financial Stability Plan does call for all banks with at least $100 billion in assets to undergo a stress test to determine whether they have enough capital. The New York Times on Thursday reported that regulators have begun applying those tests, and are assuming a worse-case scenario to evaluate whether the banks’ common equity was equal to less that 3% of their assets.
If the equity does not meet that minimum threshold, the banks would have to raise more capital from investors. Barring that, they could take convertible preferred shares from the Treasury under the Capital Assistance Program of the FSP.
That program has onerous limits on recipients’ dividends, stock buybacks, acquisitions and executive compensation, however, which has led some observers to liken the program to a plan for gradual nationalization of troubled banks.
But Mr. Eisenbeis, for one, is skeptical that the Treasury’s stress test will lead to that, since the plan also provides for up to $1 trillion in financing from the Federal Reserve to help take bad assets off of banks’ balance sheets through a so-called “public/private partnership.” Essentially, the partnership is an investment fund that would warehouse the bad assets until they can be sold off to investors.
In theory, the offloading might remove enough assets from a banks’ balance sheet that it would qualify as sound under the Treasury’s stress test.
Without government help, Mr. Eisenbeis doubts many of the banks in question could meet any of FDICIA’s capital adequacy tests. “I don’t think they could pass even a modest shock,” he said.
Indeed, he said the Treasury’s approach suggests regulators have forgotten that the earlier law is in place, since the capital injections the department has provided since the Troubled Asset Relief Program was authorized by Congress last October reflect what Mr. Eisenbeis calls “regulatory forbearance.” Rather than apply FDICIA’s numerous capital adequacy tests, he said, regulators seem intent “to throw it out and start over.”
While that may buy the banks time in hopes that they won’t need further capital injections, Mr. Eisenbeis is skeptical. He said both the stress test and the plan to relieve banks of their toxic assets would only mask their losses—that is, if the banks aren’t required to value the assets on a mark-to-market basis.
Bank executives insist that they shouldn’t have to do that, because the banks intend to hold the assets until maturity rather than trade them. And some analysts suggest that skeptics such as Messrs Eisenbeis and Whalen are overstating the industry’s problems.
After the Times report, analyst Richard Bove of Ladenburg Thalmann issued a research note saying that all of the 18 banks subject to the Treasury’s stress test would have common equity of at least 3% of assets (based on values reported as of last Dec. 31). But Mr. Eisenbeis insists such a view flies in the face of FDICIA’s capital adequacy requirements.
“The flaw is that it’s all based on book value,” he said. Indeed, he contends that the failure of regulators to force banks to write down their losses based on actual market conditions—and then deal with the consequences—has merely delayed the solution to the financial crisis.
Mr. Eisenbeis isn’t alone. In a research note put out late last week, analysts at research firm, Friedman, Billings, Ramsey & Co. said the Treasury’s plan “does not adequately address the toxic assets on bank balance sheets,” since private investors in the proposed investment fund “will want to buy assets at distressed prices and the banks will only sell assets at above-market prices.”
The analysts, Paul Miller, Bob Ramsey and Annett Franke, echoed Mr. Eisenbeis’ preference for the government to take over troubled banks and restructure them.
“We would prefer to see the government take bold steps now, either putting the much-needed capital into financials or providing a closed-bank solution, in which the government briefly takes over the weakest financials (regardless of size), strips out the bad assets, and sells the good back to public markets.”
Nationalization? FDICIA stipulates that when the government bails out troubled institutions “preexisting owners and debt-holders of any troubled institution or its holding company should make substantial concessions,” and that “directors and senior management should not include individuals substantially responsible for the troubled institution’s problems.”
Until such an approach is taken, Mr. Eisenbeis fears regulatory policy will just go in circles, and that insolvent banks will keep getting taxpayer support but won’t return to health.
He noted that Mr. Geithner’s proposed new investment fund isn’t much different from the Master Liquidity Enhancement Conduit that his predecessor, Henry Paulson, proposed back in the fall of 2007. At the time, Citi’s problems with assets taken off its balance sheet through so-called Structured Investment Vehicles were first coming to light. Mr. Paulson’s Super SIV was abandoned within a few weeks of its debut because it failed to attract enough investors.
“We’re back to Paulson’s Super SIV reincarnated—with no specifics.”
Write to Ronald Fink at rfink@financialweek.com. Or write to the editors at fw_editor@financialweek.com.
A former director of the Atlanta Fed’s research department says troubled banks should be taken over under a law that dates back to the S&L crisis
By Ronald Fink
February 16, 2009 12:01 AM ET
(Bloomberg) While the Treasury busily fills in the gaps in its latest plan to save the banking industry, a former Federal Reserve official says that regulators should instead apply a law enacted in the wake of the savings and loan meltdown.
The law, the Federal Deposit Insurance Corporation Improvement Act, was signed into law in 1991. In an interview with Financial Week, Bob Eisenbeis, a former research director of the Federal Reserve Bank of Atlanta, said the FDICIA contains more than enough tools for regulators to help stem the current financial crisis.
If regulators had applied FDICIA’s provisions once the solvency of major banks was first called into question, Mr. Eisenbeis said, many would already have been taken over by Uncle Sam.
That would mean that their good assets would have been separated from their bad and sold off to healthy institutions or other investors.
This, he claims, would have gone a long way toward solving the credit crisis.
The most obvious candidate for such a takeover is Citigroup, which is considered by many analysts to be insolvent because its liabilities are worth vastly more than its assets.
Christopher Whalen, principal in the financial consulting firm Institutional Risk Analytics, estimated on Friday that Citi needs roughly $200 billion in additional capital, and that this would become apparent after the bank reports further losses in the first quarter of this year.
“When the Q1 numbers for the financials come out, the children’s hour in DC will end,” Mr. Whalen wrote in a note posted on the blog, The Big Picture. “The markets will react and Washington will finally be forced to have an adult conversation with the global community as to how much we haircut the bondholders.”
Mr. Eisenbeis insists that such a haircut should already have been provided, as FDICIA stipulates that the federal banking agencies “facilitate early resolution of troubled insured depository institutions whenever feasible if early resolution would have the least possible long-term cost to the deposit insurance fund.”
Instead, said Mr. Eisenbeis, the Treasury’s new Financial Stability Plan further delays such resolution.
A spokesman for the Treasury Department did not respond to a request for comment.
The Treasury’s Financial Stability Plan does call for all banks with at least $100 billion in assets to undergo a stress test to determine whether they have enough capital. The New York Times on Thursday reported that regulators have begun applying those tests, and are assuming a worse-case scenario to evaluate whether the banks’ common equity was equal to less that 3% of their assets.
If the equity does not meet that minimum threshold, the banks would have to raise more capital from investors. Barring that, they could take convertible preferred shares from the Treasury under the Capital Assistance Program of the FSP.
That program has onerous limits on recipients’ dividends, stock buybacks, acquisitions and executive compensation, however, which has led some observers to liken the program to a plan for gradual nationalization of troubled banks.
But Mr. Eisenbeis, for one, is skeptical that the Treasury’s stress test will lead to that, since the plan also provides for up to $1 trillion in financing from the Federal Reserve to help take bad assets off of banks’ balance sheets through a so-called “public/private partnership.” Essentially, the partnership is an investment fund that would warehouse the bad assets until they can be sold off to investors.
In theory, the offloading might remove enough assets from a banks’ balance sheet that it would qualify as sound under the Treasury’s stress test.
Without government help, Mr. Eisenbeis doubts many of the banks in question could meet any of FDICIA’s capital adequacy tests. “I don’t think they could pass even a modest shock,” he said.
Indeed, he said the Treasury’s approach suggests regulators have forgotten that the earlier law is in place, since the capital injections the department has provided since the Troubled Asset Relief Program was authorized by Congress last October reflect what Mr. Eisenbeis calls “regulatory forbearance.” Rather than apply FDICIA’s numerous capital adequacy tests, he said, regulators seem intent “to throw it out and start over.”
While that may buy the banks time in hopes that they won’t need further capital injections, Mr. Eisenbeis is skeptical. He said both the stress test and the plan to relieve banks of their toxic assets would only mask their losses—that is, if the banks aren’t required to value the assets on a mark-to-market basis.
Bank executives insist that they shouldn’t have to do that, because the banks intend to hold the assets until maturity rather than trade them. And some analysts suggest that skeptics such as Messrs Eisenbeis and Whalen are overstating the industry’s problems.
After the Times report, analyst Richard Bove of Ladenburg Thalmann issued a research note saying that all of the 18 banks subject to the Treasury’s stress test would have common equity of at least 3% of assets (based on values reported as of last Dec. 31). But Mr. Eisenbeis insists such a view flies in the face of FDICIA’s capital adequacy requirements.
“The flaw is that it’s all based on book value,” he said. Indeed, he contends that the failure of regulators to force banks to write down their losses based on actual market conditions—and then deal with the consequences—has merely delayed the solution to the financial crisis.
Mr. Eisenbeis isn’t alone. In a research note put out late last week, analysts at research firm, Friedman, Billings, Ramsey & Co. said the Treasury’s plan “does not adequately address the toxic assets on bank balance sheets,” since private investors in the proposed investment fund “will want to buy assets at distressed prices and the banks will only sell assets at above-market prices.”
The analysts, Paul Miller, Bob Ramsey and Annett Franke, echoed Mr. Eisenbeis’ preference for the government to take over troubled banks and restructure them.
“We would prefer to see the government take bold steps now, either putting the much-needed capital into financials or providing a closed-bank solution, in which the government briefly takes over the weakest financials (regardless of size), strips out the bad assets, and sells the good back to public markets.”
Nationalization? FDICIA stipulates that when the government bails out troubled institutions “preexisting owners and debt-holders of any troubled institution or its holding company should make substantial concessions,” and that “directors and senior management should not include individuals substantially responsible for the troubled institution’s problems.”
Until such an approach is taken, Mr. Eisenbeis fears regulatory policy will just go in circles, and that insolvent banks will keep getting taxpayer support but won’t return to health.
