Tag Archives: Bankruptcy

Seek Help Before Trusting Your Home Lender

As many are aware, Wells Fargo Home Loans has been accused of qualifying customers into unfavorable loans. In efforts to avoid further attention, Wells Fargo attempted to settle their debt by offering their customers money. According to Scott Reckard, in his recent article in the Los Angeles Times entitled, “Wells Fargo sends refunds to some FHA mortgage customers”, borrowers had randomly received checks via mail from their mortgage home lender Wells Fargo. At first glance, what seemed like a nice surprise, these checks came with a string attached. Stated clearly, if borrowers cashed the checks, it prohibited them from suing Wells Fargo in the future.

Reckard reported, as a way for Wells Fargo to side step further litigation over steering their customers into unfavorable home loans, an estimated 10,000 letters enclosed with checks went out to Wells Fargo Home Loan’ borrowers. These unfavorable loans were written as Wells Fargo Home Loans surged to become the No. 1 originator of loans insured by the FHA.

In his article, Reckard shared how a California resident, Eric Murillo-Angelo, received a check from Wells Fargo for $6,676.89. Enclosed with Murillo-Angelo’s check was a letter stating, “You may have qualified for a conventional conforming mortgage” instead of the FHA loan he received in 2010. Also, in large print, the letter stated, “You should understand by cashing the enclosed check, you agree to release Wells Fargo Home Loans from any and all claims relating to Wells Fargo’s origination of a more expensive mortgage loan than the loans for which you may have qualified.”

Wells Fargo Home Loan costumers faced the dilemma of either cashing their checks, or not. If they did not cash their checks, the questions they faced were what other avenues of justice they could pursue. Or, at that point, who could help them fight a large corporation like Wells Fargo. After weeks of holding onto the check and debating these questions, Murillo-Angelo cashed his check and settled paying for a loan that he could be paying far less for. In his case, he had a secure job and was economically stable enough to possibly refinance into a less expensive loan later.

Fortunately, Murillo-Angelo has options to get out of the home loan that Wells Fargo gave him. However, many others have not been so fortunate. For many, their home loans have led them into escalating debt, and for many others, they face foreclosure. These refunds checks hold little meaning to borrowers who have already lost their homes or are facing foreclosure.

There is help for borrowers who have fallen victim to lenders who share the same practices as Wells Fargo. Instead of waiting for home lenders to help, it is important for borrowers to understand that they should seek outside help before trusting their home lender. It is possible to save their homes and relieve themselves from escalating debt.

James H. Magee is a Washington bankruptcy attorney who has helped many people in Pierce, Thurston, and King Counties save their homes and get on a stable financial path. With help on how to take the next step towards financial security, it is possible to overcome poor home lending practices and refinance expensive home loans into home loans that are fair and affordable.

An update on Washington Mutual’s bankruptcy reorganization plan

Washington Mutual Inc. has reached an agreement with previously objecting creditors that could lead to an approval of its latest bankruptcy reorganization plan.

This morning, a hearing in WaMu’s bankruptcy was delayed several hours as attorneys worked towards obtaining a settlement involving creditors who bought certain WaMu securities. The WaMu securities in question were converted into stock when regulators seized WMI’s flagship bank in 2008 and sold WaMu’s assets to JPMorgan Chase.

The securities investors voted against WMI’s plan, because they faced far less recovery as stockholders than they would as debt holders. This raised doubts as to whether WaMu could win court approval.

In exchange for withdrawing their “no” votes, the investors will receive $18 million from JPMorgan and an unsecured claim of about $618,000. On top of that, these investors will be able to seek reimbursement of legal fees, up to $15 million.

I will post additional updates as developments in the case unfold.

