Today’s blog comes courtesy of Shari Storm, Vice President and Chief Marketing Officer of Verity Federal Credit Union. Shari is the author of the new book ‘Motherhood is the New MBA”, available here:
Is the economy turning? Are we going to double dip? Will delinquencies drop? Will lending ever get back to normal? What the heck are rates going to do?
The ONLY certainty for this year is that we marketers are being asked to do more with less.
In light of that, I’d like to share with you three ways we are saving marketing money in 2010.
They aren’t easy. We’ve stopped doing some things that we have been doing since the beginning of time. Sacred cows, I believe they are called. But getting rid of them has helped put a good chunk of change in my marketing piggy bank. (OK, enough of the barnyard animal word plays.)
1. Annual Reports: We aren’t printing annual reports this year. Instead, we’ll design it, post it online and print enough to hand out at our annual meeting. If a member asks for one, we will print it for them.
Savings: $5,000 / year
2. Yellow Book Advertising: We’ve stopped completely. Instead, we’ve made sure our contact information is correct on Yelp and other such websites.
Savings: $12,000 / year
3. Newsletters: We stopped designing and printing newsletters. Instead, we focus our attention on our employee run blog.
Savings: $18,000 / year
We knew these changes would save us a considerable amount of money, but we were happy to discover that there were additional benefits we weren’t expecting.
1. Conservation of Time: We hadn’t really realized how much time we were spending putting together the newsletter and sending it to print. It sounds like a simple task, but wrangling content from already busy contributors and formatting files for the printers does take time. We also eliminated the time we were spending on working with yellow page reps, proofing ads, executing contracts, etc.
2. Conservation of Resources: As soon as we made the decision to stop advertising in yellow pages, we started seeing blogs and other social sites complaining about Washington State’s practice of giving each resident at least two phone books. There is a large movement in our state to outlaw this system. We feel good about doing our part in minimizing the environmental impact yellow pages have on our environment. We’ve mentioned in a few places that Washington yellow pages have one less ad due to us.
3. Increased Job Satisfaction: We’ve concluded that our new efforts are more enjoyable than our former task. We like monitoring Yelp better than we like figuring out what to put in a yellow page ad. We like writing for the blog more than we like printing a newsletter. The work is more fun and that’s ALWAYS a good thing.
By: Monette W. Cope, Esq.
The bills in both the House and Senate which would have allowed bankruptcy judges to modify the terms of certain mortgages died long ago. However, one prominent Chapter 13 bankruptcy trustee is promoting his own version of reform by promoting the use of HAMP (Homeowners Affordable Modification Program) in concert with a Chapter 13 bankruptcy. Lenders and Servicers need to be aware of this and the issues it presents.
The idea is to submit an application for a HAMP modification at the same time a Chapter 13 bankruptcy is filed. Because both require proof of income, a budget, and the debtor’s most recent tax return, it should be “easy” for the debtor’s attorney to submit them to HAMP along with the Request for Modification and Affidavit of Hardship. Because lenders and servicers are required to respond to applicants within 30 days with a yea or nay, it would in theory dovetail perfectly with the timing of most districts’ confirmation hearings, and result in reduced mortgage payments and so affordable plan payments.
The assumptions behind this idea show its inherent problem – delay. Among the assumptions are the following: the debtor is a viable candidate for a HAMP modification; the documents the attorney sends are complete and sufficient the first time; the lender or servicer will be able to respond within the 30 days; the debtor can afford the proposed modification; the modification is accepted immediately; the plan will work with the modification; and the modification documents are signed soon after the 30 day response period has passed. It is more likely that there will be snags in the process and it will not move as smoothly as the trustee assumes. Debtor’s counsel will certainly use any delay in the HAMP process to delay the Chapter 13 proceedings.
Even if the modification process goes smoothly, a huge delay is overlooked. Confirmation hearings are usually set within 60-90 days after a case is filed, and plans can be confirmed in 60 days in some jurisdictions. Under HAMP, a signed modification will not be permanent until and unless the debtor pays according to the modification for three consecutive months. Assuming that a plan cannot be confirmed until the modification is finalized, it will be at least 4 ½ months until the plan can be confirmed. Meanwhile, the creditor is bound by the automatic stay.
Moreover, if the debtor cannot afford the existing mortgage payments, how will it be paid after the bankruptcy is filed? If a post-petition default accumulates, creditors have grounds for relief from stay. Will courts put off granting relief while a HAMP application or trial period is pending? More delay.
How could a debtor propose a budget and a plan if he or she cannot afford the current mortgage payments? If not, the debtor must file a budget and plan that are unfeasible or based on a future unknown payment. With either option, creditors have grounds for denial of confirmation, dismissal of the case or relief from stay. Will courts delay or deny creditors this relief while a debtor is waiting for a loan modification? Again, more delay.
