Friday, December 30, 2011

Bank of America Settles Huge Fair-Lending Lawsuit For Discriminating Against Minority Borrowers

Illinois and federal officials recently announced that Bank of America must pay $335 million to settle allegations that its Countrywide Financial unit discriminated against minority borrowers during the housing boom.  According to the Chicago Tribune, Countrywide allegedly steered African-American and Hispanic borrowers into high-risk subprime loans and charged them higher interest rates and fees on mortgages.

This news comes as a sad but not unsurprising development.  Our Oak Park foreclosure defense attorneys know that many instances of mortgage fraud and abuse occurred before and after the housing bubble burst.  If you or someone you know is in danger of mortgage foreclosure, it may be worth examining your options and understanding the ways in which unscrupulous lenders have taken advantage of troubled homeowners in the past. 

Bank of America’s agreement is the largest residential fair-lending settlement in history, reports the New York Times.  However, a federal judge in California first must approve the settlement.  The now-defunct Countrywide was originally based in California before Bank of America purchased its assets.  The allegations stem from actions the company took between 2004 and 2008, before Bank of America bought it. 

Countrywide’s lending problems evolved out of a company policy granting loan officers and brokers the discretion to alter the terms for which a particular applicant qualified.  However, Countrywide failed to develop any system that ensured their loan officers were complying with fair-lending rules.  Federal civil rights laws prohibit lending practices that have a disparate impact on minority borrowers.  Here, Countrywide charged Hispanics and African-Americans more, on average, than white applicants with similar credit histories.

On the federal level, the Department of Justice increasingly has investigated instances of illegal lending practices due to the housing crisis and the revelation of suspected fraudulent or discriminatory behavior.  In 2010, the Department formed a unit focusing exclusively on banks and mortgage brokers suspected of discriminating against minority mortgage applicants. 

Closer to home Attorney General Lisa Madigan has also investigated fraudulent Illinois lending practices.  In June 2010, AG Madigan filed a lawsuit against Countrywide Financial Corp., Countrywide Home Loans Inc., and Full Spectrum Lending Inc., a branch of Countrywide that primarily sold subprime loans.  The suit alleged that Countrywide violated the Illinois Fairness in Lending Act and the Illinois Human Rights Act.  The Illinois Fairness in Lending Act states that no financial institution may “[d]eny or vary the terms of a loan on the basis of the borrower’s race . . . or national origin.”  815 ILCS 120/3.  By analyzing Countrywide’s lending data, AG Madigan was able to determine that minority borrowers paid more for mortgages than white borrowers.  They also were sold high-risk (i.e. subprime) loans even when they qualified for low-cost (i.e. prime) loans.

In today’s economy, the Oak Park mortgage foreclosure lawyers at the Emerson Firm know that people of all income levels may find themselves struggling.  We understand that clients appreciate lawyers who care about them, as well as about the outcome of their case.  If you believe you were a victim of lending discrimination, or if you have questions about whether defending your mortgage foreclosure or choosing bankruptcy is right for you and your family, please contact the Emerson Firm at 708-660-9190 or visit us online today.

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Friday, December 23, 2011

Continuing Losses for Mortgage Giant Freddie Mac

Our Oak Park foreclosure attorneys know that the foreclosure crisis in America is continuing to this day.  We all hope that the housing market is on its way back up after a rough few years, but it seems there is still a long way to go before the market is healthy again.

Last month, government-sponsored mortgage giant Freddie Mac (the second largest mortgage lender in the US) asked the US Treasury for another $6 billion dollars after posting its worst quarterly loss in over a year.  That brings the total Freddie Mac taxpayer bailout to $72.2 billion, although it has returned $14.9 billion in dividends.  While in the last quarter the organization received a net interest income of $4.6 billion, it lost $4.8 billion in derivatives alone and another $3.6 billion in credit losses.  Freddie Mac’s CEO Charles Haldeman stated that a lot of these losses are due to hundreds of thousands of borrowers refinancing in the third quarter, which was a great step for borrowers and will help those struggling to make their mortgage payments.  But it also means more losses and less income for Freddie Mac.  And the losses are likely to continue with a revamping of the Home Affordable Refinance Program (HARP).  HARP is expected to allow up to one million more homeowners with Freddie Mac and Fannie Mae loans to refinance at today’s incredibly low interest rates.  To be eligible, the mortgage must have been sold to Freddie Mac or Fannie Mae before May 31, 2009.  There are additional conditions to these loans to make sure they are targeting responsible homeowners, such as you must be current on your mortgage with a good payment history for the last 12 months and the current loan-to-value ratio must be greater than 80 percent.  This type of loan adjustment is often the only viable option for borrowers with low credit scores or little equity left in their homes.

