In the world of bankruptcy, debtors are protected from collections initiated by their creditors. Under the current bankruptcy code, debtors are required to list all available assets and liabilities. A trustee is assigned to the case in order to observe and enforce the will of the bankruptcy court. An automatic stay is granted for the debtor against claims of creditors until the case is dismissed.
Many debtors develop multiple layers of relationship with their creditors. Most bankruptcy filers maintain a checking or savings account with the same financial institutions that issues them credit cards and other forms of financial products. Thus, some financial institutions developed an internal mechanism allowing them to setoff debtors' assets against outstanding debts. This process is often identified as Administrative Freeze.
Instead of resolving the problem, This expanded banker's dilemma, legal problems resulting from financial institutions making claims against personal accounts of debtors who file bankruptcy. Courts have battled over the exact meaning and implication of Administrative Freeze. In 1983, The Third Circuit held that Administrative Freeze violated the automatic stay (United States v. Norton). The Ninth Circuit upheld Administrative Freeze as a legal process to protect rights of the creditors (Bank of National Trust and Savings Assoc. v. Edgins, 1984)
In 1995, the U.S. Supreme Court ruled in support of this(citizens Bank of Maryland v. David Strumpf). Justice Scalia delivered the unanimous court opinion. The high court found that they did not violate automatic stay granted to debtors under bankruptcy laws. Justice Scalia stated that bank accounts are promises to pay conditioned on terms of contractual agreement which existed prior to bankruptcy filing. The actual physical account becomes part of the bankruptcy estate. Banks' actions - denying debtors access to their accounts upon filing of bankruptcy - protected the estate formed by the bankruptcy filing (first), and it constitute refusal to perform due to legal changes.
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Monday, February 21, 2011
Sunday, February 6, 2011
Real Estate and Social Responsibility
The recent Great Recession highlighted the interdependency of the U.S. social structure to the real estate industry. As the real estate market froze to a standing halt, so did the whole U.S. economy. Government officials and regulators should have expected such results as real estate employed more Americans than any other sector.
Prior to the Great Recession, 60% of U.S. assets were tied to real estate. This occurred due the free market philosophy entrenched within the U.S. economic foundations. Real properties are mortgaged to pay for sales or to enable owners to access their equity. Mortgages are bundled and divided up in accordance to average credit rating of total borrowers and other variables. Investment banks and other financial institutions purchase and trade mortgage bundles to acquire more capital. In addition, insurance companies and retirement funds purchase mortgages to increase cash flow needed to cover for monthly payments.
Furthermore, the real estate industry employed many Americans. Most individuals are quick to recognize real estate agents and brokers. In addition, the real estate industry includes appraisers, construction workers, civil servants employed at all government levels and many more. Many other industries are also connected to real estate. Production and manufacturing of construction materials, as well as points of sale and transportation of goods to construction sites from sales locations are few of such connected industries. For example, in order for a house to be build, the builder must purchase a real property, conduct a soil test, contracts an engineering firm for designing and drawing, hires a licensed contractor to build, and purchase all the material needed.
The U.S. real estate industry is very influential in domestic politics. Following the collapse of real estate prices, many real estate associations lobbied the government to enact restrictions against foreclosures. The government was split between supporting the frontend (sales and home owners) and the backend (financial institutions and holders of liens). As a result, the government passed special tax credit to stimulate real estate sales and offered government backed modification through HAMP. As for the backend, the government invested heavily in many of the different banks who operated within the United States. Commonly known as “bailout”, government assistance to financial institutions allowed those organizations to survive the worst recession in modern history of humanity.
By offering a double deal to help both sides of the equation, the government acted in accordance with the principle of social reasonability. Many homeowners faced growing harsh times and needed the government to force holders of mortgage deeds to accept renegotiated mortgage agreements. At the same time, financial institutions are some of United States biggest employers. By saving them, the federal government curbed the down spiral of collapsing economy. In addition, saving such big businesses helped the United States maintain its attraction as a fertile ground for economic growth.
For more detail information visit us: Loan Modification or Bankruptcy Attorney.
