Swimming in Different Oceans

 Consumer Law  Comments Off on Swimming in Different Oceans
Jul 272011
 

According to an analysis performed by the PEW Research Center, the wealth gap between whites and minorities has widened.  REALLY widened.  Not that it was all that great before – during the late 80’s and early 90’s, the ratios of median net worth for white households versus minority households ranged from about 7:1 to 10:1.  Between 2005 and 2009, however, that ration jumped to 15:1 for Hispanics, and almost 20:1 for blacks.  This disparity is the largest since the federal government started tracking this data 25 years ago. 

So, what caused this increased disparity?  Why didn’t the economic meltdown and later “recovery” affect every group equally (or at least more equally)?  A rising tide raises all boats, right?  Well, not if they are in different oceans – or, in this case, invested in different asset classes.  For all groups, home ownership is the biggest contributor to net worth.  However, for minorities, especially younger Hispanics and African-Americans, their home counts for more than half of their net worth.  For whites, that percentage is 44%.  The other major contributor to net worth (particularly older whites) is investment accounts – 401(k)’s, stock accounts, etc.

But why does this matter?  After the crash in 2008, the stock market rebounded, and now is doing better than ever.  The housing market didn’t, and will remain in turmoil for many more years.  Plus, many people in financial trouble deplete their retirement accounts to pay their mortgages, literally mortgaging their futures. 

Obviously, there’s much more to this disparity than just house v. stocks.  But this is something that can be helped, if the federal government and their lender cronies decided to view homeowners with a little less distain.

New Foreclosure Laws in Effect! But before you pop the cork…

 Consumer Law, Foreclosure, Indiana  Comments Off on New Foreclosure Laws in Effect! But before you pop the cork…
Jul 142011
 

This past July 1st, a slew of new (and amended) Indiana statutes went into effect, including the ones in Senate Enrolled Act 582.  SEA 582 contains several new and significantly changed laws regarding residential foreclosures.  As I see it, have some of these changes are good, some are not so good, and some just make me nervous.  Over the next few posts, I will delve into what I see as the most significant changes in SEA 582, and what they mean to Hoosiers facing foreclosure. 

To start, here is my summary of the provisions in SEA 582 that will have the greatest effect on Indiana homeowners and the attorneys that represent them:

1.    Changes to the foreclosure settlement conference process (IC 32-30-10.5 et al).  There are some helpful changes here, including improved notice to homeowners of the availability of a settlement conference, clarification of what, when, and to whom documents must be provided by the borrower and the creditor, a prohibition against charging the homeowners for the lender’s attorney’s fees for attending the settlement conference, and treating settlement conference requests as an appearance under the trial rules. 

However, there is one change makes me pause, namely, the addition of IC 32-30-10.5-8.6, which gives the judge the authority to order a borrower to make monthly “mortgage” payments, either to the court or into an attorney trust account, while the foreclosure action continues.  These payments are then to be disbursed either to the lender or the homeowner, depending on what happens during the foreclosure action.  Although the idea is worthy (a homeowner must be able to make monthly payments in order for a modification to succeed), I see some potential problems and consequences for unwary homeowners and their attorneys.  

2.    Creation of a new chapter granting immunity for lenders and others entering onto property that is “vacant” or “abandoned.”  This falls under the “nervous” category.  I’ll delve more into what constitutes “vacant” or “abandoned,” and how this can either help or, in the wrong hands, hurt certain homeowners. 

3.    A “suggestion” that the Legislature establish a committee to consider switching to non-judicial foreclosure.  Oh, boy.  I know, putting together a group of people to discuss whether to make a major change in how (and how fast) homeowners can lose their homes is a long way from actually making that change.  I also know that we are not the only state to consider this change (Florida has batted this one around, too).  So, I will go through some of the pros and cons of both types of foreclosure, and what Indiana homeowners could expect if this committee decides to recommend changes.  

 That’s enough for now.  Stay tuned – I’ll keep these postings coming over the next couple of weeks.