Northern California Bankruptcy Lawyer Blog

Have you had problems with obtaining a loan modification? California and the other 49 states have joined together to fight lenders against inefficient, impersonal and predatory lending practices. All 50 U.S. states are currently investigating whether banks and loan servicers used false documents and signatures to justify hundreds of thousands of foreclosures. The investigation, announced Oct. 13, 2010 came after JPMorgan and Ally Financial's GMAC mortgage unit said they would stop repossessions in 23 states where courts supervise home seizures, and Bank of America, the largest U.S. lender, froze foreclosures nationwide. The states began the probe last year after complaints that financial institutions submitted faulty paperwork in foreclosure cases.

The state attorneys general along with federal agencies submitted a 27-page settlement proposal to the country's five largest mortgage servicers to try to reach an agreement that leads to more loan modifications for homeowners having trouble making their payments. The state attorneys general are pressuring lenders to reduce loan balances and they hope to reach a settlement with banks over their mortgage-servicing and foreclosure practices within two months.

State attorneys general and federal agencies, including the Justice Department, the Treasury Department and the Consumer Financial Protection Bureau, submitted the proposal as a starting point for negotiating a settlement with the servicing industry, said Iowa Attorney General Tom Miller, who is helping to lead the talks with the banks.

"The result we come to can have an impact on the housing market and the economy," North Carolina Attorney General Roy Cooper told reporters at a meeting of attorneys general in Washington. "We don't want uncertainty to linger very long." The companies that received the settlement terms from officials are Bank of America Corp. (BAC), Wells Fargo & Co. (WFC), JPMorgan Chase & Co. (JPM), Ally Financial Inc. and Citigroup Inc. (C) They service 59 percent of U.S. home loans, according to Tom Miller.

The settlement terms from officials don't include a dollar figure for civil penalties nor do they mandate loan modifications, Miller said. The goal is to reach a final agreement in a couple months, he said. The settlement sheet seeks to force procedural changes on servicers, including banning companies from initiating foreclosure proceedings while a loan modification is pending, providing borrowers with a single point of contact, and informing borrowers of denied modifications in writing. Homeowners trying to avoid foreclosure sometimes complain of a move to foreclose on their properties while they are negotiating a modification.

Borrowers who are enrolled in a trial period for a loan modification under a federal program and make three loan payments on time would have to receive a permanent loan modification, according to the proposal. The document would give attorneys general and the Consumer Financial Protection Bureau responsibility to police servicers' compliance with any settlement.

The 50 state attorneys generals received an update at yesterday's meeting on the investigation into the mortgage- servicing practices of banks and the efforts to reach a settlement that could overhaul their procedures.

Homeowner activists have protested at meetings of the attorneys general, criticizing banks and demanding state and federal officials reach a tough settlement with the companies. They also called for criminal prosecutions.

Continue reading "Loan Modification Assistance In Sight From State Attorneys General" »

On May 23, 2008, the city of Vallejo filed a case seeking bankruptcy protection and the adjustment of its debts under Chapter 9 of the United States Bankruptcy Code. Vallejo filed for bankruptcy after the recession eroded tax revenue and unions rejected wage cuts. Chapter 9 allows municipalities to reorganize debt rather than liquidate. The case was filed in the United States Bankruptcy Court for the Eastern District of California, Sacramento Division (the "Bankruptcy Court") and was assigned case number 2008-26813. The City intended to continue normal business operations throughout the bankruptcy process.

Vallejo with a population of about 120,000 is the biggest U.S. city currently in bankruptcy. Vallejo has blamed the unions for its financial woes. Vallejo has submitted a plan to the bankruptcy court, but the plan has been opposed. A group of retirees opposed to the plan have asked that details about work the city's mayor did as a bond lawyer be included in the disclosure statement. The group claims Osby Davis may have a conflict of interest in the bankruptcy case because he was involved in reviewing some of the debt the city issued from 1999 through 2003. The retirees claim the city plans to repay its bank lenders by cutting benefits to current and former workers and slashing city services. The workers argue that Vallejo should cancel leases that guarantee payment of $45.9 million in debt owed to Union Bank NA instead of cutting worker benefits.

Vallejo informed the bankruptcy court that it will add more information to the disclosure statement, to give creditors enough information to vote on the plan. Once the disclosure statement is approved by the judge, it will be sent to creditors, who will be asked to vote on the plan. The city says its plan will save about $100 million by reducing retirees' health benefits and it cannot risk city services and facilities by defaulting on the loans to Union Bank.

U.S. Bankruptcy Judge Michael S. McManus has indicated he will issue a written ruling on a request that more information about the city's bankruptcy exit plan be included in a disclosure statement for the city's proposed plan. He declined to put off beyond June 2011 a court hearing for him to approve or reject the proposal.

Continue reading "City of Vallejo Bankruptcy, Unions and Vallejo Spar Over Solutions" »

The U.S. Trustee program is an arm of the U.S. Department of Justice. If you file a Chapter 7 bankruptcy or a Chapter 13 bankruptcy your case will be assigned to a trustee that is appointed to the U.S. Trustee program. The U.S. Trustee program assigns independent officials to handle bankruptcies and to take the reins of companies under Chapter 7 protection or to act as receivers. Members of the Chapter 7 trustee panel are subject to an initial background check, updated every five years. They are charged with rounding up and liquidating property of the bankruptcy estates to which they are assigned and distributing funds to creditors.

