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, 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)

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

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, 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?
(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

NV Attorney General Announces Arrests of Two Robo Signers

Catherine Cortez Masto, Attorney General
555 E. Washington Avenue, Suite 3900 Las Vegas, Nevada 89101
Telephone – (702) 486-3420
Fax – (702) 486-3283
Web –
FOR IMMEDIATE RELEASE Contact: Jennifer Lopez
DATE: November 16, 2011 702-486-3782
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.

Here Comes Warning to Banks for Wrongful Foreclosure

The highest court in Massachusetts ruled that U.S. Bancorp and Wells Fargo erred when they seized two troubled borrowers’ properties in 2007, putting the nation’s banks on notice that foreclosures cannot be based on improper or incomplete paperwork.

The Supreme Judicial Court voided the foreclosures, returning ownership of the properties to the borrowers and opening the door to other foreclosure do-overs in the state. However, this decision did not set any precedent for other courts, however, this is still a good decision and other lenders should be warned. The case dates to 2007, when Wells Fargo and U.S. Bancorp began foreclosure proceedings against delinquent borrowers on two separate properties. Neither borrower fought the proceedings — the courts in Massachusetts are not obligated to oversee foreclosures — and both banks quickly seized the properties.

The banks’ problems began in the fall of 2008, when Wells Fargo and U.S. Bancorp sought judgments from the Massachusetts Land Court that would have given them clear title to the properties. In 2009, the court rejected the banks’ arguments, ruling that the banks had not been assigned the mortgages before they foreclosed, as is required. Instead, the banks had acquired the mortgages after they had begun foreclosure proceedings.

Foreclosures are supposed to occur only when lenders can prove they own the note underlying the property. While it is common now for borrowers to question whether banks moving to seize their properties have the right to do so, in 2007, most borrowers assumed that the institutions foreclosing on them were acting properly.

Since then, lenders’ foreclosure practices have come under intense scrutiny. Borrowers’ advocates have argued that lenders flouted private property rights in their rush to foreclose on troubled borrowers. As lenders and Wall Street firms bundled thousands of mortgage loans into securities, banks often failed to record each link in the chain of documents demonstrating ownership of a note and a property.

As our readers are well aware, attorneys general in all 50 states are investigating foreclosure improprieties, which include forged signatures on legal documents and other dubious practices meant to patch up holes in loan documentation. Both mortgages in the Massachusetts case had been bundled into securities and sold to investors. The banks that foreclosed on the borrowers were acting as trustees, bringing the actions on behalf of investors in the trusts, which held the properties at the time of the ruling.

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.

More Foreclosure: When it is going to stop?

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.

The Whistleblowers Get Rewarded: Good Work

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

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

Unending Litigation Against Wells Fargo

As we stated that certain lenders are the laziest, most procastinator when it comes to loan modification. No matter what happens, they would never change themselves. Case in point is Bank of America. This bank has been sued left and right throughout USA, but still not changing and learning its lesson. Now, the latest news is that it would lay off some 40,000 people. Again, this top list includes Wells Fargo, Bank of America, and of course Chase bank. They would always find something to deny or delay your request for loan modification. Anyway, recently two lawsuits have been filed against Wells Fargo for discriminatory lending practices. One lawsuit is filed by the city of Memphis and Shelpy County, Tenn. Redlining is a term of the real estate when you steer certain minorities for improper lending based on the color of their skin and other social factors. Here, this lender has targeted individual property owners with specific lending practices increasing foreclosure and vacancies with specific results. The judge in this case had found a plausible link of deliberately steering African-American borrowers who qualified for prime mortgages into sub mortgages.

Good News from Massachusetts Settling Suit Against Mortgage Lender

This is a good news from Massachusetts as mortgages will be adjusted for thousands of Massachusetts homeowners. This lawsuit was filed by black and latino homeowners against their supprime lender (Option One) for unfair, discriminatory and predatory lending practices. This lawsuit was filed against Option One which agreed to make loan modifications to the tune of $115 million dollar. This lender issued very risky loan which did not match with the borrower’s income as it had shown scant regard for their income and the affordability by them. All this lender cared if the borrowers can afford a payment in the earliery and introductory stage. (Teaser rate of 1%). As expected, nearly 5,500 homeowners would get relief from this settlement. Option One has employed AHMSI as servicer for this relief.

