PROPOSED LAW HR 3609 TO UPDATE TITLE 11 OF THE UNITED STATES BANKRUPTCY CODE quoted:
“SEC. 2. DETERMINATION OF SECURED STATUS. Section 506(b) of Title 11, the United States Code, is amended by adding at the end the following: `While a case is pending, no fee, costs, or charges may be added to a debt that is provided for in a chapter 13 plan and is secured by the debtor’s vital place unless the holder of the secured claim gives timely gaze of such fee, costs, or charge to the debtor and to the trustee.’. SEC. 3. LIMITATION OF 1978 EXEMPTION THAT PREVENTS FEDERAL BANKRUPTCY COURTS FROM MAKING MODIFICATIONS TO THE TERMS OF A MORTGAGE ON A DEBTOR’S PRINCIPAL RESIDENCE. Section 1322(b)(2) of title 11, United States Code, is amended by striking `, other than a claim secured only by a security interest in real property that is the debtor’s vital state,’. SEC. 4. MODIFICATION OF CLAIMS SECURED BY DEBTOR’S PRINCIPAL RESIDENCE. (a) Contents of Plan- Section 1322(b) of title 11, the United States Code, is amended– (1) in paragraph (10) by striking `and’ at the end, (2) by redesignating paragraph (11) as paragraph (12), and (3) by inserting after paragraph (10) the following: `(11) provide for payment of allowed claims secured by the debtor’s principal region consistent with section 1325(a)(5), over a period exceeding the period permitted under section 1322(d); and’. (b) Confirmation of Plan- Section 1325(b)(5) of title 11, the United States Code, is amended by inserting `except as otherwise provided in section 1322(b),’ after `(5)’. SEC. 5. ELIMINATION OF CREDIT COUNSELING REQUIREMENT FOR CHAPTER 13 DEBTORS FACING FORECLOSURE. Allotment 109(h) of title 11, United States Code, is amended by adding at the end the following: `(5) The requirements of paragraph (1) shall not apply with respect to a debtor in a case under chapter 13 who submits to the court a certification that the holder of a claim secured by the debtor’s principal residence has initiated a judicial or non-judicial foreclosure on the debtor’s principal residence.’. SEC. 6. CONFIRMATION OF View. Section 1325(a) of title 11, the United States Code, is amended– (1) in paragraph (8) by striking `and’ at the end, (2) in paragraph (9) by striking the period at the end and inserting `; and’, and (3) by inserting after paragraph (9) the following: `(10) notwithstanding paragraph (5)(B)(i)(I), the holder of a claim that is paid pursuant to section 1322(b)(11) shall keep the lien securing such claim until payment of such claim.’. SEC. 7. DISCHARGE. Fraction 1328 of title 11, the United States Code, is amended– (1) in subsection (a)– (A) by inserting `(other than payments to holders of allowed claims provided for under section 1322(b)(11)’ after `paid’ the 1st space it appears, and (B) in paragraph (1) by inserting `or 1322(b)(11)’ after `1322(b)(5)’, and (2) in subsection (c)(1) by inserting `or 1322(b)(11)’ after `1322(b)(5)’.”
HR 3609 IH, Emergency Home Ownership and Mortgage Equity Protection Act of 2007, 110th Congress, 1st Sess., September 20, 2007. Library of Congress, Thomas, http://thomas.loc.gov/cgi-bin/query/z? c110:h3609.
I. AN INDIVIDUAL’S FINANCIAL LIFELINE.
Troubled times often lead to declining values in the American dollar, real estate and loan/credit defaults and then Bankruptcy. Bankruptcy can be traced aid as far as the Old Testament, “every seven years, debts are forgiven.” (Deuteronomy 15:1-2). The root of the word Bankruptcy comes from “bancus ruptus,” Latin for bench and broken, respectively. Freund, William; Lewis, Charlton T; et al, A Latin Dictionary, Clarendon Press, 1966. For decades, Bankruptcy has allowed consumers room to legally declare an incapacity to determine debts owed to creditors. Most view a Bankruptcy in a poor light, however, when it comes to someone who relies on Bankruptcy, as a interim measure to restructure or bag back on their feet, sometimes Bankruptcy is the sole option. Federal Law, Title 11 of the United States Code governs the Law of Bankruptcy, which is the law affected with the proposed bill H.R. 3609.
Corporations are downsizing, adding to one’s economic hardships. According to the Bureau of Labor and Statistics, today we have an 8.5% National Unemployment rate . As such, during a period of unemployment, bills are probably not getting paid and Credit Ratings are only becoming increasingly lower. Credit Ratings are composed of a statistical analysis of whether a person is creditworthy or not. Lenders use this score to calculate interest rates, whether to lend to the individual based on the determination of whether the person will be able to pay them back. Many employers look at a person’s credit rating and obligation to determine one’s eligibility for a job. Even with solid references and employment history, someone can be denied employment if their Credit Report consists of subjective adverse information. Thus, a Bankruptcy becomes a practical option since employers cannot deny a person employment because they are in Bankruptcy. (§525. Protection against discriminatory treatment, United States Bankruptcy Code prohibits employers from discriminating against insolvency.) Credit counseling is offered and mandated to help debtors manage their credit and spending.
Insurance Agencies also consume the credit rating to resolve insurance eligibility and price based on their assessment of uncertainty and insurance loss. House representatives continue to discuss legislation that will regulate the value of credit score insurance valuation. H.R. 5633 proposed the following and is quoted as follows:
“To amend the Fair Credit Reporting Act to prohibit certain discriminatory uses of consumer reports and consumer information in connection with definite personal lines of insurance, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
Portion 1. SHORT TITLE. SEC. 2. USE OF CONSUMER REPORTS AND CONSUMER INFORMATION IN A DISCRIMINATORY MANNER PROHIBITED.
(a) In General- Fragment 604 of the Fair Credit Reporting Act (15 U.S.C. 1681b) is amended– (1) in subsection (a), by striking `Subject to subsection (c)’ and inserting `Subject to subsections (c) and (h)’; and (2) in subsection (c)(1), by striking `A consumer reporting agency’ and inserting `Subject to subsection (h), a consumer reporting agency’. (b) Prohibition on Certain Discriminatory Uses of Consumer Reports and Consumer Information in Connection With Insurance- Section 604 of the Fair Credit Reporting Act (15 U.S.C. 1681b) is amended by adding at the end the following new subsection:
(h) Prohibition on Certain Discriminatory Uses of Consumer Reports and Consumer Information in Connection With Insurance- `(1) IN GENERAL- No consumer reporting agency may furnish a consumer report or consumer information with respect to any consumer to any person for consume in making any decision to underwrite or rate any personal lines of insurance, and no person shall use or obtain a consumer report or consumer information with respect to any consumer in connection with the underwriting or rating of any personal line of insurance, for which the Commission determines, including any finding or determination made in any study for which a record is submitted to the Congress, that any such use of the consumer report or the consumer information– `(A) results in racial or ethnic discrimination; or `(B) represents a proxy or proxy effect for run or ethnicity. `(2) INSURANCE INFORMATION NOT INCLUDED- Information derived from the following data bases shall not be treated as a consumer report or consumer information for purposes of paragraph (1): `(A) Databases that beget information on property loss data regarding personal lines of insurance, such as the Comprehensive Loss Underwriting Exchange (CLUE) and Automobile-Property Loss Underwriting System (A-PLUS). `(B) Databases that contain information on driver history, such as accidents or moving violations, typically maintained at State departments of motor vehicles. `(C) Databases that contain information on a consumer’s medical history, to the extent such access and use for purposes described in paragraph (1) is consistent with the requirements of section 604(g). `(3) EFFECT ON STATE LAWS- Notwithstanding section 625(b)(3)(C), no provision of this section shall be construed as limiting or superseding the application of any State laws or regulations that restrict or prohibit the consume of consumer reports or consumer information in the underwriting or rating of any personal lines of insurance. `(4) DEFINITIONS- For purposes of this subsection, the following definitions shall apply: `(A) CONSUMER INFORMATION- The term `consumer information’ means any information from the file on any consumer at a consumer reporting agency, or any product derived from any such information. `(B) PERSONAL LINE OF INSURANCE- The term `personal line of insurance’ means any personal automobile or homeowners line of insurance, as defined in the Uniform Property and Casualty Product Coding Matrix established and maintained by the National Association of Insurance Commissioners (or any successor to such document). `(C) PROXY FOR Hasten OR ETHNICITY- The term `proxy for race or ethnicity’ means a substitute or stand-in for race or ethnicity, either by originate or in effect, without regard to the extent of the effect.’”.
