The following is an article by Alan Zibel I felt was important to pass on:

WASHINGTON -Only one in three homeowners who have signed up for the Obama administration's mortgage relief plan have sent back the necessary paperwork, highlighting continuing problems for the government's effort to stem the foreclosure crisis.

The poor results from the mortgage industry drew sharp criticism from House Financial Services Committee members Tuesday. Since the program was launched in March, lenders have made loan modification offers to just 680,000 borrowers, far short of the administration's goal of up to 4 million.

"Taxpayer-funded foreclosure mitigation programs have been an abject failure," said Rep. Jeb Hensarling, R-Texas, at a hearing on the program. "Throwing more money at programs that do not work is absolutely insane."

Under the program, eligible borrowers who are behind or at risk of default can have their mortgage interest rate reduced to as low as 2 percent for five years. They are given temporary modifications, which are supposed to become permanent after borrowers make three payments on time and complete necessary paperwork, including proof of income and a hardship letter.
On Thursday, the government plans to release the first figures on how many modifications have been made permanent.

Much of the criticism for the disappointing results is being leveled at the banks, many of which received billions in taxpayer bailout dollars. Calls are growing louder on Capitol Hill for the Obama administration to take a tougher approach.
"We haven't spanked anybody," said Rep. Emanuel Cleaver, D-Mo. "I think they've come to the conclusion that spankings are not on the agenda ... Why can't we do something to one of them?"

Herbert Allison, the Treasury Department's assistant secretary for financial stability, said punishment could be in the works.

"We're putting them on notice," he said. "We will exact penalties ... and be publicly outspoken about who's performing well and who's not."

Lenders, however, say the majority of borrowers either don't complete the paperwork or don't make the payments. At Bank of America, for example, only a quarter of the 65,000 borrowers in trial modifications have sent back their paperwork.

The bank blamed "ineffective communications with customers, shortcomings in document maintenance, misunderstandings about program requirements, and the inability to comply by some borrowers," according to written remarks from Jack Schakett, Bank of America's credit loss mitigation strategies executive.

But those explanations only prompted House members to threaten more legislation to curb the foreclosure crisis. A record 14 percent of homeowners with a mortgage are either behind on their payments or in foreclosure. Bargain-priced foreclosures are dragging down home values in neighborhoods across the country. Nationwide, American homeowners have lost $4 trillion in home equity since the housing bust.

"We are terribly frustrated by what's happening," said Rep. Barney Frank, D-Mass., the committee chairman. He has proposed attaching $3 billion in assistance for unemployed homeowners to a bill set for a vote in the House this week.

I completely agree with banking analyst Meredith Whitney when she says that the government is running out of ways to help the economy as the US faces major issues regarding credit and employment ahead.

"I think they're out of bullets," Whitney said in an interview during which she reinforced remarks she made last month indicating she is strongly pessimistic about the prospects for recovery.

 Primary among her concerns is the lack of credit access for consumers who she said are "getting kicked out of the financial system."
She is right on the money and the only bullet that will stop foreclosure for those who still have jobs is passage of the Bankruptcy “Cramdown” Amendment just re-introduced by Rep. Conyers D- Michigan.  BAKER LAW, PLLC was very active in contacting our U.S. Senators and Representatives when this bill was pending earlier this year.  I will continue my efforts to help people save their homes and allow restructuring of home mortgage through bankruptcy. – RICHARD BAKER, ESQ.

Some good news for American homeowners that are struggling with high payments and are upside down in their home equity.  I applaud House Judiciary Chairman John Conyers (D-Mich.) for submitting an amendment to the financial overhaul package that would allow a Bankruptcy Judge to modify the terms of a home mortgage, including reducing the principal.
This bill, called the “Cramdown Bill” passed the U.S. House earlier this year, but fell 15 votes short in the Senate due to massive opposition from the banking industry.

I strongly believe that the failure to amend the Bankruptcy law earlier this year to allow mortgage restructuring for homeowners has greatly worsened the foreclosure crisis.  It is destroying our neighborhoods and communities and it must be stopped.  Banks are not helping homeowners quickly enough and most often provide no relief at all despite receiving $75 billion dollars to turn the tide on foreclosures.  Contact your lawmakers and tell them to enact the mortgage cramdown amendment.

Many people contemplating filing for Bankruptcy want to know what happens to their tax refunds.  It depends on when you file your case.  At this time of year (December/January) there are two ways to play it: 

Option #1 is that you file your 1040 as soon as you can in the new year, get your refund and spend it on the cost of filing your bankruptcy case or other necessary living expenses (not on debts and friends and family). 

Option #2 is to file your case and exempt the refund if you have enough room to also exempt all other assets.  The problem with option #2 is that it uses up exemptions you could use to keep other assets and it only works where you can fully exempt the tax refund and still have other assets protected (exempt) as well.  This we determine case-by-case with each client based on their situation.