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Friday, 22 May 2009

  • Bankruptcy "Cram Down" Mortgage Bill Suffers Defeat




    Yesterday, I met with prospective bankruptcy clients who were established homeowners and deep "underwater" to the tune of several hundred thousand dollars.  Since the peak of the Northern California market in 2006, their home had declined in value from about $650,000 to $350,000 according to Zillow (a great tool for getting quick and dirty estimates on property values).  The clients had heard news reports that a law had recently passed allowing the Bankruptcy Court to reduce their mortgage.  Like many other financially distressed clients I have spoken to over the last six months, they didn't know the details of the "program" and just had vague notions that it was part of President's Obama plan to get the economy back on track.  The troubled homeowners were partially right.  There was indeed a bill of this nature making the rounds in Congress recently.  Unfortunately, it went down in flames a couple of weeks ago on Capital Hill.

    The much talked about "Mortgage Modification Cram Down" bill recently suffered a defeat in the Senate despite endorsement by President Obama.  On April 30th, the Senate vote was 45 in favor and 51 opposed after a dozen Democrats joined Republicans in opposition.  Previously a version of the bill was passed by the House 234-191 in March.  Had the bill passed, Bankruptcy Court judges would have had the power in Chapter 13 cases to lengthen mortgage terms, cut interest rates and even reduce mortgage balances for distressed homeowners.  In order to qualify, the bill required homeowners to be at least two months delinquent and have an outstanding balance of less than $729,750. In addition, if the debtors sold their home while still in bankruptcy proceedings, the borrowers would have had to split any profit with the lender in cases where the bankruptcy judge reduced the principal balance.  Note that Chapter 13 repayment plans typically last five years.

    Predictable, the banking industry was strongly opposed to the proposed legislation.  It's not hard to understand why.  The proposed changes effectively would have given the Bankruptcy Court the power to tear up existing sales contracts and rewrite them as they saw fit.  Banking lobbyists argued that the "Cram Down" bill, if passed, would destabilize home prices to an even greater degree than they are now.  Many Republicans agreed.  Arizona Republican Senator Jon Kyl, voted against the bill.  “The answer is not to incentivize bankruptcy by making it the means to save one’s home,” Kyl said.  In the first quarter of 2009, Arizona had the second highest rate of foreclosures in the nation according to RealtyTrac.  Nevada was number one with a rate five times higher than the national average.  California was number ranked three with one in every 58 housing units receiving a foreclosure filing. 

    Some economists agreed that overall, the bill would have done more harm than good.  Ronald Utt, Ph.D. of The Heritage Foundation wrote, "This provision will increase the risk to lenders of all mortgages. The industry is already treating this as a permanent measure. Increased risk requires higher costs to compensate lenders, and either down payments or interest rates would have to rise, while potential borrowers with checkered credit histories would be denied access to credit. However, these costs would not rise evenly for all borrowers: Higher risk borrowers (first-time buyers and moderate-income workers) would see costs rise more and have fewer opportunities to buy a house."

    However, Oregon Bankruptcy attorney Kent Anderson recently noted that research by Adam Levitin, Ph.D. does not support this theory.  Levitin studied the effects of mortgage modifications made between 1981 and 1993 in areas where it was permitted and compared them to areas where it was not.  The conclusion?  There was no statistical significant effect on mortgage rates.  Levitin also noted that Freddie Mac and Fannie Mae, who frequently purchase home mortgages on the secondary market, do not charge a risk premium on certain kinds of property that currently can be modified in bankruptcy.
      Kent further argues that "
    Prudent lenders make loans based in large part on the ability of the borrower to make payments and on the value of the collateral if the borrower defaults.  The possibility of bankruptcy is only a small part of the analysis and the credit reputation of the borrower is the primary indicator used by lenders in making home loan decisions."

    Although Senate Democrats have vowed to resurrect this bill again, for the time being it appears the best option for many distressed, underwater homeowners is still to surrender the home in a Chapter 7 proceeding.  This is especially true if the homeowner has incurred substantial credit card and other types of unsecured debt. 

