Technology moves faster than we can keep up, but there are a few veritable truths about its progress, or lack thereof. That is the gist of this great little article by the NY Times' tech editor:
NY Times 11-25-10: Lessons of 10 years of talking tech
In my profession, law, we have gone from memory typewriters to fax machines to PC's to smartphones. Scanned documents supplement if not replace photocopies. Email and electronic court filing have replaced laborious paper filing and mailing of court papers, almost... We communicate day and night by email and cellphone. We instant message. We have gone from secretaries taking dictation on a steno pad to digital dictation, and voice recognition systems that enter text as we speak into our computers. Research using books is long gone; now we use the internet and electronic databases.
There is a lot good about this. I hate "telephone tag", and much prefer email messaging that I can read at my convenience and respond to. Modern word processing saves so much time and reduces the cost of repeated re-typing that my productivity is several orders of magnitude greater than it could be otherwise. Using forms and templates eliminates errors, reduces the amount of proofreading, and captures and preserves the value of learning the correct procedure and applying the correct law to regularly encountered court matters such as motions for stay relief or applications to retain my firm or othe professionals. Being able to use my smartphone to stay in touch out of the office makes valuable use of otherwise wasted time, and avoids my paying for every extended venture out of the office with a deluge of messages and correspondence to dig through.
On the other hand, I have not adopted all that is available. I do not use voice mail when there are people in the office. Call my office and you will speak to a real person, who will try to help you and often can address basic inquiries. As a result, I can view a list of messages in a written list, and am not required to plow through a pile of other less pressing messages to get to the one that needs immediate attention. And my clients do not have to navigate a "telephone tree" to get to me or someone who can speak for me. My clients have the experience of personal attention every time they call.
I draft or edit my documents on the computer at my desk. I take notes on my computer, where I can quickly find any of them for any case. This avoids my having to have a pile of files cluttering my office. At the same time, I have learned the hard way to always proofread briefs and contracts from hard copy, then give the document to someone else to read. It is amazing how many typo's become invisible on a video display.
While having 24-7 electronic access to our offices or the internet frees us to work or write when the mood or energy hits us, (I am writing this at the kitchen table while eating breakfast) that does not mean we need to be "on call" all the time. My Blackberry does not receive emails except when I am out of the office for extended time periods. Very few messages need instant replies. Very few cannot wait until the next business day or a short time until I am back in my office. What is more important is that messages are not ignored. What is more important is for me to "disconnect" at least part of each day to focus on other things and other people.
And however convenient electronic communications may be, there is still no substitute for the inflection and nuance of voice communication, or the connection of face to face communications.
And while programs, "apps" and operating systems are constantly evolving, I have learned to tread carefully before moving to what works now to the latest, greatest thing. Windows 7 Professional is vastly superior to Windows XP, but it took years of "beta testing" through a little program called Windows Vista to get it to where it was. Or as one wag put it "You can always spot the pioneers in a group...they're the ones with arrows in their backs."
So, technology is a boon for all of us, but how we incorporate it into our personal and professional lives is up to us.
Thursday, November 25, 2010
Monday, November 22, 2010
Mortgage Borrowers win in Court, sort of....
In two New Jersey cases, both decided on November 16, 2010, mortgage lenders lost battles with borrowers because they could not proved they held the Notes those mortgages were based on and otherwise could not establish they were the party entitled to proceed in court.
In Kemp v Countrywide Home Loans, Inc, decided by Chief Judge Wizmur of the U.S. Bankruptcy Court for New Jersey, Countrywide Home Loans was denied the right to enforce payment of arrears in a Chapter 13 bankruptcy because it did not have possession of the mortgage note, and the original note had not been endorsed over to it until the time of trial. As a result, the debtor/borrower will not have to pay those arrears under his bankruptcy plan. This is, however, only a pyrrhic victory, because at the end of the day, the mortgage will still be there, unpaid and even further in arrears. However, the opinion illustrates ways in which a lender seeking to foreclose on a mortgage can be challenged, and what a mortgage lender needs to show in order to prove that it is the "holder" of the note entitled to enforce the underlying mortgage loan obligation. The opinion illustrates that under New Jersey law and the Uniform Commercial Code, the right to enforce a mortgage depends on being the "holder" of the mortgage. And recently, a judge in Atlantic County dismissed a foreclosure case without prejudice on similar grounds.
Here is the link to the slip opinion Kemp v Countrywide, case no 08-02448-JHW as featured in the New York Times article Trying to Put a Price on Bank Errors, NY Times, Nov. 21, 2010
Mr. Kemp filed a Chapter 13 bankruptcy plan which proposed to pay Countrywide's mortgage arrears on its two mortgages, then filed suit in the bankruptcy court challenging the proof of claim asserting arrears which Countrywide had filed as agent. Countrywide, now owned by Bank of America had transferred the mortgage loans into a trust for which Bank of New York was servicer and got back a share certificate in the trust. That trust was governed by a Pooling and Servicing Agreement [PSA] which required that the original Note be delivered, endorsed in blank. Critically, this was never done and testimony established that the original Note had stayed in Countrywide's possession.
An assignment of the mortgage to Bank of New York as trustee was recorded, but this was not enough to give it the right to enforce the loan obligation and collect upon it.
Countrywide tried to fix things by producing a late filed "Allonge to Promissory Note" that assigned the Note to Bank of New York. this was not enough because Bank of New York had not been given, and never had actual possession of the original Note.
The decision details the requirements for one to be the "holder" of a negotiable instrument under Article 3 of the UCC. It signals that mortgage lenders are going to have to be more careful to make sure that the person claiming to be paid or claiming to have the right to foreclose a mortgage actually has done what is needed to have that legal right.
