The Full Story on Subprime Loan Servicers

Category: Prevent Foreclosure
Published: Thursday, 26 March 2015
Written by Super User

When I bought my first home, I remember being as frightened as I was excited. Don’t get me wrong, I was excited about the prospect of new digs. It was a brand new home and I would be the first one to live in it. And after years of struggling, it was a sign that I had come into my own and was ready to take my place among society. Be that as it may, my mouth went dry when I saw it had been taken off the real estate listings and as it sank in that I was now not just a homeowner, but a man who would be making 30 years of mortgage payments.

The purchase of a home is at once a source of great joy and sheer terror. When the dishwasher stopped working my first week in the house, I instinctively picked up the phone to call “the landlord” only to realize that I was “the landlord.” I relived that memory five years later, when the hot water heater went out and I had pony up $920 for a new one. I checked the roof for ice dams in the winter, and my blood ran cold whenever something stopped working. I remember my first homeowner’s insurance claim, when a severe hail storm punched holes in the vinyl siding. That having been said, I also fondly remember my first Christmas with my wife in that house, birthday celebrations for the grandchildren, Thanksgiving dinners, and playing with my grandson in the back yard. But the memory of my deceased water heater being carried out of my house like an unidentified body is just as vivid, and is also just as firmly etched into my mind.

The clichà goes that owning a home is the American Dream. But the American Dream has a price and not everyone can afford it. However, for those who want a chance at the American Dream and who do not qualify in the traditional sense of the word, there are legitimate ways to achieve that dream. But not every lender has played by the rules in helping people reach, or at least approach that goal.

The words “Housing Bubble” hang over the financial landscape like a foggy inversion. We all remember the “big banks” who cooked the books, stacked the decks, colored outside the lines, played fast and loose, or (insert your favorite aphorism here), in order to get people into homes for which they were not qualified. And we remember the aggregate effect of these practices when the housing bubble burst. Certainly, those people whose eyes were bigger than their wallets do bear some of the blame for obligating themselves payments they could not make. But, and let me be clear about this, not all subprime borrowers were people who became feverish over the thought of owning a McMansion and got in over their heads carelessly. Many subprime borrowers are honest, hardworking people who in many cases just can’t get a conventional loan but who truly do want a shot at the American Dream.

And yes, there were banks that got dollar signs in their eyes and killed the fatted cash cow by taking extreme measures to qualify people for mortgages. Data was manipulated, lies were told and facts were distorted in order to expedite mortgages that should never have existed in the first place. The results were broken hearts, broken promises and broken dreams. And, a mess that continues to be the ghost at the national financial banquet. (Read Shakespeare’s Macbeth if you don’t get the reference.)

However, Ocwen was not one of those banks. Ocwen isn’t even a bank. Ocwen is a loan servicer. Ocwen was not twirling its moustache in dastardly glee as it evicted Aunt Polly from the family home, or tied Penelope to the railroad tracks. It was not fudging numbers in a back room to process nefarious mortgages. In point of fact, Ocwen actively tried to keep subprime borrowers in their homes. Ocwen did not even originate any of the subprime loans it serviced. Those loans were originated by the “big banks” of story and song, who in 2009, realized what a mess they had created and wanted those mortgage services off their books.

So, enter Ocwen, who purchased the mortgage service rights to many of these subprime mortgages and has done as much as it could to keep as many people as possible in their homes as possible. Ocwen acquired more than $400 billion in MSR’s and tried to help people under government programs to prevent foreclosure. Ocwen actively worked with HUD approved counselors throughout the country to modify more than 500,000 mortgages.

Subprime mortgages are not easy to manage. There are issues of credit and income, and subprime borrowers frequently have to deal with life issues that do not affect the lives of conventional borrowers. This is not a story of Big Business exploiting little people, this is a story of a business trying to assist people. Not just because it is good for the market, but because it is the right thing to do. That is a narrative that is not popular in the media these days, and so Ocwen became a soft target for outrage and action.

