Month: December 2011

N.C. Court of Appeals: In re Yopp- Holder of the Note through Corporate Merger; Evidence Allowable in a Foreclosure

Summary:

Capital One commenced a foreclosure against the Debtors on a Deed of Trust, originally granted to Chevy Chase Bank, which later merged with Capital One.  The foreclosure was allowed in part based on, among other documents, an Affidavit from James Cox, Vice President of Capital One.  This Affidavit stated that “to the best of [his] knowledge” Capital One was the servicer and holder of the mortgage note.

The Debtors objected to this affidavit, arguing that it denoted only Mr.  Cox’s personal opinion and was not made upon personal knowledge as required by Rule 56(e).  The Court of Appeals rejected this argument, holding instead that when an Affiant puts a “self-imposed limitation to the affiant’s personal knowledge” See Faulk v. Read More

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Book Review: Graeber, David- Debt: The First 5,000 Years

Summary:

Arguing that debt pre-dates actual money as the basis of human economic life, this book views the last 5,000 years of lending and monetary policy through the lense of  anthropology, assessing concepts from ancient debt slavery to the current mortgage crisis like practices and traditions from foreign cultures.  The author, an outspoken anarchist, who is also one of the central thinkers behind the Occupy Wall Street movement, uses detailed historical and sociological evidence to show that despite the assumptions of Adam Smith and the explicit statements of nearly every economics text book, human society did not evolve from a barter based economy to using coins, because such barter based economies have never existed in any real sense.  … Read More

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Bankr. E.D.N.C.: In re L.L. Murphrey Co.- Hypothetical Amounts not allowed in Accounting

Summary:

The Chapter 11 Plan for LLM provided that for the eventual reamortization of two notes, partially based on cash flow.  Ten years later when it came to recapitalize  the notes,  LLM and the note holder disagreed by nearly $5 million on the amount.

Each party presented evidence from their separate accountants.  The note holder’s accountant, however, included hypothetical figures into her calculation for “demonstrative purposes” and the court found there was no factual basis for these asserted amounts.

In re L.L. Murphrey Co.- Hypothetical Amounts not allowed in Accounting.PDF Read More

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Bankr. E.D.N.C.: In re Harris- Debtor Not liable for Student Loans Signed by Mother without Authority

Summary:

The Debtor’s mother signed the Debtor’s signature on 11 student loans.  After filing bankruptcy, the Debtor objected to the validity of the claims.

The Court began by reiterating that under 11 U.S.C. § 502(b0, ‘[claims that are unenforceable against the debtor or against property of the debtor . . . are simply not allowable for purposes of a right to share in a distribution of the debtor’s assets.” In re Easthaven Marina Group, LLC, No. 08-05453-8-JRL (Bankr. E.D.N.C. May 7, 2009) (Leonard, J) (quoting 4 Collier on Bankruptcy (15th ed. rev.) ¶ 502.03[2][b][iii]).

Pursuant to N.C.G.S. § 25-3-401, “A person is not liable on an instrument unless (i) the person signed the instrument, or (ii) the person is represented by an agent or representative who signed the instrument and the signature is binding on the represented  person under G.S.… Read More

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Bankr. E.D.N.C.: In re Voliva- Homestead Exemption Allowed despite Absence from the Property

Summary:

The Debtors are the owners of real property in Vandemere, North Carolina and a mobile home that sits at that location, but is  personal property.  The Debtors claimed both as exempt under their homestead.  A judgment creditor objected that this was not the residence of the Debtors and that the Debtors had not obtained the necessary permits to place the mobile home at the property.

The Debtors testified that they were currently not residing on the property, partly because the Male Debtor required dialysis that was not available locally and also because the mobile home had been destroyed after the case had been filed, as a result of a hurricane. … Read More

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Bankr. E.D.N.C.: In re Harper- Denial of Motion to Convert from Chapter 7 to Chapter 13 Due to Bad Faith

Summary:

The Chapter 7 Debtors failed to disclose in their petition their interests in various real estate partnerships and multiple foreclosure proceedings, which the Chapter 7 Trustee discovered through reviewing the Debtors’ tax return and public records.  The Debtors then sought to convert to Chapter 13 and the Chapter 7 Trustee objected.

The Court held the Debtors  initial schedules were so misleading as to give rise to an inference  of bad faith, which in turn prevents conversion. Marrama v. Citizens Bank of Massachusetts, 549 U.S. 365 (2007).  The debtors argued that providing the 2009 tax return, which disclosed some of the missing items, demonstrates they were not purposefully concealing matters from the Trustee. … Read More

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4th Circuit: Watkins v. Sun Trust- Incorrect TILA Notice of Right to Cancel Form is not a Material Violation

Summary:

The Debtors refinanced their home original Sun Trust mortgage again with Sun Trust, which provided the Model Form H-8 “Notice of Right to Cancel”, which is used for closed-end secured consumer credit transactions.  In fact it should have used Model Form H-9, which applies in a refinancing rather than new extension of credit.  Form H-9 differs from  Form H-8 in two ways- First, instead of Form H-8’s disclosure that the borrower is “entering into a transaction that will result in a security interest in your  home,” Form H-9 provides that “[y]ou are entering into a new transaction to increase the amount of credit previously provided to you.” Second, Form H-9 adds a sentence, “If you cancel this new transaction, it will not affect any amount that you presently owe.”

In a divided opinion, the Court of Appeals held that neither the Truth in Lending Act nor Regulation Z, which is promulgated by the Federal Reserve to implement TILA, makes a distinction between a refinancing and an initial financing. … Read More

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NC Court of Appeals: GMAC Mortgage v. Miller- Ambiguous and/or Conflicting Description of Real Property in a Deed of Trust

Summary:

William Miller, Russell Grogan and Stephanie Grogan purchased a 21.394 acre tract (Tract I) in 1997 and subsequently a 0.15 acre tract (Tract II) to provide access to a road.  In 2003, the owners granted a Deed of Trust to GMAC.  The Deed of Trust included a tax parcel number that encompassed both Tract I and Tract II, but the legal description only referenced Tract II.  In 2005, the owners subdivided Tract I into Tract IA, consisting of 10.932 acres owned by all three,  and Tract IB, consisting of 10.389 acres which was henceforth to be owned solely by the Grogans. … Read More

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Law Review: Jacoby, McCue, & Belsky- In or Out of Mortgage Trouble? A Study of Bankrupt Homeowners

Abstract:     

This paper  examines the determinants of missed payments and foreclosure initiation among a national sample of homeowners who filed for personal bankruptcy in 2007, using a rich dataset from the 2007 Consumer Bankruptcy Project.

Credit access had a significant effect on keeping mortgages current across all of the authors’ models: access to, and reliance on, credit cards reduced the chance of missed payments and default, increasing the likelihood that bankruptcy could produce a fresh start. Missed mortgage payments also were associated with a substantial drop in income and with the use of a mortgage broker. The probability of foreclosure initiation was lower in states with longer foreclosure timelines.… Read More

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