H.R. 5633 IH, Nondiscriminatory Use of Consumer Reports and Consumer Information Act of 2008, 110th Congress, 1st Sess., March 13, 2008.
H.R. 5633 was presented to the House Finance Committee to offer a non-discriminatory use of consumer confidence reports and providing limiting and prohibitory measures. The House members for the bill argued “credit-score ratings penalize consumers because of the business decisions of the lenders, unfairly penalizes consumers who are victims of medical and natural catastrophes, has an adverse and disparate impact on low-income families and credit reports often have incomplete and incorrect information.” Hunter, Robert J. Consumer Federation of America, The Impact of Credit-Based Scoring on the Availability and Affordability of Insurance, Hearing Committee in Financial Services Subcommittee on Oversight and Investigations – House of Representatives, May 21, 2008. Those members opposed to the bill argue the requirement for credit scoring risk since “[l]ending institutions use credit to determine the likelihood of repayment… The most significant disagreement between insurers and lending institutions is that insurers never consider income… The latest survey shows that 90.2 percent of automobile insurance policyholders and 90.8 percent of homeowners insurance policyholders either received a discount or were otherwise unaffected by the exercise of credit.” Neeson, Charles, Westfield Group on behalf of Property Casualty Insurers Association of America, Hearing before the House Financial Services Subcommittee on Oversight and Investigations, The Impact of Credit-Based Insurance Scoring on the Availability and Affordability of Insurance, May 21, 2008. The H.R. 5633 bill never passed. However, bills are often revisited.
A majority of our states have already enacted some statute which limits the application of credit scores when predicting risk, thus reflecting the issue that consumers are often harmed without restrictions and cram-down provisions. In Folks v. Tuscaloosa County Credit Union, 989 So. 2d 531, 538 (Ala. Civ. App. 2007), an action for a deficiency claim was filed by debtor’s automobile lending company after his vehicle was repossessed. The state of Alabama enacted a statute limiting the use of debtor’s credit score to determine interest rates, in that a setoff advance is used in order to settle the deficiency. The Alaska Supreme Court decided against the request of an insurance companies use a debtor’s credit score in order to renew insurance, interpreting Alaska Statute § 21.36.460, Uses of and restrictions on credit history or insurance scoring applicable to personal insurance. Perceive State v. Progressive Cas. Ins. Co., 165 P.3d 624 (Alaska 2007).
Under our current Administration and economic situation, views of a person’s insolvency are quickly changing. Analysts occupy Bankruptcy filings will only increase should the new cram-down measures implement. Looking at the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA -amendments to the U.S. Bankruptcy Code) which impacted the way consumer debts are processed by adding more restrictions and measures to alleviate the Bankruptcy process, and how this new proposed law will reverse some of these restrictions, legislators are quickly recommending and voicing their opinions and perspectives. Our legislators address what a person’s eligibility is for bankruptcy and who decides which assets the debtor will keep. Since the intent BAPCPA introduced was to make a less desirable way to file Bankruptcy (as some say it was too easy), the new proposed act today impacts individuals filing Bankruptcy by requiring now a credit counseling certificate and a segregation of individuals by median income levels. According to the American Bankruptcy Committee, there is not enough historical data to rely on legislator’s true intent, and we must then rely on case history and policy when determining meaning and intent of the statute. Hollowell at 175. Since there is conflict in interpretation among the courts, it is well established this means the analytical framework is not sufficient. Hollowell at id. The required computation called the means test (§1325(b)(3)) – or projected disposable income, determines eligibility. Anyone having an excess of $166 over household expenses is now required to file a Chapter 13, rather than a Choice of either Chapter 13 (reorganization) or Chapter 7 (total liquidation); thus raising the bar of expectation courts have on the debtor and a more complex path to confirming a debtor’s reorganization plan in order to prevent Chapter 7 abuse.
Normally a Chapter 11 Bankruptcy reserves application for a Business Entity reorganization. However, under the proposed Bankruptcy Code, debtors who do not qualify for Chapter 7 or 13, may only have a Chapter 11 option. (See Toibb v. Radloff, 501 U.S. 157 (1991)). §1115, 1123(a)(8), and 1129(a)(15) provide a requirement where a debtor must withhold a percentage of future income to creditors.) This may introduce problems for debtors where there is more flexibility – a good problem to have.
II. ACTIONS A DEBTOR HAS TODAY THAT MAYBE AFFECTED BY H. R. 3609.
A. Mortgages and Foreclosure
California and other state statutes recognize ways real property may guarantee the payment of debt or plan for some other obligation: 1) mortgage (Cal. Civ. Code §2922); and deed to secure debt; and deed of trust sometimes called the grant deed, or trust deed. Cal Civ Code §1092 provides the benefit of grant deeds to transfer ownership to property. Grant deeds are the most favorite instrument used in California. With the proposed law, now valuation will be determinative whether the property guarantees full payment of debt or not. The following explains the relationship between property and security deed.
A mortgage secures an obligation (debtor to pay) with a lien against the debtor’s real estate. Should the debtor default on her mortgage, debtor is still lawfully in possession and control of the title and the lender only has an interest in her property (Cal. Civ. Code §2923). A security deed transfers the title to the lender/mortgagee with an opportunity to direct a foreclosure or take the property. A mortgage would force lenders to proceed through judicial foreclosure, which can be time consuming and expensive. So long as there is a reasonable default, as stated in Ghirardo v. Antonioli, 14 Cal 4th 39, 57 Cal Rptr 2d 687 (Cal. 1996) “there may be only one action for the recovery of a debt secured by a trust deed, which action is one of foreclosure. Although an exception to this one action rule has developed in cases where foreclosure would be an idle act because the security has been destroyed or has become worthless, the exception does not apply if the beneficiary is responsible for the loss of security. When the mortgagee, by his or her own act or neglect, deprives himself or herself of the right to foreclose the mortgage, he or she no longer has a right to an action upon the note.” (See also Cal. Code Civ. Proc. §726.) Lenders prefer to apply the non-judicial method security deed’s require.
While a security deed (grant deed a.k.a deed of trust) is mostly preferred and used routinely in almost residential and business real estate transactions, a mortgage can be used by someone irregular with California law. Fortunately, laws governing security deeds and mortgages are similar. If the mortgage contains a provision that authorizes sale, it may be foreclosed through a non-judicial use foreclosure sale; like the same manner as a deed of trust.
From a Debtor-Borrower’s perspective, if she goes into foreclosure, she may only have a few options. A borrower may choose to sell the property, provide a Deed in lieu of foreclosure, work out some arrangement/loan modification, file bankruptcy and finally go into foreclosure proceedings. The threat of foreclosure brings lenders to an option to negotiate a defaulted loan. July 8, 2008, California legislators passed an amendment of California Civil Code 2923.6, now requiring lenders in the State of California to accept loan modifications if borrowers qualify under the unique requirements. California Civil Code 2923.6 applies to loans made from January 1, 2003, to December 31, 2007, and secured by residential real estate and are owner-occupied.
