About Me
Craig D. Robins, Esq. New York Bankruptcy Attorney, Longisland bankruptcy attorney

“ Craig D. Robins, Esq., has been a practicing Long Island bankruptcy attorney for over twenty-four years ”

Craig D. Robins, Esq.

Archive for March, 2011

Steven J. Baum Foreclosure Firm Being Pursued with Same Laws Used to Go After Organized Crime

Posted on Wednesday (March 30, 2011) at 11:55 pm to Current Events
Foreclosure Defense
Mortgages & Sub-Prime Mortgage Meltdown

Steven J. Baum is in the Fire

Steven J. Baum is in the Fire

Written by Craig D. Robins, Esq.

In March 2010, I wrote a rather detailed review of the Baum law firm as they had gained a significant amount of notoriety for not only being the largest foreclosure firm in New York but also the one most plagued by allegations of foreclosure misconduct.  See Has Steven J. Baum, P.C. Served You with Foreclosure Papers? 
I then provided an update with my second post about Baum in which I compared Baum, as the Foreclosure King of New York, with David J. Stern, a former foreclosure king in Florida who tumbled from grace amid robo-signing scandal.  See:  Is Steven J. Baum, the Foreclosure King of New York, Worth $50 Million?
Update on the Baum Firm — Foreclosure Mill Extraordinaire
In this post I will now provide you with an additional update on some of the ongoing trials and tribulations of the Steven J. Baum foreclosure mill. 
If you have been served by Baum in a foreclosure case, are in the process of litigating against that firm, or are simply intrigued, as I am, about this monster of a foreclosure factory, then read on.
In a nutshell, the firm has preserved its reputation for engaging in shoddy and improper foreclosure litigation as indicated in a host of court opinions, lawsuits and investigations.
Since my prior post about the Steven J. Baum firm, Baum has been hit with two federal class action suits, he has been sanctioned, and a Long Island judge described his conduct as “out of the Twilight Zone.”
new-york-times-cover-january-11-2011-with-article-about-foreclosure-lawyersI Succeed In Getting Baum Foreclosure Dismissed — and Case is Discussed in New York Times Cover Story
I was also successful in having the Suffolk County Supreme Court toss out a foreclosure case that Baum had brought against one of my clients and this was just reported in the New York TimesCraig Robins Mentioned in New York Times Cover Story About Sloppy Foreclosure Lawyers Who Represent Lenders.
In that case, Baum represented mortgagee Wells Fargo, who it turned out failed to have standing to bring the case in the first place.
The Campbell v. Baum Class Action Suit
In August, a federal class action suit was filed against the Baum firm alleging that tens of thousands of New York State homeowners were victims of foreclosure fraud orchestrated by the Baum law firm.
The case, Connie Campbell v. Steven Baum, MERSCORP, Inc., et. al., is pending here in the Eastern District of New York.  The case alleges that the Baum firm engaged in a bevy of improprieties worthy of being sued under RICO, which is the federal criminal statute designed to permit the authorities to punish members engaged in organized criminal enterprises. 
The RICO statute also permits victims of organized crime to seek redress in a civil suit for acts that are orchestrated as part of a criminal enterprise.   This class action involves that type of civil suit.  RICO’s original intended use was to prosecute the Mafia.
MERS Allegations Are a Chief Component of the Campbell Class Action Suit
In the suit, Ms. Campbell, who lost her Brooklyn home in a foreclosure proceeding that the Baum firm had brought, alleged that the foreclosure filings were false. 
She claimed that Baum sued her, claiming that HSBC was the owner of the mortgage.  Yet, Ms. Campbell asserts that the loan was never assigned to HSBC, but instead, was assigned to MERS.
MERS is a very controversial, privately-held electronic registry that does not really own a mortgage, but tracks servicing rights and ownership. 
I previously wrote about special defenses that a homeowner can assert to defend a foreclosure action involving a MERS mortgage.  See:  A New Powerful Mortgage Foreclosure Defense — Compliments of MERS.
In essence, Ms. Campbell alleged that any MERS mortgagee does not have standing to sue, and the Baum firm was complicit in bringing improper foreclosure suits.
She also alleged that the Baum firm was in cahoots with MERS with the robo-signing of various foreclosure documents.
Current Status of the Campbell v. Baum Class Action Suit
Since New York City attorney Susan Chana Lask commenced the suit in August, 2010, she amended it twice.  You can see a copy of the Second Amended Campbell v. Baum Class Action Complaint.   The case is Campbell v. Baum, 10-cv-3800.
Since the class action started half a year ago the parties have been bitterly bickering about exchanging documents and information in the discovery phase of the suit.  This has resulted in Ms. Lask having to make a number of applications seeking to have the court determine that Baum’s discovery requests were unreasonably burdensome. 
In other words, she has claimed that Baum is papering her to death — a grossly unfair tactic that is used to abusively smother and sidetrack an opponent while draining their resources by serving an excess of papers and demands, thereby creating unnecessary legal work.  But looking at Baum’s less-than-stellar history, perhaps that could have been expected.
Baum also engaged in what many believe to be the dirtiest of dirty pool — he counter-sued Ms. Lask, claiming he defamed her by discussing the suit.  Yet, in interviews that she gave to the press, she insisted that everything she said was true, based on various court decisions against Baum.
Another Baum Class Action Suit:  Menashe v. Baum
More than one attorney believes Baum has violated the rights of many.  Baum must now defend against another class action suit that is now pending in the Central Islip Courthouse of the U.S. District Court for the Eastern District of New York.
In November 2010, Jacob Manashe filed a class action against the Baum firm, alleging that Baum was illegally charging homeowners for attending settlement conferences.
This case is Menashe v. Steven J. Baum P.C., 10-cv-5155.  The attorney for that case is New York City attorney Randall S. Newman.
Mr. Newman sent me a copy of the complaint which you can view for yourselves.  Click Menashe v. Baum federal class action complaint.  
Baum Fined and Sanctioned in Nassau County Case Containing 50% Falsities
It seems that New York courts regularly criticize the Baum firm for shoddy, sloppy and problematic foreclosure practices.  Last year, Baum’s firm foreclosed on a Garden City home owned by Pal Raia.
After Baum succeeded in conducting a foreclosure sale, he sought to evict the homeowner.    However, Baum neglected to properly identify the mortgagee owner that took over the property.
Nassau County District Court Judge Scott Fairgrieve dismissed the proceeding in November 2010, stating, “Falsities were contained in five paragraphs out of only ten paragraphs in the entire petition.”
In this case, Baum’s firm was ordered to pay about $15,000 in legal fees and costs, on top of a $5,000 fine.
Baum Investigated for Overcharging
I’ve read reports that the Baum firm is being investigated by New York’s Attorney General for overcharging, filing false documents and representing parties on both sides of a mortgage transfer.
Judge Arthur M. Schack Twilight Zone Case with Steven J. BaumThe Judge Schack Attack Against Baum — Not Only in the Twilight Zone
Arthur M. Schack, a New York State Supreme Court Judge sitting in Brooklyn, has been especially vocal with his criticisms of the Baum firm.
In one case he called the firm’s explanations “so incredible, outrageous, ludicrous and disingenuous that they should have been authored by the late Rod Serling,” referring of course to the old, black & white classic TV show, theTwilight Zone (which I have recently been watching on the Syfy channel) about science fiction and the supernatural.
That case involved another improper mortgage assignment.  Judge Shack stated, “Steven J. Baum PC appears to be operating in a parallel mortgage universe, unrelated to the real universe.”
Judge Schack, writing in a manner that makes reading his decisions a fun and enjoyable exercise, continues, “Rod Serling’s opening narration, to episodes in the 1961 – 1962 season of The Twilight Zone, could have been an introduction to the arguments presented in support of the instant motion by plaintiff’s counsel, Steven J. Baum, P.C. – ‘You are traveling through another dimension, a dimension not only of sight and sound but of mind. A journey into a wondrous land of imagination. Next stop, the Twilight Zone.'”
Read Judge Schack’s Twilight Zone case for yourself:  HSBC Bank USA, N.A. v. Yeasmin, 2010 NY Slip Op 50927(U).
Judge Arthur M. Schack has pursued Stephen J. Baum for various foreclosure irregularitiesIn Another Case, Judge Schack Accuses Baum of Engaging in a Conflict of Interest
In a foreclosure case last year pending in the Kings County Supreme Court, Judge Schack admonished Baum for representing two parties in the same action, which is a conflict of interest.
In the case, Lasalle Bank, N.A. v. Smith, Judge Schack denied the mortgagee’s motion for a judgment of foreclosure that the Baum firm had brought on the ground that they failed to provide an affidavit of facts executed by an officer of the mortgagee who had knowledge of the facts.
However, Schack also criticized the Baum firm for simultaneously representing both first and second mortgagees in violation of 22 NYCRR 1200.24 of the Disciplinary Rules of the Code of Professional Conduct since Baum was unable to demonstrate that his clients consented to such representation after full disclosure of the risks involved.  The slip opinion was rendered on March 22, 2010.
Baum in Litigated Divorce Proceeding with Spouse
Upon searching for various Baum foreclosure cases, one other interesting case turned up:  Baum v. Baum
It appears that Baum is involved in a heavily litigated divorce case pending in upstate New York before Judge John O’Donnell who recently ordered Baum to pay pendente lite support.
More About Baum to Come
I’ve also prepared a rather lengthy and detailed list of various decisions that New York judges have issued in various Baum foreclosure cases, most of which have highlighted various irregularities and sloppy conduct on the part of the Baum firm.
I am hoping to assemble that for a future blog post.
This Post About Steven J. Baum Is Merely a Follow-Up — See My Prior Posts for Lots More on Baum’s Bumbling
If you think the above is something, you must see my first Baum Post from 2010 About the Stephen J. Baum Foreclosure Mill
Print This Post Print This Post
Be Sociable, Share!