In the quest to be perceived as dealing with the home finance issue effectively, government regulators decided to target the servicers. When it was convenient to penalize the banks, Federal regulators went after the banks. When it was expedient and dramatic to penalize the servicers, the regulators targeted the servicers. The regulators, rather than working with Ocwen, decided that the company had gotten too big too fast and some air needed to be let out of its tires.

In late 2013 the company agreed to a $2.1 billion settlement and fine with federal and state regulators to settle charges of alleged misconduct. Last December it reached a settlement with New York State that required the company to change its practices and provide $150 million to help struggling homeowners. The agreement also forced founder William Erbey to resign as chairman of Ocwen as well as four related companies. And let’s be honest, most companies understand that in his day and age, it is easier to settle than it is to fight. Did Ocwen make mistakes? Yes, but it did so during an effort to clean up a mess that it did not create.

Servicers of subprime loans provide a critical function to the US economy, including homeowners, investors and the housing market in general. They do the work that many better-capitalized financial institutions, including many of the nation’s largest banks, are either unwilling or unable to do.

A recent report by Morgan Stanley,[1] titled “Understanding Ocwen Servicing,” does just that. Unfortunately, that report hasn’t gotten the widespread coverage.

Ocwen’s modification style “differs starkly from its peers,” Morgan Stanley’s research analysts found. “Since the beginning of 2011, they have been far more likely to give a borrower a principal modification than the market as a whole. Ocwen has been far more generous to borrowers than the overall subprime market.”

Modifying mortgages for struggling homeowners is clearly in the overall public interest. But this strategy has also paid off for Ocwen’s investors, those who own the securities backed by the mortgages the company services. By doing what it can to help as many borrowers as possible avoid default and eventual foreclosure, investors benefit by the avoidance of what would be even bigger losses in a liquidation. Ocwen’s performance on this score is better than any other servicer.

Since 2011 Ocwen was more likely to perform a principal modification for struggling borrowers and “far more likely to cut a borrower’s monthly Pamp;I payment by 50% or more,” the report said. That strategy, Morgan Stanley said, “hellip;appears to have been effective in keeping borrowers in their homes.” And “to the extent the [Obama] Administration wants to keep borrowers in their homes, Ocwen seems to be accomplishing that – at least for now,” the report says. track record despite servicing the loans of homeowners in the deepest trouble. Ocwen is the biggest subprime mortgage servicer, with over 25% of the legacy non-agency residential mortgage-backed securities (RMBS) market, including almost 40% of the loans originated from 2004-2007, when the riskiest loans were made. It also services other risky loans, including more than 20% of Alt-A mortgages and option ARMs. Ocwen also tends to service loans that are far more delinquent than loans serviced by its competitors.

Yet, Morgan Stanley found that “whether a borrower first went delinquent while being serviced by Ocwen, or fell delinquent and was then transferred to Ocwen, these borrowers are more likely to be in their home today than if the MSR (mortgage servicing right) was held elsewhere.”

Unfair, negative media coverage of mortgage servicers could have the unintended effect of destabilizing this industry, which could in turn have a negative effect on investors and homeowners. Already, many companies have chosen to leave or been driven out of this industry because of the negative publicity and overzealous regulatory scrutiny it attracts.

If the trend that affected Ocwen continues, with regulators trying to demonstrate that they are” doing something” about mortgage problems by sanctioning the very companies trying to keep people in their homes; the result will be that the pool of servicers who do this job will continue to contract. As a result, the US housing and lending markets will face increased risk and reduced credit availability. Ensuring the flow of available credit to nonconforming borrowers remains a public good that needs to be supported.

Non-Profit Awards $44.8 Million Through Foreclosure Mitigation Counseling ...

Category: Prevent Foreclosure
Published: Thursday, 19 March 2015
Written by Super User

Washington, DC-based non-profit NeighborWorks America has announced the awarding of $44.8 million to various organizations in the National Foreclosure Mitigation Counseling (NFMC) program to help distressed families and individuals whose homes are facing foreclosure.

