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2011 Bankruptcy Articles

Home Foreclosures Jump in Third Quarter

December 21, 2011
Reuters

The number of new home foreclosures jumped by more than 21 percent in the third quarter from the second as banks moved more aggressively after a pause to review how they deal with troubled borrowers, according to a report released by a bank regulator on Wednesday.

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The Financial Crisis on Trial

December 21, 2011
The Wall Street Journal

The Securities and Exchange Commission's lawsuits against six top executives of Fannie Mae and Freddie Mac, announced last week, are a seminal event.
For the first time in a government report, the complaint has made it clear that the two government-sponsored enterprises (GSEs) played a major role in creating the demand for low-quality mortgages before the 2008 financial crisis...

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Fed Strengthens Its Tools for Preventing Collapse of Large Financial Firms

December 20, 2011
Bloomberg

The Federal Reserve sought to curb the threat of financial turmoil by compelling the biggest banks to follow a tougher standard for risk management and demanding stricter oversight by companies’ boards of directors.

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Banks, Officials Near Pact on Foreclosures

December 13, 2011
American Banker

Bank representatives and government officials are pushing to put the finishing touches on a broad settlement of most state and federal investigations of alleged foreclosure improprieties that could force five large banks to make concessions worth roughly $19 billion.

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Federal Reserve Report: Home Flipping Drove Housing Bubble in Nevada, California, Other States

December 12, 2011
Washington Post

A new report by researchers with the Federal Reserve Bank of New York shows that speculative real estate investors played a larger role than originally thought in driving the housing bubble that led to record foreclosures in Nevada, California, Arizona, Florida and other states...

American Airlines Workers Face Pension Plight

November 30, 2011
Reuters

Millions of Americans remember US Airways pilot Chesley B. "Sully" Sullenberger III. In 2009, he became an instant hero for saving 155 lives by landing on New York City's Hudson River when his aircraft lost power after it was struck by birds shortly after taking off.

But few know that - like thousands of other airline employees - Sullenberger was struggling financially at the time because two US Airways bankruptcies had derailed his pension and slashed his salary 40 percent.

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Too Big to Fail Banks Getting Bigger as Smaller Banks Lay Off Employees: WSJ

November 30, 2011
International Business Times

Small banks are facing some of the largest personnel costs in the banking industry, while large institutions are tepidly adding jobs, an analysis by the Wall Street Journal published Wednesday has found.

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Debt Collector Abuses on Rise

November 18, 2011
USA Today

As consumers struggle to pay their bills, complaints about debt collectors are growing faster than those in any other industry, regulators say.

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Fed’s Evans Seeks To 'Take New Chances' on Monetary Policy

November 15, 2011
The Wall Street Journal

The slow-to-recover U.S. economy requires the Federal Reserve to "stretch the boundaries and take new chances” on monetary policy, a key Fed official said Tuesday.
Federal Reserve Bank of Chicago President Charles Evans also expressed concern that the U.S. economy will be harmed by risk aversion from Europe’s ongoing sovereign-debt troubles.

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The Deleveraging Myth

November 14, 2011
The New Yorker

When the government reported, last month, that the U.S. economy grew at an annualized rate of 2.5 per cent in the third quarter, it was a classic good-news, bad-news situation. The good news is that we aren’t falling back into recession (the dreaded "double-dip"), but the bad news is that, two and a half years after the recession ended, the economy is still just limping along. Many analysts casting about for an explanation of why this recovery has been so tepid have concluded that, as Paul Krugman has written, "it was debt what did it." Between 2001 and 2007, Americans went on an incredible borrowing binge, nearly doubling their household debt. Now, the argument goes, consumers are focused on paying off that debt instead of spending freely, and, as long as this process of "deleveraging" continues, the economy is going to stay stuck in the doldrums. Debt, in the words of The Atlantic, is the recovery’s "silent assassin."

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Foreclosure Backlogs Could Take Decades To Clear Out

November 9, 2011
USA Today

Foreclosure sales are moving so slowly in half the states that at the current pace, it will take more than eight years on average to clear the 2.1 million homes in foreclosure or with seriously delinquent mortgages, new research shows.

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Generation Jobless: Young Men Suffer Worst as Economy Staggers

November 7, 2011
Wall Street Journal

PORTLAND, Ore. - Few groups were hit harder by the recession than young men, like Cody Preston and Justin Randol, 25-year-old high-school buddies who didn't go to college.

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State, Debt Collector Reach $4.3 Million Settlement

November 2, 2011
USA Today

The state Office of Consumer Protection has resolved charges a debt collector engaged in unfair business practices with a $4.3 million settlement.