B. Stay Period, ultimately delaying the Foreclosure
California Senate Bill 1137 is a result of the sub-prime loan market collapse and as an urgency measure. Until this bill, mortgage lenders were under no statutory requirement to communicate its intention to act on a non-judicial foreclosure. This law applies to loans secured by an owner occupying residential trusty property and loans made between January 1, 2003 and December 31, 2007. These laws will stay in force until January 1, 2013. A current component added to the California Civil Code as follows:
“Until January 1, 2013, and as applied to residential mortgage loans made from January 1, 2003, to December 31, 2007, inclusive, that are for owner-occupied residences, this bill would, among other things, require a mortgagee, trustee, beneficiary, or authorized agent to wait 30 days after contact is made with the borrower, or 30 days after satisfying due diligence requirements to contact the borrower, as specified, before filing a peep of default. The bill would require contact with the borrower, as defined, in order to assess the borrower’s financial situation and peep options for the borrower to avoid foreclosure. The bill would require the mortgagee, beneficiary, or authorized agent to deny the borrower that he or she has the right to request a subsequent meeting within 14 days, and to provide the borrower the toll-free telephone number made available by the United States Department of Housing and Urban Development (HUD) to get a HUD-certified housing counseling agency. The bill would require the notice of default to include a specified declaration from the mortgagee, beneficiary, or authorized agent regarding its contact with the borrower or that the borrower has surrendered the property. If a notice of default had already been filed prior to the enactment of this act, the bill would instead require the mortgagee, trustee, beneficiary, or authorized agent, as part of the notice of sale, to include a specified declaration regarding contact with the borrower. The bill would authorize a borrower to tag a HUD-certified housing counseling agency, attorney, or other advisor to discuss with the mortgagee, beneficiary, or authorized agent, on the borrower’s behalf, options for the borrower to avoid foreclosure. The contact and meeting requirements of these provisions would not apply if a borrower has surrendered the property or the borrower has contracted with an organization, as specified. The bill would also require specified mailings to the resident of a property that is the subject of a glance of sale, as specified. In addition, the bill would make it a crime to tear down the notice of sale posted on a property within 72 hours of posting, thereby imposing a state-mandated local program.
Until January 1, 2013, this bill would require a legal owner to maintain vacant residential property purchased at a foreclosure sale, or acquired by that owner through foreclosure under a mortgage or deed of trust.” (Cal. Civ. Code §2923.5) (Watch also American Housing Rescue and Foreclosure Prevention Act of 2008, H.R. 3221, 110th Cong. §§ 401-402 (2008).
The stay period will only delay the foreclosure, in my opinion, according to what I have witnessed working in my Law Firm. The issue that the debtor still does not have a job, has not been resolved. Without a job, regardless of the stay period, the debtor will still not be able to pay the mortgage. However, with a finish period, the debtor has time until the new provisions are passed which then the debtor will have the option to file bankruptcy and cram-down the mortgage loan.
C. Deficiency Actions
When potentially-to-be-foreclosed property incurs a lien, at the judgment of foreclosure sells with a deficiency of proceeds to cover the lien, a lender may file a deficiency judgment against a debtor or anyone else liable within the foreclosure of the mortgage (Cal. Code §3151).
“California’s anti-deficiency laws do not preclude a creditor from pursuing all security given to collateralize an indebtedness. Thus, a guarantor of a security deed is not protected against a deficiency judgment.” Hodges v. Mark, 49 Cal. App. 4th 651, 656 (Cal. App. 2d Dist. 1996). Cal Code Civ Proc § 580b lists prohibitory conditions applying deficient judgments .
In order to location a deficiency action after a foreclosure sale, the lender must, within 30 days of the sale, report the transaction to the court and file with the clerk an application for an order confirming the sale. (Cal. Civ. Proc. §580(b)) The mortgagee must prove the land sold for its true market value. In order to carry this burden of proof, the lender should have the property appraised shortly before sale by at least one MAI certified real estate appraiser and be willing to bid on the property in an amount comparable to the appraised value. The foreclosure bid will repay the indebtedness to that extent; therefore; it is imperative the lender yell the appraised value of the property in a deficit status with a legal legal description. (Clayton Development Company v. Michael P. Falvey, 206 Cal. App. 3d 438)
Unless the debtor appears financially sound, it is probably not helpful end efforts obtaining an appraisal, pursing confirmation and filing a deficiency action. However, some lenders may be under instructions from governmental agencies (Fannie Mae, Freddie Mac, etc.) or mortgage insurers to cure the deficiency rights in all cases.
“California’s anti-deficiency laws do not preclude a creditor from pursuing all security given to collateralize an indebtedness. Thus, a guarantor of a promissory impress secured by a deed of trust is not protected against a deficiency judgment.” Hodges v. Stamp, 49 Cal. App. 4th 651, 656 (Cal. App. 2d Dist. 1996).
In order to file a deficiency action after a foreclosure sale, the lender must, within 30 days of the sale, report the sale to the court and file with the clerk an application for an order confirming the sale. (Cal. Civ. Proc. §580(b)) The mortgagee must prove the property sold for its lawful market value. In order to carry this burden of proof, the lender should have the property appraised shortly before sale by at least one MAI certified real estate appraiser and be prepared to bid on the property in an amount equal to the appraised value. The foreclosure bid will satisfy the indebtedness to that extent; therefore; it is imperative the lender bid the appraised value of the property in a deficiency situation. (206 Cal App 3d 438)
Unless the debtor appears financially sound, it is probably not worthwhile to expend the time and money involved in obtaining an appraisal, pursing confirmation and filing a deficiency action. However, some lenders may be under instructions from governmental agencies (Fannie Mae, Freddie Mac, etc.) or mortgage insurers to preserve the deficiency rights in all cases.
A probable effect of the H.R. 3609 is the fresh proposed law will cram-down any deficiency above actual (appraised) value of the property.
D. Priorities
Home loans are always given a priority over other types of loans since they have high collateral value (a secured claim based on the value of the home). This means the priority of a lien applied in a home loan will generally be first. Lien priorities are charged on a property for payment of a debt on the property. Federal and state laws settle the priority of liens, i.e. federal tax liens will typically be given top priority (paid first); see Slodov v. United States, 436 U.S. 238, 257-58, 56 L. Ed. 2d 251, 98 S. Ct. 1778 (1978). “[S]tate law dictates the existence of property interests, but the priority of those interests with respect to other portions of the tax law is an issue of federal law.” Bednarowski & Michaels Dev., L.L.C. v. Wallace, 293 F. Supp. 2d 728, 732 ( E.D. Mich. 2003). “A preexisting lien, i.e., a tax lien, encumbers whatever property the lienee thereafter acquires.” Wallace, 293 F. Supp. 2d at 733.
Lien Priorities are dealt with repeatedly in Foreclosure actions. Today, true estate property may contain multiple types of liens filed against it including a Trust Deed, a Federal Tax Lien, a Construction or Mechanics Lien. Some properties may also include a First and Second Mortgage Trust Deed, Homeowner Association (HOA) lien, or Delinquent Property taxes. Generally, lien priority attaches when the lien is recorded and expressly prioritized with the County Recorder. As such any transactions occurring during a loan re-work or foreclosure sale, it is significant to search for any liens attached to the property.
In the United States we fight to retain our right to occupy property over any other right. Prioritizing home loans over all others clearly supports this policy. The cram-down goal is to give the home owner incentive to pay as much to their home loan as possible by reducing their lower priority – unsecured debt in order to free up extra cash to pay down the mortgage/home loan.
E. Loan Modifications
The decline of the American economy has led to an increase of loan modifications in order to place lender’s assets back into a working-asset rather than a loss and write-off. When a loan is modified, usually a) the loan maturity date shortens (the loan is due at an earlier date), b) the interest rate increases, or c) the entire amount of debt owed is increased. This is considered a material modification that would adversely affect the debtor and any subordinate lien holder on account.
“Despite the waiver as to application of loan proceeds, the court held that public policy requires protection of subordinating sellers and that a lender and a borrower may not bilaterally make a material modification in the loan to which the seller has subordinated, without the knowledge and consent of the seller to that modification, if the modification materially affects the seller’s rights.” Gluskin v. Atl. Sav. & Loan Assn., 108 Cal. Rptr. 318, (Ct. App. 1973). In Gluskin, Jack Gluskin owned 172 lots of land which he sold to the corporation Pathfinder under a promissory note secured by the Trust Deeds for the land plus fifty percent of profits on the sale of these new developments. Pathfinder then borrowed money from Atlantic Savings and Loan in order to construct a housing development on the land. And thus when Pathfinder defaulted, the issue ascended on whether a loan modification made without Gluskin’s consent, created a priority Atlantic has over Gluskin since in the Gluskin Trust Deed contained a subordination provision expressly stating Gluskin subordinated under Atlantic’s Trust Deeds and that loans were given in reliance on the subordination. Here the Appellate Court reversed the lower court’s ruling for Atlanta since there was no finding of the fact that Gluskin had consented to this modification.
