If you’re thinking of the new “foreclosure review” process, check out this article:

If this doesn’t set your teeth on edge, you’ve had too much medical marijuana.

Taibbi makes some interesting observations, but doesn’t complete the analysis on this point. Since elected officials continue to pay homage to the financial services industry* and ignore this disaster, its left to the courts to address the problem. There have been 4 MILLION foreclosures since 2008, and RealtyTrac says there will be 6 MILLION more by the end of 2012. There is no way any of our court systems has the capacity to deal with 10 MILLION new cases in 4 years. In some states, the lender must go to court to foreclose (“judicial foreclosure”) but in some states lenders merely file papers, frequently with erroneous information, in the County Recorder’s office (“non-judicial foreclosure”). In either case, the foreclosure can not be challenged without going to court. The result is the “rocket docket” Taibbi writes about, or in California, the refusal of most courts to even engage in the issue.

*Until the 80s, financial services accounted for about 11% of GDP; today it’s over 30%. The new activity merely churns dollars, providing little or no tangible value to Main Street America.

One critical but unexposed part of this crisis is that many well-heeled interests DO NOT WANT it fixed. That’s because of the tax implications on trillions of dollars of mortgages.

Almost every mortgage since 2004 was transferred into a Real Estate Mortgage Investment Conduit (REMIC) trust to avoid taxation. While a clever idea, the vast majority of these trusts were never properly formed. If that fact is acknowledged by the lending community or decided by the courts, it will expose many individual and institutional investors to enormous taxes, penalties and interest in addition to capital loss.

From a homeowner’s perspective, that means that most foreclosures are illegal.

From a real estate market perspective, it means that the cost of title insurance will sky rocket.

From a general economy perspective, it means that one of the most important engines of economic activity will operate sub-optimally for the next decade or longer.

I hope that my comments can add a new dimension to your understanding and continue to build momentum for addressing the root of the problem. Otherwise my grandchildren (6 & counting) will have to shoulder this along with the other burdens we’re leaving them.

Motley fool is warning investors off stocks in the banking sector. I think they have underestimated the risk. Read the Fools article and my comment here:

If you’re facing foreclosure and want to stay in your home, or are merely “upside down” and want to re-negotiate the value of your mortgage, the name of the game is to hang on long enough for the momentum of public discord about pretender-lenders wrecking the economy to overcome the inertia of government to take action that might actually penalize the financial wizards that made fortunes for themselves by ruining the rest of us.

I have been counselling folks for some time now to learn what alternatives are available when foreclosure threatens…attached is an interview I gave to Auburn Sentinel in July ’09. Although the foreclosure environment continues to evolve, it’s still good advice.
Foreclosure Options

First GMAC tumbled to their fraud. Then JP Morgan Chase admitted their wrongdoing. Now Bank of America is in the soup too.

It’s time California told ALL the fraudulent foreclosers that the gig is up. Here is the email I sent to today to Deputy Attorney General Benjamin Diehl, who demanded that JP Morgan Chase “put up or shut up”:

“Dear Deputy Attorney General Diehl,

Thank you and Attorney General Brown for demanding JP Morgan Chase “put up or shut up.”

I write you to urge you and Attorney General Brown to consider suspending the privilege granted to lenders under Calfornia Civil Code section 2924 to conduct non-judicial foreclosures, for two clear, simple reasons.

First, nearly every mortgage loan originated in California since 2004 has been securitized. The securitzation scheme employed in the last six years places loan assets in a REMIC trust to avoid taxation. The validity of these trusts depends upon proper formation, including making the notes “bankruptcy remote” from the perspective of members of the trust. Thus, successful creation of the trust depends on a valid assignment from the “loan originator” to the “sponsor”, from the “sponsor” to the “depositor” and from the “depositor” to the trustee of the trust. Further, by the terms of the Pooling & Servicing Agreement (PSA) which further circumscribes the operation of the trust, these transfers must be completed with a short period (90-120 days) of the closing of the “loan pool.” Failure to complete these transfers within the proscribed time invalidates the trust and any subsequent assignment of the note or trust deed, meaning that the vast majority of foreclosures conducted in California today are done so illegally. Additionally, subsequent alleged assignments “divorce” the note from the Trust Deed, rendering the Deed of Trust meaningless under centuries old black letter law.

Secondly, nearly all PSAs, which are made a part of the trust, require either the “master servicer” or “sub servicer” to make principal and interest payments to the note holder if the homeowner fails to pay. In other words, the note holder is receiving payment even when the homeowner does not pay. This is revealed in the “loan level files” that document payments continuing to the note holder. Thus, no “default” has occurred under the terms of the trust deed, which defines default as non-payment to the beneficiary of the benefits due. Ultimately, no legal basis for exercising the power of sale clause in a deed of trust exists.

There are many other compelling reasons why the non-judicial foreclosure privilege (granted by the legislature in the wake of the Great Depression) should be suspended. But these two are easily understood and communicated and fall clearly within the operating mandate of the Attorney General.

