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2012 Bankruptcy Articles

Allow Private Education Loan Debts to Be Erased in Bankruptcy

December 26, 2012
U.S. News

Millions of Americans pursue college educations and training for new careers, which is good for them and for our nation. Yet these efforts are costly. This year, total student loan debt exceeded $1 trillion, more than any other kind of consumer debt. Debt from student loans issued by private for-profit lenders is troublesome.

Bond Ratings Cuts Advance to Fastest Since ’09: Credit Markets

December 26, 2012
Bloomberg

The ratio of ratings downgrades to upgrades worldwide climbed to 1.85 this year from 1.23 in 2011, according to S&P data. PSA Peugeot Citroen (UG), Europe’s second-largest car maker, was cut three times by Moody’s since March to speculative grade.

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Exclusive: Pension Fund Slams California's San Bernardino for 'Sham' Bankruptcy

December,17 2012
Thomson Reuters

A high-stakes legal battle intensified Friday as the largest U.S. pension fund filed court papers denouncing the financially troubled California city of San Bernardino for what it called a "sham" bankruptcy and accused the city of "criminal behavior" in withholding payments to the pension plan.

Capital One U.S. Credit-Card Delinquencies Rise in November

December,17 2012
Credit and Collection News

Capital One Financial Corp. said delinquencies at its U.S. credit-card business rose in November from October, while its international credit-card business and auto loans saw a decrease.

Defaulters On Student Loans Face Credit Problems

December,16 2012
Credit and Collection News

Many of those contributing to the growing default rate for federal student loans include people who want to pay but can't and who end up facing a lifetime of credit problems, The Columbus Dispatch reported Sunday.

U.S. Trustee Asks Court to Toss Aletheia Research's Chapter 11

December 13, 2012
Dow Jones

The U.S. Justice Department is asking a judge to throw out Aletheia Research and Management Inc.'s bankruptcy case, saying that the state of California's decision earlier this year to suspend the company's corporate powers makes it ineligible for chapter 11 protection, Dow Jones Daily Bankruptcy Review Small Cap reported yesterday. In papers filed with the U.S. Bankruptcy Court in Los Angeles, the U.S. Trustee Peter C. Anderson said that a "suspended corporation cannot properly conduct business, initiate legal proceedings, and initiate a chapter 11 bankruptcy petition." California suspended Santa Monica-based Aletheia's corporate status in October as a result of its failure to pay its 2008 income taxes and penalties for 2020, 2011 and 2012 for late-filed returns. If the court declines to throw out the chapter 11 case, the trustee asked that a chapter 11 trustee be appointed to manage the company during the proceedings in light of the "sustained and continuing" decline of the company's assets under management and "loss of confidence by investors" "before the company's business deteriorates to the point that it can't be saved. A court hearing on the trustee's request is set for Jan. 15. Aletheia Chief Executive Peter J. Eichler Jr. put the company into chapter 11 protection last month to help it cope with the legal battles that have caused clients to take nearly $6 billion out of the firm, which provides advice and management services to securities investors.

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Bank Foreclosures Hit Nine-Month High In November

December 13, 2012
Credit and Collection News

U.S. home repossessions rose to a nine-month high in November, even as the number of homes starting on the path to foreclosure declined to the lowest level in six years.

Credit Card Delinquencies Fall Below Student Loan Delinquencies For The First Time

December,12 2012
Credit and Collection News

For the first time since regulators started keeping records, Americans have let more of their student loan balances fall into delinquency than their credit cards.

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San Bernardino's Bankruptcy Case Becomes a Battle of Titans

December 10, 2012
The Sun

The battle lines have formed in San Bernardino's effort to enter Chapter 9 bankruptcy protection.

On one side is CalPERS, the state's public employee retirement system, which is the city's biggest creditor and brooks no lapse in payments from its member agencies. CalPERS has challenged San Bernardino's petition for bankruptcy protection and asked for a reversal of the stay that prevents lawsuits against the city until its bankruptcy case is decided.

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Consumer Spending in U.S. Declines as Sandy Reduces Wages

November 30, 2012
Bloomberg Business

Americans unexpectedly pared spending in October as superstorm Sandy depressed wages, showing the world’s largest economy is cooling as lawmakers seek ways to avoid the so-called fiscal cliff.

Student Loan Debt Nears $1 Trillion: Is it the New Subprime?

November 28, 2012
CBS News

(MoneyWatch) Since the recession, Americans have vastly reduced the amount of debt they maintain, with one glaring exception: Student loans. Outstanding student loan debt now stands at $956 billion, according to the Federal Reserve Bank of New York's Quarterly Report on Household Debt and Credit. Student debt increased by 4.6 percent in the third quarter from the previous quarter -- when annualized, that's almost a 20 percent rate of increase.

