California Bankruptcy Attorney Blog

Home foreclosures are still high, but they've dropped since December, new real estate numbers show. The Orange County Register reported Feb. 22 that foreclosures fell sharply at the end of 2008, although there were still more foreclosures in December of 2008 than there were in December of 2007. Other Southern California areas reported similar drops in foreclosures, with San Diego County reporting a 12% drop between December and January, and Riverside County dropping by 5%.

In all of these drops, experts suggested that federal and state legislation played an important role. The Register quoted an economist who attributed the drop to a state law, which took effect Sept. 8, that required lenders to talk with certain borrowers at least 30 days before sending them a notice of default. The San Diego Union-Tribune attributed it to the glut of foreclosed properties already on the market, which drives down the value of a repossessed home further, in anticipation of help from President Obama's housing plan. And City News Service, through KTTV, quoted a RealtyTrac executive who suggested that a foreclosure sales moratorium by the Fannie Mae and Freddie Mac may be responsible.

Regardless of the cause, this is good news for Southern California homeowners at risk of losing their homes. As we have written here before, banks don't want to foreclose because it's expensive and it puts them in the position of homeowners, which they're not set up for. However, until recently, that wasn't enough to slow the rate of foreclosures, or make banks more willing to negotiate with homeowners seeking a mortgage loan modification. The change might be attributed to the natural workings of the market -- the added incentive to avoid foreclosure when the market is already glutted -- or laws that outright force lenders to stop foreclosing. In either case, it can only give homeowners and their Santa Ana mortgage loan modification lawyers more time to find a permanent solution.

However, a slow in foreclosures is no guarantee that banks are more willing to address the problems that cause foreclosures -- including mortgage loans whose terms have become unrealistic for the borrowers. In many cases, borrowers who believe they can make payments if they can also the terms of their loans are met with deaf ears from lenders. This reluctance to negotiate is partly about money -- despite the housing crisis, some lenders still haven't changed their approach -- and partly about the difficulties of changing a loan that has already been "securitized" and sold to investors who have a stake in its value. For homeowners in this situation, getting help from a Garden Grove mortgage loan modification attorney may be the best course of action.

At Howard | Nassiri LLP, our Anaheim mortgage loan modification lawyers help clients hold on to their homes by negotiating for better interest rates, a longer repayment term or even a reduction of principal. When it's appropriate, we can also point out instances of predatory lending that may make a previously uninterested lender more cooperative. We have helped many homeowners with "subprime" or non-traditional mortgages convert to a more livable, more traditional loan. If you know you need this kind of help, we invite you to take advantage of our free, confidential consultations to learn more about your options and your rights. To set one up today, contact Howard | Nassiri online or call us at 1-800-872-5925.

The House of Representatives delayed a vote Feb. 26 on important changes to bankruptcy law that could help hundreds of thousands of Americans stay out of foreclosure. According to the Los Angele s Times, the House may vote next week on a bill that would, if signed into law, allow bankruptcy judges to reduce the principal owed by homeowners involved in a bankruptcy, which is commonly referred to as a "cram down." Bankruptcy judges currently have this power for other debts, including mortgages on second homes, but not for primary home mortgages. The bill also includes a "safe harbor" provisions for mortgage servicers who are afraid they will be sued if they alter the terms of a securitized mortgage.

Lenders are decrying this legislation because it will give bankruptcy judges the ability to wipe out some of their profits with the stroke of a pen. But as Chino Hills mortgage loan modification attorneys, we believe it could actually save both lenders and homeowners substantial money by giving lenders an incentive to renegotiate loans that are no longer realistic. Many homeowners who have taken on "subprime" loans -- or who are victims of bad economic circumstances like a layoff -- would like to change the terms of their loan so that they can continue making payments and avoid foreclosure. Lenders may be interested too.

However, mortgage servicers often refuse to talk, in part because it's cheaper for them to foreclose than to negotiate, and in part because many mortgages are now securities that are partly owned by investors who could sue them if they hurt the investment. This bill solves that problem in two ways. One is the safe harbor provision, which simply takes away the threat of a lawsuit. The other is the threat that a bankruptcy judge will cram down the mortgage. As reluctant as a mortgage servicer may be to talk about changing a loan, it still has power to control those changes when negotiating outside of court. Once the homeowner is forced into bankruptcy, servicers lose that control and may lose even more money than they would have if they had negotiated with homeowners a few months ago.

