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Fannie, Freddie Give Some Relief to Foreclosed Homeowners

December 3, 2014 Leave a comment

Fannie, Freddie Give Some Relief to Foreclosed Homeowners

Agencies Will Allow Homeowners in Foreclosure to Buy Back Properties at Market Value

Mortgage-finance giants Fannie Mae and Freddie Mac will allow homeowners who have been foreclosed upon to repurchase their homes at market value even if they owe more, reversing a policy that prohibited such transactions.

The change comes as Melvin Watt, the director of Fannie and Freddie’s regulator, has come under increasing pressure from some groups to use the companies to provide more relief to struggling homeowners.

“This is a targeted, but important policy change that should help reduce property vacancies and stabilize home values and neighborhoods,” said Mr. Watt, the chief of the Federal Housing Finance Agency.

Previously, someone who lost a home through foreclosure and wanted to buy it back from Fannie or Freddie needed to pay the full amount owed on the mortgage, even if the market value of the home was less. That was intended to take away the motivation for homeowners to intentionally default in order to get the balance of their mortgages reduced.

In effect, that meant Fannie and Freddie had two standards where they would be willing to sell properties they owned to a new buyer at market prices when they wouldn’t do so for the former homeowner.

“There’s no reason why you shouldn’t be willing to sell a home to these borrowers on the same terms that you’re willing to sell it to someone else,” said Laurie Goodman, center director of the Housing Finance Policy Center at the Urban Institute.

The old policy drew the ire of some politicians and nonprofit groups, which argued that it encouraged homes to stay vacant and hurt neighboring property values. In June, Massachusetts Attorney General Martha Coakley sued Fannie and Freddie, alleging that the policy violated a Massachusetts state law that allowed market-value sales to foreclosed-upon homeowners in some circumstances. That lawsuit was dismissed in October.

On Tuesday, Ms. Coakley said the change “is encouraging news for homeowners in Massachusetts and across the country” while adding that she hoped the regulator would move further to reduce mortgage debt for some homeowners.

Elyse Cherry, chief executive of Boston Community Capital, a nonprofit group that provides financing to foreclosed-upon homeowners to buy their homes back, called the new policy “an encouraging step in the right direction. It makes sense for homeowners and it makes sense for neighborhoods.”

However, the impact of the change could be limited. It will only apply to the 121,000 homes that Fannie and Freddie have already foreclosed on and own, a provision that’s intended to curtail any incentive for borrowers in good standing to default. That narrow scope is unlikely to quiet the drumbeat for the FHFA to make bigger changes intended to help a larger number of borrowers who owe more than their homes are worth.

Foreclosed-upon borrowers will also still need to find the cash or financing to buy the old home back at market value, a tall order for those with tarnished credit histories.

“This is a ‘feel-good’ type of policy. It’s directionally helpful to a small number of homeowners that ran into trouble, but at the end of the day, I don’t look to this to have a major policy impact,” said Clifford Rossi, a finance professor at the University of Maryland.

Since Mr. Watt took office in January, many politicians and nonprofit groups have asked that he allow Fannie and Freddie to reduce the principal of mortgages for borrowers who owe more than their homes are worth, a step that he has so far avoided taking.

At a Senate Banking Committee hearing last week, Sen. Elizabeth Warren (D., Mass.) criticized Mr. Watt for not allowing principal reduction. Mr. Watt at the hearing said that principal reduction was “the most difficult issue that I’ve faced as director.”

The new policy in effect reduces mortgage principal, albeit for a small number of foreclosed-upon borrowers. Some nonprofit groups said that Fannie and Freddie would be better served to reduce the borrower’s principal before a foreclosure.

“It would make more sense to do a mortgage modification with principal reduction earlier in the process and prevent foreclosure in the first place,” said Kevin Whelan, national campaign director for the Home Defenders League, a nonprofit that has advocated for widespread principal reduction.

A Fannie Mae spokesman declined to comment beyond Mr. Watt’s statement.

“Our ongoing practice has been to sell homes at current market price to minimize losses to Freddie Mac and maximize opportunities to stabilize home prices in communities while fostering homeownership opportunities,” said a Freddie Mac spokesman.

