San Francisco Bankruptcy Lawyer Blog

Michael Agoglia at Morrison & Foerster reported in June 2010 that there has been an increase in putative class actions on home loan modifications.

These cases have been filed throughout the United States based on the plaintiffs alleging that they have standing to sue lenders for not making modifications under the Home Affordable Modification Program ("HAMP"), and for not following Treasury Department guidelines. These plaintiffs are third party beneficiaries under the servicer participation agreements.

Class actions have also been rising based on plaintiffs alleging the form trial payment plan ("TTP") is a contract requiring lenders to automatically convert to a permanent loan modification as long as borrowers make three qualifying loan payments and turn in the required documents.

The TTP theory might eliminate the lenders' use of borrower income verification, the Net Present Value test and the 31% cap on net monthly income to mortgage expenses. Agoglia says that all of this was against the basic elements of HAMP.

Another class action theory of liability involves a due process challenge alleging lenders failed to provide borrowers with written adverse action notices and an appeals process after the denial of a HAMP loan modification.

If you have any questions on resolving financial difficulties, please contact our office at 1-800-303-2964. Rinne Legal is located at 1990 North California Blvd., Walnut Creek, California 94596, with additional offices in Fairfield, Oakland, and Sacramento. Rinne Legal offers free initial consultations.

In May 2010, the Mortgage Bankers Association released its latest national delinquency survey. According to the survey, the "delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 10.06 percent of all loans outstanding as of the end of the first quarter of 2010, an increase of 59 basis points from the fourth quarter of 2009, and up 94 basis points from one year ago."

At the same time, the survey reported the non-seasonally adjusted delinquency rate decreased from 10.44% in the fourth quarter of 2009 to 9.38% in the first quarter, and the rate of serious delinquencies declined to 9.54% in the first quarter, down 13 basis points from the fourth quarter. Serious delinquencies are loans more than 90 days past due.

The new foreclosures remained flat, at 1.23% of outstanding loans, up 3 basis points from the fourth quarter and down 14 basis points from the 2009 first quarter.

If you have any questions with regard to bankruptcy or foreclosures, please contact our office at 1-800-303-2964. Rinne Legal is located at 1990 North California Blvd., Walnut Creek, California 94596, with additional offices in Fairfield, Oakland, and Sacramento. Rinne Legal offers free initial consultations.

With continued high unemployment, more homeowners are unable to make their monthly mortgage or sell their homes at prices that generate enough to pay off lenders. Many homeowners are forced to consider short sales as an alternative hoping to at least protect their credit. Rather than letting a house go into foreclosure, a short sale is a sale of property for less than the outstanding loans.

A short sale requires lender consent. The homeowner conveys title to the lender free of mortgages, but the lender may still keep liens until it is paid in full, or willing to accept less than the loan amount. If the primary lender accepts a short sale, the secondary lender like a line of credit does not necessarily need to agree to wipe out its loan - even when it seems like the same bank that issued the mortgage and the equity line of credit. The two entities are thought of as separate companies, and the entity that gave the line of credit can file a breach of contract claim against the borrower when a short sale does not offer enough payoff money.

A short sale can affect a homeowner with tax liabilities. The homeowner getting a break on not having to payback an entire loan amount can be taxed on the difference because the write off is considered income.

If you have any questions with regard to bankruptcy or foreclosures, please contact our office at 1-800-303-2964. Rinne Legal is located at 1990 North California Blvd., Walnut Creek, California 94596, with additional offices in Fairfield, Oakland, and Sacramento. Rinne Legal offers free initial consultations.

On January 8, 2010, the New York Times reported that Giuseppa Bagnarol, 82, was dying at home in Redwood City when a process server delivered papers that ordered Mrs. Bagnarol and her family to leave. Wells Fargo, formerly Wachovia, formerly World Savings had foreclosed on the property bought in 1994 for $535,000. Wells Fargo had a policy against negative amortization loans, but finds itself dealing with the loans of its predecessors.