Howard | Nassiri LLP has an active practice in mortgage loan modification -- helping homeowners negotiate with their banks for changes in their loans. Our Tustin mortgage loan modification lawyers have successfully helped many homeowners stay out of foreclosure and bankruptcy by changing the length of their loans, their interest rates and sometimes even the principal. The cram down provision could help us save even more homes by giving mortgage servicers a way to avoid lawsuits as well as a clear ultimatum: Negotiate now or risk having your control taken away later.

If you're one of the thousands in Southern California who could benefit from the cram down legislation and you need help negotiating with your lender, Howard | Nassiri can help. To set up a free, confidential consultation with our Orange County mortgage loan modification lawyers, please contact us through our Web site or call us at 1-800-872-5925.

At Howard | Nassiri LLP, we work with people who need help resolving serious debt -- including uncontrolled mortgage debt. Unfortunately, like other California bankruptcy attorneys, we've seen a sharp rise in the number of clients who need mortgage loan modifications that could save their homes from foreclosure. In most cases, the homeowners know foreclosure is coming months before it becomes a reality. This gives them -- and us, if we can step in early enough -- time to consider options that might help them avoid the negative credit consequences of a foreclosure. One of those options is selling the home in a "short sale."

In a short sale, homeowners sell their home for less than the balance left on their mortgage loans. The bank that owns the mortgage must give permission for the sale, because the property is still collateral for the mortgage loan. However, the bank may or may not choose to forgive the remainder of the debt the homeowner owes. Banks and homeowners may both lose money in this transaction, but they also avoid a foreclosure, which is often bad for both parties. (Remember, banks don't want the hassle of maintaining and selling real estate, especially if they must sell it at a loss.) In addition to being potentially cheaper than foreclosure, a short sale is also generally faster.

Short sales have become more common in Southern California as home values have dropped dramatically, leaving many homeowners with more mortgage debt than their homes are worth. They offer a way for people in a tough situation to sell their homes and walk away with less damage to their credit than a foreclosure would do. However, a short sale isn't right, or even available, for everyone. For one thing, a bank is unlikely to approve a short sale if payments are current, or it believes the homeowner has the income or assets to keep making loan payments. The loan may need to be in default before the bank's loss mitigation department will even consider a short sale. For another, homeowners with a tax lien or other obligation on their property may not even be able to pursue a short sale.

Furthermore, a short sale may not solve the homeowners' debt problems. A bank can agree to a short sale but choose not to forgive the rest of the mortgage loan, which means the homeowners still owe the balance of the mortgage not paid by the sale. The homeowners' credit will also take a hit, though not as badly as it would if they had gone into foreclosure. They must continue making mortgage payments while they find a buyer, which prolongs some people's financial problems. And if the debt is forgiven, the IRS could count it as taxable income, depending on the homeowners' other financial circumstances.

Finally, a short sale may not be right for people who know they are going to file for bankruptcy. Some people may be able to save their homes in a Chapter 13 bankruptcy, depending on the circumstances. But even if they can't, their credit takes a substantial hit in a bankruptcy, just as it would if they went into foreclosure. This erases some of the big disadvantages of foreclosure, leaving the advantage of being able to live in a home rent-free and save money for months during the foreclosure and eviction process.

As you can see, whether to pursue a short sale of your home depends very heavily on your financial circumstances. If you'd like help understanding the advantages and disadvantages in your own case, you should talk to the Anaheim bankruptcy attorneys at Howard | Nassiri LLP. In addition to outlining your short-sale options, our experienced lawyers can help you renegotiate your mortgage, get control of unsecured debt or start a bankruptcy filing. To tell us about your case at a free consultation, please contact us online or call 1-800-872-5925 as soon as possible.

As Orange County bankruptcy lawyers, we see a substantial number of clients who come to us after medical problems put them in an overwhelming amount of debt to hospitals, doctors and other medical providers. In fact, according to a 2005 study by Harvard University, medical debt is responsible for more than half of all bankruptcies. Disturbingly, many of the people in the study did have health insurance -- just not enough to cover the full extent of their illnesses.

For people with a serious illness, chronic health condition or catastrophic injury, medical bills can add up very fast. An emergency-room visit after a car accident, for example, can quickly reach five or six figures if there was a serious injury involved. At Howard | Nassiri, we understand all too well that being in debt can feel so overwhelming that many people simply shut it out. But people with medical debt they know they can't pay still have options to consider.