Despite the financial losses, Freddie Mac claims to have helped 48,000 borrowers avoid foreclosure in the third quarter, utilizing things such as loan modifications and repayment plans.  But the mortgage giant’s real estate owned (REO) costs from foreclosed properties skyrocketed, consisting of such expenses as maintaining the foreclosed properties and recoveries from mortgage insurance, which also hurt their bottom line.

Emerson Firm attorneys are experienced at helping clients defend against foreclosure actions.  Our Illinois foreclosure defense attorneys can help you understand the many options that exist out there specifically to help hardworking people keep their homes.  Our attorneys can also explain options to refinance to make it easier for you to keep up to date on your mortgage, like the HARP program discussed above.  We can help you determine the best cause of action and to navigate the regulations to give you the best chance to find a solution for you and your family.

In the spirit of the season, all the Oak Park foreclosure lawyers at the Emerson Law Firm want to wish our clients and friends in the Chicago area Happy Holidays!

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Thursday, December 22, 2011

City Ordinances Hold Mortgagees Responsible For Foreclosed Vacant Properties

Although the number of foreclosures have dropped in the Chicago area and nationally, many homes still sit vacant.  Our Oak Park foreclosure defense attorneys know that vacant properties, especially if not properly cared for, can cause a host of problems for Chicagoland residents.  Abandoned homes typically affect the value of the houses of neighbors, making it extremely hard to sell in an already challenged housing market.

The growing number of abandoned and dilapidated properties has made many Illinois cities eager to enter into agreements that will require owners of vacant buildings to take responsibility for them.  According to the Chicago Tribune, as of September 2010, there were 1,900 vacant properties within the city of Chicago alone where foreclosure proceedings had been launched by mortgage servicers but were never completed, which left the properties in limbo and likely not secured or maintained.  Approximately 10% of residential buildings in Cook County are vacant.

Last week, the Cook County Board passed a vacant building ordinance that is similar to the one the city of Chicago previously adopted.  The Chicago Tribune reports that the county’s measure, which passed without opposition, requires a property’s mortgagee to pay $250 to list buildings as vacant on a countywide registry.  The ordinance will take effect in mid-February and will apply to all areas of unincorporated Cook County.

The Cook County ordinance mandates that owners of vacant properties register those parcels and take responsibility for them within 30 days of the buildings becoming vacant or after assuming ownership of the buildings.  Mortgagees must do so within 60 days after a mortgage default.  Thus, mortgagees are now responsible for the maintenance of vacant properties within a reasonable timeframe so the properties do not fall into such drastic disrepair.  The ordinance will not apply to buildings that are vacant but being cared for, under construction or rehab, the subject of a probate action, or in an ownership dispute.

According to Commissioner Bridget Gainer, D-Chicago, 75% of the mortgages in Cook County are owned by the Federal Housing Finance Agency (FHFA).  Gainer claims this allows the owners of vacant properties to ignore their responsibilities to their own assets and to Illinois communities.

Despite apparent support for such laws, Chicago’s ordinance, which is similar to Cook County’s but requires a $500 property registration fee, has become the subject of a federal lawsuit.  The FHFA, which oversees Fannie Mae and Freddie Mac, filed a lawsuit against the city, alleging that the ordinance infringes on its role as the sole regulator and supervisor of Fannie and Freddie.  The two big-time mortgage financiers own about 258,000 mortgages within the city of Chicago.  In recent years, the lending giants have been accused of failing to detect and prevent fraudulent mortgage foreclosure practices

The federal lawsuit seeks to exempt all of the FHFA’s mortgages from the ordinance.  Chicago officials say they plan to vigorously defend the ordinance in court.