Many experts believe that we may be headed for another recession. Don’t enter a second recession with mountains of debt. I can help you to understand the options available to you for dealing with your debts. I am sure that I can be of assistance to you, to a family member, or to a friend as we all know people experiencing trouble these days even if we are not experiencing our own financial troubles. Please do not hesitate to make contact with me. I emphasize courteous and discrete consultations that fill your time with useful information. The impact to your life after an in-person consultation with me may be substantial, and life-long. You will enjoy a new peace of mind and a fresh hope for the future with a new roadmap for financial success that we develop together. You can contact my scheduler through our website for your free 30 minute consultation. If you wish, you may schedule your free 30 minute consultation by phone by calling us at 253-383-1001 Monday through Thursday from 9:00 AM until 5:45 PM, and on Friday from 9:00 AM until 12 noon.

Bankruptcy and Litigation

After a decade of litigation and related bankruptcy, Jacqueline Palank of the Wall Street Journal wrote on the question of who owns the song, “Whoomp! (There It Is)”.

This song is familiar to anyone who attended a sporting event in the ’90s. Released in 1993, “Whoomp! (There It Is)” was one of those ubiquitous pump-up-the-crowd songs played during sporting events, a status cemented by its inclusion on the first volume of “Jock Jams.” It was later declared the 65th worst-song-ever, surrounded by such other ’90s gems as “How Bizarre” by OMC, “Breakfast at Tiffany’s” by Deep Blue Something and “Supermodel (You Better Work)” by RuPaul.

To decide this matter, Judge Richard A. Schell of the U.S. District Court in Sherman, Texas, scheduled a hearing for Aug. 27. This is when a jury will be selected for a trial over which of two music companies is the true owner.

In 1993, Alvertis Isbell’s Bellmark Records released “Whoomp! (There It Is),” by one-hit wonder Tag Team. According to Isbell, the record label owned the sound recording of the song, while its affiliated publishing company, Alvert Music, owned the composition rights to the song’s written form.

However, DM Records licensed “Whoomp! (There It Is)” in 1997. Bellmark filed for bankruptcy protection the same year. In 1999, Bellmark sold most of its assets, including its sound recording rights, to DM Records. According to Isbell, the composition rights weren’t included in that sale because they are an asset of Alvert, which wasn’t in bankruptcy.

According to Isbell, DM has been wrongly claiming ownership of both the song’s sound and composition rights. Isbell is seeking a ruling that Alvert Music still owns the composition rights, and also wants damages for DM’s alleged infringement on his ownership rights.

DM Records, however, says written agreements do not mention him or Alvert Music by name, and therefore don’t distinguish between the two types of song rights. As a result, both were assets of Bellmark and therefore included among the assets DM Records bought from Bellmark’s bankruptcy.

After a decade of litigation, the parties asked Schell to rule on the dispute without a trial. The judge denied the request Friday stating, “Because there are genuine issues of material fact surrounding ownership of the subject composition copyrights, the court denies both DM and Isbell’s motions for summary judgment.”

Credit Report Nuts and Bolts, Part 6 of 6: Who can see your credit report?

Creditors – can look at your report whenever you apply for credit, such as a mortgage, car loan, or credit cards.

Employers – can look at your report, but only under certain circumstances and only if you give them written authorization. Employers are allowed to look at your report to evaluate you for hiring, promotions, and other employment purposes – but I understand that it is done only with your permission in most states. A few states, such as Washington and Hawaii, have banned employers from using credit reports unless a good credit record is related to a job’s qualifications. (I will try to blog on this Washington state law in a later post)

Government agencies – some can look, but only if searching for hidden income or assets – usually only certain agencies can do this such as those trying to collect child support.

Insurance companies – home and auto insurers now use specialized credit scores to decide whether to issue you a policy and how much to charge for it.

Landlords – when deciding whether to rent you an apartment or home.

Utility companies – when deciding how much of a utility deposit (if any) to seek – but not in deciding whether to extend utility services.

Student loans – Usually, I am told by the NCLC’s Guide to Surviving Debt, that a credit score is irrelevant to obtaining government student loans, but it could be a factor in obtaining private (not government guaranteed) student loans. There may be an exception though, for Parent PLUS loans wherein parents–or professional students such as dental, law school, and medical school students–are seeking student loans in order to finance a child’s education.