Or would debtor’s counsel seek and obtain an extension of time to file a plan and budget while waiting for a HAMP decision? In cases where a loan modification gets approved, confirmation will be extended to at least 5 ½ months after filing. In cases where modification is not successful, the case will either have to be dismissed or converted to a Chapter 7. Again, the creditor is delayed from exercising its state court rights because the automatic stay has been in effect during the Chapter 13 case.
While a HAMP modification plan could be a win-win for both creditor and debtor in certain cases even with the delay it would cause, chances are that the creditor will be frustrated with the process. Creditors must move aggressively and quickly if a Chapter 13 case is filed that is dependant upon a HAMP modification.
If you have any questions concerning this matter, please contact Ms. Monette W. Cope, Esq. Monette is a Junior Partner in the Bankruptcy department located in the Chicago office. She can be reached directly at 312-253-9614 or via email at email@example.com.
Filed under: bankruptcy
The Supreme Court admits that its decision from March 23, 2010, “is potential for bad-faith litigation tactics” by debtors.
A Chapter 13 debtor listed his student loan debt in his plan. In the Chapter 13 plan, the debtor proposed to repay only the principal while the remainder (accrued interest) would be discharged. The United States Department of Education (the “Government”) did not object to the plan or appeal the order confirming the plan. During the bankruptcy case, the Government filed a proof of claim and received the principal on the debt. When the Government proceeded to collect on the debt after the debtor received a discharge in the Chapter 13, the debtor filed a motion to enforce the discharge order and direct the Government to cease all collection efforts. The Government responded to the debtor’s motion to enforce and filed a motion under Federal Rule 60(b)(4) to set aside the confirmation order as void.
The Court’s Ruling
Whether the confirmation order is void was the focus of the Supreme Court’s ruling. For a judgment to be void, there must be some jurisdictional issue (the court does not have the power to hear the matter) or a due process issues (the creditor did not receive sufficient notice to defend the matter). The Supreme Court states that there was no jurisdictional error or due process violation so the confirmation order providing for a discharge on student loans is binding on the creditor.
Normally, a Chapter 13 debtor receives a discharge for all his or her debts except in some situations. One example where a Chapter 13 debtor would not receive a discharge is under 11 U.S.C. §523(a)(8) – the student loan exception. Some student loans are excepted from discharge and such exception is self-executing. The caveat is that the Court can find that such nondischargeable student loans create an undue hardship for the debtor and can be discharged. According to the Bankruptcy Rules, such action requesting a finding of undue hardship is brought by the debtor in an adversary proceeding upon summons and complaint.
The Supreme Court found that the undue hardship provision in the Bankruptcy Code is not a limitation on the bankruptcy court’s jurisdiction but only a precondition to obtaining a discharge order. Also, the Court stated that the Bankruptcy Rules that require a complaint to be brought to determine undue hardship are only procedural rules and not jurisdictional rules. Therefore the confirmation order was well within the jurisdictional authority of the Bankruptcy Court and can not be determined as void.
On the positive side, the Court found that, “[g]iven the Code’s clear and self-executing requirement for an undue hardship determination, the Bankruptcy Court’s failure to find undue hardship before confirming the plan was a legal error.” Unfortunately for the Government, a legal error does not make an order void.
Going further, the Supreme Court stated that the Government’s due process rights were not violated as they had ample time to either object to the Chapter 13 plan or appeal the confirmation order. A finding of due process by the Supreme Court means that the confirmation order can not be found as void.
Where the Supreme Court said that the lower court’s ruling went too far is when they considered that any plan can be confirmed if it provides for a discharge of a non-dischargeable debt. “Failure to comply with the self-executing requirement should prevent confirmation of the plan even if the creditor fails to object, or to appear in the proceeding at all.”
What This Means To You
A debtor can put any provision in his or her plan, which may be contrary to the code (i.e. discharging a debt that is otherwise nondischargeable). This provision should prevent confirmation. However, the creditor may be bound under the order if the Chapter 13 plan confirms. If the creditor fails to object to the plan or appeal the confirmation order in a timely manner, the confirmation order whether contrary to the Bankruptcy Code or not will be binding on the creditor.
As a creditor, you will need to make a business decision whether to object or not. WWR can help guide you through the decision making process.
If you have any questions concerning this matter, please contact Ms. Beth Ann Schenz, Esq. or Mr. Milan Kubat, Esq. Beth is an associate in the Bankruptcy department located in the Brooklyn Heights office. She can be reached directly at 216-739-5645 or via email at firstname.lastname@example.org. Milan is also an associate in the Bankruptcy department located in the Brooklyn Heights office. He can be reached directly at 216-739-5647 or via email at email@example.com.