Debtors Denied Discharge in High-Debt Case for Failing to Report Info on Petition

Posted on Tuesday (March 29, 2011) at 11:55 pm to Bankruptcy Crime
Bankruptcy Tips Consumers Should Know
Recent Bankruptcy Court Decisions

Getting a fresh financial start in bankruptcy is for the honest debtor.  Written by Craig D. Robins, Esq.
A decision from the 7th Circuit Court of Appeals last week illustrates the importance of providing accurate information in the bankruptcy petition.  In that case,  debtors from Michigan failed to do so and were denied a discharge.  (Stamat v. Neary, 7th Cir. Mar. 24, 2011).
This Bankruptcy Filing Was Far From Ordinary
Dr. and Mrs. Stamat of Illinois filed a high-debt Chapter 7 bankruptcy case in July 2007.  Dr. Stamat is a medical doctor who operates a pediatric clinic.  The wife owns a medical billing company.  They sought to discharge over $1.5 million in debt.
After being examined, the trustee alleged that the debtors failed to list numerous assets and transactions including past business interests, two limited partnerships, a $10,000 law suit settlement payment, and $90,000 obtained from a refinance.  The trustee also alleged that they misreported their 2006 income.
Accordingly, the trustee sought to deny their discharge by bringing an adversary proceeding under Bankruptcy Code section 727, arguing that the debtors concealed estate assets with intent to defraud their creditors, fraudulently made false statements under oath, and failed to satisfactorily explain the loss of assets — some pretty serious charges.
The bankruptcy court agreed with the trustee, denying the debtors a discharge.  The debtors unsuccessfully appealed to both the District Court and the Court of Appeals, who held that the debtors made numerous material omissions which displayed a reckless disregard for the truth. 
Debtors Were Far From Candid and Honest
The debtors indicated in their petition that their 2006 gross income was $53.000.  However, their 2006 tax return indicated that Dr. Stamat grossed $265,000 from his medical practice and his wife grossed $22,000 from her billing business.  That’s quite a disparity.
In addition, the debtors failed to disclose past investment and business interests, as well as ownership interests in various limited partnerships, which information they were required to list in the Statement of Financial Affairs, which is one of the schedules of the bankruptcy petition.
The debtors also refinanced their home twice in the two years before filing the bankruptcy petition, receiving over $90,000 in cash, and they failed to report that as well.
Bankruptcy Relief is for Honest Debtors
The decision underscores a basic tenet of consumer bankruptcy — that an honest debtor is entitled to a fresh new financial start.  Honesty and candidness are paramount.
The Court stated that the debtors knew or should have known that the information they provided was inaccurate and that the cumulative effect of their false statements was material.  This established a pattern of reckless indifference to the truth.
What Can We Learn From This Case?
First, the debtors in this case are both intelligent and educated.  They ran a medical practice.  So they were smart enough to know what they were doing.  When it came to their bankruptcy petition, they made not one omission, but many.  It appears that they did so to deceive the court.
If the debtors had merely neglected to schedule one particular asset, or if they merely provided inaccurate information about their income, they likely would have been able to coast, assuming that they were immediately forthright about amending their schedules to provide accurate information.
However, in this case, the debtors’ failure to provide accurate information was so wide-spread, that it was impossible for the court to overlook, as the only reasonable conclusion was that the debtors intentionally acted to withhold important information.
The bottom line is that it is important to be as accurate as possible when disclosing information about your financial situation.  Failure to do so can result in having the court deny your dischage.
Print This Post Print This Post
Be Sociable, Share!

