All posts in Legislation

California Exemptions Bill is Defeated – Note from Eric Clark

I am sorry to report that after a long two year journey, we were not able to summon the courage among the California Assembly members to pass SB 308.  The bill failed in today’s final vote and is now officially dead.

M. Erik Clark

SB 308 would have increased the homestead exemption substantially and done after with the requirement that the proceeds of sale be reinvested within six months.

U.S. Trustee Proposes Rulemaking on Ch. 11 MOR’s, Deadline for Public Comments Jan. 9, 2015

U.S. Trustee Program is authorized under §602 of the BAPCPA to issue rules that require DIP’s in non-small business cases under chapter 11 to file uniform period reports.  Now, the USTP is seeking public comment on the proposed rule that was published in the Federal Register (see link below). The proposed rule only applies to non-small businesses.  As you might know, small business debtors are currently required to use Form 25C for their MOR’s. Deadline for public comments Jan. 9th 2015

Link to PDF of Proposed Rule: www.justice.gov/ust/eo/rules_regulations/docs/MOR_NPRM.PDF

Link to USTP’s site at www.justice.gov/ust/eo/rules_regulations/index.htm#proposed.

California Foreclosures Down ….but Numbers May Be Misleading

For three straight quarters, California foreclosure starts remain little changed, hovering at a level last seen in early 2006. According to a market study released by DataQuick, steady economic growth and higher home values are responsible for the steady pace of new foreclosures.

Lenders and servicers in the first quarter of 2014 recorded roughly 19,000 notices of default on California house and condo owners, up 6 percent from the previous quarter.

Compared to peak numbers of roughly 135,000 in Q1 2009, foreclosure starts have dropped significantly over the intervening years. However, DataQuick posits that the numbers could be misleading.

“It may well be that the foreclosure starts in recent quarters don’t reflect the ebb and flow of financial distress as much as they reflect a steady state of workload capacity on the part of the servicers. They may well be just working their way through a backlog, stacks of paper piled high on desks,” said John Karevoll, DataQuick analyst.

This year’s first quarter was the first to see a year-over-year increase in default filings since 2009, but that gain can be attributed to new laws in California, known as the “Homeowner Bill of Rights” which took effect in January and February of last year. The laws caused lenders and services to pause, artificially decreasing notices sent to homeowners and pushing foreclosure start numbers downward.

DataQuick points out that most of the loans in California going into default are still from the 2005-2007 period. The median origination quarter reported by the company for defaulted loans is still the third quarter of 2006, noting that weak underwriting standards peaked in that period of time.

California homeowners were a median 9.8 months behind on their payments when the lender filed the notice of default. Borrowers owed a median $22,538 on a median $301,732 mortgage.

The most active companies in the foreclosure process last quarter were Wells Fargo (2,834), Bank of America (1,637), and Nationstar (1,282).

“The trustees who pursued the highest number of defaults last quarter were Quality Loan Service Corp (for Wells Fargo and others), MTC Financial (Bank of America, Greentree, JP Morgan Chase) and Western Progressive (OCWEN and Deutsche Bank),” DataQuick said.

California Assembly Bill 233 – Protecting pay checks from garnishment by private student loan lenders

California Assembly Bill 233 – Protecting pay checks from garnishment by private student loan lenders. Here is the status of the legislation. AB 233 passed the Assembly, but failed to gain State Senate approval. As things now stand, AB 233 has been put on hold in the Senate. It may be reconsidered again by the Senate in January 2014 without the necessity of being refiled in the Assembly. The bill is authored by Assemblyman Bob Wieckowski, of Fremont, California.

I am informed that once AB 233 reached the Senate, it ran into enormous opposition from lobbyists of the California Banker’s Association. They are the ones who killed it. Assemblyman Wieckowski is considering changes to the bill that might give it a better chance of passage. I personally discussed it with his staff. Private student loans are predominantly originated at what we used to call “vocational trade schools.” I note that such institutions have mostly renamed themselves “private universities.” I offered a suggestion that would prevent wage garnishment for private student loans that originated at schools with a high rate of loan defaults. Such a measurement may be indicative that the schools in question are diploma mills where little or no useful education has taking place. Thus, the students who incurred private loans attending such institutions should be protected from exploitation to repay loans incurred for a useless education. This would force the private lenders to partner with the students to assure that the education received translates into valuable market skills for the students who emerge from such schools. Do you agree? If so, let your state legislators know how you feel! http://ow.ly/pr9jr