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Visa, MasterCard Settlement Order Appealed by Plaintiffs

November 27, 2012
Bloomberg

The tentative approval of Visa Inc. (V) and MasterCard Inc. (MA)’s proposed $7.25 billion settlement of a merchant fee price-fixing case will be challenged in a federal appeals court, according to a notice filed by objecting plaintiffs in Brooklyn, New York.

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2 Million Could Lose Unemployment Benefits Unless Congress Extends Program

November 12, 2012
The Washington Post

More than 2 million Americans stand to lose their jobless benefits unless Congress reauthorizes federal emergency unemployment help before the end of the year.

The people in danger of having their unemployment checks cut off are among those who have benefited least from the slowly improving job market: Americans who have been out of work longer than six months.

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Child’s Education, but Parents’ Crushing Loans

November 11, 2012
The New York Times

When Michele Fitzgerald and her daughter, Jenni, go out for dinner, Jenni pays. When they get haircuts, Jenni pays. When they buy groceries, Jenni pays.

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State Bankruptcy Debate Returns

November 9, 2012
The Wall Street Journal

Nearly two years after a "fierce" debate that "fizzled as quickly as it started," University of Pennsylvania law professor David Skeel is arguing that the idea of giving states a way to file for bankruptcy remains relevant and necessary.

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Credit Card Debt At A 10-Year Low; Slow Revival Seen

November 6, 2012
Investor's Business Daily

Credit card debt is poised to rebound off its 10-year low, but consumers may not return quickly to their old, debt-fueled buying habits.

While historic borrowing and spending patterns should resume eventually, stagnant incomes are holding them back, said Greg McBride, senior financial analyst for Bankrate.com.

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October Bankruptcy Filings Increase 16 Percent over Previous Month, Commercial Filings Up 19 Percent

November 5, 2012
American Bankruptcy Institute

Total bankruptcy filings in the United States for the month of October increased 16 percent compared to September, according to data provided by Epiq Systems, Inc. October bankruptcy filings totaled 101,278, up from the 87,522 filings registered in September 2012. The 96,498 total noncommercial filings for October represented a 16 percent increase from the September noncommercial filing total of 83,493. Total commercial filings for October 2012 were 4,780, representing a 19 percent increase from the 4,029 filings in September. Commercial chapter 11 filings also increased in October as the 704 filings represented a 3 percent increase over the 681 filings in September.

FTC Hangs up on Robocalls from 'Rachel'

November 1, 2012
Los Angeles Times

"Rachel from Cardholder Services" may not be calling you anymore.

A federal court order Thursday morning temporarily halted operations at five telemarketing firms that the Federal Trade Commission said illegally dialed up consumers with millions of prerecorded messages – often saying they were from "Rachel."

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Will Foreclosure Abuses Ever End?

October 22, 2012
The New York Times

The creation of the Consumer Financial Protection Bureau is arguably the best reform to emerge from the Dodd-Frank law. An effective bureau will rectify and prevent lending abuses and ensure that consumer protection is a central priority in a sound banking system.

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Worried About Your Home? Why the Foreclosure Crisis is Getting Worse

October 22, 2012
U.S. News

Although the housing market is showing signs of recovery, other indicators show the foreclosure crisis is getting worse. In a September interview with U.S. News, Austan Goolsbee, the former chairman of the Council of Economic Advisers, said, "I think there's a lot wrong in the housing market. If Fannie and Freddie would start enabling people to rent out the vacant homes, that would also help."

Cash Available for Foreclosed Homeowners

October 21, 2012
The Orange County Register

People who lost their home to foreclosure from 2008 through 2011 should have received a letter by now saying they’re eligible to get cash under the national mortgage settlement stemming from the robosigning scandal.

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Why Jobless Claims May Not Be as Good as Market Thinks

October 11, 2012
CNBC

For the second time in a week, a government unemployment report is sowing confusion—and may not be as positive as the markets think.

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U.S. Charges 530 in Mortgage Probe With $1 Billion in Losses

October 9, 2012
Bloomberg

The U.S. charged 530 people with targeting homeowners in mortgage schemes that cost the victims more than $1 billion, Attorney General Eric Holder said today.

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U.S. Business Bankruptcies Fall 22% so far in 2012, Group Says

October 3, 2012
Bloomberg/American Bankruptcy Institute

Total bankruptcy filings totaled 921,219 nationwide during the first nine months of 2012 (Jan. 1-September 30), a 14 percent decrease from the 1,073,021 total filings during the same period a year ago, according to data provided by Epiq Systems, Inc.

