New Housing Task Force

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During his State of the Union address, President Barack Obama announced the formation of a Housing Task Force, officially called the Residential Mortgage-Backed Securities Working Group.  This new agency, led by New York Attorney General, Eric T. Schneiderman, will be responsible for cracking down on financial firms that have improperly bundled mortgage loans into securities for investors.  The task force will focus on Wall Street firm and large lenders. 

This is not be the first time the current administration has attempted to institute some form of investigative body to investigate or prosecute crimes related to the financial crisis.  The task force is the latest effort by the administration to address the complaints of so many homeowners and investors that the government has not done enough to hold the financial institutions accountable, or to address and correct the behavior and practices that led to the financial crisis.

Mr. Schneiderman has stated that the new task force will make a more focused, concerted and aggressive effort to address the issues.  Reportedly, 15 attorneys from the U.S. Attorney General’s Office and 10 FBI agents will join the task force staff of 30 attorneys in the investigative and prosecution efforts.  The Securities and Exchange Commission will also be involved.

The task force has already sent subpoenas to the 11 largest financial institutions, which as of today remain undisclosed. More subpoenas are expected.

—Craig I. Kelley, West Palm Beach Bankruptcy Attorney of Kelley & Fulton, P.L., represents individual and business debtors and creditors in Chapter 7, 11, 12, and 13 proceedings. He is A.V. rated by Martindale-Hubbell directory, which is the highest rating as voted on by his peers in the legal profession. He is an Adjunct Professor of Bankruptcy Law at Palm Beach Community College and lectures nationally on the subject. You can get more information about bankruptcy from an experienced bankruptcy attorney in West Palm Beach by contacting Craig I. Kelley at 561-491-1200 or by emailing info@kelleylawoffice.com.

Debunking Bankruptcy Myths

When it comes to bankruptcy, there are several misconceptions and myths floating around.  This misinformation often persuades individuals not to avail themselves of the benefits of a bankruptcy filing. Below is an account of the most common misconceptions regarding bankruptcy.

I will lose my property. This is generally not the case.  In many cases, debtors do not lose or have to give up any property.  In a Chapter 7 Bankruptcy, most assets are exempt from liquidation. Florida, especially, provides very generous exemptions.  Only non-exempt property is subject to liquidation.  In a Chapter 13 case, debtors’ assets are fully protected so long they comply with their payment plan. 

Everybody will know.  Although bankruptcy filings are a matter of public record, unless you are a high profile individual, it is unlikely people will find out about the case.  Of course, all your creditors will be notified of your filing, and if someone, an employer, potential employer, landlord, or an interested individual obtains a credit report, or sets to find out specifically whether you have filed for bankruptcy, they will have that information available through the appropriate sources.

My credit will be ruined forever or I won’t get credit for 10 years after my filing.  The filing of a Chapter 7 case will stay on your credit report for 10 years.  However, you will be able to access credit shortly after your bankruptcy, and you will be able to rebuild your credit within 2 years of your bankruptcy.    Since bankruptcy reduces your outstanding debt, some lenders actually see you as a good candidate for new credit.

I don’t have to include a creditor if I am current and intent to continue to pay.  Many debtors would love to keep their Macy’s credit card, or other department stores credit card, or they feel they must keep their commitment to repay their friend or family member who aided them in a time of need.  However, you must include all your creditors and debts in your bankruptcy petition.  Institutional lenders will most likely close your account upon your bankruptcy filing.  You are allowed to reaffirm your debt with a particular creditor if you desire to continue to have the legal obligation to repay them after bankruptcy.

Filing for Bankruptcy is simple.  Filing for bankruptcy is a lot more than filling out a few forms.  Bankruptcy is a serious legal proceeding; every form submitted in bankruptcy has legal implications.  Although bankruptcy generally is not adversarial, even in a simple case there is potential for litigation and loss of assets if not done correctly.  For more information on Bankruptcy visit www.kelleylawoffice.com.

“—Craig I. Kelley, West Palm Beach Bankruptcy Attorney of Kelley & Fulton, P.L., represents individual and business debtors and creditors in Chapter 7, 11, 12, and 13 proceedings. He is A.V. rated by Martindale-Hubbell directory, which is the highest rating as voted on by his peers in the legal profession. He is an Adjunct Professor of Bankruptcy Law at Palm Beach Community College and lectures nationally on the subject. You can get more information about bankruptcy from an experienced bankruptcy attorney in West Palm Beach by contacting Craig I. Kelley at 561-491-1200 or by emailing info@kelleylawoffice.com.”

