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Changes in Mortgage Servicing Practices Take Effect Today

ABI Bankruptcy Brief | September 27, 2012
 
  

October 2, 2012

 
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CHANGES IN MORTGAGE SERVICING PRACTICES TAKE EFFECT TODAY

A significant element of the government’s historic settlement with big banks over foreclosure abuses takes effect today, when firms face a deadline for carrying out more than 300 changes in the way they service mortgages and treat struggling homeowners, the Washington Post reported today. Much of the attention surrounding this year’s $25 billion government settlement has focused on the banks' agreement to reduce the loan balances of some borrowers and undertake more refinancings for thousands of Americans. Although the new standards have not received as much attention, they are crucial for fixing a broken mortgage system, government officials said. The standards forbid the pervasive practice of "robo-signing," and mortgage servicers can no longer foreclose on a borrower while simultaneously negotiating a loan modification, a practice known as "dual tracking." They must provide customers with a single point of contact, rather than shuffling them around to different employees with each call. Read more.

U.S. CREDIT CARD LENDERS SHUN ADD-ONS AS CFPB CRACKS DOWN

JPMorgan Chase & Co., Bank of America Corp. and American Express Co. are among credit card lenders retreating from a $2.4 billion market as regulators seek curbs on deceptive marketing of products including debt cancellation, Bloomberg News reported today. Scrutiny from the Consumer Financial Protection Bureau (CFPB) has led to fines against banks including Capital One Financial Corp. and Discover Financial Services, prompting them to curtail sales of so-called add-ons that offer to help customers pay credit card bills if they get sick or lose their jobs, or help monitor their credit. American Express, the biggest U.S. credit-card issuer by purchases, said yesterday that it will pay $112.5 million to settle claims that it violated consumer safeguards from marketing to collections in products sold to about 250,000 customers. That case did not involve add-on products. The crackdown is CFPB Director Richard Cordray's first enforcement campaign after the Dodd-Frank Act consolidated regulation of retail financial products under one federal agency. With U.S. banks already complaining that regulation has squeezed revenue, the bureau is considering new limits on payday lending and fees for checking overdrafts, and has proposed an overhaul of mortgage practices. Read more.

COMMENTARY: MONEY MARKET MUTUAL FUNDS AND MORAL HAZARD

The wrangling over money-market mutual funds is a vivid illustration of some of the hidden costs of bailouts — in this case, the government rescue of the $2.6 trillion money-market mutual fund industry in 2008 that was so successful it took away any sense of urgency for major reform, according to a commentary in Friday’s Washington Post. Last month, SEC Chair Mary Schapiro canceled plans to move forward on a reform proposal for regulating the mutual fund industry after concluding she did not have the votes for passage of the proposal. SEC Commissioner Luis A. Aguilar had indicated he would oppose her proposal, favoring a more overarching approach to overseeing the cash-management industry. To step up pressure on the SEC, Treasury Secretary Timothy Geithner’s letter to the Financial Stability Oversight Council (FSOC), created by the Dodd-Frank Act, advocated for regulators to step up oversight of money-market mutual funds. Read the full commentary.

CALIFORNIA DAIRIES GOING BROKE DUE TO FEED, MILK PRICES

Across California, the nation's largest dairy state, dozens of dairy operators large and small have filed for bankruptcy in recent months, and many teeter on the edge of insolvency, the Associated Press reported on Saturday. Others have sold their herds or sent them to slaughter and given up on the business. Experts say California dairymen face a double hit to their operations: exorbitant feed costs and lower milk prices. The Midwest drought has led to corn and soybean costs increasing by more than 50 percent this summer, stressing dairymen from Wisconsin and Minnesota to Missouri. But in California, milk prices have also lagged behind those in the rest of the nation, exacerbating the crisis. And while milk revenues in California have soared to over $7.5 billion in 2011, making milk the top agricultural commodity, higher revenues mean little, farmers say, because it costs so much more to produce the milk. Read more.