New California Law Signed by Jerry Brown re Levies on Banks

September 26, 2012
Central District Insider

Governor Brown Signs AB 2364 into Law, Centralizing the Location for Service of Levies, Attachments and Garnishments on Financial Institutions

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Low-income Southland Households Had Biggest Recession Losses

September 19, 2012
Los Angeles Times

New census data show people of all income levels suffered losses during and after the Great Recession, but the lowest fifth of households took the biggest hit.

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Rich-Poor Gap Widens to Most Since 1967 as Income Falls

September 12, 2012
Bloomberg

A census report showing median household income fell last year puts a new focus on the biggest issue of the U.S. presidential election. And it’s likely to be deployed by both candidates to reinforce their campaign themes.

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AIG Bailout Success a Two-Sided Coin

September 10, 2012
The Washington Post

The Treasury Department estimated Monday that its pending sale of shares in global insurance giant American International Group would put taxpayers in the black, four years after the government rescued the company in one of the largest, most-despised bailouts of the financial crisis.

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Tougher Dodd-Frank Fiduciary Standard for Brokers Stalled

September 10, 2012
Bloomberg

Even with Wall Street and consumer advocates allied in pushing for it, a U.S. Securities and Exchange Commission proposal to raise standards for brokers advising retail investors has run aground.

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ECB May Disappoint on New Anti-Crisis Measures

September 5, 2012
Agence France-Presse

FRANKFURT - Financial markets risk disappointment if they expect the European Central Bank to unveil a cure-all for the eurozone's seemingly never-ending debt crisis this week, analysts warned on Wednesday.

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California Leads the Way With Job Growth

August 13, 2012
Silicon Valley/San Jose Business Journal

California is leading the way in terms of expanding its employment bases in the past year, according to the latest figures from the U.S. Bureau of Labor Statistics.

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Law Professor Dan Schecter reports that California Amends "Purchase Money" Statute to Extend Antideficiency Protection to Refinancing Debt.

On July 9, 2012, Governor Edmund G. Brown, Jr. signed Senate Bill 1069, amending California Code of Civil Procedure §580b to extend "purchase money" antideficiency protection to refinancing debt, as of January 1, 2013. This legislation will provide additional protection for homeowners and will limit the potential recovery available to refinancing lenders.

The legislation was introduced by Sen. Ellen Corbett (D–San Leandro) and was sponsored by the Insolvency Law Committee of the Business Section of the California State Bar. It passed both houses of the Legislature with no opposition. Full disclosure: I was a member of the team that drafted the original version of this bill, and we have been working on it for several years. The bill went through several iterations; the language of the final version is different from our original product, although the central premise is intact.

Analogous legislation was introduced in a prior legislative session by the California Association of Realtors. That version would have extended antideficiency protection retroactively. Our committee declined to support that version because retroactivity would have modified existing contracts, possibly violating the United States and California constitutions. Gov. Schwarzenegger vetoed that version; his veto message cited retroactivity as the reason for his refusal to sign the bill. The veto then opened the door for our draft.

Even though I [Law Professor Dan Schector] was one of the drafters of this bill, I must admit that the final version as enacted raises some unresolved questions. As one might expect, the final version incorporated a series of compromises among a variety of constituencies (including the lending industry), thus giving rise to some of the issues I address below.

First, let us examine the structure of revised CCP §580b. In new subdivision (a), the statute creates separate categories for each of the three classes of transactions covered by the statute: (1) contract of sale, (2) vendor financing, and (3) lender-financed residential purchases:

(a) No deficiency judgment shall lie in any event for the following:

(1) After a sale of real property or an estate for years therein for failure of the purchaser to complete his or her contract of sale.

(2) Under a deed of trust or mortgage given to the vendor to secure payment of the balance of the purchase price of that real property or estate for years therein.

(3) Under a deed of trust or mortgage on a dwelling for not more than four families given to a lender to secure repayment of a loan which was in fact used to pay all or part of the purchase price of that dwelling, occupied entirely or in part by the purchaser.

Subdivision (b) then labels transactions in the (a) (3) category as "purchase money" loans: "(b) For purposes of subdivision (c), a loan described in paragraph (3) of subdivision (a) is a "purchase money loan."

The heart of the amendment appears in subdivision (c). (I will dissect the language of subdivision (c) below.) It provides:

(c) No deficiency judgment shall lie in any event on any loan, refinance, or other credit transaction (collectively, a "credit transaction") which is used to refinance a purchase money loan, or subsequent refinances of a purchase money loan, except to the extent that in a credit transaction, the lender or creditor advances new principal (hereafter "new advance") which is not applied to any obligation owed or to be owed under the purchase money loan, or to fees, costs, or related expenses of the credit transaction. Any new credit transaction shall be deemed to be a purchase money loan except as to the principal amount of any new advance. For purposes of this section, any payment of principal shall be deemed to be applied first to the principal balance of the purchase money loan, and then to the principal balance of any new advance, and interest payments shall be applied to any interest due and owing. The provisions of this subdivision shall only apply to credit transactions that are executed on or after January 1, 2013.

