As reported today in a previous post members of a small political party filed an involuntary bankruptcy petition against Bank of America in Colorado on June 20, 2011. If I am not mistaken there was a Bank of America branch that was seized by a Sheriff in Florida when it failed to pay a judgment but other than that it appears that Bank of America is paying its bills when they become due.
Tags: Bankruptcy, Involuntary Bankruptcy
The housing bubble officially burst in 2008 when the Bush Administration acknowledged the problem and began a government bail out of the housing industry. Prices on houses across the country began to drop as early as 2005. On December 24, 2009, the U.S. Treasury Department made an unprecedented announcement that it would be providing Fannie Mae and Freddie Mac unlimited financial support for the next three years despite acknowledging losses in excess of $400 billion up to that date. The Treasury Department has been criticized for trespassing on spending powers that are recited for Congress alone by the U.S. Constitution and for violating limits imposed by the Housing and Economic Recovery Act of 2008.
A straw buyer is a fake buyer set up to defraud the mortgage company. If an individual cannot qualify for a loan for a particular home, due to bad credit or some other reason, it may seem like a solution to ask a relative or friend to purchase the home and pay them. However, this scheme is considered mortgage fraud and can have disastrous consequences, and bankruptcy may not be able to help after the fact.
Between 2005 and 2007, a Phoenix Loan Officer named Paige Kinney used this scheme to defraud Countrywide Home Loans of approximately $40 million. The agent recruited straw buyers to purchase homes they never intended to live in, obtained loans for them by submitting false information about their assets and employment, obtained excessive loans for the home based on inflated property appraisals, and diverted the excess cash value to herself and several co-conspirators. She later declared bankruptcy and attempted to hide her assets, amounting to bankruptcy fraud. Although she has yet to be sentenced, she faces decades behind bars.
Although the magnitude of such fraud as committed by Kinney may make the use of a straw buyer by the average individual seeking to qualify for a home seem like a totally different story, in the eyes of the court they are both mortgage fraud. In bankruptcy, debtors often attempt to keep their home by obtaining a straw buyer. This is not only mortgage fraud, but will amount to fraud on the bankruptcy court, and could lead to a complete denial of discharge of all the debtor’s debt.
A non-fraudulent alternative is to get a co-signor or guarantor for the loan. Talk to an attorney about your available options and what would work best for you.
Tags: Home, Straw Buyer
The middle class has been hit hard in the recession. The housing crisis, credit card debt, and high unemployment rates have prompted more people to file for bankruptcy, many who have never considered the possibility before. More middle class Americans, people with high incomes, and people with higher education levels have resorted to filing for bankruptcy. But do the rich continue to get richer?
A new study published in the Journal of Economic Issues in June of 2011 by two economists from Monmouth University in New Jersey, Robert H. Scott III and Steven Pressman, claimed mounting debt from credit cards and student loans have been causing the income and buying power of the middle class to deteriorate.
The economists stated that 4 million Americans fell out of the middle class and into poverty in 2007.
Tags: Class, Middle Class
It’s no secret that the United States economy has been driven by consumer credit card spending. Credit card companies have spent billions of dollars each year aimed at convincing us to buy on credit. More than a billion credit card offers are mailed out each year in the United States each year. Solicitations often begin at the age of 18, when credit card company representatives swarmed colleges campuses and convinced financial inexperienced college students to overextend themselves and get into credit card debt. Credit card companies then continue to extend credit so that when students graduate and begin earning money all of their excess disposable income goes toward credit card minimum payments.
In late 2009, many of the credit card companies, at least for my San Diego clients, increased many credit card interest rates to 29% or more, causing minimum payments to double or even triple. F
Tags: Card, Credit Card
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