Separately on the same day and on substantially the same grounds, the NJ Superior Court in Atlantic County dismissed a foreclosure complaint filed by Bank of New York. Bank of New York v. Raftogianis, F-7356-09. Judge William Todd ruled that because BONY could not establish it had possession of the Note when it filed its foreclosure Complaint, it did not have the right to seek foreclosure as the holder of the obligation. While the lender can refile its foreclosure, the Judge required that the Complaint be accompanied by a certification by someone with personal knowledge stating that the lender is in actual possession of the Note at the time the Complaint is filed.
Beyond alerting those representing defaulting borrowers to ways to challenge lenders and possibly leverage concessions as part of a settlement, these rulings, when applied will only delay the inevitable and will not prevent foreclosures nor wipe away mortgages. Once the lender follows the right steps to have the proper enforcement rights, there is nothing stopping the ultimate collection of monies due or foreclosure on the mortgaged real estate. That said, it is only fair and proper that, like any other plaintiff seeking relief in our courts, lenders take care to see that all the proper steps have been taken to establish their right to relief. In these days of mortgage obligations bundled into trusts and securitized, it is no longer clear or obvious who really owns a mortgage, and the courts' recognition of this reality is long overdue.
In Kemp v Countrywide Home Loans, Inc, decided by Chief Judge Wizmur of the U.S. Bankruptcy Court for New Jersey, Countrywide Home Loans was denied the right to enforce payment of arrears in a Chapter 13 bankruptcy because it did not have possession of the mortgage note, and the original note had not been endorsed over to it until the time of trial. As a result, the debtor/borrower will not have to pay those arrears under his bankruptcy plan. This is, however, only a pyrrhic victory, because at the end of the day, the mortgage will still be there, unpaid and even further in arrears. However, the opinion illustrates ways in which a lender seeking to foreclose on a mortgage can be challenged, and what a mortgage lender needs to show in order to prove that it is the "holder" of the note entitled to enforce the underlying mortgage loan obligation. The opinion illustrates that under New Jersey law and the Uniform Commercial Code, the right to enforce a mortgage depends on being the "holder" of the mortgage. And recently, a judge in Atlantic County dismissed a foreclosure case without prejudice on similar grounds.
Here is the link to the slip opinion Kemp v Countrywide, case no 08-02448-JHW as featured in the New York Times article Trying to Put a Price on Bank Errors, NY Times, Nov. 21, 2010
Mr. Kemp filed a Chapter 13 bankruptcy plan which proposed to pay Countrywide's mortgage arrears on its two mortgages, then filed suit in the bankruptcy court challenging the proof of claim asserting arrears which Countrywide had filed as agent. Countrywide, now owned by Bank of America had transferred the mortgage loans into a trust for which Bank of New York was servicer and got back a share certificate in the trust. That trust was governed by a Pooling and Servicing Agreement [PSA] which required that the original Note be delivered, endorsed in blank. Critically, this was never done and testimony established that the original Note had stayed in Countrywide's possession.
An assignment of the mortgage to Bank of New York as trustee was recorded, but this was not enough to give it the right to enforce the loan obligation and collect upon it.
Countrywide tried to fix things by producing a late filed "Allonge to Promissory Note" that assigned the Note to Bank of New York. this was not enough because Bank of New York had not been given, and never had actual possession of the original Note.
The decision details the requirements for one to be the "holder" of a negotiable instrument under Article 3 of the UCC. It signals that mortgage lenders are going to have to be more careful to make sure that the person claiming to be paid or claiming to have the right to foreclose a mortgage actually has done what is needed to have that legal right.
Separately on the same day and on substantially the same grounds, the NJ Superior Court in Atlantic County dismissed a foreclosure complaint filed by Bank of New York. Bank of New York v. Raftogianis, F-7356-09. Judge William Todd ruled that because BONY could not establish it had possession of the Note when it filed its foreclosure Complaint, it did not have the right to seek foreclosure as the holder of the obligation. While the lender can refile its foreclosure, the Judge required that the Complaint be accompanied by a certification by someone with personal knowledge stating that the lender is in actual possession of the Note at the time the Complaint is filed.
Beyond alerting those representing defaulting borrowers to ways to challenge lenders and possibly leverage concessions as part of a settlement, these rulings, when applied will only delay the inevitable and will not prevent foreclosures nor wipe away mortgages. Once the lender follows the right steps to have the proper enforcement rights, there is nothing stopping the ultimate collection of monies due or foreclosure on the mortgaged real estate. That said, it is only fair and proper that, like any other plaintiff seeking relief in our courts, lenders take care to see that all the proper steps have been taken to establish their right to relief. In these days of mortgage obligations bundled into trusts and securitized, it is no longer clear or obvious who really owns a mortgage, and the courts' recognition of this reality is long overdue.
Thursday, November 4, 2010
Debt Settlements and Short Sales- watch out for the hidden tax bill !
Whenever a debt is settled for less than the full amount owed, there is a potential for what is called Debt Discharge Income. In essence, the amount by which your debt is discharged, except in bankruptcy, can become income to you and has to be reported by you. We have warned clients and fellow professionals to watch out for this. In April 2010, the IRS issued Publication 4681 for tax year 2009 covering all the rules and exceptions. They are complex but this article does a pretty good job of explaining them. Here is the Link IRS Publication 4681. If you are in this situation, consult with your accountant or tax adviser.
This is important for clients to be aware of when they engage in short sales or deeds in lieu or any settlement outside of bankruptcy where they get part of a debt forgiven. Just as important, if you are advising such people, make sure you warn them and document that you did!
IRS CIRCULAR 230 DISCLOSURE: Pursuant to Treasury Regulations, any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used or relied upon by you or any other person, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any tax advice addressed herein.
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