Tuesday, July 2, 2013

New Loan Modifications are available to mortgages owned or guaranteed by Freddie Mac or Fannie Mae effective July 1, 2013 - August 1, 2015.

The Federal Housing Finance Agency ("FHFA") announced that, effective July 1, 2013, Fannie Mae and Freddie Mac mortgages will offer a new, simplified loan modification initiative to minimize losses and to help troubled borrowers avoid foreclosure and stay in their homes. 

Beginning July 1, servicers will be required to offer eligible borrowers who are at least 90 days delinquent on their mortgages an easy way to lower their monthly payments and modify their mortgages without requiring financial or hardship documentation.  It is called the "Streamlined Modification Initiative".  After making the three trial payments, the mortgage should be permanently modified with the lower payment.  The lower payments would be due to a lower interest rate and/or longer mortgage term, rather than a reduction to mortgage principal.  The homeowner must timely make each of the three trial- modification payments.

The program begins July 1, 2013 and ends August 1, 2015.

The loan must be owned or guaranteed by Fannie Mae or Freddie Mac.  Homeowners must be 90 days to 24- months (and no more) delinquent in mortgage payments, and have a first-lien mortgage that is at least 12 months old with a loan-to-value ratio equal to or greater than 80 %. That means you must have a first mortgage where the balance you owe is 80% or more of the value of your home and you must have taken out this mortgage at least twelve months ago, and be somewhere between 3 months and 24 months behind in your monthly mortgage payments.

Loans that have been modified at least two time previously are not eligible.  

For further information, dial 211 and ask to be placed with a Housing counselor.  Why?  The State of New Hampshire provides to its residents, at NO COST, the ability to work with a housing counselor to process a loan modification application.  Again, simply dial 211 and ask to be placed with a housing counselor to apply for a loan modification at no cost to you!

You can click here to see if your loan is owned or guaranteed by Fannie Mae or Freddie Mac.
Fannie Mae look up: 

For more information, click on the news releases below issued by the Federal Housing and Finance Agency:

Friday, June 7, 2013

Discharge in Bankruptcy Definition of "Defalcation".

"Defalcation" in context of bankruptcy discharge defined by the Supreme Court in Bullock v. Bankchampaign, N.A. May 13, 2013

Click here for the full decision:


Petitioner’s father established a trust for the benefit of petitioner and his siblings, and made petitioner the (nonprofessional) trustee. The trust’s sole asset was the father’s life insurance policy. Petitioner borrowed funds from the trust three times; all borrowed funds were repaid with interest. His siblings obtained a judgment against him in state court for breach of fiduciary duty, though the court found no apparent malicious motive. The court imposed constructive trusts on certain of petitioner’s interests—including his interest in the original trust—in order to secure petitioner’s payment of the judgment, with respondent serving as trustee for all of the trusts. Petitioner filed for bankruptcy. Respondent opposed discharge of petitioner’s state court-imposed debts to the trust, and the Bankruptcy Court granted respondent summary judgment, holding that petitioner’s debts were not dischargeable pursuant to 11 U. S. C. §523(a)(4), which provides that an individual cannot obtain a bankruptcy discharge from a debt“for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny.”  The Federal District Court and the Eleventh Circuit affirmed. The latter court reasoned that “defalcation requires a known breach of fiduciary duty, such that the conduct can be characterized as objectively reckless.”
Held: The term “defalcation” in the Bankruptcy Code includes a culpable state of mind requirement involving knowledge of, or gross recklessness in respect to, the improper nature of the fiduciary behavior.

(a) While “defalcation” has been an exception to discharge in a bankruptcy statute since 1867, legal authorities have long disagreed about its meaning. Broad definitions of the term in modern and older
dictionaries are unhelpful, and courts of appeals have disagreed about what mental state must accompany defalcation’s definition.

(b) In Neal v. Clark, 95 U. S. 704, this Court interpreted the term “fraud” in the Bankruptcy Code’s exceptions to discharge to mean “positive fraud, or fraud in fact, involving moral turpitude or intentional wrong, as does embezzlement; and not implied fraud, or fraud in law, which may exist without the imputation of bad faith or immorality.” Id., at 709. The term “defalcation” should be treated similarly. Thus, where the conduct at issue does not involve bad faith, moral turpitude, or other immoral conduct, “defalcation” requires an intentional wrong. An intentional wrong includes not only conduct that the fiduciary knows is improper but also reckless conduct of the kind that the criminal law often treats as the equivalent. Where actual knowledge of wrongdoing is lacking, conduct is considered as equivalent if, as set forth in the Model Penal Code, the fiduciary “consciously disregards,” or is willfully blind to, “a substantial and unjustifiable risk” that his conduct will violate a fiduciary duty.

(c) Several considerations support this interpretation.

First, statutory context strongly favors it. The canon noscitur a sociis argues for interpreting “defalcation” as similar to its linguistic neighbors “embezzlement,” “larceny,” and “fraud,” which all require a showing of wrongful or felonious intent. See, e.g., Neal, supra, at 709.

Second, the interpretation does not make the word identical to its statutory neighbors. “Embezzlement” requires conversion, “larceny” requires taking and carrying away another’s property, and “fraud” typically
requires a false statement or omission; while “defalcation” can encompass a breach of fiduciary obligation that involves neither conversion, nor taking and carrying away another’s property, nor falsity.

