Sonoma County Bankruptcy Lawyer Blog

Occupy Petaluma is lauding the announcement of a holiday moratorium on foreclosures,
The Press Democrat reports. Fannie Mae and Freddie Mac announced a two-week halt to actual evictions, from Dec. 19 to Jan. 2.

CNN reports that the Big Banks will also hold off on foreclosure evictions during the period, although as always with banks there is plenty of wiggling.

Chase was the only major bank to commit to a full ban on evictions. Both Wells Fargo and B of A said they would not evict on their own loans but would still proceed when they are the servicers of other loans.

The foreclosure mortatorium is something Occupy movement across the state have been pushing for. Notes Steve Scauzillo in the San Gabriel Valley Times:

"Occupy leaders now demand: a moratorium on all foreclosures; a re-examining of complex laws that clearly favor banks; courts to examine foreclosure documents, many of which they say are fraudulent or in error.

"In California, banks don't have to prove they own the property and the judge will grant an eviction. This is so wrong," he said.

Bringing fairness to foreclosure evictions is a worthy battle for the Occupy movement, far more than occupying city parks all winter.

In this piece from the Daily Show, we learn about a couple who owned their house outright but Bank of American tried to foreclose on them anyway. No lawyer wanted their case except a rookie attorney with eight months' experience. They sued the bank and got a judgment for $3,000. When BofA wouldn't pay, they got a writ of execution and went down to the local branch with a sheriff and emptied the place out.

The response is pretty much exactly the reason for Occupy Wall Street - the failure of the Democratic Party - the one that controls the White House to take the pain of the broken economy seriously.

Congressional Democrats met with Obama's housing chief Edward DeMarco last week to demand stronger action on the travesty of underwater homes in California. His response was "tepid and defensive," according to Rep. Anna Eshoo of Palo Alto.

The Dems want to see homeowners able to refinance at today's low interest rates rather than the high rates they originally financed at. That would mean less profits for banks but a huge benefit to the economy at large as hundreds of dollars a month move from mortgage payments to groceries, gas dining and entertainment.

And isn't it possible that many more people paying their mortgages instead of defaulting will be better for the banks than foreclosing?

Congresswoman Zoe Lofgren of San Jose says it won't cost the taxpayers anything. Banks, she says, are another story. "The banks are going to eat a loss eventually," she says. "The question is when." Lofgren says the banking industry's financial hit "has been deferred to the detriment of the American public."

The California attorney general is charging the law firm Kramer and Kaslow with "prey(ing) on desperate consumer homeowners facing foreclosure" by selling participation in bogus "mass joinder" lawsuits and "litigation settlement(s)," but "No settlements exist and in some cases no lawsuit has even been filed,"
according to Courthouse News reports.

To get a feel for this, head on over to Kramer's site, which proudly proclaims:

Kramer & Kaslow is now asserting your legal rights through "mass action" litigation to force the banks to do what they should have done voluntarily and pay for their predatory lending tactics. The old "loss mitigation" process may not be working any more, but we have a new and better approach, where we aim to force the banks to settle as they face multi-plaintiff "mass joinder" lawsuits of national scope that will seek to give you financial relief if not void your mortgage loan entirely.

Continue reading "California law firm charged with foreclosure abuse and fraud" »

Have you thought about walking away from your home? For many Santa Rosa, Petaluma and Rohnert Park homeowners, that has to be a kitchen-table discussion these days. The Santa Rosa Press Democrat reports that some 31,000 Sonoma County homes -- 29% of all homes -- are underwater.

That leaves people trapped in "negative equity" -- unable to sell and with little chance of ever breaking even on their loans.

Compared to the country, Sonoma County is running slightly worse. The U.S. has 29 percent of homes underwater.

All of this seems to indicate that there will be no shortage of distressed homeowners, who will have to face the prospect of walking away or trying to protect the home in a Chapter 13. I would challenge homeowners to take a careful look at whether preserving a home really makes sense, or if you crunch the numbers, renting is a better option.

Of course, every case is different, the other debt loads have to be considered and so on, but the depth of the equity crash in this county is sobering.

