Marcus' Law and Politics

More ammunition for the homeowner in the foreclosure crunch.

2011-01-08T19:29:00.000-08:00

A recent ruling in Massachusetts has given homeowners some relief against lenders who have purchased mortgages. With the high rate of transfer of the loans, many banks cannot provide the proper documentations that the bank owns the loan. If the bank cannot prove they own the loan, then it has no right to foreclose. This is an important lesson to anyone facing foreclosure proceedings. The bank must prove that it is in fact the holder of the note that your mortgage secures. While experts are hailing this ruling as "groundbreaking" and "far-reaching", this fact has been well established in Kentucky for many years. In fact, one of my first cases was an appeal for a homeowner where the bank had failed to produce the assignments showing it was the holder of the note. The homeowner won when the bank failed to produce the documents. Now it seems other jurisdictions plan to follow that precedent.

Experts predict less bankruptcies in 2011

2011-01-08T19:18:00.000-08:00

Two sources are predicting fewer bankruptcies in 2011. The Seattle Times says that filings were down in December 2010 from the same period a year ago. The Wall Street Journal's Real Time Economics Blog state that filings are at a five-year high but are expected to be lower in 2011 because consumers are carrying less debt.

Are business bankruptcies falling?

2011-01-08T19:11:00.000-08:00

According to the Wall Street Journal and the Dow Jones Daily Bankruptcy Review, the number of Chapter 11 filings for businesses is on the decline. According to the article, this is the first decline since 2005. Is this a sign that the economy is turning around?

Which states saw higher bankruptcy filings?

2011-01-08T19:08:00.000-08:00

This article in the Huffington Post discusses states that have seen spikes in bankruptcy filings. It looks like there is trouble in paradise.

Law School Problems

2011-01-08T19:00:00.000-08:00

I remember being told of the value of a good education as I grew up. I was fortunate in going to law school and having a practice that I enjoy. However, these financial times have made the value of education questionable according to this article in the New York Times.

More Problems with Foreclosure System

2010-09-24T07:53:00.000-07:00

In recent years, foreclosures across the nation have garnered much attention due to the "sub-prime" loan crisis and the slow economy. For example, according to data provided by the Jefferson County, Kentucky, Master Commissioner's office, foreclosure sales in that county increased from 554 in 1997 to an estimated 5200 in 2010. While the concern over people losing their homes is great, the methods which many national lenders are using in their foreclosures may be even more concerning.

I have had several clients come in with horror stories in dealing with national lenders when they have gotten behind on their loan. Most deal with the supposed modification programs that lenders now offer. Clients send in the modification requests and wait months for responses, while interest is still accumulating, only to be told that the applications are deficient and they have to start over or that they never really qualified anyway. Even some clients have found private buyers for their properties, but the contracts will not be accepted because they did not use a realtor, despite the fact that the commission saved will be a financial benefit to the lender.

Two other cases that have been recently arisen have been much worse. One client negotiated a reaffirmation agreement with her lender through her bankruptcy. The lender initially demanded a lump sum payment to get the client caught up, but the lump sum was beyond the financial means of the client. The client informed the lender that the lump sum would be impossible. A reaffirmation agreement was then sent with modified terms, but no lump sum. It was signed by the client and by the lender and filed with the bankruptcy court. The client began making payments, which were accepted at first, but then returned because the lump sum was not paid. The lender then proceeded to have a judicial sale of the client's home rescheduled, without notice to the client. We found this out the day before the sale, and had it stopped. The bankruptcy court has said that that was improper and that the lump sum was not enforceable since it was not in the agreement. Even though the client has continued to send her payments under the agreement monthly, the lender continues to fight this issue in court.

A second case that has recently arisen is even more alarming. In representing an estate, the personal representative of the estate calls and says that a company has placed locks on the doors prohibiting her from entering the residence of the decedent. When the company is contacted, they say they effectively have repossessed the home for a national lender since the loan is in default and to contact the lender. Even though no suit has been filed and this repossession is illegal in the first place, the problem for the company and the lender is that they have no mortgage on the property they have seized. There is even some suspicion that the company has removed personal property from the residence. When the lender was contacted, the automated phone system effectively prohibited the client from speaking with someone to fix the problem because no one could tell her which department was responsible for the mix-up.

