Nevada Foreclosure Laws Has Virtually Stopped All Foreclosure?


The new laws in Nevada just got passed only last month and it has miraculous effect already on our rapid foreclosure. New default notices were way down last month in Las Vegas (116 or so) and foreclosure filings in Nevada plunged in October during the first month of a new state law. Only more than 600 default notices were filed against homeowners through Oct. 25 in the state’s two most-populous counties, Las Vegas’s Clark County and Reno’s Washoe County. That was down from 5,360 in September, or an 88% drop, according to data tracked by ForeclosureRadar.com, a real-estate website that tracks such filings.

As you may know, Nevada’s state Assembly passed a measure that took effect on Oct. 1, 2011 designed to crack down on “robo-signing,” where bank employees signed off on huge numbers of legal filings while falsely claiming to have personally reviewed each case. This new law makes it a felony—and threatens to hold people criminally liable—for making false representations concerning real estate title. There are civil penalties of $5,000 for each violation. The good thing is that the new legislation has almost stopped foreclosure.

The bad thing is that the banks would have glut of homes which it cannot dispose off easily. The surplus homes would create problem for everyone including the banks, homeowners, and of course the local economy. The continuous auctioning of these properties were a capitalistic action which should not be stopped for any convenience. Again, if banks are at fault, the homeowners have not done justice with their contracts as well. Many of the delinquencies are deliberate and intentional. These “walks-aways” should be punished. Everyone should be made responsible for their actions or inactions. Furthermore, it may tempt many people to be intentionally delinquent on their homes. They may avoid taking care of these homes because they had no attachment. Possibly, they may not pay the HOA dues. Now, we have homeowners living in these homes, and still not taking care of their property. The problem with delinquency, and dependency (as you may see with immigrants coming from Communist countries, who get government housing, ration, jobs etc) that they do not strive enough to make their justified living when they come to US. Unfortunately, this dependency is taught in USA creating road blocks to the capitalistic system. We are unfortunately heading towards a socialistic economy. We should not forget that we live in a capitalistic society and should not help greedy and needlessly protect greedy and non law-abiding people. Of course, we are creating a massive delinquent homeowners society who had scant regard of their promissory notes, contracts, and ethical agreements. These folks always shift the accusation on someone else. They have not done anything wrong according to them. All the wrongs were done by their lenders, servicers. This is a very bad way to handle the recovery on homes. This would create the height of lack of accountability. Even though we had supported homeowners (and always would do) but the unintended result of this law would have a terrible effect on the banks and the general restoration of our economy.

What should have been done?

A simple solution which of course would not need the congressional approval (as they have the tendency to mess up everything) would be to encourage banks to refinance the mortgage of everyone regardless of the appraisal or the FICO score. Come on! FICO cannot be upright, everyone’s credit had taken too many hits in this struggling economy. It is difficult to keep your heads above water. So the basic solution is following:

1. Give refinance to every homeowner or at least the choice of it on the current interest rate. No one should be denied

2. No penalties, or fines of any kind.

3. Ignore FICO

4. Ignore appraisal. It is gimmick. (May be a drive by appraisal can be used)

4. This refinancing would generate plenty of business for lenders, brokers, loan agents, appraisers, home construction specialists etc. It would rejuvenate our markets. Every one would be busy and make money. This is the only solution towards restoration of our economy. I hope Mr. Obama would be listening. Mr. Obama can also fire his treasury secretary along with housing secretary. They have proven to be nincompoop. I personally think these folks are playing the same role what Dan Quayle had done for George Bush’s (Sr.) in his relection campaign. (he was the biggest hurdle in his reelection)

Can the Debt Collectors Directly Garnish Your Wages?


This is what the debt collectors continuously tell the debtors that they can directly garnish their wages. It is a pure lie, and this threat is actionable under the FDCPA. In Nevada,  in order for a creditor to obtain a writ of garnishment against your employer to withhold money from your paycheck, that creditor must have a judgment against you. In order to have a judgment against you, that creditor must have filed a lawsuit against you and won either after a trial or by default, that is, because you did not file a response. A default judgment or regular judgment needs to be executed which means the judgment holder needs to find the assets, the payroll master, and do other steps to find assets, and than file an execution of judgment. This execution of judgment is a legal process which again needs permission and authority from the court. This, of course, is a complicated process, and the debt collectors threatening can’t do all these steps in single day. Also, all these steps requires the help of an attorney and the debt collectors yelling and screaming at you, is not an attorney. If he poses as such, he would be violating the FDCPA again.