Shane v. Winter Hill Fed. Sav. & Loan Assn. raised the seek information from about a loan modification where interest raised on a first mortgage applies to the second mortgage. In this Massachusetts court, trustee Richard Ross provided a $450,000 mortgage and deed for the Winter Hill Federal Savings and Loan Association for a property on Turnpike Street, Canton, Mass. Two years later, Ross executed a second mortgage for $100,000 on the aforementioned property, to a Realty company. The realty company had agreed to take on an option to cure a default by Winter Hill, by increasing the first mortgage’s interest rate. When Winter Hill defaulted again, they also notified the realty company of its intent to foreclose. The realty company also purchased the property subject to the first mortgage, and then filed claims against Winter Hill for the raise in interest. The realty’s interest was only that they had a claim in the security of the property, and had requested watch of any default and then have the option to rectify it and not be bound by any interest rate agreements she was a junior interest thereto. The court held that the interest rate increase agreed between the Ross and Winter Hill without notice to the Realty company, did prejudice the Realty company and they will not remain bound to that agreement as they were the second mortgagees.
Courts seem to stay more lenient applying loan modifications that have minimum impact on the debtor and may in some cases be of benefit to junior liens. Where loan modifications a) extend the maturity date, b) defer interest, c) reduce the interest rate or d) chop the loan amount, the extensions seemingly put a lender’s property attend to a working and active status. Also, these types of modifications should not adjust the lender’s priority.
In Resolution Trust Corporation v. BVS Development, Inc., land developers sold land in exchange for deeds of trust for construction financing with subordinate interests, from Concord-Liberty Savings and Loan Assn. who partnered with Resolution Trust Corporation. When the development project soured, and the land developer’s defaulted on a $2.6 million loan, the lenders filed a foreclosure action. Defendant land developers argued that when their maturity date was extended, the subordinate clause was not appropriate and also cite the rule from Gluskin that the extension loan modification had not been consented had thus adversely affected their lien position. Here however, the amendment did not expand the chance of default, like it did in Gluskin. The land developers in fact, had more time to pay at the equivalent rate, unlike Gluskin where time was reduced and interest was increased.
“[T]he extension was made at a time when the borrower was in difficulty; it could be reasonably argued the extension gave the borrower a chance to turn itself around and pay off its debts. By itself, the extension cannot be said to be a material modification requiring an adjustment of priorities as a matter of law.” Lennar Northeast Partners v. Buice, 49 Cal. App. 4th 1576, 1584 (Cal. App. 3d Dist. 1996). Here the interest rate changed from a variable to a set rate. The maturity date was extended as well as the principal amount in order to befriend the Trust company-debtor acquire control of payments. The lower court ruled Trust company no longer had a priority claim since they modified the terms of the agreement. This Appellate court reversed ruling no material modification or prejudice to the subordinate lien holders.
The fresh 1322 (b) statement striken “other than a claim secured only by a security interest in real property that is the debtor’s necessary residence[,]” modifications will be allowed to a debtor’s principal location. We are looking at cramming down the value of the property to what its actual value is today in order to free up extra cash applied to other unsecured and lower priority loans. This should not be considered a material modification since it is a best-effort to pay those we owe in the fairest way possible.
F. Title Insurance
Since valuation is at stake here and title insurance covers the actual value of the property, two major organizations should be discussed regarding insurance related to real estate; The American Land Title Association (ATLA) and the California Land Title Association (CLTA). ATLA and CLTA provide title insurance endorsing that the property at impart is free and easy to transfer and provides certain assurances. When mortgage loans are modified, ATLA will not guarantee any subsequent agreements than the first policy contracted on the land. There are other coverage options that will require extra protection and endorse modifications dwelling forth in ATLA Form 11 and CLTA Form 110.5. However, as mentioned in Gluskin, Shane and RTC, courts do not favor material modifications that prejudice junior lien holders; so long as Form 11 and Form 110.5 do not contain a material modification, the title insurance coverage value should be ascertainable.
To be exhaustively diligent, the title to the property should be examined early in a foreclosure proceeding. A full title examination would, of course, be the most useful in that it would reveal any defects in the mortgagor’s title existing when the security deed was executed. However, where an attorney is provided with a mortgage title insurance plan (obtained when the security deed was executed) it is customary to conduct a restricted title examination coming forward from the date of the security deed (2008 Cal ALS 80, Cal. Code Civ. Proc.§880.020(a)(4)). The title insurance policy should be provided to an attorney at the outset (Cal Ins Code §1063.1).
The limited title examination should include a search of the following public records; 1) deed records, 2) federal tax lien docket, 3) lis pendens docket, 4) bankruptcy records and 5) possibly probate records. It is also recommended to check the bankruptcy records shortly before a foreclosure sale. These factors are simply a guideline and to be sure all bases are covered, and to be positive your property does not contain any hindering constructs that Title Insurance may not cover.
I will highlight important factors to know:
1. Deed Records.
The deed records kept by the Clerk of the Trustworthy court in the count which the land lies should be examined to ascertain the names of all persons who have held right to the property since the execution of the security deed. A chain of title is needed in order to support evidence of ownership.
Only litigation which goes to the validity of the security deed or the right to foreclose should stop the foreclosure sale. Any other litigation regarding the property concerns rights of parties which are subject to the security deed and thus subject to foreclosure (Cal. Code Civ. Proc.§ 880.260 (a)(1)).
If the lis pendens docket reveals the property in foreclosure is in the custody of a receiver, the foreclosure should immediately cease. Such property is in the custody of the court appointing the receiver, and its assets may not be interfered with unless the mortgagee intervenes in the proceeding and obtains authorization to foreclose. Where the due date is ascertainable from the relate, the 10-year limitations period of Civ. Code §82.020(a)(1), applies. Any recorded document that contains the due date of the note secured by the trust deed in question will suffice. Slintak v. Buckeye Retirement Co., L.L.C., Ltd., 139 Cal. App. 4th 575 (Cal. App. 2d Dist. 2006).
2. Bankruptcy Records.
The filing of a bankruptcy petition automatically enjoins a foreclosure against property of the debtor and of the insolvency estate (11 U.S.C.A §362(a) – automatic stay). All foreclosure activities should be dropped upon proper notification the present owner has filed bankruptcy. Failure to end the foreclosure could result in the lender’s (and perhaps the attorney) being held in contempt of court. Furthermore, a foreclosure sale conducted in defiance of the end is void. Before proceeding with foreclosure, the lender must either achieve a court order lifting the quit or wait until the stay otherwise terminates under 11 U.S.C.A §362. Debtors or their attorneys generally notify the foreclosing lender of a bankruptcy filing, but not always. Therefore, it is recommended to check the Bankruptcy Court records to ensure the present owner has not filed. Since bankruptcy filings are often take place at the eleventh hour, the bankruptcy records should be checked shortly before the foreclosure sale date.
3. Federal Tax Liens.
A tax lien against anyone in the chain of title recorded must be dealt with in a specific manner. The trust deed will maintain its priority over subsequently filed federal tax lien. 26 U.S.C.A §7425 (b). Without IRS look or consent, the federal lien will remain on the property superior to the purchaser’s title obtained at sale. The purchaser may apply for a Certificate of Discharge From Federal Tax Lien, however. 26 U.S.C.A §6325 (b).
4. Probate Records Need Not Be Examined.
A right of sale in the security deed is a power coupled with an interest and is therefore irrevocable so that the power may be exercised regardless of the death of the mortgagor. In California, a trust plot, when a trustor has died, the successors in interest are entitled to receive notice of default under sure circumstances. Essentially, proof of interest must be filed in the county where the land is located. It must provide constructive notice to the trustee prior to the recording of the leer of default. Further, it must supply an address to which notices may be mailed. The trustee should try to track down successor’s but does not include the duty to. See Estate of Yates, 25 Cal. App. 4th, 511 (1994).
In light of the title, with a due diligent search, the proposed cram-down should not have any affect on the insured amount of your property so long as modifications made have not been determined material.
