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Posts Tagged ‘In the News’
Massachusetts Bankruptcy Rates Increase
Thursday, April 16th, 2009
Bankruptcy Court Shuts Down Predator
Sunday, March 15th, 2009
When people are in foreclosure, they can fall victim to a host of scammers and scams. Unfortunately, by the time many of these folks are scammed, they are worse-off than they were before they stumbled into foreclosure. So when I come across a scammer who preys on people who need real help, you’ll read about here. Here’s the story behind David Coleman and his bogus outfit: Mortgage Finders of New England.
In April 2008, a Virginia couple contacted Coleman’s firm about an upcoming foreclosure on investment property in Newbury, MA. Coleman told the couple he could help them by filing a bankruptcy petition on their behalf. He also told the couple that he was experienced in filing bankruptcy cases, although at no time did he mention that he wasn’t a lawyer and that by law, he could not give legal advice. Only after the case was filed did the couple learn for the first time that Coleman wasn’t a lawyer at all.
Coleman waited for the debtor (the wife only) in the lobby of the Tip O’Neill building where he collected a $1,000 cash “fee” and had her sign a skeletal bankruptcy petition he prepared. But he did not properly complete the portion of the petition acknowledging that he was a petition preparer. In fact, in an effort to presumably fly below the radar and to keep his scam going, he left it blank. The case was dismissed on May 5, 2008 because no other documents were filed.
On May 21, 2008, a New Bedford woman was contacted by Coleman after he obtained information about a looming foreclosure from a local paper. Coleman told the woman that he could stop the foreclosure and it would cost $1,000 cash to retain his services. The next day, he met the woman in the lobby of the Tip O’Neill building where he collected his $1,000 cash fee, filed a chapter 13 petition, but did nothing more. When the clerk asked Coleman if he was representing the woman, he said he was only assisting her. It was at that time that the woman learned that Coleman wasn’t a lawyer. The woman’s friend demanded that he return the money, but Coleman refused.
On May 6, 2008, a Roxbury man filed a chapter 13 case after being contacted by Coleman, who learned of a foreclosure in the local paper. Again, he met the man for the first time in the lobby of the Tip O’Neill building in Boston and collected the $1,000 case. Again, the filing was deficient. And in this case was dismissed because required documents were not filed. Again, the forms were not completed correctly. Again, the people were not properly advised.
There are many more cases. There are many more violations. There are many more victims.
Who is he?
David Coleman is a predator. He operated Mortgage Finders of New England at 70 Worcester Street in Methuen. He’s not a lawyer. He has no formal education. He has no training with regard to the bankruptcy process or how to properly and fully prepare bankruptcy documents. Yet despite this, he contacts distressed homeowners, convinces them that he can help them, takes their money (and I’m willing to bet, money they cannot afford to lose), files a bare bones petition and does nothing more. Since April 2008, when he started this operation, he has collected money and prepared bankruptcy documents for over thirty people.
He advertises in the Verizon Yellow Pages and by distributing cards and flyers. He makes calls to people, using “411″ to get a homeowner’s name after getting personal information from a foreclosure notice or other public record. He tells his victims to meet him in at the Bankruptcy Court in Worcester or Boston. He downloads forms on line, completes them in his own handwriting, and files them. He doesn’t tell his victims that he is not an attorney and that he may not give legal advice. He does not disclose to the court that he is a petition preparer. He does not even give copies of the documents he files to his victims. And then he does nothing more – ultimately letting their cases fail because other necessary documents are never filed.
He holds himself out as a bankruptcy expert. Folks, David Coleman is no expert.
And it gets worse.
In July 2008, US Bankruptcy Judge Hillman issued an injunction requiring that Coleman comply with the Code and properly disclose on cases that he is a petition preparer as defined by Section 110 and his fees. Even with this order, Coleman continued this unlawful and illegal scam. He continued to file documents without disclosing who he was and what he was doing. He continued to rip people off. He continued to hurt people.