U.S. Attorney Alleges Mafia Crime Family Took over FirstPlus Financial

November 2, 2011
American Bankruptcy Institute

Thirteen people, including an alleged member and an alleged associate of the Lucchese organized crime family and several attorneys, have been indicted on charges of racketeering and related offenses for the alleged "extortionate takeover" of FirstPlus Financial Group Inc., Dow Jones DBR Small Cap reported today. According to the 25-count indictment unsealed yesterday, the 13 were members and associates of a criminal organization engaged in crimes, including wire fraud, mail fraud, bank fraud, securities fraud, money laundering, extortion, obstruction of justice, and other related offenses.

4 Million Borrowers Eligible For Foreclosure Review

November 1, 2011
Washington Post

More than 4 million borrowers who have faced foreclosure since early 2009 will have the chance to have their cases reviewed for potential wrongdoing, federal regulators and some of the nation’s largest mortgage servicers announced Tuesday.

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Obama Announces Student Loan Relief

October 27, 2011
Associated Press

Millions of borrowers will be eligible to lower their payments under president's plan.
President Barack Obama recalled his struggles with student loan debt as he unveiled a plan Wednesday that could give millions of young people some relief on their payments.

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Mortgage Refinancing To Get Easier Under Revised U.S. Program

October 25, 2011
Los Angeles Times

The plan could help 1 million to 2 million people get significantly lower monthly payments in hopes of stabilizing the real estate market.

Home Lending Revamp Planned

October 24, 2011
Wall Street Journal

Federal regulators on Monday plan to unveil a major overhaul of an under-used mortgage-refinance program designed to help millions of Americans whose home values have tumbled.

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Obama’s Efforts to Aid Homeowners, Boost Housing Market Fall Far Short of Goals

October 23, 2011
Washington Post

It was a critical plan to jump-start the economy.
President Obama pledged at the beginning of his term to boost the nation’s crippled housing market and help as many as 9 million homeowners avoid losing their homes to foreclosure.

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Study: Foreclosure Crisis Threatening Americans' Health

October 21, 2011
Health Day

A new study finds that falling behind on your mortgage payments hurts more than just your finances, as the stress and financial strain that come with the struggle can also harm your physical and psychological health.

More Americans Falling Behind On Mortgages

October 20, 2011
U.S. News & World Report

Mortgage defaults are rising again after nearly a year of trending downward, raising concerns about homeowners falling behind on their payments and undermining whatever nascent housing recovery may be under way.

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Changes to California NonJudicial Foreclosure Procedures

October 20, 2011

Most lenders with real property security in California foreclose by means of nonjudicial foreclosure trustee’s sales, rather than through court-supervised judicial foreclosures. The first step in the nonjudicial foreclosure process is to record and give a Notice of Default. The next step, after the passage of at least three months, is to record and give a Notice of Sale, giving at least 20 days’ notice of the specified date, time and place of sale.

New Proposal Floated in Servicer/AG Settlement Talks

October 18, 2011
Mortgage News Daily

A new plan is on the table in the seemingly endless parade of negotiations aimed at ending the foreclosure crisis and resolving the legal impasses over alleged foreclosure abuses by the big banks. The latest proposal, detailed in today's Wall Street Journal, was presented in a meeting last week between the banks and government negotiators.

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Analysis: U.S. Gambles With Mortgage Retreat

October 11, 2011
Wall Street Journal

Three years after virtually nationalizing the U.S. mortgage market, the government has embarked on a pullback to see whether private industry picks up the slack, according to an analysis in yesterday's Wall Street Journal. Some people in the housing industry worry that the government's move will cause fresh pain in many regions where demand has yet to recover amid the sluggish economy. At issue, according to the analysis, are the loan limits that Congress expanded in 2008, allowing Fannie Mae and Freddie Mac to buy mortgages that exceeded the national cap of $417,000. To stem the fallout in prices, Congress raised the loan caps to as high as $729,750 in markets such as Los Angeles and New York. It then passed a series of one-year extensions to keep the higher limits in place. However, Congress and the Obama administration this year opted against an extension. As a result, the limits in hundreds of counties fell by 10 percent or more on Oct. 1. For loans backed by Fannie and Freddie, the limits declined to between $417,000 and $625,500 in about 200 counties.

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New Bankruptcy Ripples May Emergency in Tough Economy

October 11, 2011
Reuters

Three years after the collapse of Lehman Brothers touched off a tidal wave of bankruptcy filings, corporate failures may be about to pick up again, with some big-name companies among those struggling for survival, according to a Reuters commentary today. Companies in a range of businesses, including hair salons, restaurants, renewable energy and the paper industry have tumbled into chapter 11 in the past few months. The weak economy, lackluster consumer spending, a shaky junk-bond market and increasingly tight lending practices are also threatening struggling companies in industries as diverse as shipping, tourism, media, energy and real estate, according to the commentary. "It's getting busier for everyone I know," said Jay Goffman, co-head of the Global Restructuring Group at law firm Skadden Arps, Slate, Meagher & Flom. "I think 2012 will be a busy year and 2013 and 2014 will be extraordinarily busy years in restructuring."