Divorce, child custody, immigration, citizenship applications, registering to vote and other legal proceedings – your credit report should not be used against you, subject to a few limitations and circumstances.

Symbol of Lady Justice: Where did the lady with the blindfold, sword, and scales come from?

This post is a bit off topic for this blog, but I thought you might find something a bit out of the ordinary refreshing.

The lady with the balance scales, sword, and blindfold comes from ancient history. This symbol is used in American jurisprudence as a representation of judicial justice.

She was known as Maat in ancient Egypt – the goddess of harmony and order. She is depicted in the Book of the Dead as weighing a human heart against a feather to determine a soul’s fate in the afterlife.

She evolved in ancient Grecian lore to become Themis, sister, wife and counselor to Zeus.

Roman mythology rolled Themis and her sister Dike together to form Justitia, the only one of the cardinal virtues to have a signature look in ancient art, reports Randy Kennedy in the New York Times, Thursday, December 16, 2010 edition.

Mr. Kennedy cites a recent book/treatise by Yale Law School professors Judith Resnik and Dennis Curtis. Resnik and Curtis recite that Lady Justice’s familiar blindfold did not become her fashion accessory until late in the 17th century (the 1600s).

Resnik and Curtis recite that medieval and Renaissance people did not view blindfolds favorably. Up into the 1600s sight was considered a virtue, and thus a blindfold carried a very negative connotation. Resnik/Curtis recite that a medieval/Renaissance term for a blindfold was a “hoodwink” – a noun – which today means to trick or deceive someone with an accompanying very negative connotation.

One interesting thing is that the image of Lady Justice seems to be something almost approaching universal although the exact look varies from culture to region. The Lady Justice figure can be found in courts from a statue at the Supreme Cout of Canada in Ottawa to one presideing over a constitutional court in Azerbaijan. The image can be found in courts of Zambia, Iraq, Brazil and Japan, according to Resnik/Curtis as reported by Randy Kennedy.

A man with a future? Ohio Attorney General Richard Cordray avenges foreclosures with populist tradition.

A grandstanding, self-serving and undisciplined avenger seeking local political status or a national law enforcer seeking to hold the rich and powerful to account? Ohio’s next Senator or Congressman? Opinions differ widely on Ohio Attorney General Richard Cordray.

See the NY Times October 12, 2010, article of Michael Powell: "The States vs. Wall Street – Crusaders for the Public’s Purse, in Ohio and Elsewhere".

http://www.nytimes.com/2010/10/12/business/12avenge.html?scp=1&sq=The+states+vs.+Wall+Street&st=nyt

Richard Cordray AG for Ohio, joins with Martha Coakly (AG for Mass.) Lisa Madigan (AG for Illinois) Roy Cooper (AG for North Carolina) and Tom Miller (AG for Iowa) – they are "cut from a mold like that of Eliot Spitzer, and give full throat to popular outrage." – Michael Powell, NY Times.

Michael Powell reports: "[Mr. Cordray] is no Wiliam Jennings Bryan inveighing against the evils of monopoly capital…he is, however, tapping a populist tradition in Ohio. THis is where politicians mounted challenges to the Standard Oil monopoly of John Rockefeller and where Senator John Sherman led a late 19th-century campaign to pass the Sherman Antitrust Act, which was the first law to require the federal government to investigate companies suspected of running cartels and monopolies…’the notion that banks will just get things right over time is perhaps true..but over that time period, and at what terrible cost to the individual American?’" Mr. Powell quotes Mr. Cordray.

Mr. Cordray has recently sued Bank of America in a "first of its kind" lawsuit in October 2009, accusing B of A oficials of concealing critical facts in the acquisition of Merrill Lynch, even as that firm careened towards insolvency. Top bankers, he said, had not come remotely clean about the extent of the losses at Merrill and its bonuses.

in the first week of October 2010, Mr. Cordray sued GMAC Mortgage over the "foreclosuregate" practices of allegedly filing thousands of false affidavits in Ohio foreclosures.

