Reg Z - It May Be The Key To Rescinding Your Bad Loan, But Do You Really Want To Know How It Works??

The concept is simple: federal law requires an accurate written disclosure of the annual percentage rate ("APR") and finance charges in home and consumer loans. Good luck understanding what the Reg Z rules are on your own.

Regulation Z of the Truth and Lending Act



Related to Reg Z and also important in compelling a modification of your home mortgage is the Real Estate Settlement Procedures Act, or RESPA (HUD-1 good faith estimate of closing charges, reasonableness of charges, anti-kickback).


Go see an experienced Truth in Lending attorney - you likely only have 3 years from the making of the loan to take legal action

(c) copyright 2008 New Dawn Law all rights reserved

Mortgage Modification Poker - "Call,and Raise You $10,000"

California Foreclosures: Must Your Lender Accept Your Loan Modification Offer?

By Michael Doan on Sep 8, 2008 in Mortgage Law Network

A new law enacted on July 8, 2008, now requires Lenders of residential loans in the State of California to accept loan modifications in most foreclosure situations. California Civil Code 2923.6 went into effect on July, 2008, and applies to all residential loans made from January 1, 2003, to December 31, 2007, inclusive, that are secured by residential real property and are for owner-occupied residences.

Practically all residential mortgages have Pooling and Servicing Agreements ("PSA") since they were transferred to various Mortgage Backed Security Trusts after origination. These vehicles likewise almost always contain a duty to maximize net present value to its investors and related parties. Under the new laws, California Civil Code 2823.6 broadens and extends this PSA duty by requiring servicers to accept loan modifications with borrowers.

Essentially, California Civil Code 2823.6(a) states that "a servicer acts in the best interest of all parties if it agrees to or implements a loan modification where the (1)loan is in payment default, and (2) anticipated recovery under the loan modification or workout plan exceeds the anticipated recovery through foreclosure on a net present value basis."

Likewise, California Civil Code 2823.6(b) now provides "that the mortgagee, beneficiary, or authorized agent offer the borrower a loan modification or workout plan if such a modification or plan is consistent with its contractual or other authority."

So what does all this mean? Well, lets take an example:

John Martin's loan is presently in default, or reasonably foreseeable of near default. The house he previously bought 2 years ago for $800,000 with a $640,000 first and $140,000 second, has now plummeted to $375,000. While Mr. Martin can no longer afford the $9,000 per month mortgage payment, he is willing, able, and ready to execute a modification of his loan on the following terms:

a) New Loan Amount: $330,000.00

b) New Interest Rate: 6% fixed

c) New Loan Length: 30 years

d) New Payment: $1978.52

While this new loan amount of $330,000 is less than the current fair market value, the costs of foreclosure need to be taken into account. Foreclosures typically cost the lender $50,000 per foreclosure. For example, the Joint Economic Committee of Congress estimated in June, 2007, that the average foreclosure results in $77.935.00 in costs to the homeowner, lender, local government, and neighbors. Of the $77,935.00 in foreclosure costs, the Joint Economic Committee of Congress estimates that the lender will suffer $50,000.00 in costs in conducting a non-judicial foreclosure on the property, maintaining, rehabilitating, insuring, and reselling the property to a third party. Freddie Mac places this loss higher at $58,759.00.

Accordingly, the anticipated recovery through foreclosure on a net present value basis is $325,000.00 or less and the recovery under the proposed loan modification at $330,000.00 exceeds the net present recovery through foreclosure of $325,000.00 by over $5,000.00. Thus California Civil Code 2823.6 would mandate a loan modification to the new terms.

The homeowner just got a new arrow to add to his foreclosure defense quiver. Pursuant to California Civil Code 2823.6, the lender is now
contractually bound to accept the loan modification as provided above.
Failure to do so should allow the borrower to sue for specific performance or wrongful foreclosure in State Court.

California Senate Bill 1137, enacted and effective on July 8, 2008 was a variety of new laws that directly addressed California's foreclosure crisis, among the highest in the nation. Civil Code 2823.6 was among the new laws, and clearly establishes a legal standard of conduct for servicers of pooled or securitized mortgages in meeting their legal duties owed to mortgage investors where a proposed loan modification "maximizes net present value." But the law appears to direct that lenders and their agents make loan modification offers to borrowers "if such a modification or plan is consistent with its contractual or other authority" - that is, results in a "maximized net present value" if indeed their servicing contracts so provide.