Florida Supreme Court Suspends Foreclosure Mediation Program

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On December 19, 2011, the Florida Supreme Court issued an Administrative Order discontinuing the state’s mandatory foreclosure mediation program.  The residential mortgage foreclosure mediation program was established in December of 2009 to address the foreclosure crisis in the state’s courts.  Although no cases filed after December 19, 2011 will be required to be referred to the mediation program, the Court clarified that the cases currently pending mediation on the date of the issuance of the administrative order will still be able to complete the mediation process. 

Reportedly, the mediation program was never very successful. Statewide, less than 4 percent of cases referred to mediation resulted in an agreement between the parties. In Palm Beach County, the numbers are even more disappointing – less than 2 percent.  Often times, lenders could not reach the borrowers to set the mediation; other times, the lenders came to the mediation with no intentions to actually reach an agreement; and many times, the borrowers came to the mediation with no real ability to work anything out due to economic strains.

The Florida Supreme Court’s decision to terminate the foreclosure mediation program does not necessarily mean that the program or some form of it will cease to exist throughout the state. For instance, the Fifth Judicial Circuit Court has already indicated its intention amend its county administrative order to continue its mandatory managed mediation program.  Some other circuits may do the same.

 —Craig I. Kelley, West Palm Beach Bankruptcy Attorney of Kelley & Fulton, P.L., represents individual and business debtors and creditors in Chapter 7, 11, 12, and 13 proceedings. He is A.V. rated by Martindale-Hubbell directory, which is the highest rating as voted on by his peers in the legal profession. He is an Adjunct Professor of Bankruptcy Law at Palm Beach Community College and lectures nationally on the subject. For more information about bankruptcy, visit www.KelleyLawOffice.com or contact Craig I. Kelley by calling 561-491-1200 or by emailing info@kelleylawoffice.com.

Palm Beach County November Foreclosure Stats

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The Palm Beach County Office of the Clerk & Comptroller recently released the November foreclosure statistics.  These stats show that the number of foreclosure cases in the county has increased 51 percent compared with the same time last year.  Notwithstanding this significant increase, the November numbers are still lower than the numbers for the previous month. 

Also significant is that the number of foreclosures filed in 2011 is still lower than the number of foreclosures filed in 2010.  Specifically, by November 2010, 18,968 foreclosures had been file in the County.  By November 2011, only 10,935 cases had been file, a 42.4 percent decrease from 2010.  For perspective, however, foreclosures in Florida continue to be relatively high.  Around 25,000 foreclosures were filed in the State in November 2011, the second highest total in the country.

The Clerk’s office sold 899 properties though foreclosures auctions in November, 2011.  Of those auctioned properties, only 142 were sold to third parties; the rest were sold back to the lender or mortgage holder.

—Craig I. Kelley, West Palm Beach Bankruptcy Attorney of Kelley & Fulton, P.L., represents individual and business debtors and creditors in Chapter 7, 11, 12, and 13 proceedings. He is A.V. rated by Martindale-Hubbell directory, which is the highest rating as voted on by his peers in the legal profession. He is an Adjunct Professor of Bankruptcy Law at Palm Beach Community College and lectures nationally on the subject. You can get more information about bankruptcy from an experienced bankruptcy attorney in West Palm Beach by contacting Craig I. Kelley at 561-491-1200 or by emailing info@kelleylawoffice.com.

Bankruptcy Demographics: Who is the American Debtor?

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The Institute for Financial Literacy (“IFL”) recently released its 2011 Annual Consumer Bankruptcy Demographics Report.  This is an annual report that looks at the demographic profile of the American debtor.  In this report, the IFL did not limit its presentation to the 2010 bankruptcy demographic data, but it compared data from the previous five years to determine how the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), the Great Recession of 2008, and the political changes have affected the demographic makeup of the Bankruptcy petitioner.  The report examines the demographic information of the bankruptcy filer in 2010, and compares the results with the findings from 2006 through 2009.

The IFL found that since the passage of BAPCPA, the following demographic changes have occurred:

• Although more than 70% of the debtors do not have a college degree, more people with advanced degrees are filing for bankruptcy
• Most debtors earn $40,000 a year or less, and approximately 40% of debtors make less than $20,000.
• Sixty percent of debtors are married, and 35% of those married debtors filed jointly
• More men are filing for bankruptcy, closing the once existing gender gap.

The IFL also reports that the following changes are attributable to the Great Recession:

• The number of bankruptcy filers 45 years old and older increased by 19%
• The number of bankruptcy filers 34 years old and younger decreased by 30% since 2006
• The number of Asian American debtors doubled
• The number of Hispanic/Latinos filing increased by 33%
• The number of college-educated people filing for bankruptcy increased by 20%
• The number of debtors earning above $60,000 increased by 66%
• The number of unemployed bankruptcy filers increased by 21% since 2006
• The number of married bankruptcy filers increased by 12% since 2006

Other interesting findings is that the number of African American bankruptcy petitioners has been steadily decreasing since 2006, while the number of Caucasian, Latino/Hispanic American and Asian American bankruptcy filers has been steadily increasing since 2006.  With the exception that the number of Caucasian filers decreased by 2.3% in 2010.  The number of Native American filers has been fluctuating, with the lower number of Native American filing in 2009.

