NBS Ledger v01 i01

JU

LY

20

10

A NATIONAL BANKRUPTCY SERVICES PUBLICATION

Credit union opportunity

Makeover for reaffirmation

agreements

Visualizing bankruptcy data

timingIS MONEYHAMP & BANKRUPTCY

FORTUNATELY, WE’VE GOT MORE THAN TWO DECADES OF UNMATCHED BANKRUPTCY RECOVERY EXPERIENCE TO KEEP EVERYTHING IN CHECK.

Since 1987, we’ve focused on helping companies deal with the maze of bankruptcy cases by consistently increasing recovery results, reducing loan losses and improving the bottom-line performance of their bankruptcy portfolio. Contact NBS and let us help you stay ahead of the game.

NATIONAL BANKRUPTCY SERVICES

9441 LBJ Freeway, Suite 250 Dallas, TX 75243 1-800-766-7751

NBSdefaultservices.com

RESIDENTIAL MORTGAGE LENDERS AUTOMOBILE FINANCE COMPANIES BANKS, CREDIT UNIONS, & FINANCIAL INSTITUTIONS CONSUMER LENDING ORGANIZATIONS PORTFOLIO SERVICERS, OWNERS & INVESTORS

NB

S. H

AN

DL

ING

BA

NK

RU

PTC

Y C

AS

ES

SIN

CE

19

87.

DA

TA

ISS

UE

SPA

GE

1F

OC

US

WWW.NBSDEFAULTSERVICES.COM « JULY 2010

A NATIONAL BANKRUPTCY SERVICES PUBLICATION

IN THIS ISSUE

ISSUESA discussion of current trends

and issues in the world of bankruptcy and

bankruptcy servicing.

2

FOCUSInterviews with industry

professionals offering insight into servicing and

legal developments.

22

DATAInformation aggregated from

authoritative data sources detailing bankruptcy filing statistics around the nation.

16

TABLE OF CONTENTSBALANCING THE BOOKS » Managing bankruptcy as a line of business: a credit union opportunity 2

RENOVATING REAFFIRMATION » A makeover for reaffirmation agreements 6

TIMING IS MONEY » HAMP and bankruptcy 10

BY THE NUMBERS » This is a description of the overall section 16

CASE STUDY » United Student Aid Funds, Inc. v. Espinosa 22

HOT SEAT: BRAD CLOUD » Up close and personal with the COO of NBS 24

Lance Vander Linden, Chariman [email protected]

Paul Bourke, CEO [email protected]

Larry Buckley, EVP of Business Development [email protected]

Brad Cloud, COO [email protected]

The Ledger is a National Bankruptcy Services publication. © 2010 National Bankruptcy Services • All Rights Reserved

9441 LBJ FREEWAY, SUITE 250 • DALLAS, TX 75243

Contributing Writers Jennifer H. Brown, Dennis Dollar, Sammy Hooda, Joe M. Lozano, Adam Womack

Magazine Design LTV Creative, www.LTVcreative.com

MANAGING

BANKRUPTCY

AS A LINE OF

BUSINESS

A

CREDIT UNION

OPPORTUNITY

BY DENNIS DOLLAR

THE LEDGER » WWW.NBSDEFAULTSERVICES.COM

PA

GE

2

balancing the books

AS a credit union true believer, sel-dom do I find an area in finan-

cial institutional management where it seems that for-profit banks seem to be supe-rior in their customer focus than are credit unions in their member focus. Because credit unions are not driven primarily by stockholder returns but rather by satisfac-tion levels of their member owners as their driving factors as not-for-profit member owned financial cooperatives, the credit union focus on service has been the differ-entiator which has consistently resulted in higher satisfaction levels for credit union account holders in every survey than for their banking competitors.

However, if my experience in credit union circles shows any area where the banks have set a higher bar than we have even begun to lift ourselves to, it is in the area of bankruptcy management that cred-it unions are missing a true opportunity to help their members and enhance the fi-nancial position of their institutions at the same time.

What do I mean? Don’t credit unions try to encourage members to reaffirm their debts in a bankruptcy so that they can maintain necessary credit at their mem-ber-owned cooperative? And don’t credit unions try to get as much recovery as pos-sible from a bankrupt member while try-

ing to control unnecessary legal expenses in order to re-invest those recovered funds back into their members?

The answer is yes, kinda. But, more of-ten than not this is done without a plan or a strategy.

Banks treat bankruptcy as a line of busi-ness. Many credit unions take whatever they can recover through reaffirmations, pay whatever the attorneys say they should pay to cover the filings and tend to be thankful for whatever recoveries come in.

It is to the benefit of all credit union members when those who declare bank-ruptcy reaffirm and make payments to the credit union. It is certainly to the benefit of

PA

GE

3


DA

TA

ISS

UE

SF

OC

US

BA

LA

NC

ING

TH

E B

OO

KS

» B

Y D

EN

NIS

DO

LL

AR

the members who reaffirm and now have at least one source of future credit that they will inevitably need the next time they need a car to get to work or a debit card to buy groceries with.

Yet, when credit unions take somewhat of a helter-skelter approach to managing bankruptcy and do not treat it as a line of business to be managed and maximized, they miss a tremendous member service opportunity and source of potential income through recoveries and loss mitigation.

Why is getting more reaffirmations a member service opportunity? Well, who needs to maintain a relationship with at least one of his or her financial institu-tions more desperately than someone who is filing bankruptcy and soon to sever his good standing with everyone he or she has previously done business with? I would submit that no one needs a reaffirmed re-lationship more.

