Central District Consumer Bankruptcy Attorney's Association

Regarding your synopsis of the Durbin bill:
My reading of the first part did not automatically exclude underwater
secured debt from the eligibility computation - only where there is a
deficiency (i.e. post foreclosure), short sale or pending foreclosure sale.
Thus we still have the lien strip problem where the newly stripped loan is
counted towards the unsecured eligibility total.
As for the second part which says:
"2. A claim which I held by a creditor which violated TILA or other
consumer protection act if subject to disallowance. Citigroup has requested
this be limited."
Did you mean to say: A claim which is held by a creditor which violated TILA
or other consumer protection act is subject to disallowance......?
I read this provision and it is ambiguous. I cannot tell whether it confers
or removes jurisdiction in the BK Ct to hear these issues. I hope they
clarify the language.
None of this solves one of our biggest problems which is that CA real estate
values are still creating lots of cases with debts over the Ch 13 debt
limits. Nor does it solve the issue of
David A. Tilem
Certified Bankruptcy Specialist*
Law Offices of David A. Tilem (a debt relief agency)
206 N. Jackson Street, #201, Glendale, CA 91206
Tel: 818-507-6000 Fax: 818-507-6800
* Bankruptcy specialist cert. by State Bar of CA Bd of Legal
Specialization.
Elmer Martin
Sent: Wednesday, January 14, 2009 11:27 AM
To: cdcbaa@yahoogroups.com
Subject: [cdcbaa] A trustee sent this to me to pass along
INTRODUCTION
Three bills have been introduced in the 111th Congress related to the
mortgage issue. They are:
House
Judiciary committee it is probable that this is the bill that will either be
attached to the bailout bill or be pushed the day after the bailout bill
ll last
year
e
brought up for a vote last spring where it only received 38 votes.
The Durbin bill has the following elements:
1. If a mortgage is underwater or there is a deficiency from a
surrender or foreclosure prior to the petition, the debts (secured and
unsecured) are NOT counted to determine the debtors eligibility.
2. A claim which I held by a creditor which violated TILA or other
consumer protection act if subject to disallowance. Citigroup has requested
this be limited.
3. A mortgage on a debtors residence where foreclosure is threatened
can be modified by:
a. Limited the secured claim to the value of the home.
b. Stopping or delaying the adjustment of interest rates
c. Re-amortize the claim over up to 40 years from the date the
original mortgage was incurred.
d. Adjust the interest rate to the Federal Reserves compiled
conventional mortgage rates, plus a risk factor.
e. Permitting the debtor to elect such payment directly to the
creditor.
4. Creditors holding mortgage claims must file notice of charges or
fees, or the fee or charge is effectively discharged. Such fees would also
be disallowed if they are unreasonable or they, with the underlying claim,
exceed the value of the property.
5. The plan may call for a waiver of prepayment penalties.
6. Any mortgage modification must be proposed in good faith.
7. The bill would be effective as to cases pending or filed after its
enactment. Citigroup has requested that the bill be applicable only to
loans that are in existence as of the date the legislation is signed.
Representative Millers bill contains similar provisions but does not
include the TILA and consumer law provisions.
TALKING POINTS
expertise in valuations and credit restructuring to restructure home
mortgages to reflect economic reality. These are the same experts who
restructure the airline industry and other industries in financial distress.
homes which preserves neighborhoods, protects local tax bases, and helps
maintain home values in a community.
identifiable, fixed and manageable levels. The losses that may result from
foreclosure now approximate $50,000 per lost home to the lender.
ons
proposed should insure that the financial condition of the debtor is
carefully examined and that all of a debtors disposable income is devoted
to repay the debts of a debtor, including a mortgage.
first several years of the restructured mortgage obligation will be subject
to the scrutiny and supervision of an independent trustee and the court.
PROBLEMS WITH THE BILLS
ive
debtors the option of choosing to act as their own disbursing agents on the
restructured mortgages in chapter 13 cases. It takes the judge out of the
decision.
supervision of the implementation of this legislation will prevent effective
monitoring of the debtor and the creditors compliance with the modified
mortgage.
ors
to act as a disbursing agent. No reason exists to deviate from current law.
In fact, much can be said to support a requirement that all payments of
claims in a Chapter 13 case should be paid through the trustee.
on
Administrative Oversight revealed the widespread problems in the mortgage
service industry and the leading efforts of trustees to curb those abuses.
This provision would undercut the ability of trustees to fill that role.
has commented that giving the debtors the option to avoid the scrutiny of
the supervision of the trustee is a bad idea. Her research on mortgage
abuses was presented at NCBJ last year and she testified with Deb Miller at
the Judiciary Subcommittee hearings last year.
Message
Regarding your synopsis of
the Durbin bill:

My reading of the first
part did not automatically exclude underwater secured debt from the eligibility
computation - only where there is a deficiency (i.e. post foreclosure), short
sale or pending foreclosure sale. Thus we still have the lien strip
problem where the newly stripped loan is counted towards the unsecured
eligibility total.
As for the second part
which says:
"2.
A claim which I held by a creditor which violated TILA or
other consumer protection act if subject to disallowance.
Citigroup has requested this be limited."
Did you mean to say: A claim which is
held by a creditor which violated TILA or other consumer protection act issubject to disallowance......?
I read this provision and it is
ambiguous. I cannot tell whether it confers or removes jurisdiction in the
BK Ct to hear these issues. I hope they clarify the
language.
None of this solves one of our biggest
problems which is that CA real estate values are still creating lots of cases
with debts over the Ch 13 debt limits. Nor does it solve the issue of


David A.
Tilem
Certified Bankruptcy
Specialist*
The post was migrated from Yahoo.

INTRODUCTION
Three bills have been introduced in the 111th Congress related to the mortgage issue. They are:
e Judiciary committee it is probable that this is the bill that will either be attached to the bailout bill or be pushed the day after the bailout bill
ast year
ought up for a vote last spring where it only received 38 votes.
The Durbin bill has the following elements:
1. If a mortgage is underwater or there is a deficiency from a surrender or foreclosure prior to the petition, the debts (secured and unsecured) are NOT counted to determine the debtor's eligibility.
2. A claim which I held by a creditor which violated TILA or other consumer protection act if subject to disallowance. Citigroup has requested this be limited.
3. A mortgage on a debtor's residence where foreclosure is threatened can be modified by:
a. Limited the secured claim to the value of the home.
b. Stopping or delaying the adjustment of interest rates
c. Re-amortize the claim over up to 40 years from the date the original mortgage was incurred.
d. Adjust the interest rate to the Federal Reserve's compiled conventional mortgage rates, plus a risk factor.
e. Permitting the debtor to elect such payment directly to the creditor.
4. Creditors holding mortgage claims must file notice of charges or fees, or the fee or charge is effectively discharged. Such fees would also be disallowed if they are unreasonable or they, with the underlying claim, exceed the value of the property.
5. The plan may call for a waiver of prepayment penalties.
6. Any mortgage modification must be proposed in good faith.
7. The bill would be effective as to cases pending or filed after its enactment. Citigroup has requested that the bill be applicable only to loans that are in existence as of the date the legislation is signed.
Representative Miller's bill contains similar provisions but does not include the TILA and consumer law provisions.
TALKING POINTS
rtise in valuations and credit restructuring - to restructure home mortgages to reflect economic reality. These are the same experts who restructure the airline industry and other industries in financial distress.
omes which preserves neighborhoods, protects local tax bases, and helps maintain home values in a community.
entifiable, fixed and manageable levels. The losses that may result from foreclosure now approximate $50,000 per lost home to the lender.
ons proposed should insure that the financial condition of the debtor is carefully examined and that all of a debtor's disposable income is devoted to repay the debts of a debtor, including a mortgage.
first several years of the restructured mortgage obligation will be subject to the scrutiny and supervision of an independent trustee and the court.
PROBLEMS WITH THE BILLS
ive debtors the option of choosing to act as their own disbursing agents on the restructured mortgages in chapter 13 cases. It takes the judge out of the decision.
ision of the implementation of this legislation will prevent effective monitoring of the debtor and the creditor's compliance with the modified mortgage.
ors to act as a disbursing agent. No reason exists to deviate from current law. In fact, much can be said to support a requirement that all payments of claims in a Chapter 13 case should be paid through the trustee.
Administrative Oversight revealed the widespread problems in the mortgage service industry and the leading efforts of trustees to curb those abuses. This provision would undercut the ability of trustees to fill that role.
has commented that giving the debtors the option to avoid the scrutiny of the supervision of the trustee is a bad idea. Her research on mortgage abuses was presented at NCBJ last year and she testified with Deb Miller at the Judiciary Subcommittee hearings last year.
INTRODUCTION