Agape World Ponzi Victim, Forced to File Bankruptcy, Later Sued by Agape Trustee

Posted on Monday (March 28, 2011) at 2:00 am to Bankruptcy and Society
Bankruptcy Crime
Bankruptcy Practice
Chapter 7 Bankruptcy
Current Events

Victim of Ponzi Scheme Sued by Bankruptcy TrusteeWritten by Craig D. Robins, Esq.
Losing money in a Ponzi Scheme is bad enough.  Being forced to file for bankruptcy relief because of these losses is even worse.  But how about getting your bankruptcy discharge, and then being sued by the bankruptcy trustee overseeing the failed Ponzi business?
That’s exactly what happened to one of our clients last month.
Agape World, Inc. Lands in Bankruptcy Because of Ponzi Fraud
In February 2009, several creditors forced Agape World into an involuntary Chapter 7 bankruptcy in the Central Islip Bankruptcy Court, here on Long Island in the Eastern District of New York.
I previously wrote that Ken Silverman was Appointed Chapter 7 Trustee in Agape World Case .  Around that time, it was discovered that Agape president Nicholas Cosmo  perpetrated a Ponzi scheme involving several hundred million dollars.
Many Long Island consumers lost their life savings after falling victim to his scheme.  As a result, many of them filed bankruptcy cases themselves.
We recently represented one of them and filed his Chapter 7 bankruptcy petition last year.  The unfortunate debtor lost hundreds of thousands of dollars.  Our client’s bankruptcy case itself was unremarkable and was routinely processed and closed as a no-asset case.  The client got his discharge last month.
Out of the blue, Ken Silverman, the Agape World trustee, brought an adversary proceeding in the Agape World bankruptcy case against our client.  He alleged that our client had received some distributions from Agape shortly before Agape was put into an involuntary bankruptcy, and that these payments now had to be returned to the Agape bankruptcy estate under several different legal theories.
We had not even scheduled Agape as a creditor in our client’s bankruptcy as we had no idea that there was any potential liability to them. 
Trustee Recognizes Bankruptcy Discharge
In response to the adversary proceeding, we contacted an attorney in the trustee’s office and explained the circumstances of our client’s bankruptcy filing.  It appeared that the trustee was totally unaware of our client’s prior bankruptcy as we had not included Agape or its trustee as a potential creditor.
We were concerned that the trustee would nevertheless seek to go forward with the adversary proceeding because the debtor had not listed Agape in the schedule of creditors.
However, we advised the trustee that failure to schedule a creditor in a no-asset Chapter 7 case does not, in and by itself, prevent the debtor from discharging that debt.  I previously wrote about Inadvertently-Omitted Creditors in Chapter 7 Bankruptcy Cases
Much to the trustee’s credit, he acknowledged that any possible liability of our client to Agape was discharged by virtue of the prior bankruptcy, and within 24 hours of advising his office of our client’s bankruptcy discharge, he withdrew the adversary proceeding.
Print This Post Print This Post
Be Sociable, Share!

Bankruptcy Trustee Gives Up Trying to Sell Former Slave’s Land — Forty Acres and a Mule

Posted on Wednesday (March 23, 2011) at 8:30 pm to Bankruptcy and Society
Bankruptcy Exemptions
Chapter 7 Bankruptcy

forty-acres-and-a-muleWritten by Craig D. Robins, Esq.
Every so often we file a bankruptcy case that has a rather unusual asset – and unusual assets sometimes lead to unusual dispositions by the trustee.
Almost two years ago, in 2008, we filed a Chapter 7 bankruptcy petition in the Central Islip Bankruptcy Court here on Long Island that was routine in every respect – except one.  The debtor had an unusual asset which the trustee thought he could sell for the benefit of creditors.
Our client, an African-American, had inherited some property 30 years ago that had been in his family for quite some time.
Forty Acres and a Mule
Apparently, the debtor’s great grandfather was a slave in Virginia and upon his emancipation around 1865, he was given some unimproved property in that state – what was then referred to as “forty acres and a mule.”
According to Wikipedia, 40 acres and a mule was a practice in the 1860’s of providing farmable land to Black former slaves who became free as Union armies occupied areas of the Confederacy.
The combination of the land, together with Army mules, was meant to provide a sound start for a family farm.
40 acres (16 hectares) was a standard lot size for rural land, being a sixteenth of a square mile.
Former Slave’s Property Handed Down to Debtor
Over the ensuing years, the great grandfather and his descendants carved up the property several times and transferred it down family lines.
When the debtor inherited some of this property about 30 years ago from his parents, it  consisted of two unimproved lots, one about two acres in size, and the other about four acres.  Other family members owned adjoining parcels.  The trustee assumed that six acres of property had to be worth something.
However, the property was located in a very rural area in Southern Virginia consisting primarily of farms and vacant, unused land. Neither of the debtor’s parcels abutted a roadway; there were no structures on or near the land; and there was no utility service to the land.  Basically, the property had very little value.
Nevertheless, the property was not exempt under any statutory authority.  Since the debtor did not reside on the land, he was unable to assert the homestead exemption to protect it, and since the bankruptcy case was filed before New York’s exemption statutes changed a few months ago, the debtor could not utilize any wildcard exemption.
The debtor had hoped to keep the property for sentimental reasons, but realized that cooperating with the trustee and obtaining a discharge of his existing debts was more important.
Nevertheless, the debtor knew that there was very little demand for such lots as there were many of them, and hoped the trustee would just abandon it.
Bankruptcy Trustee Tries to Sell Former Slave’s Land
The Chapter 7 bankruptcy trustee, known in local circles for being rather aggressive about pursuing assets, would do no such thing.  The trustee brought an application to retain a local Virginia real estate broker to list and sell the property.
I initially tried to persuade the trustee, who I am friendly with, to abandon the property as having no value to the bankruptcy estate.  However, the trustee was somewhat adamant so I assured him that the debtor would fully cooperate with him.
The broker tried to sell the parcels for two years with no success.  The trustee did not give up.  Earlier this month, he fired the broker and brought an application to retain another one.  That application was granted just yesterday.
The Trustee Gives Up
Today, quite unexpectedly, the trustee filed a “no-asset report” – just 24 hours after getting court approval to retain a new real estate broker.
By filing this no-asset report, otherwise known as a “Chapter 7 Trustee’s Report of No Distribution,” the trustee advised the bankruptcy court that there were no assets to be distributed and that the case should be closed as having been fully administered.
What happened in 24 hours?  I haven’t spoken to the trustee yet, but my guess is that the trustee finally realized what the debtor had known all along – that the property had very little extrinsic value and that it would be very difficult to sell.   Sometimes Debtors Can Keep Non-Exempt Assets in Chapter 7 Bankruptcy Cases .
Out of curiosity I called the broker who acknowledged that this property would certainly be a hard-sell.
Non-Exempt Real Estate Stays in the Family
Consequently, the debtor received his discharge (the court actually granted this over two years ago) and he was able to keep all of his assets – including the land remaining from his great grandfather’s emancipation from slavery – forty acres and a mule.
About the Artwork:  The image is a painting by renowned Atlanta Landscape and Wildlife artist Leonard M. DeFoor.  He has some great work!  Check out his website.
Print This Post Print This Post
Be Sociable, Share!

