“Extreme Makeover” home in Atlanta in bankruptcy to prevent foreclosure

by Sundeep Kothari

Atlanta Georgia Bankruptcy Attorney

Extreme Makeover home in foreclosure

A home in Clayton County, refurbished by the ABC TV show “Extreme Makeover”, was set to be auctioned but the couple who owns it filed for bankruptcy.

From the article:

A Clayton County couple living in an “Extreme Makeover” home delayed foreclosure Tuesday for a second time by filing for bankruptcy.

Milton and Patricia Harper and their three sons will continue living for now in the 5,300-square-foot home constructed four years ago by the ABC television show that rebuilds or refurbishes homes for families in need.

The house was scheduled to be sold on the Clayton County Courthouse steps Tuesday, but the auction never happened. Court records showed Milton Harper filed Monday for Chapter 13 bankruptcy, which stalls the foreclosure.

In the bankruptcy filing, Harper said he owes $100,000 to $500,000 to creditors, including the mortgage company, six credit cards, two pawn shops and Sprint. Harper says he owns the same range amount in assets. He is scheduled to meet April 21 with creditors.

The Harper home was rebuilt for free when the television show’s producers learned the family was having septic tank problems. In addition to the $450,000 remodeling, the show gave the family $200,000 in cash.

The couple borrowed against the house to start a business and ended up with a $450,000 mortgage. After struggling several years with finances, the couple faced foreclosure in August. The house was saved then by a loan modification.

After defaulting on that loan, the house was again up for auction Tuesday.

Obama’s statement on campaign trail about bankruptcy/foreclosure reform

by Sundeep Kothari

Atlanta Georgia Bankruptcy Attorney

Obama’s campaign statement on mortgage crisis

Here’s President Obama’s statement from about a year ago on mortgage/bankruptcy reform.

Poll: Only 28% think Obama’s $75 Billion Foreclosure Plan is fair

by Sundeep Kothari

Atlanta Georgia Bankruptcy Attorney

64% find Obama’s foreclosure plan is unfair

A nation of contradictions (from the article):

On the day that the Obama administration begins implementing a new program to fight home foreclosures, a new national poll suggests that most Americans think the plan is unfair to those who pay their mortgages on time.

Sixty-four percent of those questioned in a Quinnipiac University survey released Wednesday feel the Obama administration program is unfair to those who pay their mortgages on time. Only 28 percent say that the president’s $75 billion plan is fair. More details on the program, which is aimed at helping up to nine million borrowers stay in their homes using refinanced mortgages or modified loans, were released Wednesday.

Americans may not like the plan — but that doesn’t mean they think it’s a bad idea. While nearly two-thirds think the plan is unfair to those who follow the rules, 57 percent say they approve of the package, and 55 percent believe the plan will stabilize home prices.

One in five mortgage borrowers are underwater

by Sundeep Kothari

Atlanta Georgia Bankruptcy Attorney

One in five homeowners underwater

One in five homeowners in the U.S. are underwater, with over 50% of homeowners in Nevada underwater. More declines are expected to follow.

This is a huge factor of why I believe the economy will not start rebounding until 2011. When a home goes underwater by a significant amount, a lot of people refuse to leave their home and file for bankruptcy. They do this because they like living there, they think the economy will rebound soon, they think the government will step in with a plan to save them, they think the mortgage company will step in with a plan to help them, they have put in a lot of money, effort, time, and life into their home.

This is a very emotional issue. In many situations, it is simply best for the person to leave the home, file for bankruptcy, rebuild savings and then purchase a smaller home in a few years. However, this sounds much easier to say than for people to do.

Home ownership is for many people the most important purchase of their life, and losing it is like losing a part of their own soul. And even when the economic realities say otherwise, people would rather be stubborn than lose not only their place to live, and continue to live somewhere where their money is getting eaten rather than move to a smaller place and save liquid cash. The pain of dealing with the present economic realities is simply too painful to be rational.

