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Green Tree to Pay $48 Million in Borrower Restitution and $15 Million Fine for Servicing Failures The Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) took action against Green Tree Servicing, LLC, for mistreating mortgage borrowers who were trying to save their homes from foreclosure. The mortgage servicer failed to honor modifications for loans transferred from other servicers, demanded payments before providing loss mitigation options, delayed decisions on short sales, and harassed and threatened overdue borrowers. Green Tree has agreed to pay $48 million in restitution to victims, and a $15 million civil money penalty for its illegal actions. “Green Tree failed consumers who were struggling by prioritizing collecting payments over helping homeowners,” said CFPB Director Richard Cordray. “When homeowners in distress had their mortgages transferred to Green Tree, their previous foreclosure relief plans were not maintained. We are holding Green Tree accountable for its unlawful conduct.” • Demanded payments before providing loss mitigation options. • Failed to honor in-process modifications. • Delayed short sales • Harassed and threatened overdue borrowers • Used deceptive tactics to charge consumers convenience fees.
2 weeks 2 days ago
According to a publication of National Association of Student Loan Administrators “NASFAA” the options for students and guarantors of student loans to discharge those loans are slowing expanding.  Only time will tell how this will play out for students and guarantors. GEN-15-13: Undue Hardship Discharge of Title IV Loans in Bankruptcy Adversary Proceedings  Publication Date: July 7, 2015 DCL ID: GEN-15-13 Subject: Undue Hardship Discharge of Title IV Loans in Bankruptcy Adversary Proceedings Summary: This letter provides guidance to guarantors and educational institutions participating in the Federal Family Education Loan Program (FFELP) and Federal Perkins Loan Program (Perkins), hereinafter “holder[s],” as they continue to implement U.S. Department of Education (Department or Education) regulations (at 34 C.F.R. § 682.402(i)(1)(ii) & (iii)) (FFELP) and 34 C.F.R. § 674.49(c)(Perkins)), which govern their actions in defending bankruptcy adversary proceedings seeking discharge of student loans authorized by Title IV of the Higher Education Act of 1965, as amended (hereinafter Title IV), on the basis that excepting the loans from discharge would impose undue hardship upon the borrowers. For more information, please see the attached PDF file for Dear Colleague Letter GEN-15-13. Attachments/Enclosures:
2 weeks 2 days ago
Chapter 7 is not something that you can dip your toe into in order to check the temperature of the water.  It is something that you jump into and can only be rescued from it if you show cause”  In re Dreamstreet, 221, B.R. 724 (Bankr. W.D. Tex. 1998) At least once a week I hear a report of someone filing bankruptcy and then trying to get out because they do not like the way things are going.  You can see from the quote above that this is not so simple.  Only a judge can release you from a chapter 7, and then only after you show good cause.  How hard is it to show “good cause”, some courts are not inclined to allow a debtor to dismiss their chapter 7, other courts are more lenient.  Why take that chance? Talk to an experienced bankruptcy attorney who will give you proper advice about the challenges and rewards of bankruptcy. In the medical arena this would be similar to starting your open heart surgery only to have you try to leave the operating table halfway through the surgery.  Perhaps you should think about the surgery before laying down on the operating table. I know this is a harsh sentiment, but bankruptcy, like open heart surgery, should not be taken lightly.  Please talk to an experienced bankruptcy lawyer, or two, before ever taking that first step off the cliff.
2 weeks 3 days ago
I keep encountering posts on internet bankruptcy boards from individuals who have “filled out the means test” and then proceed to announce their conclusions. Given the uncertainties in the legal community about how to apply the means best and the think and re-think I engage in preparing Form 22, I can’t imagine a non lawyer learning anything reliable from trying to do this themselves. The tricky issues include how to deal with income from non filing spouses; from roommates or extended family member; and how to handle business expenses for the self employed. (One bankruptcy appellate panel recently decided that the judges who drew up the form did it wrong!) Then there is the dispute on the deduction side about operating expenses for paid for cars; operating allowances for older cars; debts associated with property you’re surrendering, and just what part of your telecommunication expenses go on the form. I cringe when I ask a client to sign this form, as they cannot possibly validate all of the entries on the form.
2 weeks 4 days ago
It’s not the foreclosing creditor that really threaten California homeowners. It’s the forces that follow foreclosure. The junior lender and the tax man can deliver  truly punishing blows to a family losing a home. Cut-off Junior Lienholders Californians enjoy the protection of the one action rule governing foreclosures.
A creditor who conducts a non judicial foreclosure of its security interest cannot collect anything more than the property it forecloses on.
Foreclosure is, as lawyers say, an election of remedies. When the lender chooses to foreclose, it gives up the right to pursue the borrower for anything more. But, the typical foreclosure sale destroys all liens on the property that are junior (inferior) to the foreclosing creditor. The HELOC lender, the second deed of trust, the SBA loan are rendered unsecured by the sale. Even though they no longer have a lien on the foreclosed property, those cut off lienholders CAN sue you for what’s owed on the debt. The exception is the California purchase money rule:  If the junior lien secured a loan used to acquire a property you used as your home when you bought it, the lender cannot pursue you personally.  The limitation on purchase money lenders suing you personally is often called the “antideficiency” statute.
2 weeks 4 days ago
Nice piece in Time Magazine on the CFPB here