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The Compelling Case For Re-Electing President Obama

October 15, 2012 Leave a comment
Compelling Case For Obama

http://www.huffingtonpost.com/steve-sheffey

By Steve Sheffey

 

Israel should not be an issue in this election–President Obama and Romney both support Israel.  All administrations have ups and downs, but there have been fewer downs in this administration than in previous administrations, and many unprecedented successes.

 

Paul Ryan was wrong about President Obama’s meeting with Prime Minister Netanyahu and he was wrong about Iran sanctions.

 

President Obama is the clear choice on the economic and social issues that most of us care about. As the St. Louis Post Dispatch observed in its must-read endorsement of President Obama, “If more Americans were paying attention, this election would not be close. Barack Obama would win going away, at least 53 to 47, perhaps even 99 to 1.”

 

Friends,

 

The Romney campaign is based on, as Joe Biden delicately put it, “malarkey.” Paul Ryan said at the debate that President Obama was in New York the same day as Prime Minister Netanyahu but went on a TV show instead of meeting him. The truth, according to Politfact, is that “the two leaders were not there on the same day: Obama was there Monday and Tuesday, and Netanyahu was there later in the week, on Thursday and Friday.” Ryan out and out lied. That’s the only way Romney-Ryan can win this election. Ryan also misrepresented President Obama’s position on Iran sanctions; more on that below. And by the way–Joe Biden was right to laugh, because the Romney-Ryan tax plan is an insulting joke on the American people.

 

For most of us, Israel is our threshold test. We won’t even consider voting for someone unless we are confident that he or she supports Israel. The good news is that both President Obama and Governor Romney support Israel. The bad news is that the Republican path to victory depends on denying that basic fact. So the first part of  today’s newsletter sets the record straight on Israel.

 

The Facts on Israel

 

The rest of this section is from my October 11, 2012 Times of Israel article, “Playing Politics With Israel.” I urge you to read it on-line because the links are there and because, well, it looks better on-line. Please click here.

 

Israel should not be an issue in the November election.  No one argues that President Obama’s record on Israel is perfect. But our legitimate concerns about Israel are being manipulated for partisan gain by those who attack Obama for policies that are no different from previous administrations.

 

The United States has never officially recognized Jerusalem as Israel’s capital. That’s why the US embassy is not in Jerusalem. The Jerusalem Embassy Act of 1995 requires that the US embassy be moved to Jerusalem unless the President signs a waiver every six months preventing the move. Bill Clinton signed the waiver every six months. George W. Bush signed the waiver every six months. Barack Obama signed the waiver every six months. And unless the parties to the conflict reach an agreement on Jerusalem, the next president will continue to sign the waiver every six months. We’ve seen videos of State Department officials refusing to say that Jerusalem is Israel’s capital. But we’ve never seen videos of State Department officials from prior administrations saying that Jerusalem is Israel’s capital. It’s been this way for over 60 years, and it will continue this way no matter who wins in November.

 

The United States has always objected to settlements. Settlements are not the root cause of the conflict. There were no settlements when the Arabs attacked Israel in 1948, nor were there any settlements prior to the Six Day War. The root cause of the conflict is Arab refusal to accept and recognize the permanent reality of a Jewish state of Israel. But every American administration since the Six Day War has opposed settlements because the more settlements there are, the more difficult it becomes to draw reasonable borders for a Palestinian state. The Bush administration publicly objected to construction even in Jerusalem, and George W. Bush publicly expressed frustration with Israel’s Prime Minister. The Bush roadmap for peace explicitly forbids “natural growth” of settlements. It’s not a new issue.

 

Even President Obama’s statement that “we believe the borders of Israel and Palestine should be based on the 1967 lines with mutually agreed swaps, so that secure and recognized borders are established for both states” was simply a restatement of George W. Bush’s declaration that any peace agreement between Israel and the Palestinians “will require mutually agreed adjustments to the armistice lines of 1949 to reflect current realities and to ensure that the Palestinian state is viable and contiguous.”