    If you are in the greater Sacramento area and thinking about Bankruptcy please contact me to sit down and discuss your situation.  Initial consultations are discounted and afternoon and early evening appointments are available.  If you reside in another area of California, click here for a referral to a competent bankruptcy attorney in your area.

    -- Michael

    "Sign of the Times - Foreclosure" Photo Credit, Jeff Turner aka "respres" on Flickr (Creative Commons License)

    Sources & Further Reading on this Topic:

    "Senate Defeats Mortgage Cram-Down as Democrats Balk (Update 2)" by Margaret Chadbourne, The Bloomberg Report, April 30, 2009. 

    "Mortgage Bankruptcy Bill Fails in the Senate", Associated Press, MSNBC, April 30, 2009.

    "
    12 Problems with the Obama Mortgage Stability Initiative Plan", Ronald D. Utt, Ph.D. and David C. John, Webmemo #2311, The Heritage Foundation, 02.27.09.

    "Will Bankruptcy Reform Increase Interest Rates?" by Kent Anderson, Esq., Bankruptcy Law Network, 12.24.07.

    "The Effect of Bankruptcy Reform on Mortgage Interest Rates" by Adam Levitin, From the Warren Reports, 12.19.07.

    "Foreclosure Activiity Increases 9% in First Quarter" by RealtyTrac Staff, RealtyTrac Press Room, 04.16.09.


    "Mortgage Modification Bill Faces Trouble in Senate" by Renae Merle, Washington Post Staff Writer, Washington Post Economy Watch, 04.28.09.

Monday, 11 May 2009

  • Some Interesting Facts and Figures About Marriage


    Some time ago in the Sacramento Bee I saw an article that contained some interesting Facts & Figures about Marriage and Relationships.  I ripped the article out, but failed to post it here until now.  As someone who works in family law, I'm always interested in these sorts of statistics!  I updated the original Bee list to include information related to same sex marriages in California..
    • 753,000:  Estimated number of households in the Sacramento metropolitan area.
    • 374,000:  Estimated number of those households shared by married couples.
    • 46,000:  Estimate of those households that are shared by a man and woman.  Of these 3,300 are shared by two women and 2,940 are shared by two men.
    • 8 Years:  The average length of first marriages that end in divorce in the United States.  (Note that in California, a "long term marriage" under the Family Code is 10 years.  This has important implications for  spousal support!)
    • 3.5 Years:  Median time between divorce and a second marriage.
    • 12 of men & 13% of women:  Proportions of those over 15 years of age who had married twice by 2004.
    • 3 of men and women had married three or more times by 2004.
    • 58 percent of women 15 and older had married only once as of 2004.
    • 54 percent of American men had married once as of 2004.
    • 38 percent of men in their 50's had been divorced by 2004.
    • 41 percent of women in their 50's had been divorced by 2004.
    • About 33 percent of men and 25 percent of women reported never having married.
    • 28.4:  Median age at marriage for men in California.  (Nationally it is 27.5.)
    • 26.2:  Median age at marriage for women in California.  (Nationally it is 25.9.)
    • 45,515:  Number of domestic-partner declarations filed in California with the Secretary of State's office between 2000 and September of 2008.  (Note that domestic partnerships are still available in California even after Proposition 8.  Domestic partners have many of the same legal protections and benefits as married spouses in California).
    • 5,335:  Number of terminations of domestic partnerships filed with the Secretary of State's office.
    • 18,000:  Approximate number of same sex marriages validated in California before the passage of Proposition Eight.
    • 4037:  Number of marriage licenses issued to same sex couples on the day before the State Supreme Court issued its stay.
    • 57 percent of same sex couples in California were women.
    • 74 percent of same sex couples in California were over the age of 35.
    • 69 percent of same sex couples in California held at least one college degree.