Last night, I attended the Northeast Chapter of Credit Unions meeting in Concord. It was scholarship night and the Chapter awarded 3 $1000 awards and also had the recipients speak. Additionally, they had a young man who has won awards as a young entrepreneur give a presentation. I could not help but think how terrific something like this is for the community and how it illustrates that credit unions are committed to young people.
Jill Cottone from the League was there too showing real dedication as she had to drive up from Columbus. She spoke on current league efforts to expand their free compliance programs for league members and the upcoming Zenith convention.
Of course, there were jokes about Chapter Chicken (and indeed we ate said chicken). There’s a lot of camaraderie at these meetings as well. Chapter meetings illustrate what credit unions are all about: volunteerism, community investment and helping people. In two and a half hours, you get it all.
As mentioned previously, I’m still wracking my brain for a credit union category killer product to take the place of lost revenue from the decline of overdraft services. I wrote the prior article as humor, but I really have been seriously trying to think of a concept that could help. This morning, I had an epiphany. I called a friend of mine who is a very successful businessman and economist and told him about it. He actually thought it was a good idea. This surprised me because, as a lawyer, I don’t get good business ideas very often.
Yet, I’m not sure that this concept is ready for prime time blogging, so I’m calling some credit union CEO and VPs of lending friends personally to see what they think about it first. If there’s interest and if it has legs, I’ll write more about it here later. One thing I will tell you is that it is in the credit union spirit and it’s something that credit unions could collaborate on to produce.
Filed under: foreclosure, loss mitigation | Tags: foreclosure, HAFA, HAMP, loan modifications, loss mitigation, mortgage
On April 5, 2010, the Home Affordable Foreclosure Alternative (“HAFA”) will go into effect. This new program is the Obama administration’s latest attempt to help homeowners avoid foreclosure.
HAFA is a new program that will allow borrowers to sell their home for less than the mortgage balance, commonly known as a short sale. Borrowers will receive preapproved short sale terms from their lender prior to putting the home on the market. Eligibility is limited to loans which:
- Are on a person’s primary residence
- Are originated before January 1, 2009
- Are delinquent or in imminent danger of default
- Do not exceed $729,750
- Create homeowner hardship
- The Borrower’s total monthly housing payment exceeds 31 percent of gross income
- Are serviced by Fannie Mae, Freddie Mac, or servicers who have voluntarily signed on to the HAMP program
HAFA comes as a response to the Home Affordable Modification Program (“HAMP”). According to government statistics published in January 2010, of the 3 million plus eligible loans, lenders/servicers have offered, started, or placed loans into trial or permanent modifications to 28% of eligible borrowers. HAFA is one response to the remaining borrowers who have not received a modification. Under the new program, when a borrower does not qualify under HAMP, the lender /servicer must offer a short sale in writing to the borrower within 30 days, and the borrower must respond within 14 days. There are monetary incentives for lenders/servicers who participate in the program. The program is set to expire December 31, 2012.
Critics of the program are concerned with the potential for fraud. To combat such fraud, lenders will require the borrowers, realtors, and buyers to sign affidavits that the sale is an arm’s length transaction. Other concerns include investors making low offers to lenders, buying the property and then selling the property on the open market at a higher rate. To avoid this scheme, lenders can require that offers only come from licensed real estate agents.
HAFA brings more change to the growing loss mitigation industry. Lenders and servicers must keep abreast of the various programs, as well as prepare for the upcoming changes. Weltman, Weinberg & Reis Co., L.P.A. will continue to monitor this situation and provide updates with respect to loss mitigation issues.
If you have any questions on this information, please contact Jennifer M. Monty, Esq. or Matthew G. Burg, Esq. Jennifer and Matt are both Associates in the Litigation & Defense department in the Cleveland office of Weltman, Weinberg & Reis Co., L.P.A. Jennifer can be reached at (216) 685-1136 or via e-mail at firstname.lastname@example.org and Matt can be reached at (216) 685-1111 or email@example.com.
Today’s blog comes courtesy of Matt Davis, an advisor specializing in implementation.
I’m not a fan of Chinese restaurants. A big part of that, of course, is the fact that I don’t particularly enjoy Chinese food. A secondary reason (and the theme of this post) is that typical Chinese restaurant menus stress me out.
4. Shrimp Egg Roll
74. Chicken Lo Mein
117. Beef Egg Foo Young
192. Moo Shu Pork
I start feeling the stresses of choice overload well before I get to 232. Szechuan Pork. How many choices do we need? There should be four category columns with five to ten choices in each: Base (meat or vegetable), Sauce, Noodle, Toppings/Add-ons. Think Macaroni Grill’s “Create Your Own Pasta.” Just because there are thousands of combinations of your core ingredients, doesn’t mean you need to create an exhaustive menu of those items.