Finally, subdivision (d) deals with "mixed collateral" transactions, with no substantive change from the original version of the statute:

(d) Where both a chattel mortgage and a deed of trust or mortgage have been given to secure payment of the balance of the combined purchase price of both real and personal property, no deficiency judgment shall lie at any time under any one thereof if no deficiency judgment would lie under the deed of trust or mortgage on the real property or estate for years therein.

Author's Comment: Note that under the broad language of subdivision (c), the term "refinance" includes not only a "same lender" refinance but any refinancing, even if new funds are provided by a new lender. The language of the statute should also be broad enough to encompass modification and restructuring transactions. (Our original version made that explicit, but it appears to be implicit in the final version.)

Under the first sentence of subdivision (c), the purchase money protection does not extend to an advance of new principal (i.e., a "cash out" refinancing). However, if the "new principal" is applied to the original purchase money loan "or to fees, costs, or related expenses" of the refinancing transaction, purchase money protection extends to the original balance and also to the fees and costs. Apparently, this is true even if the fees and costs are to some extent attributable to the "cash out" portion of the transaction. I suppose that the fees and costs could have been prorated between the "purchase money" and "cash out" portions of the transaction, but that probably would have been too complicated.

Although the amended statute does not expressly say whether "new principal" that is applied to accrued but unpaid interest under the original purchase money loan would be entitled to "purchase money" protection, my guess is that it would, in light of the language stating that the "new principal" is entitled to purchase money protection if it is "applied to any obligation owed or to be owed under the purchase money loan." The same thing should be true, of course, if the accrued interest had been folded into the principal of the purchase money obligation under a negative amortization provision.

Interestingly, the statute's focus on the advance of "new principal" seemingly leaves open the question of the treatment of the interest accruing on that new advance. One could plausibly argue that post-refinancing interest accruing on the "cash out" portion of the loan is not "new principal" and thus could be afforded purchase money protection. I can tell you, as one of the drafters, that this was not our intention. Instead, the goal was to create a bifurcated obligation, partly protected by purchase money status and partly not. Anything attributable to the "cash out" transaction, including interest, should not be protected by the "purchase money" label. (For an analogous system of bifurcation, see the "dual status" rule for purchase money security interests under revised UCC §9-103(b), and see also Comment 7(a).)

Note that the statute does not allocate the burden of proof: who bears the burden of showing that the obligation is partly purchase money and partly not? Our original version of the statute imposed that burden on the borrower, on the theory that the borrower was the party asserting the benefit of the antideficiency protection and should therefore establish the extent of that defense to liability. However, the issue of the burden of proof was deleted from the later versions of the bill, thus leaving that question open for later litigation.

The statute provides a new rule governing the application of payments: "[A]ny payment of principal shall be deemed to be applied first to the principal balance of the purchase money loan, and then to the principal balance of any new advance, and interest payments shall be applied to any interest due and owing." Can this rule be waived contractually? Probably not, although the statute does not say so. Earlier decisions under §580b have held that the antideficiency protection of the statute cannot be waived contractually. See, e.g., DeBerard Properties, Ltd. v. Lim, 20 Cal.4th 659, 670-671, 976 P.2d 843, 850-851, 85 Cal.Rptr.2d 292, 299-300 (1999). Admittedly, the issue of the allocation of payments is not quite the same as a waiver of the entire statute, but I doubt that such a waiver would be upheld.

Note that although the amended version of the statute simply reiterates the language barring vendors from obtaining deficiency judgments under all circumstances, the Legislature neither ratified nor overturned the result in Spangler v. Memel, 7 Cal.3d 603, 498 P.2d 1055, 102 Cal.Rptr. 807 (1972), holding that a vendor subordinated to a construction loan may, under some circumstances, obtain a deficiency judgment against the borrower, despite the language of the statute. Our original version of the bill contained an express ratification of Spangler, but that language was deleted from the final version. That deletion was unfortunate, since the omission of that provision could be misconstrued as an intent to overturn Spangler.