Prior to the Great Recession, 60% of U.S. assets were tied to real estate. This occurred due the free market philosophy entrenched within the U.S. economic foundations. Real properties are mortgaged to pay for sales or to enable owners to access their equity. Mortgages are bundled and divided up in accordance to average credit rating of total borrowers and other variables. Investment banks and other financial institutions purchase and trade mortgage bundles to acquire more capital. In addition, insurance companies and retirement funds purchase mortgages to increase cash flow needed to cover for monthly payments.
Furthermore, the real estate industry employed many Americans. Most individuals are quick to recognize real estate agents and brokers. In addition, the real estate industry includes appraisers, construction workers, civil servants employed at all government levels and many more. Many other industries are also connected to real estate. Production and manufacturing of construction materials, as well as points of sale and transportation of goods to construction sites from sales locations are few of such connected industries. For example, in order for a house to be build, the builder must purchase a real property, conduct a soil test, contracts an engineering firm for designing and drawing, hires a licensed contractor to build, and purchase all the material needed.
The U.S. real estate industry is very influential in domestic politics. Following the collapse of real estate prices, many real estate associations lobbied the government to enact restrictions against foreclosures. The government was split between supporting the frontend (sales and home owners) and the backend (financial institutions and holders of liens). As a result, the government passed special tax credit to stimulate real estate sales and offered government backed modification through HAMP. As for the backend, the government invested heavily in many of the different banks who operated within the United States. Commonly known as “bailout”, government assistance to financial institutions allowed those organizations to survive the worst recession in modern history of humanity.
By offering a double deal to help both sides of the equation, the government acted in accordance with the principle of social reasonability. Many homeowners faced growing harsh times and needed the government to force holders of mortgage deeds to accept renegotiated mortgage agreements. At the same time, financial institutions are some of United States biggest employers. By saving them, the federal government curbed the down spiral of collapsing economy. In addition, saving such big businesses helped the United States maintain its attraction as a fertile ground for economic growth.
For more detail information visit us: Loan Modification or Bankruptcy Attorney.
Wednesday, January 19, 2011
What’s Next Economically
During the past three years, the world witnessed great changes. In 2007, the United States was hit with a subprime crisis which dried all available liquidity from the markets. The world reacted and demand for oil raised dramatically driving crude oil to trade for $135.00 on the stock market. Europe began to suffer after as European banks and investment firms failed in bulk. U.S. voters brought their frustration to the polls and voted in a government controlled and administered by the Democratic Party.
Ironically, change failed to produce sustainable achievements. Yes, the “Great Recession” is officially over, but facts are still the same. Currently, the U.S. unemployment is 9.3%, up from 5% in January 2007 (U.S. Bureau of Labor Statistics 2010). The federal government is split as voters voted the Republican Party to control the House of Representatives. Stock markets are in a constant frenzy due to debt worries as members of the European Union are requesting assistance (The Associated Press and Reuters 2010). Even the great Asian economic powers are concerned. China is currently facing its highest level of inflation since the new century began (MediaCorp Press Ltd. 2010).
How about real estate, did the industry recover? U.S. real estate values have stabilized overall except for high end properties. A different story is drawn internationally. United Arab Emirate, Spain and Japan are suffering from debts related to real estate. Spain saw its national bonds’ grade downgraded a number of times within the last 12 months (Oakley and Mallet 2010).
Domestically, the Obama administration will be forced to work with a different government. Analysts are generally optimistic about corporative governments where the government is controlled by more than a single party. They cite former U.S. President Client and his achievements after 1994 when the GOP gained control of the U.S. Congress. There is also the success of the French government – split between different parties – in addressing France’s budget worries in comparison with other European nations.
Finally, consumers ought to expect modest inflation as the world recovers from the last economic pitfall. This inflation is the result from redistribution of wealth and more constraint government spending. The United States will continue to dominate the economic world as the world’s leading consumer, but new middle class – from rising economic powers – will compete with U.S. consumers as they become fully accustomed to an American style living.
For more information on this article visit us at loan modification and bankruptcy attorney
Ironically, change failed to produce sustainable achievements. Yes, the “Great Recession” is officially over, but facts are still the same. Currently, the U.S. unemployment is 9.3%, up from 5% in January 2007 (U.S. Bureau of Labor Statistics 2010). The federal government is split as voters voted the Republican Party to control the House of Representatives. Stock markets are in a constant frenzy due to debt worries as members of the European Union are requesting assistance (The Associated Press and Reuters 2010). Even the great Asian economic powers are concerned. China is currently facing its highest level of inflation since the new century began (MediaCorp Press Ltd. 2010).