We do the same thing with credit union accounts. Silver Checking. Gold Checking. Rewards Checking. Platinum Checking. Titanium Checking. Youth Checking. Free Checking. Super Free Checking. Freer Than Free Checking. Hockey Checking. Try explaining those categories in the three minutes you have a potential member’s attention.
Different people have different tastes and different needs, make no mistake. Generally, however, the features that make up that universe can be divided into a much smaller choice set. Even as concise and consistent as McDonald’s menu is, I regularly see customers stare at it as if it were A Tale of Two Cities.
Want to be innovative this year at your credit union? Pare your menu of account choices back as far as you can. Better yet, create a membership account suite, which is made up of a savings account, a checking account, and a debit card. Want to join our credit union, you must open the membership account suite. Not interested? Sorry it didn’t work out.
Focus on creating a small core of remarkable services that fits the needs of the members you are trying to attract. Worry about the people you are right for, and forget those that don’t fit that description.
We can’t be all things to all people, so why do we try to create a separate account for each of them?
Read more about Matt here.
Courts continue to remind businesses that, when it comes to records retention and the conduct of discovery, “[t]hose who cannot remember the past are condemned to repeat it.” This most recent warning came from District Judge Schira Scheindlin, in an eighty-seven page opinion in The Pension Committee of the University of Montreal Pension Plan, et al. v. Banc of America Securities, LLC, et al., in the United States District Court for the Southern District of New York, Case No. 05 Civ. 9016 (SAS), detailing the duty to preserve records and the harsh sanctions for failing to do so.
During the discovery process of this case, substantial gaps were found in the plaintiffs’ document productions. Therefore, several defendants moved for sanctions, alleging that the plaintiffs failed to preserve and produce documents and electronically stored information.
From the outset, the Court emphasized that the case did not present any egregious examples of the plaintiffs purposefully destroying evidence. Rather, the Court characterized the plaintiffs’ conduct as the failure to timely institute written litigation holds, and as engaging in careless and indifferent collection efforts after the duty to preserve arose. The Court found that the plaintiffs’ conduct resulted in the destruction of evidence, which justified relatively harsh sanctions.
Before determining the appropriate sanction, the Court defined negligence, gross negligence, and willfulness in the context of tortuous conduct in records preservation and discovery. The Court then found the plaintiffs’ conduct to constituted “gross negligence,” and specifically identified the following unacceptable conduct:
(1) Failure to issue a “litigation hold” on documents when there is a duty to preserve.
(2) Failure to identify the key players and make sure their records are preserved.
(3) Failure to stop the deletion of e-mail and failure to preserve backup tapes that are the only source of relevant information.
(4) Failure to supervise document preparation efforts.
The Court issued monetary sanctions, including attorneys’ fees, as to all plaintiffs, both those which were negligent and those which were grossly negligent in their preservation and production of records. Further, as for the plaintiffs which “conducted discovery in an ignorant and indifferent fashion,” and were found to be grossly negligent, the Court also ordered a very strongly worded adverse jury charge which, if the case proceeds to trial, will result in the jury being instructed that they are to presume that evidence was destroyed by the plaintiffs and to further presume that the destroyed evidence would have been favorable to the defendants.
The importance of having, reviewing and complying with a business’s record retention policy is underscored by this opinion, and is highlighted each time a court sanctions a company for failing to preserve and produce its records.
Weltman, Weinberg & Reis will continue to monitor trends in electronic discovery, records retention policies and compliance, and we are available to discuss these issues with you, review your company’s records retention policies and procedures, and represent your interests in litigation.
If you have any questions on this information, please contact Michael F. Schmitz, Esq. Michael is an Associate in the Litigation & Defense department in the Cleveland office of Weltman, Weinberg & Reis Co., L.P.A. Michael can be reached at (216) 685-1106 or via e-mail at firstname.lastname@example.org.
In the spirit of crowd-sourcing and the social media community, I have something that you can help me with if you wish. Years ago, I wrote a Q and A piece for the Ohio Bar Association called: Member-Owned Credit Unions Offer Banking Alternatives. Visit the link to read the full article. It was last updated in 2008 and the OBA has asked me to update it again. The Ohio Credit Union League helped me with it when it was first published and I will ask for their input again. However, if you have any suggestions, dear readers, please leave a comment below and I will make every effort to integrate those comments into the revised version. When I told the OBA rep that credit unions are getting a lot of press right now from luminaries such as Suze Orman, she thought they the article could be re-released through their local news outlets throughout the State of Ohio. I think that you would agree that anything that spreads the word about credit unions is a good thing!