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

I was privileged to attend an insider’s breakfast briefing with guest speaker Congressman Ed Royce of the 40^th District a couple weeks ago. This event was hosted by the Fullerton Chamber of Commerce. When Congressman Royce spoke about the impact of economic reform and healthcare, as it relates to small business here in California, he mentioned that businesses were hoarding capital and not spending because of the uncertainty in Washington. We all know that the economic recovery is primarily dependent upon spending, but most Americans are still working on paying down their debt.   Adding to the lack of consumer spending is the national jobless rate holding at 9% and here in California, we rank third with 12.3% unemployment rate.

Ironically, as Mr. Royce was speaking, his colleagues in the Senate blocked a bill to aid small business. The problem with most bills though, is the cost of such legislation. We can all agree that government spending must end and the private sector needs to pick up the slack, but with political rhetoric at an all-time high and legislation costing trillions of dollars, paid for by cuts in Medicare and increased fees; the Congressman explained that this would have erected a new entitlement program.

Congressman Royce explained that Healthcare and taxes are the two major expenses to small business in America. The hoarding of capital by American businesses is due to the long range rule changes creating uncertainty in Washington. Congressman Royce explained, “We must eliminate uncertainty first, then small business will begin to spend capital.”  We need to eliminate our debts and the uncertainty in Washington, along with the toxic mortgages.  This is a marathon recovery, not a sprint to the economic finish line.

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I'm losing my voice over year, screaming from the mountain top.  I've been calling 'Bull' on the toxic securitized mortgages and explaining to my fellow Californians that we have all been blindsided into thinking that this ocean front real estate of ours will always increase; or bounce back sooner rather than later.  I don't know about you, but I'm sitting on at least $200,000 in negative equity. 

As you all probably know, I read a lot.  I also share with you here, my musings and information.  Here are some more tidbits for you homeowners to chew on.  First, remember when I posted, When Should You Walk Away From Your Mortgage, about the psychology of why people don't/won't strategically default?  It's time to get ruthless with our own personal finances; like the wealthy do.  If it's toxic, it's time to dump it, and deal with it legally.

In this morning's readings, I found Strategic Default's website where homeowners post their own stories.  I found Brad's story from there.  Brad happens to have his own website called You Walk Away and he provides a calculator that is intended to tell you how much savings you'll have by walking away from your underwater mortgage.  It's liberating to say the least.  Now, these sites talk about short sales and loan modifications, but as I've been screaming; if MERS is involved and named on your promissory note, then you're not getting a modification absent litigation.

When will you get off your high moral horse and get real?  I'm clueless on this one.  If your home mortgage is your only financial concern, then you may look to foreclosure or short sale as a solution; even bankruptcy can be a home saving device.  However, if you are dealing with more than just your home mortgage, it's high time you dealt with your debts as legally effective as Chrysler, GM, and AIG.  No, you can't get a bailout; but you can file Bankruptcy.  As my favorite bankruptcy guru, Max Gardner said in his recent post by Mandelman Matters, The Great Unwind and Final Redemption, "Praise the Lord and pass around those bankruptcy petitions.  Like now. Like yesterday."

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Last week, Yves Smith caused a stir with this post, "Fannie and Freddie Continue to Rely on Foreclosure Mills Despite Evidence of Fraud."  The 64 comments are worth a read, if anything to ferret out the boys from the men in terms of skill level in dealing with the legal issues.  Smith gives acknowledgment to O. Max Gardner, who is the nation's go-to bankruptcy litigation attorney and, I am proud to say that, I am a Lieutenant in his army.  So, what's all the scuttle butt about? 

Smith's post referred to another piece published by Mother Jones, "Fannie and Freddie's Foreclosure Barons," which provides a peek inside the shady document fabrication operations to cover up past mistakes in the mortgage industry and post foreclosure clean-up.  What a mess.

Looking at the securitization issues from a California standpoint, we have both federal and state law to contend with.  From a bankruptcy position, here in the Central District we have the In re Foreclosure cases , In re Hwang, In re Walker, and In re Vargas.  Since the mortgage follows the note, we need a complete, and unbroken chain of custody of the note and adherence to the California Commercial Code.  We are arguing the Creditor has no standing and even if they did, there are major computation errors in their claims. The fight goes on for now.  Results may vary in California.  Side effects include general frustration; nausea; possible foreclosure; and guilt for not paying your mortgage. 

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Let's face it, we are in tough financial times throughout our country.  There are many options to dealing with money issues.  Along with tough financial times comes stress, even depression, anxiety and fear.  Our emotions are tied very closely to our relationship with money.  Here are a few tools that just might help you gain some perspective.

Take a look at this WebMD article, The Debt-Stress Connection and notice where you might be in terms of your stress level about your current financial situation.  Your life is much too precious to lose over your debts.  It's important to start right where you are and decide to take action; whatever action is necessary to change the outcome. What is the worst that could happen to you financially?  Most people don't answer the question with any health issues, but that's what you're facing if you remain paralyzed about the situation.

Take action and get help.  I'm a big fan of the Dave Ramsey program for those of you that have the ability to climb out of debt without bankruptcy.  Learn about financial planning and get yourself on a budget today.  Have a reality check with your doctor, your tax professional, financial planner and your bankruptcy lawyer.

Vision your life in five years.  What does your life in the future look like?  Where will you live?  How will you provide for your self?  Your family?  Imagine what that looks like and then decide the path that is right for you to get there.  For some, it's creating a budget and sticking to it.  For others, it means filing for bankruptcy. The sooner you commit to your future, the sooner you'll feel better.

Remember that financial responsibility requires that we make some tough choices in our lives.  Filing bankruptcy is not the end, but a process toward a new beginning.

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Homeowners in California have been fighting an uphill battle to unwind wrongful foreclosures and have been getting mixed results in state courts all over California.  I have always said that it's easier to stop a foreclosure by filing bankruptcy than  it is to try to reverse a wrongful foreclosure in state court once it's been sold or reverts back to the bank. 

Mortgage Electronic Registration Systems, Inc., fondly known as 'MERS,' has been named on more than 80% of all California mortgages, but who are they?  MERS came onto the scene back in the 90's, created by the mortgage banking industry to streamline the mortgage process by using electronic commerce to eliminate paper.  What they really did was cheat many local governments out of recordation fees and failed to properly document the assignments and transfers of the sub-prime mortgages as they were allegedly turned into securitized investments.

Mandelman, over at Mandelman Matters, recently posted this article entitled, California Court Rules:  MERS Cant' Foreclose, Citibank Can't Collect.  The court case he cited, In re Walker, 2:10-21656-E-11 is a Chapter 11 case where MERS, acting solely as 'Nominee' assigned a Deed of Trust to the Creditor.  The Court was not swayed by the assignment and held that the Creditor had not demonstrated any document to support its claim that it has standing to enforce the promissory note and deed of trust.

MERS is not a real party in interest and has no right to enforce, assign, or foreclose on any mortgage note, even though their named on the note as a 'nominee' and 'beneficiary.'  So, if you look at your mortgage note and see MERS listed as a nominee and beneficiary, chances are pretty good that your mortgage has been securitized and any attempt to foreclose by the loan servicer, or any entity for that matter is probably unlawful.  Call your lawyer and take action to stop the foreclosure and save your home.

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