-Leon Bayer

California Assembly Bill AB 929 effective on 1/1/2013: increasing personal property exemptions under CCP 703 and 704 impacting the homestead exemption

Dear constituency list members of the Insolvency Law Committee (“ILC”), the following is a legislative summary of interest to insolvency practitioners and professionals:

California Assembly Bill AB 929 became effective on January 1, 2013, increasing personal property exemptions under California Code of Civil Procedure (“CCP”) sections 703 and 704 and impacting the homestead exemption as set forth below:

Under AB 182 (2003), a bill developed through coordination between the California Law Revision Commission and the Insolvency Law Committee, the process of increasing exemptions as to personal property under CCP §703.140, the so-called “wild card” set of exemptions, was removed from the political process through application of a first-of-its kind automatic triennial cost-of-living adjustment set by the annual California Consumer Price Index to keep pace with inflation. See CCP §703.150. Increases in the homestead exemption in real property were not part of this automatic adjustment process.

AB 929, a bill sponsored by Assemblyman Bob Wieckowski, a long-time member of the National Association of Consumer Bankruptcy Attorneys, finally ties the homestead exemption to inflation and the increasing cost of home ownership. On April 1, 2013 (and every three years thereafter) the Judicial Council is required to submit adjusted homestead exemptions based on the change in the annual California Consumer Price Index to the Legislature.

AB 929 modifies CCP §704.730 so that the maximum income threshold is increased (from $15,000 to $25,000 if single and from $20,000 to $35,000 if married) for persons 55+ years of age to be eligible for the $175,000 homestead exemption.

Read more…

Foreclosure Activity Drops Sharply Thanks to New California Law

BY JANN SWANSON
Foreclosure Activity Drops Sharply Thanks to New California Law

Foreclosure activity in much of the nation now appears to be accelerating downward, dropping 7 percent in a single month according to RealtyTrac. Foreclosure filings nationwide – default notices, scheduled auctions, and bank repossessions – numbered 150,864 or one in every 869 U.S. housing units in January compared to 162,511 in December. This was a 28.5 percent decrease from January 2012. Foreclosure starts were down 11 percent from December and 28 percent compared to a year earlier and at the lowest level since June 2006. Bank repossessions or REO dropped 5 percent from the previous month and were down 24 percent from January 2012 to the lowest level since February 2008.

While overall activity was down in most states, the size of the national decline can be traced to California where a new law caused a 39.5 percent decrease in filings from December to January making it the first time since January 2007 that California did not have the largest number of filings in the country. RealtyTrac Vice President Daren Blomquist said the new legislation that became effective on January 1 profoundly altered the U.S. foreclosure landscape. “Dubbed the Homeowners Bill of Rights, this legislation extends many of the principles in the national mortgage settlement – including a prohibition on so-called dual tracking and requiring a single point of contact for borrowers facing foreclosure – to all mortgage servicers operating in California. In addition the new law imposes fines of up to $7,500 per loan for filing of multiple unverified foreclosure documents. As a result, the downward foreclosure trend in California accelerated into hyper speed in January, decisively shifting the balance of power when it comes to the nation’s foreclosure activity.

Read more…

2013 Conference of Delegates

Dear Members of the Commercial Law and Bankruptcy Section of the Los Angeles County Bar Association:
Have you ever had occasion to think, “This statute would work better for me and my clients if it said/did  ____ instead”?  This email will describe how you can become involved in effecting changes to California statutory law.

Each year, the Conference of California Bar Associations holds an annual Conference of Delegates in coordination with the State Bar Annual Meeting.   The Conference of Delegates meets to consider and adopt resolutions recommending potential revisions to California statutory law to the California legislature.  The 2013 Conference of Delegates will be held October 11-13, 2013 in coordination with the 2013 State Bar Annual meeting in San Jose.

Each year, the Los Angeles County Bar Association sends a Delegation of LACBA Members to the annual Conference of Delegates.    The 2013 LACBA Delegation will meet during August in advance of the Conference of Delegates to consider and refine resolutions that may be proposed to the Conference of Delegates.  The LACBA Delegation’s August pre-conference meetings are approved for MCLE credit, so participation in the Delegation’s work is an opportunity to be involved with the legislative process, healthy debate, and get MCLE credit.  For more information, visit www.lacba.org/delegation.