From a practical perspective, this new legislation will have a fairly limited effect. In most residential transactions, a foreclosing lender will elect a nonjudicial foreclosure, thus protecting the borrower from further liability under CCP §580d. That statute applies regardless of the nature of the underlying debt (i.e., purchase money or refinancing). However, upon rare occasion, a refinancing lender will elect a judicial foreclosure, in order to be able to pursue a deficiency judgment against the residential borrower. This legislation will end that practice. Some residential borrowers who had been targeted in these judicial foreclosure scenarios had contended that they were unaware that the refinancing had terminated their antideficiency protection. This legislation protects them from those inadvertent waivers.

(For a discussion of a recent Arizona decision extending comparable protection, see 2012 Comm. Fin. News. 26, Refinanced Purchase Money Obligation Is Still Protected By Antideficiency Statute, Even Though Refinancing Is Extended by New Lender and Some Of The Debt Pertains To Residential Construction.)

Consumer Financial Protection Bureau Trots Out Mortgage Servicer Rules To Curb Abuses

August 10, 2012
Huffington Post

In the latest effort by a federal regulator to force the mortgage industry to stop treating desperate homeowners like vagrants looking for a handout, the Consumer Financial Protection Bureau on Friday proposed new standards meant to force loan servicers to mend their ways.

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Upper-middle Class Hit by Student Debt

August 9, 2012
United Press International

Upper-middle-income families in the United States have taken on the biggest increase in student loan debt from 2007-10, Federal Reserve data indicated.

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Fannie Mae, Freddie Mac Won’t be Allowed to Reduce Loan Balances for Troubled Borrowers

July 31, 2012
Washington Post

The federal regulator for government-backed mortgage giants Fannie Mae and Freddie Mac said Tuesday that he will not allow the firms to reduce loan balances of struggling homeowners, frustrating the Obama administration as it looks for ways to boost a floundering economy.

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U.S. Economic Growth Slowed to 1.5% in Second Quarter

July 27, 2012
The Associated Press

The U.S. economy grew at an annual rate of just 1.5 percent from April through June, as Americans cut back sharply on spending. The slowdown in growth adds to worries that the economy could be stalling three years after the recession ended.

Foreclosure Filings Increase in 60% of Large U.S. Cities

July 25, 2012
Bloomberg

Foreclosure filings rose in almost 60 percent of large U.S. cities in the first half of 2012, indicating many areas will have more distressed homes on the market later this year, RealtyTrac Inc. reported.

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College Is a Debtor's Prison for the American Family

July 24, 2012
The Street

The U.S. higher education system is a pretty good business, as college costs are rising way ahead of the rate of inflation, and ahead of the ability of U.S. families to pay for a college education.

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Consumer Debt Decreases 14.6% to $12,986 in First Half of 2012

July 24, 2012
Marketwire

Consumer money resource Bills.com today released its America's Debt Report for the first half of 2012. The report reflected larger economic trends, with overall improvement but persistent areas of concern such as credit card spending and the number of accounts in collection.

Trust in Financial System Falls Back to 2009 Levels.

July 24, 2012
Wall Street Journal

Americans’ trust in the financial system dropped in June to the lowest point since the financial crisis, driven by waning faith in national banks. And that’s before the Libor scandal drew widespread attention in recent weeks.

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CFPB Says Students Victimized by ‘Subprime-Style’ Lending

July 20, 2012
Bloomberg

Students grew indebted and went into default at the hands of a “subprime-style” private loan market that contracted amid the 2008 financial crisis, a U.S. government report issued today concluded.

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Foreclosure Crisis Hits Older Americans Hard

July 19, 2012
Associated Press

More than 1.5 million older Americans already have lost their homes, with millions more at risk as the national housing crisis takes its toll on those who are among the worst positioned to weather the storm, a new AARP report says.

San Bernardino City Council Declares Fiscal Emergency, Votes to File Bankruptcy

July 19, 2012
CNN

The City Council of San Bernardino, California, declared a fiscal emergency ahead of a planned bankruptcy filing, a move that allows officials to bypass a 60-day mediation period with creditors that is mandated by the state.

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Years of Unraveling, Then Bankruptcy for a City

July 18, 2012
New York Times

This inland port on the San Joaquin River recently became the largest city in the country to declare bankruptcy, but evidence of its unraveling has been mounting for years.

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Capital One to Pay $210 Million for Deceptive Credit Card Practices

July 18, 2012
Washington Post

The government’s new consumer watchdog took its first enforcement action Wednesday by fining McLean-based Capital One Bank for deceiving millions of customers into buying costly and unneeded services when they signed up for credit cards.

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Student Debt Hits The Middle-Aged

July 17, 2012
Wall Street Journal

Student debt is rising sharply among all age groups, but middle-aged Americans appear to be struggling the most with payments, according to new data released Tuesday by the Federal Reserve Bank of New York.

