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Admitting it was a “bad boy” handling mortgages in bankruptcy, Chase recently entered a settlement with the federal government to compensate more than 25,000 US homeowners. The settlement is subject to court approval.
The United States Trustee Program, a unit of the Department of Justice whose attorneys at the bankruptcy court oversee the integrity of the system, announced on March 3 it had reached an agreement with Chase forcing it to pay homeowners $50 million in cash, mortgage loan credits and loan forgiveness for “robo-signing” and other improper practices before the bankruptcy court. Chase also agreed to change internal operations and submit to the oversight of an independent compliance reviewer.
Chase admitted it submitted more than 50,000 mortgage “payment change notices” that were signed by persons who had no knowledge of the accuracy of the notices they signed:

• More than 25,000 of the notices were signed by employees or former employees who had nothing to do with reviewing the accuracy of the notices.
• The rest of the notices were signed by employees of third party vendors who also were not involved in verifying the accuracy.

Chase also admitted it failed to file the notices in a timely fashion, as well as failing to provide timely escrow statements to homeowners in bankruptcy.
“It is shocking that the conduct admitted to by Chase in this settlement, including the filing of tens of thousands of documents in court that never had been reviewed by the people who attested to their accuracy, continued as long as it did,” said Acting Associate Attorney General Stuart F. Delery. “Such unlawful and abusive banking practices can deprive American homeowners of a fair chance in the bankruptcy system, and we will not tolerate them.”
“This settlement should signal once again to banks and mortgage servicers that they cannot continue to flout legal requirements, compromise the integrity of the bankruptcy system and abuse their customers in financial distress,” stated U.S. Trustee Program Director Cliff White.
Under the proposed settlement, Chase agrees to provide payments, credits and contributions totaling more than $50 million:

• Chase will provide $22.4 million in credits and second lien forgiveness to about 400 homeowners who received inaccurate payment increase notices during their bankruptcy cases.
• Chase will pay $10.8 million to more than 12,000 homeowners in bankruptcy through credits or refunds for payment increases or decreases that were not timely filed in bankruptcy court and noticed to the homeowners.
• Chase will pay $4.8 million to more than 18,000 homeowners who did not receive accurate and timely escrow statements. This includes credits for taxes and insurance owed by the homeowners and paid by Chase during periods covered by escrow statements that were not timely filed and transmitted to homeowners.
• Chase will pay $4.9 million, through payment of approximately $600 per loan, to more than 8,000 homeowners whose escrow payments Chase may have applied in a manner inconsistent with escrow statements it provided to the homeowners.
• Chase will contribute $7.5 million to the American Bankruptcy Institute’s endowment for financial education and support for the Credit Abuse Resistance Education Program.

If approved by the court, homeowners will get notification from Chase to any relief for which they are eligible.
If you have questions or concerns about your situation, contact our law office.

Filing Bankruptcy Can be Good for Your Credit Score Last week, The Federal Reserve Bank of New York published a study of people who did, and didn’t, file bankruptcy. The results didn’t surprise me, but they might startle you. Comparing people in financial trouble who filed bankruptcy and people who kept struggling, these economists who […]The post Filing Bankruptcy Can be Good for Your Credit Score by Robert Weed appeared first on Robert Weed.

Did you recently abandon or move out of a property going through foreclosure in Walworth County? Are you a financial institution left with an abandoned property going through a Walworth County foreclosure? A recent Wisconsin Supreme Court decision could have interesting ramifications for both banks and homeowners. The decision states that mortgage lenders must sell foreclosed and abandoned property within a reasonable time after obtaining a foreclosure judgment. The “reasonable time” period will depend on the circumstances surrounding the foreclosure.
 