The Chicago foreclosure lawyers at the Emerson Firm can help you decide if foreclosure is the best possible option for you and your family.  Helping you comply with the law and protecting your assets is our top priority.  Illinois foreclosure law is changing all the time, so it is essential for Oak Park residents to be aware of the resources available to them.  Please consider contacting the Emerson Law Firm for a foreclosure defense consultation today. 

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Friday, December 16, 2011

Illinois Debtors Should Ensure That Bankruptcy Petitions Are Prepared Legally

Our Oak Park bankruptcy lawyers know that filing for bankruptcy has become a reality for many Chicagoland residents who decide it is necessary as a last resort.  Bankruptcy is a legal procedure for dealing with consumer and/or business debt and is typically a one-time event for most people.  If you are not familiar with the process, it can sometimes seem overwhelming.  Many debtors worry that their situation is hopeless, but, thankfully, that is not true. 

If you are considering filing for bankruptcy, one of the most important things is to make sure you are completing all of your paperwork legally and above-board.  For example, as Delmarva Now News reports, someone who is not a lawyer (or who does not work for a lawyer) who prepares bankruptcy petitions for a fee and does not sign the petitions is violating federal law.  A bankruptcy petition is the official document that a debtor or creditor files to start a bankruptcy case.  It is legal for a non-lawyer to prepare bankruptcy petitions for a fee.  However, those preparers must sign the petition as well as other documents that must accompany the petition.  Bankruptcy petition preparers must also make significant written disclosures to the debtors they assist and provide those debtors with a written contract.  All of these requirements are essential to making sure your bankruptcy documents are prepared in accordance with Illinois bankruptcy law.

On the other hand, bankruptcy petition preparers who are not lawyers may not provide legal advice.  Changes to U.S. bankruptcy law frequently occur, so you should seriously consider consulting a legal professional to help you with your case.  A professional well versed in Illinois bankruptcy law can help assist you in answering many of the important questions you are sure to have if you are considering filing for bankruptcy.  For example, you might wonder what assets, if any, you can keep after filing for bankruptcy.  You may also be unsure whether you should even file for bankruptcy or may need to know what type of bankruptcy to file. 

While it can be tempting to cut corners, doing so could have serious, long-term consequences for you, your business, or your family.  If a problem arises with your bankruptcy petition, and you did not seek the help of a bankruptcy lawyer a debtor could be on his or her own.  This is because a bankruptcy petition preparer cannot represent a debtor, even at a creditors meeting.  If the petition is not prepared properly, it can result in the debtor’s case being dismissed or in a delay in the proceedings.  Debtors may also have to repay filing fees, which can add up if you are concerned about finances.

Our Oak Park bankruptcy attorneys work with clients to best meet their needs.  We realize that financial troubles can often seem overwhelming and that it can be difficult to admit you need help.  In these tough economic times, our lawyers will do everything they can to help you consider all of your options.  For a confidential bankruptcy consultation with the Emerson Law Firm, please call our office at 708-660-9190 or visit us online.

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Friday, December 9, 2011

Illinois Foreclosure Defense Lawyers Understand Current State of Chicago Housing Market

Our Oak Park foreclosure defense attorneys have closely monitored the housing market troubles since the beginning and watched with concern when the housing bubble burst in 2008.  We realize that it is vital for lawyers to understand the various factors that continue to affect the housing market.
Recently, the National Association of Realtors stated that U.S. home prices fell in three-quarters of all metropolitan areas in the third quarter of 2011. reports that the median price of homes in the U.S. was down 4.7% in the third quarter of 2011, compared to the same period in 2010. 

According to an article in Medill Reports, Illinois third-quarter home sales are up 19.9% from a year ago.  Illinois is one of the top five states that accounted for more than half of the nation’s total foreclosure activity in 2010.  In Illinois, mortgage loan applications also have surged, boosted by low interest rates, which have fueled a refinancing demand.  A homeowner might choose to refinance for a number of reasons, including to take advantage of a lower interest rate or to reduce a monthly repayment amount.