In an order dated February 18, 2009, the US Bankruptcy Court issued an order finding that Coleman had violated Section 110(b)(1) of the Code. He was fined a total of $34,500 for violation of the code, and among other things was ordered to disgorge (return) the fees he unlawfully received.
It was also found that he was engaging in the illegal practice of law, and therefore, he has been barred as “(1) acting as a bankruptcy petitioner; (2) soliciting, assisting, advising, providing legal guidance, advice, assistant or consultation of any king to any person in connection with the filing or prosecution of any bankruptcy case or any document in any bankruptcy case, whether for a fee or for free” in Massachusetts. The order includes not only Coleman but also includes “any person or entity acting in concert with him.”
When it comes to helping people keep their homes out of foreclosure, Coleman serves no legitimate purpose. He preys on people who are probably feeling as if they are at the lowest point in their lives. What people facing foreclosure need is sound counsel given by people who are trained in and who study the law and know what they are doing. That’s not Coleman, and it never was. He’s only taking money and selling false hope. He’s the lowest of the low.
If you’re facing foreclosure, talk to an attorney. Don’t be scammed by Coleman, or anyone else.
Read the Court decision here: US v. Coleman, 08-04132 (2/18/2009).
HR 1106 is About Fairness (or “What About Bob?”)
Thursday, February 26th, 2009
Word out of Washington is that HR 1106 will be voted on next week. Today’s debates and votes were procedural in nature.
Apparently, this gives more time for the highly-paid bank lobbyists to organize their “packs” and convince House Members that allowing Chapter 13 debtors to cram down the mortgage on their principal residences will bring their the world ever closer to financial ruin. From The Huffington Post:
“We continue to be opposed to the bill and that hasn’t changed, but we do live in the real world, and we do understand that this is very likely to happen, and we owe it to our members to recognize that reality and to limit the damage as much as possible,” said Francis Creighton, a lobbyist for the Mortgage Bankers Association, which spent $4.2 million on lobbying last year. “We’re encouraged by the fact that the bill is moving to limit the damage of cram-down rather than make it worse.”
At the very least, you can see that my quip about them being “highly paid” was not altogether gratuitous. But what is this about the “damage” of cram-down? Give me a break.
Perhaps Mr. Creighton and his fellow highly paid lobbyists are not aware that cram-down is already happening in the bankruptcy system and so far, vast bread-lines have not formed because of it. Indeed, if the facts justify it, I can propose a cram-down for anyone with the following: investment property; an owner occupied two or three family home; a family home that also has commercial space (such as a store front with living space above it – very popular in some towns on the Cape); a car (subject to certain limitations imposed by BAPCPA – which are not particularly relevant for this discussion); and a boat. Actually, we can cram down any boat big or small provided the facts justify it. I just cannot do it on people with single family residences. Congress is trying to change that.
So why is the lending industry spending hoards and hoards of cash to stop it? Again, from The Huffington Post:
[T]he mortgage industry contends the measure will impose steep and unpredictable costs on its companies, which will be forced to pass them along to borrowers in the form of higher fees and interest rates. The industry spent millions last year on a successful lobbying effort to kill the bill….
Higher fees and interest rates? Perhaps they if spent less on lobbying, they would not need to charge higher fees and interest rates. But putting my comedic skills aside for a moment….consider this illustration:
Bob and his wife live in West Roxbury.* He has worked as a State Employee for 15 years, and his wife took a job as a manager of a Circuit City after they had their third child, who is now 5. His wife will soon be unemployed and will be trying to get back to work in retail which is (to put it mildly) struggling. Bob is not sure he’s going to survive the the budget cuts his department is facing. In 2004, they refinanced their home to pay bills and to get what they thought was a lower rate for a few years. And it was…but for only two years, but they assumed (and in hindsight now see that they assumed incorrectly) that they could refinance their way out of it. The house is now worth $250,000. The mortgage totals $350,000.