 

The policies of this administration toward Israel that some question are continuations of American policy that will persist no matter who is president. But this is what sets the Obama administration apart from previous administrations: President Obama has called for the removal of Syrian President Assad, ordered the successful assassination of Osama bin-Laden, done more than any other president to stop Iran’s illicit nuclear program, restored Israel’s qualitative military edge after years of erosion under the Bush administration, secretly sold Israel the bunker-busting bombs it requested but did not receive during the Bush administration, increased security assistance to Israel to record levels, boycotted Durban II and Durban III, took US-Israel military and intelligence cooperation to unprecedented levels, cast his only veto in the UN against a one-sided anti-Israel Security Council resolution, opposed the Goldstone Report, stood with Israel against the Gaza flotilla, and organized a successful diplomatic crusade against the unilateral declaration of a Palestinian state.

 

Contrary to Paul Ryan’s claim during the vice-presidential debate, President Obama did not oppose Iran sanctions-the issue was executive prerogative, and the provisions President Obama requested actually gave the President more flexibility to impose tougher sanctions.

 

Yet we’ve all seen the videos–some of which feature attractive young people who claim to have voted for Obama in 2008 and are now shocked, SHOCKED that his election did not usher in an era of world peace and universal love and that the US and Israel disagree on certain issues.

 

The reality is that US policy toward Israel has remained remarkably consistent over the past 60 years. There have been ups and downs throughout the history of US-Israel relations, but there have been many fewer downs during this administration than in previous administrations. We don’t know what Romney will do if elected. While there are legitimate questions about his foreign policy expertise, chances are that a Romney administration would resemble a Bush administration on Israel, for better or for worse.

 

Israel is an election issue because Republicans need it to be an election issue: It’s their only hope for winning Jewish votes. The problem for Republicans is that while they are generally supportive of Israel, the Democrats are too. There are real differences between the parties and the candidates, but Israel is not one of them. Where the parties do differ, the Democratic party is much better on the social and economic issues that most Jews care about.

 

The Republicans have a choice: Admit that both parties support Israel and concede the Jewish vote on social and economic issues, or use Israel as a partisan wedge issue by denying the Democratic party’s strong record of support for Israel (you can read my reaction to the Democrats who booed Jerusalem here). Unfortunately for America and Israel, the Republicans have chosen to ignore Michael Oren’s warningabout turning Israel into a partisan issue.  Fortunately for America and Israel, the vast majority of Jews are smart enough to see through these divisive Republican tactics and will vote to re-elect President Obama.

 

The Facts on Social and Economic Issues

 

On October 7, the St. Louis Post Dispatch endorsed President Obama. If you click on only one link in today’s newsletter, click on this one.  You should really read all of it, but at least read this:

 

Mr. Obama sees an America where the common good is as important as the individual good. That is the vision on which the nation was founded. It is the vision that has seen America through its darkest days and illuminated its best days. It is the vision that underlies the president’s greatest achievement, the Affordable Care Act. Twenty years from now, it will be hard to find anyone who remembers being opposed to Obamacare.

 

He continues to steer the nation through the most perilous economic challenges since the Great Depression. Those who complain that unemployment remains high, or that economic growth is too slow, either do not understand the scope of the catastrophe imposed upon the nation by Wall Street and its enablers, or they are lying about it.

 

To expect Barack Obama to have repaired, in four years, what took 30 years to undermine, is simply absurd. He might have gotten further had he not been saddled with an opposition party, funded by plutocrats, that sneers at the word compromise. But even if Mr. Obama had had Franklin Roosevelt’s majorities, the economy would still be in peril.

 

Extraordinary, perhaps existential, economic challenges lie just beyond Election Day. The nation’s $16 trillion debt must be addressed, but in ways that do not endanger the sick and elderly, or further erode the middle class or drive the poor deeper into penury.

 

The social Darwinist solutions put forward by Republican Mitt Romney and his running mate, Rep. Paul Ryan, are not worthy of this nation’s history, except that part of it known as the Gilded Age.

 

The Dispatch says this about Mitt Romney:

 

Mr. Romney apparently will say anything that will help him win an election. As a president, he might well govern as a pragmatic chief executive, or he might sell himself to the plutocrats and the crazies who have taken over his party. He is asking Americans to take a lot on faith – there’s nothing to see in his tax returns; he can cut taxes and whack away debt while trimming deductions he will not specify.