    Some of the statistics above were obtained at the Alternatives to Marriage Project at www.unmarried.org.  This is an interesting and worthy national nonprofit organization advocating for equality and fairness for unmarried people, including people who are single, who choose not to marry, cannot marry, or live together before marriage.  Despite being one of the fasting growing demographic groups in America, single people often suffer discrimination in various forms.  For instance, they may be taxed at a different rate, experience difficulty obtaining housing or not have equal access to health care benefits.  A more complete list of current issues and public policy concerns can be found here.  The group is not against marriage per se, they simply feel there are other legitimate lifestyle options for families that people may want to consider.  It is important to note that this progressive organization is "open to everyone, including singles, couples, married people, people in relationships with more than two people, and people of all genders and sexual orientations."  To get involved, click the banner below!

    End Marital Status Discrimination - Alternatives to Marriage Project


    -- Michael

    P.S. -- I have started a new Legal Technology blog also on Xanga called "Law Tech Geek."  I imagine it will mostly appeal to attorneys who are interested in learning more about how technology relates to law practice managment.  However, it might have some interest to techies.  Everyone is welcome to check it out!

    Other Sources:  US Census Bureau, California Secretary of State's Office, 365gay.com crediting Associated Press, Wikipedia "Same Sex Marriage in California."

    Photo credit:  "Finnish Summer Night" by Wili Hybrid (creative commons license)

Wednesday, 24 September 2008

  • Last Chance For Class Action Settlement Benefit!



    With the changing of the seasons, it seemed like the perfect time to start updating my blog here more regularly.  The press of business at my office has prevented me from posting entries as much as I would like.  I'm especially swamped with bankruptcy cases.  Sorry for being away so long!

    TODAY is the last day to take advantage of a class action settlement that nearly all adults qualify for and provides useful benefits.  If you had/have a credit card, loan, or credit account, point your browser now to www.listclassaction.com and register to get six or nine months of free credit monitoring services.  You'll have unlimited access to your credit report (including credit score) and receive timely alerts whenever there are any changes to your data.  This can be very useful when trying to rebuild your credit or keeping an eye out for identify theft. 

    The retail value of the "enhanced" credit monitoring service for nine months is $115!  I used to subscribe to the exact service they are giving away and liked it a lot!  There's no catch, so just do it.  Everyone should be informed about what's going on their credit report.  It's used for so many purposes these days besides credit applications including insurance rates and potential employers.  There's also the possibility of receiving a cash payment, but this is not a sure thing.  If you select that option instead of the credit monitoring service, you may receive nothing or just a few dollars. 

    This class action stems from a lawsuit involving privacy issues against TransUnion, one of the big three credit reporting agencies.



    On October 1st, updated median income levels go into effect for Chapter 7 bankruptcy filers.  The median income level is a key part of the "Means Test" which is now one of the hurdles debtors must clear before qualifying for a fresh start under Chapter 7.  The "Means Test" is complex, but in a nutshell, a few years ago Congress placed income limits on would be filers for Chapter 7 bankruptcy.  These limits are based on the median income for your size family in your geographical area.  If you earn too much, you may be forced into Chapter 13, which is not as attractive for most debtors.  In Chapter 13, debtors must repay some or all of their debts unlike a Chapter 7 where they are simply wiped out. 

    Generally when these numbers are adjusted, the median income level goes up, which is good news for debtors since they can now earn more before and still qualify for Chapter 7.  However, in some areas the median income goes down and bankruptcy filers are impacted negatively in this situation.  For instance, filers in Vermont and Rhode Island got hit especially hard this go round.  The limit for a single person in these states was reduced $2979 and $2332 respectively.  I can only imagine that is because hard times have fallen on these states and the population is earning substantially less.  California debtors have a more rosy picture.  Here's how it will affect filers in the Golden State:

    1 earner (living alone) can now earn $541 more.  ($47,363)
    2 person families can earn $948 more.  ($62,690)
    3 person families can earn $1459 more.  ($68,070)
    4 person families can earn $83 more.  ($77,014)

    Bankruptcy can still be a wonderful solution if you find yourself knee deep in debt and don't see a way out.  If you are in the greater Sacramento area and want to explore this option, please don't hesitate to contact me for a free consultation (mwcrosson at gmail dot com).

    -- Michael

Thursday, 09 August 2007

  • Dads & Daughters

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    I saw a book on the new acquisitions page of the Sacramento County Public Library website this morning that may be of interest to clients and readers. 