First of all, if you're being harassed by creditors, you should know that you have rights. Under the Fair Debt Collection Practices Act, you have the right to request that creditors and bill collectors stop calling you and that they verify your debt in writing -- among many other things. If they ignore your requests, you have the right to sue them for up to $1,000 per violation (plus attorney fees and sometimes more), so it's best to make your request in writing and send it by certified letter. Howard | Nassiri has successfully represented many clients in Southern California debtors' rights lawsuits.

If your bills haven't been sent to collection agencies yet, you may be able to strike a deal with the original medical organization. Hospitals may not be eager to say so, but many have programs allowing forgiveness of debt for people who meet certain income qualifications -- generally those who make around 400% of the federal poverty line. If you don't qualify, they should still offer the option of setting up a payment plan. Smaller medical groups and individual doctors may also be willing to do these things. You'll probably have to show them documents that prove your income, like tax returns and pay stubs.

If your bills are in the hands of debt collectors, you probably can't ask for complete forgiveness, but you might still be able to set up a payment plan. If you have extra money, you may also be able to strike a settlement agreement, in which they drop the case entirely in exchange for a partial payment. Again, it's extremely important that you document every exchange you have with collection agencies, so you can prove you had a deal if things go sour later.

Unfortunately, many debt collectors are hostile and aggressive, and a few cross the line into illegal and unethical behavior. Clients already struggling with financial problems often find dealing with them very difficult. Howard | Nassiri has an active debt settlement and debt negotiation practice, in which we negotiate with creditors on our clients' behalf for a fair and complete settlement.

Bankruptcy is not most people's favorite option, but it might be right for those who can't resolve their financial problems in other ways. Depending on the type of bankruptcy you choose, your debt may simply be forgiven by a judge, or you may be asked to pay off a reduced amount in a way that allows you to support yourself. At Howard | Nassiri, our Buena Park bankruptcy attorneys can give you more information on whether bankruptcy is right for you. To set up a free consultation, contact us online today or call 1-800-872-5925.

If you have ever read the fine print on a billing statement, you may have seen references to a law called the Fair Debt Collection Practices Act. This is a powerful federal consumer protection law intended to stop unfair or harassing practices by debt collection agencies -- the companies that collect debt on behalf of a creditor or buy debt outright. Here in California, we are lucky enough to be protected by a similar state law that covers the original creditor as well. All of these agencies are forbidden from engaging in a long list of "abusive and deceptive" behaviors, including:

• Repeated or continuous phone calls.
• Calling at any time that is not between 9 a.m. and 8 p.m. in the consumer's time zone.
• Failing to stop contact attempts after the consumer makes a written request that they stop.
• Calling a consumer at work after being told this is forbidden by the employer.
• Using any kind of lie or misrepresentation to collect the debt.
• Seeking more money than is owed or allowed by law.
• Calling a consumer they know is represented by an attorney.

They must also provide certain information about the consumer's rights, including providing written verification of the debt and notifying consumers of their right to dispute the debt.

Consumers can report violations of the FDCPA to the Federal Trade Commission and state agencies, but these agencies can't or won't always take action. Luckily, the law also allows consumers to pursue civil penalties against debt collectors that violate their rights. Anyone may sue a debt collector for FDCPA violations and collect up to $1,000 per violation, plus court costs and attorney fees.

Importantly, the $1,000 is "statutory damages," meaning you don't need to prove you had a financial injury totaling $1,000 -- you are entitled to the payment if you can prove the law was broken. (California law allows statutory damages of $100 to $1,000 as well, but not in class-action lawsuits.) If you have actual damages, such as the loss of an income after getting fired over harassing calls, you may sue to recover those as well.

The statutory damages provision of the FDCPA is a powerful consumer rights tool because it allows consumers to hold debt collectors responsible for breaking the law in ways that don't cost money, such as use of profanity or threats. At Howard | Nassiri LLP, our Orange County Fair Debt Collection Practices Act lawyers have helped people throughout Southern California whose rights have been violated by a collection agency. If necessary, our Santa Ana debt settlement and negotiation attorneys also help clients get on top of uncontrollable debt, to avoid further harassment by creditors. If you know you need this kind of help and you're ready to learn more, please contact us online or call 1-800-872-5925 today.