A lawsuit has been filed alleging elder abuse from predatory lending. According to the New York Times, the lawsuit argues that Mrs. Bagnarol was pursued to take out new mortgages when Mrs. Bagnarol was in her late 70s, suffering from the onset of dementia. She refinanced the property with a $1.5 million loan in December 2006 with monthly payments rising to $14,541.32 from $5,176.81, skyrocketing to $1,640,000 by December 2008.

Michael Rooney is the San Francisco lawyer representing the family in the lawsuit. The loan terms involved negative amortization and adjustable rate. Negative amortization arises when the payment made by the borrower is less than the interest due and the difference is added to the loan balance. Rooney specializes in contract negotiation and breach, real estate, consumer predatory lending claims, commercial mortgage modification, and makes special appearances on behalf of attorneys of record who cannot appear themselves to court hearings, depositions, arbitrations, and mediations in Marin, Alameda, San Francisco, Contra Costa, and San Mateo counties.

Loans Mrs. Bagnarol received were sold under names like Option/ARM where borrowers made minimum payments that did not cover the entire amount due. The balance was then added back into the loan, increasing the debt.

In 2009, Gov. Arnold Schwarzenegger signed laws making it illegal to write negative amortization loans in California.

Continue reading "Barbary Coast Foreclosure Crisis" »

In a speech at the Economic Club of Washington on December 7, 2009, Federal Reserve Chairman Ben S. Bernanke addressed frequently asked questions on Federal Reserve:

1. What has the Federal Reserve been doing to support the economy and the financial system?
2. Will the Federal Reserve's actions lead to higher inflation?
3. How can we avoid a similar crisis in the future?

Bernanke stated improving conditions in housing, consumer expenditure, business investment and global economic activity, but tight credit conditions and a weak job market remain. The Federal Reserve purchased "unprecedented volumes" of mortgage-related securities and Treasury debt.

After Bernanke's speech, on December 8, 2009, the House Financial Services Committee held a hearing entitled "The Private Sector and Government Response to the Mortgage Foreclosure Crisis" to review the results of the federal government's actions in preventing additional mortgage foreclosures and encouraging existing loan modifications. Chairman Barney Frank (D-MA) opened the hearing with frustration of the Committee and the public with the federal government's failure to prevent mortgage foreclosures. Committee Member Ron Klein (D-FL) said the problem with the Making Home Affordable program was the lack of documentation. JPMorgan Chase offered over 560,000 modifications to struggling homeowners through November 30, 2009, and had approved or completed over 112,000 permanent modifications under the Making Home Affordable program. Bank of America had over 160,000 customers enrolled in a trial modification program and, combined with Bank of America's loan modification programs, over 615,000 homeowners modified their loans.

These loan modification concerns raise the issue whether a lender's failure to offer loan modification is privately actionable. California has a loan modification law under Civil Code 2923.6. A district court in Fresno in Nool v. Homeq Servicing, No. 1:09-CV-0885 OWW (E.D. Cal., Sept. 4, 2009), Judge Wanger held that "the language of section (b) belies the imposition of any duty to engage in loan modification discussions, as the provision merely expresses legislative 'intent' that the mortgagee, beneficiary, or authorized agent offer the borrower a loan modification if doing so is consistent with its authority." Another case agreeing with Judge Wanger is Farner v. Countrywide Home Loans, 2009 WL 189025, at *2 (S.D. Cal. Jan.26, 2009) ("[N]othing in Cal. Civ.Code § 2923.6 imposes a duty on servicers of loans to modify the terms of loans or creates a private right of action for borrowers.").

To listen to a bankruptcy audio on mortgage cram downs and strip downs (Teleconference recorded on Dec 13, 2009 with special guest: Leanne Levett, Esq, a foreclosure specialist in Florida), go to: http://www.713training.com/mortgagecramdown/

Continue reading "Where is the Economy Headed?" »

In a sign that business conditions remain bad for many in Silicon Valley, the San Jose Mercury News reported recently that around 20% of all commercial office space in the Valley stood empty at the end of 2009 - and that experts believe office vacancies will only rise in 2010.

Citing figures from NAI/BT Commercial, a broker, the paper reports that this is the Valley's worst vacancy rate for four years. It quotes a local economist who notes that, like Bay Area home foreclosures, vacant office space represents a stock of real estate that must be "worked off" as part of the painful process of economic recovery.