He noted that Mr. Geithner’s proposed new investment fund isn’t much different from the Master Liquidity Enhancement Conduit that his predecessor, Henry Paulson, proposed back in the fall of 2007. At the time, Citi’s problems with assets taken off its balance sheet through so-called Structured Investment Vehicles were first coming to light. Mr. Paulson’s Super SIV was abandoned within a few weeks of its debut because it failed to attract enough investors.
“We’re back to Paulson’s Super SIV reincarnated—with no specifics.”
Write to Ronald Fink at rfink@financialweek.com. Or write to the editors at fw_editor@financialweek.com.
GOT THE NOTE?
Homeowners’ rallying cry: Produce the note
ZEPHYRHILLS, Fla. – Feb.18, 2009 – Kathy Lovelace lost her job and was about to lose her house, too. But then she made a seemingly simple request of the bank: Show me the original mortgage paperwork.
And just like that, the foreclosure proceedings came to a standstill.
Lovelace and other homeowners around the country are managing to stave off foreclosure by employing a strategy that goes to the heart of the whole nationwide mess.
During the real estate frenzy of the past decade, mortgages were sold and resold, bundled into securities and peddled to investors. In many cases, the original note signed by the homeowner was lost, stored away in a distant warehouse or destroyed.
Persuading a judge to compel production of hard-to-find or nonexistent documents can, at the very least, delay foreclosure, buying the homeowner some time and turning up the pressure on the lender to renegotiate the mortgage.
“I’m going to hang on for dear life until they can prove to me it belongs to them,” said Lovelace, a 50-year-old divorced mother who owns a $200,000 home in Zephyrhills, near Tampa. “I’ll try everything I can because it’s all I have left.”
In interviews with The Associated Press, lawyers, homeowners and advocates outlined the produce-the-note strategy. Exactly how many homeowners have employed it is unknown. Nor is it clear how successful it has been; some judges are more sympathetic than others.
More than 2.3 million homeowners faced foreclosure proceedings last year and millions more are in danger of losing their homes. On Wednesday, President Obama will unveil a plan to spend at least $50 billion to help homeowners fend off foreclosure.
Chris Hoyer, a Tampa lawyer whose Consumer Warning Network Web site offers the free court documents Lovelace used to file her request, has played a major role in promoting the produce-the-note strategy.
“We knew early on that the only relief that would ever come to people would be to the people who were in their houses,” Hoyer said. “Nobody was going to fashion any relief for people who have already lost their houses. So your only hope was to hang on any way you could.”
Tom Deutsch, deputy executive director of the American Securitization Forum, a group that represents banks, law firms and investors, dismissed the strategy as merely a stalling tactic, saying homeowners are “making lawyers jump through procedural hoops to delay what’s likely to be inevitable.”
Deutsch said the original note is almost always electronically retained and can eventually be found.
Judges are often willing to accept electronic documentation. And lenders are sometimes allowed to produce other paperwork to establish they are the holder of a loan. Still, assembling such documents to a judge’s satisfaction takes time, which to homeowners is the point.
Lovelace filed her produce-the-note demand last fall after the bank acknowledged that her original mortgage document had been lost or destroyed. Since then, there has been no activity on the foreclosure - no letters from the lender, no court filings.
The law firm handling the foreclosure for the lender refused to comment.
A University of Iowa study last year suggested that companies servicing mortgages are often negligent when it comes to producing the documentation to support foreclosure. In the study of more than 1,700 bankruptcy cases stemming from home foreclosures, the original note was missing more than 40 percent of the time, and other pieces of required documentation also were routinely left out.
The first big success of the produce-the-note movement came in 2007 when a federal judge in Cleveland threw out 14 foreclosures by Deutsche Bank National Trust Co. because the bank failed to produce the original notes.
Michael Silver, a lawyer for two of the families in that case, said at least one eventually lost their home. Still, he considers that a success.
“From the perspective of the person who’s in the home, you may have kept them in the house another 10 or 12 months,” he said. “If I can get a result with economic benefits to a client, then I think I won.”
Democratic Rep. Marcy Kaptur of Ohio endorsed the strategy in a fiery speech on the House floor during debate on the federal bank bailout last month.
“Don’t leave your home,” she said. “Because you know what? When those companies say they have your mortgage, unless you have a lawyer that can put his or her finger on that mortgage, you don’t have that mortgage, and you are going to find they can’t find the paper up there on Wall Street.”
April Charney, head of foreclosure defense for Jacksonville Area Legal Aid in Florida, said the strategy has been so successful for her that she now travels around the country to train other lawyers in how to use it. She said she has gotten cases delayed for years by demanding that lenders produce paperwork they cannot find.
“This is an army of lawyers getting out there to stop foreclosures so we can get to the serious business of creating solutions,” Charney said. “Nothing good is going to happen as long as we continue to bleed homeowners.”
ZEPHYRHILLS, Fla. – Feb.18, 2009 – Kathy Lovelace lost her job and was about to lose her house, too. But then she made a seemingly simple request of the bank: Show me the original mortgage paperwork.
And just like that, the foreclosure proceedings came to a standstill.
Lovelace and other homeowners around the country are managing to stave off foreclosure by employing a strategy that goes to the heart of the whole nationwide mess.
During the real estate frenzy of the past decade, mortgages were sold and resold, bundled into securities and peddled to investors. In many cases, the original note signed by the homeowner was lost, stored away in a distant warehouse or destroyed.
Persuading a judge to compel production of hard-to-find or nonexistent documents can, at the very least, delay foreclosure, buying the homeowner some time and turning up the pressure on the lender to renegotiate the mortgage.
“I’m going to hang on for dear life until they can prove to me it belongs to them,” said Lovelace, a 50-year-old divorced mother who owns a $200,000 home in Zephyrhills, near Tampa. “I’ll try everything I can because it’s all I have left.”
In interviews with The Associated Press, lawyers, homeowners and advocates outlined the produce-the-note strategy. Exactly how many homeowners have employed it is unknown. Nor is it clear how successful it has been; some judges are more sympathetic than others.
More than 2.3 million homeowners faced foreclosure proceedings last year and millions more are in danger of losing their homes. On Wednesday, President Obama will unveil a plan to spend at least $50 billion to help homeowners fend off foreclosure.
Chris Hoyer, a Tampa lawyer whose Consumer Warning Network Web site offers the free court documents Lovelace used to file her request, has played a major role in promoting the produce-the-note strategy.
“We knew early on that the only relief that would ever come to people would be to the people who were in their houses,” Hoyer said. “Nobody was going to fashion any relief for people who have already lost their houses. So your only hope was to hang on any way you could.”
Tom Deutsch, deputy executive director of the American Securitization Forum, a group that represents banks, law firms and investors, dismissed the strategy as merely a stalling tactic, saying homeowners are “making lawyers jump through procedural hoops to delay what’s likely to be inevitable.”
Deutsch said the original note is almost always electronically retained and can eventually be found.
Judges are often willing to accept electronic documentation. And lenders are sometimes allowed to produce other paperwork to establish they are the holder of a loan. Still, assembling such documents to a judge’s satisfaction takes time, which to homeowners is the point.
Lovelace filed her produce-the-note demand last fall after the bank acknowledged that her original mortgage document had been lost or destroyed. Since then, there has been no activity on the foreclosure - no letters from the lender, no court filings.
The law firm handling the foreclosure for the lender refused to comment.
A University of Iowa study last year suggested that companies servicing mortgages are often negligent when it comes to producing the documentation to support foreclosure. In the study of more than 1,700 bankruptcy cases stemming from home foreclosures, the original note was missing more than 40 percent of the time, and other pieces of required documentation also were routinely left out.
The first big success of the produce-the-note movement came in 2007 when a federal judge in Cleveland threw out 14 foreclosures by Deutsche Bank National Trust Co. because the bank failed to produce the original notes.
Michael Silver, a lawyer for two of the families in that case, said at least one eventually lost their home. Still, he considers that a success.
“From the perspective of the person who’s in the home, you may have kept them in the house another 10 or 12 months,” he said. “If I can get a result with economic benefits to a client, then I think I won.”
Democratic Rep. Marcy Kaptur of Ohio endorsed the strategy in a fiery speech on the House floor during debate on the federal bank bailout last month.
“Don’t leave your home,” she said. “Because you know what? When those companies say they have your mortgage, unless you have a lawyer that can put his or her finger on that mortgage, you don’t have that mortgage, and you are going to find they can’t find the paper up there on Wall Street.”
April Charney, head of foreclosure defense for Jacksonville Area Legal Aid in Florida, said the strategy has been so successful for her that she now travels around the country to train other lawyers in how to use it. She said she has gotten cases delayed for years by demanding that lenders produce paperwork they cannot find.
“This is an army of lawyers getting out there to stop foreclosures so we can get to the serious business of creating solutions,” Charney said. “Nothing good is going to happen as long as we continue to bleed homeowners.”
Trumps lucky numbers .....11
Trump Resorts Latest Hotel Firm to Fall Victim to Economy
Feb 18, 2009
By: Tonie Auer, Southwest Correspondent
As high-end resorts continue to feel the crunch of the staggering economy, the latest firm going down in the bankruptcy rolls is Trump Entertainment Resorts Inc. along with subsidiaries Trump Entertainment Resorts Holdings L.P. and Trump Entertainment Resorts Funding Inc.
Those entities filed voluntary petitions for relief under Chapter 11 in United States Bankruptcy Court for the District of New Jersey in Camden. Donald and Ivanka Trump resigned as members of the board of directors of the company on Feb. 13. He was chairman of the board and a member of the board’s executive committee. She was a member of the board’s corporate governance and nominating committee.
In the SEC filing, the Chapter 11 case listed a default or otherwise triggered repayment obligations under the registrants’ $1.25 billion 8.5 percent senior secured notes due 2015 and $493 million senior secured term loan agreement.” The company requested court approval to continue to pay its vendors in the normal course of business. Additionally, the company is not seeking debtor-in-possession financing as it currently has adequate cash resources to fund its ongoing business operations
“We are focused on our goal of successfully restructuring our company to reduce our debt in order to strengthen our balance sheet during this difficult economic period. This filing will result in no immediate change in our daily operations, and we expect to make no changes regarding our operating structure or philosophy,” stated the company's CEO, Mark Juliano, in a prepared statement.