Blockbuster hires counsel to consider bankruptcy filing

by Sundeep Kothari

Atlanta Georgia Bankruptcy Attorney

Blockbuster considers bankruptcy filing

Blockbuster Inc., the world’s largest video rental company, has retained counsel to explore filing for bankruptcy reorganization under Chapter 11. Blockbuster has retained counsel to determine whether there would be support among creditors for a pre-packaged bankruptcy – i.e. creditors agree to terms, so the bankruptcy proceeding goes smoother and faster.

Blockbuster has been struggling to compete with Netflix, despite expanding its mail-order business and digital business.

Fed announces $200 Billion Consumer Credit Program

by Sundeep Kothari

Atlanta Georgia Bankruptcy Attorney

$200 Billion Consumer Credit Program

The Federal Reserve announced a $200 billion securitization program to help spur consumer lending for cars, credit cards, education and small businesses.

Prior to the financial meltdown that began in September 2008, banks relied heavily on packaging loans into securities and selling them to fund additional lending. This process has financed about 1/4 of all auto, student and other consumer loans in recent years, the Treasury Department said Tuesday, until the credit markets ground to a halt in October.

So basically, the Fed is trying to spur consumer spending by backing up credit cards, auto loans the rest. So essentially they are acting as a national bank. Not a huge national bank, but still a small player in the market.

Will this work? Possibly. It can help some people buy items that otherwise they wouldn’t be able to. But consumer spending is time significantly, as job losses are piling up, and hours are being reduced. In addition, people’s attitudes towards debt has changed significantly, as frugality has become the latest fad.

Citi offers new mortgage payment plan

by Sundeep Kothari

Atlanta Georgia Bankruptcy Attorney

Citi’s new mortgage payment plan

From the article:

Citigroup Inc. will announce Tuesday a new program aimed at addressing the latest challenge facing the mortgage industry: unemployed homeowners.

Under the program, Citigroup will temporarily lower mortgage payments to an average of $500 a month for certain borrowers who have recently lost their jobs and are at least 60 days behind on their mortgage payments. Borrowers will be allowed to make the lower payments for three months. Citigroup will waive interest and penalties during this period.

Citigroup’s announcement comes days before the Obama administration is expected to announce guidelines for its massive loan-modification program, a cornerstone of its effort to fight the housing crisis. The bank’s new initiative takes aim at one of the hardest groups of borrowers to assist: those who have seen their income fall sharply.

“We expect that there will be thousands of people we can help,” said Sanjiv Das, chief executive of CitiMortgage, who called rising unemployment “the single biggest issue facing mortgage servicers.” Although the novel program will help just a small fraction of troubled borrowers, Mr. Das said he hopes it will be copied by others in the industry.

To qualify for the program, borrowers must live in the home and have a mortgage that is owned and serviced by CitiMortgage. The program applies only to loans of $417,500 or lower. Citigroup holds 1.4 million mortgages on its books. It also services another four million loans for others, but those don’t qualify for the program.

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Of course, there will be people out there who are paying their mortgage on time and will say, “Hey! What about me? I am paying on time, I didn’t burn my cash on a second mortgage or an equity line to rebuild my kitchen or basement, I didn’t burn my cash on going to Vegas or buying a more expensive car than I need. These people were irresponsible and they should suffer for it, not benefit!”

This is a legitimate concern – that as Rick Santelli said, is the reward of bad behavior. These types of arguments make bankruptcy reform very difficult, and a very emotional issue.

Morris Brown College tries to stop auction of one of its buildings

by Sundeep Kothari

Atlanta Georgia Bankruptcy Attorney

Morris Brown tries to stop auction

Morris Brown College, one of the nation’s oldest historically Black universities, attempts for a third time to stop the auction of one of its buildings, Jordan Hall.

Jordan Hall is scheduled to be auctioned Tuesday on the Fulton County Courthouse steps if Morris Brown doesn’t make good on a $13.1 million construction loan issued in 1996. The building contains classrooms and an art gallery.

Since Jan. 1, Jordan Hall has twice been scheduled for foreclosure sale. Both in January and in February, investors halted the procedure.

House to vote on bankruptcy reform on 2/26

by Sundeep Kothari

Atlanta Georgia Bankruptcy Attorney

House to vote on bankruptcy reform

The House is set to vote on a measure to allow bankruptcy judges to modify mortgages for primary home residences on Thursday, 2/26.