    The book is called The Dads and Daughter's Togetherness Guide:  54 Fun Activities for Dads and Daughters to Help Build a Great Relationship written by Joe Kelly.  In my family law cases, quite often I hear complaints from Mom that Dad doesn't "do anything" with Daughter during his parenting time (which is often on the weekend).  In one case I worked on, Mom alleged that Dad practically ignored the child all day while he played on the Internet or went bowling with his buddies.  Another similar complaint is that Dad doesn't do age appropriate activities with the child.  In other words, he does things that he wants to do, without regard to the interests of the minor.  One Mom complained that Dad took his teenage daughters to jazz concerts and sporting events that his daughters couldn't care less about.  As a final example, in one matter I handled, Mom alleged Dad was guilty of both sinsHe took his five year old daughter out on a fishing boat with his friends all weekend long.

    If unaddressed, these kind of issues can lead to serious conflict between the parents and visitation discontent with the minor as well, at least in cases where Mom's concerns are valid.  I'm not suggesting that Dad necessarily has to do something grand every time he has visitation.  There's no need to go to Disneyland every weekend; but it is an opportunity to spend quality time with the child that should not be squandered.

    Sometimes I think Dad's behavior is unintentional.  He may never have considered the issue or could simply be clueless about what kind of activities he could do with his daughter.  That's where this book comes in.  According to the publisher's description, "Fathers know that doing things with their daughters is important. Shared activities build trust and self-esteem, show how much dads care, and allow everyone to cut loose and have fun. But even fathers who can beat the generation and gender gaps that make them feel awkward can’t always dream up cool places to go or mutually enjoyable things to do. Like the coach of their favorite team, dads need a game plan, and that’s exactly what Joe Kelly provides in Dads & Daughters Togetherness Guide." 

    If you're a Dad who has struggled with this issue, check this book out!  And if you're a Mom who is unhappy with Dad's agenda during his visitation, why not buy him a copy?  As mentioned above, this book is available at the Sacramento Library, but it can also be purchased at Amazon for under $10.    


    Speaking of the library, this month the Sacramento Library is calling on area residents to support reading, learning and community in Sacramento in conjunction with Borders. 

    During the month of August, visit any Sacramento area Borders Bookstore and donate one of 150 books from the Library’s wish-list. Not only will the Sacramento community benefit from the addition of the book to the Sacramento Public Library’s collection, but the Sacramento Public Library Foundation will receive 5% from the proceeds of the book’s sale.  For other ways to support the library, check this page!

    Remember, "Books are the quietest and most constant of friends; they are the most accessible and wisest of counselors, and the most patient of teachers."  ~ Charles W. Eliot.


    I added my office this morning to Google Maps.  From time to time my listing will have a valuable coupon for prospective clients.  The first one is $25 off an initial consultation for prospective family law clients.  This offer expires on August 31, 2007.  I normally charge $100 at the first meeting for up to an hour. 

    At the consultation we would sit down face to face and discuss your goals, the issues in your case, your options and possible trouble-spots, court procedure, and of course I would try to answer any questions you have.  The best time to meet for a consultation is when your case is in the early stages or when you are simply contemplating taking legal action.  However, even if you case is has progressed to a later stage, I may still be able to assist you.  If you live outside the Sacramento area, the consultation can be performed on the telephone at a prearranged time.  Please contact me if you would like to set one up!  I am sure you will gain a much better understanding of your situation and find it worthwhile.  I am currently accepting new clients in the areas of family law, small business matters and bankruptcies.       

    -- Michael

Wednesday, 11 July 2007

  • 07-07-07, Divorce Rates and Upcoming Charity Events!




    This past Saturday was 07-07-07 of course, and all around the world, couples in love were tying the knot at a frenzied pace hoping to gain an extra lucky edge for their marriage.  According to Theknot.com, a popular wedding site, the number of marrying couples was estimated to be 31,000 in the U.S. alone which is twice as high as the average summer Saturday.  While this type of "insurance" against failure may strike some as grasping at straws, it might not be a bad idea given the relative frequency of divorce in this society.  After all what can it hurt? 