If Bob lives in a single family home on a nice lot, he cannot currently cram down the mortgage in chapter 13.
If Bob lives in a two-family home, where he and his family reside in the larger of the two units and the second is rented out to tenants (who may, or may not be current on their rent), currently he can cram it down.
So this claim that “if bankruptcy judges can modify loans, the world and all you know and love will end as we know it” is really just fear-mongering. Why do we know this? Because cram downs are already allowed. Just not for Bob and his family if he is living in a single family home. The only question left: why the fear-mongering?
HR 1106 is not about cram downs – it’s about fairness in the bankruptcy system. Please make sure your leaders know this.
*Fictional characters in a nonfictional town. Any resemblence with actual people in West Roxbury (or anywhere else) is entirely coincidental…with that said though, if this is you, we should talk more about your options.
Tell Congress: It’s Now or Never
Wednesday, February 25th, 2009
Tomorrow (February 26) the House will vote on HR 1106, a housing package that includes the judicial modification provision of HR 200. That provision would let homeowners turn to the bankruptcy courts to allow them to modify the mortgages securing their principal residence. Currently, bankruptcy provides no remedy for homeowners who are trying to save their home from foreclosure.
While there are a number of complicated issues affecting our economy, the housing crisis continues to devolve. The Washington Times reports that there is no relief in sight from foreclosures and the falling home values that help fueling it. We can encourage Congress to do nothing, while the economy continues a downward spiral. Or we can tell them to pass this bill and give homeowners the chance they deserve in bankruptcy.
House approval is not guaranteed. The American Banks Association and the Financial Services Roundtable have sent letters to house leaders urging that the bankruptcy modification provisions be removed from the “Helping Families Save Their Homes Act of 2009.” The “buzz” I am hearing is that the lender lobbyists are showing up in “packs” in Member offices urging opposition to the judicial loan modification proposals. “Packs.” What the hell are they so scared of that they have to travel in packs? According to a report from CNN, two-thirds of mortgage servicers have agreed to the foreclosure mitigation plan outlined by the Secretary of the Treasury.
[T]he prospect of a law amending the bankruptcy code to allow judges to dictate new terms on mortgages in the event of an individual filing bankruptcy, was also likely a significant factor in the companies’ willingness to cooperate with the administration’s plans.
The House is working on legislation which would be aimed at helping people in bankruptcy to hang on to their primary residences. It could see bankruptcy judges compelling mortgage-servicing companies to accept new terms on an individual’s mortgage.
Other than Citigroup, other large banks remain opposed to the bankruptcy-law change, arguing that it would lead to borrowers to seek bankruptcy at the first sign of trouble, rather than consider other options that might be more costly.
I don’t buy that – mainly because when I meet with clients, they are the first to tell me that filing bankruptcy is the last thing they wanted to do. So to the lenders and their servicers, I say this: if the remaining one-third of you do not want bankruptcy judges modifying their loans, modify the loans so that the homeowner doesn’t have to file bankruptcy. And for those two-thirds who have expressed a willingness to modify the loans, do it. Let’s cut the crap and just do it.
Will it increase bankruptcy filings? The Congressional Budget Office says yes. But they also say that more than 1 million homeowners facing foreclosure could benefit from this legislation. I view that as 1 million less people who will lose their home if this bill fails. These people are our neighbors, our friends and our colleagues.
So what can you do? Contact your member of Congress by phone or fax.
Email your friends and family. Ask them to contact their congressional representative by phone or fax.
What do you tell them? Try something like this:
We cannot end the financial crisis without stemming the rising tide of foreclosures. Court-supervised loan modification is an essential component of an effective and comprehensive plan to meet that challenge. And unlike every other solution being considered in Washington, it comes at no cost to U.S. taxpayers.
If we are successful tomorrow, we move over to the Senate. If we are not, that is it. No second chance. So please don’t wait. Support HR 1106.