Third, the interpretation is consistent with the longstanding principle that “exceptions to discharge ‘should be confined to those plainly expressed.’ ” Kawaauhau v. Geiger, 523 U. S. 57, 62.
It is also consistent with statutory exceptions to discharge that Congress normally confines to circumstances where strong, special policy considerations,such as the presence of fault, argue for preserving the debt, thereby benefiting, for example, a typically more honest creditor. See, e.g., 11 U. S. C. §523(a)(2)(A).

Fourth, some Circuits have interpreted the statute similarly for many years without administrative or other difficulties. Finally, it is important to have a uniform interpretation of federal law, the choices are limited, and neither the parties nor the Government has presented strong considerations favoring a different

Vacated and remanded.
BREYER, J., delivered the opinion for a unanimous Court.

Sunday, March 31, 2013

Local Bankruptcy Rules and Forms for New Hampshire

You can find the local rules and forms used by the Bankruptcy Court for the District of New Hampshire, on line, at no cost.

Rules, Orders & Forms, click below:

  • Local Bankruptcy Rules, Interim Bankruptcy Rules, Administrative Orders, and Local Bankruptcy Forms (as amended February 1, 2013)
  • If I filed bankruptcy before, can I file again?

    If I filed bankruptcy before, can I file again?
    The answer is yes.

    The more important question is, how soon do you have to wait in between bankruptcy cases?

    Chapter 7 to another Chapter 7 (8 years):
    If you filed a Chapter 7 case and received a discharge of debt , then you must wait 8 years in between filing another Chapter 7 case.  See 11 U.S.C §727(a)(8).

    Chapter 13 then Chapter 7 (6 years):
    You must wait six years.  See 11 U.S.C.§727(a)(9).  However, if you paid 100% of your debts in the prior Chapter 13 case or paid at least 70% of your debts in the prior Chapter 13 case and the Bankruptcy Court found that this was your best effort then the 6-year rule does not apply.  See 11 U.S.C.§Section 727(a)(9),  provided you otherwise qualify.

    Chapter 7 then Chapter 13 (4 years):
    If you previously filed a Chapter 7 case and received a discharge of debt, then you would wait four years in between the prior Chapter 7 case and the new Chapter 13 case.   See 11 U.S.C.§1328(f)(1).  But, if after filing a Chapter 7 case you file a Chapter 13 case and you do not need a discharge of debt in the new Chapter 13 case, then you do not wait.

    Chapter 13 to another Chapter 13 (2 years):
    If you received a discharge of debt, meaning you completed your repayment plan in a prior Chapter 13 case, then you must wait two years before filing another Chapter 13 case or you will not receive a new discharge of debt in the new Chapter 13 case.  See 11 U.S.C.§  1328(f)(2).  But, if you are not looking for a discharge of debt in the new Chapter 13 case, then you can file another one without waiting.

    NO time (0 years):
    If you are going to pay your creditors back 100% and do not need a discharge of debt, then you do not need to wait to file a Chapter 13 case. Why would you file a bankruptcy case and not care about discharging debt?  A common answer is that you have fallen behind on your mortgage payments, or other types of payments, and you want to catch up and a Chapter 13 repayment plan would allow you to do that.  For example, if you fall behind in your mortgage payments for several months, it is nearly impossible to catch up quickly and you do not want to lose your house, and a Chapter 13 payment plan would allow you to spread those arrearages over a repayment plan of 3-5 years.

    "Good Faith Rule": 
    All cases must be filed in good faith to receive protection under the Bankruptcy Code, regardless as to timing.

    Divorce Obligations may not be discharged through bankruptcy.

    In a recent opinion issued by the New Hampshire Bankruptcy Court, (Honorable James B. Haines, Jr.  sitting in designation), the Court reiterated the parameters of what is, or is not, discharged through a chapter 7 bankruptcy case relevant to a divorce proceeding.  See Maville v. Maville (In re Maville), 2012 BNH 007 (Bankr. D.H. 2012)( Haines, J, sitting in designation).

    Debts in the nature of alimony and child support are not discharged through a bankruptcy case.  Section 523(a)(5) of the Bankruptcy Code establishes that individual debtors will not be relieved of domestic support obligations; and, Section 101(14A) defines these to include debts in the nature of alimony, maintenance and support.  Prior to 2005, some obligations were discharged.  That changed with the amendments to the Bankruptcy Code in 2005.  Section 523(a)(15) now unqualifiedly provides that a property settlement obligation encompassed by that section is not discharged.  Mavillesupra.

    Click here for the full opinion from the Court's web site:

    Get a copy of your Tax Returns

    If you cannot locate your tax return, the IRS can provide you with a "tax transcript" at no charge.

    Click below for more information:

    If you want  a copy of the full tax return, you can order that as well but there will be a minimal charge.

    Foreclosure: First Circuit would not force mortgagee to foreclose.

    Canning v. Beneficial Maine, Inc. (In re Canning), ___ F.3d ___(1st Cir. Feb. 1, 2013).

    The refusal by the Chapter 7 debtors’ mortgage creditor to accede to the debtors’ demand that the creditor either foreclose the mortgage on their residence, which the debtors had surrendered and vacated, or release its lien on the property did not violate the discharge injunction. Distinguishing In re Pratt, 462 F.3d 14 (1st Cir. 2006), in which the court held that a secured creditor's refusal to foreclose or release its lien on an inoperable, worthless car was intended to objectively coerce the debtor into paying a discharged debt, the court observed that the creditor offered to release its lien through either a settlement offer or a short sale, which indicated the intent to collect no more than the value secured by the underlying lien, as well as a willingness to negotiate a palatable solution for all involved.

    Click here for the full opinion from the court's web site:  Click here: USCA1 Opinion