As vacancy rates rise, rents are also falling. This situation could, in turn, lead to an increase in Bay Area bankruptcies if a lack of tenants leaves building owners unable to service their mortgages. Signs of a downward spiral of this sort can already be seen. The paper quotes a managing director at Silicon Valley's BT commercial saying some landlords are already in "giveaway" mode, anxious, as the paper puts it, "for any lease revenue they can get in the worst market since at least 1995." A Walnut Creek foreclosure attorney can counsel distressed property owners on loan modifications and other foreclosure prevention options.

Times like these are also a reminder of the importance of planning ahead. Beginning consultations with a San Francisco bankruptcy lawyer at an early stage - well before bankruptcy has become a certainty - can be a decisive factor in how your home or business makes it through these troubled times. A Bay Area bankruptcy attorney with a specialization in loan modification and foreclosure prevention can be a key ally in your efforts to save your property.

San Jose Mercury News: Silicon Valley office vacancies to remain high this year

In a development illustrating how much worse the home foreclosure situation can get, Florida's Supreme Court is ordering the use of managed mediation proceedings as a way of clearing the state's backlog of foreclosure and loan modification cases. The order, of course, does not apply here in California, but since the two states are closely linked as centers of the mortgage and housing crisis it can be seen as an indication of how bad things might soon get.

According to a report in the online industry publication eCreditDaily.com last week's order by Florida's chief justice supported the findings of a task-force appointed by the court itself. It requires lenders and distressed homeowners to meet and attempt to resolve their differences with the help of a legal mediator who is paid a fee of no more than $750. Florida trails only California and Nevada in the number of pending foreclosure actions on the state's legal docket. The court-mandated mediation sessions are an attempt to get a slow-to-stalled system moving again.

In recent months California has enacted new laws regulating California loan modifications. The recent action in Florida raises new questions: Would a mandated California mediation program be a good idea here as well? Especially in hard hit Bay Area districts including Alameda County and Contra Costa County? Is managed mediation actually a good choice for individual homeowners?

These are issues a California mediation attorney is well-situated to help you consider. An experienced Contra Costa County loan modification and mediation lawyer can explain your options and help distressed home and business owners determine whether California bankruptcy or some form of Bay Area mediation leading to a loan modification is best for them.

eCreditDaily.com: Florida's Fix: Can 'managed mediation' stem foreclosures?

The economy still looks dismal and Northern California's housing foreclosure and bankruptcy crisis continues, but consumers can take heart that new laws coming into force offer them some help.

As TV station KCRA reports, Gov. Arnold Schwarzenegger signed a total of 724 bills into law during 2009 and a number of these are designed to help homeowners struggling to make their mortgage payments or seeking California home loan modifications. The best known of these is the state's new law banning the charging of advance fees for loan modification services. This law was declared an "emergency" measure and took effect in October. Other notable bills came into force on the first of the year.

The most notable of these bills, SB 239, makes it a crime to commit mortgage fraud. Until now California mortgage fraud had been prosecuted under the state's existing fraud statutes. Other measures regulate the ways in which purchasers of foreclosed properties can resell those properties and require mortgage loan originators to pass an exam and register with a national database of mortgage professionals.

How all of this affects individuals will vary widely from person to person. That, in turn, makes it more important than ever to have a trusted and experienced Northern California loan modification and foreclosure attorney in your corner. Understanding legal changes can be difficult. A qualified San Francisco bankruptcy lawyer can, however, help you sort through the new laws. The legislature and governor have given consumers new protections and new tools to help them cope with these trying times. Experienced legal help is your path to deriving the full benefits envisioned by these new laws.

KCRA.com: New Laws protect home, car buyers

There has been much talk about the national economy turning the corner (or at least hitting bottom) sometime soon. A couple of end-of-year analyses took a good news-bad news view with Northern California, as it so often is, at the epicenter of things.