Many of our clients don't realize that debt settlement or bankruptcy can substantially affect their taxes. With tax season upon us, we thought it was a good time to revisit some basic information on how your debt settlement efforts could affect your income taxes. As always, this is general advice that shouldn't be taken as advice for your specific situation. If you have taxation concerns in a bankruptcy or debt settlement, you should speak with a Southern California bankruptcy attorney to understand your obligations.

1. If you have filed for bankruptcy, the good news is that most federal income tax (and California income tax) debts can be discharged (erased). In short, you can usually discharge debts for tax returns you filed two or more years ago and debts assessed at least eight months ago -- as long as they don't spring from tax fraud or tax evasion on your part. However, the IRS still has some rights that other creditors don't have, including the right to audit you and assess any unpaid taxes it finds. Furthermore, debts from unfiled returns are not dischargeable, and courts will not grant a bankruptcy without seeing tax returns for the last four years. So if you know you haven't filed a return that you should have, the time to fix that is now.

2. If you have already filed for bankruptcy, your bankruptcy estate may need to file its own tax return -- separate from yours as an individual. The bankruptcy estates for Chapter 7 filers (and filers of Chapter 11, business reorganization) file their own tax returns; Chapter 13 filers include bankruptcy information in their individual taxes. In either case, this can get complicated. You should talk to your trustee in a Chapter 7 case about which property belongs to you and which belongs to the estate, and consider getting help with your taxes in either kind of bankruptcy.

3. If you haven't filed for bankruptcy yet but are considering it, you may want to do your taxes first. That's because any tax refund you're owed during a bankruptcy becomes part of the bankruptcy estate. That is, it will be used to pay debts rather than going into your pocket. If you need that money for another purpose, consider filing your taxes and collecting the refund before you start a bankruptcy case. Because this tax return will be submitted to the court, make sure everything is as correct as possible. And if you consistently collect a large tax refund every year, consider getting help adjusting your withholding so that the refund money is available as you earn it, rather than a year-plus later.

4. If you have a tax lien on your home and it's keeping you from modifying your mortgage loan or selling your home, the IRS has offered you some help. On December 16, the IRS announced that homeowners with a primary tax lien can ask to the agency to subordinate that lien -- make it secondary to a lender's lien. Even better, homeowners can have tax liens discharged if they are selling the home or otherwise giving up ownership for less than the mortgage lien is worth. (People with substantial other assets that the IRS can tap into may also qualify for a tax lien discharge.) This is very important, because it is very difficult to sell or refinance a property with a tax lien that "clouds" the title. With the lien out of the way, homeowners are free to take steps to get out of mortgage debt.

5. If you've managed to settle your debt without declaring bankruptcy, the bad news is that forgiven debt usually counts as taxable income. This is not true for people who have already declared bankruptcy, people who are provably financially insolvent (whose debts exceed all assets) and people with certain kinds of business debt. Almost everyone else must pay taxes on the portion of the debt that they do not have to pay back. This is complex, and you may qualify for some exceptions, so your best bet is to talk to a tax professional for help.

At Howard | Nassiri, we specialize in helping Southern California clients get control of their financial lives, including advising clients on bankruptcy and its potential tax effects. If you're considering declaring bankruptcy and you'd like to learn more about how it could affect your life, we'd like to help. To set up a free evaluation of your case, please contact us online or call 1-800-872-5925 as soon as possible.

Nobody plans to have a home go into foreclosure -- so when it happens, very few people know exactly what to expect. Unfortunately, the emotional strain of dealing with that much debt is so overwhelming that not everyone takes the time to learn about the foreclosure process. At Howard | Nassiri, we work with many Californians in or near foreclosure, thanks to our practices in loan modification, bankruptcy, predatory lending and debt negotiation, so we've had many chances to watch the California foreclosure process play out. Sometimes, especially if it's early in the process, we're lucky enough to be able to stop foreclosures.

The good news is that homeowners have many chances to avoid a foreclosure, because the process is not short. Most banks will not start the foreclosure process until the homeowner has missed four payments in a row. (Some may have longer or shorter times.) After four missed payments, the lender will serve the homeowner with a Notice of Default, which gives the homeowner another 90 days to make the missed payments. This is called the reinstatement period because it's the last chance for the homeowner to reinstate the loan. If the loan isn't reinstated, the bank forecloses and puts the home up for auction. The home may go through more before it's sold, but for the homeowner, the damage has been done.