And if you do not support it, I’ll remember. I’ll remember it when my friend loses her home because she lost her job. I’ll remember it when my house value plummets because the home next door is vacant and abandoned because the previous owner could not afford the payments. I’ll remember it on election day.
Ok, so maybe that last bit is a little over the top, but you get my point. It really is now or never. And Congress really needs to know this now.
For more thoughts, check out Real Clear Politics: Let Bankruptcy Courts Change Mortgages
Previous posts on the subject:
Mortgage Modification Legislation Update: Citigroup Supports the Bill
Keep the Bankruptcy Option On the Table
Changing Chapter 13: Some Facts on the Pandora’s Box
Mortgage Modification Update: Not So Hopeful
The President’s “Plan”
Thursday, February 19th, 2009
I am no economist, but there’s something about the President’s mortgage foreclosure rescue plan that just has not been sitting well with me. I have not been able to put my finger on it and do the research to put together a thoughtful article. Fortunately, I can stay focused on my clients and share with you this article from BusinessWeek by Peter Coy and Theo Francis who point out that the plan doesn’t address the danger of negative equity, and that homeowners with negative equity “might just walk away.”
Even for those who want to keep their homes at the moment, reducing monthly payments without addressing negative equity may just postpone the inevitable. “The reality is, people lose jobs, especially in a recession. People get transferred, people have to move at some point,” says Sean O’Toole, founder and CEO of ForeclosureRadar.com, which tracks California foreclosures. “By lowering payments and not principal balance, you’re guaranteeing the extension of this crisis for years to come.”
As the Economy Turns…
Wednesday, January 28th, 2009
Today, my Bankruptcy Colleague and fellow-blogger Jonathan Ginsberg wrote about The Psychology of Debt Collection: Avoid the Manipulation.
The Boston Globe reports that the Massachusetts Attorney General has filed a bill to slow down foreclosures. But the legislation would only protect those in “risky” loans. And if people keep losing their jobs, homeowners with “risky” loans will not be the only ones facing the possibility of losing their home.
Meanwhile, in Washington, a bill that would let some homeowners in Chapter 13 modify the mortgage on their principal residence has cleared the House Judiciary Committee.
While homeowners might be getting a break, recent graduates are finding it tougher and tougher to pay off student loans. An opinion piece in the Minneapolis Star Tribune suggests that a good way to stimulate the economy may be to forgive student loan debt.
The Federal Reserve however, seems to have another idea, although I am not convinced it’s a better idea. From CNNMoney.com:
The Federal Reserve is getting ready to launch a new program that should make it easier for consumers to get credit-card and auto loans — though not necessarily at lower interest rates.
Yikes.
Student Loans: The Financial Shackles of Higher Education
Tuesday, January 20th, 2009
Debtors with student loans have an often insurmountable burden in proving their loans are dischargeable in bankruptcy. Section 523(a)(8) requires them to show that the loans are an undue hardship and an example of how the definition of “undue hardship” lacks any common sense can be found here. Lately, many bankruptcy attorneys I have spoken to have admitted that they question the disparity in the treatment that debtors with high mortgage debt receive versus those with high student loan debt.
In its February 2, 2009 issue, Forbes looks at the issue of what it calls “The Great College Loan Hoax.”
Census figures show that college grads earn an average of $57,500 a year, which is 82% more than the $31,600 high school alumni make. Multiply the $25,900 difference by the 40 years the average person works and, sure enough, it comes to a tad over $1 million.
But anybody who has gotten a passing grade in statistics knows what’s wrong with this line of argument. A correlation between B.A.s and incomes is not proof of cause and effect. It may reflect nothing more than the fact that the economy rewards smart people and smart people are likely to go to college. To cite the extreme and obvious example: Bill Gates is rich because he knows how to run a business, not because he matriculated at Harvard. Finishing his degree wouldn’t have increased his income.