SHOW YOUR SUPPORT FOR STEVEN GOLICK, A COLLEAGUE AND ABI LEADER

Our friend Steven Golick (Osler Hoskin & Harcourt LLP, Toronto) is facing a medical crisis. He has been diagnosed with a serious brain tumor, requiring complex surgery and treatment. Steven’s spirits are very strong and he and his family remain optimistic, but he can use our support. A prominent international restructuring attorney and an ABI member since 1994, Steven is also a founding member of the ABI house band, the Indubitable Equivalents. Because the band is important to Steven, his fellow band-mates have organized a new Blog site for Steven's friends and colleagues to show their love and support at this critical time. Please click on this link to share your thoughts with many others, and post as often as you'd like.

ABI IN-DEPTH

SEE THE N.L. EAST DIVISION CHAMPION WASHINGTON NATIONALS IN THE PLAYOFFS: ABI HAS YOUR TICKET!

Don't miss playoff baseball in Washington, D.C.! Only 20 tickets are available to the ABI Endowment's special event at the Nationals first home playoff game to be played either Oct. 9 or 10 (depending on Major League Baseball scheduling). For $400, you will receive a game ticket to a luxury suite, food and open bar. Click here to register!

Sponsorships Are also Available!
Stand out from the crowd and sponsor this historic playoff event! Bring a client- tickets included with your sponsorship. All sponsorships are tax deductible. Click here for details.

MEMBERS WILL NOT WANT TO MISS ABI'S PROGRAM AT NCBJ'S ANNUAL MEETING ON OCT. 26

Members planning to attend the 86th Annual NCBJ Annual Conference in San Diego from Oct. 24-27 will not want to miss the exciting line-up scheduled for the ABI program track on Oct. 26. In addition to roundtable discussions on the hottest consumer and business bankruptcy topics, ABI will be hosting a ticketed luncheon that will feature the presentation of the 7th Annual Judge William L. Norton, Jr. Judicial Excellence Award and entertainment by Apollo Robbins, a sleight-of hand artist, security consultant and self-described gentleman thief. Click here to register for the Conference.

To view the list of ABI programs on Oct. 26 and the full NCBJ Annual Conference schedule, please click here.

ABI's Chapter 11 Reform Commission will also be holding a public hearing on Oct. 26 from 2:30-4:30 p.m. PT at the San Diego Marriott. Interested parties have the opportunity to submit testimony at the hearing. For further information, please contact ABI Executive Director Samuel J. Gerdano at sgerdano@abiworld.org.

LATEST CASE SUMMARY ON VOLO: MATOS V. RIVERA (IN RE MATOS; 1ST CIR.)

Summarized by Guy Moss of Riemer & Braunstein LLP

As a threshold matter, the First Circuit BAP ruled that all tax refunds received by a chapter 13 debtor are property of the estate whether pursuant to 11 U.S.C. § 541(a) to the extent that they are rooted in pre-petition earnings, or 1306 to the extent that they relate to earnings from services performed by the debtor post-petition. Reversing the rulings of the bankruptcy court, the BAP next determined that an objection to the debtor's claimed exemption in the refund (defined below) did not lie because (1) the refund was property of the estate, (2) the exemption was valid on its face, and (3) the trial court incorrectly considered an alleged infirmity in plan confirmation, i.e., whether the refunds had to be devoted entirely to a plan pursuant to 11 U.S.C. §§ 1322(a)(1) and 1325(b)(1)(B), to determine the validity of an exemption. Rather, consideration of that issue arises only if and when there is an objection to the plan. The BAP reserved comment on whether such an objection to an exemption is a necessary "placeholder" to preserve the objecting party's ability to object to plan confirmation on the ground that not all future earnings and income are being devoted to plan payments.

