Daily Archives: January 12, 2013

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U.S. Opposes ResCap Bonus Plan

U.S. Opposes ResCap Bonus Plan

The U.S. Government is objecting to a proposal by Residential Capital to pay roughly $33.4 million in annual bonuses to employees.

ResCap, the subprime mortgage unit of Ally Financial that has operated under bankruptcy protection since May, asked the court on Dec. 26 to authorize the company to pay the awards to roughly 3,000 of its 3,926 employees from funds the company has set aside.

“Providing employees with an annual discretionary payment that has historically comprised a portion of their annual compensation is a normal component of conducting business and essential to conducting the debtors’ businesses, which rely heavily on consistent leadership, familiarity with complex financial assets, and regular interaction with sophisticated governmental agencies,” lawyers for ResCap wrote in papers filed with the U.S. Bankruptcy Court in Manhattan.

DEBTOR HAS STANDING TO ARGUE FAILURE TO COMPLY WITH TERMS OF PSA

A Michigan state court found that a debtor may oppose foreclosure on the basis that the assignment of themortgage to the foreclosing party was in violation of the Pooling and Service Agreement and, therefore, ineffective. HSBC Bank, USA v. Young, No. 11-693 (Cir. Ct. Mich. Oct. 16, 2012). HSBC conducted aforeclosure by advertisement and bought the property at the foreclosure sale. When it moved the court for possession of the property the debtor challenged the legitimacy of the foreclosure on the basis that the assignment of the note and mortgage from Wells Fargo to HSBC took place after the note was in default in violation of the terms of the PSA.

The court began by finding that the debtor challenged HSBC’s ownership of both the note and themortgage and Michigan law does not allow foreclosure by a party who owns neither the note nor themortgage. Residential Funding Co. v. Saurman, 490 Mich 909, 805 NW2d 183 (2011).

The court then turned to the question of whether the debtor had standing to challenge the assignment of the mortgage and note on the basis that it did not conform to the requirements of the PSA. The court found that she did. Citing Livonia Property Hldgs v. 12840-12976 v. Farmington Rd. Hldgs, 717 F.Supp. 2 724, 746 (E.D. Mich 2010), the court recognized an exception under Michigan law, to the rule that only a party or third party beneficiary to a contract may enforce its terms. Under that case, a debtor may protect herself from the threat of having to pay the same debt twice by raising as a defense the assignee’s lack of title.

More here…

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Foreclosure Predators Prey Upon Vietnam Vet Who Owed $11,000 in Taxes, Lawsuit Claims

Foreclosure Predators Prey Upon Vietnam Vet Who Owed $11,000 in Taxes, Lawsuit Claims

With this week’s $3.3 billion settlement by banks who engaged in faulty foreclosures, you might think that the worst tales of the housing bust are behind us. But the predators of the foreclosure era are still out there, still making money on other people’s misery.

 

*See Also: Shawn Portmann: Loan Wolf
Foreclosure Vultures

According to a complaint filed last month in King County Superior Court, just such a scenario happened to Ames Larson.

Larson is a 67-year-old Vietnam veteran and former prisoner of war who, as recently as this past December, owned his three-bedroom Lake City home free and clear. But that’s about all he owned. He lived on roughly $1,100 a month, most of it coming from Social Security, according to his attorney, David Leen, who recently started a non-profit called the Northwest Consumer Law Center. Larson couldn’t afford to pay his utility bills; Leen think he was using candles for light. He also couldn’t keep up with his property taxes.

Had he known about King County programs for seniors offering tax relief, he probably could have qualified, according to Leen. But he didn’t. In June of last year, the county initiated tax foreclosure proceedings against Larson. To stop it, he needed to come up with $11,000.

He didn’t have it. In October, however, several representatives from a business calledNorthwest Home Buyers knocked on Larson’s door. “We buy homes: any house any condition,” declares Northwest’s website, which also proclaims the ability to provide “quick cash” for homeowners facing foreclosure and other difficult situations.

The Northwest representatives offered Larson $120,000 for his home, according to the complaint But when another company representative, by the name of Chris Lundquist, showed up at the house a month later with paperwork for Larson to sign, the offer was reduced to $70,000. Zillow estimates the house to be worth a little over $300,000.

Leen says Larson felt he had no choice but to sign. His house was scheduled to be foreclosed upon in just two weeks. In the end, he came away with only about $40,000, after payment of back property taxes and various transaction fees, according to Leen.