The number of bankruptcy filers with graduate, bachelor’s and associate’s degrees has been steadily increasing since 2006. With the exception that the number of bankruptcy filers with a bachelor’s degree slightly decreased in 2010.  Most of the bankruptcy filers only have a high school degree or GED diploma, but the number of these filers has been steadily decreasing since 2006.

With respect to the income gap, expectedly, the less you make, the more likely you are to file for bankruptcy, except if you make more than $60,000.  Debtors making between $50,000 and $60,000 have consistently been the least likely to file for bankruptcy since 2006.  The number of bankruptcy filers with an income of more than $60,000 has been steadily increasing since 2006.

Craig I. Kelley, West Palm Beach Bankruptcy Attorney of Kelley & Fulton, P.L., represents individual and business debtors and creditors in Chapter 7, 11, 12, and 13 proceedings. He is A.V. rated by Martindale-Hubbell directory, which is the highest rating as voted on by his peers in the legal profession. He is an Adjunct Professor of Bankruptcy Law at Palm Beach Community College and lectures nationally on the subject. For more information about bankruptcy, visit www.KelleyLawOffice.com or contact Craig I. Kelley by calling 561-491-1200 or by emailing info@kelleylawoffice.com.

 

 

Occupy Movement Focuses on Foreclosures

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The Occupy movement has recently focused their attention from Wall Street to the thousands of homes in foreclosure across the United States.  Occupy protesters around the country are “re-occupying” vacant foreclosed homes, or homes that are at risk of being foreclosed by the banks.

The protesters are voicing their frustration with the banks they claim are responsible for the current foreclosure crisis.  The protestors point out the lack of regulations for loan modifications, the variable interest rates, and other profit tools and predatory lending practices some banks have been known to employ.

The Occupy Foreclosures movement has had some direct success at preventing banks takeover of homes.  Reportedly, the protester’s tactics in conjunction with the homeowners’ efforts have prevented the eviction of homeowners, prevented the auction of some homes, and delayed many foreclosures.  In some cases, banks have agreed to open or re-open loan modification discussions with homeowners on the verge of foreclosure.

It is too early to determine the impact this new phase of the Occupy movement will have on the foreclosure crisis.  In the meantime, some small victories have energized the movement and their visibility and strength keeps growing. 

 “—Craig I. Kelley, West Palm Beach Bankruptcy Attorney of Kelley & Fulton, P.L., represents individual and business debtors and creditors in Chapter 7, 11, 12, and 13 proceedings. He is A.V. rated by Martindale-Hubbell directory, which is the highest rating as voted on by his peers in the legal profession. He is an Adjunct Professor of Bankruptcy Law at Palm Beach Community College and lectures nationally on the subject. You can get more information about bankruptcy from an experienced bankruptcy attorney in West Palm Beach by contacting Craig I. Kelley at 561-491-1200 or by emailing info@kelleylawoffice.com.”

Banks Halting Foreclosures During the Holiday Season

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Several big lenders, including Wells Fargo Bank, J.P. Morgan Chase Bank, Bank of America and others are suspending their foreclosures and evictions during the holiday season.  Although the legal and administrative foreclosure proceeding will continue to move forward, these banks are implementing policies to avoid the scheduling of hearings on foreclosures or the execution of evictions and lockouts during the holidays.

Freddie Mac and Fannie Mae have also announced they will suspend evictions involving residential properties.

Although a small, symbolic gesture to struggling homeowners, the temporary moratorium will benefit many families by preventing their displacement during the holiday season.  Banks are expected to continue business as usual after January 2, 2012.

“—Craig I. Kelley, West Palm Beach Bankruptcy Attorney of Kelley & Fulton, P.L., represents individual and business debtors and creditors in Chapter 7, 11, 12, and 13 proceedings. He is A.V. rated by Martindale-Hubbell directory, which is the highest rating as voted on by his peers in the legal profession. He is an Adjunct Professor of Bankruptcy Law at Palm Beach Community College and lectures nationally on the subject. You can get more information about bankruptcy from an experienced bankruptcy attorney in West Palm Beach by contacting Craig I. Kelley at 561-491-1200 or by emailing info@kelleylawoffice.com.”