US is Suing Big Banks Over Mortgages

The NY times has recently reported that the federal agency that oversees the mortgage giants “Fannie Mae and Freddie Mac is set to file suits against more than a dozen big banks, accusing them of misrepresenting the quality of mortgage securities they assembled and sold at the height of the housing bubble, and seeking billions of dollars in compensation”. These lenders include Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank, among others.

The suits will argue the banks, which assembled the mortgages and marketed them as securities to investors, failed to perform the due diligence required under securities law and missed evidence that borrowers’ incomes were inflated or falsified. When many borrowers were unable to pay their mortgages, the securities backed by the mortgages quickly lost value. Fannie and Freddie lost more than $30 billion, in part as a result of the deals, losses that were borne mostly by taxpayers.

We are thrilled about this news. This proves that the predatory lender had wide implications then what everyone initially thought. The foreclosure crisis looming on US is unending, and the economy cannot be improved, until this gigantic crisis is controlled and remedied. This crisis has especially hit hard Nevada, and its economy. We virtually see no construction activities at this time. The latest job report is very dismal. The politicians are running from pillar to post, and nothing tangible is done to rectify the job situation. Only statements are delivered for their print effect.

What is MERS and Had They Lost Their Significance?

What To Do With Mers?
Most of the mortgages are owned by an entity called MERS (Mortgage Electronic Recording System). This is not some physical entity, it is just like an electronic warehouse which keeps title record of most of the mortgages in USA. Now, irrespective of the fact that you are making your mortgage payments directly to your lender, this entity possibly may have all of your records. It is an electronic entity. Many cases have been decided in USA calling it a non party-in-interest. This term is a legal terms which means that only legal entity can sue or be sued. Every action in US courts must be initiated by a real party in interest and be defended by a real party in interest. MERS as such is not a real party in interest. They can be identified in your mortgage record as the “mortgagee of record” or sometimes as “nominee” or agent for the purpose of making future transfer of transactions.

What Is MERS and How Does It Work?
It was a mysterious electronic organization, a very large electronic database of mortgages and mortgage transactions. It was crafted in the mid 1990s as a legal device to replace the county land title recording system. The real estate boom was largely attributed to MERS as the securitization process culminates with MERS. Most of the lenders joined MERS happily as it transferred and registered all the mortgage transaction to its data bank. The lenders saved lots of money because most of the transaction took place electronically and saved millions for lenders as they saved having local agents in various counties throughout USA. Also, most of its work was generic, similar, and ingenuity was required so there was a tremendous cost saving which made lenders very rich, and softened their lending practices.

Innumerable Problems Created by the MERS System
We know that under the traditional (and legally authorized) method of keeping track of who owns what, any person is free to walk into a land records office and search the entire historical record of who bought and sold any particular piece of property. In other words, this was commonly called a “title search.” Under the MERS system, however, no such search is possible. MERS Members are not required to report transfers to the database and so there is no real way to be sure about who owns what.

One Court Says: MERS Doesn’t Deliver Clear Title
Back to our previous comment that MERS cannot sue in their names because they are not a real party in interest. As it is one of the cardinal principle of transfer that a note follows the deed and they cannot be sold separately. In In re Agard, a bankruptcy judge analyzed MERS for the purpose of deciding whether a bank seeking foreclosure could prove that it owned the promissory note accompanying the mortgage — a prerequisite in bankruptcy court when asking the court for permission to proceed with the foreclosure. Previously, MERS had attempted to assign the mortgage and promissory note to the foreclosing bank and the question was whether it successfully did so.

The bankruptcy court in Nevada had decided that MERS is not a proper party which can sue in its own name because it had not entered into any transactions with the homeowners. It concluded that MERS, as currently structured, did not deliver clear title to the foreclosing bank.
MERS Announces Some Changes
Because of the various problems it faces in the Courts, MERS has recently announced that it is changing one of its membership rules (Rule 8) to require that members no longer foreclose in MERS name. MERS has also told its members that assignments out of MERS’s name should be recorded in the county land records even if the state law doesn’t require it.