 

Mr. Romney’s business career is the only way to judge his foundational beliefs: He did not run a company that built things and created jobs and strong communities. He became fabulously wealthy by loading up companies with tax-deductible debt, taking millions out up front along with big management fees. Some companies were saved. Others went bankrupt. Mr. Romney’s firm always got out before the bills came due, either in lost jobs, bankruptcies or both.

 

If the nation’s most pressing issue is debt, why elect a president whose entire business career was based on loading up companies with debt?

In picking Mr. Ryan as his running mate, Mr. Romney signaled that he’s ready to perpetuate that model in public office. The middle class hasn’t had a raise in 20 years. Income inequality has reached record heights. Mr. Romney is the very embodiment of what’s gone wrong with the economy: Too many people at the top create vast wealth that they do not share, either by creating jobs or by paying fair tax rates.

 

If more Americans were paying attention, this election would not be close. Barack Obama would win going away, at least 53 to 47, perhaps even 99 to 1.

 

But the atmosphere has been polluted by lies, distortion, voter suppression and spending by desperate plutocrats who see the nation’s changing demographicsand fear that their time is almost up. They’ve had the help of a partisan Supreme Court.

 

The question for voters is actually very simple. The nation has wrestled with it since its founding: Will this be government for the many or the few?

 

Choose the many. Choose Barack Obama.

 

Read the entire editorial here.

 

Just for fun…your reward for getting through another newsletter. Bill Clinton’s take on the first Obama-Romney debate. Click here.

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Unless explicitly stated otherwise, the views I express in my emails do not necessarily reflect the views of any candidates or organizations that I support or am associated with.

Benjamin G. Kelsen, Esq. named a “Super Lawyer”

March 23, 2012 Leave a comment

Benjamin G. Kelsen, Esq., of  The Law Offices of Benjamin G. Kelsen, Esq. LLC, a Teaneck New Jersey based firm with offices in Lakewood and Newark, has been named to the New Jersey Rising Stars list as one of the top up-and-coming attorneys in New Jersey for 2012.  Each year, no more than 2.5 percent of the lawyers in the state receive this honor. The selection  for this respected list is made by the research team at SuperLawyers. SuperLawyers, a Thomson-Reuters business, is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement. The annual selections are made using a rigorous multi-phased process that includes a state wide survey of lawyers, an independent research evaluation of candidates, and peer reviews by practice area. The Rising Stars lists are published nation wide in Super Lawyers magazines and in leading city and regional magazines across the country.

For more information about SuperLawyers, go to superlawyers.com. The first SuperLawyers list was published in 1991 and by 2009 the rating service had expanded nationwide. In February 2010 SuperLawyers was acquired by ThomsonReuters the world’s leading source of intelligent information for business and professionals

Legal issues slow foreclosures

November 6, 2011 1 comment

Legal issues slow foreclosures

SUNDAY, NOVEMBER 6, 2011    LAST UPDATED: SUNDAY NOVEMBER 6, 2011, 10:22 AM
BY KATHLEEN LYNN
STAFF WRITER
THE RECORD

In a small Bergen County courtroom one recent Friday, a sheriff’s officer auctioned off two foreclosed properties in a matter of minutes, as a handful of investors kept their eyes open for bargains.

Few buyers attended a foreclosure auction of two properties at the Bergen County Courthouse.

DAVID BERGELAND/STAFF PHOTOGRAPHER
Few buyers attended a foreclosure auction of two properties at the Bergen County Courthouse.

It was a far cry from the typical sheriff’s auction of mid-2010, when 15 or more properties were auctioned weekly and up to 100 investors crowded the courthouse’s large jury room.

Sheriff’s auctions are among the most visible symbols of the housing crisis, which left many homeowners saddled with mortgages they couldn’t afford. But foreclosure auctions have slowed dramatically since questions arose more than a year ago about “robo-signing” — that is, sloppy paperwork by mortgage lenders and servicers.

Requesting a review

Homeowners who lost their homes to foreclosure in 2009 and 2010 can have their cases reviewed to see if their mortgage companies did anything wrong, the federal Office of the Comptroller of the Currency said last week.