Normally when this threat is being made, a lawsuit has yet to be filed. How do you know if you have been sued? First, if suit has been filed against you, you should have been served with a Summons and Complaint by either the sheriff’s department of your county or by certified mail. However, if you cannot be found by the creditor, the creditor may have you served by publication, that is, by running a notice in the newspaper in the county of your last known address. If you are still unsure, you may call the clerk of court of your county.

What if I have been sued? See a lawyer immediately. Try not to be your own attorney. Afterall, this is a complex situation, and we had seen many people lose on simply and basic technical grounds. Please do not play with fire. This could be very prejudicial to lots of your interests.

What if I already have a judgment and/or garnishment against me? If you already have a judgment and/or garnishment against you, I would again suggest you see an attorney immediately. You may be able to have the judgment set aside or appealed, but only if you act very quickly. This may also be a good time to take a strong and hard look at bankruptcy. With a bankruptcy you should be able to discharge the judgment prior to garnishment and stop any garnishment that is already in place. Upon filing a bankruptcy, you may even be able to have a portion of any money garnished from your check returned to you. But this has to be done very quickly. Our law office (Law Office of Malik Ahmad) has gotten many such garnished checks restored to our debtors, and they always says thank you because this money and them had already parted. It is of course a good advantage to hire a reputable and experienced law firm like us. So, if you have any such problem, please do not hesitate to call our at (702) 270-9100

What is debt forgiveness, and its implications


If you owe a debt to someone (lenders) else and they cancel or forgive that debt, the canceled amount may be taxable.

The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.

This provision applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion does not apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.

More information, including detailed examples can be found in Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments. Also see IRS news release IR-2008-17.

We have simplified the legislation and the following are the most commonly asked questions and answers about “The Mortgage Forgiveness Debt Relief Act” and debt cancellation:

What is Cancellation of Debt?
If you borrow money from a commercial lender and the lender later cancels or forgives the debt, you may have to include the cancelled amount in income for tax purposes, depending on the circumstances. When you borrowed the money you were not required to include the loan proceeds in income because you had an obligation to repay the lender. When that obligation is subsequently forgiven, the amount you received as loan proceeds is normally reportable as income because you no longer have an obligation to repay the lender. The lender is usually required to report the amount of the canceled debt to you and the IRS on a Form 1099-C, Cancellation of Debt.

Here’s a very simplified example. You borrow $10,000 and default on the loan after paying back $2,000. If the lender is unable to collect the remaining debt from you, there is a cancellation of debt of $8,000, which generally is taxable income to you.

Is Cancellation of Debt income always taxable?
Not always. There are some exceptions. The most common situations when cancellation of debt income is not taxable involve:

Qualified principal residence indebtedness: This is the exception created by the Mortgage Debt Relief Act of 2007 and applies to most homeowners.
Bankruptcy: Debts discharged through bankruptcy are not considered taxable income.
Insolvency: If you are insolvent when the debt is cancelled, some or all of the cancelled debt may not be taxable to you. You are insolvent when your total debts are more than the fair market value of your total assets.

Certain farm debts: If you incurred the debt directly in operation of a farm, more than half your income from the prior three years was from farming, and the loan was owed to a person or agency regularly engaged in lending, your cancelled debt is generally not considered taxable income.
Non-recourse loans: A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral. That is, the lender cannot pursue you personally in case of default. Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income. However, it may result in other tax consequences.
These exceptions are discussed in detail in Publication 4681.

What is the Mortgage Forgiveness Debt Relief Act of 2007?The Mortgage Forgiveness Debt Relief Act of 2007 was enacted on December 20, 2007 (see News Release IR-2008-17). Generally, the Act allows exclusion of income realized as a result of modification of the terms of the mortgage, or foreclosure on your principal residence.

What does exclusion of income mean?Normally, debt that is forgiven or cancelled by a lender must be included as income on your tax return and is taxable. But the Mortgage Forgiveness Debt Relief Act allows you to exclude certain cancelled debt on your principal residence from income. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.