Bankruptcy Tips with Richard C. Koman, bankruptcy attorney in Santa Rosa CA.
Bankruptcy can only be used once every eight years so if you're going to file, you need to make sure this is the right time to file.
Two kinds of bankruptcy: Chapter 7 and 13. Chapter 7 is a full discharge of debt. Chapter 13 is really a payment plan where you use disposable income to pay off creditors.
The reason Chapter 13 is popular is that if your house is under water, the second loan can be stripped away and that can mean you can afford to keep your house.

The steps of bankruptcy: Specifically, you need to take a prefiling consumer education class, after filing there is a meeting of creditors where the trustee asks you questions about your assets and debts, and there's one more class after that, the debtor financial education class. After that you'll get your discharge in 3-4 months.

And of course everybody can always go to richardkoman.com to find out more about these steps.

How does this effect my credit? People coming in to talk about bankruptcy always ask that and the answer is, isnt your credit pretty much destroyed? If you look at bankruptcy as a curtain coming down, on one side you have all the late payments, nonpayments, writeoffs and the risk that the person is going to file. After the curtain comes down, all that debt has been wiped out so you can afford a little new credit and you can't file for eight more years. You can easily start to rebuild your credit. A few years down the road you start looking like a pretty good customer instead of a pretty bad one.

Wow -- we've all been frustrated by being unable to stop an eviction after foreclosure. But foreclosure defense lawyer Michael Pines is taking his frustration to a whole new level. the L.A. Times reports that after a Ventura County judge ordered his clients evicted, Pines responded he would hire a locksmith and break in.

"I'm going back there," Pines declared, gripping the lectern. "And I hope I get arrested." "I certainly hope not," (Judge) Lane shot back. "That is a blatant disregard of this court's order."

He claims he's done just that a dozen times, antics that have gotten him arrested, fined and threatened with jail for contempt of court.

Continue reading "Frustrated California foreclosure lawyer tells clients to squat" »

By Richard Koman, Sonoma County-Santa Rosa-Petaluma bankruptcy and debtor attorney ("We are a debt relief agency")

Back in 2009, Congress considered trying to save homes by changing the bankruptcy laws to allow judges to "cram down" homeowners' principal balance on their primary residence. Great idea, which passed the House but died in the Senate.

America being what it is, bankruptcy judges can cram down principal on lots of goodies, like vacation homes, but not the roof over your head. Since Congress is apparently not going to challenge the banks on this inequity, the National Association of Consumer Bankruptcy Attorneys has a radical new proposal that just might work for troubled homeowners in Sonoma County and around the country.

Continue reading "A proposal to save Santa Rosa homes - without a cramdown" »

Santa Rosa-based attorney Jim Sansone notes that come January a new law will require additional notices to tenants in foreclosed homes. Under new Code of Civil Procedure 1161c, notices must state, among other things:

"You may have the right to stay in your home for 90 days or longer, regardless of any deadlines stated on any attached papers. In some cases and in some cities with a "just cause for eviction law," you may not have to move at all. But you must take the proper legal steps in order to protect your rights."

More importantly, San Francisco-based Tenants Together reported in October the new law protects foreclosed tenants from negative credit reporting just because a case was filed against them. Now, eviction cases are not reported, unless the foreclosing plaintiff actually prevails at trial.

Continue reading "New law offers protections for California tenants in foreclosed homes" »

Santa Rosa, CA - If you're in foreclosure and your home is about to be sold at auction, here's what you need to know. Once the auction takes place, there's a new owner of the house - either the foreclosing bank or a third-party buyer. And that new owner is going to serve you with a three-day notice to quit.

Does that mean you have to git in three days? Hardly. Case in point is a case I just settled. As you should be aware, a notice is just the first step in an eventual eviction. (First comes the notice, then an unlawful detainer lawsuit, and finally the sheriff eviction).

My clients were served with a lawsuit brought by Fannie Mae in early October, evicting them from their Rohnert Park home. They desperately wanted to be able to stay through the end of November. I attempted to call FNMA's attorneys numerous times; I never got through.