And, of course, we all know the reason why more reaffirmations are good for credit union members at large. Every recovery on a bankruptcy mitigates a loss that would otherwise cost earnings that could be in-vested in new branches, services, higher savings rates and lower lending rates.

Dollar Associates was contacted by Na-tional Bankruptcy Services (NBS) in 2009 to help them evaluate the potential benefit to credit unions if they were to be offered a structured bankruptcy management program that had proven itself incredibly successful in the banking industry. As part of that evaluation process we traveled to Dallas to check out their operation with a recognition that credit unions needed to strengthen their bankruptcy management efforts — but still curious as to whether a program that has produced such outstand-ing reaffirmation results and reduced legal costs for mega-banks nationwide could be

transferred into the credit union space.What we found at NBS was a program

that would translate itself very well to fit a pressing credit union need. Just the le-gal savings alone that come from the sys-tematic and structured volume approach implemented at NBS would be worth a credit union carefully examining; howev-er, it was the reaffirmation rates in excess of 50 percent at mega banks (not the most popular institutions with their customers these days) that convinced us that the NBS program could produce even more impres-sive reaffirmation rates at member-owned credit unions.

Certainly, anything that NBS does in its systematic approach to required bankrupt-cy response filings and respect from bank-ruptcy trustees can be provided by a local team of attorneys with careful monitoring by credit union staff. But is it?

Most credit unions have not been treating their bankruptcy portfolio like a book of business. Even though there is considerable potential income and mem-ber service opportunity there, few credit unions hire or manage closely the exper-tise — either in-house or through a third party — in the bankruptcy arena that they do in their investments, lending, col-lections or even fee income.

While credit unions manage their in-vestments, lending, collections and fee in-come down to the penny, most could not validate their effectiveness in managing their bankruptcy portfolio. Do we have unnecessary legal expenses? What is our return on investment? Are we maximiz-ing our reaffirmations? How do we know? These are questions that are rarely, if ever, asked by most credit unions.

I’ve had credit union CEOs tell me that they, when their bankruptcy legal expens-es were audited, had discovered hundreds

of thousands of dollars of legal filings that were not even necessary under the 2005 bankruptcy reform laws. Another shared with me that he didn’t realize until he asked that over forty percent of his mem-bers with reaffirmations had never paid a single penny toward their reaffirmed debt.

Most credit unions have more bank-ruptcies to manage today than they did prior to the bankruptcy reform legislation that was intended to make the process more productive for creditors and harder to beat for debtors. Some larger credit unions are averaging 50 to 100 new bankruptcy fil-ings per month.

Although the present economy is driv-ing much of this growth in bankruptcies and the number could diminish some-what when the economy rebounds, we are in an era where bankruptcy filings will never go away. Perhaps they may not even decrease, if the growing number of attor-neys advertising for bankruptcy business is any indication.

Managing a bankruptcy portfolio of hundreds of thousands, and perhaps mil-lions, of dollars cannot be treated lightly. Banks have realized this well before credit unions. And their bankruptcy returns have been better than those of credit unions in most instances.

We are convinced that any credit union with a sizable bankruptcy portfolio that cannot be managed daily by existing staff to the level that they can answer the previ-ously mentioned series of questions at any time should look carefully at experienced and proven third party bankruptcy man-agement support.

From our review, NBS has the best pro-gram in the country in this field. Its po-tential for credit unions that need to treat bankruptcies more like a line of business is significant.

DENNIS DOLLAR is principal partner in a full service credit union industry consulting firm, Dollar Associates

LLC, based in Birmingham, AL. He is a former presidential-appointed Chairman of the National Credit Union

Administration, award winning credit union CEO and two-term state legislator from his home state of Mississippi.


PA

GE

4

PA

GE

5


DA

TA

ISS

UE

SF

OC

US

MOST CREDIT

UNIONS HAVE

NOT BEEN

TREATING

THEIR

BANKRUPTCY

PORTFOLIO

LIKE A BOOK

OF BUSINESS

BA

LA

NC

ING

TH

E B

OO

KS

» B

Y D

EN

NIS

DO

LL

AR

A reaffirmation agreement is a bind-ing contract between a debtor and

creditor that allows the debtor to repay a personal obligation that would normally be dischargeable under the Bankruptcy Code (the “Code”). The agreement is com-pletely voluntary for both creditors and debtors. A debtor generally enters into a re-affirmation agreement to repay discharge-able debt when the debt is secured by a lien on property that the debtor wants to retain. A reaffirmation agreement is only enforce-able if it complies with the governing pro-visions of the Bankruptcy Code codified at 11 U.S.C. § 524(c), (d), and (k).

Reaffirmation agreements have not always been allowed, and were almost banned by Congress in 1978.1 After much debate, Congress allowed reaffirmations under narrow and monitored situations;

hence the original section 524(c) of the Code, which governs reaffirmation agree-ments, was created.2

As originally enacted, the Code gave courts a pivotal role in the creation and enforcement of reaffirmation agreements. Subsection 524(c)(4) of the 1978 Code stat-ed, “In a case concerning an individual, to the extent that such debt is not secured by real property of the debtor, the court approves such agreement as (A)(i) not im-posing an undue hardship on the debtor or a dependent of the debtor; and (ii) in the best interest of the debtor; or (B)(i) entered into in good faith; and (ii) in settlement of litigation under section 523 of this title, or providing for redemption under section 722 of this title.”3

Since that time, reaffirmation agree-ments and section 524(c) have gone

through many changes. In 1984, the Bank-ruptcy Amendments and Federal Judge-ship Act of 1984 modified section 524(c) to state that a reaffirmation agreement was not valid unless the debtor’s attorney signed an affidavit acknowledging that the agreement would not cause undue hard-ship on the debtor.