According to third quarter results, Trump Entertainment suffered a $102.2 million loss from operations for the three months ended Sept. 30. The sale of Trump Marina to Coastal Development L.L.C. remains on track for a definitive purchase price of $270 million with a targeted transaction completion date of May 28.
Trump Entertainment Resorts Inc. owns, through its interest in holdings, and operates three casino resort properties: Trump Taj Mahal Casino Resort (pictured) and Trump Plaza Hotel and Casino, located on the Boardwalk in Atlantic City, N.J., and Trump Marina Hotel Casino, located in Atlantic City's Marina District. Trump is a shareholder of the company and is not involved in its daily operations. The company is separate and distinct from Trump's privately held real estate and other holdings, which the company understands encompasses substantially all of his net worth. Trump Entertainment Resort Holdings also went into Chapter 11 in 2004, from which it emerged a year later with Trump having relinquished the position of CEO.
And Trump Entertainment isn’t the only resort hitting the skids. In November, The Yellowstone Club in Billings, Mont., one of the most exclusive resorts in the U.S., filed for Chapter 11 bankruptcy protection. The Associated Press reported that Yellowstone owes an estimated $343 million to creditors. The latest news accounts rumor a sell to an affiliate of CrossHarbor Capital Partners, under a deal outlined in bankruptcy court documents. The Yellowstone Club for the ultrarich had only been partially developed when it fell more than $400 million in debt last year. The nearly 14,000-acre club near Yellowstone National Park has 340 members.
Elsewhere, Daufuskie Island Properties L.L.C.--which operates The Daufuskie Island Resort & Breathe Spa--filed for Chapter 11 bankruptcy protection recently at the United States Bankruptcy Court for the District of South Carolina. The Hilton Head company listed $97.1 million in assets and $88.2 million in liabilities on its schedules includes two golf courses, tennis courts, several restaurants, the Melrose Inn and an equestrian center.
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Trump Resorts Latest Hotel Firm to Fall Victim to Economy
Feb. 18, 2009
As high-end resorts continue to feel the crunch of the staggering economy, the latest firm going down in the bankruptcy rolls is Trump Entertainment Resorts Inc. along with subsidiaries Trump Entertainment Resorts Holdings L.P. and Trump Entertainment Resorts Funding Inc.
Extended Stay’s Long-Haul Potential
Feb. 17, 2009
At the Americas Lodging Investment Summit held in San Diego in late January, Hilton Hotels Corp. announced Home2 Suites by Hilton, a midscale extended-stay brand. Bill Duncan, global head of brand management for Hilton’s Homewood Suites and Home2 Suites, talked with hospitality editor about the brands.
Hawaiian Resort Gets Funding, Other Projects Not So Lucky
Feb. 13, 2009
Maui Land & Pineapple Co. scored big recently when it secured a new loan agreement through the United States Bankruptcy Court to fund the complete construction of its joint venture project, The Ritz-Carlton Club and Residences at Kapalua Bay, after its main investor filed bankruptcy. But other resort projects haven’t been as lucky.
Despite Challenging Times, Firms See Opportunities for Growth
Feb. 06, 2009
While the recession continues to advance, some real estate companies are finding opportunities to do business. Most recently, HEI Hotels & Resorts, identifying some softening in hotel prices, has thrown its hat into the ring, with plans to shell out billion of dollars this year on acquisitions and developments.
Rudolph and Sletten Completes Construction of Red Hawk Casino Ahead of Schedule
Feb. 04, 2009
Rudolph and Sletten Inc. completed construction on California's Indian gaming casino, Red Hawk Casinon located in Placerville. Red Hawk Casino is a 278,000-square-foot full-service gaming facility with an 88,000-square-foot gaming floor, 2,000 slot machines, 75 gaming tables, six restaurants and four bars.
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Feb 18, 2009
By: Tonie Auer, Southwest Correspondent
As high-end resorts continue to feel the crunch of the staggering economy, the latest firm going down in the bankruptcy rolls is Trump Entertainment Resorts Inc. along with subsidiaries Trump Entertainment Resorts Holdings L.P. and Trump Entertainment Resorts Funding Inc.
Those entities filed voluntary petitions for relief under Chapter 11 in United States Bankruptcy Court for the District of New Jersey in Camden. Donald and Ivanka Trump resigned as members of the board of directors of the company on Feb. 13. He was chairman of the board and a member of the board’s executive committee. She was a member of the board’s corporate governance and nominating committee.
In the SEC filing, the Chapter 11 case listed a default or otherwise triggered repayment obligations under the registrants’ $1.25 billion 8.5 percent senior secured notes due 2015 and $493 million senior secured term loan agreement.” The company requested court approval to continue to pay its vendors in the normal course of business. Additionally, the company is not seeking debtor-in-possession financing as it currently has adequate cash resources to fund its ongoing business operations
“We are focused on our goal of successfully restructuring our company to reduce our debt in order to strengthen our balance sheet during this difficult economic period. This filing will result in no immediate change in our daily operations, and we expect to make no changes regarding our operating structure or philosophy,” stated the company's CEO, Mark Juliano, in a prepared statement.
According to third quarter results, Trump Entertainment suffered a $102.2 million loss from operations for the three months ended Sept. 30. The sale of Trump Marina to Coastal Development L.L.C. remains on track for a definitive purchase price of $270 million with a targeted transaction completion date of May 28.
Trump Entertainment Resorts Inc. owns, through its interest in holdings, and operates three casino resort properties: Trump Taj Mahal Casino Resort (pictured) and Trump Plaza Hotel and Casino, located on the Boardwalk in Atlantic City, N.J., and Trump Marina Hotel Casino, located in Atlantic City's Marina District. Trump is a shareholder of the company and is not involved in its daily operations. The company is separate and distinct from Trump's privately held real estate and other holdings, which the company understands encompasses substantially all of his net worth. Trump Entertainment Resort Holdings also went into Chapter 11 in 2004, from which it emerged a year later with Trump having relinquished the position of CEO.
And Trump Entertainment isn’t the only resort hitting the skids. In November, The Yellowstone Club in Billings, Mont., one of the most exclusive resorts in the U.S., filed for Chapter 11 bankruptcy protection. The Associated Press reported that Yellowstone owes an estimated $343 million to creditors. The latest news accounts rumor a sell to an affiliate of CrossHarbor Capital Partners, under a deal outlined in bankruptcy court documents. The Yellowstone Club for the ultrarich had only been partially developed when it fell more than $400 million in debt last year. The nearly 14,000-acre club near Yellowstone National Park has 340 members.
Elsewhere, Daufuskie Island Properties L.L.C.--which operates The Daufuskie Island Resort & Breathe Spa--filed for Chapter 11 bankruptcy protection recently at the United States Bankruptcy Court for the District of South Carolina. The Hilton Head company listed $97.1 million in assets and $88.2 million in liabilities on its schedules includes two golf courses, tennis courts, several restaurants, the Melrose Inn and an equestrian center.
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Recent Hospitality Headlines
Trump Resorts Latest Hotel Firm to Fall Victim to Economy
Feb. 18, 2009
As high-end resorts continue to feel the crunch of the staggering economy, the latest firm going down in the bankruptcy rolls is Trump Entertainment Resorts Inc. along with subsidiaries Trump Entertainment Resorts Holdings L.P. and Trump Entertainment Resorts Funding Inc.
Extended Stay’s Long-Haul Potential
Feb. 17, 2009
At the Americas Lodging Investment Summit held in San Diego in late January, Hilton Hotels Corp. announced Home2 Suites by Hilton, a midscale extended-stay brand. Bill Duncan, global head of brand management for Hilton’s Homewood Suites and Home2 Suites, talked with hospitality editor about the brands.
Hawaiian Resort Gets Funding, Other Projects Not So Lucky
Feb. 13, 2009
Maui Land & Pineapple Co. scored big recently when it secured a new loan agreement through the United States Bankruptcy Court to fund the complete construction of its joint venture project, The Ritz-Carlton Club and Residences at Kapalua Bay, after its main investor filed bankruptcy. But other resort projects haven’t been as lucky.
Despite Challenging Times, Firms See Opportunities for Growth
Feb. 06, 2009
While the recession continues to advance, some real estate companies are finding opportunities to do business. Most recently, HEI Hotels & Resorts, identifying some softening in hotel prices, has thrown its hat into the ring, with plans to shell out billion of dollars this year on acquisitions and developments.
Rudolph and Sletten Completes Construction of Red Hawk Casino Ahead of Schedule
Feb. 04, 2009
Rudolph and Sletten Inc. completed construction on California's Indian gaming casino, Red Hawk Casinon located in Placerville. Red Hawk Casino is a 278,000-square-foot full-service gaming facility with an 88,000-square-foot gaming floor, 2,000 slot machines, 75 gaming tables, six restaurants and four bars.
Select Coverage By City: Atlanta Boston Chicago Dallas Denver Detroit Houston Los Angeles Miami New Jersey New York Orange County Orlando Philadelphia Phoenix San Diego San Francisco Seattle/Portland Washington DC
Click here for more CPN conferences
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Sunday, February 15, 2009
GOOD CREDIT VS.FORECLOSURE????
A foreclosure can be reported on your credit report for 7 years and should be avoided at all costs. A foreclosure can be devastating to your credit scores. If you have a foreclosure on your record, credit repair should be one of the very first things you look into. A foreclosure can be deleted from your credit report just like any other negative account, but you must know what you are dealing with or you could actually make matters worse.
If you would like to remove a foreclosure from your credit report, you will first want to learn about your rights in the Fair Credit Reporting Act and all other laws having to do with foreclosures and credit reporting. The better you understand your rights, the easier it will be to have your foreclosure removed from your credit report.
Most people would claim that they don’t have the time or resources to commit to learning about the laws and their rights, but it’s very important to know your civil and consumer rights. If you don’t have the time you may want to seek legal help and/or consult with a credit repair company.
Credit repair professionals specialize in removing foreclosures and other negative items from your credit reports. They focus on correcting inaccurate and erroneous information on your credit report. If a negative item on your credit report is disputed and can not be verified by the creditor or contains any kind of inaccurate information it must be legally corrected and/or removed from your report immediately.