How about real estate, did the industry recover? U.S. real estate values have stabilized overall except for high end properties. A different story is drawn internationally. United Arab Emirate, Spain and Japan are suffering from debts related to real estate. Spain saw its national bonds’ grade downgraded a number of times within the last 12 months (Oakley and Mallet 2010).
Domestically, the Obama administration will be forced to work with a different government. Analysts are generally optimistic about corporative governments where the government is controlled by more than a single party. They cite former U.S. President Client and his achievements after 1994 when the GOP gained control of the U.S. Congress. There is also the success of the French government – split between different parties – in addressing France’s budget worries in comparison with other European nations.
Finally, consumers ought to expect modest inflation as the world recovers from the last economic pitfall. This inflation is the result from redistribution of wealth and more constraint government spending. The United States will continue to dominate the economic world as the world’s leading consumer, but new middle class – from rising economic powers – will compete with U.S. consumers as they become fully accustomed to an American style living.
For more information on this article visit us at loan modification and bankruptcy attorney
Thursday, January 6, 2011
Important Steps When Filing For Loan Modification
When faced with foreclosure, a loan modification is usually the best and last hope for keeping your home (and credit) safe. The application process can be complex and daunting and the way you file the paperwork can be the determining factor in the lender accepting the terms of the modification. Here are a few simple, yet important steps that are needed to be successful in the process:
Work With An Experienced Loan Counselor/Underwriter When your options are exhausted you need someone with experience that will know what you’re qualified for regarding your specific situation. Legal Debt Solutions is able to challenge lenders, make counteroffers on your behalf and make sure that all paperwork is filed completely and professionally.
Make Sure Your Loan Workout is Realistic Modifying your mortgage loan often means extending payback periods or lowering interest rates, but make sure that the payment schedule is sustainable. It’s important that the homeowner gives accurate financial information to us so we can work with the servicer to give you the best options for a payback plan.
Watch Your Budget Troubled borrowers should cut back on spending and make accurate calculations on the financial information given to their servicers. Homeowners will often give inflated or overestimated figures which may result in unsustainable loan workouts.
Understand Loan Modification Lingo Borrowers and homeowners should know what they’re dealing with. There can definitely be a frustration when dealing with terms that aren’t easily understood. To make things a little easier for our clients. We have an extensive frequently asked questions and a glossary database for your loan modification reference.
For more information on this article visit us at loan modification and bankruptcy attorney
Work With An Experienced Loan Counselor/Underwriter When your options are exhausted you need someone with experience that will know what you’re qualified for regarding your specific situation. Legal Debt Solutions is able to challenge lenders, make counteroffers on your behalf and make sure that all paperwork is filed completely and professionally.
Make Sure Your Loan Workout is Realistic Modifying your mortgage loan often means extending payback periods or lowering interest rates, but make sure that the payment schedule is sustainable. It’s important that the homeowner gives accurate financial information to us so we can work with the servicer to give you the best options for a payback plan.
Watch Your Budget Troubled borrowers should cut back on spending and make accurate calculations on the financial information given to their servicers. Homeowners will often give inflated or overestimated figures which may result in unsustainable loan workouts.
Understand Loan Modification Lingo Borrowers and homeowners should know what they’re dealing with. There can definitely be a frustration when dealing with terms that aren’t easily understood. To make things a little easier for our clients. We have an extensive frequently asked questions and a glossary database for your loan modification reference.
For more information on this article visit us at loan modification and bankruptcy attorney
Wednesday, November 3, 2010
The Economy of Bankruptcy
Every market has its buyers and sellers. Some parties profit which some other parties acquire losses. The same is true of the foreclosure crisis. During the past two years, almost every city in the United States experienced the ironic and joyful nature of the real estate world. In turn, this helped to form market equilibrium where supply and demand exchanged patterns giving rise to a new economic wave with foreclosure acting as the inner motor.
In order for any market to operate, two main mechanisms must exist: supply and demand. Supply refers to availability of products, while demand refers to consumers purchasing the available products. In the foreclosure market, the product is mainly devalued real properties. In addition, devalued banking assets became also steadily available. Potential property buyers, including individuals and investors, comprise majority of consumers demanding such product. Recently, NAR – National Association of Realtors – announced a 24% increase in property purchases. Moreover, many commercial banks bought devalued banking assets from failed investment firms. For example, Bank of America acquired Lehman Brothers for pennies on the dollar.