Three bills have been introduced in the 111th Congress related
to the mortgage issue. Theyare:


H.R. 200 Introduced by Conyers Since he is
chair of the House Judiciary committee it is probable that this is the bill that
will either be attached to the bailout bill or be pushed the day after thebailout bill

H.R. 225 Introduced by Miller He
introduced a similar bill last year

S. 61 Introduced by Durbin This is similar
to the bill he brought up for a vote last spring where it only received 38votes.

The
Durbin bill has the following elements:

1.
If a mortgage is underwater or there is a
deficiency from a surrender or foreclosure prior to the petition, the debts(secured and unsecured) are NOT counted to determine the debtors
eligibility.

2.
A claim which I held by a creditor which
violated TILA or other consumer protection act if subject to disallowance. Citigroup has requested this be
limited.

3.
A mortgage on a debtors residence where
foreclosure is threatened can be modified by:
a. Limited the secured claim to the value of the
home.
b.
Stopping or delaying the adjustment ofinterest rates
c. Re-amortize the claim over up to 40 years from
the date the original mortgage was incurred.
d.
Adjust the interest rate to the FederalReserves compiled conventional mortgage rates, plus a risk factor.
e. Permitting the debtor to elect such payment
directly to the creditor.

4.
Creditors holding mortgage claims must file
notice of charges or fees, or the fee or charge is effectively discharged. Such fees would also be disallowed if
they are unreasonable or they, with the underlying claim, exceed the value of
the property.

5.
The plan may call for a waiver of prepayment
penalties.

6.
Any mortgage modification must be proposed in
good faith.

7.
The bill would be effective as to casespending or filed after its enactment.
Citigroup has requested that the bill be applicable only to loans that
are in existence as of the date the legislation is signed.


Representative Millers bill contains similar provisions but does not
include the TILA and consumer law provisions.


TALKING
POINTS


The legislation permits bankruptcy courts
the courts with expertise in valuations and credit restructuring to
restructure home mortgages to reflect economic reality. These are the sameexperts who restructure the airline industry and other industries in financial
distress.


The legislation will permit homeowners the
option of retaining homes which preserves neighborhoods, protects local taxbases, and helps maintain home values in a community.


The legislation will limit losses to the
mortgage industry to identifiable, fixed and manageable levels. The losses that
may result from foreclosure now approximate $50,000 per lost home to the
lender.


The modifications involve no expenditure of
taxpayer funds.


The use of Chapter 13 as the vehicle toimplement the modifications proposed should insure that the financial condition
of the debtor is carefully examined and that all of a debtors disposable income
is devoted to repay the debts of a debtor, including a mortgage.


The use of Chapter 13, just as Chapter 12,
will assure that the first several years of the restructured mortgage obligation
will be subject to the scrutiny and supervision of an independent trustee and
the court.


PROBLEMS WITH
THE BILLS


The provision amending 1322(b) by adding
(11)(D) appears to give debtors the option of choosing to act as their
own disbursing agents on the restructured mortgages in chapter 13 cases. It takes the judge out of the
decision.


The ability of the debtor to elect to avoid court/trustee supervision
of the implementation of this legislation will prevent effective monitoring of
the debtor and the creditors compliance with the modified mortgage.


Current law permits the court to determine whether to allow
debtors to act as a disbursing agent. No reason exists to deviate from current
law. In fact, much can be said to
support a requirement that all payments of claims in a Chapter 13 case should be
paid through the trustee.

Hearings last year before the Senate
Judiciarys Subcommittee on Administrative Oversight revealed the widespread
problems in the mortgage service industry and the leading efforts of trustees to
curb those abuses. This provision would undercut the ability of trustees to fill
that role.


As a noted academic (Katherine Porter of the
University of
Iowa) has commented that
giving the debtors the option to avoid the scrutiny of the supervision of the
trustee is a bad idea. Her research
on mortgage abuses was presented at NCBJ last year and she testified with Deb
Miller at the Judiciary Subcommittee hearings last year.

The post was migrated from Yahoo.