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Bernanke: Economy Faces Dire Risk From Fiscal Cliff

July 17, 2012
National Journal

Federal Reserve Board Chairman Ben Bernanke delivered a bleak assessment of the U.S. economy on Tuesday, warning of dire risks surrounding the approaching fiscal cliff.

U.S. Bancorp Accused of Failing to Maintain Properties

July 16, 2012
Bloomberg

U.S. Bancorp (USB)’s U.S. Bank unit has become one of Los Angeles’s biggest slumlords by letting hundreds of foreclosed homes fall into disrepair, city officials said in a court filing.

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Letter From NACBA

July 16, 2012
National Association of Consumer Bankruptcy Attorneys

Attorney March is a member of NACBA, the National Association of Consumer Bankruptcy Attorneys. NACBA takes positions in bankruptcy cases that NACBA believes will assist bankruptcy attorneys nationwide, who represent individual and small business debtors. Mortgage lender GMAC Mortgage, which is the DOT lender on many houses in California and nationwide, recently filed bankruptcy, in the Bankruptcy Court for the Southern District of New York, because GMAC has not been profitable in recent years, due, in large part, to the high default rate in GMAC mortgage (DOT) loans. So that individual and small business debtors, and their bankruptcy attorneys, can take necessary actions AGAINST GMAC, in bankruptcy cases filed by those individuals and small businesses, NACBA has, for its member attorneys (such as attorney March) negotiated a nationwide relief from the bankruptcy stay, in the GMAC Mortgage bankruptcy case, so that individual and small business debtors will not be stayed, by the bankruptcy automatic stay in the GMAC Mortgage bankruptcy case, from objecting to GMAC proofs of claim filed by GMAC in the bankruptcy cases of those individual and small business debtors, and will not be stayed from seeking to "lienstrip" (turn from secured to unsecured) GMAC DOT loans which are completely "underwater" (i.e. have no equity to attach to, at all, because they are junior to a 1st DOT secured loan, and the amount owed to the 1st DOT loan exceeds the market value of the house).

Visa, MasterCard, Banks in $7.25 Billion Retail Settlement

July 13, 2012
Reuters

Visa Inc, MasterCard Inc and banks that issue their credit cards have agreed to a $7.25 billion settlement with U.S. retailers in a lawsuit over the fixing of credit and debit card fees in what could be the largest antitrust settlement in U.S. history.

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Visa, MasterCard to Pay $6 Billion to Settle Retailers; Lawsuit

July 13, 2012
Los Angeles Times

Visa Inc.and MasterCard Inc. agreed late Friday to pay retailers $6 billion to settle a price-fixing lawsuit that alleged they overcharged companies billions of dollars in credit-card transaction fees.

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Know Before You Owe: Introducing Our Proposed Mortgage Disclosure Forms

July 9, 2012
CFPB

This is the third post in a series on the Know Before You Owe project for simplifying mortgage disclosures. Last week, we explored the origins of the project and the process that brought us to this point. Today, we’re explaining the proposed rule we’re issuing to make mortgage disclosures more effective and easier to use.

Global Factory Indexes Beat Forecasts as Slumps Ease

July 2, 2012
Bloomberg

Manufacturing indexes from the euro region to the U.K. and Japan beat economists’ forecasts, suggesting contractions in factory production are easing.

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Bank of America Sued Over Force-Placed Insurance Costs

June 27, 2012
Bloomberg

Bank of America Corp. was sued in a Florida federal court by homeowners who allege the company overcharged them for so-called force-placed insurance.

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Stockton, Calif. to Take Up Bankruptcy Budget Plan

June 26, 2012
Reuters

Stockton, California was poised on Tuesday to take a major step toward becoming the largest U.S. city ever to file for bankruptcy after talks with its creditors on Monday at midnight.

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Slight Decline in Claims for U.S. Jobless Benefits

June 21, 2012
Reuters

The number of Americans filing new claims for unemployment benefits was little changed last week, according to government data on Thursday, suggesting that the labor market was still struggling.

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Stocks Move Higher on Hopes of Fed Action

June 19, 2012
Associated Press

Stocks rose sharply on Wall Street Tuesday as traders hoped that the Federal Reserve will come up with a plan to jumpstart the economy.

Why Mortgage Rates are So Low

June 18, 2012
Market Watch

Glimmers of hope in the housing market suggest a turnaround is near, with statistics showing stabilizing home prices and an increasing number of home sales.

U.S. Economic Outlook Worsens After Jobs Report

June 5, 2012
CBS News

(AP) WASHINGTON - The faltering U.S. job market has prompted economists to take a much dimmer view of the country's growth prospects. That's a shift from just a few weeks ago, when many were upgrading their forecasts.

