Mortgage Survives Chapter 13 Even Though the Secured Claim Was Disallowed
New York judge disagrees with Ninth Circuit on the effect of disallowance of a secured claim.
Judge Name - Do not use it.
Diane Davis
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CFPB Steps Up Inquiry Into Home Contracts
The Consumer Financial Protection Bureau, the nation’s top consumer watchdog, is stepping up an investigation into seller-financed home sales that target lower-income home buyers unable to get a traditional mortgage, the New York Times reported today. The regulatory agency disclosed yesterday that it recently ordered two major companies that offer high-interest installment contracts, called contracts for deed, to comply with a civil investigative demand for documents. The two firms, which challenged the demand for documents, are Harbour Portfolio Advisors of Dallas and National Asset Advisors of Columbia, S.C. The agency began informally looking at seller-financed homes, and specifically contracts for deed, this year. Enforcement lawyers at the agency have been investigating the prevalence of these types of transactions to determine whether they violate federal truth-in-lending laws. Harbour Portfolio bought more than 6,700 single-family homes after the financial crisis of 2008, most of them from Fannie Mae, a government-controlled mortgage finance firm, through bulk sales. Harbour paid $10,000 or less for most of the homes, which were foreclosed on during the financial crisis, and sells them “as is.” This year, Harbour began to sell off more than 600 homes with existing contracts for deeds in place to other investment firms and individual investors.
State Consumer Protection Law Preempted by the Bankruptcy Code
Preemption easier to find than implied repeal, Chicago district judge says.
Judge Name - Do not use it.
Harry D. Leinenweber
Judge Tells Trump University Litigants They Would Be Wise to Settle
The judge overseeing a lawsuit against President-Elect Donald Trump and his Trump University told both sides they would be wise to settle the case "given all else that's involved,” Reuters reported today. Lawyers for the president-elect are squaring off against students who claim they were they were lured by false promises to pay up to $35,000 to learn Trump's real estate investing "secrets" from his "hand-picked" instructors. Trump owned 92 percent of Trump University and had control over all major decisions, the students' court papers say. The president-elect denies the allegations and has argued that he relied on others to manage the business. Trial is scheduled to begin Nov. 28, and District Judge Gonzalo Curiel told lawyers that he was not inclined to delay the six-year-old case further. Trump lawyer Daniel Petrocelli said he would ask to put the trial on hold until early next year, in light of the many tasks the magnate has before his inauguration. Judge Curiel said he would allow both sides to file briefs on whether to delay the case. He also indicated they should consider making a deal. "It would be wise for the plaintiffs, for the defendants, to look closely at trying to resolve this case given all else that’s involved,” Judge Curiel said.
Trump Win Puts a Bullseye on Warren’s Banking Watchdog
Republicans — as well as many lobbyists — have long vilified the controversial Consumer Financial Protection Bureau for having scant accountability and writing rules that harm banks and when the party controls both the U.S. Congress and White House, they’re finally in a position to do something about it, Bloomberg reported today. President-elect Donald Trump could sign legislation that would put the agency under Congress’s thumb. Lawmakers could also overturn specific CFPB regulations, including one loathed by the industry that made it easier for consumers to sue their banks. Most importantly, Republicans are poised to get the chance to replace Richard Cordray. His term is up in 2018, but Trump might be able to replace him even sooner if a recent court ruling is upheld that gave the president more leeway to oust the agency’s director. Trump would be expected to replace Cordray with someone far less interested in pursuing tough oversight. Regardless, Sen. Elizabeth Warren and other progressive Democrats will be on the defensive. There are procedural ways for senators to try to block legislation, and Warren has already said she would protest any changes Trump seeks to make to the agency she helped create.
Consumer Credit Rose in September
U.S. consumers’ credit balances increased in September, led by the category that includes student and auto loans, according to a report yesterday from The Wall Street Journal. Outstanding consumer credit, a measure of nonmortgage debt, rose by a seasonally adjusted $19.29 billion in September from the prior month, the Federal Reserve said. Economists surveyed had expected an increase of $18.8 billion. September’s 6.28 percent seasonally adjusted annual growth rate was a slowdown from August’s blistering 8.77 percent rate. August’s growth was revised up slightly from an earlier estimate of 8.48 percent. Household balance sheets have been steadily expanding since late 2010. While monthly figures can be volatile, over the third quarter, consumer credit expanded by 7 percent, its fastest rate in a year.
Payday Lending on the Ballot in South Dakota
Regulations on payday lending will be on the ballot in South Dakota next week, providing an opportunity for critics of the industry to advance their agenda even as the federal government readies new nationwide rules, the <em>Washington Examiner</em> reported today. South Dakota voters will be asked if they want to cap interest rates on short-term loans at 36 percent, a rule that advocates believe would eliminate payday loans that trap borrowers in a cycle of debt. Annual percentage rates on such loans in the state currently can go over 500 percent. That provision would go beyond the regulations that the federal Consumer Financial Protection Bureau is set to impose. The bureau is not allowed to directly cap interest rates. The industry, however, is fighting back in South Dakota with another ballot measure that would amend the state constitution to impose an 18 percent cap on short-term loans but would not apply to loans set in writing, meaning that all existing payday loans would be exempted.
October Business Filings Increase 21 Percent from Previous Year, Total Filings Down 10 Percent
Total U.S. commercial bankruptcy filings increased 21 percent in October 2016 over October of last year, according to data provided by Epiq Systems, Inc. Commercial filings totaled 3,023 in October 2016, up from the October 2015 total of 2,491. October is the twelfth consecutive month with a year-over-year increase in commercial filings. However, total commercial chapter 11 filings decreased in October 2016, as the 401 filings were 7 percent less than the 431 commercial chapter 11 filings registered in October 2015. The total bankruptcy filings of 63,042 in October 2016 represented a 10 percent decrease from the October 2015 total of 70,254. Consumer filings also decreased as the 60,019 filings in October 2016 were down 11 percent from the October 2015 consumer filing total of 67,763. Click here to read the full statistical press release.
