GMAC-RESCAP Order Granting Relief from Stay

By | July 24, 2012 | Current Events | No comments

So the LENDER filed bankruptcy!  The automatic stay goes into effect as to it.  Limitations on doing business “outside of the ordinary course of business” without court orders now exist.  No one can “commence or continue any act” AGAINST GMAC without permission from GMAC’s bankruptcy court.  So does that affect all the motions for relief brought by the lender accross the country that are opposed by debtors, RESPA claims made to the lender, loan modification negotiations, demands relating to unkept promises by the lender etc etc.  How does that affect pending loss mitigation programs, settlements already reached with GMAC, pending foreclosures and evictions, pending litigation against GMAC etc etc.

On July 13, 2012, the GMAC bankruptcy court entered a 19 page Order Granting Relief designed to cover these and lots more issues.  NACBA got involved negotiating the order on behalf of the consumer bankruptcy lawyers throughout the country – good job.  The order is here.  GMAC Order 7.24.12

9th Circuit BAP Affirms Cramdown Interest of 4.5%

By | July 21, 2012 | Chapter 11 | 1 Comment

A few weeks ago, the 9th Circuit BAP affirmed the bankruptcy court’s confirmation of a chapter 11 plan in In re Windmill Durango Office, LLC.  The single asset debtor owned a building worth $19 million on which it owed $16.2 million to the bank.  The court confirmed over the objection of the bank, a 4.5% interest rate, balloon in 10 years.  The opinion is here. 

What is surprising to me is that since the debtor is solvent, the sole beneficiary of the cramdown as to the interest rate is the debtor.  The unsecured totaled only a few thousand dollars and were paid in full.  I have seen many cases that say the debtor can’t simply change its mind about the deal and re-write the loan to lower the interest rate.  The attempt to do that is not in good faith.  It’s possible that the bank didn’t think of that argument so it didn’t come up.   The opinion also doesn’t state the original interest rate so maybe the 4.5% was close to the contract rate.

As a debtor lawyer, I was happy to see approval of the 4.5% interest rate as “reasonable.”  I still think most judges confronted with the decision are looking at higher interest rates, especially when the loan is 100% LTV.

First Time for Everything: My First Webinar

By | July 21, 2012 | Chapter 11, Programs | 3 Comments

On August 7, 2012 at 10:00 a.m., Peter Lively and I will teach a webinar entitled “Chapter 11: Handling the Individual Chapter 11 Case.”  Should be good.  Peter and I met yesterday to review the program and were arguing about something and pulling out our respective codes within minutes.  We are preparing a powerpoint slide which can be followed while we talk.  The program will be geared to the fairly sophisticated chapter 11 practitioner.

How Does Non-Recourse Debt Fit Into Chapter 13 Eligibility?

By | July 21, 2012 | Chapter 13, Judges Corner | No comments

Another great thought from Arne Wuhrman: where the second that is being stripped because it is entirely unsecured, the debt should not be treated as unsecured if it is a non-recourse loan.  There is no Section 1111(b) in chapter 13 providing that non-recourse debt is treated as recourse for purposes of a plan.  Section 102(2) defines claim to include a claim against property of the debtor but if the debt is treated as unsecured for eligibility purposes, 102(2) should not apply and then there is no “right to payment” and therefore no claim.  Attached is a tentative ruling from Judge Erithe Smith that lays out the argument pretty well.  Smith Tentative.  Remember though, a secured loan is only purchase money if it was incurred to buy the property or is a seller-financed debt and a refi of either makes the new debt recourse.  CCP 580(b).

Homeowner Bill of Rights Act Signed by Jerry Brown on July 11, 2012 (Effective January 1, 2013)

By | July 17, 2012 | Legislation | 1 Comment

From the Department of Justice:

Two key bills of the Homeowner Bill of Rights contain significant mortgage and foreclosure reforms. The major provisions of AB 278 (Eng/Feuer/Mitchell) and SB 900(Leno/Corbett/DeSaulnier/Evans) include:

  • Dual track foreclosure ban: Mortgage servicers will be required to render a decision on a loan modification application before advancing the foreclosure process by filing a notice of default or notice of sale, or by conducting a trustee’s sale. The foreclosure process is essentially paused upon the completion of a loan modification application for the duration of the lender’s review of that application.
  • Single point of contact: Mortgage servicers will be required to designate a “single point of contact” for borrowers who are potentially eligible for a federal or proprietary loan modification application. The single point of contact is an individual or team  with knowledge of the borrower’s status and foreclosure prevention alternatives, access to decision makers, and the responsibility to coordinate the flow of documentation between borrower and mortgage servicer.
  • Enforceability: Borrowers will have authority to seek redress of “material” violations of theCalifornia Homeowner Bill of Rights. Injunctive relief willbe available prior to a foreclosure sale and recovery of damages will be available following a sale.