In 2012, nine LACBA resolutions were passed by the Conference, and five others were actively negotiated by LACBA to pass in improved amended versions. Four LACBA resolutions from 2008 through 2010 were placed with bill authors, succeeded in the California Legislature and have been chaptered into law, and another three through 2011 are pending.

The Bylaws of the LACBA Delegation provide that each Section may designate a representative as an automatic appointment to the LACBA Delegation.  However, the Bylaws provide further that each such designee must express an interest in serving on the delegation by virtue of having completed an application.   If you wish to serve as a member of the LACBA Delegation to the 2013 Conference of Delegates, please complete, sign and submit the attached application to LACBA in accordance with the instructions on the application form.  If you wish to serve as the Section’s designee, please submit your application and send a copy of the submitted application to me for my receipt on or before March 19, 2013.  The Executive Committee of the Section will select the Section nominee at the Committee’s March 21, 2013, meeting.

Please note that Section designees and all other members of the LACBA Delegation are individually responsible for all expenses incurred as a delegate. LACBA funds may not be used to reimburse volunteers for participation in the Conference of Delegates.

If you are interested in submitting a potential resolution for adoption by the Conference of Delegates, you must send the resolution to Grace Danziger at gdanziger@lacba.org  by January 25, 2013.  See the attached instruction for information on how to format a resolution.

Brian Holman
Section Chair

Click Here for additional information.

First Revamped Bankruptcy Forms Out for Public Comment

The Judicial Conference Committee on Rules of Practice and Procedure is asking for comment on the first proposed modernization of bankruptcy forms in two decades. The revised forms, published for comment, are all used by individual debtors and include the fee waiver and installment fee forms, income and expense forms, and the means test forms, replacing previous forms. The comments, submitted by the public, will be reviewed in coming months and will be used to fine-tune the forms.

There were over 1.2 million non-business bankruptcies filed in federal courts in the 12-month period ending September 30, 2012, where the debts were predominantly personal or consumer in nature.

Read the full article here.

California Assembly Bill 929: Increasing Certain Exemptions Available to Bankruptcy Debtors under C.C.P. Sections 703 and 704

Dear California NACBA member:

In case you had not heard, California Assembly Bill 929, took effect on January 1, 2013, increasing certain exemptions available to bankruptcy debtors under CCP Sections 703 and 704.  This legislation was introduced by Assembly Member Bob Wieckowski, who is also a long-time NACBA member.  We have learned that Rep. Wieckowski has been named the Chairman of the Assembly Judiciary Committee in the legislative session which began on December 1, 2012, and NACBA looks forward to working closely with him in this session to address further revisions needed to CCP 703 and 704.

Here are some highlights of California Assembly Bill 929:
. Increases the dollar amount of the exemptions for various categories under CCP 703.140(b)
. For the personal injury exemption under CCP 703.140(b)(11) (D), eliminates the exclusion for pain, suffering and actual pecuniary loss
. Expands the motor vehicle exemption under CCP 703.140 (b)(2) to one or more vehicles
. Increases the maximum income threshhold for persons 55+ years of age to be eligible for the $175,000 homestead exemption under CCP 704.
. Beginning April 1, 2013, and every 3 years thereafter, requires the Judicial Council to submit to the Legislature the amount by which the homestead exemptions may be adjusted based on the change in the annual California Consumer Price Index

Read more…

Homeowner Bill of Rights

Hello, Happy Holidays

Please see the link below; it is a link to ConsumersUnion, and contains what I think is an excellent summary of the law about to take effect.  I assume the lenders have prepared & are preparing new forms for this, such as foreclosure notices & denial of loan modification applications. I also assume this is going to have an impact on the bankruptcy filings; it will likely slow them down for a month or so. And, for oppositions to motions for relief from the stay, if I were a debtor’s attorney I would include a copy of the loan mod. application (although getting a copy may be much easier said than done).

For creditors, as the attorney for the lender I would ask for copies of all letters denying any & all loan mod applications so to be prepared for the debtor who says he or she never received it. You just know that is going to be part of an opposition to the motion for relief from the stay.
http://www.consumersunion.org/pdf/CA_Homeowner_Bill_of_Rights_Summary.pdf

David Brian Lally, Esq.
Law Office of David B. Lally
8001 Irvine Center Drive, Suite 1090
Irvine, CA 92618