Boilerplate disclosure statements and a longer time frame to rescind the agreement after it was filed with the court were also instituted.4 More changes regarding the reaffirmation agreement came with the Bankruptcy Reform Act of 1994, including the addition of 524(d). This new legislation added two new requirements to Section 524, including changes to the boilerplate disclosure statements, and a requirement that the debtor’s attorney certifies that he or she fully advised their client of the legal


PA

GE

6

BY JENNIFER H. BROWN

A MAKEOVER FOR REAFFIRMATION AGREEMENTS

Renovating Reaffirmations

consequences of reaffirming the debt, and that the agreement was an informed and voluntary decision.5

By 1994, court hearings were not an or-dinary occurrence on reaffirmation agree-ments, and much of the reviewing and ap-proving became the responsibility of the debtor’s attorney.

The Bankruptcy Code was amended most recently in 2005 through the Bank-ruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). BAPCPA made several changes to the provisions governing reaffirmation agreements, which included the expansion of the sec-tion 524 by adding subsections (k), (l), and (m). The additional language that was add-ed to 524 included very specific provisions concerning the form and required terms of the reaffirmation agreement.

In order to simplify the reaffirmation agreement process, an official bankruptcy reaffirmation agreement form, known as the B240, was adopted in June of 1999, which included all of the required ele-ments set forth in 524(c).

The form was developed as the result of a recommendation of the National Bank-ruptcy Review Commission which asked the United States Judicial Conference’s Advisory Committee on Bankruptcy Rules to “prescribe a form motion for approval of reaffirmation agreements that contains information enabling the court and the parties to determine the propriety of the agreement. Approval of the motion would not entail a separate order of the court.”6

The B240 form had been around for several years, although it wasn’t until after BAPCPA went into effect that it be-

came a staple in most courts because of the detailed requirements set forth in the reformed litigation. Originally, the docu-ment was “recommended” for use to the various jurisdictions, but by 2007 many courts had incorporated the form into their local rules as a mandatory document.

Although some courts utilize a local version of the B240 form, the National B240 remains the most common form required by bankruptcy jurisdictions today. Since the B240 became the universal reaffirma-tion agreement form, the committee that developed the form has changed its struc-ture and appearance several times. The lat-est change to the document came in April of 2010.

Official forms B240A & B240B (also re-ferred to as Director’s Procedural Forms), as well as a new national coversheet, Form

PA

GE

7


DA

TA

ISS

UE

SF

OC

US

RE

NO

VA

TIN

G R

EA

FF

IRM

AT

ION

» B

Y J

EN

NIF

ER

H. B

RO

WN

JENNIFER HARDWICKE BROWN is an Associate Attorney with Brice, Vander Linden & Wernick, P.C., with a

primary focus on the Consumer bankruptcy portfolio. She is a graduate of the University of Oklahoma College

of Law and has been practicing law since 2007.


PA

GE

8

B27, were created in December 2009. Ac-cording to the US Court’s website, “The Advisory Committee on Bankruptcy Rules developed and recommended implementa-tion of the amended reaffirmation forms package, which has been reorganized and substantially revised to make the reaffir-mation form easier to complete and, as a re-sult, to reduce errors. The forms also are in-tended to be easier for the court to review.”

The Advisory Committee recommend-ed to the various jurisdictions using the new forms that they should allow a six month transitional grace period for the courts, debtors and creditors to implement the new forms. At that time, many juris-dictions announced that they would be using the new forms and coversheet, al-though a handful opted to continue using their own local forms.7

In February 2010, the US Courts web-site announced that they were changing the B240 reaffirmation agreement form again.

The Committee stated, “Director’s Form B240A (Reaffirmation Documents) inte-grates the Reaffirmation Agreement, disclo-sures, and other documents necessary for a debtor to reaffirm a debt. It has prompted a number of suggestions since its introduction in December 2009. After consultation with the Bankruptcy Rules Committee, B240A has been modified (effective April 1, 2010), to incorporate some of the suggestions made since December 2009, and instructions have been drafted for the form. The new instruc-tions identify governing law, and provide directions for use of the form.”

The new forms replaced the most recent December 2009 version all together, and

the January 2007 versions of the form were brought back as an alternate document. The instruction sheet created by the advi-sory committee describes the differences between the 2007 form, which is now the alternate form, and the new B240A form (04/10).

The January 2007 version of Director’s Form B240A (now designed as B240A/B ALT) which implemented the reaffirma-tion disclosures and form requirements of the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act, carefully tracked the statutory language and orga-nization.

As a result, the form was quite long and some of the most significant information needed for court review followed many pages of preliminary disclosures and in-formation.

REAFFIRMATION AGREEMENTS

HAVE ALWAYS BEEN THE TOPIC

OF MUCH DEBATE

PA

GE

9


DA

TA

ISS

UE

SF

OC

US

RE

NO

VA

TIN

G R

EA

FF

IRM

AT

ION

» B

Y J

EN

NIF

ER

H. B

RO

WN

Based on the authority provided by 11 U.S.C. § 524(k)(2), this revised form orga-nizes the required information in a differ-ent order, bringing information important to the court to the beginning of the docu-ment while directing the debtor’s attention to pertinent disclosures and definitions that must be reviewed before entering into the Reaffirmation Agreement.