Kelley & Fulton, P. L. on YouTube

Third-Party Investors Buying Your Property in Bankruptcy

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A new trend has emerged in the Bankruptcy process in Florida.  Third party investors are increasingly approaching Chapter 7 trustees and offering to buy the bankruptcy estate’s interest in the debtors’ real property for a small amount of money.  The investor who buys the property, typically for a few thousand dollars, acquires title to the property, rents it out, and delays the foreclosure process while making profit from the rentals.

In a Chapter 7 bankruptcy procedure, a trustee takes over the assets of the debtor’s estate, liquidates them, subject to any applicable exemptions, and then distributes the proceeds to the creditors.  Generally, trustees would abandon a property of the estate that is secured by a mortgage lien in excess of the value.  The recent trend to sell the estate’s interest in the property essentially curtails any hope the debtors may have to pursue a loan modification and to reach any arrangement with the lender to prevent foreclosure of their property. 

Some creditor’s attorneys are concerned this practice will cause delays in the foreclosure process, and increase litigations costs.  Creditor attorneys are also alarmed that in some instances these third-party investors are corporate entities affiliated with foreclosure defense firms.

Obviously, this new trend will not affect debtors who claim the homestead exemption on their property, which will allow them to keep the property after the bankruptcy.

Craig I. Kelley, West Palm Beach Bankruptcy Attorney of Kelley & Fulton, P.L., represents individual and business debtors and creditors in Chapter 7, 11, 12, and 13 proceedings. He is A.V. rated by Martindale-Hubbell directory, which is the highest rating as voted on by his peers in the legal profession. He is an Adjunct Professor of Bankruptcy Law at Palm Beach Community College and lectures nationally on the subject. You can get more information about bankruptcy from an experienced bankruptcy attorney in West Palm Beach by contacting Craig I. Kelley at 561-491-1200 or by emailing info@kelleylawoffice.com.   For more information log on to www.kelleylawoffice.com.

Major Changes in New Proof of Claim Form

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On December 1, 2011, a new proof of claim (“POC”) requirement proposed by the Bankruptcy Rules Advisory Committee, and established by the U.S. Supreme Court takes effect.  This new form is different from the previous POC form in several aspects.  Some of the more salient changes are the following:

• Section 3b has been added to establish a uniform claim identifier to facilitate distribution and posting of payments by Chapter 13 trustees.
• Section 4 now requires that secured-claim holders disclose the annual interest rate in effect at the time a bankruptcy case is filed. Check boxes have been added to this section to further indicate whether the interest rate is fixed or variable.
• Section 7 was revised to clarify that creditors must attach documentation supporting their claim or evidencing perfection of a security interest. The form also includes language that reminds the creditor of the need to redact any documents attached to the POC. 
• Section 8, the date and signature box on the POC form, was revised to include a certification that the information submitted on the form meets the requirements of Bankruptcy Rule 9011(b), which requires that the claim be “true and correct to the best of the signer’s knowledge, information and reasonable belief.”  The POC signer will now have to declare, under penalty of perjury, that the information provided in the POC is correct to the best of the signer’s knowledge.  The effect of this new section is that now all POCs will require a person to review the information for accuracy and sign off on that assertion of accuracy.

In addition to changes to the actual POC form, the POC changes include the creation of three new attachments required from certain mortgage creditors:

• Mortgage Attachment Form – Attachment A.  This new form is now required to be completed and attached to the proof of claim secured by the debtor’s principal residence. 
• Notice of Mortgage Payment Change – Supplement 1.  This new form requires the holder of a secured claim on the debtor’s principal place residence to notify any changes in the amount of the mortgage payments, at least 21 days before the change, and to indicate the basis for the change, and the date when the change will take effect.  
• Notice of Post-petition Mortgage Fees, Expenses, and Charges – Supplement 2.  This new form requires the holder of a security interest in the debtor’s principal residence to file a notice of all post-petition fees, expenses, and charges within 180 days after they are incurred. 

The new POC form is designed to prevent the filing of unsubstantiated claims.  All these new forms require that the signer declare under penalty of perjury that the information provided is true and correct.  The new changes are an obvious attempt to increase the oversight on creditors, especially mortgage lenders, in the wake of the several complaints on their handling of defaulted mortgages.

Craig I. Kelley, Esquire of Kelley & Fulton, P.L., represents individual and business debtors and creditors in Chapter 7, 11, 12, and 13 proceedings. He is A.V. rated by Martindale-Hubbell directory, which is the highest rating as voted on by his peers in the legal profession. He is an Adjunct Professor of Bankruptcy Law at Palm Beach State College and lectures nationally on the topics of Bankruptcy and Foreclosure. His law firm is located in West Palm Beach and he can be reached at 561-491-1200 or at info@kelleylawoffice.com. For more information log on to www.kelleylawoffice.com.