Does the Mortgage Forgiveness Debt Relief Act apply to all forgiven or cancelled debts?
No. The Act applies only to forgiven or cancelled debt used to buy, build or substantially improve your principal residence, or to refinance debt incurred for those purposes. In addition, the debt must be secured by the home. This is known as qualified principal residence indebtedness. The maximum amount you can treat as qualified principal residence indebtedness is $2 million or $1 million if married filing
separately.

Does the Mortgage Forgiveness Debt Relief Act apply to debt incurred to refinance a home?
Debt used to refinance your home qualifies for this exclusion, but only to the extent that the principal balance of the old mortgage, immediately before the refinancing, would have qualified. For more information, including an example, see Publication 4681.

How long is this special relief in effect?
It applies to qualified principal residence indebtedness forgiven in calendar years 2007 through 2012.

Is there a limit on the amount of forgiven qualified principal residence indebtedness that can be excluded from income?
The maximum amount you can treat as qualified principal residence indebtedness is $2 million ($1 million if married filing separately for the tax year), at the time the loan was forgiven. If the balance was greater, see the instructions to Form 982 and the detailed example in Publication 4681.

If the forgiven debt is excluded from income, do I have to report it on my tax return?
Yes. The amount of debt forgiven must be reported on Form 982 and this form must be attached to your tax return.

Do I have to complete the entire Form 982?

No. Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Adjustment), is used for other purposes in addition to reporting the exclusion of forgiveness of qualified principal residence indebtedness. If you are using the form only to report the exclusion of forgiveness of qualified principal residence indebtedness as the result of foreclosure on your principal residence, you only need to complete lines 1e and 2. If you kept ownership of your home and modification of the terms of your mortgage resulted in the forgiveness of qualified principal residence indebtedness, complete lines 1e, 2, and 10b. Attach the Form 982 to your tax return.

Where can I get this form?
If you use a computer to fill out your return, check your tax-preparation software. You can also download the form at IRS.gov, or call 1-800-829-3676. If you call to order, please allow 7-10 days for delivery.

How do I know or find out how much debt was forgiven?
Your lender should send a Form 1099-C, Cancellation of Debt, by February 2, 2009. The amount of debt forgiven or cancelled will be shown in box 2. If this debt is all qualified principal residence indebtedness, the amount shown in box 2 will generally be the amount that you enter on lines 2 and 10b, if applicable, on Form 982.

Can I exclude debt forgiven on my second home, credit card or car loans?
Not under this provision. Only cancelled debt used to buy, build or improve your principal residence or refinance debt incurred for those purposes qualifies for this exclusion. See Publication 4681 for further details.

If part of the forgiven debt doesn’t qualify for exclusion from income under this provision, is it possible that it may qualify for exclusion under a different provision?
Yes. The forgiven debt may qualify under the insolvency exclusion. Normally, you are not required to include forgiven debts in income to the extent that you are insolvent. You are insolvent when your total liabilities exceed your total assets. The forgiven debt may also qualify for exclusion if the debt was discharged in a Title 11 bankruptcy proceeding or if the debt is qualified farm indebtedness or qualified real property business indebtedness. If you believe you qualify for any of these exceptions, see the instructions for Form 982. Publication 4681 discusses each of these exceptions and includes examples.

I lost money on the foreclosure of my home. Can I claim a loss on my tax return?

No. Losses from the sale or foreclosure of personal property are not deductible.

If I sold my home at a loss and the remaining loan is forgiven, does this constitute a cancellation of debt?
Yes. To the extent that a loan from a lender is not fully satisfied and a lender cancels the unsatisfied debt, you have cancellation of indebtedness income. If the amount forgiven or canceled is $600 or more, the lender must generally issue Form 1099-C, Cancellation of Debt, showing the amount of debt canceled. However, you may be able to exclude part or all of this income if the debt was qualified principal residence indebtedness, you were insolvent immediately before the discharge, or if the debt was canceled in a title 11 bankruptcy case. An exclusion is also available for the cancellation of certain nonbusiness debts of a qualified individual as a result of a disaster in a Midwestern disaster area. See Form 982 for details.

If the remaining balance owed on my mortgage loan that I was personally liable for was canceled after my foreclosure, may I still exclude the canceled debt from income under the qualified principal residence exclusion, even though I no longer own my residence?
Yes, as long as the canceled debt was qualified principal residence indebtedness. See Example 2 on page 13 of Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments.

