Never Heard This One Before
Posted: Tue Dec 04, 2012 10:29 am
I have been having trouble posting - the last one never appeared. Try again. Yes some of the trustee's in LV have been attempting these "carve outs". However, claiming a legitimate homestead exemption ($550,000 in Nevada)will block any attempt to sell the property out from under the Debtors. Also, the Lender must agree - which is not happening in many cases.
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> As I understand it, this is prevalent in Las Vegas. Sam, perhaps you have some insight ?
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> On Nov 28, 2012, at 7:04 PM, "Steven B. Lever" wrote:
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> > Jeff;
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> > First, thanks for sharing this horror story. If Stephen King were a bankruptcy trustee he couldnt do better to put a chill in debtors and their attorneys.
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> > Perhaps we need a Tara Toomey like effort for motion to abandon, creating our own form with P&As and just fill in the blanks and hit her with said motions every time, thereby increasing the cost of this overreaching transaction that will stress the hell out of our clients.
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> > Of course, the quality of the P&A which depends on whether the law allows Trustees to take such speculative actions that depend on the kindness of secured creditors and the craziness and hunger of realtors. Ive no idea if this is part of the business judgment rule or not, but it sure seems like a stretch to me.
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> > Steve
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> > Steven B. Lever
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Of jbsesq1965
> > Sent: Wednesday, November 28, 2012 5:39 PM
> > To: cdcbaa@yahoogroups.com
> > Subject: [cdcbaa] Never Heard This One Before
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> > PC calls for a second opinion on a matter. He is in Chapter 7 in RS, judge is MW and Chapter 7 Trustee is Linda Bui.
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> > He has a house that is underwater with a first and second mortgage. At filing he is 5 payments down to CitiMortgage, he is NOT in foreclosure, and they are accepting payments for the last 6 months so he isn't getting further behind. Moreover, Citi offered him a possible modification (in writing) under the NMS program which he is actively pursing and Citi even sent him a "pre-approval" letter that says as long as he gets the usual list of docs into them, they will modify the mortgage and reduce the principal to Current Market Value and capitalize the arrears so he's not 5 payme nts down anymore. Citi has NOT asked for relief from stay.
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> > At the 341(a) last month Linda Bui makes a demand that he provide proof that he is "modifing" and asks that he keep her apprised of the modification efforts. When PC's current lawyer asks Linda why this is necessary, she says that if he doesn't modify the loan, she intends to sell the house in a "short sale" and ask Citi and the second lender for a "carve out" to pay unsecured creditors.
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> > I have never heard of such a thing! Maybe if Linda is convinced the debtor is serious about modification she will back down, but thinking this through there seems to be something wrong about a trustee listing the property for sale under 363 in the hopes that she can get a short sale negotiator to carve out a few bucks for the estate, when the debtor is not in foreclosure, the property is upside down and the debtor is no where near at the end of his proverbial rope in terms of options to w ork it out with Citi. Assume the debtor has used all available exemptions on other stuff so he can't dissuade Linda by amending C to exempt her potential/theoretical carve out.
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> > There is a part of me that says this is outrageous. There is another part of me that says if an enterprising trustee finds a unique way to generate funds for the estate, what is to stop her?
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> > Anyway I'd love to hear what the group says and just wanted this posted as a possible warning of yet one more thing we practitioners may have to warn our clients about in the right circumstances.
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> > BTW-My advice was that if trustee won't back down after an exchange of e-mails, and information about the seriousness of the loan modification: Motion to Compel Abandonment of the house. It has no equity and the trustee's suggestion that she "might" squeezee a few bucks out in a short sale is pure speculation.
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> > Jeffrey B. Smith**
> > CURD, GALINDO & SMITH, L.L.P.
> > 301 East Ocean Blvd. #1700
> > Long Beach, CA 90802
> > (562) 624-1177
> > (562) 624-1178 fax
> > (310) 993-6560 cellular
> > www.expertbk.com
> >
> > **Certified By The State Bar
> > Of California As A Specialist
> > In Bankruptcy Law
> >
> >
> >
>
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