Banks Repay TARP Loans With Money Meant for Small Businesses

October 6, 2011
Wall Street Journal

(Wall Street Journal) - More than half of $4 billion in federal funds disbursed this year to spur small business lending by community banks was used to repay bailout funds that the banks received under the government's Troubled Asset Relief Program (TARP), The Wall Street Journal reported Thursday.

Update on "Venue Change" Legislations

October 6, 2011

The House Judiciary Committee recently heard testimony on the benefits and pitfalls of proposed legislation that would change bankruptcy venue rules by imposing limitations on where corporations may file for bankruptcy protection. The hearing came in the wake of a statement by Judiciary Committee Chairman Lamar Smith, R-Texas, in which he asked how Enron had been able to file its bankruptcy case in Manhattan considering that Enron was based in, and had substantially all of its assets and operations in, Texas. According to remarks made by University of North Carolina law professor Melissa B. Jacoby, approximately 70 percent of the 200 plus large public companies that have filed for Chapter 11 bankruptcy since 2005 filed their petitions in either Delaware or New York City.

Sept. Consumer Spending Nears Lowest Levels of 2011

October 5, 2011
FOXBusiness

Americans' self-reported spending in stores, restaurants, gas stations and online was down an average of $3 a day in September from the month prior, marking the second consecutive period of declines, according to a Gallup poll.

Falling Stocks Bring S&P 500 into Bear Market

October 4, 2011
Los Angeles Times

After turning in the worst quarter since the financial crisis, U.S. stocks started the new one by approaching the level considered a bear market.

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Global Manufacturing Shrinks for First Time Since 2009, India Output Falls

October 4, 2011
Reuters

Global manufacturing shrank for the first time in over two years in September, reinforcing fears of another recession despite a modest bounce in U.S. factory activity.

Against the trend, manufacturing activity in the U.K., U.S. and Canada picked up speed, but slumps in factory output in Europe and Asia raised questions about the sustainability of the rebound.

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Consumer Spending Keeps Dropping

September 28, 2011
Pittsburgh Post-Gazette

As household incomes decline, household spending is also going down for basic items such as food, clothing and housing while the cost of health care is eating up more of the family budget, according to the Bureau of Labor Statistics.

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Loan Limits Are Falling, But Does It Matter?

Sept 27, 2011
Wall Street Journal

For the past three years, the federal government has guaranteed the vast majority of new home loans, working through Fannie Mae and Freddie Mac and the Federal Housing Administration.

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Markets Swoon on Recession Fears

September 23, 2011
Wall Street Journal

Global investors dumped everything from stocks to corporate bonds to foreign currencies and fled to the relative safety of U.S. Treasurys on fears of another recession and a Greek debt default.

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Census: Recession Taking Toll on Young Adults

September 22, 2011
Associated Press

Call it the recession's lost generation.

In record-setting numbers, young adults struggling to find work are shunning long-distance moves to live with Mom and Dad, delaying marriage and buying fewer homes, often raising kids out of wedlock. They suffer from the highest unemployment since World War II and risk living in poverty more than others - nearly 1 in 5.

10 Million More Mortgages Set to Default, Expert Says

September 20, 2011
Housing Wire

Roughly 10.4 million mortgages, or one in five outstanding home loans in the U.S., will likely default if Congress refuses to implement new policy changes to prevent and sell more foreclosures, according to analyst Laurie Goodman from Amherst Securities Group.

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GAO Puts Treasury Troubles Under the Microscope

September 16, 2011
Housing Wire

The Government Accountability Office said in a report Friday the Treasury Department is struggling to implement new Making Home Affordable programs and that more transparency is needed.

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RE Loans Declares Bankruptcy in Texas

September 13, 2011
Equitatus

R.E. Loans, LLC commenced chapter 11 proceedings in the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division. The case no. is 11-35865-bjh11 and has been assigned to the Honorable Barbara J. Houser.

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Statement by Peter C. Califano Regarding Chapter 11 Bankruptcy Venue Reform Act of 2011 ("H.R. 2533")

September 8, 2011

The Commercial Law League of America (the "CLLA"), has been in favor of venue reform for over 10 years. The CLLA, founded in 1895, is the nation's oldest organization of attorneys and other experts engaged in the field of commercial law, bankruptcy and reorganization.

House Judiciary Subcommittee Considers Chapter 11 Venue Reform

September 8, 2011
American Bankruptcy Institute

The House Judiciary Subcommittee on Courts, Commercial and Administrative Law held a hearing today examining H.R. 2533, the "Chapter 11 Bankruptcy Venue Reform Act of 2011."

