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The Federal Housing Finance Agency has now expanded the program by allowing homeowners to refinance regardless of how much their house has fallen in value. Originally, the program was limited to borrowers whose mortgages were no greater than 125 percent of the value of their homes. Under the program, borrowers must still be making on-time payments. The program also only applies to loans owned or guaranteed by Fannie Mae or Freddie Mac.
HAMP has received significant criticism as the number of homeowners participating in the program permanently that modified their mortgage is significantly lower than expected. The most recent statistics released by the Treasury Department in October indicated that the program helped 691,000 homeowners. The projected goal of the program was to help over 4 million homeowners. With the expansion of the program, the number of homeowners able to modify their mortgage may increase.
On November 1, 2011 Bankruptcy Court Costs will be increasing. The Judicial Conference has approved changes to the miscellaneous fee schedule for the Bankruptcy Courts. Motions for Relief from Stay will now carry a court cost of $176.00, which is up from $150.00. Complaints to Determine Dischargeability and other Adversary Proceedings will now carry a court cost of $293.00, which is up from $250.00. These fees become effective November 1st for any pleadings filed in any case. It does not just apply to cases filed after November 1st.
Weltman, Weinberg & Reis Co., LPA. will keep you advised as to any other changes from the Bankruptcy Courts.
If you have any questions on this matter, please contact Alan C. Hochheiser, Managing Partner of the Bankruptcy Group at Weltman, Weinberg & Reis Co., LPA. Al can be reached at 216.739.5649 and .
While still in its early stages, the City of Harrisburg, PA’s recent Chapter 9 Bankruptcy filing represents a rare move by a municipality to seek the protection of the Bankruptcy Code. The City Council authorized the filing of the Chapter 9 case, while the mayor and other city officials opposed, and continue to oppose, the move. Chapter 9 is designed to provide a municipality with “breathing room” from its creditors’ collection efforts, which will then enable the municipality to formulate a plan of debt adjustment acceptable to a majority of its creditors. A municipality in Chapter 9 has the ability to adjust debts and other obligations, with a plan of debt adjustment ultimately resulting in the unpaid claims of creditors being reduced and/or extended or restructured, including those unpaid pre-petition claims of a utility or other creditor.
Utilities do not have the same rights to adequate assurance of payment in Chapter 9 as they do in Chapter 11. In Chapter 11, a debtor must provide a form of adequate assurance of payment that is satisfactory to the utility and is limited to a very small list of options (cash deposit, letter of credit, surety bond, certificate of deposit, prepayment or any other form that is mutually agreed upon by the parties). However, in Chapter 9, the form of adequate assurance is not limited and may include granting of an administrative priority claim. Further, the requirement that the offer of adequate assurance be “satisfactory to the utility” is not included in Chapter 9. In addition, Chapter 9 gives the municipality the option of assuming or rejecting executory contracts. Such contracts could include a whole range of potential obligations, from ongoing service contracts to vendor agreements and, possibly, collective bargaining agreements with its public employee unions.
If you have any questions on this matter, please contact Mr. Scott D. Fink, Esq. Scott is an associate in Bankruptcy focused on the Consumer Bankruptcy and Commercial Bankruptcy Groups with Weltman, Weinberg & Reis Co., LPA. He is located in the Brooklyn Heights, OH office. Scott can be reached at 216.739.5644 and .
With residential loans defaulting at a record pace, Congress proposed or passed various bills to staunch this consequence of the economic dive-bomb. The Home Affordable Modification Program (“HAMP”) was enacted to prevent foreclosures through loan modifications. The general consensus is that this program has not produced the number of loan modifications as hoped. The process has proved burdensome for both creditors and debtors. Other bills proposed in an attempt to prevent foreclosures would have changed the Bankruptcy Code and permit Chapter 13 debtors to “cramdown” and bifurcate underwater residential mortgages. For good reasons, including the probable disastrous effect this would have on our already damaged economy, these bills were defeated.
Some are predicting we are on the cusp of yet another foreclosure wave. While this looms in the background, Congress may not extend HAMP when it is set to expire on December 31, 2012, and there will no longer be a federal loss mitigation program. There is a bill pending on the Senate calendar (which means it is awaiting action in the Senate) that would give each bankruptcy court the power to set up its own loss mitigation program. Senate Bill 222 was born on its Sponsors’ premise that mortgage servicers are bad guys because they profit from foreclosure losses, while the investors are good gals because they want to mitigate losses to protect the value of their portfolios, and so will engage in negotiations.
The bill would permit each court to establish its own program for consensual loss mitigation on loans secured by debtors’ homes. The bill in its current form would not require creditors to engage in loss mitigation. However, this might not deter some courts from establishing programs or creating complicated requirements that would delay hearings on motions for relief for loss mitigation. This would be especially harmful when the debtor has no realistic chance of a successful modification.
Additionally, because each court could establish its own program, there could be a complex patchwork of programs throughout the country. While loss mitigation is a worthy goal when both parties can agree, a decree from Congress to require it in bankruptcy could only delay the inevitable relief from stay in the majority of cases while further harming a creditor’s position.
Monette Cope is a Junior Partner practicing in Bankruptcy. She focuses her practice within the Consumer Bankruptcy and Commercial Bankruptcy Groups located in the Chicago office of Weltman, Weinberg & Reis Co., LPA. She can be reached at 312.253.9614 and .
MERS, Mortgage Electronic Registration Systems, Inc., is the ostensible nominee for numerous lenders on countless mortgages. Like many in the lending industry, this behemoth is now under fire in courtrooms across America, emerging from a variety of challenges, some as a victim and some as a victor.
MERS itself is a nationwide database that facilitates the buying, selling and transfer of mortgages. While the real estate market was sunny and foreclosures were the exception, MERS was a member-based valuable service that allowed the tracking of servicing and ownership of over 30 million loans,[1] and nearly 60 million homes.
Adding confusion to an already murky legal situation are the various legal challenges that are brought against MERS, meaning that a ruling “against” MERS may only pertain to some issues or rights and not others. These include but are not limited to issues of conveyance based on blank endorsements, assignments made by “officers” under the authority of corporations that no longer exist, the issue of whether MERS has a legal or beneficial interest in the note, and whether the circumvention of recording fees constitutes an illegal purpose.[2] These issues all result in consistent challenges – that MERS mortgage transfers are invalid, and the ostensible holders should be stripped of enforcement remedies.
Some states are still interpreting MERS as holding authority, whether to hold or convey mortgages. New Hampshire upheld MERS as a nominee and determined that they have clear rights to convey.[3] Other states that have also upheld the rights of MERS are Kansas, California, and Georgia. However, other states, including New York, have ruled in the opposite direction, invalidating a foreclosure.
The results of invalidating MERS transfers would be staggering. MERS is a central registry for loans, it allows borrowers to locate servicers and track the owner of their note. It also assists public servants in determining who is responsible for vacant properties and in the detection of mortgage fraud.[4]
Keep an eye on this issue, as it is possible that the issue may find itself in higher courts as the nation strives for some kind of consistency in the current tumultuous real estate environment. However, property law in the United States has historically been left largely to the states and thus fragmented and disparate approaches are likely, at least in the short term. Be sure to consult your Real Estate Default attorney for questions as to how this affects you.
WW&R Bankruptcy is a practice group of Weltman, Weinberg & Reis Co., LPA, the nation's largest creditors' rights law firm. This weblog is dedicated to informing clients and prospects to current government legislation concerning bankruptcy law.