Mr. Cordray has wrung money out of lawsuits before (critics recite that the wealth banks just pay the settlements and then move on- calling it a "cost of doing business" – thus rarely amending their ways0 hitting Merrill Lynch for $475 million, $400 million from Marsh & McLennan and $725 from American International Group.

Is Richard Cordray out to help…or is he just out to grandstand for his own political gain? Keep an eye on Ohio Attorney General Richard Cordray – he may burst upon the national political scene – for better or for worse.

Attacks on foreclosure attorneys – a newer industry gathers steam with “robosigners” and “foreclosuregate” despite forecast of 2 million foreclosures per year.

"Foreclosuregate" and "robo-signers" seem to be words fading from the public lexicon, although in September and October 2010, such words dominated business media.

"Robosigners" were individuals who signed vast numbers of foreclosure related documents (usually, affidavits for those states requiring bank affidavits in the processing of a foreclosure). The vast number of documents signed per month by such individuals begged the question of whether such individuals were truly signing and reviewing the foreclosure related documents and affidavits.

"Foreclosuregate" was the general name given to foreclosures that may have been flawed – either because the foreclosure was done with "robosigner" documents or was subject of some other technical mis-procedure.

Banks, their employees and their outsourced employees rushing "robosigned" documents through a foreclosure court (in those few states requiring a judge’s signature or judicial proceeding to foreclose – Washington state is not one of these states) may be undesirable, but perhaps understandable. Over 2.25 million foreclosures are expected in 2010, and 2 million more expected in each of 2011 and 2012. Many of these homes are abandoned – and many more involve owners who could not afford any mortgage payment whatsoever, so for that subgroup, even a modification is not plausible.

Perhaps three questions should be considered before the cheers grow to burn the foreclosure lawyers and the banks at the stake: First, did or did not the homeowner borrow funds to purchase a home? Second, did or did not the homeowner fail to make the payments? Third, what is to be gained by giving someone a "free house" by alleging technical procedural problems in a foreclosure?

Perhaps the most widley recognized consumer advocate attorney pursuing banks is O. Max Gardner, III, a Shelby, N.C. attorney. Mr. Gardner offers a "bootcamp" to lawyers to teach bankruptcy litigation techniques. Mr. Gardner is referenced the the October 16, 2010, NY Times article of Barry Meier – see link below:

http://www.nytimes.com/2010/10/16/business/16legal.html?_r=1&scp=1&sq=foreclosure%20mess%20draws%20in%20the%20filing%20lawyers,%20too&st=cse

Round Two: Countrywide/Bank of America now attacks those from whom it purchased loans. See my earlier post: “Round One: Bank of America under attack for selling lousy mortgages to investors Pimco Bonds and Black Rock”

First off, many kudos to Joe Nocera of the NY Times, the source of much of the info and inspiration in this post in his 11/27/2010 article:

"Liar Loans" a/k/a "stated income" loans were the forte of Countrywide, which may come to represent the dirtiest of all the subrime lenders. However, other companies also made stated income loans, in all fairness, and stated income loans have been around in one form or another since the 1980s.

However, Countrywide went around looking to purchase the "stated income" loans made by other companies, banks and lenders.

To help you understand this "behind the scense" squabbling between the banks and government, I quote from Stephanie Strom’s November 27, 2010, NY Times article:

"Take, for instance, that litigation between Countrywide and the Mortgage Guaranty Insurance Corporation (Ginnie Mae). For some time now, the mortgage insurer has refused to pay claims on thousands of stated-income loans it insured, on the unsuprising grounds that the loans were fraudulent at their inception and thus violated the terms under which the company insured them. In December, Bank of America (Countrywide) filed suit on behalf of its Countrywide unit, arguing, in effect that it doesn’t matter whether the loans were fraudulent. Since the insurer never asked for income verification – and accepted the fact they were stated income loans – it has to pay up. (Nearly a year later the litigation is just getting started.)