Read More from: Credit Slips

2 weeks 4 days ago
The Sixth Circuit Court of Appeals issued a new FDCPA opinion this week affirming dismissal for failing to state a claim but remanding to allow a plaintiff to amend his complaint against a law firm for threatening or misleading statements the firm allegedly made in a collection letter. In Walker v. Shermeta, Adams, Von Allmen, PC, 2015 U.S. App. LEXIS 14200 (6th Cir. Aug. 10, 2015) (not recommended for full-text publication), the defendant was a law firm tasked with collecting on overdue student loan accounts.  One of the letters the firm mailed to the plaintiff stated that interest and other charges “may” continue to accrue, a statement the plaintiff alleged was deceptive because the firm did not have the legal right to add interest or other charges. Relying on a reported Seventh Circuit case, Taylor v. Cavalry Inv., L.L.C., 365 F.3d 572 (7th Cir. 2004), the district court dismissed the claim, ruling that “[e]ven if Defendants cannot lawfully charge interest and other fees on behalf of [the creditor], the statement that interest and other fees may be charged is not (1) a threat or (2) false and misleading.”

Read More from: Creditors' Sidebar

2 weeks 5 days ago
50 Cent doesn’t want you sippin’ Bacardi like it’s your birthday anymore. Instead, the rapper would like you to drink Effen vodka in da club. And no, it’s not because he doesn’t give an Effen it’s not your birthday. It’s because as a spokesman for the Dutch brand he gets a cut. However, the details of that endorsement deal could remain a secret in his bankruptcy case after a request by lawyers to keep the documents private.
50 Cent autographed bottles of Effen vodka at a Philadelphia liquor store on July 22.
Ricky Fitchett/Zuma Press
As a spokesman for the vodka, Mr. Jackson has appeared in print advertisements with the black-and-white bottle. And in April, Mr. Jackson and his G-Unit crew’s appearance at Bronx liquor store helped the stores sell 277 gallons of the vodka, according to the Syracuse Post-Standard.