Update on Ponzi Scheme Attorney Who Committed Suicide, Leading to Involuntary Bankruptcy for his Law Firm

Posted on Friday (March 11, 2011) at 3:00 am to Bankruptcy and Society
Bankruptcy Crime

Ponzi scheme on Long Island causes involuntary bankruptcy 
Written by Craig D. Robins, Esq.
In November I wrote about a Long Island attorney, Jay Korn, who, on March 24, 2010, had just jumped eight stories to his death amidst an investigation into whether he fleeced millions in a Ponzi scheme.
He jumped from the roof of his the Hempstead building where his law office was located at 50 Clinton Street.
That led several investors in the scheme to put Korn’s firm, Korn & Spirn, into an involuntary Chapter 7 bankruptcy.
See:  Korn & Spirn — Involuntary Bankruptcy Just Filed Against this Beleaguered Long Island Law Firm  for a post that contains a fairly detailed discussion of the situation, the bankruptcy case, and an explanation about involuntary bankrutpcy.
Nasssau County D.A. Completes Investigation
The Nassau County District Attorneys Office just concluded, after examining Korn’s financial affairs for a year, that Korn was solely responsible for the Ponzi scheme.
In a statement, Nassau County District Attorney Kathleen Rice said, “The credible evidence did not establish that anyone other than Jay Korn was involved in the alleged criminal wrongdoing.”  She added that the D.A. was closing the case.
The Involuntary Bankruptcy Case Continues
The bankruptcy case, which had been filed in November, was assigned to Chapter 7 bankruptcy trustee, Andrew M. Thaler, who is in the process of investigating the decedents financial affairs to ascertain if there are any assets to liquidate for the beneift of creditors, who primarily consist of scammed investors.
The trustee may likely adopt some of the legal theories currently used by the trustee in the Bernie Madoff Ponzie scheme case to “claw back” from those investors who benefited from the scheme.
So far, about $13.1 million in claims have been filed in the involuntary bankruptcy case.  However, reported assets so far consist of a mere $2,500 representing funds that were in the law firm’s bank account.
How Did Korn Defraud His Friends and Clients?
Korn told friends and clients that he was administering a real estate investment program and he promised to pay investors returns of 12 to 15 percent per year.
As an attorney, Korn also represented parties in real estate transactions.  In one of those transactions, he represented a Manhattan doctor who was purchasing a condo.  Two weeks before Korn committed suicide, the doctor wired him $2.5 million for that real estate purchase.  The doctor has not seen the money since.
Long Island Bankruptcy Attorney David Baram, a colleague of mine who was with me at the National Association of Consumer Bankruptcy Attorneys Workshop in Puerto Rico last fall, represents Arthur Spirn, who was Korn’s law partner.  Spirn says he was a victim of his Korn. 
The Nassau County D.A. has not pursued him at all and appears to have been cleared by the D.A.’s investigation.
Print This Post Print This Post
Be Sociable, Share!

Craig D. Robins and Long Island Bankruptcy Blog Mentioned in Washington Post Article About Judges Becoming Intolerant of Mortgage Lenders in National Mortgage Debacle

Posted on Thursday (March 10, 2011) at 6:00 pm to Foreclosure Defense
In The News

washington-post-300x270Written by Craig D. Robins, Esq.
I previously mentioned that I’ve been a little slow in writing posts about some national-level periodicals that have quoted me on various bankruptcy and foreclosure issues.
I’m pleased to say that on November 9, 2010, the Washington Post published an article written by their staff reporter Ariana Eungung Cha, who has been regularly covering national news about foreclosure improprieties committed by big mortgage lenders and their foreclosure attorneys.
The article discussed the recent revelation last fall that many foreclosure cases across the nation were based on improperly executed robo-signed mortgage documents.   
As New York had become a hotbed of cases in which judges have expressed their frustration with mortgage lenders who are reckless with their litigation, she asked for my comments.
She also highlighted the noteworthy and highly-publicized decision of Long Island Judge Jeffrey Arlen Spinner, who tossed out a mortgage because he felt that the mortgage lender wasn’t playing fair with its legal obligation to work out a resolution with the homeowner in good faith.  See Judge Cancels Mortgage Due to Mortgagee’s Shocking Behavior in Long Island Foreclosure Action .
 Long Island Bankruptcy Attorney and Foreclosure Defense Lawyer Craig D. Robins, Esq. Quoted in Washington Post 
Click to see “Some Judges Chastise Banks Over Foreclosure Paperwork” on the Washington Post website, or read the the article below:  
Some Judges Chastise Banks Over Foreclosure Paperwork
Washington Post Staff Writer
Tuesday, November 9, 2010


EAST PATCHOGUE, N.Y. – A year ago, Long Island Judge Jeffrey Spinner concluded that a mortgage company’s paperwork in a foreclosure case was so flawed and its behavior in negotiations with the borrower so “repugnant” that he erased the family’s $292,500 debt and gave the house back for free.