I cannot find a link to the article, but I recently read that this "wrongful" foreclosure is a growing trend nationally. Lenders are foreclosing on loans that are not actually in default due to poor record keeping or misreading files. There are other reports, similar to the client above, where the lender foreclosed on an home for which they had no lien. In jurisdictions where the repossession without foreclosure or eviction is permitted, this wrongful foreclosure has led to extensive property damage, which has led several property owners being left homeless through no fault of their own.

I have attached two links to this post that show that the problems now seem to go from merely negligent to intentional and fraudulent. Forged documents and improper reviews of accounts to determine their deficiency have now come to light.

With all of this in mind, we have to be very careful in how we advise our clients in a situations involving loans. Even though foreclosures have gotten more common, the more problems render them far less routine. It has gotten to the point that I tell clients to ignore the advertising of cheaper rates and only go with local lenders. It is much easier to walk into a branch office to talk to someone you know if you are having financial problems that to speak with someone in another state that will transfer you to someone in another department in some other state that has no idea what the client is dealing with. With this level of personal service, I feel that lender are more likely to review the client's situation carefully and clients are less likely to have the problems that I have describe above.

ABA JOURNAL: Foreclosure System Is Riddled with Faked Documents
http://www.abajournal.com/weekly/article/foreclosure_system_is_riddled_with_faked_documents

ABA JOURNAL: "Robo-Signer" Halting Foreclosures
http://www.abajournal.com/weekly/article/how_2_pro_bono_lawyers_uncovered_robo-signer_halting_foreclosures_in_23_sta

The President and Jury Duty

2010-01-29T15:44:00.001-08:00

I intended to write this post earlier in the week when I first heard about President Obama's selection for jury duty in his home state of Illinois. I understand that jury duty is an important civic function; however, I tend to think that leader of the free world would definitely be one responsibility more important than jury duty.

I reflected back to a family member's call to me this past summer. He was concerned that he had just been called to serve a term as a juror in his hometown. The first question was what he could do the "get out" of serving. My response was not much these days. The next question was, "what will I have to do?" That got me thinking that despite the importance of juries to our legal system, the legal system does a poor job in expressing or explaining that importance to the public.

The jury system, as we know it, stems from the Magna Carta in the 13th Century, which allowed for a trial by your peers. Prior to that time, the King and he alone made the decision. The shortcoming of the Magna Carta was that this right seemingly still only applied to the nobility. Nevertheless, our Constitution established a right to jury trial in criminal and civil cases in the 6th and 7th Amendments. From that point forward we had the right to have our peers settle disputes and establish penalties rather than depending solely upon the "establishment" to protect our life, liberty and property.

One of the only pictures I have seen of my grandfather was taken while he was serving on a jury. Several years ago, in simpler times, court days and jury service were social events for the community. Folks went to watch and were interested in what happened in the courts. Finding jurors was not as problematic. Since that time, however, our lives have gotten "busier" and service has gone from an honor to a burden. Another factor is a lack of respect for the court system (and I admit lawyers have some of the blame for this), but that is the subject for another post.

Pulaski County has been fortunate to have many wonderful citizens whom have served on jury duty in the last few yeas that I have been practicing here. Included in those number have been workers whom have come from late night shifts to early morning service. The have been old and young alike. We have had doctors. We have had lawyers. We have even had a couple of judges and the County Attorney serve on jury duty. No one is immune from service.

