More bad news coming about foreclosure filings as it rose in August, as more homebuyers fell behind on their mortgage payments.The new statistics shows that filings were up 7% compared to July, but were still 33% lower than they were a year ago — marking the eleventh straight month of year-over-year declines, according to RealtyTrac, a leading online marketer of foreclosed properties. According to the report, 228,098 homes in the U.S. received some kind of foreclosure filing in August. Default notices, which typically initiate the foreclosure process, surged more 33% from July. Foreclosure auctions and bank repossessions, which come later in the process, both fell slightly.
The lenders did take a pause after the “robo signing” last year but now they are increasing the pace of forelcosure again. We had stated that the recovery of economy depends upon the recovery of housing market. Sometime ago NY Times reported that Obama administration is working on a plan to give refinancing option to home owners who would not otherwise qualify for refinancing on the lowest interest. But we had not heard more details on this program so far. Unfortunately, our judicial system is clogged by thousands of complaints, lawsuits involving lenders, homeowners and brokers. This seems to be an unending crisis, and presently we do not see any light at the end of the tunnel. Obama administration is gearing up for the second election, and his Treasury Secretary is a hopeless person. Once there was a rumor of his resignation, the market briefly rose but came back to negative again, when he denied resigning from this post. Too me, he is like Dan Quayle with the Senior Bush. The senior Bush did not want to get rid of him, and eventually lost election.
US Department of Labor finds Bank of America in violation of Sarbanes-Oxley Act whistleblower protection provisions. Here is the good news as Bank is ordered to reinstate fire employee employee and pay $930,000. This interesting story is new, and came from San Francisco where it has found Charlotte, N.C.-based Bank of America Corp. in violation of the whistleblower protection provisions of the Sarbanes-Oxley Act for improperly firing an employee. The bank has been ordered to reinstate and pay the employee approximately $930,000, which includes back wages, interest, compensatory damages and attorney fees. The findings follow an investigation by OSHA’s San Francisco Regional Office, which was initiated after receiving a complaint from the Los Angeles-area employee.
“It’s clear from our investigation that Bank of America used illegal retaliatory tactics against this employee,” said OSHA Assistant Secretary Dr. David Michaels. “This employee showed great courage reporting potential fraud and standing up for the rights of other employees to do the same.”
The employee originally worked for Countrywide Financial Corp., which merged with Bank of America in July 2008. The employee led internal investigations that revealed widespread and pervasive wire, mail and bank fraud involving Countrywide employees. The employee alleged that those who attempted to report fraud to Countrywide’s Employee Relations Department suffered persistent retaliation. The employee was fired shortly after the merger.
“Whistleblowers play a vital role in ensuring the integrity of our financial system, as well as the safety of our food, air, water, workplaces and transportation systems,” added Michaels. “This case highlights the importance of defending employees against retaliation when they try to protect the public from the consequences of an employer’s illegal activities.”
Both the complainant and Bank of America can appeal the monetary damages to the Labor Department’s Office of Administrative Law Judges within 30 days of receiving the findings.
OSHA enforces the whistleblower provisions of the Sarbanes-Oxley Act and 20 other statutes protecting employees who report violations of various airline, commercial motor carrier, consumer product, environmental, financial reform, food safety, health care reform, nuclear, pipeline, public transportation agency, railroad and maritime laws. Under these laws enacted by Congress, employers are prohibited from retaliating against employees who raise various protected concerns or provide protected information to the employer or to the government. Employees who believe that they have been retaliated against for engaging in protected conduct may file a complaint with the secretary of labor to request an investigation by OSHA’s Whistleblower Protection Program. Detailed information on employee whistleblower rights, including fact sheets, is available at http://www.whistleblowers.gov.
Under the Occupational Safety and Health Act of 1970, employers are responsible for providing safe and healthful workplaces for their employees. OSHA’s role is to ensure these conditions for America’s working men and women by setting and enforcing standards, and providing training, education and assistance. For more information, visit http://www.osha.gov.
While we criticize everyone including lenders, mortgage brokers, bank attorneys has been berated by judges lately. Now judges are lamenting and doing their scorching criticism of lawyers–notably bank lawyers. Judges have accused lawyers of processing shoddy or fabricated paperwork when representing their clients i.e banks. Here, is one such judge. Judge Arthur M. Schack of New York State Supreme Court in Brooklyn has taken aim at an upstate lawyer, Steven J. Baum, referring to one filing as “incredible, outrageous, ludicrous and disingenuous.” As we know, New York judges are also trying to take the lead in fixing the mortgage mess by leaning on the lawyers. In November, a judge ordered Mr. Baum’s firm to pay nearly $20,000 in fines and costs related to papers that he said contained numerous “falsities.” The judge, Scott Fairgrieve of Nassau County District Court, wrote that “swearing to false statements reflects poorly on the profession as a whole.”
The courts in New York State, along with Florida, have begun requiring that lawyers in foreclosure cases vouch for the accuracy of the documents they present. This also prompted a protest from the New York bar. We know that involvement of lawyers in questionable transaction can expose them to disciplinary conduct under their respective bar associations. It may reflect very poorly on our profession as a whole. The role of lawyers is under scrutiny in 23 states where foreclosures must be reviewed by a court. The situation has become especially heated for high-volume firms whose practices mirror the so-called robo-signing of some financial institutions. Robo signing, as you may know, was an accelerated process to do foreclosure without actually physically signing by someone knowledgeable and was merely a rubber stamp hoodwinked the foreclosure process.
Home Foreclosure and BankruptcyI have dealt with this topic many times here, one more time I like to dwell this very important topic in somewhat greater details.
When You Are Facing Imminent Foreclosure?