As you can see, the entire foreclosure process takes about seven months, depending on the bank involved. However, many homeowners who run into financial problems know in advance that they won't be able to make their mortgage payments, which gives them even more time to avoid a foreclosure. The first strategy for avoiding foreclosure is simply to talk to the bank. Banks will often call when homeowners start missing payments; homeowners can use those calls to explain their financial problems and ask for help. Because banks don't want to foreclose, they may be willing to refinance, renegotiate or otherwise change the loan.

Homeowners in this situation will likely end up talking to the bank's loss mitigation department, which is the division that works with borrowers to prevent foreclosure. What happens next depends greatly on the circumstances of both the borrower and the lender, but options include:

• Modifying the loan to make it possible for the homeowner to keep making payments
• Selling the home, sometimes at a loss
• A special forbearance, in which the lender agrees to accept smaller payments or no payments temporarily
• Refinancing with a new lender
• Simply turning over the deed in lieu of foreclosure, which doesn't stop loss of the home but prevents harm to the borrower's credit rating

Unfortunately, banks may not always be helpful, due to bureaucratic mistakes, skepticism or too much work for the loss mitigation department. Sometimes, it takes help from an attorney to show them that you're serious about trying to save your home or protect your legal rights. Howard | Nassiri has an active mortgage loan modification practice as well as a predatory lending practice in Southern California. Our Orange County loan modification attorneys help clients understand their situation and their legal options, then negotiate aggressively with lenders to get clients the best deal possible. To learn more at a free consultation, please contact us as soon as possible or call us toll-free at 1-800-872-5925.

A Jan. 28 article by Good Morning America explores a new and potentially illegal practice by credit card companies called "behavioral analysis" or "behavioral scoring." According to the article, at least one credit card company, American Express, now evaluates its customers' creditworthiness according to the behavior of other people who visit the same shops. That is, an AmEx customer with a clean payment history can now be penalized for shopping at the same stores as people who have trouble making their payments.

This was exactly what happened to Kevin Johnson of Atlanta, who returned from his honeymoon last fall to discover that his card's credit limit had been lowered by $7,000 (about 65%) because "other customers who used their card at establishments where you have recently shopped have a poor repayment history with American Express." Johnson, who said he was appalled and deeply offended by the move, launched consumer activist site NewCreditRules.com after he couldn't get his credit limit restored. Other lenders may also be using this system, but none would discuss it with ABC.

Unfortunately, the trouble with behavioral scoring goes beyond credit limits. Credit scoring organizations use credit limits as part of the equation that determines your credit score -- if your credit limit suddenly dives, your FICO score also dives. This unfairly penalizes people who may be trying to save money by shopping at discount retailers patronized by people who have trouble making their payments. It could be especially tough on people who are trying to rebuild their credit after a bankruptcy, foreclosure or other major financial problem that left them without much credit to spare.

In fact, "behavioral scoring" has already been the subject of a lawsuit by federal regulators. The article noted that the Federal Trade Commission sued Compucredit, a company that issues credit cards for other companies, for not disclosing that it used behavioral scoring to make its decisions. Among other things, the FTC claimed that customers had their credit scores reduced for buying things like marriage counseling and tire retreading, which Compucredit believed could be a sign of financial problems. The company settled with the FTC in December of 2008 for $114 million in customer refunds, but denied any wrongdoing.

At Howard | Nassiri, we work closely with credit score issues. In our role as Orange County debt settlement attorneys, we counsel our clients to use credit responsibly to rebuild their credit scores. But when customers are deemed guilty by association by a system with no public accountability, not even an experienced bankruptcy lawyer can tell clients how to get back into good financial standing. If you are a victim of unfair practices by credit card companies and you're ready to fight back, our Southern California unfair debt collection practices lawyers can help. To set up a free consultation, contact our firm online today or call 1-800-872-5925.

Even debt collectors are affected by the current financial downturn, according to Conde Nast Portfolio. A Jan. 27 article from the magazine says the debt collection industry currently has two big problems that are driving down profits. One is that you can't get blood from a stone -- that is, many debtors simply don't have the money to pay them. The other is the "credit crunch." Retailers and lenders have raised their standards for granting credit, which means borrowers are less likely to get into debt in the first place. And if debt purchasing companies need to borrow money themselves to buy more bad debts, they may find they suddenly can't get a loan.

