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Posted by David Leibowitz on February 27th, 2009 in Uncategorized
Yale Professor Alan Schwartz doesn’t like the idea of mortgage modifications in bankruptcy. It doesn’t sound to me as though he knows much about mortgages or bankruptcy.
Here’s my rebuttal. I hope that the Times publishes it. If they don’t you can see it here.
Professor Schwartz’ view from Yale in opposition to allowing bankruptcy judges to modify residential mortgages in chapter 13 reflects a severe disconnect with conditions on the ground.
Bankruptcy judges enthusiastically support this proposal. They have no fear of their courts being swamped. The judges have considerable experience in consumer cases. Bankruptcy judges encourage streamlined and efficient hearings. Moreover, in bankruptcy, most business and negotiations occur outside of court. When stakeholders know the rules of the road, they come to resolution promptly, whether on the negotiation of a big chapter 11 plan or the modification of car loans in chapter 13 cases – something bankruptcy judges have been doing for years.
The professor’s hyperbolic fear of millions of new mortgage cases in bankruptcy fails to recognize that mortgage modifications in bankruptcy court would only be available to homeowners. They would have to be able to afford a chapter 13 plan for five years. Lenders would share in any appreciation for five years.
People who could not afford a sustainable mortgage will continue to lose their homes to foreclosure. But people who can sustain their mortgages in chapter 13 will set a floor from which the residential market will build. Who is more motivated to “buy” a home in foreclosure than the person already living in it? Foreclosure sales lead to further depression of the real estate market not to mention further depression of the values of the homes in the surrounding neighborhood.
Most disturbing is Professor Schwartz’ rather arrogant thought that business cases are entitled to greater priority in the bankruptcy court than those of consumers. Well over 90% of all bankruptcy cases are filed by consumers. Business bankruptcy may get a lot of news but consumer bankruptcy is what bankruptcy judges and most bankruptcy lawyers deal with day in and day out, especially in places other than New York and Wilmington.
The professor’s suggestion that debtors’ attorneys would be outmatched at a valuation hearing by creditors’ attorneys is insulting to the thousands of competent and capable attorneys who represent debtors day in and day out. Under the Bankruptcy Abuse Prevention Consumer Protection Act, these attorneys literally must vouch for the accuracy of data in their clients’ papers. They become quite familiar with property values in the areas they serve. A residential appraisal costs about $300. Dueling appraisals will be introduced and the judge will decide. It’s not hard.
And the professor doesn’t stop at belittling debtors’ attorneys. He also goes on to insult bankruptcy judges – saying that they are not experts in valuation. Dear professor, that’s their job. They’ve been doing it for years. The Bankruptcy Code requires valuation of property to determine the amount of a secured claim and has for a very long time.
What the professor fears and what the banks and other lenders fear is that they might actually have to deal with borrowers in foreclosure rather than putting them in limbo in voice mail hell while their foreclosure team inexorably moves forward to put them in the street.
Posted by David Leibowitz on February 23rd, 2009 in Foreclosure - Saving Your Home
The Chicago Tribune reported on February 22, 2009 that people are fighting back against their mortgage companies in foreclosure court. It’s hard to win. But it is possible to gain valuable time.
Lakelaw has been at the forefront in fighting mortgage foreclosure. And we have now joined forces with experienced Chicago attorney, Arnold Kaplan to aid us and you in this fight. Arnie is a veteran in the area of mortgage foreclosures. He used to represent lenders and knows all their strategies. As a result, he’s developed, with us, very effective counterstategies to help homeowners fight back.
We can’t promise you that you will win. But we will promise that you’ll get a fair shake in court and informed and aggressive representation with the lender.
Watch our website for more and new information about Arnie and his group as it becomes integrated with our Lakelaw team.
Posted by David Leibowitz on February 22nd, 2009 in Uncategorized
Most people struggle to pay their mortgages. They do so even if their homes have lost value — even if they are “upside-down” on their mortgage. Why? They can afford it. They like their home. If they abandoned their home, they would owe big money to the lender. They stand to lose a lot in bankruptcy. We at Lakelaw sympathize with people who can pay and do against all odds. We understand. We’ve lost money on our home as well and keep paying anyway to protect what equity remains.
Here’s the point. We all suffer because of the collapse of the housing market. My neighbors problems cause my home goes down in value. So I want, and we should all want, a normal market in residential real estate.
In the meantime, we are on top of the rapidly changing mortgage modification scene. We know how to help you and we will.
President Obama’s plan doesn’t save every homeowner. It will only save some. Check out the Treasury Fact Sheet. And others will only get help for a period of five years. The point of the plan is to put some brakes in the free-fall of the housing market. The mortgage modification amendments to the bankruptcy code won’t be a permanent thing either. It will apply only to current mortgages, and according to President Obama, only those made in the “past few years.” It won’t apply to mortgages obtained by fraud. It won’t “wipe out” the mortgage either. It will convert some of the mortgage to unsecured debt which must be paid in a chapter 13 plan over a period of up to 5 years. And as it presently stands, the mortgage modification bill would allow a lender to share in any appreciation that the homeowner might be fortunate enough to enjoy over the next five years.
We hear lots of complaints about “moral hazard” and “unfair to those who pay.” But what we don’t hear is any constructive solution. Doing nothing and “letting the market work” will result in staggering deflation, paralysis of the real estate market, and millions of homeowners with little or no incentive to pay a staggering debt on a house which no longer has significant value.
In the meantime, we are on top of the mortgage modification scene. We know how to help you and we will.