Senate Bill No. 4

September 2011
California State Senate

SB 4, Calderon. Mortgages.

Existing law requires a lender to file a notice of default in the case of nonjudicial foreclosure prior to enforcing a power of sale as a result of a default on an obligation secured by real property, as specified. Existing law also requires that a notice of sale be given before the power of sale may be exercised. Existing law requires the notice of sale to contain specified information regarding the property and the sale, and to be recorded with the county recorder, as specified.

U.S. Job Growth Stalls, Fuels Recession Fears

September 2, 2011
Reuters

U.S. employment growth ground to a halt in August, reviving recession fears and piling pressure on both President Barack Obama and the Federal Reserve to provide more stimulus to aid the frail economy.

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White House Sharply Cuts U.S. Growth Forecast

September 2, 2011
Reuters

President Barack Obama sharply cut estimates on Thursday for U.S. economic growth, underscoring the difficult challenge he faces in spurring a stronger recovery and creating more jobs.

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White House Forecasts High Unemployment Through 2012

September 1, 2011
Los Angeles Times

Reporting from Washington - In a move underscoring the urgency of the nation's economic problems, the White House issued a new assessment that predicted continued high unemployment through 2012.

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New-home Slump Keeping Door Shut on U.S. Recovery

September 1, 2011
Los Angeles Times

Plagued by too many houses and too few buyers, 2011 is shaping up to be the worst year on record for new-home sales. The slump is pushing the key home-building industry into its fifth year of decline and keeping the U.S. economy from a rebound.

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U.S. Households Save, Economy Sputters

August 29, 2011
Wall Street Journal

"Delay and pray" is not a viable repair for a domicile sector’s woes. Indeed, it might usually be creation things worse.

In a noted change from their borrow-and-spend function during a boom, U.S. households are now by and vast prioritizing saving and debt reduction. On Monday, a Commerce Department is to redeem Jul total expected to uncover a personal saving rate, or suit of after-tax monthly income unspent, in a 5% to 5.5% operation it has confirmed for roughly a past 18 months.

Homeowners Need Help

August 21, 2011
New York Times

Neither Congress, nor federal regulators, nor state or federal prosecutors have yet to conduct a thorough investigation into the mortgage bubble and financial bust. We welcomed the news that the Justice Department is investigating allegations that Standard & Poor’s purposely overrated toxic mortgage securities in the years before the bust. We hope the investigative circle will widen.

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The Economy: Are Consumers Still Calling the Shots?

August 21, 2011
Other News

RALEIGH, N.C. — Much of the recent economic news has not been good. Unemployment remains above 9 percent, with many forecasts saying it will stay elevated. Loans are difficult to get. Consumer confidence is low, and home sales remain weak.

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State Sues Lawyers Who, it Says, Defrauded Troubled Homeowners

August 19, 2011
Los Angeles Times

California Atty. Gen. Kamala Harris has sued four Southern California lawyers and their associates, accusing them of defrauding distressed homeowners at their most vulnerable moment by deceiving them into thinking they would receive relief on their troubled home loans.

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Threat of a New Recession is Rising in the United States: Economists

August 16, 2011
AFP

WASHINGTON: The threat of a new recession is rising in the United States, economists say, as they slash their growth forecasts for the second half of the year.

More Student Loans Are Past Due

August 16, 2011
The Wall Street Journal

Student loans are on the rise, but so is the delinquency rate on them.

On Monday Real Time Economics noted that since the depths of the recession the only type of credit to notch growth was student loans. Credit to students also stands out when looking at delinquency rates.

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Recession 'Three Months' Away: Manager

August 16, 2011
CNBC

The next recession could happen within a quarter of a year, one fund manager told CNBC Tuesday, as weak German economic growth figures were announced.

Nevada Joins States Balking at Bank Releases in Foreclosure Practices Deal

August 16, 2011
Bloomberg

A possible settlement of a 50-state probe of foreclosure practices drew more state scrutiny as Nevada’s attorney general joined three other states in voicing concern about a deal that protects banks from continuing mortgage investigations.

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National Association of Consumer Bankruptcy Attorneys Issues Response to Obama Administration Plan to Sell Vacant and Abandoned Properties in Foreclosure

August 12, 2011
NACBA

WASHINGTON, D.C.///August 12, 2011/// National Association of Consumer Bankruptcy Attorneys (NACBA) President William Brewer today issued the following statement in response to the announcement on Wednesday by the Obama Administration that it is looking at developing a plan to sell vacant and abandoned properties owned by Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA) as rental properties:

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Housing Plan Gets A Mixed Response

August 11, 2011
The Wall Street Journal

The housing industry gave mixed reviews to the Obama administration's proposal to sell tens of thousands of foreclosed properties owned by government-backed entities and then convert them to rentals.