The judgment in favor of the homeowner, Diane Yano-Horoski, which is being appealed, has alarmed the nation’s biggest lenders, who say it could establish a dramatic new legal precedent and roil the nation’s foreclosure system.

It is not the only case that has big banks worried. Spinner and some of colleagues in the New York City area estimate they are dismissing 20 to 50 percent of foreclosure cases on the basis of sloppy or fraudulent paperwork filed by lenders.

Their decisions illustrate the central role lower court judges will have in resolving the country’s foreclosure debacle. The mess came to light after lawsuits and media reports showed lenders were routinely filing shoddy or fraudulent papers to seize the homes of borrowers who had missed payments.

In millions of cases across the United States, local judges have wide latitude to impose sanctions on banks, free homeowners from their mortgage debts or allow the companies to proceed with flawed foreclosures. Ultimately, the industry is likely to face a messy scenario – different resolutions by courts in all 50 states.

The foreclosure dismissals in this area of New York have not delivered free homes for borrowers. With so much at stake, lenders in this part of New York are aggressively appealing foreclosure dismissals, which is likely to keep the legal system bogged down, foreclosed homes off the market, and homeowners like the Yano-Horoski family in legal limbo for years.

“We believe the Yano-Horoski ruling, if allowed to stand, has sweeping and dangerous implications for the entire mortgage lending industry,” said OneWest Bank, the family’s mortgage servicer.

The situation in Suffolk and Nassau counties on Long Island and Kings County in Brooklyn- which have among the highest rates of foreclosure in the state and where the 81 judges handling foreclosures have become infamous over the past few years for scrutinizing paperwork for errors – provides a window into how the crisis could unfold across in the country.

While the level of tolerance for document mistakes varies from judge to judge, the group as a whole has a reputation for ruling against mortgage companies when paperwork issues or other problems arise. At least one bank, J.P. Morgan Chase, requires document processors to separate foreclosures cases from these three counties from those in the rest of the country. A high-ranking executive of the company is specially assigned to sign off on the area’s foreclosure filings.

Judge Dana Winslow of Nassau County says he’s thought a lot about why judges in his area are more apt to question filings. He said it comes down to one thing: Lack of trust for Wall Street. In this region, judges have seen a lot of inaccurate filings from the financial sector.

Trust “of the lending institutions and Wall Street has eroded in some areas of the country more than others,” Winslow said.

Craig D. Robins, a foreclosure defense attorney who authors the Long Island Bankruptcy blog, said of the Yano-Horoski case: “I think we’re going to see more decisions like this across the country. Many judges are finding their court calendars clogged with cases that have all these flaws in them that never should have been brought in the first place or should never have been brought without more due diligence.”

Going forward, mortgage companies trying to foreclosure in the state of New York will face stiffer requirements. On Oct. 20, the state’s chief judge said attorneys for lenders will have to vouch personally for the accuracy of documents.

“We can’t have the process being a fraud,” New York State Chief Judge Jonathan Lippman said in announcing the new procedure. “It has to be real and based on credible information.”

Even before Lippman’s order, however, lower court judges were already raising questions about faulty paperwork in foreclosures.

On June 17, for example, Judge Karen Murphy of Nassau County ruled that Wachovia Bank lacked standing to foreclose on a home because the document used to prove ownership of the mortgage was incomplete.

On Sept. 21, Judge Peter Mayer of Suffolk County delayed a foreclosure by Ally Financial’s GMAC mortgage unit after noticing that the paperwork transferring the mortgage to the bank was dated two days after the foreclosure was initiated.

And on Oct. 21, Judge Arthur Schack of Kings County dismissed a OneWest foreclosure motion because the bank had not adequately documented how the mortgage had been sold and resold to investors. He also questioned why the employee who signed many of the documents claimed to be a vice president of several different mortgage companies at the same time.

In a different case in May, Schack ruled that HSBC Bank could not foreclose on a home because the paperwork that assigned the mortgage to HSBC from the original lender, Cambridge, was “defective.”

That didn’t mean the borrower, Lovely Yeasmin, a 28-year-old cashier who immigrated from Bangladesh, got her three-story townhouse in Brooklyn’s Bushwick neighborhood for free. Wells Fargo, the mortgage servicer for HSBC, has not appealed the case. Instead, it has offered to temporarily lower her monthly payment from $4,700 to $3,000.

Yeasmin’s eldest brother, Mohammed Parpez, 35, said that before the judge’s order, Wells Fargo was resistent to a loan modification. “The banks are crooks. They tell everyone they are trying to help people like us, but they are really doing the opposite,” Parpez said.

Tom Goyda, a Wells Fargo spokesman, said that although the company “disagrees with the court’s findings,” it is continuing to try to work out a longer-term solution with the family.

Members of the Yano-Horoski family said they struggled similarly to get their lender to modify their loan after Greg Horoski fell ill in 2005 and his online business selling specialty dolls suffered. After he underwent a triple bypass surgery, two stents and two hip replacements, he and his wife, Diane – who teaches an online English composition course – found themselves unable to pay the bills.

Despite his pleas, Horoski said, he failed to get OneWest to come to an agreement, even though he became able to pay the debt after his company’s sales picked up.

In his November 2009 ruling, Judge Spinner of Suffolk County blasted OneWest for negotiating with an “opprobrious demeanor and condescending attitude.” He also cited the bank’s “duplicity” in offering a forbearance agreement with a deadline that had already passed and for presenting contradictory paperwork claiming different amounts for what the family owed.

With their case under appeal, the Yano-Horoskis now find themselves in a tricky position, wary of putting more money into a house that an appeals court could take away from them. While the other houses on their quiet suburban street are meticulously maintained, their front-porch light remains shattered and the paint on their house is peeling.