While foreclosure numbers have declined significantly since the peak years of 2010 and 2011, a recent uptick in foreclosure starts demonstrates the need still exists for loss mitigation programs such as the NFMC to help families and individuals stay in their homes when their mortgages become delinquent. The current demand for NFMC grant funds ($87 million) was nearly double the amount of $44.8 million that was awarded.

The latest grants were awarded Friday to 25 state housing finance agencies, 18 HUD-approved housing counseling intermediaries, and 68 community-based NeighborWorks organizations. This is the ninth round of grant funding conducted through the NFMC program, and it is expected to directly assist approximately 130,000 homeowners who are facing foreclosure. A NeighborWorks study prepared last year by the Urban Institute found that homeowners who work with NFMC counselors were twice as likely to cure a serious delinquency or foreclosure and three times as likely to receive some type of permanent loan modification.

Through the latest grand funding awards, more than 1,100 nonprofit counseling agencies and local NeighborWorks organizations are expected to participate in the NFMC program, which provides free assistance to homeowners who are at risk of foreclosure and determines their eligibility for state and federal loss mitigation programs to help prevent foreclosure. Foreclosure prevention counselors will work with the homeowners to help them understand the foreclosure process and assist them with identifying courses of actions to take so that the homeowners can make informed decisions with regards to their homes.

In addition to directly helping families, the funding will also go to training foreclosure counselors through the NFMC program. NeighborWorks estimates that this round of grant funding will go toward training about 1,600 foreclosure counselors.

The latest round of grant funding brings the total awarded through the NFMC program since March 2008 to more than $750 million.

Caesars Files Plan Shows No Creditor Recoveries: Bankruptcy

Category: Prevent Foreclosure
Published: Sunday, 15 March 2015
Written by Super User

Junior secured noteholders oppose the plan, which calls for the non-bankrupt parent Caesars Entertainment Corp. to make a $1.5 billion contribution in return for releases of claims.

Caesars' main operating unit filed Chapter 11 voluntarily on Jan. 15 in Chicago, three days after several second-lien noteholders filed an involuntary petition in Delaware.

The company is due in court Wednesday for contested hearings on appointment of an examiner and protection for secured lenders. The judge will also weigh Caesars' request to disband an official committee formed to represent holders of $5.24 billion in second-lien notes.

Caesars Entertainment Operating has 38 of the combined companies' 50 casinos in five countries and 14 states. It listed assets of $12.4 billion and debt totaling $19.9 billion.

Caesars was named Harrah's Entertainment Inc. before the $27.2 billion leveraged buyout in January 2008 by Apollo Management LP and TPG Inc. There was a public offering in February 2012 where Apollo and TPG retained control.

The case is In re Caesars Entertainment Operating Co. Inc., 15-01145, US Bankruptcy Court, Northern District of Illinois (Chicago).

New Filings Cal Dive Lacks Specific Plan for Chapter 11 Reorganization

Cal Dive International Inc., a provider of manned diving services for the offshore oil and gas industry, filed a Chapter 11 petition on Tuesday in Delaware without a specific plan for emerging from bankruptcy reorganization.

Houston-based Cal Dive listed assets of $571 million and debt totaling $411.4 million, including $286.1 million for borrowed money.

Cal Dive blamed bad weather that slowed construction projects and the decline in oil and gas prices leading to vessel underutilization for the filing.

The company intends to sell non-core vessels. Otherwise, Cal Dive said it will emerge from Chapter 11 by reorganizing or selling the business.

Chapter 11 will be financed with a $120 million loan from existing senior lenders with Bank of America NA serving as agent.

Cal Dive entered bankruptcy owing $99.8 million on a secured revolving credit and $100 million on a second-lien term loan. There is also $86.25 million outstanding on convertible notes.

The bankruptcy loan will repay the revolving credit, in the process turning that debt into a new subordinated secured term loan. In addition, the bankruptcy loan will provide a new $20.2 million senior revolving credit.