Dow Tumbles 634 Points on Recession Fears

August 9, 2011
Los Angeles Times

Reporting from Washington and Los Angeles - Accelerating fears of a new global recession sent the Dow Jones industrial average plummeting more than 600 points — wiping out $1 trillion in U.S. market value — as the White House scrambled to contain the damage.

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Second Recession in U.S. Could Be Worse Than First

August 7, 2011
The New York Times

If the economy falls back into recession, as many economists are now warning, the bloodletting could be a lot more painful than the last time around.

Given the tumult of the Great Recession, this may be hard to believe. But the economy is much weaker than it was at the outset of the last recession in December 2007, with most major measures of economic health - including jobs, incomes, output and industrial production - worse today than they were back then. And growth has been so weak that almost no ground has been recouped, even though a recovery technically started in June 2009.

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Data Reinforce Economic Malaise

August 2, 2011
The Wall Street Journal

U.S. consumers cut their spending in June and saved at a faster rate, signs that reinforced the economy's lack of vigor. Spending decreased 0.2% after rising an upwardly revised 0.1% in May -- the biggest drop since September 2009. Incomes rose 0.1% after increasing 0.2% in May.

The data follow a report Monday that showed the U.S. manufacturing sector -- a onetime driver of the economy -- barely expanded in July. The Institute for Supply Management's manufacturing index was at 50.9% -- the lowest level in two years -- down from 55.3% in June.

Hitting the Mule on the Head: The "Fighting Fraud in Bankruptcy Act of 2011" and Other Remedies

July 12, 2011
National Association of Attorneys General; Washington D.C.

The story goes that a farmer bought a mule from a salesman who told him that if he were polite to the mule, it would do whatever he wanted. After months of being nice – but with no success in getting the mule to work, the farmer asked the salesman for help. The salesman came over, hit the mule on the head with a 2x4 and explained that you did have to be nice - "but first you had to get the mule’s attention."

Bank's Deal Means More Will Lose Their Homes

July 11, 2011
The New York Times

Tens of thousands of Bank of America's most distressed borrowers could be evicted and lose their homes more quickly as a result of a proposed settlement between the bank and investors in its troubled mortgage securities, the New York Times reported today. For struggling borrowers in better financial shape, the outcome could be more positive: the deal would include incentives for mortgage servicers to help homeowners who have fallen behind on their payments and whose homes are worth less than they borrowed. "The goal is to reinstate as many borrowers in a modification that performs well," said Tony Meola, a servicing executive with Bank of America. "It also is likely to lead to faster resolution in those unfortunate situations where foreclosure is inevitable." While powerful investors stand to benefit from the $8.5 billion settlement over the bank's bundling of shoddy mortgages as securities, the fallout for the nearly 275,000 borrowers who took out those loans depends greatly on how deep they are in the foreclosure process and whether they earn enough money to dig themselves out.

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Fannie Mae Silence on Taylor Bean Opened Way to $3 Billion Fraud

June 30, 2011
Bloomberg

The first sign of what would ultimately become a $3 billion fraud surfaced Jan. 11, 2000, when Fannie Mae executive Samuel Smith discovered Taylor, Bean & Whitaker Mortgage Corp. sold him a loan owned by someone else.

Fannie Mae, the government-sponsored enterprise which issues almost half of all mortgage-backed securities, determined over the next two years that more than 200 loans acquired from Taylor Bean were bogus, non-performing or lacked critical components such as mortgage insurance.

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More Money for Struggling Homeowners

June 29, 2011
SmartMoney

For the roughly four million homeowners who have fallen behind on their mortgage payments, the federal government is offering yet another remedy: free money to catch up on their loans.

The effort, called the Emergency Homeowners Loan Program, is the latest in the federal government's efforts to slow down the flood of foreclosures a necessary step to a meaningful recovery in the housing market, says a Department of Housing and Urban Development official. For people who have lost their jobs, the $1 billion program offers loans of up to $50,000 that don't actually need to be repaid, if applicants meet certain requirements.

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Report: Troubled Mortgages Still Plague Banks

June 29, 2011
The Wall Street Journal

The nation’s banks are holding a much higher rate of defaulted mortgages on their books than mortgage giants Fannie Mae and Freddie Mac, according to a report released Wednesday by the Office of the Comptroller of the Currency, which regulates national banks.

The report said that some 19.7% of mortgages held in banks’ portfolios were delinquent at the end of March. By contrast, nearly 6.8% of mortgages backed by mortgage giants Fannie Mae and Freddie Mac were nonperforming, and 11.4% of all mortgages that are serviced by banks.

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Serious Delinquencies, Foreclosures Outnumber FC Sales 50:1

June 29, 2011
Mortgage Orb

Serious delinquencies and foreclosures overshadowed the number of foreclosure sales at the end of May by a 50:1 ratio, Lender Processing Services Inc. (LPS) reports.