If you are called to serve, please remember the case you are there for is just as important to the participants as your time is to you. The matter would not be resolved without you. Most of the cases that I try are mental health disability trials. To me, these cases particularly outline the importance of jury service. These matters are for individuals who are no longer able to make informed decisions about their own welfare. If they have failed to plan for this, there is only one way to get help. Someone must petition to become their guardian and have the person declared disable. In Kentucky, the only way to do this is with a trial by jury. Without jury service, these individuals would not be able to take care of their personal, medical and financial affairs on their own and there would be no one to help them. Further, there is a jury of their peers to make the determination if the person is disabled and should lose their decision making powers rather than leaving this decision to a lawyers and medical personnel to make that decision for them. This is truly an important and unique safeguard that would not be possible without jury service.

To those that have served on a term on the jury panel, the legal system owes you thanks. For those of you who wonder why you have to serve, I hope this can explain some of the history and importance of jury service. We couldn't do it without you.

Tort Reform and Health Care Reform: The Real Need is Insurance Reform

2009-12-01T18:41:00.000-08:00

Let me start this by saying I am not sure that either party if right or wrong. I do need help in understanding why neither seem to be willing to address the real problem. I guess that is the point of this entry. I need help understanding it all, because obviously I am missing something. I encourage responses here, because I want to know what I am missing.

Let me start with the tort reform push from the Republicans. In a recent speech by Sen. John McCain, he stated that one of the main problems with the health care reform plan is the lack of any significant medical malpractice reform plan. Now there are many torts out there, but the only one that seems to really matter is the specific tort of medical malpractice. I recently received a emailed photo from a client that voiced a similar sentiment painted on a van driven around Washington, D.C. Everyone blames trial attorneys for the need for tort reform. The arguments in support of tort reform center on two main points. The first is that attorneys file so many frivolous lawsuits that the insurance companies are forced to defend, resulting in higher premiums to health care providers that are then passed on to patients through higher health care costs. A side argument to this is that many doctors will go on to practice in states with tort reform due to these costs and leave non reform states with a lack of providers. The second argument, which I had not heard before reading excerpts from Sen. McCain's speech, is that the fear of suits force health care providers into practicing defensive medicine, resulting in unnecessary tests and procedures to avoid lawsuits, thus driving up the costs of health care.

Conversely, trial lawyer groups (one of which I am a member) argue that there is no correlation between tort reform and lower malpractice insurance premium to the health care providers. The former American Trial Lawyers Association (which Sen. McCain singles out in his speech) also points out that when caps are placed on the recovery for patients severely injured by medical negligence, these injuries can often result in permanent damage that require a lifetime of extensive treatment that would often not be fully covered by the limited damages. Those in favor of tort reform will point out that the attorneys are also opposed to proposed limits in attorney's fees in these cases, producing a conflict, but ignore the question of who will pay for the excess cost of treatment for these injured persons if not the malpractice insurance. I do not mean to imply that either side is right on this issue. I am merely trying to illustrate the arguments as I understand them. If I am misunderstanding this issue, I encourage someone correct me on this.

On the other hand, we have the health care reform package that is now being proposed by the Democrats. The argument here is that so many people cannot afford health insurance that they are forced to go without resulting in great financial hardship in the case of illness. I do not think anyone argues that this is not a huge problem facing our nation. The arguments against the proposal are that it will be hugely expensive and result in more taxes and national debt and that the plan is rushed and not well thought out.

I have two major concerns with this plan myself that I do not have enough information about and that seem to be receiving little attention. The first is the effect that mandatory coverage will have on small businesses. If small businesses are required to obtain coverage for their employees, what happens when the business cannot afford the coverage. This seems destined for me to cause job cuts and maybe even closure of businesses. The loss of jobs would worsen the seemingly worsen the economy. If uninsured persons have no jobs, the coverage concern is not remedied and the problem becomes compounded. The second concern is that the proposal may result in higher health care and insurance costs. Insurers will have a mandatory market and they can charge what they want. Policies can and will be watered down to provide minimum coverage that really will not provide any helpful coverage. Providers will have no motivation to keep costs low knowing that someone will pay for the service. Again, I do not mean to imply that either side is right on this issue. I am merely trying to illustrate the arguments as I understand them. If I am misunderstanding this issue, I encourage someone correct me on this.