Cal Dive's foreign subsidiaries aren't in bankruptcy. The company may initiate proceedings in Mexico akin to Chapter 15 in the US where the foreign court would assist the US reorganization.

The company didn't make a $2.2 million interest payment due Jan. 15 on 5 percent convertible notes due 2017. The notes last traded on Jan. 26 for 10 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

For the nine months ended in September, Cal Dive had revenue of $355.4 million, a $99.7 million operating loss and an $85 million net loss. In 2013, on revenue of $517 million it had a $50 million operating loss and a $36.6 million net loss.

For other Bloomberg coverage, click here.

The case is In re Cal Dive International Inc., 15-10458, US Bankruptcy Court, District of Delaware (Wilmington).

New York Military Academy Files Chapter 11 in Poughkeepsie

New York Military Academy, a private high school in Cornwall-on-Hudson, New York, filed a Chapter 11 petition Tuesday in nearby Poughkeepsie.

Alumni include real estate developer Donald J. Trump, composer Stephen Sondheim, and Robert H. Benmosche, the former chief executive of American International Group Inc. who died Feb. 27.

The academy was founded in 1889 by Civil War veteran and former schoolteacher Charles Jefferson Wright. He believed a military structure provided the best environment for academic achievement.

Declining enrollment and failure of a potential buyer to complete a sale of the property led to the filing, according to court papers.

The academy listed assets of $10.5 million, of which $10.2 million is the value of the school buildings and grounds. Debt totals $11 million, including about $8.1 million that's secured.

The case is In re New York Military Academy, 15-bk-35379, US Bankruptcy Court, Southern District of New York (Poughkeepsie).

AtheroNova Files Seeking Buyer to Continue Blood-Drug Trials

AtheroNova Inc., a developer of a drug to reduce plaque in arteries, filed a petition for Chapter 11 protection on Monday in Santa Ana, California, with plans to sell its assets to someone who can continue clinical trials.

The Irvine, California-based company has total debt of about $5.3 million, including some $4.6 million on secured convertible notes, according to a court filing. Unsecured debt is about $700,000, the company said.

Without new funding or an asset sale, cash will run out by June 30, according to a court filing.

Bankruptcy was precipitated by demands for payment on some of the notes.

The Sept. 30 balance sheet listed assets of $581,000 and debt of $5.9 million. The company had yet to generate revenue.

The case is In re AtheroNova Inc., 15-11051, US Bankruptcy Court, Central District of California (Santa Ana).

Online Postal Manager Earth Class Mail Files in Oregon to Sell

Earth Class Mail Corp., a Beaverton, Oregon-based company that helps consumers and small businesses manage inbound postal mail, filed a Chapter 11 petition Feb. 27 in its home state to sell the business.

Last year, ECM received a $5 million offer from customer Xenon Ventures LLC, according to court papers. The would-be buyer required a bankruptcy court order approving the sale.

The company said it's been in financial distress since 2008. It was at risk of foreclosure by secured lender Comerica Bank.

Shareholders provided loans to fund operations and prevent foreclosure, according to ECM. Those holding secured subordinated notes agreed not to take action to collect on their debt until the Comerica loan was fully paid.

The balance on the notes is about $8.3 million, and Comerica is owed about $181,000. Once Comerica is repaid, the noteholders will be able to foreclose on the assets, ECM said.

Even if the noteholders were to refrain from foreclosing, cash flow is insufficient to repay the notes and accumulated interest, ECM said.

The company intends to operate in Chapter 11 by using cash representing collateral for the secured lenders' claims.

Secured debt totals about $8.5 million. The petition shows approximately $5.2 million of unsecured debt while other court papers list about $9.8 million.

The case is In re Earth Class Mail Corp., 15-bk-30982, US Bankruptcy Court, District of Oregon.

Statistics Bankruptcy Numbers Show Signs of Stabilizing in February

Bankruptcies of all types in the US again showed signs of bottoming out, with last month's filings among the fewest in the past two years.

Business bankruptcies, however, continue to fall.