Will I receive notification of cancellation of debt from my lender?
Yes. Lenders are required to send Form 1099-C, Cancellation of Debt, when they cancel any debt of $600 or more. The amount cancelled will be in box 2 of the form.

What if I disagree with the amount in box 2?
Contact your lender to work out any discrepancies and have the lender issue a corrected Form 1099-C.

How do I report the forgiveness of debt that is excluded from gross income?
(1) Check the appropriate box under line 1 on Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) to indicate the type of discharge of indebtedness and enter the amount of the discharged debt excluded from gross income on line 2. Any remaining canceled debt must be included as income on your tax return.

(2) File Form 982 with your tax return.

My student loan was cancelled; will this result in taxable income?
In some cases, yes. Your student loan cancellation will not result in taxable income if you agreed to a loan provision requiring you to work in a certain profession for a specified period of time, and you fulfilled this obligation.

Are there other conditions I should know about to exclude the cancellation of student debt?
Yes, your student loan must have been made by:

(a) the federal government, or a state or local government or subdivision;

(b) a tax-exempt public benefit corporation which has control of a state, county or municipal hospital where the employees are considered public employees; or

(c) a school which has a program to encourage students to work in underserved occupations or areas, and has an agreement with one of the above to fund the program, under the direction of a governmental unit or a charitable or educational organization.

Can I exclude cancellation of credit card debt?
In some cases, yes. Nonbusiness credit card debt cancellation can be excluded from income if the cancellation occurred in a title 11 bankruptcy case, or to the extent you were insolvent just before the cancellation. See the examples in Publication 4681.

How do I know if I was insolvent?
You are insolvent when your total debts exceed the total fair market value of all of your assets. Assets include everything you own, e.g., your car, house, condominium, furniture, life insurance policies, stocks, other investments, or your pension and other retirement accounts.

How should I report the information and items needed to prove insolvency?
Use Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) to exclude canceled debt from income to the extent you were insolvent immediately before the cancellation. You were insolvent to the extent that your liabilities exceeded the fair market value of your assets immediately before the cancellation.

To claim this exclusion, you must attach Form 982 to your federal income tax return. Check box 1b on Form 982, and, on line 2, include the smaller of the amount of the debt canceled or the amount by which you were insolvent immediately prior to the cancellation. You must also reduce your tax attributes in Part II of Form 982.

My car was repossessed and I received a 1099-C; can I exclude this amount on my tax return?
Only if the cancellation happened in a title 11 bankruptcy case, or to the extent you were insolvent just before the cancellation. See Publication 4681 for examples.

Are there any publications I can read for more information?
Yes.
(1) Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals) is new and addresses in a single document the tax consequences of cancellation of debt issues.

(2) See the IRS news release IR-2008-17 with additional questions and answers on IRS.gov.

NV Attorney General Announces Arrests of Two Robo Signers


OFFICE OF THE ATTORNEY GENERAL
Catherine Cortez Masto, Attorney General
555 E. Washington Avenue, Suite 3900 Las Vegas, Nevada 89101
Telephone – (702) 486-3420
Fax – (702) 486-3283
Web – http://ag.state.nv.us
FOR IMMEDIATE RELEASE Contact: Jennifer Lopez
DATE: November 16, 2011 702-486-3782
OFFICE OF THE ATTORNEY GENERAL ANNOUNCES INDICTMENT IN MASSIVE
CLARK COUNTY ROBO-SIGNING SCHEME
Defendants to be Held Criminally Accountable for Filing Tens of Thousands of
Fraudulent Foreclosure Documents
Carson City, NV — The Office of the Nevada Attorney General announced today that the Clark County grand jury has returned a 606 count indictment against two title officers, Gary Trafford and Gerri Sheppard, who directed and supervised a robo-signing scheme which resulted in the filing of tens of thousands of fraudulent documents with the Clark County Recorder’s Office between 2005 and 2008.
According to the indictment, defendant Gary Trafford, a California resident, is charged with 102 counts of offering false instruments for recording (category C felony); false certification on certain instruments (category D felony); and notarization of the signature of a person not in the presence of a notary public (a gross misdemeanor). The indictment charges defendant Gerri Sheppard, also a California resident, with 100 counts of offering false instruments for recording (category C felony); false certification on certain instruments (category D felony); and notarization of the signature of a person
not in the presence of a notary public (a gross misdemeanor).
“The grand jury found probable cause that there was a robo-signing scheme which resulted in the filing of tens of thousands of fraudulent documents with the Clark County Recorder’s Office between 2005 and 2008,”said Chief Deputy Attorney General John Kelleher.
The indictment alleges that both defendants directed the fraudulent notarization and filing of documents which were used to initiate foreclosure on local homeowners.
The State alleges that these documents, referred to as Notices of Default, or “NODs”, were prepared locally. The State alleges that the defendants directed employees under their supervision, to forge their names on foreclosure documents, then notarize the signatures they just forged, thereby fraudulently attesting that the defendants actually
signed the documents, which was untrue and in violation of State law. The defendants then allegedly directed the employees under their supervision to file the fraudulent documents with the Clark County Recorder’s office, to be used to start foreclosures on homes throughout the County.
The indictment alleges that these crimes were done in secret in order to avoid detection. The fraudulent NODs were allegedly forged locally to allow them to be filed at the Clark County Recorder’s office on the same day they were prepared.
District Court Judge Jennifer Togliatti has set bail in the amount of $500,000 for Sheppard and $500,000 for Trafford. The case has been assigned to Department 5 District Court Judge Carolyn Ellsworth who will preside over the case.
Anyone who has information regarding this case is asked to contact the Attorney General’s Office at 702-486-3777 in Las Vegas or 775-684-1180 in Carson City.
TRAFFORD, GARY
SHEPPARD, GERRI
###