They’ve shelled out $3,000 for a new hot-water system. They paid $2,000 for tree trimming after a neighbor complained. But they’ve let the $10,000 property tax bill become delinquent, and they worry an appeals court could not only reverse the earlier ruling but demand that the family pay back the mortgage for every month that has passed since.

Nonetheless, Horoski remains optimistic.

“People thought people who didn’t pay their mortgages were automatically deadbeats,” he said. “People are educated now. They are realizing all of a sudden how many hundreds of thousands of these homes that were foreclosed may have been done so with fraudulent documents.”

Print This Post Print This Post
Be Sociable, Share!

Update on Bankruptcy Attorney Sanctioned for Cheating on Credit Counseling Requirement

Posted on Saturday (March 5, 2011) at 7:00 am to Bankruptcy Crime
Issues Involving New Bankruptcy Laws
Lawyer to Lawyer

attorney misconduct in bankruptcy court caseWritten by Craig D. Robins, Esq.
Two years ago I wrote about a scandalous situation in which a consumer bankruptcy attorney in New York thought he had found a way to by-pass the requirement of having his clients go through mandatory credit counseling.  He had his secretary do it for them!
I wrote a detailed post about that attorney:  Attorney Caught Cheating on Credit Counseling Requirement .
This attorney didn’t even bother telling his clients about their obligation to do credit counseling.  He just had his secretary do it for them, in their names.  When the Chapter 7 trustee discovered this “irregularity” he told the debtor that there were serious problems with the case.
That debtor wound up coming to me for advice since he no longer trusted his attorney (and for good reason).  I took the case over and was successful in getting the former attorney to refund the debtor’s legal fees and pay my fees as well.
The U.S. Trustee then went on to investigate the attorney and sanctioned him $40,000.  In addition, the bankruptcy court suspended the attorney from practicing bankruptcy before the court for a year.  He was also required to take 16 hours of continuing legal education covering bankruptcy law, four hours of which had to be for ethics.
Here’s the update:  The New York Appellate Division for the Second Judicial District learned of the suspension and misconduct.  It disciplined the attorney by giving him a public censure.  This is the highest form of discipline short of suspension.
The attorney paid the full $40,000 sanction, took the required continuing legal education courses, and has since been reinstated to practice before the bankruptcy court.
In short, a very expensive price to pay for taking a foolhardy and highly improper shortcut around a bankruptcy law requirement.
Print This Post Print This Post
Be Sociable, Share!

Federal Bankruptcy Exemption for Loss of Future Earnings Benefits

Posted on Friday (March 4, 2011) at 3:00 pm to Bankruptcy Exemptions
Suffolk Lawyer

Exemptions used in New York bankruptcy filings. 
By Craig D. Robins, Esq.
Second Circuit Decision Emphasizes Forward-Looking Approach to Protecting Claim for Wrongful Termination
Bankruptcy exemptions have been receiving a great deal of attention here in New York lately because of the recent dramatic changes to our state’s exemption statutes.  These changes include giving debtors the option of using either the federal or New York State exemptions.
It is therefore an ideal time to discuss a recent, interesting Second Circuit decision involving a Connecticut bankruptcy case that addresses the federal exemption for protecting entitlement to a claim for lost post-petition earnings.
Debtors Had a Claim for Wrongful Termination
In Jackson v. Novak, 593 F.3d 171 (2d Cir. 2010), the husband and wife debtors, who were a psychiatrist and a psychologist, filed a typical Chapter 7 consumer bankruptcy petition in which they sought to discharge typical consumer debt.  One of the assets that they sought to exempt consisted of the proceeds of a settlement for wrongful discharge.
Prior to filing, both debtors had been employed by a health insurance company in Connecticut.  The company closed the local office and terminated the debtors’ employment about six months pre-petition.  Also prior to filing, the debtors asserted claims against the company for wrongful termination, alleging they were fired in retaliation for challenging the way certain health insurance claims were treated.
In October 2003, the debtors filed their Chapter 7 bankruptcy petition, listing the cause of action for wrongful termination. Thereafter, the Chapter 7 trustee pursued the claims against the former employer and reached a settlement of $130,000 about a year after the bankruptcy was filed.
The settlement was “to satisfy claims for future lost earnings.”   After attorney’s fees and expenses, the net proceeds to the debtors amounted to $83,000.  In essence, the settlement essentially bought out the debtor-husband’s contract, paying him an amount equal to one year’s worth of salary.  The debtor had stood to earn half of this amount prior to the time the bankruptcy was filed, and the other half, after the bankruptcy was filed.
Debtors and Trustee Litigate Over Exempting Proceeds From Claim
The debtors sought to exempt the settlement proceeds by amending their schedule of exemptions, stating that under Bankruptcy Code § 522 (d)(11)(E), which is one of the federal exemption provisions, these proceeds were exempt.
This section of the federal exemptions permits a debtor to exclude from the bankruptcy estate “a payment in compensation of loss of future earnings of the debtor to the extent reasonably necessary for the support of the debtor and any dependent of the debtor.”
The trustee objected, arguing that the proceeds were not exempt under several different theories, and the matter landed before the bankruptcy court judge who held a trial.
Bankruptcy Court Utilizes Forward-Looking Approach
The court noted that the debtor’s schedules indicated monthly income of $10,000 and monthly expenses of $14,000, a monthly shortfall of $4,000.  In addition, the court also noted that debtors retained post-petition, $6,200 in cash, and a boat and trailer; they had the use of four vehicles; they lived in a $435,000 house; they owned a one-third interest in 20 acres of land in Tennessee; and both debtors were working “without any mental or physical disabilities or restrictions.”
The bankruptcy court concluded that given the language of § 522(d)(11)(E), only earnings related to the period after the filing of the bankruptcy petition could be exempted.  Property of the estate, and a debtor’s exemption therein, is determined as of the bankruptcy petition date.  Section 522(d)(11)(E) refers only to post-petition loss of earnings, and the debtor may not exempt that portion of the settlement proceeds that provided compensation of his pre-petition loss of earnings. 
In other words, the debtor was only able to protect that compensation which he stood to earn after the petition was filed.  However, the court did not stop there.  The statute states that debtors can only exempt such payments “to the extent reasonably necessary for the support of the debtor and any dependent of the debtor.”
Accordingly, the court conducted an computational analysis.  Basically, since the debtors had a monthly shortfall of $4,000 a month, the court let the debtors keep that sum for the period of the settlement that covered the post-petition period.  That amount was $16,550.   
The debtors, who had hoped for much more, appealed to both the District Court and the Second Circuit Court of Appeals, arguing that the bankruptcy court had improperly calculated the amount.  Both appellate courts affirmed the decision of the bankruptcy court.  
The Second Circuit emphasized that the provisions of § 522(d)(11)(E) apply only to post-petition earnings and defined the term “future” as “looking forward from the date of the bankruptcy filing” and not from some previous point in time, as the debtors had argued. 
The Court of Appeals found no error in the lower courts’ reasoning that considered such factors as the debtors’ needs, including present and anticipated expenses, their assets, present and anticipated income, training and education, and “ability to earn a living” in arriving at the $16,550 figure that represented a shortfall in their income.
About the Author.  Long Island Bankruptcy Attorney Craig D. Robins, Esq., is a regular columnist for the Suffolk Lawyer, the official publication of the Suffolk County Bar Association in New York. This article appeared in the March 2011 issue of the Suffolk Lawyer. Mr. Robins is a bankruptcy lawyer who has represented thousands of consumer and business clients during the past twenty years. He has offices in Mastic, Patchogue, Commack, West Babylon, Coram, Woodbury and Valley Stream. (516) 496-0800. For information about filing bankruptcy on Long Island, please visit his Bankruptcy web site: http://www.BankruptcyCanHelp.com
Print This Post Print This Post
Be Sociable, Share!

