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Here in Florida, our foreclosure defense clients have seen two more excellent principal reduction offers in the past month – both from Ocwen. Both reductions were to the fair market value, maybe even below, and both were reduced over $100,000. Additionally, the interest rates were reduced to 4% for the remaining balance.

As I’ve reported in the past, Ocwen is buying the servicing rights for many mortgage loans, including Litton and Saxon, so when you open your mail and find your loan has been transferred once again, don’t fret if its Ocwen, as it may be a blessing in disguise.

Both of the above cases were involved in litigation with our law firm so that may also have been a relevant fact, but we really don’t know. All I can say on behalf of my clients is: Thank you Ocwen. Kudos.

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underwater house.jpgThe recent AG settlement among the states’ Attorneys General and the five largest mortgage servicers is expected to be filed any day now. Hopefully then more light will be shed on what exactly the terms are and how they will help Florida homeowners.

The Wall Street Journal reported today that Bank of America also made a side deal to avoid penalties and will be doing more principal reductions. Under the terms of the settlement, the five servicers are required to make more than $10 billion in principal reductions. There is a lot more info in the article at the link above.

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1099c.jpgCreditors are busily sending out more 1099C’s then ever before according to a story by Jeremy Campbell of Channel 13 in Tampa, Florida this week. The news story “How the IRS taxes debt” explains that debt settlements while good, come with a penalty. Consumers are taxed on the forgiven debt sometimes months or years after the settlement. More than 6 million consumers are expected to receive 1099C’s this year, double last year.

One important point that the story did not address. Cancelled debt is not taxed in a bankruptcy. Just saying.

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occupy tampa.jpgUSF and Occupy Tampa is holding a Foreclosure Teach-In this Saturday March 10, 2012 1:30-4:30. There is no charge and you can also attend via the Internet live feed.

Senior Staff Attorney from Jacksonville Area Legal Aid April Charney will be speaking. April has been traveling around the State of Florida for the past several years educating attorneys on the nuances of foreclosure defense. I have personally attended two of her all day seminars and she is a very spirited and knowledgeable fighter of foreclosures! It was time well spent.

Do not miss this opportunity. This seminar is designed to help participants become familiar with the foreclosure process and what they can do when faced with foreclosure. If your schedule does not permit you to attend, the seminar will be archived on the site as well.

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pros_cons.gifI often sit with my clients in Tampa, Florida and perform a simple test: I make two columns on a piece of paper and list the pros and cons of filing bankruptcy versus trying to settle their debt.

More often than not, the bankruptcy column has many more pros, while the debt settlement column has more cons. For instance, in a Chapter 13, the monthly payment is usually much less. In a Chapter 7, the monthly payment is zero if there is no disposable income.

Debt settlement on the other hand usually requires the client have lump sum amounts available to offer to get any kind of substantial reduction. So they have to save up. The client has to reach satisfactory agreements with each creditor, or they still have leftover debt. Finally, in debt settlements the cancelled debt is taxable by the IRS. Not so in bankruptcy.

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nacba.jpgThe Federal Housing Finance Agency (FHFA) that recently approved of HAMP principal reduction for Freddie and Fannie loans has rejected a proposal by the National Association of Consumer Bankruptcy Attorneys (NACBA). The Principal Paydown Plan is designed to amend the bankruptcy code to allow for payments during a Chapter 13 to go towards principal to substantially reduce the balance owed on an underwater home.

According to an email update by NACBA, many members of Congress have endorsed the Principal Payback Plan. However, despite FHFA Director DeMarco’s initial positive comments about the Principal Paydown Plan, which he said struck him as “being responsible,” and a “credible way to address the crisis while recognizing various interests mortgaged properties,” he recently wrote to Congress informing them that the agency would not be implementing the Principal Paydown Plan. FHFA concluded that few GSE borrowers have filed for chapter 13 bankruptcy and are underwater and therefore the proposal would not be all that helpful. They did, however, commit to doing what they can to help eligible borrowers in bankruptcy get the HAMP modifications they qualify for.

Personally, I see a lot of homeowners that would qualify for the Principal Paydown Plan. Moreover, until something is done about the conflict of interest of servicers, we are not going to see any widespread adoption of principal reduction for Fannie and Freddie loans.

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The Home Affordable Modification Program (HAMP) is being extended and expanded to reach more borrowers- will it be enough to help or an example of “too little too late”?

On January 27, 2012, the Treasury department announced the revisions.

First, to encourage principal reduction, the Treasury is tripling incentives and paying 18 to 63 cents on the dollar depending upon the change in the loan-to-value ratio. In the past, the Federal Housing Finance Agency (FHFA) prohibited Freddie and Fannie from using HAMP to reduce principal. Treasury now allows the incentives for Freddie and Fannie if they allow servicers to forgive principal in a HAMP modification. So if your servicer previously denied your HAMP modification, check to see if your loans are owned by Freddie or Fannie because the rules may be different now. Here’s how to do that.

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Nation Mortgage News reports today that Ocwen is on the verge of closing on two large MSR purchases: a $15 billion package of nonprime product from JPMorgan Chase, and a $26 billion deal from Saxon Mortgage.

Both could close this month. The $300 billion figure, the company says, excludes the JPM and Saxon transactions. Investment banking officials told National Mortgage News that Ocwen and JPM are discussing additional purchases. Once these two transactions are completed Ocwen will control roughly $140 billion of MSRs, most of it tied to nonprime loans.

The relevance is that we and other attorneys see Ocwen doing principal reductions. Sometimes outright and sometimes in an equity share participation arrangement. Some may only appear to be a principal reduction, but are actually a balloon. We also have been able to have a rapport with Ocwen unlike some other big players.

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price v value.jpgQuotation of the Day:

“The fundamental issue is that law schools are producing people who are not capable of being counselors. They are lawyers in the sense that they have law degrees, but they aren’t ready to be a provider of services.” Jeffrey W. Carr, General Counsel.

At my Tampa, Florida law firm we pride ourselves in our abilities to counsel clients as to their options and help make decisions that may impact the rest of their lives. We don’t take that responsibility lightly. We don’t just file bankruptcy for everyone who contacts us. It is not one size fits all. We don’t mandate that our bankruptcy clients file according to our schedule when simple timing and planning achieves a much better result. We don’t suggest every client defend their foreclosure or maintain a scorched earth policy. We are able to advise our clients regarding both bankruptcy and foreclosure or civil defense. I have 20 years legal experience in areas of bankruptcy and civil litigation (including foreclosure defense).

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If you are like most Florida consumers overloaded with debt, by not considering bankruptcy, you are continuing to just throw money away on debt servicing. Once you get behind, it can be nearly impossible to catch up especially now with the costs of living rising higher than wage increases. You have options rather than see your money continue to go down the drain: speak with a bankruptcy attorney. Quit delaying. Make a decision now. Bankruptcy may or may not be the answer. But you owe it to your family and yourself to find out if it is.

debt whirlpool.jpgNationwide bankruptcies by consumers declined approximately 10% last year. Is this a sign the economy is improving? In part perhaps. But mostly, it may be from indecision, and the inability to pay up to $2,000 to file bankruptcy. The debt is still there and getting bigger in most cases.

The general need for bankruptcy is still present, but the financial ability of clients to pay the fees has decreased. The availability for credit is diminished. In the past, as long as you were breathing, you were able to secure a car loan and probably even a home loan. Not anymore. Costs of food and other essentials have skyrocketed leaving less disposable income. The availability of funds to pay one-time fees for a bankruptcy attorney or other unexpected expenses is non-existent for some clients.

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