Supply and demand within any market yields profit and loss. Starting with loss, the upcoming middle class and blue collar working class were the primary losers. Most of the foreclosed properties were funded through risky investments in the form of subprime lending practices. In turn, banks and lending institutions, which supplied subprime loans, found their assets devalued by rating companies and lowered investors’ confidence.
In the profit corner, traditional buyers profited the most. Potential buyers, who enjoy good credit and had saved enough of a down payment, are able to acquire real properties at almost 50% discount in comparison with real property values from 2005. Moreover, consumer banking in the United States became stronger as risky banks flunked under economic stresses.
Furthermore, consequences of a market fueled by foreclosure can be divided into economical, social and political spheres. First, the economical sphere carries consequences of failed economic policies. The United States government bailed out over 100 financial institutions, in addition to a number of bail out policies directed towards failed industries, through public funds.
Most of those public funds are collected from current tax-payers’ pay check. Second, the social sphere as many cities are forced to cut services due to loss of income from taxation of properties and regulatory fees associated with real estate transaction. And third, the political sphere was demonstrated during the 2008 Presidential and Congressional elections. Both Democratic and Republican politicians had manipulated the foreclosure crisis to gain votes and attack the other side.
Finally, the crisis of foreclosure is part of the American real estate market cycle.
In 1989, a similar foreclosure crisis existed, where Saving and Loan financial institutions were over burdened with bad real estate mortgage loans. But, Americans must learn from every crisis in order to develop strategies to deal with future problems. As with any market, the foreclosure crisis created its own economy. Better regulations of both the supply and demand of the real estate market can limit the affects of such economic downfalls. At the end, life experiences are the road map for future stability.
For more detail information visit us: Legal Debt Solutions or Stop Banks Blog
In order for any market to operate, two main mechanisms must exist: supply and demand. Supply refers to availability of products, while demand refers to consumers purchasing the available products. In the foreclosure market, the product is mainly devalued real properties. In addition, devalued banking assets became also steadily available. Potential property buyers, including individuals and investors, comprise majority of consumers demanding such product. Recently, NAR – National Association of Realtors – announced a 24% increase in property purchases. Moreover, many commercial banks bought devalued banking assets from failed investment firms. For example, Bank of America acquired Lehman Brothers for pennies on the dollar.
Supply and demand within any market yields profit and loss. Starting with loss, the upcoming middle class and blue collar working class were the primary losers. Most of the foreclosed properties were funded through risky investments in the form of subprime lending practices. In turn, banks and lending institutions, which supplied subprime loans, found their assets devalued by rating companies and lowered investors’ confidence.
In the profit corner, traditional buyers profited the most. Potential buyers, who enjoy good credit and had saved enough of a down payment, are able to acquire real properties at almost 50% discount in comparison with real property values from 2005. Moreover, consumer banking in the United States became stronger as risky banks flunked under economic stresses.
Furthermore, consequences of a market fueled by foreclosure can be divided into economical, social and political spheres. First, the economical sphere carries consequences of failed economic policies. The United States government bailed out over 100 financial institutions, in addition to a number of bail out policies directed towards failed industries, through public funds.
Most of those public funds are collected from current tax-payers’ pay check. Second, the social sphere as many cities are forced to cut services due to loss of income from taxation of properties and regulatory fees associated with real estate transaction. And third, the political sphere was demonstrated during the 2008 Presidential and Congressional elections. Both Democratic and Republican politicians had manipulated the foreclosure crisis to gain votes and attack the other side.
Finally, the crisis of foreclosure is part of the American real estate market cycle.
In 1989, a similar foreclosure crisis existed, where Saving and Loan financial institutions were over burdened with bad real estate mortgage loans. But, Americans must learn from every crisis in order to develop strategies to deal with future problems. As with any market, the foreclosure crisis created its own economy. Better regulations of both the supply and demand of the real estate market can limit the affects of such economic downfalls. At the end, life experiences are the road map for future stability.
For more detail information visit us: Legal Debt Solutions or Stop Banks Blog
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