Bankruptcy Means Test Figures Change March 15, 2011

Posted on Friday (March 4, 2011) at 1:00 am to Bankruptcy Means Test

New York Bankruptcy Means Test Figures 
by Craig D. Robins, Esq.
Important Note as of October 18, 2001:
Click link to see new article about:  Means Test figures are changing again on November 1, 2011
New Bankruptcy Means Test Criteria Going Into Effect March 15, 2011 Will Make It Easier for Consumers to Qualify for Chapter 7
The state median income figures that you need to use for the means test change periodically.  The last change was on November 1, 2010, and the change before that went into effect exactly a year ago, on March 15, 2010.  The change before that was November 1, 2009.
It seems the means test median income figures change twice a year to coordinate with the changes to daylight savings time.  I’m not sure what the analogy here is.
The changes last fall actually made it slightly harder to qualify.  However, the changes going into effect in two weeks will make it slightly easier for most Long Island consumers.
In order to automatically pass the bankruptcy means test your income must be less than the median income in the state where you live.  For New York residents, it will be slightly easier for some families to qualify for Chapter 7 bankruptcy than last year.
The Changes Can Mean Savings of Many Thousands of Dollars for Those Filing for Chapter 13 Relief
For those seeking to file for Chapter 13 bankruptcy, debtors will be fortunate in that many will be able to pay at close to a thousand dollars less each year, or even more than that.  A family of four stands to pay about $1,500 less per year, a very significant savings.  Considering that a Chapter 13 plan lasts three to five years, that can mean a savings of many, many thousands of dollars.
The figures used for the each state’s median income are based on United States Census data, and adopted by the Office of the United States Trustee.  These figures routinely change once or twice a year.  Pursuant to 11 U.S.C. § 101(39A)(B), the means test median income data is regularly adjusted, based upon the Consumer Price Index (CPI) for All Urban Consumers.
Usually, income rises each and every year because of inflation, the cost of living, etc.  When we were deep into the recession last year, income actually decreased slightly from the prior year.  That resulted in lower median income figures which made it more difficult to qualify for Chapter 7, and also required some Chapter 13 debtors to pay more into a Chapter 13 plan.
However, it appears that we may be heading out of the recession as median family income has increased over the past six months.  Accordingly, debtors will benefit.
To see the very old and now obsolete median income data for each of the 50 states, go to the U.S. Trustee Census Bureau Median Income Means Test Chart for cases filed between November 1, 2009 to March 14, 2010.
To see the old data from last year of median income data for each state, which is only good through the end of this week, go to Median Income Means Test Chart for cases filed between March 15, 2010 and October 31, 2010.
To see the current median income data for each state, which is only good through the end of next week, go to Median Income Means Test Chart for cases filed between November 1, 2010 and March 14, 2011.
To see the new median income data going into effect next week, go to Income Means Test Chart for cases filed beginning March 15, 2011.
New, New York Means Test Figures
Family Size of One: If you are a single individual, which means that you have a “family size of one”, the New York median income has increased, from $45,548 earlier this year to $46,295.  This is a minor but nevertheless significant change of $747 per year, or about $62 per month. 
Family Size of Two: For a family size of two, the new median income figure has increased, from $67,292 earlier this year, to  $68,396.
Family Size of Three: For a family size of three, the new median income figure has increased, from $56,845 earlier this year, to  $57,777.
Family Size of Four: For a family size of four, the new median income figure has increased, from $82,587 earlier this year, to  $83,942.
The Bankruptcy Means Test
This is a comprehensive, very complex series of calculations that the federal government designed to ascertain whether someone qualifies for Chapter 7 filing. 
Under the old bankruptcy law, almost anyone could seek to eliminate their debts by filing Chapter 7.  The new laws changed that.  Click here to take a look at the actual Means Test form.
The Means Test formula is designed to evaluate whether a debtor has the financial means to pay back a substantial portion of his or her debts. If the person does, then he or she may not be eligible to file Chapter 7 bankruptcy, and may instead have to file a payment plan bankruptcy under Chapter 13.
If  debtor’s income is below the New York State median income for a family of that particular size, then passing the Means Test is virtually automatic.  If not, the debtor must have a sufficient amount of acceptable deductions permitted by the Means Test.
Impact of New Means Test Figures on Consumers Filing Bankruptcy on Long Island
In my Long Island bankruptcy law practice, I estimate that at least 9 out of 10 clients now seeking to file for Chapter 7 bankruptcy relief do indeed qualify under the means test. 
Making the most of qualifying under the means test and making the figures work for you requires that you meet with an experienced Long Island bankruptcy attorney to ascertain eligibility for filing for bankruptcy relief.
New Median Family Income Figures for New York
(Effective for cases filed after 03/15/11)
 Family Size                     Amount
     1                                       $46,295
     2                                       $57,777
     3                                       $68,396
     4                                       $83,942
Add $7,500 for each individual in excess of 4. 
There Are Many Other Posts About Means Test Issues on this Blog
I’ve written several dozen articles on various issues concerning the bankruptcy means test.  You can see them by clicking the category, Bankruptcy Means Test.
Here are some of the more popular posts:
Print This Post Print This Post
Be Sociable, Share!