As Southern California debt settlement attorneys, we don't expect any of our clients to shed a tear for debt collectors. However, we do see a potential advantage for our clients. People with too much debt don't always realize it, but they can and should negotiate with bill collectors to settle their debt for an amount they can afford. Collection agencies are frequently willing to settle the account for a discount just to get some payment -- after all, if the consumer goes into bankruptcy, they probably get nothing. And like all businesses, debt collection agencies are more likely to make this kind of compromise when they don't have a lot of other revenue coming in. This means consumers may be able to get deeper discounts -- with some smart negotiation.

However, troubles in the debt collection industry could also backfire on debtors by encouraging even more aggressive collection techniques. Even when the economy is good, debt collectors can be extremely invasive. A federal law called the Fair Debt Collection Practices Act and many state laws forbid debt collectors from using humiliation, threats and harassment to get paid, but these laws are frequently violated. Falling revenues could incentivize debt collectors to be even more abusive, which means consumers should be on guard for violations of their legal rights. If a creditor or collection agency is caught violating the Fair Debt Collection Practices Act, victims may sue it for $1,000 per violation, plus attorney fees and any actual financial damages it caused.

Howard | Nassiri has an active Fair Debt Collection Practices Act practice, in which we help consumers sue to protect their rights to be free of bullying and harassment by debt collectors. Our Southern California debt settlement attorneys also help consumers find a permanent solution to their debt problems by negotiating with creditors to reach a settlement our clients can afford. Even if you believe bankruptcy is your only option, we may be able to help you find a solution with a less drastic effect on your credit and your life. To learn more at a free consultation, please call us as soon as possible at 1-800-872-5925 or contact us online.

The finance industry may be dropping its opposition to proposed laws that could help homeowners in financial trouble avoid foreclosure. A Jan. 26 article from Asset Securitization Report says that while investment companies are very concerned about proposals to allow mortgage "cramdowns" in bankruptcy court, they also acknowledge that it could help stabilize the housing market in the long term, reducing short sales and foreclosures.

A mortgage cramdown is when a bankruptcy judge changes the principal owed on a loan. At the moment, bankruptcy judges may not do this for mortgages on primary residences, but they can change the amount owed on most other kinds of debt, including a mortgage for a second home. Congress wants to add primary homes to that list to stop the rising tide of foreclosures, especially those affecting homeowners whose loans are now worth more than their homes. The financial industry -- including mortgage holders themselves as well as holders of mortgage-backed securities -- has opposed similar measures for years, but took a serious blow when industry giant Citigroup dropped its opposition to cramdown legislation earlier this month.

Now, this article suggests, at least some securities analysts are seeing advantages in mortgage cramdowns. While lenders and investors would lose money in cramdowns, the article said, it's not likely to be more than they would have lost if the home went into foreclosure. Furthermore, analysts say loan servicers would be more likely to consider voluntary loan modifications if they knew they faced the possibility of a mortgage cramdown later on. And this could ultimately reduce foreclosures, the article suggested, which would help stabilize the housing market and put everyone back on the path to a better economy.

The financial world does still have objections to the law, including a belief that allowing mortgage cramdowns might actually drive more people into bankruptcy. Under this thinking, homeowners who owe more than the value of their homes might decide to file for bankruptcy just because they know a judge could change the principal they owe. As Orange County bankruptcy attorneys, we wonder how realistic this concern is -- after all, bankruptcy is a drastic, life-changing financial step that affects the filer's credit for years to come.

Nonetheless, we're glad that the financial industry might be willing to relax its opposition to this measure, which could help millions of homeowners keep their homes. In Howard | Nassiri's Santa Ana mortgage loan modification practice, we have found that it is nearly impossible for homeowners whose mortgages were securitized to negotiate a loan modification, because the owners of the loans are now many individual investors. Investors and lenders have every right to be concerned about protecting their profits, but when loan modification is no more damaging than foreclosure, it's not sensible to take another option off the table.

Howard | Nassiri offers legal services for homeowners concerned about their financial futures, including negotiation on clients' behalf for a loan modification, predatory mortgage litigation and counseling on a possible bankruptcy. If you're considering any of these options, contact us today or call 1-800-872-5925 for a free consultation.