There are more than 650 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: PILGRIM'S PRIDE OPINION ALLOWS ENHANCEMENTS IN BANKRUPTCY, OFFERS COMPREHENSIVE OVERVIEW OF BANKRUPTCY FEES

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post examines the Fifth Circuit's ruling in Matter of Pilgrim's Pride Corp., No. 11-10774 (5th Cir. 8/10/12), to allow a $1 million fee enhancement to a chief restructuring officer who achieved results described as "rare and exceptional." The court rejected the argument that a recent Supreme Court opinion on fee-shifting precluded enhancements, and in the process set forth a comprehensive framework for allowance of professional fees in bankruptcy.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

Bankruptcy courts should adopt formal loss mitigation procedures to facilitate the negotiation of residential mortgage modifications for consumer debtors.

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

HAVE YOU TUNED IN TO BLOOMBERG LAW'S VIDEO PODCASTS?

Bloomberg Law's video podcasts feature top experts speaking about current bankruptcy topics. The podcasts are available via Bloomberg Law's YouTube channel so that you can access the programs from your computer or device of your choice! Click here to view the Bloomberg Law video podcasts.

INSOL INTERNATIONAL

INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

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THIS WEEK:

NABMW 2012
Oct. 4, 2012
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SE 2012
Oct. 5, 2012
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Oct. 5, 2012
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COMING UP:

 

SE 2012
Oct. 8, 2012
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ABI YOUNG AND NEW MEMBERS COMMITTEE “TRENDING ISSUES: EXAMINERS AND SELECT PLAN CONFIRMATION ISSUES” WEBINAR
Oct. 15, 2012
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SE 2012
Oct. 16, 2012
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SE 2012
Oct. 18, 2012
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ABI/ST. JOHN'S "BANKRUPTCY AND RACE: IS THERE A RELATION?" SYMPOSIUM
Oct. 19, 2012
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ABI'S PROGRAM AT NCBJ'S ANNUAL MEETING
Oct. 26, 2012
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MEXICO 2012
Nov. 7, 2012
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4TH ANNUAL PROFESSIONAL DEVELOPMENT PROGRAM
Nov. 9, 2012
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Nov. 12, 2012
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Nov. 29 - Dec. 1, 2012
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MT 2012
Dec. 4-8, 2012
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ACBPIKC 2013
Feb. 17-19, 2013
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  CALENDAR OF EVENTS
 

October
- Nuts & Bolts for Young and New Practitioners - KC
     October 4, 2012 | Kansas City, Mo.
- Midwestern Bankruptcy Institute Program, Midwestern Consumer Forum
     October 5, 2012 | Kansas City, Mo.
- Bankruptcy 2012: Views from the Bench
     October 5, 2012 | Washington, D.C.
- Chicago Consumer Bankruptcy Conference
     October 8, 2012 | Chicago, Ill.
- "Trending Issues: Examiners and Select Plan Confirmation Issues" Webinar
October 15, 2012
- ABI/Bloomberg Distressed Lending Conference
October 16, 2012 | New York, N.Y..
- International Insolvency and Restructuring Symposium
     October 18, 2012 | Rome, Italy
- ABI/St. John's "Bankruptcy and Race: Is There a Relation?" Symposium
     October 19, 2012 | Queens, N.Y.
- ABI Program at NCBJ's Annual Conference
     October 26, 2012 | San Diego, Calif.

  

 

November
- U.S./Mexico Restructuring Symposium
     November 7, 2012 | Mexico City, Mexico
- Professional Development Program
     November 9, 2012 | New York, N.Y.
- Detroit Consumer Bankruptcy Conference
     November 12, 2012 | Detroit, Mich.
- Winter Leadership Conference
     November 29 - December 1, 2012 | Tucson, Ariz.

December
- Forty-Hour Bankruptcy Mediation Training
     December 4-8, 2012 | New York, N.Y.

2013

February
- Kansas City Advanced Consumer Bankruptcy Practice Institute
     February 17-19, 2013 | Kansas City, Mo.


 
 
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