A trustee is legally required to safeguard all assets, keep detailed and accurate financial records and accounting relating to all funds received and disbursed, and make reports and give appropriate notice to parties of activities occurring in administration of the estates. Once appointed, a trustee has a fiduciary duty to safeguard and protect all assets deposited into the corresponding fiduciary bank accounts and to protect the bankruptcy estate.

The U.S. attorneys office in Florida has filed a lawsuit against a 20-year veteran of South Florida's Chapter 7 trustee panel accusing her of stealing millions from bankruptcy estates and receivership for her own personal use. The lawsuit was filed with the U.S. District Court in Miami. The trustee is 64 year old Marika Tolz.

According to the lawsuit, Tolz misappropriated $16 million from March 2003 to May 2010, when she resigned. The lawsuit accuses Tolz of writing unauthorized checks from accounts she was charged with safeguarding. According to the lawsuit, her misappropriations resulted in "at least $2.4 million in losses to affected fiduciary matters." The U.S. wants her to forfeit property that "constitutes or is derived from proceeds traceable to such violation," including the $2.4 million. The criminal lawsuit charges Tolz with conspiracy to commit wire fraud which could result in a maximum penalty of 20 years imprisonment, according to the court papers.

According to the lawsuit, wrongdoing included the unauthorized writing of checks and the filing of false reports. "It was the purpose of the conspiracy that Tolz would use the misappropriated money for her own personal benefit as well as to conceal her misappropriations by restoring the balance of other fiduciary accounts from which she had taken funds." The wrongdoing touched a variety of cases, such as Fuzion Technologies Group Inc., where she served as trustee, and Douglas Centre RB-Gem LLC, where she served as receiver.

The South Florida Business Journal is reporting that Tolz intends to plead guilty to the charges, according to a story published March 4. Ben Kuehne, her attorney, told the South Florida Business Journal that Tolz "acknowledges her errors and fully anticipates that all funds will be fully reimburse or restitution made." "She will be accepting full responsibility for her conduct."

Continue reading "U.S. Bankruptcy Trustee in Ponzi Scheme" »

Publishing powerhouse Judith Regan was fired by HarperCollins in 2006. At the time, she claimed that a senior executive at its parent company, News Corporation, had encouraged her to lie two years earlier to federal investigators who were vetting Bernard B. Kerik for the job of homeland security secretary. Ms. Regan had once been involved in an affair with Mr. Kerik, the former New York City police commissioner. Now, court documents filed in a bankruptcy filed by Ms. Regan's lawyers make it clear that Ms. Regan was accusing Roger E. Ailes, chairman of Fox News, of urging her to lie. The documents also say that Ms. Regan taped the telephone call from Mr. Ailes in which Mr. Ailes discussed her relationship with Mr. Kerik.

At the time, Mr. Kerik's mentor former Mayor Rudolph W. Giuliani, was in the beginning stages of a presidential campaign. According to the records filed, Mr. Ailes wanted to protect Mr. Giuliani and conceal the affair. The News Corporation settled a wrongful termination suit filed by Ms. Regan, paying her $10.75 million in a confidential settlement reached two months after she filed it in 2007. In a statement recently released, a News Corporation spokeswoman did not deny that Mr. Ailes was the executive on the recording.

The new documents have emerged in a bankruptcy case as part of a lawsuit filed in 2008in which Ms. Regan's former lawyers in the News Corporation case accused her of firing them on the eve of the settlement to avoid paying them a twenty five percent contingency fee. Discussion of the recorded conversation with Mr. Ailes emerged in affidavits from Ms. Regan's former lawyers who are seeking to document the work they did on her case and for which they argue they deserve the contingency fee. According to records reviewed by the New York Times, Brian C. Kerr, one of Ms. Regan's former lawyers, describes in an affidavit the physical evidence he reviewed as "including a tape recording of a conversation between her and Roger Ailes, which is alluded to throughout the complaint" that Mr. Kerr and another lawyer, Seth Redniss, drafted for Ms. Regan. That complaint said News Corporation executives "were well aware that Regan had a personal relationship with Kerik." "In fact," the complaint said, "a senior executive in the News Corporation organization told Regan that he believed she had information about Kerik that, if disclosed, would harm Giuliani's presidential campaign. This executive advised Regan to lie to, and to withhold information from, investigators concerning Kerik." Mr. Redniss, in his affidavit, referred to "a recorded telephone call between Roger Ailes, the chairman of Fox News (a News Corp. company) and Regan, in which Mr. Ailes discussed with Regan her responses to questions regarding her personal relationship with Bernard Kerik." "The 'Ailes' matter became a focal point of our work," Mr. Kerik was sent to prison last year after pleading guilty to federal charges including tax fraud and lying to White House officials.

The law firm Ms. Regan hired to draft her complaint against News Corporation was headed by Marc S. Dreier, whose firm was cast into bankruptcy in 2008 when he was charged with a $100 million fraud scheme. The firm's suit seeking the contingency fee from Ms. Regan is being led by the bankruptcy trustee handling the dissolution of the firm. Mr. Redniss was a co-counsel to the Dreier firm.

Continue reading "Bankruptcy Trustee Sues Former Publisher Judith Regan To Collect Legal fees Owed to Dreier Law Firm re Lawsuit and Allegations Fox News Chief, Roger Ailes, Urged Her to Lie" »