The Los Angeles Daily News ran a disturbing article on Jan. 25 about con artists targeting homeowners who face financial troubles and foreclosure. The article starts by describing the scam run by two men who are now charged with 71 counts of felony fraud. Posing as "foreclosure rescue services" workers, the men went door-to-door and mailed out flyers, promising to help stave off foreclosure for $500 a month. Not only did they not help, they stole equity from their victims' homes, leaving the homeowners even deeper in debt.

Other foreclosure scammers take simply the money and disappear, file forged papers in order to steal properties or trick the homeowner into granting them partial ownership of the home. Still others prey on renters by posing as owners of foreclosed properties and asking multiple tenants for a deposit and first month's rent, then disappearing before move-in day. One Los Angeles FBI agent quoted in the article said California is one of the top states for mortgage fraud, with tens of millions in losses each year.

It's easy to understand how someone facing foreclosure might end up being taken advantage of. Foreclosure doesn't happen overnight; it's a result of ongoing financial problems like loss of a job, a sudden illness or too much debt. Running out of options, desperate homeowners may turn to anyone who promises help -- even con artists like these. Unfortunately, the scammers often crowd out legitimate debt relief organizations, delaying or destroying any chance for real help. Scammers who are caught are criminally charged and prosecuted, but may not be ordered -- or even able -- to repay their victims.

Homeowners who know they face foreclosure and other debt problems can turn to a variety of legitimate organizations for help. At Howard | Nassiri LLP, our loan modification practice is entirely focused on helping homeowners negotiate successfully with their banks for more livable mortgage terms. We help clients in Southern California refinance for a longer loan term with a lower interest rate; convert balloon or adjustable-rate mortgages to conventional loans; and challenge predatory and unfair lending practices. Our Orange County loan modification attorneys have been able to save many clients' homes in this way. If you're ready to look into this, we offer free, confidential consultations. To set one up today, please contact us online or call 1-800-872-5925 as soon as possible.

In an effort to stem the foreclosure crisis, Congress is considering making a substantial change to the way mortgage loans are handled during bankruptcies. As MarketWatch reported Jan. 27, the House of Representatives has passed a proposal that would allow bankruptcy judges to change the terms of a home loan for a primary residence -- the home where the owner actually lives on a day-to-day basis. That includes the power to reduce the principal owed on the mortgage, which is commonly called a mortgage cramdown. As an Anaheim bankruptcy and loan modification law firm, we are following this debate with great interest.

Under federal bankruptcy laws that went into effect in 1979, judges are free to change the terms of a loan on a second home or an investment property -- but not for a primary residence. As things currently stand, homeowners must seek a loan modification for their mortgages before they file for bankruptcy, or else they must strike a deal with the lender in bankruptcy court. The proposed legislation would change this -- but it would also hurt the lending industry financially. Not surprisingly, the AP reports that lenders and their lobbyists are spending tens of millions in an effort to defeat it, although major player Citigroup Inc. has dropped its opposition.

Bankruptcy judges like the idea too, according to another piece by the Wall Street Journal. One judge told the newspaper that striking voluntary loan modification deals with lenders is nearly impossible when the mortgage has been sold as a security to a group of investors, all of whom would have the right to refuse a deal. Another suggested that the change would be a winner for everyone, because families would have another chance to keep their homes and lenders could avoid being forced to sell foreclosed homes at a loss.

As Southern California lawyers who handle both bankruptcy cases and mortgage loan modifications, we know millions of Californians could benefit from this rule change. However, homeowners must file for bankruptcy in order to take advantage of any new law that passes -- and bankruptcy isn't right for everyone. For some homeowners, bankruptcy's negative effect on their credit ratings and financial flexibility far outweighs the legal protections it offers. And so far, the proposed law has been limited to Chapter 13 bankruptcies, which are harder to get and harder to complete.

Homeowners who want to avoid bankruptcy are always free to strike a voluntary loan modification deal with their lenders. In fact, lenders deluged with foreclosed boondoggle properties may be more open to the idea than ever. An Orange County loan modification lawyer can help by explaining your rights to you and the lender; dealing with predatory, harassing or unfair lenders; and cutting through red tape.