It also streamlines the documents and uses language that is easier to understand. To avoid redundancy, some the required disclosures are included in the Reaffirma-tion Agreement and are simply referred to in the Disclosure Statement.8

Reaffirmation agreements have always been the topic of much debate, and many parties argue that reaffirming debt defeats the purpose of a Chapter 7 bankruptcy, while some believe that reaffirmation

agreements are a great tool for allowing the debtor to pay on their collateral over time to their secured creditors.9 No matter what side of the spectrum you fall with re-gard to the great reaffirmation agreement

debate, it is clear that as long as reaffirma-tion agreements are a hot topic within the courts and the bankruptcy community as whole, the laws surrounding them will be ever changing.

NOTES1. National Bankruptcy Review Commission. “Bankruptcy: The Next Twenty Years.” National Bankruptcy

Review Commission Final Report, Volume 1 (1997): 145-178.

2. Id. at 146.

3. Bankruptcy Reform Act of 1978, Pub. L. 95-598, 92 Stat. 2549 (1978).

4. Bankruptcy Amendments and Federal Judgeship Act of 1984, Pub. L. No. 98-353, 98 Stat. 333 (1984).

5. Bankruptcy Reform Act of 1994, Pub. L. 103-394, 108 Stat. 4106 (1994).cite web url=http://www.

govtrack.us/congress/bill.xpd?bill=h103-5116 |title=H.R. 5116 |accessdate=April 19, 2010 |author=103rd

Congress (1994) |date=Sep 28, 1994 |work=Legislation |publisher=GovTrack.us |quote=Bankruptcy

Reform Act of 1994

6. National Bankruptcy Review Commission, Final Report at 145.

7. See e.g. The United States Bankruptcy Court for the District of Massachusetts Local Rule 4008-1.

8. http://www.uscourts.gov/bankform/index.html

9. National Bankruptcy Review Commission, Final Report at 148.


PA

GE

10

COVER STORY

PA

GE

11


DA

TA

ISS

UE

SF

OC

US

TIM

ING

IS

MO

NE

Y »

BY

AD

AM

WO

MA

CKtiming

IS MONEYHAMP & BANKRUPTCY

BY ADAM WOMACK

ON March 24, 2010, the Treasury Department issued Supple-

mental Directive 10-02, which is its first substantial guidance change to the Home Affordable Modification Program (HAMP) as it relates to borrowers who are in active bankruptcy proceedings. Some of these changes will impact servicer and law firm processes as early as June 1, 2010. For a loan servicer, it is important to identify which loans will have these new bankruptcy rules (and when) so that you can properly imple-ment a HAMP management process with your bankruptcy vendors and law firms.

HAMP IN A NUTSHELL OUTSIDE OF BANKRUPTCY

Before outlining the impending bank-ruptcy changes, some readers may appre-ciate a refresher (or primer) on the basic features of HAMP. This information is of-fered only as context for a discussion of the bankruptcy changes, and should not be relied upon by a servicer, law firm or other related industry partner for any aspect of HAMP compliance.

Generally stated, a servicer may be re-quired to follow HAMP on a given loan for several reasons, which include: (1) it is

owned or guaranteed by Fannie Mae, (2) it is owned or guaranteed by Freddie Mac, and/or (3) it is covered under a Servicer Participation Agreement with Treasury. Although mostly uniform, HAMP guid-ance for Fannie Mae, Freddie Mac, and Treasury are issued separately via their own communication processes and new requirements can have different effec-tive dates. For example, the subject of this article, Treasury Supplemental Directive 10-02, controls servicer HAMP actions on loans covered under a Servicer Participa-tion Agreement, but not if the loans are


PA

GE

12

owned or guaranteed by Fannie Mae or Freddie Mac. It is expected that Fannie Mae and Freddie Mac will issue separate but similar announcements that adopt 10-02 bankruptcy guidance changes, but, at press time, the announcements and effec-tive dates have not issued.

After tackling these investor nuances, a servicer’s HAMP process is substantially uniform and follows a general path:

(1) Initial eligibility and NPV—checking that the loan is, for example, a first lien, and secured by a property which is borrower oc-cupied, and the net present value (NPV) of the property as it relates to a foreclosure outcome is positive or negative when compared to a modification outcome (NPV results may or may not affect HAMP eligibility dependent upon the loan investor or insurer)

(2) Verified eligibility—evaluating that the borrower’s documented financials (e.g., pay stubs, W-2, tax returns) establish a housing-debt-to-income ratio of greater than 31 per-cent, and that the ratio can be lowered to 31 percent through a standard modification wa-terfall: reduction in interest rate, term exten-sion, principal forbearance, and/or voluntary principal forgiveness (principal forgiveness parameters will likely change in future up-dates to HAMP)

(3) Trial plan—establishing a monthly trial payment based on the 31 percent ratio, and tracking whether the borrower can perform under that payment for a period of three months (or longer under limited circumstances)

(4) Permanent modification—converting a successful trial plan to a permanent modi-fication and managing the subsequent perfor-mance of the modification (certain servicer, investor, and even borrower incentives can accrue based on the completion and ongoing performance of the modification)

HAMP BANKRUPTCY GUIDANCE PRIOR TO TREASURY SUPPLEMENTAL DIRECTIVE 10-02

Some may have encountered the joke series involving “what is the world’s short-est book”—a tasteful example might be “America’s Most Popular Lawyers.” Simi-larly, a book, let alone a page, devoted to formal HAMP bankruptcy guidance would have been hard to assemble up until now.

Previous HAMP guidance concerning bankruptcy addressed two areas. First, a borrower who is involved in an active bankruptcy proceeding is eligible for HAMP at the complete discretion of the ser-vicer. Second, a borrower who has received a Chapter 7 discharge but did not reaffirm the loan is potentially eligible for HAMP, and, for those loans, the servicer must in-sert approved bankruptcy language into the applicable HAMP documents.