III. AN UNREGULATED INDUSTRY LEADS TO FRAUD
The Right Estate Settlement Procedures Act (RESPA) fraction 6, 12 U.S.C. 2605, provides consumer protection with the mortgage-industry loans. The debtor may send a Qualified Written Request to the lender who in return must provide a written acknowledgment. During a suspension period, the lender cannot report to any consumer credit agencies (i.e. Equifax, etc). A debtor may also file a private lawsuit for a RESPA violation and noncompliance. The plight is that these written requests are often ignored and usually a strategy to obtain a stay order.
In my opinion, Consumer Protection is thinly spread between too many agencies. The Consumer Protection Agency, the Federal Trade Commission and the Securities and Exchange Commission all stake claims on protecting consumers. Loan servicers are usually a secondary party working for a profit. When a loan goes into foreclosure, more fees are tacked on. Because of cramped to no regulation in the mortgage industry abusive behavior tends to generate and fuel the already-stressed housing crisis.
Frustrated Homeowners deal with tacked on fee after fee, some services which have not even been performed (i.e. pre-paid charges for future overdue fees and inspection costs). Law Firms, such as mine, scrutinize these fees have a immediate impact on the increase of foreclosures since those fees only add to their monthly payments which keep increasing, the homeowner can no longer pay their monthly rate and thus default.
With further regulation which will be added with the original proposed bill, I believe new administration will be able to identify, manage and address complaints with ease. I also believe ignored complaints will lessen since these complaints will now be moot if the court will now be addressing the root of the problem – valuation of the total debt.
IV. CRAM-DOWN EFFECTS.
This proposed bill may encourage more Chapter 13 bankruptcy filings. The Helping Families Save their Homes Act and HOPE for Homeowners is a rescue plan. President Obama is initiating so borrowers will have an opportunity to re-work their loan payments and pay all their debts without losing a home in foreclosure. The bill offers that legislation reimburse lenders portion of their loss should a debtor is in a Chapter 13 and sells the property. Director Peter R. Orszag, of the Congressional Budget Office, analyzed forthcoming legislation and believes “the bill as a whole… would increase the budget deficit over the next decade, incur larger losses… higher coverage levels and insured deposits… gradually offset with higher future premiums.” Orszag, Peter R., Congressional Budget Office, Letter to Chairman Christopher J. Dodd- Chairman on Committee on Banking, Housing and Urban Affairs- United States Senate, October 1, 2008. The plan, designed to secure and manage failing and troubled assets will require additional administrative costs. The resale values will be hard to ascertain. Orszag believes proceeds gained in sales and future valuation increases will be less than the entire acquisition cost this government will continue making.
While Chairman Orszag proves a reasonable point, the solutions used today cannot be applied in today’s world economy. It is clearly failing. Without some change that will jumpstart our economy, we will continue on the spiral downward turn. A different strategy will originate a novel mechanism (i.e. The Energy Improvement and Extension Act of 2008 is another method to move our economy). The key here is to conserve where we never have before in order to unlock new avenues of financing and spending.
As you see, the tide of foreclosure is bringing heavy, quick-moving change. Presently, Bankruptcy Judges do not have the right or authority to unilaterally create mortgage loan modifications. Also, now loan modifications are usually worked by private consumer companies and law firms, mine included. Cram-down supporters say a cram-down is the ideal tool that encourages lenders to provide loan modifications for their borrowers. The cram-down bill allows federal judges to modify note terms, decrease interest rates and mortgage loan balances of bankrupt homeowners. It also will permanently extend the Federal Deposit Insurance Corp.’s insured coverage to $250,000. Nay-sayers maintain cram-downs will obtain higher interest rates (higher costs to procure a loan) and an even-tighter credit market.
Those opposed against the proposed bill say these additions are unnecessary provisions. One provision allows bankruptcy judges the authority to change the mortgage loan terms, like the loan balance, in a Chapter 13 bankruptcy proceeding. When we allow judges to deliver these changes, a put a question to arises as to how the collateral value of the property at issue is calculated. Many fear an economic impact. Most of the lending community (including the American Bankers Association and other Republicans) stands against the proposal declaring mortgage rates will increase, forcing lenders to require larger payments up front in order to account for the newly added risk.
I will discuss.
Bifurcation
Bifurcation means a forking; a division into two branches. Part 506 of the title 11 United States Code (a.k.a. cram-down provision) authorizes bankruptcy claims to be bifurcated or split into secured and unsecured claims. §506 (a) maybe applied to Chapters 7, 11 and 13 claims. Courts are split, however, as whether to allow bifurcation or not. See In re Mordred J. Richards et al. v. Federal Home Loan Mortgage Corp., 151 B.R. 8, *; 1993 Bankr. LEXIS 284, **; Bankr. L. Derive. (CCH) P75, 145; 28 Collier Bankr. Cas. 2d (MB) 626. 11 U.S.C 506 provides the following:
“(d) To the extent that a lien secures a claim against the debtor that is not an allowed secured claim, such line is void, unless -
(1)such claim was disallowed only under section 502(b)(5) or 502(e) of this title; or
(2)such claim in not an allowed secured claim due only to the failure of any entity to file a proof of such claim under part 501 of this title.”
Applied to section 1325 (a)(5) as follows:
“(a) Except as provided in subsection (b), the court shall confirm a idea if — …
(5) with respect to each allowed secured claim provided for by the plan — …
(B)(ii) the value, as of the effective date of the opinion, of property to be distributed under the plan on account of such claim is not less than the allowed amount of such claim…”
Judge Feeny in Richards cites and summarizes various district court decisions in conflict with the interpretation -thus clearly ambiguous– the “denial of bifurcation would be a windfall to mortgagees whose worthless unsecured mortgages would continue to encumber debtors homes to the extent of the debt after Chapter 13. This result would counter to the reorganization provision of Chapter 13 premised upon the retention of assets and the recent start policy of the Bankruptcy Code.” With the new provision the conflict of whether to bifurcate claims or not will likely be resolved since the courts will now be able to revise the actual secured claim amount.
Valuation of the property is “fixed at the time of plan confirmation,” Richards at 30. The result then under HR 3609, would be unusual asset value of homes will be significantly lower than what was originally mortgaged. The cram-down value will then be lower and the debtor pays less. Then, of course various arguments arise as to whether the loan is really secured or not since the accurate value is much lower. I will not address these arguments here. My goal is to simply retort the question at issue which I do not believe security is at issue – only valuation and added costs.
Filing Bankruptcy
“Under chapter 13 of the Bankruptcy Code, unless the debtor surrenders the property securing the lien to the holder of an allowed secured claim provided for by the plan or such holder accepts the plan, a chapter 13 plan that provides for a secured claim may not be assured of confirmation without a cram down provision comporting with fraction 1325(a)(5)(B). Chapter 13 cram down is comprised of two essential elements, lien retention and equivalent value, distributed in accordance with certain rules each of which must be provided for under the chapter 13 plan itself.” Collier on Chapter 13 Cramdown, 2008 Emerging Issues 1253. In today’s market, with declining housing markets, unemployment rates rising steadily our legislators are taking action in order to stabilize what we already know is a declining economy. Most understand the definition of cram-down as “a court-ordered reduction of the secured balance due on a home mortgage loan, granted to a homeowner who has filed for personal bankruptcy.” Finance and Business Terminologies, http://www.answers.com/topic/cram-down.
A believe will then identify the actual value of the home as the secured value, and the deficient balance as unsecured, then prioritized as such. Example: A bankruptcy judge considers a $400,000 property value that contains a $350,000 first mortgage and $50,000 unsecured debt. He can then allow $350,000 to the first mortgage holders, and cram-down the $50,000 unsecured debt to $10,000. With proposed law HR 3609 a believe may alter the secured and unsecured debt as he sees it and to justify what the debtor actually owes maybe too much. If a debtor is making payments on a $200,000 mortgage on a home valued at $120,000, that debtor is paying over-the-top an unjust amount and thus not in compliance with §1325 (a)(5)(B)(ii).