Read More from: WSJ.com: Bankruptcy Beat

2 weeks 5 days ago
Lien stripping is a topic that has frequently been in the bankruptcy news this summer in light of the Supreme Court’s recent decision in Bank of America v. Caulkett.  Post-Caulkett, we here at the Weil Bankruptcy Blog queried whether the Dewsnup rule that liens could ride through a bankruptcy was ripe to be overruled. Last week we discussed the Second Circuit’s decision to embrace that principle.  This week, we bring you two other additions to the lien-stripping landscape, Boukatch v. Midfirst (In re Boukatch) and
2 weeks 5 days ago
On August 14, 2015, the Judicial Conference Advisory Committees on Bankruptcy and Evidence Rules published proposed amendments to their respective rules, and requested that the proposals be circulated to the bench, bar, and public for comment. The proposed amendments, rules committee reports explaining the proposed changes, and instructions on how to submit comments are posted on uscourts.gov. The public comment period ends February 16, 2016.
2 weeks 5 days ago
Energy Future Holdings Corp. on Tuesday will ask the bankruptcy court to grant initial approval of its restructuring deal, allowing it to begin to poll creditors and move a step closer to exiting chapter 11. The Dallas energy company’s restructuring plan is built around the $12.1 billion sale of its stake in Oncor, its cash-generating, regulated transmission business, to investors including Hunt Consolidated Inc. and junior creditors from one of its two main divisions, the so-called “T-side” of the company. The plan has been met with criticism from unsecured creditors from Energy Future’s other main division, the “E-side,” who said the deal is no more than a “free option” to buy Oncor that leaves E-side creditors to bear the risk if the deal fails. Patriot Coal Corp. is slated on Tuesday to ask for a similar preliminary court approval of its own contested bankruptcy plan. The company is asking the court to allow it to send the deal—built around a sale of the bulk of its operations to Blackhawk Mining, subject to a court-overseen auction—to a creditor vote as well.

Read More from: WSJ.com: Bankruptcy Beat

2 weeks 5 days ago
In 1979, mortgage bankers worried that they could be undercut by "sleeping giants" like Merrill Lynch, Sears Roebuck and what was then called Master Charge.

Read More from: BankThink

2 weeks 5 days ago
One of the drags on the ability of Spain's economy to recover from the financial crisis of 2007-2009 was the lack of a mechanism for consumers to obtain relief from the debts they ran up in the years leading up to the crisis, debts that were mainly incurred in the form of residential mortgages incurred in the housing boom that paralleled the trajectory of the US's housing boom in those years. As Spain had no meaningful procedure for individuals to obtain debt relief, it had no method to free up post-crisis wages and salaries from the legacy debt of pre-crisis mortgage debt.  This not only dampened overall demand but had the secondary effect of weighing down the Spanish financial system, in a manner very similar to the Japanese banking system a generation earlier, with "zombie" loans, that were neither collectible in accordance with their terms, nor dischargeable, and not susceptible to robust valuation as they lingered on financial institution's balance sheets, given the uncertainty surrounding the prospects for ultimate recovery.Slowly, Spain's government, led by the center-right Partido Popular that replaced the Socialist coalition that governed into the crisis era, has instituted measures to facilitate consumer debt relief for the first time.

Read More from: Necessary and Proper

2 weeks 5 days ago
Receiving Wide Coverage ... Goldman Goes Retail: Goldman Sachs is getting a bundle of deposits from General Electric's GE Capital castoff. Goldman will acquire $8 billion of online deposit accounts and $8 billion of brokered certificates of deposit. The GE bank that Goldman is buying does not require a minimum balance for online savings accounts; and it boasts 140,000 retail customers. ...