Based on this guidance, many servicers likely chose to direct HAMP resources upon borrowers not in bankruptcy. Al-though excluding active bankruptcies may have alleviated many servicer processing issues, it did not insulate a servicer from all bankruptcy issues, such as, a borrower who is paying under a HAMP trial plan and files bankruptcy midstream.

NEW TREASURY GUIDANCE EFFECTIVE JUNE 1, 2010:

A borrower in bankruptcy must be considered upon “request”

It is not hard to understand servicer con-cern (or plain old fear) related to perform-ing the various HAMP communications and document collection requirements for a loan under protection of the bankruptcy automatic stay. One only has to review a

few selections from a long series of court decisions finding servicer liability (even punitive awards) for crossing a sometimes cloudy line between bankruptcy manage-ment and debt collection.

In fact, decades of loan servicing have brought specialized bankruptcy processes and technologies to avoid communications or other practices which courts might in-terpret as prohibited debt collection.

With servicer concern likely in mind, a primary feature of the new bankruptcy guidance states, “Borrowers in active Chap-ter 7 or Chapter 13 bankruptcy cases must be considered for HAMP if the borrower, borrower’s counsel or bankruptcy trustee submits a request to the servicer.” Aside from the obvious concerns over perform-ing different bankruptcy management processes based upon a “request,” there re-main other significant issues.

A beginning issue is that the type of “request” sufficient to trigger a servicer’s mandatory HAMP review is not defined.

Outside of bankruptcy, this is not as im-portant because servicers are required to complete a standardized outbound solicita-tion process for all loans potentially eligi-ble for HAMP, and borrowers have specific requirements on what information they must provide in return.

Inside of bankruptcy, a “request” could take many forms, such as, telephone com-munication, letter, petition language, Chapter 13 plan, Chapter 7 Statement of Intent, or other filed notice.

If Treasury’s intent was that the bor-rower must submit standardized docu-mentation (Treasury Request for Modifi-cation and Affidavit) to evoke a “request,” then this could be cleared up in later guid-ance or FAQ. In the absence of defining a “request,” it is not far-fetched to imagine

ADAM WOMACK is a member of the State Bar of Texas and currently serves as VP of Operations at NBS,

which provides comprehensive bankruptcy services for its loan servicing clients. Prior to joining NBS, he

managed business operations for mortgage and consumer servicers and investors, including most recently,

Fannie Mae. He has also provided legal representation to consumer and mortgage secured creditors.

PA

GE

13


DA

TA

ISS

UE

SF

OC

US

TIM

ING

IS

MO

NE

Y »

BY

AD

AM

WO

MA

CK

IT IS NOT HARD TO UNDERSTAND

SERVICER CONCERN

(OR PLAIN OLD FEAR)

trustees implementing blanket HAMP re-quests at 341 meetings, or model Chapter 13 plans including mandatory HAMP re-view language (think Rhode Island, South-ern and Eastern Districts of New York).

Beyond defining the trigger for man-datory HAMP evaluation, borrowers in bankruptcy may present unique challeng-es based upon the timing of the request. In Chapter 7, it is foreseeable that HAMP evaluation requests could occur anytime during a very short bankruptcy lifespan.

In the event a request fell proximate to the expected discharge of the case, ser-vicers would understandably prefer clo-sure of the Chapter 7 case instead of pur-suing a more complicated process within bankruptcy.

Unclear in the guidance is whether the servicer would have discretion to wait for any bankruptcy event to occur or pass af-ter a “request” is received. For Chapter 13 cases, a servicer has significant issues to resolve regarding its proof of claim, other proofs of claim, plan language, all which are in the backdrop of either heading to-ward a plan confirmation, or understand-ing how HAMP would impact a previously confirmed plan.

Servicers must work with borrower or borrower’s counsel to obtain any required court or trustee approvals

Simply stated, Treasury expects ser-vicers to cooperate with the borrower, bor-rower’s counsel, trustee, and court to effect all necessary approvals, and servicers can-not place the whole duty upon the borrow-er’s counsel to effect approval. To comply, servicers will likely rely upon their bank-ruptcy vendors and legal counsel to ensure appropriate legal agreements and notices are secured, since jurisdictions vary wide-

ly on what is required to properly complete a loan modification in bankruptcy.

It is fair to say a minority of servicers, vendors, and firms have pursued non-HAMP loan modifications in bankruptcy over the past several years, and may be able to utilize this information for HAMP.

However, the majority of servicers will likely encounter this issue for the first time once HAMP review in bankruptcy becomes mandatory, which places experienced law firms and bankruptcy vendors in an impor-tant position to drive compliance.

Over time, Fannie Mae and Freddie Mac will likely establish acceptable fees for management of HAMP in bankruptcy, which may ultimately drive how servicers choose to develop internal and external HAMP bankruptcy processes.

Borrowers who are in a trial plan period and subsequently file for bankruptcy may not be denied a HAMP modification on the basis of the bankruptcy filing

Before this guidance change, servicers utilized their own discretion (subject to applicable law) in determining the effect of a bankruptcy filing upon a borrower’s HAMP trial plan. Likely in response to servicers’ divergent activities to date, Trea-sury directs servicers to “not object to con-firmation of a borrower’s Chapter 13 plan, move for relief from the automatic bank-ruptcy stay, or move for dismissal of the Chapter 13 case on the basis that the bor-rower paid only the amounts due under the trial period plan.”

A related accommodation for borrow-ers in bankruptcy is that servicers must extend the trial plan period by 1-2 months (5 month total) if such an extension would help in obtaining any required court ap-

provals or receiving a full remittance from the Chapter 13 trustee.