Fed Sues Allied Home Mortgage Over Bad Loans


The Associated Press has reported that the federal government sued one of the nation’s largest privately held mortgage brokers on Tuesday, saying its decade-long lending practices amounted to fraud and cost the government hundreds of millions of dollars and forced thousands of American homeowners to lose their homes.

The lawsuit in United States District Court in Manhattan sought unspecified damages and civil penalties and named as defendants Allied Home Mortgage Corporation; its founder, Jim Hodge; and Jeanne Stell, the company’s executive vice president and director of compliance.

This was announced by Preet Bharara, the United States attorney based in Manhattan. “The losers here were American taxpayers, and the thousands of families who faced foreclosure because they were could not ultimately fulfill their obligations on mortgages that were doomed to fail,” he said.

According to the lawsuit, nearly 32 percent of the 112,324 home loans originated by Allied from Jan. 1, 2001, to the end of 2010 have defaulted, resulting in more than $834 million in insurance claims paid by HUD.

The lawsuit said the default rate climbed to “a staggering 55 percent” in 2006 and 2007, at the height of the housing boom, when the government paid $170 million to settle Allied’s failed loans. It said an additional 2,509 loans are now in default and that HUD could face $363 million more in claims.

Obama New Help Plan for Homeowners–Just a Joke?


There are headlines throughout USA and in all the media about Obama’s new mortgage plan announced in Las Vegas about refinancing of underwater homes but today’s record-low mortgage rates are out of reach for millions of U.S. homeowners who would benefit from them most. The fact of the matter is that one in four homeowners with a mortgage is under water. 11 million people – owe more than their home is worth. Almost 60 percent of the home owners are underwater, if not more. However, the Obama administration is hoping at least 1 million of these borrowers will take advantage of its refinancing program under more lenient rules unveiled Monday. Let us see the important points of this program:

1. Homeowners who are current on their payments will be eligible to refinance no matter how much their home’s value has dropped.

2. This program only applies to loans which are financed by Fannie Mae and Freddie Mac.

3. This refi can be more than 125 percent value of the home.
4. This refi is available to only those homeowners who are current in their payments.

Demerits of this Plan:
This plan ignores the reality of non payments, and applies to very small segment of homeowners. There are approximately 3782 loans in Las Vegas which are financed either by Fannie Mae or Freddi Mac. According to the Clark County assessor’s office, Fannie Mae and Freddie Mac own 3,782 properties in Southern Nevada, out of 631,783 residences. I am just shocked how this administration after months of wrangling, pussyfooting came to this bogus plan which would do no meaningful changes in the plight of homeowners. A realistic plan could have opened refinancing for all the underwater homes. This would have created a revitalization of the economy in matters of months as everyone including the real estate, the loan brokers, the banks, the home construction industry, the brick layers, the carpet guys, the Home Depot, and all other who are associated with home industry would have been benefitted. Shocingly, this is a bad advice, and would bring very little result. We are disappointed on these half hearted measures.