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Housing Mismatch: Boomers Sell, Millennials Rent

June 4, 2012
The Fiscal Times

Christopher Habig, 25, and Anne Weingarten, 58, don’t know each other, but they represent two sides of a perplexing new problem that could roil the housing market in years to come. Back in the fall of 2009, Habig, a marketing consultant in Indianapolis, was on the verge of buying a home with savings and mortgage financing after graduating from Butler University.

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Wall Street Sinks on Jobs Data, Dow Negative for 2012

June 1, 2012
Reuters

NEW YORK (Reuters) - Stocks fell more than 2 percent on Friday, dragging the Dow into negative territory for the year after a dismal U.S. jobs report added to fears that Europe's spiraling debt crisis was dragging down the world economy.

Stocks Slammed as Dow Erases 2012 Gains

June 1, 2012
CNN Money

NEW YORK (CNN Money) -- Wall Street suffered its bloodiest day of the year Friday as U.S. stocks sank more than 2% following an ugly jobs report. The Dow erased all its gains for the year, and the S&P 500 and Nasdaq moved into correction territory, down more than 10% from the year's highs.

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U.S. Winds Down Longer Benefits for the Unemployed

May 28, 2012
The New York Times

Hundreds of thousands of out-of-work Americans are receiving their final unemployment checks sooner than they expected, even though Congress renewed extended benefits until the end of the year.

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HP’s Whitman to Announce Restructuring Plan Wednesday; 30,000 Jobs Targeted

May 17, 2012
All Things D

The daunting task of restructuring Hewlett-Packard will begin in earnest next Wednesday when the company reports its quarterly earnings.

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U.S. Home Ownership Rate Slides to 15-Year Low

April 30, 2012
Fox Business

The share of privately owned U.S. homes fell to a 15-year low in the first quarter, government data showed on Monday, suggesting that falling house prices are discouraging Americans from being homeowners.

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Federal Judge, ‘Like So Many Others,’ Files for Bankruptcy

April 25 ,2012
Wall Street Journal

Chief Justice John Roberts Jr., on more than one occasion, has urged Congress to pay federal judges more, pointing out that the robed ones have seen their salaries plummet over the years relative to those of other U.S. workers. Federal district judges make about $174,000 a year — just a shade more than the going rate for first-year associates at top law firms.

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Tax Refunds Being Used to Pay for Bankruptcy Filings

April 13, 2012
USA Today

More than 200,000 money-strapped households will use their tax refunds this year to pay for bankruptcy filing and legal fees, says a new study by the National Bureau of Economic Research.

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Geithner Says Fannie, Freddie Should Cut Some Principal

March 28, 2012
Bloomberg

U.S. Treasury Secretary Timothy F. Geithner told a U.S. Senate panel that he believes Fannie Mae and Freddie Mac should reduce principal on some home mortgages.

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New Foreclosures on Homes Fell in Fourth Quarter

March 28, 2012
Reuters

The number of new foreclosures on homes initiated by banks fell considerably in the fourth quarter of 2011 due to an emphasis on programs intended to keep borrowers in their houses and the effects of existing and anticipated settlements concerning foreclosure abuses.

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Bank of America Tests Rental Program as Alternative to Foreclosure

March 22, 2012
NY Times

Bank of America said Thursday that it would offer a small number of customers facing foreclosure the option to remain in their homes and rent the property instead. The program highlights how investors are increasingly interested in becoming landlords on troubled properties.

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Durbin Urges Private Student Loans Be Discharged in Bankruptcy

March 20, 2012
Bloomberg

Students who take out loans from private lenders to finance their education should have the same right to discharge their debt in bankruptcy that other borrowers enjoy, Illinois Senator Dick Durbin said today.

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Foreclosure Settlement With Banks Filed in Federal Court

March 12, 2012
Bloomberg

The $25 billion agreement with five banks to end federal and state probes into abusive foreclosure practices was filed in U.S. court in Washington, capping negotiations over claims of misconduct after the housing bust.

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Bank Officials Cited in Churn of Foreclosures

March 12, 2012
NY Times

Managers at major banks ignored widespread errors in the foreclosure process, in some cases instructing employees to adopt make-believe titles and speed documents through the system despite internal objections, according to a wide-ranging review by federal investigators.

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Bankruptcy's Spare Change

March 11, 2012
Wall Street Journal

Many companies that collapse under bankruptcy-court reorganization are leaving behind small pools of money - and no one knows what to do with them.

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Luxury Home Foreclosures Take Six Months Longer Than Cheapest Homes

February 28, 2012
The Huffington Post

If it's good to be king, it's not bad to be rich, especially when faced with foreclosure.