Mortgage servicers were to begin mailing letters last week to borrowers, telling them how to request an independent review if they believe they were injured by flawed foreclosure proceedings. If the reviewer finds they were harmed, the customer may receive compensation or another remedy.

The companies are America’s Servicing Co., Aurora Loan Services, Bank of America, Beneficial, Chase, Citibank, CitiFinancial, CitiMortgage, Countrywide, EMC, Everbank/Everhome, First Horizon, GMAC Mortgage, HFC, HSBC, IndyMac Mortgage Services, Metlife Bank, National City, PNC, Sovereign Bank, SunTrust Mortgage, U.S. Bank, Wachovia, Washington Mutual and Wells Fargo.

Requests for review must be received by April 30, 2012. For more information, visit IndependentForeclosureReview.com.

Though lenders were given the go-ahead in August to start foreclosing again in New Jersey after showing a judge they were following the rules, they have been slow to resume activity.

The reason: an August appellate court decision, Bank of New York v. Laks, according to Kevin Wolfe, head of the state’s Office of Foreclosure. In that case, the court dismissed a foreclosure, finding the lender violated the state Fair Foreclosure Act because it didn’t properly identify itself in a notice sent to the troubled homeowners.

Under new state court rules, lawyers working for foreclosing plaintiffs have to personally certify that they have checked the facts behind a foreclosure filing with an employee of the lender or the lender’s servicer. Many have indicated to Wolfe that they are reluctant to sign such a certification, because they’re concerned that the lender’s paperwork may not meet the requirements set out in the Laks decision.

E. Robert Levy, executive director of the Mortgage Bankers Association of New Jersey, said he believed there was no “real question about the validity of the loans being put through the foreclosure process.”

“The money is still owed; it’s just a matter of making sure you meet the procedural requirements, and we agree the requirements should be met,” Levy said.

Advocates for distressed homeowners say it’s only reasonable to ask lenders to get the paperwork right when it involves a matter as serious as taking someone’s home.

“Any delay that there is in New Jersey is occurring only because lenders haven’t followed the law,” said Margaret Lambe Jurow, a lawyer with Legal Services of New Jersey, who has represented homeowners in foreclosure cases. “Had they filed these things properly, they’d be in and out.”

The implications go beyond the losses suffered by homeowners and lenders. Housing analysts say the troubled real estate market can’t recover until the large number of distressed properties are finally sold. The properties make up a so-called “shadow inventory” — not on the market yet, and likely to ultimately sell at a large discount to other properties, pulling down housing values. Foreclosed homes typically sell at a discount of 20 percent or more, according to research.

Mortgage paperwork issues stem from the fact that most mortgages are not held by the local bank; they’re bundled into securities and resold to investors. In these cases, the company that a homeowner writes monthly checks to — the mortgage servicer — probably does not actually own the loan.

In the Laks case, for example, Sarah Laks’ mortgage was serviced by Countrywide Home Loans, but the actual owner was a trust managed by the Bank of New York. When Laks, of Lakewood, defaulted on the loan, she got a notice of intention to foreclose from Countrywide, but it did not mention the real owner, as required by the state’s 1995 Fair Foreclosure Act.

A lender’s attorney who spoke on condition of anonymity said that in the years since the Fair Foreclosure Act was passed, it’s been very common for these notices to name only the servicer, not the actual holder of the loan, as required by the Laks decision.

When mortgages were being written and sold to investors at a furious pace during the housing boom, the mortgage machine allegedly cut corners on recording who actually owns a mortgage and, therefore, has the right to foreclose.

 

 

Federal investigation

 

The questions over robo-signing slowed foreclosures to a trickle this year in New Jersey, after the state’s chief justice ordered six big lenders to show they were following the rules last December.

As a result, New Jersey homeowners are staying in their homes, on average, for more than 2 1/2 years without paying their mortgages before they are evicted, according to RealtyTrac, a California company that tracks the foreclosure market.

On a national level, the mortgage servicers’ questionable foreclosure practices are under investigation by the federal government and most of the nation’s attorneys general. The investigation is expected to result in a settlement reported at $25 billion; in exchange, lenders would be released from some legal claims.