Does this compel lenders to offer or accept offers for a "maximized net present value" loan modification or does it merely protect servicers if in fact they do so?

This bill

9. Would codify a legislative finding that any duty servicers
may have to maximize the net present value under their
pooling and servicing agreements is owed to all parties in a
loan pool, not to any particular parties, and that a
servicer acts in the best interest of all parties if it
agrees to or implements a loan modification or workout plan,
as specified;

10. Would codify the intent of the Legislature that the
mortgagee, trustee, beneficiary, or authorized agent offer
the borrower a loan modification or workout plan, if such a
modification or plan is consistent with its contractual or
other authority;

Creative litigation lawyers, and California's appellate courts will determine this soon, predictably.

See how this might work for you.

Present value calculator

Without legal leverage (see above, Reg Z) "loan modifications" may simply be a shell game.

A content rich source on mortgages in crisis: the mortgage lender implode=o=meter

(c) copyright 2008 New Dawn Law all rights reserved

Feeling Guilty About Needing Bankruptcy Relief? Don't.

There's no government bailout waiting there for you, is there.

Student Loans and Bankruptcy

LOAN CANCELLATIONS AND DISCHARGE

All loans received under programs authorized by Title IV, of the Higher Education Act can be canceled for several different circumstances including: (1) in the event of your death; or (2) if you become totally and permanently disabled after the loan is disbursed.

In addition, some loan types may qualify for loan discharge under a variety of conditions. Some of the most common cancellation provisions are listed for you below:

the school you attended improperly certified your ability to benefit from the training given.

the school you attended closed while you were in attendance or within 90 days after you withdrew from the school.

A National Defense Student Loan can be canceled in 2 additional circumstances: (1) full-time teaching and (2) military service.

Finally, your obligation to repay your loan may be discharged in bankruptcy. (Ed. note: good flippin' luck; see undue hardship grounds below to qualify)

Also please visit the Discharges section of the main FSA site for additional information on loan cancellation and discharges.

Death
In the event of the borrower's death, or on or after July 23, 1992 the death of the student for whom a parent received a PLUS loan, the obligation of the borrower and any endorser to make any further payments on the loan is discharged.

To verify a borrower's death, the servicing agency must have the original, certified copy, or clear, accurate, and complete photocopy of the original or certified death certificate. The U.S. Department of Education cannot accept a faxed copy.

Total and Permanent Disability
If a physician (doctor of medicine or osteopathy) certified that you are totally and permanently disabled and you meet certain other requirements during a 3 year conditional discharge period your loan(s) may be discharged.

You may request a "Loan Discharge Application: Total and Permanent Disability" from our forms request page.

False Certification
If you received a Direct Loan or a Federal Family Education Loan (FFEL) Program Loan on or after January 1, 1986, you may qualify for a False Certification discharge if you (or the student for whom a parent received a PLUS loan) received a loan that was falsely certified by an eligible school. Your eligibility to borrow is considered to have been falsely certified if the school--

Admitted you on the basis of ability to benefit from its training and you did not meet the applicable requirements for admission on the basis of ability to benefit; or
Signed your name without your authorization on the loan application or promissory note; or

You have a physical, mental, or legal status or condition at the time of enrollment that would legally bar employment in your field of study.

You are the victim of identity theft.

In order to permit a student to borrow a Federal Direct Loan or FFEL Program Loan, schools are required to certify that student borrowers who lack a high school diploma or GED have the ability to benefit from the training offered by the institution.

False certification of a student borrower's eligibility occurs, for example, if the school failed to test such a student's ability to benefit or conducted testing in an improper manner. Schools may satisfy the ability to benefit requirements, for example, by testing students or offering courses in remedial education.

Misrepresentations, by the school, on the other hand, regarding the school's educational program or its financial or administrative capability, including the school's placement services or the quality of the school's facilities, faculty, or equipment are not part of the process of "certification" of the student's eligibility to borrow and do not entitle the borrower to False Certification loan discharge.

If your loan is discharged, you will not owe any more payments on the loan, and you will get a refund of payments you have made in the past. Also, if the loan is discharged, the servicing agency will tell credit reporting agencies that the loan was discharged, and any adverse credit history resulting from nonpayment of the discharged loan will be deleted. In addition, your discharged loan will not prevent you from applying for federal student financial aid.