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Obama Budget: Price Tag for Wall Street Bailout Goes Up

February 13, 2012
Washington Post

The Obama administration has repeatedly boasted how the historic rescue of Wall Street will cost taxpayers far less than originally expected. But the budget proposal released Monday came with some unwelcome news: The price tag of the bailout is suddenly going up.

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$25B Settlement Reached Over Foreclosure Abuses

February 9, 2012
Associated Press

A landmark $25 billion settlement with the nation's top mortgage lenders was hailed by government officials Thursday as long-overdue relief for victims of foreclosure abuses. But consumer advocates countered that far too few people will benefit.

Analysis: Banks Largely Reserved for U.S. Mortgage Pact Cost

February 7, 2012
Reuters

As the nation's five largest mortgage lenders edge close to a $25 billion settlement over foreclosure abuses, it's becoming clear that the deal will have little or no impact on their future bottom lines.

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The Student Loan "Debt Bomb": America's Next Mortgage-Style Economic Crisis?

February 7, 2012
NACBA

Americans now owe more on student loans than on credit cards.

The amount of student borrowing crossed the $100 billion threshold for the first time in 2010 and total outstanding loans and exceeded $1 trillion for the first time last year.

Consumers Eventually Will Pull Back on the Reins

February 6, 2012
Wall Street Journal

Consumerus americanus is thriving once again in its natural habitat of shopping malls and cyberspace.

That's the message from the likes of Starbucks, J.C. Penney and Apple, which furnish the consumer with sustenance, clothing and not-so-crude implements.

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California May Join Multi-State Mortgage Settlement

February 5, 2012
Los Angeles Times

California has until Monday to share in a multi-state deal with banks to obtain mortgage relief and reforms. Atty. Gen. Kamala Harris, who walked away from talks last year, says the door remains open.

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The Principal Paydown Plan

February 3, 2012
National Association of Consumer Bankruptcy

Thanks to the good work of so many members, NACBA’s Principal Paydown Plan to help underwater homeowners in chapter 13 bankruptcy avoid foreclosure, has been endorsed by a substantial number of Members of Congress who in turn have pushed for action by the Federal Housing Finance Agency (FHFA) to implement the plan. In a series of private meetings and in letters to FHFA, Senators and Members of Congress have asked the FHFA to use its authority over Fannie Mae and Freddie Mac to require them to agree to the Principal Paydown Plan when proposed by a homeowner trying to save a home in chapter 13 bankruptcy.

Despite FHFA Director DeMarco’s initial positive comments about the Principal Paydown Plan, which he said struck him as “being responsible,” and a “credible way to address the crisis while recognizing various interests mortgaged properties,” he recently wrote to Congress informing them that the agency would not be implementing the Principal Paydown Plan. FHFA concluded that few GSE borrowers have filed for chapter 13 bankruptcy and are underwater and therefore the proposal would not be all that helpful. They did, however, commit to doing what they can to help eligible borrowers in bankruptcy get the HAMP modifications they qualify for.

While the FHFA response is disappointing and inadequate, and we believe wrong, we are gratified that the many Members of Congress who have pushed for this solution continue to be engaged and are looking for ways to get the Principal Paydown Plan implemented despite the FHFA’s position. These Members of Congress recognize, as so many of us do, that the foreclosure crisis is not going away anytime soon and so long as it continues, the nation will not enjoy the kind of recovery that is needed to stabilize the economy and get people back to work.

We hope you will join the Board of Directors and Legislative Committee in continuing to get the word out about the Principal Paydown Plan and to seek support for it. Our allies on and off Capitol Hill are committed to keeping up the push. We take some comfort in knowing that NACBA was among the first to sound the bell more than five years ago about the impending foreclosure crisis and to propose a widely embraced solution that would have helped minimize the damage that has been done to the economy. We were right then in proposing legislation to permit modification of mortgages in bankruptcy, an idea that again is gaining currency among policymakers, economists and others. The Principal Paydown Plan was designed to achieve the same desired result without engaging the same level of opposition to changes to the bankruptcy code.

We look forward to continuing to work with you to build support for the Principal Paydown Plan. Please contact either of us if you have questions or comments.

Obama Creates Unit With States to Investigate Mortgage Misconduct by Banks

January 25, 2012
Bloomberg

President Barack Obama’s mortgage investigation unit will probe bank conduct that created the housing bubble and bust, including the packaging of loans into securities, the New York Attorney General said.

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Time to Consider Mass Mortgage Refinancings

January 17, 2012
Washington Post

Main Street taxpayers have bailed out Wall Street. Now it’s time for Wall Street to return the favor by footing the bill to help millions of honorable Main Street borrowers pay lower interest rates on their mortgages, something that should have happened years ago. Wall Street giving back to Main Street — imagine that!

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