Now contrast that stance with Countrywide’s (B of A’s) effort to force smaller mortgage originators to buy back loans it had purchased. In these cases Countywide makes the exact opposite argument: because the loans were made fraudulently, the smaller companies have an obligation to buy them back. [ ]

Thus, when it serves Countrywide’s purposes (now owned by B of A) to argue that everyone knew the loans were fraudulent, it happily makes that case. But when it is better served by arguing that it is shocked – shocked! – to discover gambling in the casino, it makes that opposing argument wtih similar ease. Isn’t that the dictionary definition of hypocrisy?"

See "The Give and Take of Liar Loans", by Joe Nocera, NY Times Saturday, November 27, 2010.

http://www.nytimes.com/2010/11/27/business/27nocera.html

Many Kudos to Joe Nocera – a nicely written article!

Round One: Bank of America under attack for selling lousy mortgages to investors Pimco Bonds and Black Rock

Investors are mad, hopping mad, and Bank of America (and others) are in the crosshairs. Between 2004 and 2008 B of A assembled some $2 trillion in mortgage securities, and sold many of them off to investors, including Pimco and Black Rock, large money management companies.

These angry investors want to shove the cruddy mortgages down Bank of America’s throat.

This Nelson D. Schwartz October 20, 2010 NY Times Article is telling:

http://www.nytimes.com/2010/10/20/business/20bond.html

"But while the human toll of the foreclosure crisis has grabbed the headlines, the fight over how these loans were created in the first place could last much longer and ultimately cost the banks much, much more. And it is setting the stage for a huge battle between mortgage holders like the government (Fannie Mae, Freddie Mac and Ginnie Mae), hedge funds and other institutional investors on one side and teh big banks on the other. ‘It’s very serious said Glenn Schorr, an analyst with Nomura Securities. ‘The numbers are all over the map’ If the Fed and the investors succeed, it could cost Bank of America billions of dollars. On Wall STreet and in bank boardrooms,the question of whether investors can force banks to buy back, or "put back" bad mortgages to the banks that sold them is dominating the debate and worrying analysts, money managers and banking executives."

"The danger posed by angry – or opportunistic – investors ‘putting-back’ mortgages to the banks is hardly limited to Bank of America. Other giants like Citigroup and JPMorgan Chase face similar claims, and [on approximately October 14, 2010] JPMorgan set aside $1.3 billion just for the legal costs, including put-backs"

Countrywide magnate pays $67 million – Angelo R. Mozilo former CEO pays to settle civil fraud case brought by SEC

Gretchen Morgenson of the NY Times reports on October 16, 2010:

"…the settlement by Mr. Mozilo is the fist time that a prominent executive has been penalized personally for financial excesses linked to a mortgage boom that, when it went bust, threatened to topple the economy and led to an unprescedented wave of foreclosures."

"Earlier this year, Goldman Sachs paid a $550 million fine to setle securities fraud charges. Securities regulators are also investigating former senior executives at Merrill Lynch for possible securities fraud."

The SEC sued Mr. Mozilo alleging that he improperly generated profits on insider stock sales, and that he allowed "toxic" loan products to move forward, knowing them to be toxic.

Countrywide (acquired by Bank of America) is to pay $20 million of Mr. Mozilo’s settlement. Mr. Mozilo has also agreed to never again serve in a public company. (Note: Big fat deal – he is 71 years old and recorded gains on stock sales of over $140 million on Countrywide stock and for years was among the highest-paid executives in America – and was known as an audacious and flamboyant financier)

The settlement was reached four days before the scheduled beginning of a jury trial in Los Angeles.

Other Countrywide employees sued by the SEC (and whom settled) were David Sambol (former Countrywide president, paying 5.52 million) and Eric Sieracki (former Countrywide chief financial officer, paying $130,000).

http://www.nytimes.com/2010/10/16/business/16countrywide.html?scp=1&sq=Lending+Magnate+Settles+Charges+for+%2467+million&st=nyt

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