The Chicago Tribune recently reported that fewer homeowners are defaulting on their mortgages, which is a positive sign, but that foreclosures are expected to increase.  Many economists have suggested it will take years to return to a typical pattern of delinquencies and foreclosures.  For example, Guy Cecala, publisher of Inside Mortgage Finance, believes it will take at least two more years to resolve the crisis.  The pace of improvement is dependent upon how fast banks can clear out defaulted mortgages and foreclosed properties, said Mr. Cecala.

It is good news that many homeowners are currently able to keep up with their mortgage payments.  It could be a sign that the economy is improving.  Low housing prices also could encourage hesitant or first-time buyers, especially as the economy slowly starts to improve.

However, the massive backlog of foreclosed homes has meant that the housing market has been improving sluggishly, if at all.  That backlog has remained high in part due to alleged robo-signing.  Lenders halted or slowed foreclosure proceedings for much of 2011 when it was revealed in 2010 that mishandled or fraudulent paperwork had been filed in many cases.  Fraudulent mortgage foreclosure practices, such as alleged robo-signing, were a huge setback in the housing crisis.

Lingering unemployment—currently at approximately 9% nationally—also has thwarted improvements in the housing market.  Despite low housing prices, many prospective buyers may be reluctant to commit to a mortgage when the future remains uncertain.  Thus, even though it is a buyer’s market and sellers are struggling, concern regarding economic uncertainty may be discouraging those looking to make new investments.

You can be confident that the lawyers at the Emerson Firm are up to date on Chicago foreclosure law and understand the various fluctuations in the housing market.  If you are concerned that you may lose your home in a foreclosure action and you live in the Chicago area, you are not alone because there are many legal options available to you.  Our Chicago foreclosure defense lawyers work with homeowners to best meet their needs, including defending them in foreclosure suits or by helping them use loss mitigation strategies where appropriate, such as loan modification or bankruptcy.  Illinois foreclosure law is changing all the time, so it is essential for Chicagoland residents to be aware of all the resources available to them.  Please consider contacting the Emerson Law Firm for a consultation today. 

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Wednesday, December 7, 2011

Improper Bank Foreclosures Create Trail of Victims

Our Oak Park foreclosure defense attorneys know how difficult it is for a homeowner to go through foreclosure proceedings and potentially lose their home.  But what if you bought a house in what you thought was a fair and legal transaction, and kept up with all of your payments, but found out that you will still lose your house?  Not because anything you did, but because the bank previously foreclosed on a house improperly and therefore did not have the title to sell to you.  The bank’s shoddy foreclosure practices not only hurt the homeowners who lost their house but also the innocent third party who bought the house.

This was at issue in a recent judgment by the Massachusetts Supreme Judicial Court in Bevilacqua v. Rodriguez.  Mr. Bevilacqua bought a property in a foreclosure sale by US Bank.  He invested several hundred thousand dollars in the property and turned it into condominiums, a few of which he had reportedly already sold.  However, unbeknownst to him, US Bank had messed up the foreclosure.  The previous foreclosure was void under a 2010 case, U.S. Bank v. Ibanez, which found that if a bank cannot provide proof it owns the mortgage, any foreclosure actions are invalid.  The Bevilacqua case extends that ruling further and finds that the innocent third party who bought the foreclosed property from the bank never had a proper title and therefore cannot own it.  In this case the previous owner, Mr. Rodriguez, was nowhere to be found, but that did not change the fact that Mr. Bevilacqua never owned the property in question.  The only practical remedy to someone like Mr. Bevilacqua who had invested so much money in a property was to go through a re-foreclosure, which could be very costly and have consequences if Mr. Rodriguez showed up as the legal owner or if other parties were interested in bidding on the property.

Massachusetts Attorney General Martha Coakley stated that this is endemic of a wider problem with bad foreclosure practices.  She said that the banks’ reckless behavior in foreclosure proceedings has harmed both homeowners and third party buyers.  Bevilacqua, however, does not address the robo-signing controversy (see previous post here.  That issue is still waiting for judicial consideration in Massachusetts, as in Illinois. 