According to LPS' latest Mortgage Monitor report, the combined number of mortgages 90 days or more delinquent or in foreclosure totaled more than 4.08 million. At the end of the month, foreclosure sales totaled 78,676.

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GSE Reform Slips as Lawmakers Weigh Costs, Benefits

June 21, 2011
American Bankruptcy Institute

Last year's Dodd-Frank financial reform law did a lot of things, but one major untouched issue was housing finance, CongressDaily reported yesterday. Now, nearly a year since the law took effect, the sense of urgency surrounding government-sponsored enterprise (GSE) reform has waned. There is no consensus in either party, and lawmakers see more to lose than gain by forcing difficult votes on whether and how much the housing market should rely on government support. Senate Banking Committee Chairman Tim Johnson (D-S.D.) has taken a go-slow approach, holding hearings but not proposing any legislation. In the House, Republicans are fractured as conservatives want to eliminate any government backing, but many doubt mortgages would still be affordable without an emergency federal backstop. Rep. John Campbell (R-Calif.) has introduced a bill that would break up Fannie and Freddie but replace them with another government-backed organization. Rep. Scott Garrett (R-N.J.), the chairman of the House Financial Services Capital Markets Subcommittee, has taken the lead on getting rid of Fannie and Freddie. He is working on legislation that would include a plan for how the private market would provide mortgage credit, without any government guarantee, after the GSEs were shut down.

U.S. Bankruptcy Claims Trading Slows in May

June 20, 2011
Reuters

(Reuters) - The volume of U.S. bankruptcy claims traded in May fell from April, but the value of trades remained almost steady, thanks to several large trades involving Mesa Air Group Inc, according to a report on Monday.

The total number of claims fell to 701 from 892 in April while the value of claims traded dipped to $2.1 billion from $2.2 billion, according to SecondMarket, which runs a bankruptcy claims trading marketplace.

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The New Face of Bankruptcy: Public Employees

June 7, 2011
iStockAnalyst

WARREN, Mich., June 7, 2011 /PRNewswire/ -- State and local governments facing financial pressures have turned to their employees to help balance their budgets. But now a prominent Bankruptcy attorney who is the founder of the website myeasy7.com is warning of an unexpected consequence: more Bankruptcies.

Hiring in U.S. Slowed in May With 54,000 Jobs Added

June 3, 2011
The New York Times

After several months of strong job growth, hiring in the United States slowed sharply in May, suggesting the economy may be running out of steam once again.

The Labor Department reported on Friday that the nation added 54,000 nonfarm payroll jobs last month, after an increase of about 220,000 jobs in each of the three previous months. May’s job gain was about a third of what economists had been forecasting.

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Statement of Senator Patrick Leahy (D-Vt) On the Introduction of the Fighting Fraud in Bankruptcy Act of 2011 - Senate Floor

May 24, 2011
NACBA News

Today I am pleased to introduce the Fighting Fraud in Bankruptcy Act of 2011. I thank Senator Whitehouse and Senator Blumenthal for joining me as cosponsors of this legislation. This bill will give the Department of Justice and the United States bankruptcy trustee important new tools to combat creditor abuses in the bankruptcy process. The Fighting Fraud in Bankruptcy Act is another step forward in the Judiciary Committee’s important efforts to protect American citizens from fraud.

Since the onset of the housing market’s collapse, the bankruptcy courts and the United States trustee have encountered serious problems related to foreclosure documentation submitted by mortgage lenders and servicers in the bankruptcy process. As scrutiny has been brought to bear on foreclosure-related filings by bankruptcy judges, attorneys, and the United States trustee, a pattern of negligent, reckless, or fraudulent conduct on the part of mortgage lenders and servicers has been revealed with a consistency that indicates systemic problems.

Under Attorney General Holder’s leadership, the Department of Justice is making a considerable effort to ensure that mortgage lenders and servicers are playing by the rules and treating homeowners fairly and honestly. As part of its efforts to more closely scrutinize foreclosure documentation in bankruptcy cases, the United States trustee’s office reviewed 10,000 proofs of claim filed by mortgage servicers. What was found was far more serious than what mortgage servicing industry officials have been asserting. For example, in testimony before the Senate Judiciary Committee in 2008, an industry executive stated that the rate of loan servicing errors in bankruptcy cases adverse to a homeowner was “less than one percent.”

In its review, however, the trustee found an error rate based upon blatant, obvious errors more than ten times greater than what was testified to before the Judiciary Committee. And these errors are not harmless. In some cases, they were wildly inaccurate statements of what a homeowner owed to the lender, in others, the claims contained unsupported junk fees that servicers had piled on yet for which they provided no documentation. If left unchallenged, the result would be that a homeowner not only loses a home, but is cheated on what he or she owes on that home. Americans in foreclosure, and the trustee as guardian of the system are right to demand accuracy and truthfulness from creditors’ representations in court.