My response was to file a "demurrer" attacking the sufficiency of the complaint. It was a very brief complaint that claimed compliance with the foreclosure statutes but didn't detail any of the foreclosure steps. Even so, it was probably sufficient but worth making an argument over.

On the eve of the hearing on the demurrer, I was miraculously able to get the lawyer on the phone - the same lawyer who had not responded to any of my prior calls - and they agreed to settle the case giving us until not only the end of November but through the first weekend in December. No attorneys fees or costs. Just a stipulation for entry of judgment and a promise to leave the place "broom-clean."

Unlike in standard landlord cases, where a wide range of facts could provide solid defenses to unlawful detainers, in foreclosure cases there's little opportunity to stop an eviction after foreclosure. (More on that later.) But a little litigation engagement can result in very useful settlements.

California has already addressed the serious problem of attorneys taking upfront payment for loan modifications and failing to do any work. Or at least failing to get any results. It's now illegal in California for attorneys - or anyone else - to do any work.

But in much of the rest of the country, the problem continues. The Chicago Trib, for instance, reports that "Some lawyers profit off foreclosure fears, loan modifications"(!):

Attorneys are among the few professionals who can legally charge upfront fees to help homeowners modify their mortgages. But instead of negotiating with a lender, some attorneys or the companies they work for just keep the cash and don't complete the job. Homeowners are often unaware until it's too late and their homes are in or near foreclosure.

The FTC is looking at making a rule like California's nationwide, but the American Bar Association and many state bars oppose it as infringing on state courts' power to regulate lawyers.

The article highlights the evils of attorneys associating with loan mod companies.

The Illinois attorney general's office in November sued Loan Mod One, which was working with Skokie attorney Mierswa, alleging consumer fraud and deceptive business practices.

The firm advertised that it "guarantees in writing that we will find a solution to stop your foreclosure and save your home or your money back," according to the complaint filed in civil court.

Like Vega, consumers wrote checks up front that were made payable to Mierswa, according to the complaint. Mierswa and the company were supposed to renegotiate the terms of consumers' mortgages, but the work was never done, the complaint alleges.

There are a lot of sharks out there. Homeowners need to be careful and remember ... there's no such thing as a free lunch. Always ask: How do you make your money?

I get a lot of calls from people who say they've been foreclosed on improperly, the house has been sold at auction, and NOW they want to get it back. I got a call the other day from someone after the house had been sold to a third party. The caller alleged that Wells Fargo had done some unscrupulous things in the foreclosure.

Well that's a little late in the game. For one thing, the house is almost certainly gone at that point. All you can do is sue for damages for lost equity (if any). If you're underwater anyway, it would appear you have very little recourse.

There are a few good stories, though.

I'm just settling an unlawful detainer here in Sonoma County, California, for instance, where the homeowner has been in arrears for 18 months. The holder of the second foreclosed -- even as they were saying they would work on a loan mod -- and bought the property on credit at their own auction. Then they filed an eviction action against the homeowner.

We were able to work out a deal that allows him to cure the arrears on the first mortgage and the second within six months and if he can do that, he'll be reinstated to his property. He'll need to find private lenders to make it work, but it gives him one more chance to work it out.

SANTA ROSA (Sonoma County), CA -- The big news in landlord-tenant law is that President Obama has extended the Protecting Tenants at Foreclosure Act through 2014, This law gives tenants renting from landlords who are later foreclosed on 90 days (if they have a month to month lease) or the remainder of the lease (if there's a current written lease.)

The problem with the law has been that it talks about leases entered into before "foreclosure.' Well, in California (and probably many other states) there is no specific event called foreclosure. There are two events: there's the notice of default and the actual sale. Banks have argued that "foreclosure" begins at the notice of default, which I personally think is ridiculous, since, although it's required for foreclosure, it's a totally curable notice of a problem.

The new law now makes clear that "foreclosure" means foreclosure (sale), not notice.

Continue reading "Obama extends, clarifies protection for tenants in foreclosed homes" »