President Obama and Speaker Pelosi both call for bankruptcy reform

by Sundeep Kothari

Atlanta Georgia Bankruptcy Attorney

Tonight President Obama called for bankruptcy reform, echoing statements of support from Speaker Pelosi.

President Obama’s Homeowner Affordability & Stability Plan

by Sundeep Kothari

Atlanta Georgia Bankruptcy Lawyer

Homeowner Affordability and Stability Plan

Fact Sheet

Questions & Answers

Here is the Executive Summary, Fact Sheet and Question & Answer Sheet for President Obama’s Homeowner Affordability and Stability Plan.

Mortal Kombat video game maker files for Chapter 11 re-organization

by Sundeep Kothari

Atlanta Georgia Bankruptcy Attorney

Mortal Kombat maker files for bankruptcy

From the article:

Saddled with debt, American video game maker Midway has filed for Chapter 11 bankruptcy.

Creator of the long-running Mortal Kombat said it is seeking protection from creditors after a change in ownership last year pushed forward the deadline for Midway to pay off its debts.

The company said Chapter 11 protection will let the company conduct its business as usual (of losing money annually for nearly a decade). Midway stressed bankruptcy would affect only its US operations.

The events surrounding Midway’s crippling debt has spurred a group of the company’s bondholders on Friday to file an objection to the bankruptcy. Filed in Delaware court, the complaint claims Midway’s plea for relief is “tainted by highly unusual transactions” from Midway insiders which, “to put it charitably, require significant scrutiny.”

Midway’s bank book has been in hot water since December when the majority shareholder and media mogul Sumner Redstone sold off his controlling 87.2 per cent stake in the company to private investor Mark Thomas for a fire sale price of $100,000 and $70m in debt.

The change in ownership triggered debt repayment clauses that allowed creditors to ask for more than $150m in outstanding notes that otherwise wouldn’t have been due until 2025.

The objecting bondholders claim months before Redstone’s departure, he ballooned Midway’s loan obligations from $15m to $90m in loans issue by the Redstone-owned and controlled entertainment company, National Amusements.

According to the filing, the bondholders said they believe that as a consequence of the sale to Thomson, Redstone was able to capture the benefit of substantial tax losses that would otherwise have been available to Midway.

Peanut Corp. files for bankruptcy

by Sundeep Kothari

Atlanta Georgia Bankruptcy Attorney

Peanut Corp. files for bankruptcy

Peanut Corp., the corporation linked to a national salmonella outbreak, has filed for Chapter 7 bankruptcy liquidation. The company had a peanut processing plant in Blakely, Georgia shut down last month after federal health officials traced the salmonella to the plant.

Business for the corporation effectively shut down as news of the salmonella outbreak broke out wider into the public. Over 2000 products have been recalled. Over 600 people have reported sickness and at least 9 people have died from usage of the company’s products.

Bankruptcy will slow down but not shut down the salmonella litigation process.

Report: Falcons will trade Michael Vick after completion of criminal case

by Sundeep Kothari

Atlanta, Georgia Bankruptcy Attorney

Falcons to trade Michael Vick

The Atlanta Falcons will trade former starter and All-Pro Michael Vick upon completion of his sentence for criminal convictions related to dogfighting.

Vick filed for Chapter 11 bankruptcy protection in July 2008.

Foreclosure bill could cut taxable home values

by Sundeep Kothari

Atlanta Georgia Bankruptcy Lawyer

Foreclosure bill could cut homes’ taxable value

Every month in metro Atlanta, lenders foreclose on many homes, which traditionally, have been ignored by local assessors as they set yearly tax values. Instead, they’ve relied on sales at retail prices or “fair market” value.

During a housing market downturn, this can leave wide gaps between sales values and tax values — meaning some homeowners would be overtaxed.

Some state legislators want to change that with Senate Bill 55, which directs assessors to count foreclosure sales when setting tax values. The bill passed the Senate Finance Committee with no opposition Thursday.

This could lead to some homeowners having their taxes reduced significantly.

Large counties, such as DeKalb and Fulton, oppose this bill, as they would lose billions of dollars in revenue.