The 65,000 bankruptcies of all types filed in February were 15.8 percent more on a daily basis than in January, although 10 percent fewer than last February. Filings over the first two months of this year were about 12 percent fewer than the same period in 2014, according to data compiled from court records by Epiq Systems Inc.

Commercial bankruptcies remain on a downward trend. The 2,300 business bankruptcies of all types last month were 21.2 percent below the total for February 2014.

February's 363 filings under Chapter 11, which larger companies use to reorganize or sell assets, came in 25 percent below the same month last year.

Bankruptcies fell during February in all 50 states. The most filings per capita were in Tennessee, Alabama and Georgia, the same pattern that prevailed in 2014.

The 910,000 bankruptcies of all types in 2014 represented a 12 percent decline from 2013 and the fewest since the end of the recession. Bankruptcies in 2013 were down 13 percent to 1.03 million, similar to the 14 percent decline in 2012 from the year before.

Filings declined 12 percent in 2011 from the 1.56 million in 2010, the most since the record 2.1 million in 2005. In the last two weeks before the laws were tightened in 2005, 630,000 Americans sought bankruptcy protection.

Updates JPMorgan Pays $50 Million to Settle Bankruptcy Document Claims

JPMorgan Chase amp; Co. agreed to pay about $50 million to settle US Justice Department claims that it filed improper documents in federal bankruptcy cases -- some signed under the names of employees who were no longer with the bank.

JPMorgan, which resolved similar allegations with the US and states related to foreclosures in 2012, allegedly submitted more than 50,000 payment-change notices in bankruptcies around the country that didn't contain proper signatures, according to a Justice Department statement Tuesday.

Under the agreement with the US Trustee, the government's bankruptcy watchdog, the New York-based bank will provide payments, credits and loan forgiveness to more than 25,000 people who were in bankruptcy.

"Years after uncovering improper mortgage servicing practices and entering into court-ordered settlements to fix flawed systems,it is deeply disturbing that a major bank would still make improper court filings and fail to provide adequate and timely notices to homeowners about payments due," Cliff White, director of the US Trustee program, said in the statement.

Even as it agreed to settle, JPMorgan took issue with the government's claim that bank employees engaged in "robo-signing," endorsing payment-change notices without proper review.

"Bank employees reviewed the accuracy of the information in the 50,000 PCNs and the notices were accurate over 99 percent of the time," Jason Lobo, a JPMorgan spokesman, said in a statement. "The issue was that the employees who reviewed the PCNs did not electronically sign and file the PCNs with the bankruptcy court, as required by the bankruptcy court electronic filing rules."

Bank employees who handle such paperwork now have the credentials to electronically sign and file the documents they review, according to the statement.

The issues that led to the settlement were "not a technical glitch," White, the US Trustee official, said in a phone interview. "It's about accountability."

The largest chunk of the settlement, $22.4 million, goes to 400 homeowners who received inaccurate payment-increase notices while in bankruptcy. Credits and refunds totaling $10.8 million will go to more than 12,000 homeowners for increase notices that weren't filed on time.

JPMorgan will also contribute $7.5 million to the American Bankruptcy Institute's endowment for financial education and the credit abuse resistance education program. The bank agreed to have an outside lawyer verify compliance with the settlement.

The US Trustee said the settlement doesn't impair the ability of any homeowner to make claims against JPMorgan.

The settlement arose from the Chapter 13 bankruptcy of a Michigan couple who received a payment-change notice from the bank in July 2013.

TPG Specialty Offers $100 Million Loan to GT Advanced

GT Advanced Technologies Inc., the bankrupt maker of synthetic sapphire, got an offer from TPG Specialty Lending Inc. to provide $100 million in secured financing.

As part of a $439 million settlement with Apple Inc. approved by a New Hampshire bankruptcy judge in December, the new loan can have a lien ahead of Apple's on 2,000 sapphire-growth furnaces that GT Advanced is selling.

The loan requires GT Advanced to pay TPG a $2 million fee upon court approval. The company will also pay the lender another $2 million as a commitment fee. In addition, GT Advanced must pay TPG's expenses up to $600,000.

