Alabama mortgages and the Current Robo-Signing Scandal

Last year the Webster's dictionary added "unfriend" to their current lexicon of American language. Unfortunately, due to shady mortgage practices, "Robo-Sign" may join the likes of "unfriend" as a new reflection of popular culture.

Robo-Signing is a mortgage company practice of allowing barely qualified employees to prepare foreclosure paperwork with out verifying the underlying documents. Often times the employee will sign thousands of affidavits a day supporting the bank's contention that the homeowner has defaulted and as a result the home must be sold at a foreclosure sale. Savy consumer bankruptcy attorneys across the country have cried fowl about these boilerplate affidavits for years and just now the Department of Justice have discovered the sloppy paperwork.

What does that mean for an Alabama homeowner facing foreclosure. The answer is not so simple. Foreclosure sales are covered in Title 35 (Property) Articles 1, 1A, 2, 3 §35-10-1 et. seq. Alabama is a non-judicial foreclosure state. That means that to foreclose on your house in Alabama, all the mortgage company has to do it is hire an attorney to notify you of the the foreclosure sale and run notice of the foreclosure in the local newspaper for 30 days. Mortgage companies are not required to file the foreclosure paperwork with the court which means no judicial figure oversees the proceeding. If an affidavit is not correct, there is little a homeowner can do short of filing for bankruptcy to stop the foreclosure. The interesting thing is that landlords are required to file judicial evictions, however, a homeowner in Alabama is not allowed that same courtesy. Alabama was the last state to join the foreclosure investigation only after news stories reported that 49 other states had joined in the probe. A half-hearted attempt to appear to care about it's citizens.

Mad Money's Jim Cramer: Bankruptcy Looming for BP? - CNBC

Mad Money's Jim Cramer: Bankruptcy Looming for BP? - CNBC

The collapse of the Transocean rig leading to a bankruptcy filing for BP? That is highly questionable and borders on the ridiculous. Remember, BP doesn't just make billions of dollars from this rig. It is a multimillion dollar corporation that profited - yes, profited - 14 billion dollars in 2009 alone. It seems far more likely, given the 50 million dollars spent on a public relations campaign to improve their image after the spill, that this is just more public relations spinning. And what if it does happen? BP will emerge a leaner, more vibrant company than before. In other words, nothing can hurt the giant of petroleum. BP has the judges in their pocket, the administration in their pocket, and even Dawn, the Unilever brand detergent used to clean the oil sludge from delicate animals in their pocket because, after all, Dawn is made with petroleum.

The most disheartening part of this whole nightmare scenario is that, again, our bankruptcy dockets will include more and more independent fishermen, restaurant owners and other small businesses who now see their future making an independent living choked by the very people who kept them in business. In fact, most are still advocating for more drilling as a way to keep jobs in the community.

I foresee this having a trickle down effect to parts across the country. What happens when the local fishmarket who always has the freshest seafood is no longer able to stock his store? What happens to local eating establishments who are having to pay more and more for seafood from other parts of the country? What happens when the gulf income stream is no longer in the economic market?

But, yet, somewhere there is a highly paid PR guys telling the BP chairman "Bankruptcy could actually make people more sympathetic with us!"

Can your credit get better after filing for bankruptcy?

Although filing for bankruptcy protection does have a chilling effect on your credit report, this article seems to propose that your credit score could get better after filing bankruptcy. I consistently impress upon future bankruptcy clients that the ability to get credit is subjective in that if you are able to get credit after filing it would be at the sole discretion of the creditor. Kevin Chern a bankruptcy lawyer and president of Total Attorneys, a legal support firm states that following a bankruptcy, a debtor may have the ability to rebuild their credit within 18 to 24 months. I'm not quite sure I agree with that considering the credit card companies are now making it more difficult to get credit for people with good credit. In the end you will never know if you will be able to get credit until you try. There are no guarantees in the credit world now. See below:

clipped from www.nydailynews.com "Creditors and banks try to create a lot of misconceptions to scare people away from filing and tell them their credit will be ruined forever. But you have to take a more pragmatic view," he said. By the time most people file for bankruptcy, their credit is already trashed, they have a high debt-to-income ratio - a key indicator lenders look at - and they've likely defaulted on more than a few accounts. "After bankruptcy, you have a significantly better debt-to-income ratio and no outstanding debt. You may actually look like a better risk," Chern said.

Repaying Loans to Family Members prior to filing Bankruptcy

Frequently I meet with people seeking bankruptcy protection who are surprised that the actions they take prior to filing for bankruptcy can have a lasting impact on their bankruptcy. For instance, let's say the debtor's mother "helped her out" by loaning her money for several months. Later on the debtor comes into some money and repays the family member in full but then subsequently has to file for bankruptcy protection.