Our Military Is Protected from Foreclosure under The Servicemen Act (SCRA)

We have been approached by few military families whose home were foreclosed while the owner were performing military services overseas. This is very painful, but unfortunately, it has been done and the homes were foreclosed in clear violation of the SCRA. In one case, our law office helped getting back garnished wages of a police officer back. Two mortgage servicing companies have agreed to settle federal complaints that they wrongfully foreclosed on the homes of at least 178 military service members and to set aside a minimum of $22 million to compensate those victims. This is a great victory for the Justice Department that various lenders had settled such cases. The lenders include, of course the notorious one i.e Countrywide Home Loan Servicing and Saxon Mortgage Services. These companies knowingly and repeatedly violated the Service members Civil Relief Act, a federal law that extends an array of financial and legal protections to military personnel. The former Countrywide unit agreed to pay $20 million to approximately 160 victims of illegal foreclosures from January 2006 to May 2009. It also agreed to reimburse victims of any other illegal military foreclosures found to have occurred from May 2009 to the end of last year.
NY Times has posted one such painful story of Sgt. James B. Hourley who was away on war duties in Iraq. In violation of a law intended to protect active military personnel from creditors, agents of Deutsche Bank foreclosed on his small Michigan house, forcing Sergeant Hurley’s wife, Brandie, and her two young children to move out and find shelter elsewhere.

“When the sergeant returned in December 2005, he drove past the densely wooded riverfront property outside Hartford, Mich. The peaceful little home was still there — winter birds still darted over the gazebo he had built near the water’s edge — but it almost certainly would never be his again. Less than two months before his return from the war, the bank’s agents sold the property to a buyer in Chicago for $76,000. Since then, Sergeant Hurley has been on an odyssey through the legal system, with little hope of a happy ending — indeed, the foreclosure that cost him his home may also cost him his marriage. ”Brandie took this very badly,” said Sergeant Hurley, 45, a plainspoken man who was disabled in Iraq and is now unemployed. ”We’re trying to piece it together.”

“In March 2009, a federal judge ruled that the bank’s foreclosure in 2004 violated federal law but the battle did not end there for Sergeant Hurley. Typically, banks respond quickly to public reports of errors affecting military families. But today, more than six years after the illegal foreclosure, Deutsche Bank Trust Company and its primary co-defendant, a Morgan Stanley subsidiary called Saxon Mortgage Services, are still in court disputing whether Sergeant Hurley is owed significant damages. Exhibits show that at least 100 other military mortgages are being serviced for Deutsche Bank, but it is not clear whether other service members have been affected by the policy that resulted in the Hurley foreclosure.”

In court papers, lawyers for Saxon and the bank assert the sergeant is entitled to recover no more than the fair market value of his lost home. His lawyers argue that the defendants should pay much more than that — including an award of punitive damages to deter big lenders from future violations of the law. The law is called the Service members Civil Relief Act, and it protects service members on active duty from many of the legal consequences of their forced absence.

We suggest as a foreclosure defense attorney, and working in this field for long time, we encourage any military family (living in Nevada) to ask our free legal help in this regard. We would not charge any money upfront from any such familiy AND EVEN ADVANCE COURT COST, if they have meritorious case while their loved one were performing military services overseas. Call us at (702) 270-9100 and even get a free consultation over the phone.

Foreclosure Lawyers Not Above Board–Judge Berate Bank Lawyers

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.

Massachusetts Settles Suits Against Mortgage Lender Option One

We are hearing good news of homeowners fight against their predatory lenders. One such good news came from Massachusetts. Associated Press had reported (published in NY Times also in their August 11, 2011 issue) that Option One now known as Sand Canyon, agreed to make loan modification valued at $115 milliont to homeowners facing foreclosure. This lender has issued from 2004 through 2007 risky loans that did not document borrowers’ incomes to confirm they could afford the loans. Our readers may like to know that this lender is a subsidiary of H&R Block. They did not care of the general eligibility of homeowners and just based everything on their own model of not doing any loan modifications. Nearly 5,500 homeowners could get some relief on their loan payments under the settlement.

Homeowners Needs Help–The Economy is Not Reviving


Mountain of paperworks for loan modification

The following post is an interesting link where a homeowner was swamped endlessly with paperwork after paperwork by bank. This shows how callous a system has become, rubbing the miseries of homeowners.

How to stop wage garnishment in Nevada?

As we had stated many times, when someone file Chapter 13 or Chapter 7 bankruptcy petition, any pending garnishment (except for child support) will stop immediately. It also control any funds seized after the date of your bankruptcy filing will be returned to you.