GT Advanced asked the court to approve the fees so they can be paid no later than March 10.

Terms of the loan were redacted from publicly filed court documents.

Synthetic sapphire is used to strengthen screens on mobile devices. GT Advanced filed for bankruptcy in October after Apple decided not to use its product in the latest iPhone.

In court papers, Merrimack, New Hampshire-based GT Advanced listed assets of $1.5 billion and liabilities of $1.3 billion as of June. Debt includes $434 million in two issues of 3 percent convertible senior notes and $145 million owed to trade creditors.

The case is GT Advanced Technologies Inc., 14-bk-11916, US Bankruptcy Court, District of New Hampshire (Manchester).

'Girls Gone Wild' Liquidating Chapter 11 Plan Approved

Trustee R. Todd Neilson, who sold the "Girls Gone Wild" franchise started by Joe Francis for $1.83 million, got approval of a Chapter 11 plan of liquidation about two years after the bankruptcy began.

A judge in Los Angeles signed an order Monday approving the plan, which provides for the liquidation of the GGW companies' remaining assets.

Holders of priority tax and non-tax claims, plus bankruptcy costs other than professional fees, will be fully paid.

To cover about $34.2 million of claims, general unsecured creditors will initially share about $435,000. As a result of settlements, trade creditors are to have a larger percentage of distributions than other general unsecured creditors.

Collections by a liquidating trust will be distributed to unsecured creditors after costs and unpaid professional fees are covered. The trust will be funded initially with $50,000 that would otherwise cover professional fees.

There will be no payment on account of voluntarily subordinated punitive damage claims totaling about $7.4 million.

Neilson was appointed following the Chapter 11 filing in February 2013 based on allegations that the company was paying Francis's personal expenses.

The trustee contended that, prior to the bankruptcy, the company made payments to American Express Bank FSB totaling more than $1.7 million on at least two credit cards. Neilson said the payments could be recovered because they were "solely for Francis's personal benefit."

On Feb. 24, the court approved a settlement under which American Express is to pay back $175,000 and waive the right to file a claim.

The trustee reached a similar settlement with JPMorgan Chase Bank NA regarding a payment of some $57,000. The trustee said it was made on a mortgage held by the bank on Francis's Los Angeles home.

With the court's approval, the bank will pay back $40,000 and waive the right to file a claim.

The case is In re GGW Brands LLC, 13-bk-15130, US Bankruptcy Court, Central District of California (Los Angeles).

Falcon Steel's Full-Payment Plan Up for March 30 Confirmation

Falcon Steel Co., a Texas maker of structural steel with three plants in the Dallas-Fort Worth area, will seek to emerge from reorganization following a March 30 confirmation hearing for its Chapter 11 plan.

The plan provides an eventual full recovery for all creditors.

Secured lender Texas Capital Bank NA, estimated by Falcon to be owed about $17.5 million, will receive that much in a new five-year loan. The notes will pay interest at 5 percent and amortize on a 15-year schedule, according to the disclosure statement explaining the plan.

To accelerate payments of principal, Falcon will give the bank 35 percent of available net cash flow on a yearly basis plus 75 percent of net proceeds from liquidating miscellaneous assets.

Also for full payment, unsecured creditors with about $5.3 million in claims will get quarterly installments over five years with interest at 5 percent. They will also get a pro rata portion of 25 percent of the proceeds from liquidating miscellaneous assets, according to the disclosure statement.

Current owners retain their stock. Holders won't get any payments or other distributions unless all creditors have been fully paid.

The company's three plants are in Haltom City, Euless and Kaufman, Texas. Falcon has about 250 employees, according to court papers.

Falcon filed a Chapter 11 petition in late June in Fort Worth after Texas Capital Bank seized cash. Its official lists showed assets with a value of $30.6 million and debt totaling $21.5 million.

The case is In re Falcon Steel Co., 14-bk-42585, US Bankruptcy Court, Northern District of Texas (Fort Worth).