The New Wildcard Bankruptcy Exemption in New York

Posted on Wednesday (March 2, 2011) at 3:00 pm to Bankruptcy Exemptions
Bankruptcy Practice
Suffolk Lawyer

New York Bankruptcy ExemptionsZweinstein  
Written by Craig D. Robins, Esq.
How to Use the New Open-Ended Federal Exemption
Last month I wrote about some bombshell news for New York bankruptcy debtors: outgoing-Governor Paterson unexpectedly signed legislation greatly increasing the New York state law exemptions, which are the statutes debtors can use to protect assets while seeking bankruptcy relief.  The new law became effective on January 22, 2011. 
See the January 2011 Suffolk Lawyer article — Bankruptcy Exemptions for New York Suddenly Increased for 2011
Not only does the new law increase existing exemption amounts for various assets, but it also permits debtors to use the federal exemptions – something that New York debtors (and their attorneys) never had to consider in the past.
It is therefore exciting that we will now be able to protect our consumer bankruptcy clients with a set of exemption statutes that open the door to all sorts of new possibilities.  The most intriguing federal exemption is the wildcard exemption.  It’s as if we’re playing poker and we’ve been dealt a new “wild” card that will enable us to win.
The wildcard exemption should permit most Long Island debtors to keep all of their assets in a typical Chapter 7 case.  Previously, assets such as cars, bank accounts, personal injury causes of action, and tax refunds were at times difficult to fully protect for some clients.
First, a little about choosing the exemption scheme.  A debtor can choose either the federal exemptions or the state exemptions, whichever is more favorable, but a debtor cannot use a combination of the two.  If a married couple files a joint case, both spouses must use the same exemption scheme.
Next, here’s a very general outline of some of the most common federal exemptions that each debtor can claim:
 Homestead Exemption    $21,625
 Motor Vehicle                   $3,450
 Tools of Trade                  $2,175
 Jewelry                             $1,450
 Cash                                  $1,150
 Personal Injury                 $21,625
 Household Goods             $11,525
If you’ve read any older material referring to these federal exemptions, you’ll notice that all of the above amounts are different.  They changed in April 2010, and they will change again in a few years.  We New Yorkers are not used to that, as the federal exemptions have barely changed in two decades.           
The Federal Wildcard Exemption
The federal exemptions are set forth in Bankruptcy Code Section 522(d) which states, in relevant part:
The following property may be exempted […]
 (1) The debtor’s aggregate interest, not to exceed $21,625 in value, in real property or personal property that the debtor or a dependent of the debtor uses as a residence, in a cooperative that owns property that the debtor or a dependent of the debtor uses as a residence, or in a burial plot for the debtor or a dependent of the debtor.  [….]
 (5) The debtor’s aggregate interest in any property, not to exceed in value $1,150 plus up to $10,825 of any unused amount of the exemption provided under paragraph (1) of this subsection.
Sub-section 522(5) is the wildcard exemption. This sub-section works together with section 522(1) to enable a debtor who does not use the federal homestead exemption to exempt $10,825 in “any property”.
Stacking and Flexibility with the WIldcard Exemption
Thus, one great thing about the wildcard exemption is its flexibility which enables a debtor to split the wildcard exemption amount over multiple items and stack it on top of other exemptions as needed to protect any exposed equity.
This, coupled with the other asset-specific exemptions found elsewhere in section 522, usually allows a debtor to exempt all of his or her property in a Chapter 7 bankruptcy.
Learning About the New, New York Bankruptcy Exemption Law
So how does one learn more about the new federal exemptions?  Here’s my plan of action.  Since I am not used to them, I will need to commit them to memory and determine how to employ them in a strategic manner.
Therefore, I plan to read and re-read section 522 a dozen times until they sink in.  This section is lengthy and will require some dedicated concentration.
I will review various bankruptcy treatises like my favorite, Consumer Bankruptcy Law and Practice, published by National Consumer Law Center.  I will also begin reading recent cases from other parts of the country that interpret various aspects of the federal exemptions – cases that I conveniently ignored for years because they did not mean anything to me; but now they are ever so important.
I also like Consumer Bankruptcy News, published by LRP Publications – a nice bi-weekly review of new bankruptcy cases combined with news and some articles about bankruptcy practice.
I will be looking forward to the next CLE about the subject.  Suffolk Academy of Law Dean and Chapter 7 Trustee Richard L. Stern will be moderating a Lunch ‘n Learn Seminar about the new federal exemptions at the Suffolk County Bar Association on Wednesday, March 9, 2011.
Finally, I will be eagerly anticipating the first few decisions from our very own bankruptcy judges in the Eastern District of New York, as debtors’ counsel and trustees really try to see how these new laws work.
About the Author.  Long Island Bankruptcy Attorney Craig D. Robins, Esq., is a regular columnist for the Suffolk Lawyer, the official publication of the Suffolk County Bar Association in New York. This article appeared in the FEBRUARY 2011 issue of the Suffolk Lawyer. Mr. Robins is a bankruptcy lawyer who has represented thousands of consumer and business clients during the past twenty years. He has offices in Mastic, Patchogue, Commack, West Babylon, Coram, Woodbury and Valley Stream.                  (516) 496-0800  (516) 496-0800    (516) 496-0800  (516) 496-0800      (516) 496-0800  (516) 496-0800    (516) 496-0800  (516) 496-0800            (516) 496-0800. For information about filing bankruptcy on Long Island, please visit his Bankruptcy web site: http://www.BankruptcyCanHelp.com
Print This Post Print This Post
Be Sociable, Share!

About Us

Craig D. Robins, Esq. is a Long Island bankruptcy lawyer, who is focused primarily on helping individuals and families, find solutions to their debt problems. Read more »


Subsribe via RSS Feed Reader

Contact Us

Craig D. Robins, Esq.
35 Pinelawn Road, Suite 218E, Melville, NY 11747.

Tel : 516 - 496 - 0800