How about Judgment Entered Against You
State Court Judgments Can Result in Significant Seizure of Your Income

In most cases, wage garnishments arise from lawsuit judgments. There cannot be any wage garnishment in Nevada except child support and student loan without a judicial process. For everything else, a judicial process is required. The judicial process means you have be issued a summons along with a complaint for which you have a right to confront and appear in a court of law. Judgments come from lawsuits and after you lose or ignore lawsuits. For example, if a credit card company filed suit against you for non-payment and you did not answer, a default judgment would issue against you. These judgments do not disappear into thin air but stays and the judgment/creditor waits for an appropriate time to pounce against you just like cheetah in a jungle who wait endlessly to prey on the animals. If you were involved in litigation and lost, a judgment would issue against you. These judgments can be executed personally against you or your business, and the judgment creditors is watching your assets or searching for them and the appropriate moment to execute against these assets.

It is not surprising that our clients many times report that they were not even aware of a pending lawsuit, much less a judgment. This is possible as the judgment creditors might be a different entity than the original lender and this credit transactions has been sold and resold many times, and the final holder are entirely different people now. This type of unpleasant surprise happens more often than you might think. Sheriff’s deputies, who are responsible for serving the lawsuit, are permitted to leave the lawsuit with an adult who answers the door to your house. This is also called personal service in Nevada. We sometimes see cases where a spouse accepts service but fails to deliver the lawsuit papers to the named defendant. Also, these papers can get mixed up with lots of other papers and one just ignore them or do not understand the implication of these judicial papers. I had seen many many times the original papers and the client does not even know what kind of papers are they and their purpose.

Most of these cases revolve around credit card debt. As you may know, the cardholder agreement provides that payment disputes shall be referred to an arbitrator out of State, or that a specific court in another State shall be the venue for any collection lawsuit. These collections needs to be validated and usually requires 30 days time period. Defending a lawsuit is not an easy thing, it is expensive, time consuming, and basically you have no defenses other than the statutory time period, if you had used the money and is not paying it back to your creditors. Also, it is quite possible that the original paperwork may be lost or is not transferred to the current credit holder. If your creditor possesses an out of state judgment, it can “domesticate” the judgment in your home county. Once a judgment is domesticated here, you will be subject to wage garnishment, bank account levy and any other remedies otherwise available to a winning plaintiff here in Las Vegas.

Wage Ganishment Threatens 25% of Your Net Pay and Possibly Your Job
Once a judgment has been issued, your creditor can ask the local sheriff’s office for a summons for continuing garnishment and execution of judgment. Your employer will be served with this garnishment summons and ordered to withhold 25% of your after tax earnings. In addition, your employer may charge a handling fee for the extra paperwork involved with fulfilling the garnishment requirements.
Be aware that your employer cannot choose to ignore a summons of continuing garnishment. If your employer does not honor the summons, your employer will become responsible for payment of the entire debt.

As you might imagine, human resource and payroll coordinators for most employers find wage garnishments troublesome for a number of reasons. Firstly, your employer must expend time and effort to complete the paperwork associated with calculating and processing garnishment orders. Secondly, until the garnishment is paid in full or otherwise released, your employer has potential financial liability if there are errors with the paperwork. Finally, your credibility may be called into question as a defendant found liable for a judgment in a lawsuit. It would not be an understatement to conclude that your job might be at risk if you involve your employer in your personal business and wage garnishment.

Law Office of Malik Ahmad is experienced in these matters and can stop any pending garnishment no matter where you fall in the process. If you contact us before the pending lawsuit against you goes into default, we may be able to avoid a judgment from issuing. If a judgment has been issued, the judgment creditor’s right to seize your wages terminates the instant we file your bankruptcy case. Sometimes, money that has been seized can be returned to you or it can be used to pay non-dischargeable debt like taxes.

Summary Judgments and wage garnishments function as powerful tools used by creditors to seize your money. When we file your bankruptcy case, your creditors are powerless to take any action and they lose their right to seize your wages. You can file a bankruptcy at any point in the pre-judgment or judgment process to put an end to creditor action. Don’t wait until your wages are at risk – call the Law Office of Malik Ahmad at (702) 270-9100 as soon as you suspect any risk of wage garnishment.

Can you save your home via bankruptcy?

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.