Substitution of income documentation (optional)

Although not required, a servicer may utilize the bankruptcy schedules in lieu of the formal Request for Modification Agree-ment, but the borrower’s execution of a Hardship Affidavit is still required. If the schedules are greater than 90 days old as of the date of servicer receipt, then the bor-rower must supplement the bankruptcy schedules with updated evidence of income.

Also, if sufficient tax returns have been submitted by the borrower through the bankruptcy process, then the servicer can utilize copies of these tax returns for HAMP if they can be procured from the borrower, borrower’s counsel or court.

NEW TREASURY GUIDANCE ANNOUNCED BUT NO EFFECTIVE DATE CURRENTLY RELEASED:

Waiver of trial period plan for certain bankruptcy loans (optional)

Current internal process and technol-ogy complications likely prevented Trea-sury from announcing a formal effective date for a servicer’s optional waiver of the trial period when 10-02 was first released. If the complications can be overcome, the concept is that servicers may count prior bankruptcy post-petition payments as proxy for completed trial plan payments.

When implemented, this flexibil-ity may enable servicers to better manage Chapter 13 pre-confirmation requests for HAMP, and target performing bankrupt-cies for borrowers who have not formally requested HAMP evaluation.


PA

GE

14

PA

GE

15


DA

TA

ISS

UE

SF

OC

US

TIM

ING

IS

MO

NE

Y »

BY

AD

AM

WO

MA

CK

BORROWERS IN BANKRUPTCY MAY

PRESENT UNIQUE CHALLENGES BASED

UPON THE TIMING OF THE REQUEST


PA

GE

16

DATA

> 7.5

4.5 – 6

6 – 7.5

3 – 4.5

< 3

D.C.

STATE-BY-STATE FILINGS PER CAPITA

FILINGS PER CAPITA: TOP 10 FILINGS PER CAPITA: BOTTOM 10

StateFilings Per

CapitaPercent Change

Nevada 10.32 -0.91

Tennessee 8.02 -0.60

Georgia 7.83 +0.24

Michigan 7.44 +0.67

Alabama 7.14 -0.29

Indiana 6.95 -0.33

California 6.39 +0.79

Illinois 6.35 +0.72

Kentucky 6.12 +0.28

Ohio 5.88 -0.17

StateFilings Per

CapitaPercent Change

Alaska 1.52 +0.08

South Carolina 2.07 -0.10

District of Columbia 2.11 +0.15

North Dakota 2.22 -0.17

South Dakota 2.24 -0.06

Texas 2.24 -0.01

Wyoming 2.48 +0.01

New York 2.74 -0.19

Montana 2.74 +0.03

North Carolina 2.76 -0.21

PA

GE

17


DA

TA

ISS

UE

SF

OC

US

TOTAL U.S. FILINGS 2006-PRESENT THROUGH MARCH 2010, INCLUDES CHAPTER 11

2009200820072006 ‘10

180,000

160,000

140,000

120,000

100,000

80,000

60,000

40,000

20,000

0Jan Apr July Oct Jan Apr July Oct Jan Apr July Oct Jan Apr July Oct Jan

TOTAL NON-COMMERCIAL FILINGS 2006-2009

2009200820072006

1,600,000

1,400,000

1,200,000

1,000,000

800,000

600,000

400,000

200,000

0

CHAPTER 7

CHAPTER 13

248,751

336,635

TO

TA

L: 5

85

,38

6

320,799

499,761

TO

TA

L: 8

20

,56

0

360,459

725,201

TO

TA

L: 1,

08

5,6

60

1,027,117

404,550T

OT

AL

: 1,

43

1,6

67

NATIONAL BANKRUPTCY SERVICES

9441 LBJ Freeway, Suite 250 Dallas, TX 75243 1-800-766-7751

NBSdefaultservices.com

Call today to see how NBS can accelerate recovery through precision auto loan bankruptcy management services.

BANKRUPTCY IS NOT THE END OF THE ROAD.

PA

GE

19


DA

TA

ISS

UE

SF

OC

US

STATE-BY-STATE TOTAL 2010 BANKRUPTCY FILINGS AND PERCENTAGES OF CHAPTER 7 VS. CHAPTER 13

State Cumulative 2010 Filings

Ratio of Chapter 7 Filings

Ratio of Chapter 13 Filings

Alabama 8,407 48% 52%

Alaska 265 83% 17%

Arizona 9,301 82% 18%

Arkansas 4,011 58% 42%

California 59,053 77% 23%

Colorado 7,387 83% 17%

Connecticut 2,791 90% 10%

Delaware 1,135 74% 26%

District of Columbia 317 73% 27%

Florida 25,706 76% 24%Georgia 19,249 58% 42%

Hawaii 924 81% 19%

Idaho 1,714 88% 12%

Illinois 20,505 77% 23%

Indiana 11,167 74% 26%

Iowa 2,475 93% 7%

Kansas 2,516 72% 28%Kentucky 6,601 76% 24%

Louisiana 4,324 39% 61%

Maine 957 85% 15%Maryland 7,093 76% 24%

Massachusetts 5,730 78% 22%Michigan 18,545 86% 14%

Minnesota 5,509 88% 12%Mississippi 3,678 58% 42%

Missouri 7,690 73% 27%

Montana 669 85% 15%

Nebraska 1,941 74% 26%

Nevada 6,820 75% 25%

New Hampshire 1,472 82% 18%New Jersey 9,810 78% 22%

New Mexico 1,656 92% 8%

New York 13,366 80% 20%

North Carolina 6,465 56% 44%

North Dakota 359 89% 11%

Ohio 16,975 77% 23%

Oklahoma 3,462 83% 17%Oregon 4,539 78% 22%Pennsylvania 9,570 73% 27%

Rhode Island 1,375 85% 15%

South Carolina 2,364 53% 47%

South Dakota 454 90% 10%

Tennessee 12,630 54% 46%

Texas 13,860 51% 49%

Utah 4,017 67% 33%

Vermont 450 79% 21%Virginia 9,314 69% 31%Washington 8,170 80% 20%West Virginia 1,659 90% 10%

Wisconsin 7,494 83% 17%Wyoming 337 86% 14%

Please turn the page for a visual representation of the information in this table.