Howard | Nassiri LLP has had substantial success helping clients change their interest rates, extend their loans and convert to a more manageable type of loan. We offer free consultations to potential clients seeking to learn more about how we can help, so there's absolutely no risk in speaking to us. To set up your own free case evaluation, you can call us at 1-800-872-5925 or contact us online.

The mortgage "cramdown" legislation working its way through Congress would lower foreclosures by 20% and stabilize the housing market, says a report released by Credit Suisse Jan. 26. According to Reuters, the investment bank said the possibility of a cramdown by a bankruptcy judge would give lenders an incentive to work out loan modifications on their own, especially modifications of the principal owed. With "a large percentage of delinquent borrowers" poised to benefit from the legislation, this would reduce the number of foreclosures by a fifth, allowing housing prices to return to equilibrium.

A mortgage cramdown is the industry's name for when a bankruptcy judge reduces the amount of principal homeowners owe on a loan. Currently, this is allowed for almost all other kinds of debt, including mortgages on second homes, but not for mortgages on primary homes. Lenders are free to do this voluntarily but rarely do so, in part because it cuts into profits. More recently, lenders have been shy about voluntary mortgage loan modifications because so many mortgages were bundled into investment securities and sold to investors. It's very difficult to change the terms or principal on this kind of mortgage because investors rarely grant permission, and could even sue banks that they believe hurt the value of their investments.

A bankruptcy cramdown is one way to avoid this problem -- if the homeowner files for bankruptcy. But if the Credit Suisse report is right, homeowners may not have to, because banks will be newly inspired by cramdown legislation to negotiate a loan modification outside of bankruptcy. That's good news for people with mortgage problems, particularly people who took out loans whose value is now higher than the value of the home. For most homeowners, bankruptcy means ten years of substantial credit problems and three to five years on a strict budget and repayment plan, with their financial lives controlled by a court-appointed trustee. This legislation would allow our Southern California bankruptcy clients, and millions of other homeowners, the possibility of keeping their homes without this drastic step.

At Howard | Nassiri, we specialize in helping consumers handle all kinds of overwhelming debt, including mortgage debt. If your mortgage payments are no longer realistic for your budget, our Orange County loan modification lawyers can represent you in negotiations with lenders for a change in your interest rate, your principal or other terms. And we offer free, confidential consultations to potential clients, so there's no risk in speaking to us about your situation. To set up a free consultation, call us as soon as possible at 1-800-872-5925 or contact us online.

If you have a residential mortgage packaged into securities by Bear Stearns or AIG, the Federal Reserve announced some good news for you on Jan. 27. The Fed's new Homeownership Preservation Policy allows homeowners to renegotiate the terms of loans once held by Bear Stearns and AIG and now owned by the Fed itself. Homeowners who are 60 days or more behind in their payments may negotiate to reduce their interest rates, extend their mortgages or even reduce their principal. The goal, the Fed said, is to avoid preventable foreclosures whenever homeowners and banks can find a sustainable agreement.

This is especially important because securitized mortgages (mortgages that have been packaged into securities) are very difficult to renegotiate. When lenders sell their mortgages to investors, they usually agree to terms that limit their ability to change the value of the mortgage. This can tie lenders' hands when homeowners want to refinance, try a short sale or otherwise change the terms of the mortgage. Banks are afraid of getting sued if they deviate too much from their agreements, and getting investors to agree to a new deal is very difficult. With their hands legally tied, lenders are forced to pass up even loan modifications that are in their own best interests.

Banks don't want to foreclose on real estate; it means they're losing money on their investment and now must spend even more on maintaining and re-selling the property. However, the Federal Reserve now owns the securitized mortgages once owned by AIG and Bear Stearns -- and the Fed serves taxpayers rather than individual investors. This move could free lenders to help many thousands of homeowners who have a financially viable plan to avoid foreclosure. Unfortunately, millions of securitized mortgages are still owned by companies not bailed out by the Federal Reserve, and those homeowners may find they need help convincing a bank to do the right thing.

At Howard | Nassiri, we negotiate aggressively with lenders on behalf of homeowners whose existing mortgages are no longer viable. Our Fullerton loan modification lawyers have been successful at converting adjustable-rate or negative-amortization mortgages and other non-traditional loans to conventional mortgages. We can also represent homeowners who need help getting a lower interest rate, extending their loans or even lowering the principal owed. If you'd like to talk with us about your own legal options at a free consultation, please contact us today or call 1-800-872-5925.