Ira Rheingold of the National Association of Consumer Advocates predicted that the attorneys general’s settlement will include a road map for how lenders can establish ownership of a mortgage in cases where the transfer was poorly documented.

For example, he said, lawyers sometimes use a “lost note affidavit,” where a lender’s employee with knowledge of the loan signs an affidavit certifying that the lender actually owns it, even if the documentation is missing.

“How are you going to prove ownership — that really is the big question,” Rheingold said. “At some point people really need to be able to sell their houses. … If there’s a mortgage, somebody is owed the money. How do you straighten out this mess?”

Questions about this chain of ownership are being watched by the title insurance industry. In a recent case in Massachusetts, a court ruled that a buyer who purchased a property after an improper foreclosure was not the legal owner.

So far, there haven’t been enough such cases to make title insurance companies back off from writing policies, according to the American Land Title Association. But the industry is continuing to watch the issue, an ALTA official said.

It’s not clear when the foreclosure pipeline will start moving again in New Jersey, though foreclosure lawyers are watching another case that brings up issues similar to the Laks case. That case, U.S. Bank v. Guillaume, is scheduled to be heard by the Supreme Court soon. In the Guillaume case, an appellate court made the opposite decision as was made in the Laks case, and upheld a foreclosure action against an East Orange homeowner who said the notice of intention to foreclose didn’t properly identify the lender.

The lender’s lawyer, speaking anonymously, said the Supreme Court could get the pipeline moving again by requiring that the lender be identified in notices going to troubled homeowners, as the Laks ruling requires — but only in the future, not in cases already filed.

“We’re hoping the Guillaume case clears this up,” said the lawyer.

E-mail: lynn@northjersey.com

New Jersey Mortgage Default Rate Is Country’s Third Highest, Report Says

August 25, 2011 1 comment

New Jersey Mortgage Default Rate Is Country’s Third Highest, Report Says

A new report by the Mortgage Bankers Association says New Jersey is third in the nation in the number of loans either in foreclosure or on the brink.

Mary Pat Gallagher

08-23-2011

A new report by the Mortgage Bankers Association says New Jersey is third in the nation in the number of loans either in foreclosure or on the brink.

More than one in 10 New Jersey mortgage loans are already in foreclosure or are 90 days or more in arrears, says the association’s National Delinquency Survey for the second quarter of 2011, which looked at almost 43.9 million mortgage loans across the country, including 1,252,958 in New Jersey.

The state’s 11.36 percent rate of “seriously delinquent” mortgages was third highest in the U.S. Florida topped the list with 18.68 percent, followed by Nevada, with 14.34 percent.

At the opposite end of the scale were North Dakota with a 1.76 percent rate, and Alaska with 2.24.

In addition to serious delinquencies, another 3.18 percent of New Jersey mortgages are 30 days late and an additional 1.24 percent are 60 days late, says the report, released Monday..

New Jersey’s ranking was driven by a high number of pending foreclosures, nearly 8 percent. Again, only Florida (14.39 percent) and Nevada (8.15 percent) have more.

The report does not state the number of loans in foreclosure, but Kevin Wolfe, assistant director for the Administrative Office of the Courts’ Civil Practice Division, says 107,464 residential foreclosure cases filed since 2009 remain open. He points out that the figure includes settled cases for which no stipulations of dismissal have been filed.

The glut of foreclosures is the product of a flood of filings that crested in 2009, at 66,717, including non residential foreclosures, and dropped to 58,445 for 2010.

Filings slowed to a trickle at the end of last year, after the judiciary froze uncontested residential foreclosures by the six biggest lenders so it could address robo-signing and other abuses that had come to light.

Wolfe estimates that those six — Bank of America, JPMorgan Chase, CitiBank, Ally Financial, OneWest Bank and Wells Fargo — file at least 70 percent and possibly more than 80 percent of uncontested residential foreclosures.

Their sizeable share of foreclosures has been evident in the precipitous plunge in filings since theirs were suspended last December. Only 6,090 foreclosures had been filed in 2011 as of the end of July, a drop of 90 percent from 2010.