If you would like to remove a foreclosure from your credit report, you will first want to learn about your rights in the Fair Credit Reporting Act and all other laws having to do with foreclosures and credit reporting. The better you understand your rights, the easier it will be to have your foreclosure removed from your credit report.
Most people would claim that they don’t have the time or resources to commit to learning about the laws and their rights, but it’s very important to know your civil and consumer rights. If you don’t have the time you may want to seek legal help and/or consult with a credit repair company.
Credit repair professionals specialize in removing foreclosures and other negative items from your credit reports. They focus on correcting inaccurate and erroneous information on your credit report. If a negative item on your credit report is disputed and can not be verified by the creditor or contains any kind of inaccurate information it must be legally corrected and/or removed from your report immediately.
Thursday, February 12, 2009
HELP MICHAEL MOORE !
Wednesday, February 11th, 2009
Will You Help Me With My Next Film? ...a request from Michael Moore
Friends,
I am in the middle of shooting my next movie and I am looking for a few brave people who work on Wall Street or in the financial industry to come forward and share with me what they know. Based on those who have already contacted me, I believe there are a number of you who know "the real deal" about the abuses that have been happening. You have information that the American people need to hear. I am humbly asking you for a moment of courage, to be a hero and help me expose the biggest swindle in American history.
All correspondence with me will be kept confidential. Your identity will be protected and you will decide to what extent you wish to participate in telling the greatest crime story ever told.
The important thing here is for you to step up as an American and do your duty of shedding some light on this financial collapse. A few good people have already come forward, which leads me to believe there are many more of you out there who know what's going on. Here's your chance to let your fellow citizens in on the truth.
If you have any info that would help, please contact me at my private email address: bailout@michaelmoore.com.
For the rest of you on my email list who don't work in the financial industry, you're probably wondering, "What the heck is this all about? I thought he said he was making a romantic comedy!"
Well, I just can't say much right now. I'm sure you can understand why. One thing I can tell you is that you're gonna like this movie when I'm done with it. Oh, yeah...
So, again, if you work for a bank, a brokerage firm or an insurance company -- or if you have seen things or heard things that you believe the American people have a right to know -- please contact me at bailout@michaelmoore.com.
Thank you in advance for your help!
Yours,
Michael Moore
bailout@michaelmoore.com
MichaelMoore.com
Will You Help Me With My Next Film? ...a request from Michael Moore
Friends,
I am in the middle of shooting my next movie and I am looking for a few brave people who work on Wall Street or in the financial industry to come forward and share with me what they know. Based on those who have already contacted me, I believe there are a number of you who know "the real deal" about the abuses that have been happening. You have information that the American people need to hear. I am humbly asking you for a moment of courage, to be a hero and help me expose the biggest swindle in American history.
All correspondence with me will be kept confidential. Your identity will be protected and you will decide to what extent you wish to participate in telling the greatest crime story ever told.
The important thing here is for you to step up as an American and do your duty of shedding some light on this financial collapse. A few good people have already come forward, which leads me to believe there are many more of you out there who know what's going on. Here's your chance to let your fellow citizens in on the truth.
If you have any info that would help, please contact me at my private email address: bailout@michaelmoore.com.
For the rest of you on my email list who don't work in the financial industry, you're probably wondering, "What the heck is this all about? I thought he said he was making a romantic comedy!"
Well, I just can't say much right now. I'm sure you can understand why. One thing I can tell you is that you're gonna like this movie when I'm done with it. Oh, yeah...
So, again, if you work for a bank, a brokerage firm or an insurance company -- or if you have seen things or heard things that you believe the American people have a right to know -- please contact me at bailout@michaelmoore.com.
Thank you in advance for your help!
Yours,
Michael Moore
bailout@michaelmoore.com
MichaelMoore.com
MORTGAGE BANKERS ...WE WANT YOUR HOME
Mortgage Bankers Want Your Home, Not Your Money
Posted: 11 Feb 2009 08:29 PM CST
Congress is considering changes to the Bankruptcy Code that would allow the same judicial modification of home mortgages that is currently allowed for vacation homes, business property, and other assets. Letting families keep their homes by reducing principal and interest to market value would let tens of thousands of homeowners resume making their mortgage payments, halt many of the 46,000 foreclosures that are taking place each week, and stop the glut of foreclosed homes on the market that are continually ratcheting housing prices downward.
But surprise, surprise, the Mortgage Bankers Association opposes these changes. Why? Let’s look at the facts.
They first say that including these changes are “a polarizing issue” that threatens to bring down a crucial measure this country needs in order to avoid a serious economic downturn. Seems that this wasn’t “polarizing” until the MBA started arguing that it was. I guess that if the country is in favor of letting people save their homes, and the MBA wants to foreclose on them, in “bankspeak” that constitutes polarization.
They next argue that, “the lending community remains united against this idea.” Not true. Citibank, the country’s largest bank, supports it.
Next is the wonderful sentence: “It is our position that if this proposal were to become law, mortgage rates would increase in cost by 150 basis points.” Note that the MBA doesn’t say, “studies show,” or “data demonstrates” or even “the fact is” that this increase will occur. Only, “It is our position” that this would happen.
From now on, it is “My Position” that I can eat all I want without gaining a pound. By making it “my position,” I don’t need to offer any proof. And there isn’t any.
Although judicial modification is available to every other type of secured loan it doesn’t result in increases in loan rates, higher down payments or higher costs at closing. In fact, judicial modification of residential loans is already available in Chapter 12 bankruptcy, which is available to family farmers. Has its availability resulted in an increase in loan or borrowing costs? No! And has the epidemic of foreclosures resulted in lower interest rates, lower downpayments or lower closing costs? No!
It must be nice to put out these press releases without having to provide any justification. Sort of reminds me of the things the mortgage bankers did that got us into this mess in the first place.
Posted: 11 Feb 2009 08:29 PM CST
Congress is considering changes to the Bankruptcy Code that would allow the same judicial modification of home mortgages that is currently allowed for vacation homes, business property, and other assets. Letting families keep their homes by reducing principal and interest to market value would let tens of thousands of homeowners resume making their mortgage payments, halt many of the 46,000 foreclosures that are taking place each week, and stop the glut of foreclosed homes on the market that are continually ratcheting housing prices downward.
But surprise, surprise, the Mortgage Bankers Association opposes these changes. Why? Let’s look at the facts.
They first say that including these changes are “a polarizing issue” that threatens to bring down a crucial measure this country needs in order to avoid a serious economic downturn. Seems that this wasn’t “polarizing” until the MBA started arguing that it was. I guess that if the country is in favor of letting people save their homes, and the MBA wants to foreclose on them, in “bankspeak” that constitutes polarization.
They next argue that, “the lending community remains united against this idea.” Not true. Citibank, the country’s largest bank, supports it.
Next is the wonderful sentence: “It is our position that if this proposal were to become law, mortgage rates would increase in cost by 150 basis points.” Note that the MBA doesn’t say, “studies show,” or “data demonstrates” or even “the fact is” that this increase will occur. Only, “It is our position” that this would happen.
From now on, it is “My Position” that I can eat all I want without gaining a pound. By making it “my position,” I don’t need to offer any proof. And there isn’t any.
Although judicial modification is available to every other type of secured loan it doesn’t result in increases in loan rates, higher down payments or higher costs at closing. In fact, judicial modification of residential loans is already available in Chapter 12 bankruptcy, which is available to family farmers. Has its availability resulted in an increase in loan or borrowing costs? No! And has the epidemic of foreclosures resulted in lower interest rates, lower downpayments or lower closing costs? No!
It must be nice to put out these press releases without having to provide any justification. Sort of reminds me of the things the mortgage bankers did that got us into this mess in the first place.
Saturday, February 7, 2009
Is there more to life than STUFF ?
According to the government- stimulus means spending and spending means consumers will go out and purchase more stuff and then....were cured.
Wow let me get this right : buying more useless stuff is the answer to the problem-OK, what is in their koolaid? Or do we just drink it without question. and PS I think this is what got us here!
REMEMBER DUCT TAPE? Now what happened there, what a bunch of idiots-but try and find duct tape at Home Depot then.
You see the beautiful couple shopping,driving luxury cars and casually strolling off the private jet and the voice says" remember when we are all trying to keep up ...some of us woke up "
We are CONSUMER SLAVES owned by our masters. Masters called Visa,American Express,Walmart,Exon,Bank of America :( ,Mastercard,Target and more than we can list in one place . Abe Lincoln freed the slaves so lets get the new Prez to free the consumer slaves!
Here are the fist parts of the new consumerism proclamation.
1. All people shall be charged the same interest rate the banks get from the federal reserve
2. We eliminate all the banks-who needs them if we have the Federal Reserves Bank?
3. Everyone regardless of race,creed,sex,national org in,sexual preference or CREDIT SCORE can qualify for loans.
4. TRW,EQUIFAX AND TRANSUNION are shut down.
5.All companies or service providers who discriminate against anyone for credit is fined and charged as a criminal.
The vexing words of severe,dire,unprecedented have been used to describe the economy . To throw money at a broken system is a waste! To truly CHANGE a broken system will take something more than just a word...it takes courage !
Where is our "courage to change"?
I say lets just do what we love,find our passions and quit the job that we just DO ! Lets become inspired . How about being real,true and authentic.
Wow let me get this right : buying more useless stuff is the answer to the problem-OK, what is in their koolaid? Or do we just drink it without question. and PS I think this is what got us here!
REMEMBER DUCT TAPE? Now what happened there, what a bunch of idiots-but try and find duct tape at Home Depot then.
You see the beautiful couple shopping,driving luxury cars and casually strolling off the private jet and the voice says" remember when we are all trying to keep up ...some of us woke up "
We are CONSUMER SLAVES owned by our masters. Masters called Visa,American Express,Walmart,Exon,Bank of America :( ,Mastercard,Target and more than we can list in one place . Abe Lincoln freed the slaves so lets get the new Prez to free the consumer slaves!
Here are the fist parts of the new consumerism proclamation.