I have seen and alleged these exact circumstances in case after case, yet State Courts are reluctant to take action with such far reaching implications without direction from higher level State officials. However, I contend that failure to take action now to resolve this thorny issue will cripple the California housing market for years to come (witness Old Republic’s refusal to insure title of foreclosed homes) with dire consequences for the State’s economy.

Thank you for taking this concern seriously.

Richard”

Why BottomLine Lawyers for Bankruptcy in Auburn CA?

BottomLine Lawyers is one of the most sophisticated consumer bankruptcy practices in Auburn CA because of its diversified knowledge base.

It’s simple, we put our knowledge of real estate, business and real estate law together with our understanding of bankruptcy and consumer credit law to help you with the specific issue you are facing…whether it is retaining a home, business or other asset very important to you.

Don’t you think your situation warrants learning everything you need to best provide for your family’s well being?

BottomLine Lawyers go above and beyond to meet the needs of our Auburn CA clients. Using our unique Assessment Protocol, we listen and learn everything we can about your situation. We look at things from every angle. We stand in your shoes. Then we devise a specific strategy that will give you the best outcome consistent with your values and desires.

In choosing the right law firm to represent you, be sure they have the competence and experience to:

Address current and future issues your circumstances may present
Identify related issues in real estate, contract, family law, tax, etc.
Provide a comprehensive analysis, not just crisis management
A loan modification mill, foreclosure mill or bankruptcy mill might leave you with worse problems than you started with:

Filing too soon so you don’t discharge all your debts
Filing too late so you don’t get the full benefit of the automatic stay
Invalid liens on secured property that were not properly challenged
Reaffirmation of un-economic, undesired debt
Unnecessary loss of property
Expensive, hidden charges

At BottomLine Lawyers, we practice integrative law, bringing all relevant aspects into play to provide you with the best possible result.

Just because your home was lost in foreclosure or sold at short sale doesn’t mean your homeownership woes are over! Foreclosure/short sale can leave you vulnerable to deficiency judgments and tax liability. Judgments and tax liability amounting to tens or even hundreds of thousands of dollars can follow you the rest of your life! I have yet to see ANY short sale agreement explicitly exempt the homeowner from deficiency. But in bankruptcy a deficiency balance from a foreclosure or a short sale is wiped out. And if 2nd mortgage or HELOC takes a loss, its rights to pursue Debtor for deficiency is discharged in a Bankruptcy.

For most people, talking to an attorney usually means that someone is in trouble. And if you’re the one who’s calling an attorney, chances are the person in trouble is you or someone you know.

Attorneys are usually best-known as a last resort for helping people stay out of trouble. But attorneys also provide other value-added services to both individuals and businesses.

Maybe attorneys have gotten a bad reputation because of the way society portrays them in the media. After all, attorneys aren’t exactly painted in the most flattering light. We’ve all read about the high-profile cases and the huge million-dollar settlements. We’ve all seen the attorneys portrayed on television as being greedy, indifferent, and overly-concerned with their fees. In fact shows like Boston Legal not only entertain viewers with the antics of their behavior but win awards for doing it! And, of course, we’ve all heard the lawyer jokes.

But despite what you’ve heard or read, or what your personal feelings about attorneys might be, attorneys do provide a valuable and much-needed service in a number of different areas. In addition to their main duties of upholding the law and protecting client’s rights, here are just a few other areas in which attorneys add value to businesses.

 They help resolve legal disputes
 They help prevent legal problems or limit their consequences
 They provide legal representation if you’re arrested for a crime
 They can handle the legal aspects of starting a business and forming a partnership or corporation
 They can provide counsel on local, state and federal tax matters
 They represent your interests in a lawsuit
 They provide legal counsel when filing for bankruptcy
 They can protect you against claims from customers or other businesses
 They can identify business risks you may not be aware of
 They can help you stay in compliance with rules and regulations in your business or industry
 They can defend you in court
 They can handle negotiations on your behalf
 They can assist with general corporate matters
 They can assist with mergers and acquisitions
 They can advise on intellectual property matters such as copyrights, patents and trademarks
 They can handle matters of Labor and Employment law, workplace safety issues, unions, and government compliance

Now, a lot of these areas of law may not seem very exciting or glamorous. And chances are most wouldn’t make very riveting prime time viewing. But if you’re the one who has the problem, it’s nice to know that there’s a knowledgeable expert available who can help you solve it, and they’re just a phone call away.

Individuals keep almost everything in bankruptcy. In more than 98% of California cases, the Debtor retains all “free and clear” assets. Exemptions (your ability to keep valuable property) provided to qualifying California residents are quite generous and usually cover and protect all assets and equities.

California has completely “opted out” of the federal exemption plan and enacted two alternative plans for its residents. With careful planning, oftentimes assets can be reorganized and transmuted to protect even “vulnerable” assets. You have an obligation to your family and yourself to take maximum advantage of the “fresh start” promised by the Bankruptcy code.

Please seek competent counsel to determine which exemptions best fit your situation and to assure that you fully comply with the Bankruptcy law.