Unfortunately, the major players in the mortgage industry are showing little interest in addressing these problems head-on. Instead, when faced with the trustee’s scrutiny of their claims, some major mortgage servicers have resorted to engaging in litigation challenging the authority of the United States trustee to look behind their claims and provide sanctions where warranted. The United States trustees in districts around the country are now facing hundreds of challenges to their authority to effectively police the system. It is a great disappointment to see some of the very same banking entities that have benefited so much from congressional action and taxpayer funded assistance put up so much resistance to simple demands for accuracy and truthfulness in their representations to the court and those whose homes they are seeking to repossess.

There should be no disagreement that someone who is in default on their mortgage obligations may be rightfully foreclosed upon so that a home may be resold. This is important to our economic recovery. What is entirely unacceptable is for homeowners on the precipice of losing their homes to be mistreated by their lenders—whether through unsupported fees, willfully inaccurate or negligent accounting, or a lack of supporting documentation. This conduct only adds to the pain and hardship so many are experiencing.

In 2010, over one million Americans lost their homes to foreclosure. This year, housing industry analysts expect the problem to get worse. The magnitude of this problem, and its effect on American families, is difficult to comprehend. As this crisis continues to deepen, the incentives for lenders and servicers to cut corners, inflate profits, rush foreclosures, and hide from their misconduct will only increase.

The legislation I introduce today is about ensuring fair treatment for homeowners, preventing a fraud on the bankruptcy courts, and holding wrongdoers accountable. When Congress created the United States trustee program in 1978, it described the trustee’s role as the “watchdog” of the bankruptcy system, and vested the trustee’s office with the power to investigate fraud in the process. This legislation will support and strengthen this important role so that all participants in the bankruptcy system conduct themselves in accordance with the law.

My legislation will do four things. First, it clarifies the United States trustee’s inherent power and duty to police all corners of the bankruptcy system. Second, it provides the trustee and the courts with remedies to correct and sanction misconduct and fraud committed by creditors in the bankruptcy process. Third, the legislation empowers the trustee to establish a system of audits to ensure that creditors are complying with the law. These provisions taken together will help make certain that debtors and creditors are held to the same standard in the bankruptcy process.

Finally, the legislation addresses a particularly offensive form of mortgage servicer misconduct against men and women serving in our military. The Servicemembers Civil Relief Act (SCRA) protects active duty military personnel by requiring a stable, manageable interest rate for military homeowners on active duty, and by staying foreclosure actions during their deployment. A Government Accountability Office report released this month found that among just two of 14 major mortgage servicing organizations that provided data to Federal regulators, 50 foreclosure actions were carried out in violation of the SCRA.

In response to this finding, and to bolster the SCRA’s protections for the men and women serving in the military, this legislation would require a mortgage lender seeking relief from the automatic stay to certify under penalty of perjury that the foreclosure was in compliance with the SCRA.

As Congress looks at ways to mitigate the foreclosure crisis to reduce its impact on homeowners and the economy, I hope all Senators can agree that the foreclosure process for Americans should be a fair one and one in which there is accountability for fraud or other misconduct. And I hope we can all agree that the integrity of our judicial system is something worth protecting.

I ask for unanimous consent that a copy of the bill be placed in the Record.

Banks Said to Offer $5 Billion to Resolve State, U.S. Foreclosures Probe

May 11, 2011
Bloomberg

Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM), along with three other U.S. mortgage servicers, proposed paying $5 billion to settle a probe of their foreclosure practices by state and federal officials, two people familiar with the matter said.

The proposal made by banks yesterday during settlement talks in Washington came after state attorneys general and federal officials offered revised settlement terms and a proposal for banks to fund principal writedowns for homeowners.

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New Foreclosures Jump 21 Percent

May 2, 2011
NASDAQ

Foreclosure activity increased sharply in March, a sign that lenders are coming to grips with the documentation problems that led to the robo-signing scandal last fall.

Foreclosures were initiated on more than 217,000 homes in March, a 21 percent increase over February's rate, according to information released today by the HOPE NOW alliance. Nearly 85,000 properties were forfeited through foreclosure sales during the month, a 35 percent increase over February.

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Economists React: First-Quarter GDP ‘Stutter’ Likely Temporary

April 28, 2011
The Wall Street Journal

Economists and others weigh in on the 1.8% increase in first-quarter gross domestic product at a seasonally adjusted annual rate.