As Oak Park foreclosure defense lawyers, we certainly know that banks’ actions in foreclosure proceedings are not always above board.  The continuing foreclosure crisis has made these hasty and often slapdash actions to take peoples’ homes even more apparent.  And the more links added to the ineffective title chain from an improper foreclosure makes the situation harmful to more people and potentially more difficult to untangle.  If you believe your house has been improperly foreclosed or the bank is taking inappropriate actions, please contact an experienced foreclosure attorney in your area.  As these Massachusetts cases show, there is legal recourse against banks’ incorrect actions and if the bank does not have proof it holds the mortgage to the house, there are remedies for homeowners.  Additionally, if you are concerned about buying or having previously bought a foreclosed property, a Chicago foreclosure attorney can check out your title and see if there are any issues or potential problems.

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Friday, December 2, 2011

Oak Park Bankruptcy Lawyers Share Data About Increased Pro Se Filings

Our Chicago bankruptcy lawyers have learned that the Administrative Office of the U.S. Courts recently released a report outlining a troubling phenomenon in bankruptcy filings.  Over the past five years, according to the report, the growth of pro se bankruptcy filings has outpaced the rate of growth of overall bankruptcy filings.  This revelation is disturbing because it suggests that some of the nation’s most financially vulnerable citizens believe they must go it alone rather than hiring an attorney when facing bankruptcy. 

Pro se legal representation means that a person is representing himself or herself without legal counsel in a court proceeding.  A person may choose to represent himself or herself for many reasons, but, typically, it is because the person believes he or she does not need or cannot afford an attorney.  However, this often is not the case.  It is almost always worth considering hiring an attorney because it can mean a big difference in the outcome of your case.  

Over the past five years, non-pro se bankruptcy petitions increased 98%, but pro se bankruptcy petitions grew 187% over the same time period.  Pro se chapter 7 filings also rose 208%, and pro se chapter 13 filings increased 189%.  Chapter 7 bankruptcy is a process of debt liquidation under which debtors may consolidate student loans, protect loan co-signers, or eliminate credit card debt.  Chapter 13 bankruptcy is a process of debt restructuring that allows debtors to reorganize their debt under the supervision of a federal bankruptcy court.  Chapter 7 and chapter 13 filings make up the vast majority of overall bankruptcy filings.

The report found that the number of pro se petitions did not occur uniformly throughout the country.  For example, such filings increased most rapidly in the western part of the United States.  Illinois was not one of the top areas in which pro se bankruptcy filings increased.  Although the Northern District of Illinois had the second most filings in 2011 (with 63,440 filings), it ranked 39th for pro se filings.

One legal scholar has suggested that the adoption of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) in 2005 may have influenced the dramatic increase in pro se filings. The BAPCPA made several significant changes to the U.S. bankruptcy law.  For one thing, the BAPCPA made it more difficult for some consumers to file bankruptcy under chapter 7.  Thus, those consumers likely must file under chapter 13 instead.  This can have serious implications because under chapter 7 most debts are forgiven (or discharged), but under chapter 13, debts are discharged only after the debtor has repaid some portion of those debts.

The rapid increase of pro se bankruptcy filings suggests that debtors are struggling and that their legal rights may be negatively impacted.  For example, in a post on LexisNexis’ Bankruptcy Law Blog, this scholar noted that pro se filings are much less likely to succeed than filings by represented debtors. The post cited data presented at the National Conference of Bankruptcy Judges, which showed that nearly 90% of pro se chapter 13 debtors had their cases dismissed prior to confirmation of a plan and only 4% still had a case pending after four years.  A 2007 sample showed that 17.6% of pro se chapter 7 debtors had their cases dismissed for technical problems as compared to only 1.9% of represented debtors.

Such data is extremely concerning because meritorious claims may be dismissed due to technical issues.  Chicagoland bankruptcy attorneys know this is more likely to happen when debtors are not represented by legal counsel. 

The Oak Park bankruptcy lawyers at the Emerson Law Firm understand that financial troubles can often seem overwhelming and that it can be difficult to admit that you need help.  In these hard economic times, our attorneys will do everything they can to help you consider all of your options.

You can read the Administrative Office of the U.S. Courts’ full report here.  For a confidential bankruptcy consultation, please visit the Emerson Law Firm online or call 708-660-9190.

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