Los Angeles Bankruptcy Law Monitor : Los Angeles Bankruptcy Lawyer & Attorney : Christine Wilton Law Firm : Southern California Chapter 13 & Chapter 7 Bankruptcy, Foreclosure

Are you one of the many Americans caught up in the viscious grip of payday loans?  It seems, these days, that payday loan shops are replacing Starbucks on every corner.  It's the new business to be in with this depressed economy. Here's what happens when you obtain payday loans in your rup-up to filing for bankruptcy.

If you have presented a post-dated check as 'security' for the loan, when you file for bankruptcy, the payday lender will simply cash the check and hang on to the funds.  The lender can do this under 11 U.S.C. Sectioin 362(b)(11), which provides that the automatic stay does not apply to the presentment of a negotiable instrument and the giving of notice and protesting dishonor of such an instrument.

However, the overconfidence on the part of these payday lenders comes with a price.  One decision, In re Thomas, 311 B.R. 75 (W.D. Mo. 2004) provides that a post-petition transfer of funds out of the account by presentment of post-dated payday loan check could be avoided pursuant to 11 U.S.C. Section 549(a).  This means that you could bring an action to recover the funds as an unauthorized post-petition transfer.  Unfortunately, such actions are more costly than the amount transferred; which is why most debtors decline to bring an action under Section 549.

Ask your bankruptcy lawyer about their experience with repeat offenses by payday lenders because the creditor's willful violation of the automatic stay does give rise to actual damages, costs, and attorney fees; even punitive damages in some cases.  Don't think that these payday lenders have the upper hand just because they have your check in their hands.

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California’s mortgage crisis is out of control. The sub-prime lending didn’t end until late 2007 and into early 2008 when the economy collapsed. What further frustrates our sunshine state’s mortgage problems is that we were sold Jumbo loans due to our high property values. A Jumbo loan is a mortgage loan in an amount above conventional conforming loan limits and as of 2010, the limit is $417,000 according to Wikipedia.org. So, many California homeowners are in default on their primary mortgage because their “teaser” rate has ended and they’re now faced with increased interest rates and forced to pay principal and interest on a mortgage that they could not afford, with a jumbo loan that the lender is unwilling to modify.

Homeowners are being led down the primrose path of a modification offer by the lender only as a courtesy due to the HAMP program’s rules and California Law that requires the lender to contact the borrower and attempt a workout. The law, however, does not require a mandatory workout and the sub-prime lender, loan servicers, and asset-backed securitized mortgages will always be refused a modification of their mortgage because the investors don’t want it.

It may seem like we’re in a desperate situation here in California, and that’s why so many scams are cropping up. Recently, I’ve even been marketed to by these forensic mortgage loan audit scammers. They’re a new twist on foreclosure rescue fraud, so be alert to these offers. The envelope looks legitimate, but it’s nothing more than a cleverly disguised marketing piece. They generally target those homeowners in foreclosure, but they’re now starting to target the potential predatory loans too.

If you’re looking for help, avoid:

1. anyone offering guarantees;
2. instructs you not to contact your lender, lawyer, or housing counselor;
3. collects a fee up front; encourages you to lease your home so you can buy it back over time;
4. recommends that you make your mortgage payments to someone other than directly to the lender or loan servicer;
5. offers to buy your home for cash at an amount less than market value; or
6. pressures you to sign papers you haven’t had a chance to read thoroughly or don’t understand. Get Help.

You can always check out the Federal Trade Commission [FTC], the nation’s consumer protection agency for current information and scams to avoid. Contact your lender or loan servicer immediately when you fall behind on your payments. You can also get FREE advice from housing counseling agencies certified by HUD by calling 1-888-995-HOPE. Remember that filing bankruptcy will LEGALLY STOP A FORECLOSURE through the Automatic Stay, 11 U.S.C. §362.

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"If anything good should ever happen in the foreclosure crisis, we should all celebrate now," says Mandelman Matters.  His latest article entitled, HAMP. It's a Real Class ACTion, has me doing the happy dance as I read about the class action law suit that was filed by Boston-based nonprofit, and extremely formidable National Consumer Law Center ("NCLC"). 

NCLC, along with co-counsel has brought four class action lawsuits on behalf of residents of Massachusetts that challenge the failure of Wells Fargo Bank, Bank of America, J.P. Morgan Chase Bank and IndyMac Mortgage Servicers/One West Bank to honor their agreements with borrowers to modify mortgages and prevent foreclosures under the HAMP Program. Get Excited because this is the first step toward national reform!  It may start in Massachusetts, but never fear, California will catch the wave and you can take my words, and Mr. Thompson's to the bank. 

HELP NCLC HOLD THE BANKS ACCOUNTABLE FOR WHAT THEY'VE DONE UNDER HAMP:

                                                                 DONATE TO NCLC!

And, in the “Comments” box on the donate form please type in “Mandelman Matters," because he cared enough to share this priceless update with all of us and I'm only mirroring his sentiment and bringing it to the west coast.  Your Local Bankruptcy Lawyers appreciate the support.

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American homeowners are still in trouble with mounting mortgage defaults and depressed property values. The lenders and loan servicing companies are non-responsive to their customers and HAMP has had an embarrassing 20% success rate, which leaves homeowners high and dry when it comes to help with their mortgages and distressed properties. Getting out from under your upside down property through a short sale starts to look pretty good in comparison to either a foreclosure or bankruptcy on your credit report; right?

Back on April, Carry Bay highlighted the dark side of short sales in her article, Short Sales…A Breeding Ground for Fraud? Since short sales are gaining in popularity and I continue to respond to questions from my clients about their options; it’s important to be on the lookout for fraud. 

Speaking of fraud, the next time you’re approached with an offer to short sell your property consider this: The only people that are benefiting from the short sale of your home are the mortgage companies and the real estate broker who gets a commission from the sale. In addition, you would be left holding the bag, long after the deal is done, if the transaction is not conducted properly. 

This article, A Short Sale May Not Mean You’re Home Free, warns of the problems that crop up long after you move out. Not only could you be liable for deficiencies, especially if you held a second mortgage or home equity line of credit on the house, but your credit score may be in worse shape, if the information is reported incorrectly.  Don’t just let your Dream of homeownership slip away without knowing your options and your rights.

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On May 16, 2010 Max Gardner published a blog article entitled, Fake Documents and Fraud on the Court.  We are in the midst of a national foreclosure crisis and debtor's counsel throughout the nation are finding themselves defending their clients, not just against losing their home, but losing their home because their lender manufactured fake documents.  We should all be outraged.

Apparently Florida is leading the nation in getting the word out about these fake documents being submitted in our Courts.   So, what can you do?  Don't just stand by and lose your home because you've been served a piece of paper that looks legitimate.  Have your local bankruptcy lawyer review these documents and your loan documents with you. 

Your first step in defending your American Dream of homeownership should be to send a Qualified Written Request to the lender to determine who owns your note.  However, this letter alone will not stop any foreclosure proceeding.  Filing a Chapter 13 bankruptcy will legally stop your foreclosure and give you breathing room to make up for any payment arrears, while your attorney goes after your lender on your behalf.

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