1. All people shall be charged the same interest rate the banks get from the federal reserve
2. We eliminate all the banks-who needs them if we have the Federal Reserves Bank?
3. Everyone regardless of race,creed,sex,national org in,sexual preference or CREDIT SCORE can qualify for loans.
4. TRW,EQUIFAX AND TRANSUNION are shut down.
5.All companies or service providers who discriminate against anyone for credit is fined and charged as a criminal.
The vexing words of severe,dire,unprecedented have been used to describe the economy . To throw money at a broken system is a waste! To truly CHANGE a broken system will take something more than just a word...it takes courage !
Where is our "courage to change"?
I say lets just do what we love,find our passions and quit the job that we just DO ! Lets become inspired . How about being real,true and authentic.
Friday, February 6, 2009
BAILOUT RAP !
Reader Gregg Somerville, a stockbroker, sent me a link to his "rapumentary" ripping Hank Paulson. It may be a few months behind the curve at this point, but it remains hilarious. The line about Richard Fuld being the only guy who ever lost calling Paulson's bluff is a classic.
I mean, we have to laugh at this stuff, right? It's either that or launch into a 'roid rage and rip the hearts out of every jerk in our nation's capital.
Peace. Out.
APRIL CHARNEY FOR COMMERCE SECTY ???
Obama needs April Charney to lead the fight against foreclosures
Current ArticleSubscribeObama needs April Charney to lead the fight against foreclosures
By Chip Parker, Jacksonville Consumer Attorney on Dec 31, 2008 in Foreclosure News
Politicians are a lot like major league baseball managers, in that the same people tend to be recycled in the MLB and Washington, D.C. Obama’s administration contains mostly familiar names within the famed “Beltway,” and his choice for chief of Housing and Urban Development is no different.
Obama has named Shaun Donovan, former NY City housing commissioner and Clinton aide, as the new director of HUD. While by all appearances, Donovan is a great pick, HUD must play an integral part of Obama’s attempt to pull the housing market out of its nosedive.
Since the collapsed of residential real estate might be the largest contributor to our failed economy and since foreclosures are at the epicenter of this implosion, Donovan better be seeking the help of heavy hitters in the foreclosure prevention arena, and April Charney should be at the top of his list.
More than any other lawyer in this country, Charney has single-handedly elevated the profile of foreclosure defense by calling national attention to the problem facing lower and middle-class Americans in our courtrooms. She is THE face of foreclosure defense in this country at a time when foreclosure litigation is the most critical area of the law.
Charney has been featured in national print and internet publications such as Forbes Magazine and The New York Times and MSNBC.com and has done countless interviews on television - even Fox News. Just this week, The Folio Weekly, a Jacksonville independent newspaper, selected Charney as Person of the Year (the pdf takes about 45 seconds to download).
Charney has taught thousands of lawyers nationwide about mortgage servicer abuses, and she constantly gives case-specific advice to hundreds of lawyers through various email groups. I have particularly benefitted from Charney’s knowledge and experience because I am lucky enough to live in Jacksonville, Florida, her home base.
Before I had the pleasure of knowing her personally, the cynical lawyer in me pondered her motivation. Was she seeking publicity for the sake of money, power or fame? The answer has become clear to me - Charney is a real American hero.
Given the thousands of Americans who have paid the ultimate sacrifice for this country domestically and abroad, the word “hero” can be dangerously overused to describe anyone not risking life and limb. However, it is the description most accurately describing an individual who has chosen a path of not just serving the public but serving the poorest in our society – people without money, influence or celebrity.
As a Florida foreclosure defense attorney, I am often asked by local judges if I am making one of those “Charney arguments,” as if I am about to perform a parlor trick in the courtroom. Quite frankly, I am relieved that, across other parts of Florida and the nation, state court judges are beginning to appreciate that a “Charney argument” is merely an application of sound commercial principles that have been around for a thousand years. Charney is just too good to stay in our minor league town, and she has provided ammunition to enough local attorneys to leave Northeast Florida in good hands.
If Obama and Donovan want to attack the foreclosure problem at its core, they need to pick up the phone and give Charney a call. They’ll have to leave a message, though. She’s away from her desk providing “a wealth of justice to those that have neither.”
If you liked that post, then try these...
Read This If You Are Facing Foreclosure by Susanne Robicsek, NC Bankruptcy Attorney
Helping Families Save Their Homes in Bankruptcy Act of 2009 - Fox Business Network Coverage by David Leibowitz, Illinois and Wisconsin Bankruptcy Attorney
Vulture Funds Buy Residential Mortgages by Kent Anderson, Oregon Bankruptcy Attorney
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CategoriesCrime Featured Foreclosure Defense Foreclosure News Foreclosure Process Foreclosure Rescue Scams Mortgage Issues Mortgage Issues In Bankruptcy mortgage reform Mortgage Servicer Abuses predatory lending respa service yield premium Tax Issues Uncategorized yield spread premium Recent ArticlesShould I sign a mortgage modification agreement? Did you lie on your loan application? The King Amendment to HR 200 Mortgage Modifications in the Real World Success For Mortgage Mediation in Connecticut? House Judiciary Amends Bankruptcy Act to Include “Clawback” Attorneys In Our NetworkCalifornia - Bay Area California - Chico California - Southern Connecticut Florida (Northeast) Florida (Southwest) Georgia (Atlanta Area) Illinois Kansas Louisiana Maryland Massachusetts (Boston) Massachusetts (Springfield) Michigan Minnesota Missouri (Kansas City) Missouri (St. Louis Area) New York (Downstate) New York (Upstate) North Carolina Oregon (South) Oregon (Willamette Valley) Pennsylvania South Carolina Texas - Houston Personal Finance BlogsBankruptcy Law Network Credit Law Network Debt Law Network Browse Our Archives Select Month February 2009 January 2009 December 2008 November 2008 October 2008 September 2008 August 2008 July 2008 June 2008 May 2008 April 2008 March 2008 February 2008 January 2008 December 2007 November 2007 Bankruptcy Law Network ArticlesCredit Counseling and Financial Management Training - Traps for DebtorsLaid Off? I’m Going to Disney World!Income Contingent Repayment Plans & Student Loan Discharges in MassachusettsCar in Someone Else’s Name: Resulting TrustMy Employer Filed Bankruptcy! What Do I Do?How Will Mortgage Modification Work under the New Bankruptcy Law?How to choose a bankruptcy attorneyTen Reasons to Delay Filing Bankruptcy! Reason No. 2: Debtor’s DomicleCredit Suisse Supports Bankruptcy Code ChangeShould I File Bankruptcy Now if the Law is Going to Change?© Copyright Bankruptcy Law Network, LLC 2007-2009. All rights reserved. Powered by WordPress. Design by Pixelhaven | Blog Design. XHTML.
Current ArticleSubscribeObama needs April Charney to lead the fight against foreclosures
By Chip Parker, Jacksonville Consumer Attorney on Dec 31, 2008 in Foreclosure News
Politicians are a lot like major league baseball managers, in that the same people tend to be recycled in the MLB and Washington, D.C. Obama’s administration contains mostly familiar names within the famed “Beltway,” and his choice for chief of Housing and Urban Development is no different.
Obama has named Shaun Donovan, former NY City housing commissioner and Clinton aide, as the new director of HUD. While by all appearances, Donovan is a great pick, HUD must play an integral part of Obama’s attempt to pull the housing market out of its nosedive.
Since the collapsed of residential real estate might be the largest contributor to our failed economy and since foreclosures are at the epicenter of this implosion, Donovan better be seeking the help of heavy hitters in the foreclosure prevention arena, and April Charney should be at the top of his list.
More than any other lawyer in this country, Charney has single-handedly elevated the profile of foreclosure defense by calling national attention to the problem facing lower and middle-class Americans in our courtrooms. She is THE face of foreclosure defense in this country at a time when foreclosure litigation is the most critical area of the law.
Charney has been featured in national print and internet publications such as Forbes Magazine and The New York Times and MSNBC.com and has done countless interviews on television - even Fox News. Just this week, The Folio Weekly, a Jacksonville independent newspaper, selected Charney as Person of the Year (the pdf takes about 45 seconds to download).
Charney has taught thousands of lawyers nationwide about mortgage servicer abuses, and she constantly gives case-specific advice to hundreds of lawyers through various email groups. I have particularly benefitted from Charney’s knowledge and experience because I am lucky enough to live in Jacksonville, Florida, her home base.
Before I had the pleasure of knowing her personally, the cynical lawyer in me pondered her motivation. Was she seeking publicity for the sake of money, power or fame? The answer has become clear to me - Charney is a real American hero.
Given the thousands of Americans who have paid the ultimate sacrifice for this country domestically and abroad, the word “hero” can be dangerously overused to describe anyone not risking life and limb. However, it is the description most accurately describing an individual who has chosen a path of not just serving the public but serving the poorest in our society – people without money, influence or celebrity.
As a Florida foreclosure defense attorney, I am often asked by local judges if I am making one of those “Charney arguments,” as if I am about to perform a parlor trick in the courtroom. Quite frankly, I am relieved that, across other parts of Florida and the nation, state court judges are beginning to appreciate that a “Charney argument” is merely an application of sound commercial principles that have been around for a thousand years. Charney is just too good to stay in our minor league town, and she has provided ammunition to enough local attorneys to leave Northeast Florida in good hands.
If Obama and Donovan want to attack the foreclosure problem at its core, they need to pick up the phone and give Charney a call. They’ll have to leave a message, though. She’s away from her desk providing “a wealth of justice to those that have neither.”
If you liked that post, then try these...
Read This If You Are Facing Foreclosure by Susanne Robicsek, NC Bankruptcy Attorney
Helping Families Save Their Homes in Bankruptcy Act of 2009 - Fox Business Network Coverage by David Leibowitz, Illinois and Wisconsin Bankruptcy Attorney
Vulture Funds Buy Residential Mortgages by Kent Anderson, Oregon Bankruptcy Attorney
Trackback URL
Sorry, comments for this entry are closed at this time.