Monthly filings fell from 4,358 last November, the month before the freeze, to 399 in January. They have inched back up since then, to 1,368 for July.

Filings are sure to rebound much faster now that the courts have resumed processing foreclosures for five of the big six foreclosers. All but Ally Financial, formerly known as GMAC Mortgage, got the go-ahead to resume foreclosures during the week of Aug. 15.

The five persuaded a court-appointed special master, retired judge Richard Williams, that they have stopped offensive practices — such as signing court documents that falsely stated personal knowledge of the facts of the mortgage; failing to review documents on which certifications or affidavits were based; and forging signatures — and have taken steps to prevent recurrence.

In her Dec. 20, 2010, order, Mercer County Presiding General Equity Judge Mary Jacobson said the court had “become increasingly concerned about the accuracy and reliability of documents submitted to the Office of Foreclosure” and was acting on an exigent basis “to protect the integrity of the judicial foreclosure process.”

In addition to requiring lenders to prove they have adopted and are following proper procedures, the Court has amended the rules governing foreclosure.

Among other changes to Rules 4:64-1 and 2 that took effect in June, lenders’ lawyers are now required to attach a Certification or Affidavit of Diligent Inquiry to foreclosure complaints and motions describing the lawyer’s communication with an employee of the lender or loan servicer who has personally reviewed the mortgage file and confirmed the accuracy of the information in court filings.

The courts are bracing for a spurt in new filings as well as “the large pent-up pool of cases to be moved,” by adding staff at the Office of Foreclosure and around the state, says Wolfe.

As of Tuesday, he had not yet seen the anticipated surge in filings but planned to talk with Williams about how to handle the monitoring of foreclosure filings to ensure that the new safeguards are being followed. The six lenders agreed to the monitoring in a stipulation in March.

The press release accompanying the Mortgage Bankers report suggested another cause for the New Jersey backlog. It called the existence of a judicial foreclosure system, which some states like California and Michigan do not have, the “single biggest factor” in why some states have big backlogs because it “lengthen[s] the foreclosure timeline and increase[s] the number of loans that sit in foreclosure, all other things being equal.”

REAL ESTATE 34-2-2050 Deutsch v. Binet, App. Div. (per curiam)

May 10, 2011 Leave a comment

REAL ESTATE 34-2-2050 Deutsch v. Binet, App. Div. (per curiam) (28 pp.) http://www.scribd.com/doc/55092932 This matter involves a series of transactions among the parties involving the purchase of real estate on behalf of defendants whose low credit rating did not enable them to obtain mortgaging in the regular market. Defendants appeal the trial court judgment awarding plaintiff damages, declared him to be the owner of the property, awarded him any surplus proceeds in the event of a foreclosure sale of the property, ordered defendants to pay for the use and occupancy of the property and discharged two lis pendens filed by defendants. The court affirms, finding, inter alia, no justification for defendants’ failure to comply with the terms of a settlement agreement entered into by the parties after defendants in this action filed a complaint seeking a constructive trust to secure their interest in the property; plaintiff’s breach of the agreement was not material; the agreement’s confidentiality clause did not render it unenenforceable; it was not an unenforceable contract of adhesion; and the court’ failure to reinstate the third-party complaint involved here was error that was clearly not capable of producing an unjust result.

Bankruptcy Filings at Five-Year High, Led by Chapter 7s

February 25, 2011 1 comment

Bankruptcy Filings at Five-Year High, Led by Chapter 7s

Mary Pat Gallagher

02-24-2011

The number of bankruptcies filed nationwide last year was the most since 2005, driven mainly by increased Chapter 7 filings, and New Jersey had one of the biggest boosts overall, according to the latest federal judicial figures.

But the increase does not necessarily translate into more business for lawyers, as so many of them are vying to get a share of the work.

The 1,656,340 petitions filed nationally in 2010 was 8 percent higher than the 1,575,624 in 2009, though well short of the record-breaking 2,078,415 in 2005. The majority of bankruptcies last year, 1,139,601, were Chapter 7s, according to figures released Feb. 15 by the U.S. Administrative Office of the Courts.

In New Jersey, bankruptcies rose 14 percent from 2009 to 2010, from 36,240 to 41,366, of which 31,879 were Chapter 7 filings.

