When I come across something that I think might help readers answer this question, I be sure and post it here.

Read more at MSNBC.

Posted by Bill McLeod at 4:58 PM | Permalink | Comments (0) | TrackBacks (0)

There are ads on local radio stations that make this declaration. Earlier this month, the Federal Trade Commission filed a lawsuit in New York against a couple that operated a variety debt settlement companies: The Debt Settlement Company, The Debt Elimination Center, Pay Help, Inc., Money Helps and Edge Solutions. According to the FTC, unsuspecting consumers looking for help visited websites such as idebthelp.com and moneycares.com and lured into a "debt meltdown program." According to the FTC,

The complaint alleges that, as a result of being in the defendants’ program, many consumers experience substantially increased debt because of late fees, finance charges, and overdraft charges, and suffer damage to their credit rating because of significant negative information such as late payments, charge-offs, collections, and garnishments, all of which may appear on their credit report for up to seven years.

Read more from the Arizona Republic.

Read more from the Federal Trade Commission.

Posted by Bill McLeod at 4:43 PM | Permalink | Comments (0) | TrackBacks (0)

From today's New York Times:

Borrowers who took out loans in the first six months of 2007 are falling behind on payments faster than homeowners who took out loans last year, according to a report by Friedman, Billings, Ramsey, an investment bank based in Arlington, Va. The data suggested that more Americans could lose their homes and that the housing market’s troubles might persist longer than many analysts have been predicting.

Read more here

Source

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The Washington Post reports that

At the [real estate] loan closing, [Treasury Secretary Henry M. Paulson Jr.] wrote, "the most critical facts, including potential future monthly payments, should be on a single page in clear, easy-to-understand language."

In addition, he said the United States should consider replacing the disparate state rules that govern mortgage brokers with a national system.

Between predatory lending and complicated disclosure, "some of the conduct and practices I have learned about are shameful," Paulson said. "The development of a uniform national licensing, education and monitoring system for all mortgage brokers is worth considering."

Read more here

Source

Posted by Bill McLeod at 6:39 PM | Permalink | Comments (0) | TrackBacks (0)

In an interesting case involving an attorney’s mistake (and fortunately, it was not mine), a chapter 7 debtor will obtain a “clean” discharge. The case involved a debtor who in 1995 purchased her home under a state program which helped low and moderate income families to own their homes purchased at a market discount. Under this program, the local town or city would provide the housing subsidy. The local town or city would then retain certain rights, such as a right to a portion of net sale proceeds, first refusal and assent to refinancing. These rights were spelled out in a deed rider which was attached to the deed and recorded at the local registry.

In 2005, the debtor sold her home to a buyer. The buyer used the bank’s attorney, and did not retain one for herself. The debtor also did not hire an attorney. The closing attorney handled all aspects of the closing, including issuing a report that noted that the title to the condo was “clean.” The term “clean” however, meant free from any lien or encumbrance other than the first mortgage. The closing attorney missed the deed rider and the rights of the municipality.

After the closing, the buyer got her condo subject to a deed rider, and the municipality got nothing. Debtor received over $115,000 at the closing was more than $70,000 more than she was entitled to receive. As a result, the buyer sued the debtor for breach of contract and received a judgment in connection with what the Bankruptcy Court this “unfortunately flawed transaction.”

Fortunately, the buyer obtained title insurance and in 2006, the title insurer paid the more than $70,000 to the municipality and the title to the condo was finally “clean” when the municipality discharged the deed rider.

Debtor filed bankruptcy, and the title insurer asked the bankruptcy court to exempt from discharge the “windfall” that the debtor received. They argued that the debt was precluded from discharge because it was incurred by fraud (see Section 523 (a)(2)(A)), and alternatively argued the funds were embezzled (see Section 523(a)(4)). The title insurer claimed that because the debtor received over $70,000 more than she should have and was silent about it, the requisite intent to commit fraud can be implied.

The Court noted that there were no allegations, and no evidence to support any allegation, that the debtor acted in such a way prior to the closing in an effort to obtain more money than she was entitled to. She did not prepare the settlement statement or the title examination. She made no representations about her condo, the state of her title or the rights of the municipality, and there was no evidence she was asked to. In fact, the closing attorney testified he placed no reliance on the debtor in his title examination or the settlement statement. The evidence also did show that she had refinanced the property twice in ten years, and on both occasions, the municipality was not involved. Therefore, she had no basis to expect they would be involved again.

The debt was discharged. The buyer got "clean" title to the property. And the court ruling made no mention of whether the closing attorney had malpractice insurance.

Posted by Bill McLeod at 6:25 PM | Permalink | Comments (0) | TrackBacks (0)

When a bankruptcy petition is filed under Chapter 7, an estate is created. Unless the property is otherwise exempt, all of the debtor’s property belongs to the estate. The Chapter 7 Trustee is then required to sell the property to pay creditors. In a recent case, a debtor was a sole trustee of a real estate trust and the real estate was owned in the name of the realty trust. But in this case, Massachusetts Bankruptcy Judge Robert Somma held that the property belonged to the debtor’s Chapter 7 estate.

The case involved property in Malden. The trust was created by the debtor and the declaration of trust provided that: “This instrument [the declaration of trust] may be amended at any time by a written instrument signed by the trustees and acknowledged by one or more of them.” It also provided that the trustee could terminate the trust at any time. If he elected to terminate the trust, he was obligated to disburse the trust property to the beneficiaries (included other family members, but not the debtor).

The Chapter 7 Trustee argued that the debtor’s interest in the property was not limited to the language of the trust declaration. He argued that based on Massachusetts law, the reservation to the trustee of the right to amend the trust and to terminate the trust warranted treating the trust assets as the trustee/debtor’s own property.

Judge Somma did not completely agree. The “trustee’s power to terminate the trust is of no avail to the [Chapter 7 Trustee] because the trust specifies that upon termination, the trustee is obligated to transfer the trust assets to the beneficiaries.” However, the fact that the trustee retained an unlimited right to amend the trust, and ultimately, had the power to control the trust assets to the exclusion of the trust beneficiaries, required that the property held in the name of the trust be viewed as the debtor’s, and ultimately, the Chapter 7 estate’s.

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