Find a Lawyer
CategoriesCrime Featured Foreclosure Defense Foreclosure News Foreclosure Process Foreclosure Rescue Scams Mortgage Issues Mortgage Issues In Bankruptcy mortgage reform Mortgage Servicer Abuses predatory lending respa service yield premium Tax Issues Uncategorized yield spread premium Recent ArticlesShould I sign a mortgage modification agreement? Did you lie on your loan application? The King Amendment to HR 200 Mortgage Modifications in the Real World Success For Mortgage Mediation in Connecticut? House Judiciary Amends Bankruptcy Act to Include “Clawback” Attorneys In Our NetworkCalifornia - Bay Area California - Chico California - Southern Connecticut Florida (Northeast) Florida (Southwest) Georgia (Atlanta Area) Illinois Kansas Louisiana Maryland Massachusetts (Boston) Massachusetts (Springfield) Michigan Minnesota Missouri (Kansas City) Missouri (St. Louis Area) New York (Downstate) New York (Upstate) North Carolina Oregon (South) Oregon (Willamette Valley) Pennsylvania South Carolina Texas - Houston Personal Finance BlogsBankruptcy Law Network Credit Law Network Debt Law Network Browse Our Archives Select Month February 2009 January 2009 December 2008 November 2008 October 2008 September 2008 August 2008 July 2008 June 2008 May 2008 April 2008 March 2008 February 2008 January 2008 December 2007 November 2007 Bankruptcy Law Network ArticlesCredit Counseling and Financial Management Training - Traps for DebtorsLaid Off? I’m Going to Disney World!Income Contingent Repayment Plans & Student Loan Discharges in MassachusettsCar in Someone Else’s Name: Resulting TrustMy Employer Filed Bankruptcy! What Do I Do?How Will Mortgage Modification Work under the New Bankruptcy Law?How to choose a bankruptcy attorneyTen Reasons to Delay Filing Bankruptcy! Reason No. 2: Debtor’s DomicleCredit Suisse Supports Bankruptcy Code ChangeShould I File Bankruptcy Now if the Law is Going to Change?© Copyright Bankruptcy Law Network, LLC 2007-2009. All rights reserved. Powered by WordPress. Design by Pixelhaven | Blog Design. XHTML.
ON A POSITIVE NOTE !
Big Idea - Napoleon Hill : First Plan Fail? Try Another!
“If the first plan which you adopt does not work successfully, replace it with a new plan; if this new plan fails to work, replace it in turn with still another, and so on, until you find a plan which does work. Right here is the point at which the majority of men meet with failure, because of their lack of persistence in creating new plans to take the place of those which fail.”
~ Napoleon Hill from Think and Grow Rich
“If the first plan which you adopt does not work successfully, replace it with a new plan; if this new plan fails to work, replace it in turn with still another, and so on, until you find a plan which does work. Right here is the point at which the majority of men meet with failure, because of their lack of persistence in creating new plans to take the place of those which fail.”
~ Napoleon Hill from Think and Grow Rich
CALL,WRITE EMAIL YOUR ELECTED LEADERS !!!
Tell Congress how mortgage modification would help you keep your home
Mortgage modification in Chapter 13 won't be possible until Congress amends the bankruptcy code. What we talk about in this site can't happen without this small change in the law.
You can help by contacting your representatives in Washington and letting them know how the ability to modify your mortgage would allow you to keep your house.
A phone call, fax or an email is generally most effective: snail mail is too slow with things moving as fast as they are.
S. 61 is the Senate bill: Helping Families Save Their Homes in Bankruptcy Act; an identical bill, H.R. 200 was introduced in the House.
Share how the bill would impact your life
Ask them to actively support the bill
Your message does not have to be long or complicated. It just needs to get there soon.
Find contact information for your representatives by clicking the links below.
Consider the impact of modifying your mortgage to a fixed rate; reducing the principal balance to today's lower home value, or extending the repayment period.
If this bill would help you save your home, then let each one of your representatives know. Here's a sample letter in support of mortgage modification in bankruptcy.
President Obama is also soliciting citizen input on what's important for government to address. Add your voice to the Citizen's Briefing Book.
The latest news on mortgage modification in bankruptcy is found on our sister site.
Home | See the changes | Who we are
Mortgage modification in Chapter 13 won't be possible until Congress amends the bankruptcy code. What we talk about in this site can't happen without this small change in the law.
You can help by contacting your representatives in Washington and letting them know how the ability to modify your mortgage would allow you to keep your house.
A phone call, fax or an email is generally most effective: snail mail is too slow with things moving as fast as they are.
S. 61 is the Senate bill: Helping Families Save Their Homes in Bankruptcy Act; an identical bill, H.R. 200 was introduced in the House.
Share how the bill would impact your life
Ask them to actively support the bill
Your message does not have to be long or complicated. It just needs to get there soon.
Find contact information for your representatives by clicking the links below.
Consider the impact of modifying your mortgage to a fixed rate; reducing the principal balance to today's lower home value, or extending the repayment period.
If this bill would help you save your home, then let each one of your representatives know. Here's a sample letter in support of mortgage modification in bankruptcy.
President Obama is also soliciting citizen input on what's important for government to address. Add your voice to the Citizen's Briefing Book.
The latest news on mortgage modification in bankruptcy is found on our sister site.
Home | See the changes | Who we are
HOUSES LOST WHILE GOVERMENT FIDDLES
I sat through a relief from stay calendar in San Jose this week: 63 houses, in that courtroom, headed for foreclosure. Down the hall, a like number of houses went down in flames. This scene is repeated each week in bankruptcy courts around the Bay Area.
When is judicial mortgage modification going to get some urgency for the Congress and President Obama? So, they thought it was too divisive to include in the stimulus package and might detract from bi partisan support. Just how much bipartisan support are you seeing with this provision out of the bill?
This attack on the foreclosure crisis costs the taxpayers nothing, benefits real, live people immediately, and only recognizes (but does not cause) the loss the banks have already incurred.
Join me in pushing Congress to get going on enacting mortgage modification.
by CATHY MORAN
When is judicial mortgage modification going to get some urgency for the Congress and President Obama? So, they thought it was too divisive to include in the stimulus package and might detract from bi partisan support. Just how much bipartisan support are you seeing with this provision out of the bill?
This attack on the foreclosure crisis costs the taxpayers nothing, benefits real, live people immediately, and only recognizes (but does not cause) the loss the banks have already incurred.
Join me in pushing Congress to get going on enacting mortgage modification.
by CATHY MORAN
Tuesday, February 3, 2009
12 step program in our future ?
As we have said goodbye to 2008...more like good riddance, we look at 2009 with about the same amount of excitement-when is all of this economic mess going to be over?
I am talking about days when gas was affordable,everyone had equity in their homes and there were many proud new owners of real estate who finally got a chance to grasp the dream. Jobs were plentiful,kids looked to college,small business was the buzzword,no WALMARTS, and GREED was not running the county.
I think the turning point was November 7, 2000, a day where the good guy who won really lost. We all lost that day. We lost our hope,we lost faith in the system and somehow knew things would change under the Bush Administration. They didchanged alright and here we is...(thats a BUSHISM) !
Well that is the history on how it broke- now how do we fix this! This economic explosion is "equal opportunity" as it effects all sectors,industries,regions,income levels,race,creed,nationality,maritial status,familial status,sexual preference and sexual orientation-I think I got everyone . We also want to say a shout out to the Bernie Madoff folks yes we feel your pain.
OK lets give president Obama a big A for effort in restoring the ability to know it will get better . BUT we need a 12 step program for all Americans ...sure this financial crisis is not our fault and we cannot blame ourselves . WE NEED -An Intervention ...
We need a 12 step program for the economy. First we as consumers must admit we have a problem ! Here are the steps to our recovery. Unlike DA (Debtors Annoy) yes there is such a program...whose common purpose is to maintain financial solvency-we consumers all have THAT goal but here is a new and revised mission for all of us to follow:
1. We are powerless over this financial mess and that our spending has become unmanageable(yes that includes all of those firms that have been BAILED OUT )
2. Came to believe a power greater than ourselves or the FED,FDIC,FTC,FEMA,FBI,CIA (every acronym you can imagine)can restore us to stability).
3. Turn our will and our power over to ...anyone who the government tells us will fix this...(still waiting)
4. Made a searching and FEARLESS moral inventory of bank accounts,IRA home equity loans (if there is any left).
5. Admitted to our banker,lender,mortgage holder and bankruptcy attorney, the exact nature of of our finances.
6. Ready to have TRANSUNION,EQUIFAX,TRW AND CHEK SYSTEM remove all the defects on our credit reports.(Lets face it we can hope...who are these PEOPLE ANYWAY and why do we need them?)
7. Humbly asked them to remove these defects or hired a consumer attorney to do so.
8.Made a list of all our debts and became willing to pay them something (or accept a loan modification)
9. Made direct payments (if accepted) to such creditors,lenders,vendors except when to do so was ordered by the bankruptcy judge
10.Continue to take inventory of of credit score,credit reports and when we were late promptly admitted it.
11.Sought thru prayers,pleading,bargaining and screaming into the telephone to improve our contact with anyone who will answer at the mortgage company's loss mitigation department,praying only for someone who is knowledgeable for the POWER AND AUTHORITY to carry out your request (and to find out who really owns our mortgage backed security loans)
12.Having had a financial awakening as the results of these steps tried to carry the message to other consumers that you are more than your credit score,more than just a number at the other end of the 800 # in India,more then the power of your bank account but a consumer who can practice these principals in all our finances.
(calling your elected officials to ask them to pass laws that protect consumers may help too...but don't hold your breath)
Did I forget to mention "live one day at a time"? let us close with the SERENITY PRAYER.
God grant us the serenity to accept the things we cannot change,the courage to change the things we can and the wisdom to know the difference. Amen !
I am talking about days when gas was affordable,everyone had equity in their homes and there were many proud new owners of real estate who finally got a chance to grasp the dream. Jobs were plentiful,kids looked to college,small business was the buzzword,no WALMARTS, and GREED was not running the county.
I think the turning point was November 7, 2000, a day where the good guy who won really lost. We all lost that day. We lost our hope,we lost faith in the system and somehow knew things would change under the Bush Administration. They didchanged alright and here we is...(thats a BUSHISM) !