PA

GE

20

SEEING SPOTSSTATE-BY-STATE TOTAL FILINGS AND STATE PERCENTAGES OF CHAPTER 7 VS. CHAPTER 13 FILINGS

ALABAMATotal Filings: 8,407Chapter 7: 48% | Chapter 13: 52%

ALASKATotal Filings: 265Chapter 7: 83% | Chapter 13: 17%

CALIFORNIATotal Filings: 59,053Chapter 7: 77% | Chapter 13: 23%

COLORADOTotal Filings: 7,387Chapter 7: 83% | Chapter 13: 17%

ILLINOISTotal Filings: 20,505Chapter 7: 77% | Chapter 13: 23%

KENTUCKYTotal Filings: 6,601Chapter 7: 76% | Chapter 13: 24%

MASSACHUSETTSTotal Filings: 5,730Chapter 7: 78% | Chapter 13: 22%

MISSOURITotal Filings: 7,690Chapter 7: 73% | Chapter 13: 27%

VERMONTTotal Filings: 450Chapter 7: 79% | Chapter 13: 21%

MARYLANDTotal Filings: 7,093Chapter 7: 76% | Chapter 13: 24%

UTAHTotal Filings: 4,017Chapter 7: 67% | Chapter 13: 33%

CONNECTICUTTotal Filings: 2,791Chapter 7: 90% | Chapter 13: 10%

GEORGIATotal Filings: 19,249Chapter 7: 58% | Chapter 13: 42%

INDIANATotal Filings: 11,167Chapter 7: 74% | Chapter 13: 26%

LOUISIANATotal Filings: 4,324Chapter 7: 39% | Chapter 13: 61%

MICHIGANTotal Filings: 18,545Chapter 7: 86% | Chapter 13: 14%

PENNSYLVANIATotal Filings: 9,570Chapter 7: 73% | Chapter 13: 27%

WYOMINGTotal Filings: 337Chapter 7: 86% | Chapter 13: 14%

HAWAIITotal Filings: 924Chapter 7: 81% | Chapter 13: 19%

MAINETotal Filings: 957Chapter 7: 85% | Chapter 13: 15%

MINNESOTATotal Filings: 5,509Chapter 7: 88% | Chapter 13: 12%

NEBRASKATotal Filings: 1,941Chapter 7: 74% | Chapter 13: 26%

PA

GE

21


DA

TA

ISS

UE

SF

OC

US

ARIZONATotal Filings: 9,301Chapter 7: 82% | Chapter 13: 18%

ARKANSASTotal Filings: 4,011Chapter 7: 58% | Chapter 13: 42%

FLORIDATotal Filings: 25,706Chapter 7: 76% | Chapter 13: 24%

OREGONTotal Filings: 4,539Chapter 7: 78% | Chapter 13: 22%

WISCONSINTotal Filings: 7,494Chapter 7: 83% | Chapter 13: 17%

DISTRICT OF COLUMBIATotal Filings: 317Chapter 7: 73% | Chapter 13: 27%

IDAHOTotal Filings: 1,714Chapter 7: 88% | Chapter 13: 12%

KANSASTotal Filings: 2,516Chapter 7: 72% | Chapter 13: 28%

MISSISSIPPITotal Filings: 3,678Chapter 7: 58% | Chapter 13: 42%

NEVADATotal Filings: 6,820Chapter 7: 75% | Chapter 13: 25%

New YorkTotal Filings: 13,366Chapter 7: 80% | Chapter 13: 20% OKLAHOMA

Total Filings: 3,462Chapter 7: 83% | Chapter 13: 17%

MONTANATotal Filings: 669Chapter 7: 85% | Chapter 13: 15%

TENNESSEETotal Filings: 12,630Chapter 7: 54% | Chapter 13: 46%

SOUTH DAKOTATotal Filings: 454Chapter 7: 90% | Chapter 13: 10%

NORTH CAROLINATotal Filings: 6,465Chapter 7: 56% | Chapter 13: 44%

SOUTH CAROLINATotal Filings: 2,364Chapter 7: 53% | Chapter 13: 47%

NORTH DAKOTATotal Filings: 359Chapter 7: 89% | Chapter 13: 91%

WEST VIRGINIATotal Filings: 1,659Chapter 7: 90% | Chapter 13: 10%

VIRGINIATotal Filings: 9,314Chapter 7: 69% | Chapter 13: 31%

DELAWARETotal Filings: 1,135Chapter 7: 74% | Chapter 13: 26%

IOWATotal Filings: 2,475Chapter 7: 93% | Chapter 13: 7%

New JerseyTotal Filings: 9,810Chapter 7: 78% | Chapter 13: 22%

New HampshireTotal Filings: 1,472Chapter 7: 82% | Chapter 13: 18%

New MexicoTotal Filings: 1,656Chapter 7: 92% | Chapter 13: 8%

OHIOTotal Filings: 16,975Chapter 7: 77% | Chapter 13: 23%

RHODE ISLANDTotal Filings: 1,375Chapter 7: 85% | Chapter 13: 15%

TEXASTotal Filings: 13,860Chapter 7: 51% | Chapter 13: 49%

WASHINGTONTotal Filings: 8,170Chapter 7: 80% | Chapter 13: 20%

For an alphabetical listing of the information in this graphic, see page 19


PA

GE

22

CASE STUDY

SPEAK TIMELY OR FOREVER HOLD YOUR PEACE:ESPINOSA’S IMPACT ON CREDITORS HALED INTO BANKRUPTCY COURT

CASE OVERVIEWIn United Student Aid Funds, Inc. v. Espinosa, the United States

Supreme Court held that “a creditor could not use a Motion for Re-consideration (Rule 60(b)(4)) to attempt to set aside a chapter 13 con-firmation order which included a controversial ‘discharge by decla-ration’ provision.” Espinosa, 559 U.S. ___, 2010 WL 1027825 (2010).

In Espinosa, the debtor filed a chapter 13 plan with the Bank-ruptcy Court that proposed to discharge a portion of his student loan debt, but he failed to initiate the adversary proceeding as re-quired for such discharge. The creditor received notice of, but did not object to, the plan, and failed to file an appeal after the Bank-ruptcy Court subsequently confirmed the plan.

Years later, the creditor filed a motion under Federal Rule of Civil Procedure 60(b)(4) asking the Bankruptcy Court to rule that its order confirming the chapter 13 plan was void because the or-der was issued in violation of the Code and Rules. In affirming the Bankruptcy Court and the Ninth Circuit Court of Appeals, the Su-preme Court held that confirmation of the chapter 13 plan, which contained provisions constituting a “legal error,” could not be va-cated as void and the creditor’s due process rights were not violated.