Basic Contract rules provides when asset valuation declines snappily due to unforeseen market changes, parties to that contract may be excused from performance due to commercial impracticability or courts tend to support contract modifications. “When the occurrence of an unforeseen event would cause a promisor to bear and unexpectedly large loss in performing her contractual obligation, the parties might renegotiate and modify the promisor’s contract… The accepted law doctrines of impossibility and commercial impracticability release the promisor from her obligation on the grounds of an unforeseeable supervening event that increases the cost of either literal performance or damages liability to a level beyond the anticipated values at the time of contracting.” Triantis, George G., Unforeseen Contingencies. Risk Allocation in Contracts, University of Virginia Law School (1999). It is clear with today’s market changes, the debtor’s value has significantly decreases and must be allowed and addressed with modification.
Section 5, H.R. 3609 Elimination of credit counseling requirement for chapter 12 debtors facing foreclosure, offers to strike from section 109 (h) of Title 11 “shall not apply with respect to a debtor in a case under chapter 13 who submits to the court a certification that the holder of a claim secured by the debtor’s important location.” This somewhat loosens the restrictions for what may or may not be of benefit to the debtor. Under credit counseling advisement, a person must understand the root of the financial problem. Sometimes it may only be a hardship where no matter how much credit counseling one gets, you would still have to file bankruptcy (i.e. medical costs for an unexpected accident or sickness).
V. Conclusion
H.R. 3609’s biggest impact here will be dependable property valuation. Declines in property values are at the forefront. Homes that mortgaged at $200,000 may only be worth $120,000 today. While the fresh administration maybe and probably will be required to manage activity proposed here, I am not convinced this will negatively impact the novel Mortgage business today. Will it terminate excessive fees? Probably. Does that impact mortgagees? Yes. However, the leverage of these unique rules will only help manage erroneous activity. Will title insurance coverage be affected? Yes, but only in the sense of what property will be automatically valued by the court. Credit Counseling will no longer be another hurdle to jump. Since managing a credit report should be a job in itself, and identity fraud is at it highest, we cannot solely rely on credit represent updates. That said, I believe opponents of the bill provide reasonable arguments; but do not address any other avenues resolving the conflict. If we march forward under the same rules and regulations, we will continue to spiral downward. I maintain the change will a better influence and will allow debtor/homeowners the relief they need to save their most prized-possession-their home.
Slay Notes:
“Persons are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work. Persons who were not working and were waiting to be recalled to a job from which they had been temporarily laid off are also included as unemployed. The unemployment rate represents the number unemployed as a percent of the labor force.” (Bureau of Labor and Statistics, as of May 4th, 2009)
2 “No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt, solely because such debtor or bankrupt” (Title 11 sec. 525 (b) U.S. Bankruptcy Code)
3 See Hollowell, Eileen W., Levitt, Kathleen, et al; First This Way, Then That Way -Conflicting Interpretations of BACPA, American Bankruptcy Institute, Consumer Bankruptcy Committee, Volume 4, Number 2 (2007); http://www.abiworld.org/committees/newsletters/legis/vol4num2/1.pdf. A bankruptcy judge and Chapter 13 Trustee and others came together to discuss the importance of using plain language statutes provide and when ambiguous, a statute should be revisisted.
See In re Hardacre, 338 B.R. 718. The court here sorts out the meaning of projected disposable income and loyal disposable income and the means test applied.
4 Deed in lieu of foreclosure. This is usually feasible only if the property is free from junior liens and encumbrances. There is, however, a risk of the conveyance being subsequently set aside by a bankruptcy court as a preferential transfer if the property was worth substantially more than the indebtedness. If this method is used, the mortgagor should be required to sign an estoppel and solvency affidavit in addition to the deed. The mortgagee may also want to consider including non-merger language in the deed and not releasing its security deed for some time after the transfer to insure that it as least retains its secured space in the event a bankruptcy court should set aside the conveyance. GBJ, Inc., II v. First Ave. Inv. Corp., 520 N.W.2d 508 (Minn. Ct. App. 1994).
5 The filing of a bankruptcy petition automatically enjoins a foreclosure against property of the debtor and of the bankruptcy estate (11 U.S.C.A §362(a) – automatic stay). All foreclosure activities should be dropped upon proper notification the modern owner has filed bankruptcy. Failure to stop the foreclosure could result in the lender’s (and possibly the attorney) being held in contempt of court. Furthermore, a foreclosure sale conducted in violation of the stay is void. Before proceeding with foreclosure the lender must either obtain a court order lifting the conclude or wait until the stay otherwise terminates under 11 U.S.C.A §362.
6 California Civil Code 2823.6(a) states that “a servicer acts in the best interest of all parties if it agrees to or implements a loan modification where the (1) loan is in payment default, and (2) anticipated recovery under the loan modification or workout plan exceeds the anticipated recovery through foreclosure on a obtain present value basis.” California Civil Code 2823.6(b) now provides “that the mortgagee, beneficiary, or authorized agent offer the borrower a loan modification or workout opinion if such a modification or plan is consistent with its contractual or other authority.”
7 397 Mass. 479; 492 N.E.2d 92; 1986 Mass. LEXIS 1291
8 42 F.3d 1206, *; 1994 U.S. App. LEXIS 34123, **; 94 Cal. Daily Op. Service 9295; 94 Daily Journal DAR 17208
9 “For purposes of this subsection, a qualified written request shall be a written correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer, that–(i) includes, or otherwise enables the servicer to identify, the name and myth of the borrower; and(ii) includes a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower.” (12 U.S.C 2605 (e)(1)(B)).
10 Better Business Bureau, report # unknown, author unknown, submitted March, 2009.
11 Bifurcation. Webster’s Dictionary, Merriam-Webster 11th Edition (2007).
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Filed under Corporation Filing Bankruptcy by on Oct 20th, 2010. Comment. 
To begin our see at Delta Air Lines, it is important to understand exactly what Delta does and who Delta is as an organization. Delta Air Lines provides air transportation for passengers and freight throughout the United States and around the world, currently serving 244 domestic cities in 46 states with 7,113 flights each day to over 503 cities in 94 countries. Delta is incorporated, and is headquartered in Atlanta, Georgia.
Delta traces its roots back to 1924, when Huff Daland Dusters was founded as the world’s first crop dusting organization. In 1928 the company became Delta Air Service. On June 17, 1929, Delta launched airline service with the first passenger flights over a route stretching from Dallas, TX to Jackson, MS, via Shreveport and Monroe, LA. In 1941, the company moved its headquarters from Monroe to Atlanta, GA.
Delta is a immense company, employing 47,000 people and generating revenues in excess of $16 billion in 2005. This is due in large part to their global presence, slick marketing, and name recognition. While this seems impressive when stated without considering any other information, when some other facts about Delta are considered, the portrait changes quite a bit. Over the past several years, Delta has come on hard times, as has the entire airline industry worldwide in the wake of 9/11 and the fear of commercial flight that accompanied it. As with other airlines, Delta over the past 5 years or so has had to cut thousands of unprofitable flights from their schedules which have diminished customer satisfaction, laid off thousands of workers and reduce costs by the millions upon millions of dollars. Nonetheless, Delta continues to lose hundreds of millions of dollars per year, which is significant even for a multi billion dollar giant international corporation. All of this has led to a plummeting of the value of Delta stock, a revolving door of employees and managers, and an ultimate filing for Chapter 11 bankruptcy in 2004. As one can see when looking at all of the facts and figures, Delta is certainly in quite a bad situation, but in all fairness, it is no worse than any other airline, and perhaps better than others.
All of this leads to the put a question to of what the future holds for Delta? Obviously, their work is cut out for them. Their financial house needs to be put back in order beyond cost cutting and laying off employees as well as cutting services which actually distress in the long run more than assist. Rather, intense strategic planning is necessary to bring this giant back from its slumber. Only then will the company be agreeable of its reputation and standing once again and add value to the industry, its employees, and customers.
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Filed under Corporation Filing Bankruptcy by on Oct 7th, 2010. Comment.
The after effects of the greatest mortgage meltdown in history have changed the dynamics of the accurate estate industry probably forever. Housing sales continue to slump, less future homeowners can qualify for a loan, and foreclosure filings continue to rise. Though the current snapshot of the industry looks painfully scandalous on the surface, opportunities await the savvy businessperson.