Well that is the history on how it broke- now how do we fix this! This economic explosion is "equal opportunity" as it effects all sectors,industries,regions,income levels,race,creed,nationality,maritial status,familial status,sexual preference and sexual orientation-I think I got everyone . We also want to say a shout out to the Bernie Madoff folks yes we feel your pain.
OK lets give president Obama a big A for effort in restoring the ability to know it will get better . BUT we need a 12 step program for all Americans ...sure this financial crisis is not our fault and we cannot blame ourselves . WE NEED -An Intervention ...
We need a 12 step program for the economy. First we as consumers must admit we have a problem ! Here are the steps to our recovery. Unlike DA (Debtors Annoy) yes there is such a program...whose common purpose is to maintain financial solvency-we consumers all have THAT goal but here is a new and revised mission for all of us to follow:
1. We are powerless over this financial mess and that our spending has become unmanageable(yes that includes all of those firms that have been BAILED OUT )
2. Came to believe a power greater than ourselves or the FED,FDIC,FTC,FEMA,FBI,CIA (every acronym you can imagine)can restore us to stability).
3. Turn our will and our power over to ...anyone who the government tells us will fix this...(still waiting)
4. Made a searching and FEARLESS moral inventory of bank accounts,IRA home equity loans (if there is any left).
5. Admitted to our banker,lender,mortgage holder and bankruptcy attorney, the exact nature of of our finances.
6. Ready to have TRANSUNION,EQUIFAX,TRW AND CHEK SYSTEM remove all the defects on our credit reports.(Lets face it we can hope...who are these PEOPLE ANYWAY and why do we need them?)
7. Humbly asked them to remove these defects or hired a consumer attorney to do so.
8.Made a list of all our debts and became willing to pay them something (or accept a loan modification)
9. Made direct payments (if accepted) to such creditors,lenders,vendors except when to do so was ordered by the bankruptcy judge
10.Continue to take inventory of of credit score,credit reports and when we were late promptly admitted it.
11.Sought thru prayers,pleading,bargaining and screaming into the telephone to improve our contact with anyone who will answer at the mortgage company's loss mitigation department,praying only for someone who is knowledgeable for the POWER AND AUTHORITY to carry out your request (and to find out who really owns our mortgage backed security loans)
12.Having had a financial awakening as the results of these steps tried to carry the message to other consumers that you are more than your credit score,more than just a number at the other end of the 800 # in India,more then the power of your bank account but a consumer who can practice these principals in all our finances.
(calling your elected officials to ask them to pass laws that protect consumers may help too...but don't hold your breath)
Did I forget to mention "live one day at a time"? let us close with the SERENITY PRAYER.
God grant us the serenity to accept the things we cannot change,the courage to change the things we can and the wisdom to know the difference. Amen !
GOVERMENT BACKED LOAN MOD'S...
Obama’s Foreclosure Plan May Back Rewritten Loans (Update1)
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By Alison Vekshin
Feb. 3 (Bloomberg) -- The Obama administration is considering government guarantees for home loans modified by their servicers, seeking to stem the record surge of foreclosures that’s hammering U.S. property values.
The proposal, which may also have the taxpayer share in the cost of reducing mortgage payments, is aimed at shielding lenders from default after they loosen loan terms for struggling borrowers. Comptroller of the Currency John Dugan, who regulates national banks, said yesterday that “working out the details of it is still something that’s ongoing.”
“We need to help more people stay in their homes” through helping mortgage lenders make more loan modifications, James Lockhart, director of the Federal Housing Finance Agency, said in an interview with Bloomberg Television yesterday. “I’m pleased that the new administration is starting to work on that area.”
President Barack Obama’s team is preparing the biggest effort yet to arrest foreclosures, part of a three-pronged attack on the financial crisis that also aims at restarting business and consumer lending and overhauling regulation. As banks dump on the market the properties acquired through borrower defaults, they are contributing to the biggest slide in property values since the Great Depression.
Valuing Assets
Top officials continued their series of meetings yesterday as they examine options for the next phase of the government’s financial-industry bailout. The biggest challenge is finding a way to value banks’ toxic assets so that the government can buy or insure them while providing some limit to taxpayer losses, Dugan said. An announcement on the strategy may come early next week, an administration aide said.
Treasury Secretary Timothy Geithner gathered with Dugan, Federal Reserve Chairman Ben S. Bernanke and Federal Deposit Insurance Corp. Chairman Sheila Bair. Geithner and White House economics director Lawrence Summers also met with House Financial Services Committee Chairman Barney Frank.
The proposal to guarantee modified mortgages is a variation of an idea backed by the FDIC. The administration plans to spend as much as $100 billion of the second $350 billion installment of the Treasury’s financial-bailout fund on home-loan initiatives.
Some 1.5 million foreclosures might be prevented this year in a program that would pay servicers $1,000 to modify a troubled loan by reducing the interest rate, forgiving a portion of the principal or extending the repayment plan, Bair has estimated. The government would then absorb as much as 50 percent of any loss if the rewritten loan defaults again.
Housing Losses
The U.S. housing market lost $3.3 trillion in value last year and almost one in six owners with mortgages owed more than their homes were worth as the economy went into recession, Zillow.com said today in a report.
The median estimated home price declined 11.6 percent in 2008 to $192,119 and homeowners lost $1.4 trillion in value in the fourth quarter alone, according to the Seattle-based real estate data service.
Dugan said in an interview yesterday in Washington that the approach should include a provision that would delay a government guarantee for a modified mortgage for a set period of time to ensure that the loan is sustainable.
“It is really important that when you have a modified loan that the payment become affordable to the homeowner,” Dugan said. “You wouldn’t want the government to be on the hook for someone who borrowed a lot more in credit-card debt, or what have you, and then couldn’t make their payments.”
Bad-Bank Option
Meanwhile, Treasury aides have approached Wall Street firms to gauge their appetite for participating in a so-called aggregator bank designed to remove toxic assets clogging banks’ balance sheets. They are also asking how a pricing model for the investments should be set up, financial-services industry officials said on condition of anonymity.
The administration is planning to outline stepped-up executive pay and dividend restrictions for companies that receive “exceptional” government aid later this week, helping to lay the groundwork for further help. Obama last week criticized the payment of Wall Street bonuses while the industry was receiving taxpayer funds as “shameful.”
Larger firms will see bans on severance payments for the top five executives and limits on their bonus pools, along with 50 senior officers, to 60 percent of 2007 level, according to the Treasury. The department also requires that major expenses, like aircraft or conferences in exotic locales, get prior government approval.
Bank Writedowns
Obama yesterday warned that further bank failures are likely. Lenders are “going to have to write down those losses,” he also said in an interview on NBC’s Today show.
Six banks have collapsed already in 2009, and the failures are putting pressure on the FDIC’s deposit-guarantee fund. The agency is seeking power to charge fees to bank holding companies, in legislation to be taken up by the House Financial Services Committee. The bill would also boost the FDIC’s credit line with the Treasury to $100 billion from $30 billion.
Obama directed his staff to work with Congress on “smart, aggressive policies to reduce the number of preventable foreclosures by helping to reduce mortgage payments for economically stressed but responsible homeowners,” Summers, who is helping to craft Obama’s strategy, wrote in a Jan. 12 letter to congressional leaders.
Another mortgage approach being considered would have the government provide an incentive for servicers to rewrite loans by sharing the cost of the modification.
Monthly Payments
Under that proposal, the companies would negotiate with borrowers to cut their monthly payment to represent a smaller proportion of their income, for example 38 percent. The government then would pay the cost of cutting the payment even further, to 31 percent of income.
Bernanke in December said that while such an option might “pose a greater operational burden on the government” than the FDIC plan, it could “leverage” modification efforts now under way.
To contact the reporter on this story: Alison Vekshin in Washington at avekshin@bloomberg.net. Last Updated: February 3, 2009 13:58 EST
Email Print A A A
By Alison Vekshin
Feb. 3 (Bloomberg) -- The Obama administration is considering government guarantees for home loans modified by their servicers, seeking to stem the record surge of foreclosures that’s hammering U.S. property values.
The proposal, which may also have the taxpayer share in the cost of reducing mortgage payments, is aimed at shielding lenders from default after they loosen loan terms for struggling borrowers. Comptroller of the Currency John Dugan, who regulates national banks, said yesterday that “working out the details of it is still something that’s ongoing.”
“We need to help more people stay in their homes” through helping mortgage lenders make more loan modifications, James Lockhart, director of the Federal Housing Finance Agency, said in an interview with Bloomberg Television yesterday. “I’m pleased that the new administration is starting to work on that area.”
President Barack Obama’s team is preparing the biggest effort yet to arrest foreclosures, part of a three-pronged attack on the financial crisis that also aims at restarting business and consumer lending and overhauling regulation. As banks dump on the market the properties acquired through borrower defaults, they are contributing to the biggest slide in property values since the Great Depression.
Valuing Assets
Top officials continued their series of meetings yesterday as they examine options for the next phase of the government’s financial-industry bailout. The biggest challenge is finding a way to value banks’ toxic assets so that the government can buy or insure them while providing some limit to taxpayer losses, Dugan said. An announcement on the strategy may come early next week, an administration aide said.
Treasury Secretary Timothy Geithner gathered with Dugan, Federal Reserve Chairman Ben S. Bernanke and Federal Deposit Insurance Corp. Chairman Sheila Bair. Geithner and White House economics director Lawrence Summers also met with House Financial Services Committee Chairman Barney Frank.
The proposal to guarantee modified mortgages is a variation of an idea backed by the FDIC. The administration plans to spend as much as $100 billion of the second $350 billion installment of the Treasury’s financial-bailout fund on home-loan initiatives.
Some 1.5 million foreclosures might be prevented this year in a program that would pay servicers $1,000 to modify a troubled loan by reducing the interest rate, forgiving a portion of the principal or extending the repayment plan, Bair has estimated. The government would then absorb as much as 50 percent of any loss if the rewritten loan defaults again.
Housing Losses
The U.S. housing market lost $3.3 trillion in value last year and almost one in six owners with mortgages owed more than their homes were worth as the economy went into recession, Zillow.com said today in a report.