You may request a "Loan Discharge Application: False Certification of Ability to Benefit , Loan Discharge Application: False Certification (Disqualifying Status), Loan Discharge Application: Unauthorized Signature/Unauthorized Payment", or "Loan Discharge Application: False Certification (Identity Theft)" by clicking here or by contacting us.

Closed School
If you received a Federal Perkins Loan Direct Loan or FFEL Program Loan on or after January 1, 1986, you may qualify for a Closed School discharge if you (or the student for whom a parent received a PLUS loan) could not complete the program of study for which the loan was intended because the school at which you (or student) were enrolled, closed while you were in attendance, or you (or student) withdrew from the school, or were on an approved leave of absence, not more than 90 days prior to the date the school closed. You must not have completed the program of study through a teach-out at another school or by transferring academic credits or hours earned at the closed school to another school.

If your loan is discharged, you will not owe any more payments on the loan, and you will get a refund of payments you made in the past. Also, if the loan is discharged, the servicing agency will tell credit reporting agencies that the loan was discharged, and any adverse credit history resulting from nonpayment of the discharged loan will be deleted. In addition, your discharged loan will not prevent you from applying for additional federal student financial aid.

If you believe that a school you attended may have closed, you may be able to use the Closed School Database to confirm this and to determine the date the school closed. Please note that the closed school list includes only schools that at one time participated in the federal student aid programs administered by the U.S. Department of Education. A closed school that never participated in the programs administered by the Department will not be on this database.

Please visit our Closed School Information section for more information on this topic.

You may request an "Loan Discharge Application: School Closure" by clicking here or by contacting us to request an application.

Full-time Teaching
The Teacher Loan Forgiveness Program grants loan forgiveness of up to $17,500 for teachers in certain specialties and up to $5,000 for other teachers, who teach for five years in certain low-income schools and meet other requirements. This forgiveness benefit is available to Direct Loan and Federal Family Education Loan (FFEL) program borrowers who did not have an outstanding balance on a Direct Loan of FFEL Program loan on October 1, 1998, or on the date they obtained a Direct Loan of FFEL program loan after October 1, 1998.

If you received a Perkins Loan or a National Direct Student Loan, you may qualify for the teacher loan cancellation.

Please visit the Cancellation/Deferment Options for Teachers Home Page for additional information.

Military Service
Recipients of a National Defense Student Loan may receive partial cancellation of their loan for their service in the United States Armed Forces if the loan was disbursed after April 13, 1970 and full-time active service began after June 30, 1970.

Recipients of a National Direct Student Loan and Perkins Loan may receive partial cancellation of their loan for their service in the United States Armed Forces if his/her military service was for a full year in a hostile area.

If you believe that you may qualify for cancellation of your loan(s) due to your military service as described above, you should send a copy of your DD214 (discharge form) and letter of explanation to the agency servicing your loan.

Bankruptcy
Effective October 8, 1998, your obligation to repay Title IV, HEA student loan and grant liabilities can no longer be canceled (discharged) due to bankruptcy, unless you can successfully prove that repayment of the debt would cause "undue hardship" as defined by case law in your jurisdiction. Previously, student loan and grant liabilities could only be canceled (discharged) due to bankruptcy under certain conditions which, in general, depended on the amount of time between the date on which a loan or grant liability was due or the date that the bankruptcy was filed, as well as undue hardship.

Effective May 28, 1991 and prior to October 8, 1998, a loan or grant liability was discharged by entry of a general discharge order if the first payment came due on the debt at least 7 years before the bankruptcy was filed. Prior to 1991 amendments, only five years was required. Any grace periods, forbearance, or deferment must be subtracted from the time elapsed between the first payment due date and the filing date when calculating time in repayment. Debts outstanding for less than the required seven year period could be discharged only if the court made an express finding that the repayment of the debt would place an "undue hardship" on the borrower. These non-dischargeability requirements apply to educational loans received by both student borrowers and by parent borrowers, and apply to loans received by any kind of borrower to pay off prior loans (Consolidation Loans). Dischargeability of these types of debts is governed by 11 U.S.C. 523 (a)(8). In order to determine the dischargeability of a loan, the servicing agency needs the following three pieces of information from you or your attorney:

Notice of First Meeting of Creditors;
List of Creditors (Schedule A-3); and
the Final Discharge Order

Please call us 1-800-621-3115 for additional information on any of the information on this page.