Only 10 of the 94 districts saw a bigger bump than New Jersey and seven of them are part of the Ninth and Tenth circuits in the West.

The largest rise, 36.2 percent, was in the Southern District of Florida, and the sixth-largest, 18.9 percent, was in the Eastern District of Pennsylvania.

New Jersey’s Chapter 7 petitions for 2010 are the highest in the past decade, other than 2005, when a record 37,397 were filed as debtors scrambled to get in the door in advance of a change in the law that imposed a means test. That total was more than 35 percent above the 27,604 the year before.

New Jersey filings for all chapters totaled 49,583 in 2005.

The means test was one of many changes enacted as part of the Bankruptcy Abuse Prevention and Consumer Pro-tection Act of 2005. It was meant to cut back on Chapter 7 filings and push people into Chapter 13, where they would have to come up with plans to repay their debts rather than erase them.

The swell of Chapter 7 filings in advance of the legislation was followed by a sharp drop to 8,126 in New Jersey for 2006. They bounced back to 12,411 in 2007, and have climbed steadily since: 18,377 in 2008, 27,485 in 2009 and 31,879 last year.

The overall number of cases in New Jersey last year, 41,366, was essentially the same as before the 2005 spike, 41,253 in 2004.

Chapter 7 cases, however, now constitute a greater portion of the whole. While they made up 67 percent of all cas-es in 2004, they now comprise 77 percent.

Consumer bankruptcy lawyer Martin Wolf says that though bankruptcies are up, business is not necessarily boom-ing because so many more lawyers have flooded the practice in response to economic conditions.

“Everyone and their mother has now gone into the field,” says Wolf, a Newark solo and co-chair of the New Jersey branch of the National Association of Consumer Bankruptcy Attorneys.

In his view, many newcomers are “amateurs” who are not up to the task.

Inexperienced lawyers are less likely to push back against Chapter 7 trustees who have become more aggressive in hunting down assets, says Wolf, who has been practicing bankruptcy law in New Jersey since 1995.

They are also more inclined to file petitions when it might be in the interest of the client to hold off, he says.

For instance, it makes sense for people who are underwater on their mortgages and facing foreclosure to postpone Chapter 7 until after the sheriff’s sale so the sale costs can be discharged along with the rest of their debts.

“If they file too soon, they will still be on the hook for expenses from the foreclosure because title is still in their name,” says Wolf.

High volume and recent concerns about the integrity of foreclosure proceedings have slowed things down recently, says Wolf. As a result, even though he has seen an uptick in clients, he is filing fewer cases.

The same concerns about filing too soon apply to people who expect to keep running up debt because they do not have a job or health insurance, says Wolf.

Based on his experience, that means that as high as the number of Chapter 7 debtors now is, additional people need to file and could satisfy the means test but are waiting until they get back on their feet before wiping the slate clean.

Gary Norgaard, of Stern, Lavinthal, Frankenberg & Norgaard in Englewood, notes that filing prematurely can be costly because debtors cannot file another Chapter 7 for eight years.

He also points out that the 2005 law made filing bankruptcy more expensive; lawyers are charging more because they have added obligations and clients also have to pay to satisfy new counseling requirements. The added expense is probably deterring some debtors who would otherwise file, in his view.

Norgaard says has not seen cases delayed by the increased filings.

“We have the capacity to deal with it,” Chief Judge Judith Wizmur, based in Camden, says about the filing in-creases. She notes that the district is fully staffed with bankruptcy judges and, in any event, most work in consumer cases is handled by the panel of Chapter 7 trustees, whose numbers have remained fairly constant.

Arthur Abramowitz, of Cozen O’Connor in Cherry Hill, who chairs the State Bar Association’s Bankruptcy Section, says business filings have been flat or negative. For example, Chapter 11 cases in New Jersey fell from 432 in 2009 to 345 in 2010, a 20 percent drop.

Wolf says companies are filing in other districts instead.

He also notes an accelerating trend of businesses that enter Chapter 11 being less likely to reorganize and emerge as going concerns. Many are forced to convert to Chapter 7 or liquidate because lenders are less willing to loan them money, says Abramowitz.