The median estimated home price declined 11.6 percent in 2008 to $192,119 and homeowners lost $1.4 trillion in value in the fourth quarter alone, according to the Seattle-based real estate data service.
Dugan said in an interview yesterday in Washington that the approach should include a provision that would delay a government guarantee for a modified mortgage for a set period of time to ensure that the loan is sustainable.
“It is really important that when you have a modified loan that the payment become affordable to the homeowner,” Dugan said. “You wouldn’t want the government to be on the hook for someone who borrowed a lot more in credit-card debt, or what have you, and then couldn’t make their payments.”
Bad-Bank Option
Meanwhile, Treasury aides have approached Wall Street firms to gauge their appetite for participating in a so-called aggregator bank designed to remove toxic assets clogging banks’ balance sheets. They are also asking how a pricing model for the investments should be set up, financial-services industry officials said on condition of anonymity.
The administration is planning to outline stepped-up executive pay and dividend restrictions for companies that receive “exceptional” government aid later this week, helping to lay the groundwork for further help. Obama last week criticized the payment of Wall Street bonuses while the industry was receiving taxpayer funds as “shameful.”
Larger firms will see bans on severance payments for the top five executives and limits on their bonus pools, along with 50 senior officers, to 60 percent of 2007 level, according to the Treasury. The department also requires that major expenses, like aircraft or conferences in exotic locales, get prior government approval.
Bank Writedowns
Obama yesterday warned that further bank failures are likely. Lenders are “going to have to write down those losses,” he also said in an interview on NBC’s Today show.
Six banks have collapsed already in 2009, and the failures are putting pressure on the FDIC’s deposit-guarantee fund. The agency is seeking power to charge fees to bank holding companies, in legislation to be taken up by the House Financial Services Committee. The bill would also boost the FDIC’s credit line with the Treasury to $100 billion from $30 billion.
Obama directed his staff to work with Congress on “smart, aggressive policies to reduce the number of preventable foreclosures by helping to reduce mortgage payments for economically stressed but responsible homeowners,” Summers, who is helping to craft Obama’s strategy, wrote in a Jan. 12 letter to congressional leaders.
Another mortgage approach being considered would have the government provide an incentive for servicers to rewrite loans by sharing the cost of the modification.
Monthly Payments
Under that proposal, the companies would negotiate with borrowers to cut their monthly payment to represent a smaller proportion of their income, for example 38 percent. The government then would pay the cost of cutting the payment even further, to 31 percent of income.
Bernanke in December said that while such an option might “pose a greater operational burden on the government” than the FDIC plan, it could “leverage” modification efforts now under way.
To contact the reporter on this story: Alison Vekshin in Washington at avekshin@bloomberg.net. Last Updated: February 3, 2009 13:58 EST
WALL STREET THROWS DESSERTS...NOT SHOES !
FDIC chairman shakes up Washington, Wall StreetNEW YORK – Feb. 2, 2009 – The Wall Street crowd that packed into the ballroom of the fancy Times Square hotel didn’t know what was about to hit it. As the bankers and analysts sliced into their grilled beef tenderloin and chicken, Sheila Bair stepped up to the microphone and told them off.Too many people couldn’t make their mortgage payments, she said. The mortgage industry was sitting on a ticking time bomb and just didn’t get it. Pick up the phone, she said, and talk to borrowers.“The sense of hostility from that audience was overwhelming,” said Howard Glaser, a Washington-based mortgage industry consultant who sat at Bair’s table that day in October 2007.“I thought they were literally going to throw their desserts at her.”It would not be the last time the chairman of the Federal Deposit Insurance Corp. got under somebody’s skin. Since the banking crisis erupted, Bair has led the call for more government action, creating a rift with former President George W. Bush’s treasury secretary, Henry Paulson, and thrusting herself into the limelight.Bair, who speaks in a soft but rapid-fire monotone, is a constant presence on financial news talk shows and on Capitol Hill. Forbes magazine last year ranked her the second-most powerful woman in the world, behind only German Chancellor Angela Merkel.Critics say she is on a liberal crusade, but the 54-year-old Republican has won a key ally: President Barack Obama. She’s working closely with the new administration on a plan to reshape the financial world by creating a so-called “bad bank” that would mop up hundreds of billions in toxic assets from the balance sheets of U.S. banks.The bad bank, if adopted, might be run by Bair’s agency, the FDIC.No firm decision has been made, though an announcement could come this week. Meanwhile, Bair is urging Americans to stay calm, even as some of the nation’s largest banks teeter. The country, she says, is far better prepared for a financial crisis than it was during the Great Depression.“We all just need to get a hold of ourselves,” she said in an interview. “It’s going to be hard. It’s going to take time. But we will work through it.”Roots in the DepressionBair may be a Washington insider – she has lived in the area for most of the past 30 years – but her Kansas upbringing comes through in expressions like “oh golly.” Hers is the world of Independence, Kan., where her late father Albert was the only surgeon in a town of 10,000. Her mother, Clara, was a nurse and a homemaker who grew up in a farming family that struggled to make ends meet during the Dust Bowl of the 1930s.“We’re direct – maybe sometimes too direct,” Bair said. “The kinds of basic values I learned growing up in the Midwest are good things.”During the Depression, Americans learned tough lessons about the importance of thrift, but that sensibility has been lost in recent years, she said.“We’re getting back in touch with that,” she said. “I think ultimately that will make us stronger as a society again.”Bair is quick with a laugh but is still a serious-minded policy wonk who tosses out terms like “regulatory arbitrage,” “net present value” and “granularity” and keeps neat stacks of papers on her desk overlooking the Washington monument.After graduating from law school in 1978, Bair took a job as a civil rights lawyer for Department of Health, Education and Welfare. Eventually, she landed on the staff of Sen. Bob Dole, a fellow Kansan. Being from “a good Kansas Republican family,” didn’t hurt, Bair said.“She’s aggressive in the right sense,” said Dole, who still speaks with her monthly. “If she has an idea, you’re going to hear about it.”Bair moved home to run for the House of Representatives in 1990, losing in the Republican primary by fewer than 800 votes. She has fond memories of riding a bicycle through the district with a little yellow flag attached, handing out yellow and blue brochures and following up with personal notes.“You’re out there riding your bicycle running for Congress, you’re the talk of the town for weeks,” she recalled. At the time, Bair was single, and that may have contributed to her defeat, at least in Dole’s opinion.“Out in parts of Kansas, we like to elect married people,” Dole said. “I always used to tell Sheila, ‘if you had been married, you would have been a shoo-in.’“‘Rock and Brock’After leaving Dole’s staff, Bair served on the Commodity Futures Trading Commission for four years until 1995. She was a top lobbyist for the New York Stock Exchange until 2000, a taxing job that required constant travel. It also meant less time with her two children, Preston and Colleen, who are now 15 and 9.She met her husband, Scott Cooper, in the late 1980s at a party on Capitol Hill. Cooper, who works at a Washington trade group, said his wife has an uncanny ability to stay calm and put work behind her when she’s not at the office.“When she comes home, she’s home, and she’s part of the family.” Cooper said. “Not that she doesn’t use her BlackBerry a lot.”Bair returned to government after Bush took office in 2001, receiving assurances that her job as an assistant treasury secretary overseeing banking policy wouldn’t be a 24-7 affair. But then came the 9-11 attacks and the collapse of Enron. Protecting banks from terrorist attacks and reforming the pension system became part of her mandate.At Treasury, she worked with the late Federal Reserve Governor Edward Gramlich on an early effort to combat predatory lending. Gramlich was one of the first regulators in Washington to warn about dangerous lending practices.Seeking again to spend more time with her kids, Bair left government in summer 2002 for the University of Massachusetts, Amherst. There, she taught financial regulatory policy for four years and wrote two children’s books.One of them, “Rock, Brock and the Savings Shock,” tells the rhyming story of two young boys. Rock burns through his allowance on trinkets like green hair goo and peppermint-flavored wax fangs. His thrifty brother Brock saves to buy a telescope and presents for his parents.“Brock’s cash,” Bair writes, “grew and grew and grew – eight, then sixteen, then thirty-two. His pile of bucks became so great, he had to store them in a crate! Ten weeks went by. Poor Rock was doomed. He had no cash; Brock’s had ballooned!”Making enemiesWhen the Bush administration went looking for a chairman of the FDIC in 2006, Bair was a known quantity with a long background in banking issues. Plus, nobody expected the job to be all that exciting.The FDIC, which celebrated its 75th anniversary last year, insures deposits up to $250,000 per account, an amount lawmakers raised from $100,000 last fall. The agency employs about 5,000 and its $2.2 billion budget comes from more than 8,300 FDIC-insured banks.Bair didn’t have much of a honeymoon. Months after she was confirmed, the agency’s top economist warned trouble was brewing with mortgages made to borrowers with poor credit.As the subprime crisis exploded, she became an outspoken voice for government intervention, though her ideas never caught on with the Bush administration. Democrats in Congress, though, embraced them with fervor. Last November she broke with Paulson and proposed using some of the $700 billion in financial bailout money to prevent foreclosures.“She made bitter enemies out of the (Bush) administration,” said William Seidman, who led the FDIC from 1985 to 1991. “If they had their choice of one official that they could personally throttle, she would lead the list.”Earlier this winter, Washington was awash with suggestions Bair had also clashed with then New York Federal Reserve Bank President Timothy Geithner, who is now Obama’s treasury secretary.Bair insists there won’t be a problem with Geithner.“We have different perspectives frequently, and I think that’s a healthy thing,” she said. “You don’t want to get everybody in the room nodding.”Critics say her record of helping consumers stave off foreclosures is mixed and that she has steered the FDIC into an activist role to the detriment of the agency’s traditional purpose of limiting the damage from failed banks.“She’s off on a lot of social missions,” said Bert Ely, a banking industry consultant in Alexandria, Va.Bair, though, said she remains “very much a capitalist.”“Sometimes people misinterpret that as somehow I’m not a real Republican or something. I very much am. I guess I’m more of a Teddy Roosevelt kind of a Republican ... It’s been said that Franklin would be proud of me, but I think Teddy would be proud of me too.”Copyright © 2009 The Associated Press, Alan Zibel (AP Real Estate Writer). All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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