Why consider a Foreclosure Consulting Business? A foreclosure consulting business offers great income potential, is easy to initiate and run, and fills a huge demand to help people in pre-foreclosure save their homes.
Did you know that as of mid year for 2007 there has been an average of 925,986 foreclosure filings? At that current rate, it is estimated that over 1.8 Million foreclosures will be carried out by the end of 2007. If you contemplate about it, that is a lot of foreclosures. A light bulb should also go off to factor that also equals a lot of foreclosures needing to be stopped. This means that foreclosure consulting businesses are needed because homeowners need help to stop foreclosures. Now I am not taking about the Foreclosure Consult who is really a real estate investor who goes around asking homeowners to effect their property deeds over to them. A true foreclosure consulting business will never request that homeowners sign over their property deeds. No Sir, I am talking about legitimate Foreclosure Consultants who work as a liaison between the homeowner and the mortgage lender/ bank to negotiate forbearances or a loan workout plan. This allows the homeowner in pre-foreclosure situation to keep their homes.
Even if the foreclosure process has started foreclosure consulting businesses offer trained professional Foreclosure Consultants who know how to help the homeowner halt foreclosure. Often times Bankruptcy Attorneys befriend homeowners to file a bankruptcy to end foreclosures. A bankruptcy is very hurtful to the homeowner’s credit and takes 7 long years to recover. Foreclosure Consults offer better solutions over filing bankruptcy to stop foreclosures.
Foreclosure consulting businesses provide a service that is in huge demand for a severely underserved market, the distressed homeowner facing foreclosure. Literally hundreds of thousands of distress owners desperately need this service but there are only a handful of foreclosure consultants fulfilling this great need for the demand. Therefore the market for a foreclosure consulting business is wide open.
Starting a foreclosure consulting business is ideal for real estate professionals who have experience as mortgage brokers, real estate agents, precise estate investors, etc. Also, this is a titanic business for stay at home parents and persons running a home execrable business. I have trained many people on how-to start a foreclosure consulting business and seen them make six figure profits in less than weeks and months. Make no mistakes about it; the need for the demand is very real and not extreme.
On average a beginning foreclosure consulting business could attract anywhere from five to fifty plus clients in a week. The Foreclosure Consultant has the luxury of setting their own service fees and typically collects upon signing on to provide services. Which I always recommend to collect money upfront for services being rendered. When you hire an attorney do they tell you to pay later? Exactly, the service being offered by foreclosure consulting businesses are not legal services or advice but expertise that the homeowner needs to save their homes. Therefore, homeowners typically have no problems with paying retainer fees to have their foreclosures stopped.
To learn how-to start, operate, and grow a foreclosure consulting business visit Ransom Enterprizes, LLC. They offer complete step-by-step foreclosure training programs for foreclosure consulting business http://www.ransomllc.com/foreclosuresforprofit.html.
Foreclosure consulting business is in hot demand today and is on track to be the next big business idea for 2008. Presenting opportunities for a huge need, unlimited income potential, and endless streams of clients. Foreclosure consulting business is hot.
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Filed under Corporation Filing Bankruptcy by on Oct 2nd, 2010. Comment.
It would seem that sometimes those that head America’s largest corporations are not “the smartest men in the room,” or in the city, or perhaps in the nation (dare one go so far as to say “in the world”). Examples of corporate excess, flagrant needless expenses, expenditures, and ridiculously inflated bonuses keep appearing in the newspapers, on television, online and on the radio while the American economy continues its precipitous decline into what is looking more and more as if it will end in a full-blown Depression. As these corporate heads ride their corporate colossi into the stock market ground, these audacious acts of fiscal irresponsibility and mismanagement further arouse an American public already beyond the disgusted stage and far into the stonewalling stage.
The Big 3 automakers came to Washington in search of at least a $25 billion loan. Especially needful is corporate giant General Motors, who expects that their cash pile will be depleted by years end at the current rate of losses it is suffering. Although they were facing strong public and political opposition, the automakers were hoping that the Democrats might be able to push something through to perhaps tide the industry over until there was an upturn in the economy.
But opposition grew when it came to light that the various corporate heads flew into Washington on private corporate jets.
It is estimated that the automakers flew into Washington at the cost of at least $20,000. Each. Average round-trip tickets from Detroit to Washington: $500.
The CEOs defended themselves by saying they would have traveled in that manner anyway and that focusing on such tangentials was merely distracting from a truly serious problem.
Comes the Associated Press story out of Washington about the confrontation between Congress and the CEOs, wherein House of Representatives member Gary Ackerman (D-NY) said, “There is a delicious irony in seeing private jets flying into Washington D.C. and people coming off them with tin cups in their hands.”
A “delicious irony.” A nice plan of saying “monumentally asinine.”
Antics such as this and the recent revelations of AIG corporate excesses (after receiving record federal loans) only further complicate the automakers chances for success in getting Congressional approval for a bailout Senator Richard Shelby (R-AL) has been on a virtual crusade against the Big 3 bailout. On “Meet The Press” and “Face The Nation” Sunday and CNN Wednesday, Senator Shelby vehemently maintained that loaning money to an industry that has consistently failed to alter its business plan for decades, a contributing factor for the corporations being in their present plight, was to throw away taxpayer money. Shelby called the Big 3 bailout understanding a “bridge loan to nowhere,” especially if they did not fire the current management heading the companies being loaned to and totally restructure the corporations. Said Shelby, “Being on the taxpayer dole is no way to bustle a corporation.”
Senator Shelby supports allowing the Big 3 auto manufacturers filing Chapter 11 bankruptcy, restructuring the corporations, and letting the market decide on whether General Motors, Ford, and Chrysler will survive.
Of course, the argument for bailing out the Sizable 3 rests in the hope of saving the economy from the impact of millions of lost jobs, billions of dollars worth of lost revenues, systemic and collateral business failures, and lost tax revenues. Not unbiased in the advance future but in the distant future as well. Leading economists and many politicians are hoping to stop what looks to be a looming cascading collapse of enormous and far-reaching proportions.
Talks have now stalled in Congress. Senator Chris Dodd (D-CN) was not hopeful, saying the chances of reaching an agreement before Congress breaks for the holidays is “remote.” “I don’t see how in the next few days this is going to proceed forward.”
Congresswoman Maxine Waters (D-CA) told CNN she and her fellow supporters of a bailout idea simply want an agreement where there is increased oversight and a solid business blueprint for how the corporations would attempt to turn things around.
But Waters and Dodd need not think that there will be a sign of buckling from the southern members of Congress, who have auto manufacturers among their constituencies not looking for a federal handout: a BMW plant in South Carolina; a Toyota plant in Misissippi; and a Mercedez-Benz, Hyundai, and Honda plants in Alabama. Like a good general, Senator Shelby fights from a position of strength.
******
Sources:
CNN Television
WashingtonPost.com
Associated Press
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Filed under Corporation Filing Bankruptcy by on Sep 22nd, 2010. Comment.
Hello, my name is Craig Osterhoudt, I’m the owner of InstallPro LLC windows and doors in Las Vegas, NV. Over the last decade I have seen many people build custom homes. I have personally been involved with over 1000 custom homes. Sometimes I was enthusiastic from start to finish, and sometimes I was involved fair at the end fixing problems that came about from people making poor choices at the beginning when choosing windows and doors for their home.
After so many years of seeing homeowners go through the same problems over and over and watching them have to spend thousands upon thousands in extras and fixes, I decided to write this article for anyone who is building a home in hopes that I can serve at least a few people set some money, delays, headaches and frustrations, at least when it comes to the trade of windows and doors.
Don’t get me wrong, there are hundreds of mistakes people have made that I’ve witnessed, but the 5 most costly mistakes that people effect time after time are listed here. These are the mistakes that people make that cost them the most in extras, delays and frustration. They are in no particular order for they are all equally devastating if the time isn’t spent getting better information during the decision making process.
So without further ado, let me get to the 5 Worst Mistakes People Make When Choosing a Window company to work with when building a custom home.
Mistake #1 – Working with a company that does not carry a contractors license.