The Story Behind the New Walworth County Abandoned Foreclosure Law
The decision came after a Milwaukee home was abandoned following a bank foreclosure process. The homeowner walked away. The bank did nothing. The home was then burglarized and vandalized as well as never properly maintained. The property became invaluable and not worth the bank’s time and money to sell. The home then racked up fines due to violating city codes. The homeowner was held responsible. Despite the homeowner’s attempt to declare the property abandoned, it never happened. The Circuit Court declared it did not have the authority to label a home abandoned.
Fast forward to just last week: In Bank of New York Mellon v. Carson, 2015 WI 2015 (Feb. 17, 2015), a four-justice majority ruled that section 846.102 authorizes circuit courts to order mortgagee banks to sell abandoned foreclosures, and must order sales within a reasonable time. Now, it will be a requirement that foreclosed and abandoned property be sold by banks. You can expect a large amount of properties to be placed on the real estate market in Walworth County following this Wisconsin Supreme Court case.
Homeowners must be aware that, if you abandon your property, you are declaring that you no longer have an interest in retaining the property. Therefore, the bank can and must sell the property without any long delays which previously gave homeowners an opportunity to redeem or refinance.
The purpose of the decision is to help local communities deal with abandoned properties in a timely manner before the properties attract burglars, vandals, and other criminals. The new decision will also help homes be sold before they become decrepit and face city code violations. Vacant properties have a negative impact on our local communities when they are used for the wrong purposes.
 
Contact Our Walworth County Foreclosure Attorney
If you represent a bank tackling an abandoned foreclosure or if you are a homeowner facing a Walworth County foreclosure or a Kenosha County foreclosure, contact Wynn at Law, LLC. We help financial institutions and homeowners through the foreclosure process. Our Walworth County foreclosure attorney can answer all your foreclosure questions. Wynn at Law, LLC has offices in Lake Geneva, Salem, and Delavan, Wisconsin. You can reach our Walworth County foreclosure attorney by phone at 262-725-0175 or by email via our website’s contact page.
 

 
 
*The content and material on this web page is for informational purposes only and does not constitute legal advice.
 

The 8th Circuit Court of Appeals has ruled that retirement funds rolled over from an Individual Retirement Account to purchase an annuity are exempt from the bankruptcy estate.  In re Miller (No. 13-3682).  Prior to filing bankruptcy, Joseph Miller, rolled over $267,319 from his IRA account to purchase an annuity contract from Minnesota Life Insurance Company.  The annuity was to pay the debtor $40,497.95 for the next 8 years.  Although it is clear that funds held in IRA accounts are exempt, the trustee argued that the funds lost that protected status when the annuity was purchased because the annuity did not meet the tax qualification rules of Internal Revenue  Code Section 408.
Section 522(b)(3)(C) of the Bankruptcy Code provides that funds which are exempt from federal taxation are thereby made exempt from the claims of creditors.  Such funds are not part of the “bankruptcy estate.”
The Chapter 7 Trustee in Miller argued that the rollover of funds from the IRA account exceeded the $6,000 annual premium limit imposed by IRC 408(b)(2)(A), and hence the fund were no longer exempt from taxation or protected in bankruptcy.  The 8th Circuit rejected this argument by pointing out that there is a difference between a “rollover contribution” and a “premium payment.”  The Court ruled that “a rollover contribution is distinct from a premium.”
In a similar case, the Massachusetts bankruptcy court also ruled that funds rolled over to an IRA annuity are exempt from the bankruptcy estate under 522(b)(3)(C).  In re LeClair, 461 B.R. 86 (Bankr. D. Mass. 2011).
Important facts about IRA Accounts in Nebraska Bankruptcy Cases:

• In addition to the federal retirement exemption statute of 522(b)(3)(C), Nebraska has its own exemption statute protecting retirement funds.  Neb. Rev. Stat. 25-1563.01.  So, if the federal exemption does not apply it may be possible to protect the retirement account under Nebraska’s law.
• Inherited IRA accounts are not protected in bankruptcy.
• IRA accounts which allow the debtor to borrow against the account may be at risk in bankruptcy.

If in Doubt file Chapter 13:
Sometimes it is difficult to determine if an account is exempt from federal taxation and, as a result, whether the account is protected in bankruptcy.  Debtors with sizable retirement savings simply cannot risk losing those funds in Chapter 7.  Keep in mind, Chapter 7 trustees are paid on commission–they earn bonus income if they uncover unprotected assets worth selling.  If there is any real doubt as to whether an retirement is account is protected in Chapter 7, the debtor is best advised to file for Chapter 13 and agree to pay back some of their debt over a 3 to 5 year payment plan. Chapter 13 trustees are not empowered to liquidate assets and payment plans are typically based on what a debtor can really afford to pay back.  If in doubt, file 13.
 
Image courtesy of Flickr and 401kcalculator.org