–Despite the stutter in the first quarter, we expect the U.S. economic recovery to remain largely on track and expect the pace of growth to accelerate in the coming quarters as the sustained positive momentum in labor market activity continues to provide the supportive backdrop for household spending and business investment. –Millan L. B. Mulraine, TD Securities

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Bills to Reform Foreclosure Process

April 8, 2011
Daily Journal

Attorneys general from all 50 states along with federal agencies have been negotiating with more than a dozen major mortgage lenders for months, seeking to create a set of universal foreclosure procedures to minimize shoddy home loan documentation and wrongful foreclosures.

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Servicers Said to Agree to Revamped Foreclosures

April 5, 2011
The New York Times

The nation’s top mortgage servicers are expected to sign legal agreements by the end of this week compelling them to change their foreclosure procedures, regulatory officials said Tuesday.

The servicers, which violated state and local laws and regulations governing foreclosures, are agreeing to improve their methods in numerous ways. They will be required to have more layers of oversight and proper training of their foreclosure staff. The oversight will extend to third party groups, including the law firms that do much of the actual work of eviction.

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LA Court Hits Wells Fargo with $3.5 Million Penalty in Discrimination Case

March 24, 2011
HouseingWire

A Los Angeles Superior Court jury ruled against Wells Fargo Thursday in a mortgage discrimination case, awarding borrowers $3.5 million.

The class-action lawsuit alleged the bank knowingly discriminated against borrowers in minority neighborhoods. As a result, borrowers were charged more for their loans than those in predominately white areas of Los Angeles County, the court ruled.

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Credit-Card Rules Amended by Fed to Avoid Issuance to People Who Can’t Pay

March 18, 2011
Bloomberg

The U.S. Federal Reserve approved a rule that would require credit-card issuers to consider consumers’ individual incomes before extending credit.

Credit-card applications generally can’t request household income” because that term is too vague for issuers to evaluate whether customers will be able to make the required payments on the accounts, according to a statement from the Fed today. The rule is needed to prevent making credit available to consumers who lack the ability to pay, the Fed said.

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Warren Defends Consumer Agency

March 16, 2011
The New York Times

Elizabeth Warren, who is starting the first federal consumer watchdog agency, took to Capitol Hill on Wednesday to combat criticism from Republicans who say the new agency is exerting too much power in Washington and on Wall Street.

In testimony before a House Financial Services subcommittee, Ms. Warren also defended the Consumer Financial Protection Bureau against complaints that the agency lacks transparency.

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ATM Fees Heading Higher

March 16, 2011
MarketWatch

Some of the nation's biggest banks are imposing a variety of new fees on people who withdraw money from automated-teller machines.

The move is the latest example of the burgeoning new fees that banks are imposing on customers accustomed to years of free services. Banks are scrambling to replace billions of dollars in revenue expected to be lost from new federal regulations on overdraft charges and debit cards.

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Geithner Backs New Financing Approach for Mortgages

March 15, 2011
The New York Times

WASHINGTON (Reuters) — Treasury Secretary Timothy F. Geithner on Tuesday backed legislative efforts to create a new market for financing mortgages that would help wean the $10.6 trillion United States mortgage market from government support.

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Consumer Bankruptcy Filings Are Up 9% in 2010, Compared to 2009; in Past 3 Years Consumer Bankruptcy Filings Have Increased Over 30%

February 24, 2011
Consumer Bankruptcy News

Consumer bankruptcy filings returned to pre-BAPCPA levels in 2010. According to the Administrative Office of the U.S. Courts, a total of 1,536,799 consumer bankruptcy petitions were filed last year, an increase of 8.8 percent over the 1,412,838 filings recorded during 2009.

FDIC Clarifies Orderly Liquidation Authority Under Dodd-Frank

February 9, 2011
WallStreetReform.org

The Board of Directors of the Federal Deposit Insurance Corporation approved an interim final rule January 18 to clarify how the agency will treat creditor claims under orderly liquidation authority established by Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (see 76 FR 16, p. 4207).

Texas Congressman Hinojosa Files for Bankruptcy

February 3, 2011
Business Week

An eight-term congressman who serves on the House Financial Services Committee has quietly declared personal bankruptcy and is blaming his family meat company for his problems.

Better off Bankrupt

January 27, 2011
Los Angeles Times

During the 2008 financial crisis, the federal government reacted in a frantic, ad hoc fashion, tapping taxpayers for bailouts galore, running roughshod over the rights of bondholders and catching the American people unaware and unprepared. In contrast, we still have time to prepare for the looming crisis threatening to engulf California, Illinois, New York and other state governments.

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Home Foreclosures in 2010 Top 1 Million for First Time

January 13, 2011
Reuters

(Reuters) - Banks seized more than a million U.S. homes in one year for the first time last year, despite a slowdown in the last few months as questions around foreclosure processing arose, a leading firm said on Thursday.

Banks foreclosed on 69,847 properties in December, bringing the year's total to 1.05 million, topping the prior record of 918,000 homes seized in 2009, real estate data firm RealtyTrac said.

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