A bankruptcy may stop imminent foreclosure regardless of the time if you file it before the fall of hammer, even if it is done few minutes and is intimated to the auctioneer. I have filed bankruptcy many times and then rushed to the auction place and stopped the foreclosure by showing the bankruptcy papers to the auctioneer. It is only done in emergency when the homeowner is either very lazy or hesitant to do any action or does not know his choices and the lender backed out from a loan modification promise at the 11th hour. It does not make difference if you had merely filed a skeletal i.e emergency bankruptcy regardless of the chapter you had chosen. Of course these measures are temporary. As you should know, the filing of bankruptcy petition an automatic stay is issued which is inherent in the petition of bankruptcy. In Chapter 7, you can prolong the stay if a mortgage negotiation is conducted during the mandatory period and before the creditor requests a motion to lift stay from your petition. However, when the discharge is granted, it is likely, that your creditor/lender would start the foreclosure proceedings again and try to evict you. It is different in case of Chapter 13 where debtor/homeowner might be able to cure the defaults on the mortgage under the plan and keep up ongoing payments. If so, the Chapter 13 debtor may be able to save the home from foreclosure.
One should understand that the bankruptcy can stop only the foreclosure for a short term. You need to handle the basic cause and cure the deficiency or negotiate the loan modification. If someone tells you that filing a bankruptcy is a permanent cure, then he/she is lying to you big time. Bankruptcy can buy some essential time for negotiation and cure of the loan. Again, the loan can be transferred from the underwriting department to the bankruptcy department of the bank and they now permission from your bankruptcy attorney to talk to you or some of your representative and that may be time consuming.
Reaffirmation of Mortgage
If you are willing to continue making the required monthly payments, you could still lose your home if you file for bankruptcy under Chapter 7.
In other words, in Chapter 7 filing, if you have no equity in your home and you have not made your payments, the creditor can foreclose on your home during or after bankruptcy (after the motion to lift stay is taken away, or within 30 days, or when your bankruptcy is discharged.
Would Trustee Take Your Home?It depends on two basic factors. (1) How much equity you have? (2) how much of the home value is sheltered under the exemptions?
Please remember under Nevada laws, the exemptions of homestead is $550,000.
What is Homestead Exemption?The homestead exemption is the amount of your home’s value that the law puts out of the reach of your unsecured creditors. Mostly, in Nevada, Trustees are shying away from doing this extreme action because basically very few home owners have value which is non exempted and has otherwise equitable interests in their properties in this struggling economy.
There is an interesting article published in today’s NY Times about probable changes in the bank’s foreclosure and loan modification process.
According to NY Times, the following proposals are on the table. This proposal is advanced by state attorneys generals who had presented these proposals to the nation’s biggest five banks with these demands. The net result would be that government would have sweeping authority over the mortgage modification process.
What are the proposed changes?
1. Banks would be prohibited from starting foreclosure proceedings while a borrower was actively trying to lower the interest rate or ease other terms of the home loan, a process known as a mortgage modification.
2. Any borrower who successfully made three payments in a trial modification would be given a permanent modification.
3. When a modification was denied, it would be automatically reviewed by an ombudsman or independent review panel.
According to NY Times, this blueprint is still just a draft, and weeks, if not months, of tough negotiations with the banks remain. Several big banks, including Citigroup, Bank of America and JPMorgan Chase, declined to comment.
The government’s current program to help troubled home borrowers, known as HAMP, continues to face fierce criticism. Both
Can you bounce back after bankruptcy?
I have been asked many times what would be the life after bankruptcy and how the debtors can reestablish their credit again and acquire credit again. Of course, it would be difficult and time consuming, but it is not impossible. Soon after the discharge of bankruptcy, one start getting offers from credit card companies and a secured credit card is an ideal form for reestablishing credit. Actually, almost anyone can get credit soon after a bankruptcy. It’s just a matter of knowing how and what steps to take. Of course, bankruptcy deals a devastating blow to your credit and your credit score, the three-digit number lenders use to gauge your credit-worthiness. your FICO is at the bottom of scores, but you should not be discouraged by this devasating score. Of course, you can build it slowly and surely. But the effects don’t have to be lasting. Long before the bankruptcy drops off your credit report, you could be qualifying for loans with good rates and terms. I still consider FICO a fiction but it still runs your credit life, and all the lenders use this tool all the time. So, it is an important yardstick.
Nothing in credit remains forever. A bankruptcy legally can remain on your credit report for up to 10 years, but its effect on your credit score can start to diminish the day your case is closed — if you adopt responsible credit habits such as paying your bills on time, using only a small portion of your available credit and not applying for too much credit at once. Well, to start, one must learn some lesson, some financial education after declaring bankruptcy and devise a saner financial course. The days of wasteful expenditure should be gone forever and one must always learn new tools, education, train, or get a professional training to acquire more money. Of course, if you become wealthier, it may solve lots of your financial problems.
You may live on cash for quite some time and paying by cash is a good habit, but still one has to use credit. Afterall, we live in a credit society and we have to travle, hire a cab or rent a car and buy grocery sometime on credit cards. You have to get and use credit to build your credit score. But if you want to rebuild your credit score, you can’t sit on the sidelines.
Did you ever try to make a budget? Of course a written budge, and not something on whims only. No technical knowledge is required. Simply write one page all sources of your income and on the next page write faithfully all of your expenditure, and see why there is so much widespread deficit in both. Why can’t you balance the budget and live a healthy life.
Of course it is time to clean up your credit report. You may find someone who can help you or you can write simple letters to all the credit bureaus. Possibly, your credit report may still show some of the delinquencies which ought to have been wiped out but still lingering there like a bad dream. Also, if you have other serious mistakes on your credit report, those need to be corrected as well. Your credit score is based on information in your credit report, so errors on your report can seriously dampen your score.