Posted by David Leibowitz on February 22nd, 2009 in Foreclosure - Saving Your Home
John Leland, in the New York Times, wrote and interesting article entitled “Swindlers Find Growing Market in Foreclosures.” Every day, I meet people in Illinois and Wisconsin just like you, so fearful that you will soon lose your home to foreclosure. You bring me the piles of letters you receive from all kinds of people who say they will “help” you.
In most cases, they only want to take money from you. They won’t help you at all.
Here are some facts.
If you get a summons or complaint from the court – it’s not a “letter.” It is a legal demand in court. You can’t ignore this. You have to do something in court. You need a laywer to do this who specializes in mortgage foreclosure defense.
You can try to make a modification agreement with a lender. You don’t need a consultant to do this. There are Not-For-Profit agencies in your community who can help you.\
The US Department of Housing and Urban Development has made a list of approved agencies to call:
Here’s a link to the Illinois list .
In Illinois, all homeowners have a “Bill of Rights.” Check them out.
Lakelaw represents people defending their homes against mortgage rescue fraud in Illinois and Wisconsin
Posted by David Leibowitz on February 22nd, 2009 in Uncategorized
Lakeblawg doesn’t usually re-post from other places. However, this video is extremely well done, if at times over-simplified. Lakelaw does not agree with the 9/11 connection that the video makes.
However, we agree that sustained low interest rates set by the Federal Reserve post-9/11 encouraged bankers and investors to take inordinate risks. Further, fraud, greed and indifference of mortgage lenders in mortgage loan underwriting has to be noted. Finally, for the life of us, we will never understand how bond rating agencies decided that subprime mortgages could metamorphose into AAA securities.
With that in mind, check out this video:
The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.
Posted by David Leibowitz on February 19th, 2009 in Bankruptcy
How do I know I need to file bankruptcy?
Here are some of the warning signs:
Get help. We can help. We’ve helped thousands. We can help you. Lakelaw represents people in bankruptcy cases.
Posted by David Leibowitz on February 16th, 2009 in Bankruptcy
Bankruptcy is a hard word to spell. It’s hard word to type. Some of the forms we have seen include:
Not only that, it’s a hard word to spell in Spanish too. The correct spelling is bancarrota. And in some parts of the Spanish speaking world, it’s quiebra or quiebras. Of course, in Italian, it’s bancarotta. Some of the common misspellings in Spanish are:
No matter how you spell it, Lakelaw helps people and business file bankrutcpy — oops bankruptcy — cases to help them solve their financial problems.
Posted by David Leibowitz on February 10th, 2009 in Bankruptcy, Chapter 11, Chapter 11
Chapter 11 is for people, not just corporations. If a person does not pass the “means test”, chapter 7 is out of the question. And if the person’s debts, either secured or unsecured are above the limit for chapter 13, as is often the case, chapter 13 is not allowed either. These limits vary with inflation but now are something in excess of $300,000 of unsecured debt and something in excess of $1.1 million in secured debt. Business debtors might file a chapter 7 case. However, what if an individual in business wants to get bankruptcy relief and has property he or she would like to keep, like, for example, a sole propriertorship or an owner-operated bed and breakfast involving some valuable real estate?
Chapter 11 is the answer for this type of debtor.
Some aspects of chapter 11 for people are similar to chapter 13.
There are differences as well:
In these times, it is important to seek counsel from those with experience. We at Lakelaw have handled chapter 11 cases for corporations and individuals under the Bankruptcy Code for over 35 years. We can put our experience to work for you.
Posted by David Leibowitz on February 10th, 2009 in Bankruptcy, Chapter 13, Chapter 7, Foreclosure - Saving Your Home
Clients ask “can I keep my house if I file for bankruptcy” more frequently than any other question. The answer depends on many factors.
So the answer is, “Yes, you can often keep your house – but not always. And it doesn’t always make sense for you to do so.”
Things could change under a bill now being considered in Congress. Under the “Helping Families Save their Home” Act, HR 200, people with mortgages greater than the value of their home, facing foreclosure, will be able to modify their loans in chapter 13 cases. There are more than a few conditions. So called “cram-downs” of mortgages in chapter 13 might face resistance from lenders and might turn out to be pretty expensive. But it might be a lot better than the alternative of losing your home altogether.
When thinking about bankruptcy, particularly in these changing times, look for legal counsel from people at the front-lines of the bankruptcy practice. Like the people from Lakelaw.
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Posted by David Leibowitz on February 8th, 2009 in Bankruptcy, Chapter 7, Foreclosure - Saving Your Home
If you own a condo and it’s in foreclosure, you may be facing bankruptcy. This is particularly true if your mortgage balance is now much greater than the value of your condo. You may find that it is cheaper to rent somewhere else than to keep paying on the mortgage after bankruptcy.
If your condo is in foreclosure, however, you have to be very careful about the timing of your bankruptcy. This is because your bankruptcy will result in a discharge only of debts which existed at the time you filed your bankruptcy case. Condo associations are strapped for cash. You remain the owner of your condo until the mortgage lender finishes the foreclosure and actually gets a deed to your property. So you could remain liable for condo assessments, fees and even special assessments after the filing date of your bankruptcy.
So, it’s in your interest to live in the condo until the foreclosure is complete. This way you get the benefit of your condominium assessments. You prevent damage to the unit. You limit your potential liability to the condominium association when you can least afford it.
Lakelaw helps people file bankruptcy and defends people against mortgage foreclosure.
Illinois Lawyer David P. Leibowitz handles business law, estate planning, probate, asset
protection, consumer bankruptcy, business bankruptcy, real estate, elder law, guardianships, identity theft, consumer protection, commercial collections and foreclosure defense matters from Chicago to Milwaukee with offices in Chicago, Skokie, Waukegan, Milwaukee and Kenosha.
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