US News & World Report cites an analysis by Mark Zandi, chief economist at Moodys.com, that housing prices will continue to fall before they begin a widespread rebound. Zandi does not expect the housing market to hit bottom until the third quarter of 2010. Of course, this will vary from place to place, even across the Bay Area (the city of San Francisco, for example, has not been hit nearly as badly as many parts of the East Bay), but the overall message is clear: there are at least a few more months of rough sailing ahead for homeowners. That means Oakland, Walnut Creek and Fairfield foreclosure prevention will remain a priority for many homeowners at least for the foreseeable future.

The continued drop in home prices in a market where many Bay Area homeowners are already underwater is likely to mean the local market in California loan modification remains brisk. As I have outlined in earlier blog posts, new state laws on loan modifications make it imperative that you seek out an experienced and reputable Bay Area loan modification attorney as you embark on the process of California foreclosure prevention, and holding onto your property.

The trick in the coming months will be to watch the California loan market and Bay Area foreclosure situation closely. A Contra Costa County bankruptcy and foreclosure prevention attorney can and should be one of your key allies throughout this process.

US News & World Report: 10 Things to Know About Real Estate in 2010

Economist: Off the Road

In the waning days of 2009 news emerged of a significant development regarding Northern California loan modifications. On December 29 Campbell, California-based loan modification company Whitfield Financial was forced to out of business after surrendering its real estate license. According to an article in the Sacramento Bee word of the closure came in a statement from the California Department of Real Estate. The statement noted that Whitfield had actually surrendered its license to the Department a week earlier.

The move marks a very visible effort on Sacramento's part to enforce new laws governing California loan modifications signed last year by Gov. Arnold Schwarzenegger. According to the Bee, Whitfield was accused of collecting advance fees for California loan modifications - a practice that is now illegal in California.

The news regarding Whitfield is a reminder of the importance of working with a reputable Bay Area loan modification attorney if you are considering an attempt to negotiate with lenders regarding your mortgage. San Francisco loan modifications can be a powerful tool for avoiding bankruptcy, mortgage default and foreclosure, but it is important to ensure that the professionals assisting you are working within the law.

The Bee quotes the state DRE as saying "it has 1,300 pending investigations of complaints against California loan modification firms." That is good news from a consumer protection standpoint, but it reinforces the need to choose carefully when selecting a San Francisco, Oakland or Contra Costa County bankruptcy professional to assist with your loan modification efforts.

Sacramento Bee: Whitfield financial surrenders its license

The final round of housing and foreclosure data for 2009 was released as the year drew to a close. The numbers cover October, and contain some surprisingly good news regarding California foreclosures.

According to a brief analysis published earlier this week in the New York Times, seasonally-adjusted "price recovery in California seems to be strong." This is in contrast to Florida and Nevada - both, along with California, among the worst hit parts of the country in the housing and foreclosure crisis - where housing prices fell again in October. This, the paper reported, "could mean foreclosure sales are once again dragging prices down." The newspaper was looking at data from S&P Case-Schiller.

In San Francisco and throughout Northern California, Bay Area foreclosure prevention efforts consumed much of 2009. In addition to helping families keep their homes, Contra Costa and Alameda County foreclosure prevention also helps stem the broader slide in the region's housing prices.

When tackling this complex area of financial and real estate law it is especially important to seek the advice and assistance of an experienced San Francisco foreclosure attorney. Loan modification, foreclosure and bankruptcy prevention are all areas in which a Bay Area bankruptcy lawyer can offer help. The fact that we wrapped up 2009 with a smattering of good news does not change the fact that 2010 promises to be another challenging year both for the country's economy as a whole and for the Walnut Creek and broader San Francisco and Oakland housing markets in particular.

New York Times: Bubbles keep bursting

As I have noted on several recent occasions, the government's Making Home Affordable program has come under criticism on several fronts. The program was intended to help responsible homeowners in California and elsewhere in the country hold onto their properties by assisting them with California loan modifications.

New proof that this program and numerous similar efforts have failed to live up to their promise came a few days ago in the San Francisco Chronicle. As the paper reports, only about 31,000 homeowners nationwide have received government-assisted loan modifications this year, even as the number of homes facing foreclosure in 2010 is now estimated at around 1.7 million.