This (along with the rest of the article) is a refreshing read. I expect in the months and years to come, there will be more discussions over the trend of forcing students into a debt that is nearly impossible to shed (or for that matter, pay) while dangling the carrot of an education and with that, the promise of a better life.
According to the article, the average law school graduate will emerge with over $100,000 in student loan debt. Based on discussions with law students I have met, I do not believe that it is an inaccurate assessment. Law firms are laying off. The economy continues to sour. Jobs will be scarce – and I am meeting more and more recent graduates who find themselves forced (much like I did almost 18 years ago) to hang up a shingle and establish a practice. However, those realities will not be considered an undue hardship.
I’ll put it this way: it’s far easier to walk away (in any chapter of bankruptcy) from a few properties, a few mortgages, and hundreds of thousands of dollars or more in obligations, than it is to walk away from student loan debt. Yet the unlucky, unwise or unfortunate real estate investor likely has the benefit of the societal safety net that bankruptcy offers. It seems that there is less risk to entering into an “exotic mortgage” than to get a degree in a subject area that might – or might not – have a job waiting for me after graduation. Something doesn’t seem right about that.
So You Think It’s a Good Time to Buy a House?
Monday, January 12th, 2009
Contrary to what you may hear in advertisements, 2009 may not be a good time to buy a home unless you are planning on living there for several years. This bit of news is not actually a huge shock for me, but it is not helpful for several of my clients whose success depends – at the very least – on people buying real estate in 2009.
This is again, another reason why we need meaningful reform out of Washington soon. Undoubtedly, the proposed changes to the Bankruptcy Code which would allow judges to reduce mortgages of consumers could help. But some contend that the reform will accelerate “lenders’ losses on home-equity, automobile and credit-card loans.” I’m not so that is a particularly bad thing.
About 10 years ago, I had abdominal surgery. As luck would have it, one of the sutures that was designed to dissolve didn’t. Instead, it got infected. It was very painful.
Admittedly, I’m a big baby when it comes to pain (my staff will back that up). This pain was far too much to handle….so my friend put me into a cab and we went to the emergency room. When the doctor came in, he examined the incision, looked at me square in the eye and offered these words:
Keep the Bankruptcy Option on the Table
Tuesday, January 6th, 2009
The new Congress will be introducing legislation that will allow homeowners in bankruptcy to “cram down” their mortgages on their principal residences. When a home is worth less than the amount owed on the mortgage (or as I typically see, mortgages), a cram down will enable the homeowner to reduce the amount owed to the value of the property. Currently, debtors can only do this on investment property, and on property that is not solely the primary residence of the debtor (i.e., a multi-family dwelling).
Courts can generally cut through complex mortgage contracts more aggressively than the private sector, said Wade Henderson, head of the Leadership Conference on Civil Rights, who has testified before Congress on the issue.
“The continued erosion of the housing market has probably made adopting this proposal inevitable,” he said.
I also invite readers to check out Calculated Risk, and Tanta’s discussions on cram downs. You’ll find those links here.
The final version of what the new President will sign remains to be seen. However, any homeowner facing foreclosure should start exploring whether bankruptcy is an option now and plan ahead (and if you’re in bankruptcy, you should consider speaking with your attorney about whatever options you may have). I know that no one wants to file bankruptcy. But if it comes down to whether you can actually keep your home, you would be foolish to not keep all of your options on the table, including the option to file for bankruptcy protection.
A Difference We Can Make This Holiday and in the Years Ahead
Tuesday, December 16th, 2008
When I was in my third year of law school, I adopted two female kittens from a local shelter: Annie, a 9 month old yellow short hair, and Cissie, a 6 month old grey and brown tabby. Their impact on my life has been immeasurable.
Annie had these big, brown, doe-like eyes. It was her that I fell for first. She was rubbing against the cage and purring very loudly. I was allowed to open the cage and she jumped into my arms. I recall saying “oh yeah, I’ll take her.” I actually only intended to adopt one – which I think she knew because she then went back into the cage and went to Cissie, who sat towards the back of the cage looking afraid. She somehow made it known to me that they came as a pair. So I adopted them as a pair.