    Related to this, how many times have you heard that "50% of marriages end in divorce!"  This idea has become so commonplace, it's practically accepted as The Gospel now.  There's no doubt many marriages do fail.  However, statistically it's not as simple as that.  It's better to compare the annual rate of divorce in a population over time to get a truer picture.  The National Center for Health Statistics determined that for 2005, the divorce rate in the United States was 3.6 per 1,000 members of the population with forty-six states and the District of Columbia reporting.  The same agency reported that the marriage rate for the same year was 7.5 per 1,000 of population.  This is the source of the popular 50% statistic cited above.  However, it is erroneous to conclude the divorce rate is 50% because the people getting married are not the same people getting divorce in the vast majority of cases.  Although these two figures seem related, and our mind wants to "connect the dots" they cannot be used together to calculate the divorce rate.  In 2003, the divorce rate was 3.8 divorces per 1,000 so in fact, the incident of divorce has dropped slightly. 

    I was curious whether California's average was higher or lower than the national average but unfortunately the Golden State is no longer reporting it's divorce information to NCHS.  The last year data is available for is 1990 when the rate was 4.3, only slightly higher than the current national average.  By far, the state with the highest divorce rate is Nevada where the rate is 11.4.  I suspect a transitory population lured by the promise of plentiful jobs and relative high wages in the booming Las Vegas area and high incidence of substance abuse and gambling addiction factor into this astonishingly high number.  Surprisingly, the state with the lowest rate was New Jersey coming in at 3.0 per 1,000.  If you can stand the urban decay, smog, grime, toxic contamination and toll roads, and you want something more concrete to maximize your chances of marital success than "777", move to the "Garden State."  A chart based on Census data that compares the divorce rate in all states can be found here.

    If you already know are one of the "unlucky" ones and wish to get out of an unhappy marriage, please contact me.  I can provide you with solid representation in your divorce matter at a reasonable cost.  I have been practicing in the area of family law for nearly fifteen years in the greater Sacramento area.  My cases have ranged from simple "no contest" cases to complex matters with couples that were highly conflicted over custody, support or property division issues.



    Looking for something to do?  Here are some fund raising events for worthy causes coming up soon in the Sacramento area:

    Saturday, July 14, 2007 at Raley Field -- Swing for the Cure to benefit Susan G. Kormen.  Bring out your business or organization to help raise money to find a cure for breast cancer.  Part of each packet sold goes to the Sacramento affiliate.  This is sponsored in part by Chevron.

    Saturday, July 21, 2007 at the American River Parkway -- Eppie's Great Race to benefit Sacramento County Therapeutic Recreational Services (TRS).  This annual event gives you the chance to run (5.82 miles), bike (12.5 miles) and paddle (6.35 miles) from Sacramento to Rancho Cordova.  It's advertised as "The World's Oldest Triathlon."  There's also a Kid's Duathlon at 10:00 a.m. sponsored by Kaiser Permanente.  TRS provides training in leisure, social, community and independent living skills to individuals ages five and up with mental, physical, developmental, emotional and sensory impairments or special needs.  Even if you can't race, there's opportunities to help with the race including setting up, paperwork, working in refreshment stands and more.  Contact the TRS at 916-381-0255 or via e-mail at saccotr@sacparks.org for more information.

    Saturday, July 28, 2007 -- Chefs for Charity "Sip & Savour" Event to benefit the Virginia Tech Foundation.  Local area chefs with big hearts are sponsoring this function.  The evening will consist of a tapas recipe challenge, gourmet food and wine tasting reception, live cooking demonstration and silent auctions with a truly impressive assortment of good including limited artwork, entertainment and sports collectibles, designer jewelry and ladies accessories, exotic getaways and more.  Live music will be provided courtesy of Sacramento's "Inner Soul Band."  Tickets cost $30.

    -- Michael

    Michael W. Crosson, Attorney at Law
    Family Law, Bankruptcy, Small Business Matters & Intellectual Property
    Representing clients in the greater Sacramento area, including Placer, Yolo & El Dorado Counties
       

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