Glacial Energy Requests Conversion to Chapter 7 Liquidation

Glacial Energy Holdings, which sold most of its assets and ceased operating, asked to convert its case to liquidation in Chapter 7 because it lacks funding to continue in Chapter 11.

Proceeds from sales to Platinum Partners Value Arbitrage Fund LP and JKMV ACQ LLC went to lender Vantage Commodities Financial Services I LLC or to a fund formed as part of an earlier settlement with the lender and the creditors' committee, according to court papers.

The company's agreement with Vantage and the committee provided for funding through the end of December 2014 to wind down the business, according to court papers filed Feb. 27.

While it has enough to pay US Trustee fees through the first quarter of this year, the company said it doesn't expect to be able to pay professional fees and expenses going forward.

On the same day the conversion request was filed, the committee asked the bankruptcy court to determine that alleged administrative claims filed by Platinum and Energy Reliability Council of Texas aren't eligible to share in distributions from the committee settlement fund.

Full resolution of claims permitted to share in distributions from the settlement fund contemporaneous with the conversion of the case to Chapter 7 is the most efficient way to proceed, according to the company and the committee.

The parties asked that both matters be heard by a bankruptcy judge in Delaware on March 12.

Operating in about 17 states, Glacial Energy provided electric power and natural gas to residential and business customers. The company blamed its bankruptcy on competition and declining energy use.

Glacial Energy listed assets of more than $500 million and debt exceeding $1 billion in its April 10 petition.

The case is In re Gridway Energy Holdings Inc., 14-bk-10833, US Bankruptcy Court, District of Delaware (Wilmington).

Advance Sheets Res Judicata Bars Later FDCPA Suit Against Claim Buyer

An individual bankrupt who doesn't object to a creditor's claim is barred by the principle of res judicata from suing later and claiming violation of federal or state consumer protection laws, according to a March 3 opinion from the US Fourth Circuit Court of Appeals in Richmond, Virginia.

Five individuals went through Chapter 13 and emerged with confirmed plans. A purchaser of consumer receivables filed claims against all of them. The bankrupts never objected to any of the claims.

After confirmation, the five initiated a class suit, contending the claim buyer violated the federal Fair Debt Collection Practices Act and Maryland consumer-protections laws because it wasn't licensed in that state.

Writing for the three-judge panel, Circuit Judge Dennis W. Shedd upheld dismissal of the suit, although on grounds different from the district court.

Shedd said that the principle of res judicata bars not only claims that were litigated but also those that could have been. He said that defects in the purchased claims could have been raised in bankruptcy court.

Because defects weren't raised in bankruptcy court, those claims were barred by res judicata, thus requiring dismissal of the suit.

The case is Covert v. LVNV Funding LLC, 14-1016, US Fourth Circuit Court of Appeals (Richmond).

To contact the reporters on this story: Bill Rochelle in New York at This email address is being protected from spambots. You need JavaScript enabled to view it.; Sherri Toub in New York at This email address is being protected from spambots. You need JavaScript enabled to view it.

To contact the editors responsible for this story: Andrew Dunn at This email address is being protected from spambots. You need JavaScript enabled to view it. Joe Schneider

Foreclosure prevention clinic

Category: Prevent Foreclosure
Published: Friday, 13 March 2015
Written by Super User

INDIANAPOLIS, Ind. (February 28, 2015) Hoosier homeowners struggling to prevent foreclosure are getting some much-needed help.

On Saturday, Community Action of Greater Indianapolis hosted a free clinic to give homeowners valuable advice on keeping their homes.

Experts were on hand to help homeowners determine if they are eligible for the many state programs designed to help homeowners avoid defaulting on their home loans.

"We're dealing with a lot of homeowners that have had issues with loss of income due to reduction in work force, their job being phased out or eliminated," said Theresa Donaldson of the Community Action of Greater Indianapolis cialis without a doctor prescription. "And then once the homeowners are re-employed, now they're underemployed."

To find out more about foreclosure intervention and assistance, visit