They had this love/hate relationship. When they loved one another, all was well with the world. When they did not….well, let’s just say it got a little crazy. Cissie was fascinated by the house plants, and Annie marveled at the looks and sounds of water going down the drain.
Cissie and Annie would lay close to me when I was studying for exams, including the bar. I did not realize that I would nervously click a pen while concentrating. I really only discovered it when I noticed Cissie looking at me while purring and chirping. She would then approach and then start batting it. She also loved the smell of my highlighters – which she would often pry away from me. And Annie would always let me know when it was time to stop studying: she would simply lay down on my books and give me a look that said “and now, it’s all about me.”
Looking back, I think it took Cissie longer to warm up to me. But eventually, she did. When I moved to Boston, I bought her a harness and would walk her in the Back Bay Fens in between Park Drive and the Fenway. She loved watching the ducks in the Muddy River and loved chattering to leashed dogs as they walked by in amazement. She hated being picked up and carried. She preferred walking by my side…or in many cases, dragging me to what she was interested in.
I had Annie for just over 11 years. Cissie stayed with me for more than 16. And yes, I think about them every day.
Today, I have Kit and Betty. Kit is about 10 – she was a stray. She lived with my mom for a few years until she passed away, and has lived with me ever since. She still has a bit of feral in her…which can sometimes make life surprising…and painful, if Bactine is not around.
With Betty – well – the story with her is this: I went into a pet store to get cat food. Many times, local pet stores will help local rescue agencies and shelters promote adoption awareness and on that day, there I was and there was some rescue group promoting its programs and its kittens. I made eye contact with this little 4 month old kitten (again, the big brown eyes). I asked if I could hold her. She looked into my eyes. And that was it. I said to myself “oh sh*t.” She chose me.
While the first meeting was in a pet store – this was no “impulse purchase” – this was an adoption – and it took some time to adopt her. They checked our references – made sure we could handle the responsibility of adopting a kitten. About two weeks later she arrived. She bonded with Kit immediately. I presume that as I sit here in my office writing this, they are hunched under the Christmas tree wondering when I am going to get home and turn it on (because I believe, much like Annie and Cissie, they understand that it really is all about them).
Now you’re probably asking “where is he going with this”: in today’s Boston Globe, there is this report how the recession/depression is not only forcing people to lose their homes, but it forcing them to surrender or abandon their animals. This is not the first report on this issue, nor is it the first time I have mentioned it here. And as the economy continues its trek into the abyss, I know it will not be the last. Things are tough all around. And it’s tough for the local shelters and rescue programs that come to the help of animals in need.
What can we do?
My animals have taught me many life lessons. And I know that animals, with their ability to give us unconditional love, can be a powerful force to bring reason, order, and a sense of truth and beauty to a complex and sometimes chaotic world. We need them as much as they need us. This is why I support the Animal Rescue League.
Since 1899, the Animal Rescue League of Boston has been dedicated to rescuing domesticated animals and wildlife from suffering, cruelty, abandonment and neglect. With Care and Adoption Centers in Boston, Dedham, and Brewster, the League is a leader in providing rescue and law enforcement services and promoting a compassionate and responsible attitude towards all living beings.
Our friends and neighbors face daunting challenges in this economy. Many are forced to make difficult decisions about their pets. Yet despite these challenges, the Animal Rescue League remains committed to provide shelter and veterinary care. For 109 years, the League has been there – in good times and in bad.
Please join me and McLeod Law Offices in supporting the League and its important mission. Together, we can help the League end overpopulation, rescue animals whose lives are at risk, and ensure that every adoption is a lasting and loving one.
Remember, it’s not just the animals; it’s the lives they touch.
Click here to donate or call 617.426.9170 x615
To learn more about the other ways you can help, click here.