US Department of Education, Federal Student Aid Agency

Bad Boy and Other Unavoidable Debts

There are certain debts and obligations that can not be discharged in a Chapter 7 bankruptcy:

Criminal fines and debts -- All court fees and court-ordered judgments related to any criminal activity cannot be discharged. Traffic fines and parking tickets too.

Judgments or debts incurred as a result of personal injury or death to others caused by intentional conduct (e.g., fraud, criminal activity) or reckless conduct (drunk driving).

Student Loans. Although there is a general policy not to discharge student loan debt; in some very rare circumstances, older student loans (seven years of repayments) can be discharged, but only if a severe hardship condition exists.

Taxes -- Federal, state and municipal taxes that became due within the last three years;

Fraudulent debts -- Any debt that the court finds was obtained fraudulently or illegally will not be discharged. For example, if you ran up debt on a credit card shortly before filing bankruptcy (within 60 to 90 days of filing), the court will refuse to discharge that debt. In addition, if you lied on a loan application to obtain funds -- that related debt will not be forgiven in bankruptcy;

Dischargeable debt you incurred to pay off non-dischargeable debt -- For example, you cannot take a cash advance on a credit card to pay off last year's taxes, just so you can write it off in bankruptcy;

Alimony and child support payments (court-ordered) are not dischargeable; divorce and property settlements are not dischargeable unless the other party agrees to it.

The Chapter 13 Alternative for Non Dischargeable Debts

If Chapter 7 bankruptcy doesn't work for you for any of the reasons listed above, or if you fail to qualify for Chapter 7, you might get help in a Chapter 13 bankruptcy. To qualify for Chapter 13 bankruptcy, you must have regular or reasonably predictable income that allows you to catch up on your accrued debts over a 3-5 year period while making your regular monthly payments. However your current debts cannot exceed limits set forth in the Bankruptcy Code ($336,900 unsecured debt, $1,010,650 secured).

Priority debt -- you have a significant amount of priority debt (taxes, wages owed to employees and any social security benefits, pensions, etc.) that would not be dischargeable under a Chapter 7 bankruptcy. Spousal and child support are also priority debts. Marital property settlement("equalization") is not. Priority debts are amortized and repaid under Chapter 13, without accruing interest. If the payments that are required under a Chapter 13 plan are insufficient to fully repay priority debts over the plan period, the balance is not discharged and remains owing thereafter.

Valuable property -- you don't want to turn certain property over to the bankruptcy trustee for auction. For example, a diamond ring that is a family heirloom and which exceeds the value of your allowable exemption.

Secured debt -- you are behind on your mortgage or car payment, but would like to keep these assets. Chapter 13 bankruptcy allows you to keep this property and catch up on arrearages.

Dishonest activity -- you might avoid paying a significant portion of debt incurred from fraud or malicious and criminal activity in a Chapter 13 bankruptcy.

Although Chapter 13 requires debtors to pay back their creditors over a 3-5 year plan, in reality, unsecured creditors are not paid back in full. This is due to the fact that a Chapter 13 debtor is given a budget to live on (see the Means Test)and the rest of his or her earnings is "disposable income" that funds the Chapter 13 plan, with priority claims and secured claims paid first and the balance, or what is left, if any, going to the unsecured creditors. A discharge of unpaid balances does not occur unless and until the Chapter 13 plan is fully performed (paid in full).

Debt Collectors - Stop It, Enough Already!

Fair Debt Collection Laws require that they leave you alone if you write and tell them to. If they don't, you can sue for damages.

Write a letter that looks like this



Your Name
Mailing Address
City, State, Zip

Date

Name of Collection Agency
Mailing Address
City, State, Zip

Re: Notice to Cease Contact: Case # ________

[If the collection agency has sent written notice, your case number is likely in the letter. If you have not received a written notice from the collection agency, tailor this line accordingly. For example, show the date you were contacted by the collection agency.]

To [person whose name appears on agency's notice to you]:

On [date] I was contacted by [name of person who called you] of your agency, who informed me that [name of collection agency] is attempting to collect [amount of claimed debt].