Read More from: BankThink

2 weeks 5 days ago
If the headline drew you in, like the Geico gecko, you can complain you’ve been duped. In bankruptcy, you disclose everything. Period. Disclosure is the price of the bankruptcy discharge. Shortchange the system by leaving out inconvenient facts and you risk both the omitted asset and the discharge. A false oath on the bankruptcy papers or transfers intended to conceal assets from creditors are each grounds on which the discharge of all of your debts can be denied, while the trustee recovers and sells the assets. It’s nasty and comes at a very high price. Tell the whole truth The problem of incomplete bankruptcy schedules is not so much an intention to conceal that leads to omissions of assets.  It’s  the filer’s failure to take disclosure seriously. People ready to file bankruptcy don’t want to read the questionnaire that prompts them for various kinds of assets they might have. They don’t commit to thinking about how this question might apply to their situation. Or they assume because an asset has little market value, it’s excluded from the schedules. Not so.  The schedules don’t ask for your significant assets or things you have with value;  they ask that you list what you own.
2 weeks 5 days ago
Optim Energy LLC will pay Blackstone Group LP $5 million to settle their fight in the Texas power-plant operator’s bankruptcy case in exchange for Blackstone dropping its appeal of Optim’s court-approved plan to exit bankruptcy. Read the Daily Bankruptcy Report story in The Wall Street Journal. The Journal takes a long look at Donald Trump’s lucrative relationship with ACN Inc., a multilevel marketing firm that has paid him millions while weathering regulatory investigations in three countries. Ocean driller Hercules Offshore Inc., the latest casualty of plunging oil prices, filed for chapter 11 bankruptcy protection on Thursday to implement a $1.2 billion debt-for-equity swap with its bondholders. Read the DBR story in the Journal. The Tulsa World writes Samson Resources could file for Chapter 11 bankruptcy before a substantial interest payment comes due Saturday.

Read More from: WSJ.com: Bankruptcy Beat

2 weeks 5 days ago
The Consumer Financial Protection Bureau (CFPB) took action against Residential Credit Solutions, Inc. for blocking consumers’ attempts to save their homes from foreclosure. The mortgage servicer failed to honor modifications for loans transferred from other servicers, treated consumers as if they were in default when they weren’t, sent consumers escrow statements falsely claiming they were due a refund, and forced consumers to waive their rights in order to get a repayment plan. Residential Credit Solutions has agreed to pay $1.5 million in restitution to victims and a $100,000 civil money penalty for its illegal actions. “By failing to honor loan modifications already in place, Residential Credit Solutions put consumers through more headaches but in some cases cost consumers their homes,” said CFPB Director Richard Cordray. “Residential Credit Solutions must now compensate its victims $1.5 million as a result of our action.”
  • Failed to honor in-process modifications
  • Provided incorrect information
  • Misrepresented to consumers that they had extra money in escrow and were due a refund
2 weeks 6 days ago
Co-Authored by Chris Evans The High Court in London gave judgment on parts A and B of the Lehman Waterfall II Application on 31 July 2015. The application is part of the ongoing dispute as to the distribution of the estimated surplus of more than £7 billion in the main Lehman operating company in Europe, Lehman Brothers International (Europe) (LBIE). LBIE entered administration on 15 September 2008 and has now paid its unsecured creditors 100p for every £1 owed. The Waterfall II Application addresses some key issues as to who should receive the surplus, concerning: (a) how statutory interest should be calculated, and (b) the impact of contracts signed after the administration date. Continue >>
2 weeks 6 days ago
By Michael RielaVedder PriceNew York, NY In Horwitz v.Montroy (In re Select Tree Farms, Inc.), A.P. No. 15-1014, 2015 WL 4594076 (Bankr. W.D.N.Y. July 17, 2015), the United States Bankruptcy Court for the Western District of New York held that an attorney was not an “initial transferee” for purposes of Section 550(a) of the Bankruptcy Code with respect to funds that were deposited into the attorney’s trust account and later used to pay the debtor’s creditors.  However, the bankruptcy court also held that the attorney was an “initial transferee” with respect to funds that were deposited into the trust account and later used to pay the attorney’s own fees.This case highlights some of the circumstances under which funds that are deposited into a trust or escrow account may be subject to recovery claims in a bankruptcy case.FactsGeorge A. Schichtel was the president of Select Tree Farms, Inc. and managed its operations.  Shortly before it commenced its Chapter 11 case on March 7, 2012, Select Tree Farms issued six checks that were payable to three creditors.  Those checks were signed by Mr.

Read More from: CLLA Bankruptcy Blog

2 weeks 6 days ago
Barclays' Barbara Byrne launches her Women in Leadership index, one bank bans all-male shortlists, the @GSElevator guy speaks out for women, Karen Peetz has some ideas to make social finance more attractive and the Manbassador movement grows.

Read More from: BankThink

2 weeks 6 days ago

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