You see, the Nevada Location Contractors Board is there to protect the customer. It’s there to make sure that the homeowner/builder isn’t damaged by someone “claiming” to know about their trade. The NSCB does its best to regulate the contractors in the state with the protection of the consumer in mind. It makes contractors carry a bond, to protect the consumer in case they skip town, they make determined we carry workers compensation insurance in case a worker gets hurt on your jobsite, it has many protections for the consumer and when you work with a company that does not carry a license you give all that up.
For many contractor’s it’s a hassle to maintain a contractor’s license. Many companies out there figure they can bypass the hassle and just get by without it. If you can get the same product for the same price, why would you give up all that protection?
I’ve seen many people buy windows from a company that shows up in town for a few months or even a few years and then when that company decides they want to leave, they take deposits, product and parts and materials with them and the homeowner is left with a bunch of headaches and problems and no one to help them. No bond posted to help you with expenses.
The worst part is when the window company is quiet in town but refuses to work with you. They lisp you they did their part and the rest is up to you! Who can you call for help? The better business bureau? They can assign a bad mark about them in their files and that’s about it. The contractors board can fine licensed contractors, bring about apt proceedings and shut a contractor down if need be.
Mistake #2 – Working with a company that does not install their own product.
This is a protest epic sign of a contractor that isn’t confident in his trade. If someone refuses to install their own product, you’ve got to ask yourself Why? It’s understandable if you can find someone reputable to do it for less, but someone that impartial flat out refuses to install his acquire product is telling you, “Sure, buy my product, but I’m not going to take any responsibility for it.”
You survey, if someone else installs it, and later you have a problem with the window, they will come out and say, “Nope, sorry, it was installed incorrectly; you’re going to have to call the installers and have them come out and fix it.” Even if it’s a problem they can fix, they won’t because they will incur an undue cost. Then, when the installer comes out he’s going to say, “Nope, it’s installed correctly, the window is bad, you have to call the manufacturer.” Now you’re stuck with a window that won’t work and no one to attend you fix it. Unfortunately, this is where I’ve come in time after time and the homeowner that bought a product with a lifetime warranty can’t even get the window to commence or close and has to pay someone else to fix it.
Using the company that supplies the windows to install the windows solves that predicament. Even if the window was installed incorrectly, they are going to put some effort into fixing it because they know they are responsible for the window for the life of the home.
Extra Secret – Beware of companies that offer every window under the sun. A great query to ask is “How many different window product lines to you offer? ” If they offer several different windows beware. I know of several companies that win into financial trouble and take on another window line because they are having trouble paying the first supplier so they start unique with a new one so as not to delay any customer’s shipments. However, I know one homeowner who fell into this trap. He ordered his windows from a company who in turn ordered them from the manufacturer. But then later, when he went to order his doors, the contractor told him no, no, this other door product is much better, why don’t you go with these other doors.
Well, the window contractor never paid for the doors or the windows and ended up filing for bankruptcy. Well the window and door manufacturer’s placed a lien on the customer’s house because they had never been paid. The homeowner had to pay for his windows and doors, twice! To the tune of over 80,000 dollars! To avoid this dilemma, make sure you get supplier releases faxed directly to you from the supplier before you make any final payments. If in doubt make a joint check to the window contractor and the supplier, so you know the windows find paid for.
Mistake #3 – Working with a company that does not provide lock and slide service.
Here’s another tell anecdote price of an unconfident contractor. Lock and slide service means that a week or so before you move in the contractor will reach back out to your house, install the screens, make sure everything slides nice and locks correctly. They will replace missing or damaged parts and give the windows a little tune up.
I hear customers tell me all the time. “The window company said, they worked ravishing when we dropped them off, if they don’t work now, it means you did something to them.” The fact of the matter is that windows are the first finish product to go into the home. If the windows can’t stand up to 6 to 12 months of construction wear and tear, then they don’t belong in a custom home.
Manufacturers know windows don’t accumulate installed three days before the customer moves in. They earn beaten, banged up, painted, stucco’d, people lean ladders on them, pull extension cords through them, I’ve even seen someone attach a piece of scaffolding through a window and employ it to reach a light fixture. Any window manufacturer knows this and should build their windows to stand up to this kind of treatment.
If a contractor won’t come out and do lock and slide service it means they have no confidence in their window. They either don’t know how to do a lock and slide or just don’t care enough about the consumer to bother. Most times when a window doesn’t work properly after the fact it’s a simple fix, but when its not, you want to make sure you have someone that will reach out and engage care of your window problems, because distinct enough, every window will work great except that one window that you like to use a lot.
Extra Secret - When dealing with a company that does offer lock and slide service, compose sure that good after the windows are installed and complete, you walk each window and door opening to make sure they work PERFECT. If you have any doubts about a window or door and its operation, make sure they advance out and fix it right then. If they say, “No, that’s normal, we come out and fix those problems at the end before you move in,” don’t take that for an answer.
Demand that they come out right away because any problems that exist now are only going to be multiplied by months and months of construction. Now is the easiest time to make window adjustments, they can pull the whole window out and reset it easily if need be. That is definitely not the case if you wait until the end and then you just have that much more of a chance that the problem will be worse further down the line.
Mistake #4 – Not comparing quality when comparing price.
I know you’re probably thinking, “Here we go, another person telling us how to never go with the lowest bidder, you get what you pay for, blah. blah.” Well, I’m here to tell you something different, because the fact is most people pay too much for their windows and doors. I do thunder people to be careful when shopping solely based on price, because there is something the contractor is giving up to be able to offer a lower price. As long as what they are giving up isn’t important to you, then there is no reason to pay more.
So, here is the most important part of this piece and it may come as a surprise. Just because something costs more, doesn’t necessarily mean it is any better. Many people think that if one window costs more, it has more features and benefits and will last longer and a whole slew of other misconceptions. The fact is that when a window costs more, it’s usually because that company has a titanic marketing budget to pay for and it reflects itself in the price of the window.
You need to compare the windows you are contemplating based on features and benefits. Many window companies sell an inferior product at a higher price simply because the customer has heard of those windows before. The problem with that is how many window companies can the average consumer name off hand? One or two? There are literally hundreds of great window companies that have been around a long time and offer great products.
You need to pick the benefits that are important to YOU, and then compare windows based on those benefits, not based on marketing. For example, is energy efficiency famous to you? If so, which window is the most energy efficient? You’ll fetch that windows made of similar materials are very halt when it comes to energy efficiency, yet the prices vary wildly. The same goes for warranty. The warranties available for windows are remarkably similar, so is one window worth 20% more, when the warranty is relatively the same.
Mistake #5 – Not making the window company responsible for their trade.
Here is what you may run into when you get a quote for windows. They will give you a window list and ask you to check it very carefully because any deviation from that list will incur additional costs. This is basically a window contractor asking you to be the expert instead of them. They should take responsibility and make definite what gets ordered is what you need. They should be responsible for egress, code compliance, operation and ease of use.
Many consumers try to save some money by making their own window list and asking window companies to bid off of that list. I’ve seen more people lose more money from this mistake than any other. For the price of a situation of plans, they end up spending hundreds of dollars, sometimes thousands in extra’s because they didn’t want to print another set of plans.
To save on printing costs, burn CD’s and make the bidders print their own set if they need a hard copy, but they need to acknowledge that they have received a set of plans and are bidding from that set. If need be, make a list of things that changed as you go along and e-mail/fax/mail that list with the plans to each bidder.
Then you should walk through the plans with the contractor you chose, before you order. Go through each room, one by one to make sure you are getting what you want. Of course, things like window color, and hardware colors, you will have to be responsible for. If you signed for white windows and forgot your wife said green, you can’t expect the contractor to be responsible for that if you signed for white windows. However, things like jamb extensions, nail-fin location, door and window handing should be discussed together with an experienced contractor who can lend his/her expertise in these areas. Beware of someone who sends you a list and then asks you to sign the list and give a deposit then he can order. In fact, I recommend a jobsite walk as well before anything is ordered. Also make sure you get a rough opening list from the window guy, before your framer begins to lay out. If he cuts his headers and you find out later that the windows you are ordering oversize, you might have to pay for a whole new set of headers.
Well there you have it. If you can avoid these 5 worst mistakes, you should be in good shape when it comes to building your home, at least when it comes to the trade of windows and doors.
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