[OR]

On [date] I received a written notice of the claimed debt, a copy of which is attached.

This is to give you notice to cease all contact with me or anyone else except the creditor about this claimed debt. If you must contact me, please do so in writing and not by telephone.

I look forward to your acknowledgement that you have received this notice by [date that is two weeks from date of letter].

Sincerely,

_______________

(Signature)

Your Name





(c) copyright 2008 New Dawn Law all rights reserved

Foreclosure Consultants - Scam or Valuable Service?

UPDATE!!!!! June 15, 2009: New California Law Clamps Down on the Foreclosure Consultancy Defrauders !!!

Effective July 1, 2009, it will be unlawful for a foreclosure consultant, as defined in Civil Code Section 2945.1 to engage in the foreclosure consultant business unless it has registered with the Attorney General’s Office at: http://www.ag.ca.gov/register.php. All foreclosure consultants operating in California must post a $100,000 bond and register with Attorney General’s Office by July 1, 2009 and submit the following information:

Name, address, and telephone number;
All names, addresses, telephone numbers, websites, and e-mail addresses used or proposed to be used in connection with their business;
Copies of all advertising;
Copies of each different contract the consultant will use with consumers; and
A copy of its $100,000 bond
For more information please visit: http://ag.ca.gov/consumers/general/foreclosure_reg.php.

___________________________________________________________________

From the California Department of Real Estate website:

Advance Fees and Loan Modification Services

If you are behind in your mortgage payments, you may be contacted by individuals or companies that will offer to help you work out a loan modification with your lender or provide other services to you in order to help you prevent a foreclosure on your home.

You must be very careful if you are asked to pay for any of these services in advance, whether in cash, check or by charging your credit card. First, California Civil Code Section 2945, which regulates "foreclosure consultants", forbids anyone who falls under the definition of a “foreclosure consultant”, as well as a real estate licensee, from collecting any advance fees for these types of services if a Notice of Default has been recorded against your property. If your lender has recorded a notice of default, do not pay an advance fee to anyone. There are non-profit agencies that can assist you without charging you a fee and real estate brokers who can represent you for a fee to be paid after they have completed their work. For information on non-profit housing counseling services, use the following links:

* Federal Housing Administration
* Hope Alliance Web site

If a Notice of Default has not been recorded against your property, it may be permissible for a real estate broker to assist you in working out a loan modification or otherwise negotiate a possible resolution to your problem with your lender or loan servicer and ask you for payment in advance for their services. However, the broker must have you sign an agreement that tells you what services will be performed, when they will be performed and how much you must pay. The broker cannot have you sign an agreement until it has been submitted to the Department of Real Estate for review and the broker has received permission to use it and collect the advance fee.

The following individual and corporate real estate brokers have submitted advance fee agreements for loan modification and/or similar services to the Department of Real Estate for review, and have received “no objection” letters regarding their use. CLICK HERE You can obtain information on brokers and their locations by clicking on the “License Number” on the attached list or call (916) 227-0770.

The Department of Real Estate does not approve, endorse, recommend or make any representations about any of the agreements or their terms, or any aspect of a licensee’s business activities. Consumers wishing to contract with a real estate broker for loan modification or any other similar or related services should carefully review the agreement(s) and consider obtaining independent advice before signing an agreement(s) or advancing any fees. Consumers should also consider comparing the services and fees offered by other licensed brokers on the list.

Note: Licensed real estate brokers who provide loan modification or similar services without collecting fees in advance are not required to receive the Department of Real Estate’s permission as long as their services are fully completed before you pay them.

The list is updated on a periodic basis and may not include those which have recently completed the review process.

Before you pay an advance fee to anyone for assisting you, first call the Department of Real Estate at (916) 227-0770 to find out if an advance fee agreement is on file.

California Mortgage Foreclosure Consulting Law

California Foreclosure Law

Without an attorney and the benefit of a "forensic loan audit" that may deliver legal leverage to compel a lender to make a loan modification, foreclosure "consulting" may be of dubious value.

The California State Bar Ethics Advisory On Loan Consulting

Being evicted after foreclosure? Tenant eviction law. State law in California gives you 60 days from foreclosure. Cities have additional laws that may assist you in staying longer, depending on your circumtances. Generally, it is just a matter of time if the new owner after foreclosure wont reach agreement to let you stay on.