Posted by kevin on September 30, 2014 under Foreclosure Blog | 
A little change of pace. The amount of student debt in the United States is exceeding the amount of credit card debt. So, from time to time, I will write about student debt either in this blog or my bankruptcy blog.
I attended a seminar a few months back on student loans. I was aware that since 1999, you could discharge student loans in a bankruptcy only by showing hardship. However, the test is so difficult that (and my older readers will probably get this), the only people who get hardship discharges are the one’s that can win on Queen for A Day (a somewhat popular daytime show from the late 50″s early 60’s where three women told their hard luck stories and the audiences voted on who had the toughest lot. That woman became queen for a day and won food and a clothes washer.) I’ve always thought that the test used for hardship in bankruptcy has been too stringent.
At the seminar, the presented pointed out that there were only 3 offenses under federal law that did not have a statute of limitations: murder, treason, and failure to pay your student loan. About a week ago, the Bergen Record ran an article about senior citizens saddled with student loan debt. It claimed that in 2010 4% of seniors carried $18.2 billion of student debt. Some were for Parent Plus loans for their kids, but the vast majority was on their own loans.
The problem is that these loans do not go away. The bigger problem is that if you are in default, a collection fee (in the range of 18-25%) is added on to the amount due. The biggest problem is that the federal government can garnish a portion of your wages and social security to recoup the loan.
It is tragic to think that unsuspecting Americans take out loans to get an education to get a better life, and millions are stuck with these debts even into retirement.
In this blog, I have written on numerous occasions about mortgage modifications. They are hard to get even when you qualify. It takes months of being jerked around. Sometimes you must question the good faith of the mortgage servicers who control this game.
Well, you can get modifications of federal student loans. That is the good news. The better news is that you eventually deal with the Department of Education as opposed to servicers and collection agents (but that takes a little effort). The best news is that you can substantially reduce or eliminate your monthly payments on student loans depending on your income.
It is worth looking into. Our offices are available for consultation on these matters. Email us at kh@kevinhanlylaw.com or call at 201-248-2204.
Posted by kevin on September 22, 2014 under Foreclosure Blog |
MERSCORP is the creation of the Mortgage Bankers Association of America (MBAA). In 1993, at the MBAA convention, a paper was presented which suggested that an electronic method of tracking mortgages (similar to tracking stocks) would be more efficient than the current method of filing with a county register or clerk. The MBAA funded a study which concluded that the industry could save significant money in filing fees if it could establish and sell to the industry an electronic system.
In 1995, MERSCORP was incorporated in Delaware by the MBAA. Initial members included FANNIE MAE, FREDDIE MAC, GE Mortgage, GMAC Residential Funding Corp., 1st Nationwide Mortgage, Chase Manhattan Mortgage and others.
MERS stands for Mortgage Electronic Registration Systems, Inc. Mortgage Electronic Registration Systems, Inc. MERS is a wholly owned subsidiary of MERSCORP. MERS operates an electronic registry designed to track servicing rights and ownership of mortgage loans in the United States.
You have to be a member of MERSCORP to utilize the service. MERS continued to grow in 1990’s. Then, in 1999, rating agencies, Moody’s and S&P, issued releases that they had no problem with the MERS concept and implementation. This allowed MERS’s membership to explode because it became the vehicle of choice for securitized trusts. By 2007, 60% of all mortgages in the US were utilizing the MERS system according to MERS. Now, about 5500 members.
Every State in America has a recording act and has set up an apparatus for recording Deeds, Mortgages and Assignments. The recording acts require local recording of documents with payment of the requisite fees. MBAA and MERS just took it upon themselves to set up the MERS system and bypass the various recording acts with impunity. MBAA and MERS never went to any State legislature to change the recording laws. As a result, States and counties have been deprived of billions of dollars in recording fees. Moreover, a person cannot get access to information concerning who owns his or her mortgage.
How does the MERS system work. Say you borrow money from Wells Fargo. The Note would be payable to Wells Fargo, but the Mortgage would say that MERS is the mortgagee as nominee for the lender, Wells Fargo. It is recorded like any other mortgage usually at the county level. The Note is then sold three or 4 times. You would expect that the Mortgage would be assigned for each sale and recorded. The county (and ultimately the State) would receive, presumably, three or 4 recording fees. However, under MERS, if the purchaser of the Note is a MERS member, no assignments of mortgage are recorded. The transaction is memorialized on the computers at MERS, and the public does not have access to that information. Since the lender usually deals only with the servicer of his or her loan (the company that collects the money), he or she has no idea that the loan has been sold, and no where to find out whether the loan has been sold. And, as stated above, the county and State are out the fees.
Lately, however, there has been push-back against MERS. In PA, the recorder of deeds of Montgomery County brought a suit against MERS and MERSCORP in the federal district court of Pennsylvania. The lawsuit alleges that MERS shortchanged Pennsylvania out of million of dollars in recording fees by not complying with the Pennsylvania law which requires the recording each mortgage and assignment of that mortgage. MERSCORP moved to dismiss the case, but the Judge denied the motion and the case is going to trial. The Montgomery County Department of Records estimates that from 2000 to 2015, more than $15 million in recording fees have been lost. A victory at trial will, undoubtedly, lead to actions by other counties in PA.
Couldn’t happen to nicer guys
Posted by kevin on under Foreclosure Blog |
The Consumer Financial Protection Bureau proposed to make all consumer complaints public, sorted out by lender and subject matter.
In a recent article (blog) by Ari Karen in National Mortgage News website, the author argued that this public forum could be used improperly by consumers, disgruntled employees and competitors. Moreover, the fact that a complaint is published could give it an air of legitimacy. Finally, the article contends that the lenders would have to spend money replying to these complaints.
The article does not point out that the proposal states that the body of the consumer complaint will not be published until 15 days after it is sent to lender.
The problem with the article is that it tries to paint a picture of a blameless lending sector that is being deluged with over-regulation. This ignores the simple fact that Dodd Frank and the CFPB came about because bank and investment company abuses in residential mortgages almost brought down our economy in 2008.