The actual changes are to the California CVivil Code Section 2920 et seq.   For example,

Read more…

New Anti-Deficiency Protection (a little at least) in California Starting January 1, 2013

By | July 17, 2012 | Legislation | No comments

Thanks to Arne Wuhrman for this:

Just received from the California Association of Realtors:   New Anti-Deficiency Protection for Refinance Loans Made After January 1, 2013

Starting January 1, 2013, a new California law will protect homeowners who default on their refinance loans from personal liability for any deficiency following foreclosure. Existing anti-deficiency law protects a borrower from personal liability for the difference between the principal balance and what the lender receives at foreclosure if the loan is a purchase money loan secured by an owner-occupied property with one-to-four residential units. The new law, Senate Bill 1069, extends that anti-deficiency protection to include any loan used to refinance the purchase money loan, plus any loan fees, costs, and related expenses for the refinance. The anti-deficiency protection, however, does not extend to any “cash out” in a refinance, which is when the lender advances new principal not applied to any obligation owed under the purchase money loan.  This new law does not affect the other anti-deficiency protections for non-judicial foreclosures (or trustee’s sales) and seller financing.

This new law only applies to refinance loans or other credit transactions used to refinance a purchase money loan, or subsequent refinances of a purchase money loan, that are executed on or after January 1, 2013. For purposes of this law, any payment of principal shall be deemed to be applied first to the principal balance of the purchase money loan, and then to the principal balance of any new advance and interest payments shall be applied to any interest due and owing.

  Arnie Wuhrman SERENITY LEGAL SERVICES

Chapter 11 Filing Fees Going Up Again

By | July 17, 2012 | Chapter 11, Court Clerk Information | 11 Comments

From the Wall Street Journal Bankruptcy Beat

Chapter 11 is getting more expensive, but top-dollar attorney fees aren’t the reason…this time.

Starting Nov. 1, it will cost a company $1,213 to file a Chapter 11 petition, or nearly $200 more than the current filing fees.  The extra cash will cover the cost of legislation to extend temporary judgeships at bankruptcy courts across the nation in order to avoid a judge shortage.

The $1,213 price tag includes the current $46 administrative fee but increases the case-filing fee to $1,167 from $1,000. Attorneys, take note: failure to pay these fees could result in the bankruptcy case being thrown out.

Read more…

CM/ECF Dictionary Updates Effective July 16, 2012

By | July 13, 2012 | Court Clerk Information | No comments

ATTENTION ALL CM/ECF USERS

Filing Agent

Registered Attorneys, Trustees and US Trustees (this feature is not available to users registered as Limited Filers)will have the ability to create a CM/ECF filing login and password for their employees (paralegal or assistant) to file documents on their behalf. When a Filing Agent files on behalf of the attorney, only the attorney’s name displays on the docket. In addition the Attorneys, Trustees and US Trustees can run the transaction logs to identify the filings done by the Filing Agent.

ECF Account User Maintenance

With the deployment of the Filing Agent feature, Attorneys, Trustees and US Trustees will be able to update the following information on their CM/ECF Profiles via the Maintain : Phone and Fax numbers, primary and secondary email addresses. In addition, they will be able to make specific selections on how they would like to receive the Notice of Electronic Filing (NEF).

Read more…

Reminder re: Implementation of CM/ECF Filing Agent on July 16, 2012

By | July 13, 2012 | Court Clerk Information | No comments

From the ECF Help Desk:

ATTENTION ATTORNEYS, TRUSTEES AND U.S. TRUSTEE

This is a reminder that on July 16, 2012, the Court will implement CM/ECF Filing Agent. Filing Agent is an optional feature that enables registered CM/ECF users to assign unique logins and passwords to support staff filing electronic documents on their behalf.

The Court has posted an Electronic Learning Module (ELM), containing the necessary steps to associate a Filing Agent to a registered CM/ECF user.

We encourage all registered CM/ECF users who are interested in using Filing Agent to review the ELM and become familiar with the process.

Read more…

Public Notice re Santa Ana Case Assignment to Judge Clarkson

By | July 12, 2012 | Chapter 13, Chapter 7, Court Clerk Information, Judges Corner | 4 Comments

Public Notice 12-001 attached.

Judge Scott C. Clarkson recently began receiving a portion of the new chapter 7 and chapter 11 bankruptcy cases filed at the Santa Ana Division. Judge Clarkson will also continue to receive new cases filed at the Riverside Division.

Hearings: To schedule matters on Judge Clarkson’s Santa Ana Division calendar, please refer to Judge Clarkson’s self-calendaring instructions on the Court’s website at www.cacb.uscourts.gov, or call 714-338-5378.

Unless otherwise directed by the Court, parties appearing before Judge Clarkson for Santa Ana Division cases assigned to him are to appear at the Santa Ana Division, Courtroom 5C. Hearings for Judge Clarkson’s Santa Ana Division cases should be noticed for his Santa Ana Division Courtroom at 411 West Fourth Street, Courtroom 5C, Santa Ana, CA 92701.

Filing Papers/Judge’s Copies: Papers filed on Santa Ana Division cases assigned to Judge Clarkson must be filed either electronically or, for those not registered to use CM/ECF, at the Intake Section of the Santa Ana Division. Judge’s copies of these documents must be mailed to 411 West Fourth Street, Suite 5113, Santa Ana, CA 92701, or placed in the judge’s copy bin for Judge Clarkson outside of Suite 5113.

For procedures and information regarding Santa Ana Division cases assigned to Judge Clarkson, please consult the Court’s website www.cacb.uscourts.gov under Information > Judges’ Procedures/Information.

KATHLEEN J. CAMPBELL
CLERK OF COURT

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