Regardless of who is right in respect to the issues above, I believe both sides are missing the point. The only persons or entities that benefit from both proposals (tort reform and health care reform) are the insurance companies. In both proposals, the individuals are the ones that stand to suffer (the injured patient in tort reform and the employer who cannot afford coverage or the person who gets an expensive plan that covers nothing). The health insurance companies benefit because everyone has to be covered, so their market increases. These companies will also be plan administrators for any governmental plans, so they profit there as well. On the tort reform side, the medical malpractice insurers benefit. They keep charging premiums at whatever levels they wish, because the providers cannot afford not to have coverage, but they get to limit what they have to pay out. Either way the insurance companies' margins grow while their responsibilities shrink.

The common theme in both of these debates seem to be to help the insurance industry at all costs with "solutions" that can have detrimental effects on the public. The tort reform debate insists that the purpose is to lower premiums, a premise that has not been supported by the effects in states that have tort reform, but certainly will lower the payout responsibilities of insurance companies. The insurance companies do not lower premiums but pay out less, thus obtaining greater profit. In the health insurance reform debate, the health insurers will have more customers with mandatory coverage and can charge whatever they wish. Further, they will continue as third-party administrators of any governmental care plans. The results will be like mandatory auto coverage limits, high premiums with minimum limits that are often insufficient to satisfy the needs of the customers. With high deductibles I anticipate will be like the recent Medicare prescription plans, the insurance companies will sell more policies but structure coverage so that they do not have to pay any more out. Those that need coverage now will likely still only receive minimal or insufficient policies that merely take money out of the patients pocket to pay insurance that could have been spent on bills in the first place and still leaving significant out of pocket expenses.

The question that I ask is thus with all of the regulation of the individuals (limits on the injured persons for tort reform; expense on the customer and small business employers for health care reform), where is the regulation on the insurance industry to mandate quality coverage and limit premiums? Also, would cheaper insurance not allow greater access to the medical care in the first place? Why should we support either of these plans that help insurance companies like AIG when their executives receive large bonuses and buy outs accompanies by record governmental bail-outs?

The reason for this question is from limited understanding of medical billing. Doctors charge a rate for a test or x-ray or procedure or whatever. The doctors have to make their living and they have to pay their staff and run their offices. All of these factors go into setting that price. I understand that. However, they also know that a certain portion of those patients have no insurance and are likely not to pay. The doctors also have to live by the terms of the health insurers. The health insurers discount the charges that the doctors are able to charge for a specific procedure. The insurance companies dictate these charges, thus the doctors are required to offset these charges to those that have no insurance. No control of this practice by the health insurance company has resulted in higher health care costs for the uninsured to protect the insurance company bottom line.

Control over the insurance companies can lead to real health care reform and tort reform. Arguments that these plans help the general public without addressing this control is just a waste of breath, waste of tax dollars in coming up with these plans, and waste of time in coming up with a real solution. How long must we wait until a real plan comes forth?

Welcome!

2009-11-13T12:30:00.000-08:00

Welcome to the Marcus' Law and Politics Blog. This space will be primarily devoted to explaining a little bit about practicing law in a small town. The goal is to provide information that may be useful to a wide range of people. We will address legal issues that we have encountered in helping our clients. We will address technology concerns and solutions that we use in making this office more productive and available (i.e., this blog) that other small office may enjoy. We may even address some of the political issues that are impacting our clients. The possibilities are endless!

Next, maybe I should include a little about my law firm. The Law Office of Marcus L. Vanover, P.S.C., currently has one attorney and four support personnel. I have been practicing for nine years, all of which have been in small firms or as a sole practitioner in southern Kentucky. While small town practice to me involves knowing a little about several areas of the law, we now focus on just a few. That's not to say we will not try to help out in other areas if we can do so competently. However, at this time we focus on real estate, oil and gas law, disability claims, bankruptcies and personal injury cases.

I look forward to providing updates here. Hopefully someone will find it useful. Enjoy.