Two bankruptcy provisions come into play in this situation. First, Sec. 547 allows the Trustee to avoid any transfer of an interest of the debtor in property made within 90 days before the filing of the petition or up to one year prior to the filing if the transfer was made to an insider. So that means if Debtor wants to ride the Chapter 7 , the price of admission is that she understands the Trustee can and will recover that money from the mother for the benefit of the creditors she is trying to discharge. The law will not allow the debtor to pay off her mom in full when other unsecured creditors would receive nothing in Chapter 7, which brings me to the second provision which comes into play if the debtor files a Chapter 13. According to Sec. 1322, a Chapter 13 repayment plan cannot discriminate unfairly against any class of creditor, i.e., paying the mother in full while the other unsecureds get zip. Furthermore, Sec. 1325 states that a Chapter 13 plan cannot even be confirmed unless the unsecured creditors received at least what they would have received under a Ch. 7, in this case, that would have included the amount of the preferential transfer.

So, that seemingly harmless repayment can become a can of worms in a bankruptcy setting. Invariably the debtor asserts that they didn't know they were going to file at the time of the payment, they don't want their family member involved and that it's "not fair". Those may be valid points, however, they won't get you our of the preferential transfer quagmire.

More Evidence of Indifference of Mortgage Companies

As I posted before, I have had little positive feedback regarding the home mortgage modification program instituted by the Obama administration earlier this year. Now there is objective evidence to support that. According to the government's recently released progress report on the mortgage modification plan, only about 15% of eligible homeowners were offered assistance under the plan. Some mortgage companies haven't modified a single loan. On Monday, Senator Dick Durbin threatened the banks that if mortgage companies don't get more aggressive with their modification efforts, Congress would re-introduce legislation that would allow a homeowner to modify their mortgage in bankruptcy court. Personally, I don't feel this threat has much teeth. The banking industry lobbied so hard against the legislation the last time. I don't think consumers have a chance against this financial Godzilla.

clipped from www.msnbc.msn.com In its first monthly progress report on the plan launched in March, the government on Tuesday detailed big disparities among the 38 companies that have signed up. Several loan servicing companies — including American Home Mortgage Servicing and PNC Financial Services Group Inc. — have yet to modify a single loan.

Mortgage Modification is a Fraud

I represent homeowners from all walks of life who have been hurt by the recent downturn in the economy. Some have lost their jobs as a result of employers trying to cut back in order to stave off foreclosures themselves. Others have high medical bills and are finding it difficult to buy medication and pay their home mortgage. Recently, the federal government initiated a program designed to help homeonwers modify their home mortgages through their mortgage company. The Making Homes Affordable act was part of a $50 to $75 billion government effort to prevent foreclosures. Now it has come to light that many mortgage companies have taken the "who, me?" approach when it comes to approving these modifications. Homeowners are spending hours on the phone with their mortgage companies, sending in voluminous documents with personal information that seem to become lost when it reaches the mortgage companies (even though the homeowner has verification of the delivery) and enduring other sneaky tactics designed to deny homeowners access to this program. Now someone is fighting for these homeowners. See below.

clipped from www.hppinc.org Making Home Affordable HAMP Litigation On July 28, 2009, two Minnesota homeowners sued the government alleging that the administration of the federal foreclosure prevention and loan modification program violated their procedural due process rights.  Specifically, the Home Affordable Modification Program does not require the government to provide written notice of the specific reasons for a denial and notice of a right to appeal, a uniform procedure for appealing an adverse decision, and a method to undo a foreclosure that was done in violation of program guidelines or otherwise unlawful.

Jobless recovery is no recovery

Unemployment is a serious concern for anyone in this broken economy. In simple terms, if you don't have a job, you can't pay your bills and you don't spend money at local retailers. Retailers who face decreased sales can't afford to repay business loans, pay for health care for their employees and sometimes can't even make payroll. Almost $165 billion in U.S. commercial real estate [shops, offices, hotels, apartment buildings and land] loans will mature this year and need to be sold or refinanced as rents and occupancies fall, according to First American CoreLogic. Personally I don't understand how a "jobless recovery" can turn the country around. The only people a jobless recovery could possible benefit would be bankers. The ordinary consumer doesn't benefit and continues to struggle.

clipped from www.google.com Verizon 2Q profit falls, tops view, plans job cuts By PETER SVENSSON (AP) – 1 hour ago NEW YORK — Verizon Communications Inc., the nation's largest wireless carrier, said Monday its second-quarter profit fell 21 percent as cost-cutting in its wireline business failed to keep pace with falling revenues. The company will be cutting more than 8,000 employee and contractor jobs before the end of the year in the wireline business, speeding up its efforts to keep costs in line, according to chief financial officer John Killian.