It is at times like these that the assistance of a Bay Area loan modification attorney can be invaluable. A skilled San Francisco loan modification lawyer can advise you on the advantages and disadvantages of both government and privately arranged programs, as well as representing you when you do, finally, sit down with your lenders.

Holding onto your home in these economically difficult times can be a challenge. Putting an experienced loan and negotiation professional in your corner can make all of the difference between success and failure.

San Francisco Chronicle: 2009's mortgage modifications pretty minor

A bit of good news on the housing front as we head into the holiday weekend: new data indicates that home prices rose slightly in the southern part of the state during November, according to the Los Angeles Times. Higher prices typically mean both that more buyers are now in the market and that the number of houses coming into the system may be declining. That, in turn, may mean that we will soon see light at the end of the tunnel of the long California foreclosure crisis.

The data, compiled by a California real estate data company, MDA DataQuick, show the median Southern California home price rising 1.8% from October to November. As the Times notes, that would make November "the seventh consecutive month in which prices have improved or held steady."

As I've noted in this blog on several recent occasions, there are a number of public and private resources available to help homeowners avoid California foreclosure through loan modification and other negotiation and mediation programs. In the broadest of senses, keeping your home out of foreclosure through a California loan modification proceeding helps not only you (because you get to keep your home) but helps the state as well (because it improves the state's housing statistics and, through them, the overall economy).

An experienced California loan modification and mediation attorney can help plan a strategy for holding onto your property and navigating the complex world of foreclosure and bankruptcy law.

Los Angeles Times: Southern California home prices and sales improve in November

A measure proposed by Congresswoman Doris Matsui (D-Sacramento) this month and approved unanimously by the US House of Representatives aims to help California homeowners seeking loan modifications through President Obama's Making Home Affordable program.

The measure requires that lenders taking part in the program "publicly report their progress in helping responsible homeowners stay in their homes." The Making Home Affordable program has recently drawn criticism after it emerged that some lenders were trumpeting the number of homeowners who had filled out preliminary paperwork while playing down the fact that very few had completed the program and successfully received loan modifications. California loan modification issues are on the mind of many Northern California homeowners because the region is among the worst hit in the nation's on-going housing and mortgage crisis.

Matsui proposed the amendment to HR 4173, the Wall Street Reform and Consumer Protection Act. The bill passed the House 223-202. A Senate version of the bill is currently stalled in committee, but may make it to the floor for consideration by the full Senate early in the New Year.

Navigating the complexities of Sacramento and Bay Area loan modification programs is a difficult and often confusing process. A Walnut Creek loan modification lawyer with experience throughout Northern California can offer crucial advice about available programs and the best way to approach your lender or lenders. Many programs are out there, but not all of them are good deals - or even reputable. Consulting with an experienced Fairfield loan modification attorney should be an essential, early step in your battle to keep your home.

RealEstateRama: Matsui anti-foreclosure amendment adopted into Wall Street Reform Act

Statement released by Rep. Matsui's office

GovTrack: Legislative history, text & status of HR 4173

Despite technical signs that the recession may be over and repeated predictions that things are getting better, new data released last week indicates that the US is on course for a second straight year of record home foreclosures. The foreclosure data, compiled by California-based RealtyTrac, is cited in a recent Bloomberg News article, reprinted in Business Week.

An ongoing national jobs crisis, combined with a weak credit market, led to more than 300,000 foreclosure filings in November, the article says. This marked the ninth straight month that foreclosures have hit that level. The numbers indicate that 2009 foreclosures will eventually total around 3.9 million, well ahead of last year's record total of 3.2 million.

Separate reports that I have frequently blogged about indicate that California foreclosure numbers are among the highest in the nation, with some Bay Area communities among the worst-hit.

Data like this highlights the need for the assistance of a Contra Costa County foreclosure lawyer if you are facing financial troubles. In San Francisco, Fairfield, Walnut Creek and elsewhere in the Bay Area a foreclosure attorney can also help you handle loan modification issues and can serve as a mediator between you and your creditors. Consulting with a Bay Area loan modification attorney can be a key step in keeping control of the foreclosure process, or preventing foreclosure entirely.

Business Week: U.S. foreclosures to reach 3.9 million in second record year