by Herbert Wiggins | Mar 23, 2023 | bankruptcy, Real Estate
Whether a real estate agent sold her rights to her commission, or received a loan in that amount from the factor financer was a question to be determined by the facts of the case. Here, where factoring company sought payment from the realtor during her bankruptcy, the factor was liable and contempt for violating the automatic stay. The factor was seeking repayment as the holder of a loan, rather than as recipient of a sale, and at the time the factor sought payment, it was barred by the automatic stay from doing so.
Furthermore, the objective standard of the Supreme Court in Taggart v. Lorenzen required that the factor be held liable, because the factor could not have believed in good faith belief that the automatic stay did not apply.
In re Jill Suzann Medley, Ninth Circuit Bankruptcy Appellate Panel Case No. BAP No. CC-22-1167-FLC, Filed February 13, 2023
by Herbert Wiggins | Feb 23, 2023 | bankruptcy, Fair Lending, mortage, Real Estate
Where homeowner lost property to non-judicial foreclosure, Arizona’s “anti-deficiency law” meant that the junior mortgage, which was unsecured following the foreclosure, had been “abolished,” pursuant to previous Arizona Supreme Court ruling. Therefore, the lender’s reporting of the junior mortgage as a “charge off,” rather than an abolished loan, was inaccurate and misleading. The former homeowner/borrower had a colorable claim against the junior lender, pursuant to the Fair Credit Reporting Act, 15 U.S.C. §§1681, 1681a–1681x. The trial court’s erroneous decision to dismiss borrower’s lawsuit was reversed.
Gross v. Citimortgage, Inc., Citibank, NA, Equifax Information Services LLC, Experian Information Solutions, Inc., & Trans Union LLC (9th Circuit, 2022), 33 F.4th 1246
United States Court of Appeals, Ninth Circuit.
Argued and Submitted 11/17/2021 at San Francisco, California.
Opinion Issued 5/16/2022.
by Herbert Wiggins | Feb 10, 2023 | mortage, Real Estate
San Diego County Debtor Filed Bankruptcy Petition in 2021. Bankruptcy Court Held, and 9th Circuit Court of Appeals Agreed, that California’s $600K 2021 Homestead Exemption Applied in its Entirety. That Exemption is then Added to the Mortgage Balances and Other Liens on the Property, and Where, as Here, the Sum of Those Figures Exceeds the Value of the Real Estate, the Debtor May Avoid the Trustee’s Claims. Debtor was Not Limited to the Statutory Exemption Amount at the Time the Lien was Incurred (2014).
Barclay [US Trustee] v. Boskoski [Debtor] (9th Circuit, 2022) 52 F.4th 1172;
Argued and Submitted 9/23/2022, at Pasadena, California.
Opinion Issued 11/14/2022.
by Herbert Wiggins | Nov 3, 2022 | BANKRUPTCY LAW, Real Estate
When representing clients, attorneys rely on the words of the law (a “statute”) and ask the court to implement the plain, obvious meaning of its words.
When it comes to federal statutes, however, it is easy to overlook the “comments” by Congressional committees that draft the statutes, or the agencies which implement them. Such comments can be critical in court.
For example, a recent unanimous Court of Appeal used a statute’s agency staff comments to protect a consumer from a deceitful lender.
In Gilliam v. Levine, Case No. 18-56373 (9th Circuit, 2020), the court recounts that the borrower obtained a loan as trustee for a family trust. The purpose of the loan was to make home repairs. The home itself was the sole asset of the trust. Another family member, who occupied the home, was the trust beneficiary.
The borrower later discovered that the due date for the final loan payment was 1 year earlier than she had been led to believe. The borrower was alarmed, and sued to cancel (rescind) the loan under federal law, Truth in Lending Act (TILA), 15 U.S.C. § 1601, et seq., and the Real Estate Settlement Practices Act (RESPA), 12 U.S.C. § 2601. The borrower also asserted a claim under California’s Fair Lending Law [Rosenthal Act], 1788.1(b) of California’s Rosenthal Act, California Civil Code §§ 1788.1(b).
The trial judge dismissed the lawsuit, because, according to that judge, the loan went to the trust, not to a person, and hence was not a consumer loan.
The 9th Circuit Court of Appeal reversed the trial court, noting the federal Consumer Financial Protection Bureau’s Official Staff Commentary to Regulation Z (mortgage loans), which states that “[c]redit extended for consumer purposes to certain trusts is considered to be credit extended to a natural person rather than credit extended to an organization.” 12 C.F.R. pt.1026, Supp. 1, § 1026.3 Comment 3(a)-10. (And under California law, the trustee, not the trust, holds title to trust property – – Author)
The “certain trusts,” which fall under the rubric of “natural persons,” included the trust in this case, which was formed for tax or estate planning purposes [which benefit people]. The trust in question was “primarily for personal, family, or household purposes.” 15 U.S.C. § 1602(i). The borrower was the aunt (as Trustee); the niece was the beneficiary; and the trust property was a private home. As a result, the loan was a “consumer credit transaction,” which was subject to the Fair Lending Laws.
And the Comment makes the point: Look to the substance of the transaction. Here it was to benefit a consumer, not a company. 12 C.F.R. pt. 1026, Supp. 1, and § 1026.3 Comment 3(a)-10.i. Because this was a consumer loan, the Trustee had the right to rescind this deceptive loan.
WARNING: THIS POST DOES NOT CONSTITUTE LEGAL ADVICE; PLEASE CONSULT AN ATTORNEY
by Herbert Wiggins | Apr 1, 2022 | bankruptcy, BANKRUPTCY LAW, Homestead Exemption, Property Lease, Real Estate
BANKRUPTCY LAW (9th Circuit Bankruptcy Appellate Panel; Homestead Exemption): Where debtors did not live in the property continuously from the time the judgment liens attached until the date of the filing of the bankruptcy petition, and where the facts showed that debtors had leased the property and were apparently living in another location on a permanent basis, homestead exemption was properly denied. Creditors could file claims and go through the bankruptcy process to attempt to collect appropriate portions of the debt. In re Jaswinder Singh Bhangoo, [published opinion] 9th Circuit Bankruptcy Appellate Panel, No. BAP No. EC-21-1158-BSL, filed December 22, 2021.
by Herbert Wiggins | Dec 3, 2021 | bankruptcy, creditors, debt relief, mortage, Real Estate
As of January 2021, California’s Homestead Exemption increases from a minimum of $300,000, to a maximum of $600,000. This means that many more homeowners in liquidation, Chapter 7 bankruptcy proceedings can keep their homes.
The California Civil Code will be amended as follows:
Sec. 704.730. (a) The amount of the homestead exemption is the greater of the following:
(1) The countywide median sale price for a single-family home in the calendar year prior to the calendar year in which the judgment debtor claims the exemption, not to exceed six hundred thousand dollars ($600,000).
(2) Three hundred thousand dollars ($300,000).
(b) The amounts specified in this section shall adjust annually for inflation, beginning on January 1, 2022, based on the change in the annual California Consumer Price Index for All Urban Consumers for the prior fiscal year, published by the Department of Industrial Relations.
The statute does not say whether this will apply in bankruptcy as the “automatic homestead,” or whether the debtor must file a Declaration of Homestead. Based thereon, the debtor should strongly consider filing the Declaration with the County Recorder.