The Court’s ruling rested on the reasoning that deadlines within the Code and Rules have meanings and untimely attacks on orders will not be allowed merely because the orders were un-wise, unwarranted or violated the Code.

The Supreme Court stated that, “Rule 60(b)(4) strikes a balance between the need for finality of judgments and the importance of ensuring that litigants have a full and fair opportunity to litigate a dispute.” The Court admonished that, “Rule 60(b)(4) does not provide a license for litigants to sleep on their rights.” This rul-ing emphasizes the necessity for all parties to follow the Code and Rules and the consequences for failing to act in a timely fashion.

CONCERNS FOR CREDITORSEspinosa outlines the importance of plan review and timely ob-

jections to plans that do not conform to the requirements of the Code and Rules.

In the Supreme Court’s eyes, even an unscrupulous debtor’s attorney’s bad-faith litigation tactics does not alleviate a creditor of its duty to protect its legal rights. Thus, simply filing a proof of claim in a case is no longer enough. Now, the onus is on the credi-tors to ensure that they are treated fairly under the plan and to speak up “timely” if they have any objections.

However, it should be noted that this case involved an unse-cured, priority creditor and it is uncertain whether the Court will extend its ruling to secured creditors as well.

Within a footnote in the case the Court explicitly states, “We express no view on the conditions under which an order con-firming the discharge of one of these types of debt [debts that are not dischargeable under any circumstances] could be set aside as void.”

Therefore, the application of this decision on secured creditors is currently unknown. What is known is creditors should proceed with extreme caution nonetheless, especially because this was a unanimous decision by the highest court in the country.

BENEFITS TO CREDITORSCreditors should appreciate that the decision recognized the

debtor’s “procedural error” and the court’s “legal error” commit-ted in the course of this case. But the Court was unwilling to allow the creditor to take advantage of these errors because it failed to act timely.

Thus, creditors must be cognizant not only of their compliance with the Code and Rules but must monitor the actions of other parties, including courts, to ensure that their rights are protected. Though the heightened requirement on creditors seems unset-tling, it does present a unique opportunity for creditors.

Following the Court’s decision creditors can and should freely object to debtors’ plans that fail to comply with the Code and Rules without the fear of being chastised by courts or debtor’s counsel.

In acknowledging the procedural and legal errors committed by the debtor and the bankruptcy judge, the Supreme Court gave a stern warning to both regarding their respective conduct. Though

BY SAMMY HOODA

PA

GE

23


DA

TA

ISS

UE

SF

OC

US

SP

EA

K T

IME

LY O

R F

OR

EV

ER

HO

LD

YO

UR

PE

AC

E »

BY

SA

MM

Y H

OO

DA

the case allowed the debtor to discharge his student loan interest without following the proper procedure, the Court cautioned debtors and courts to be mindful of their actions in bankruptcy proceedings.

Thus, creditors can rest assure that bankruptcy courts across the nation will be scrutinizing debtors’ chapter 13 plans and in-structing chapter 13 trustees to do the same.

Another benefit to creditors is that the Supreme Court has in-structed bankruptcy courts to use the sanctioning power of Rule 9011 to police debtors who try to circumvent the Code and Rules in the hopes that they will not get caught. Espinosa, 2010 WL 1027825 at 17 (2010).

These two underpinnings of the case can be regarded as shift in the current bankruptcy process, which will likely benefit creditors in the long run.

This decision will likely spark a sense of urgency in the Na-tional Association of Chapter Thirteen Trustees (NACTT) to adopt a National Model Plan, which has been in the works since 2003. Currently, less than fifty percent of the jurisdictions have a man-datory Model Plan that debtors are required to use without sub-stantial deviation.

The other jurisdictions either do not have a Model Plan or its use is not mandatory. Thus, in these jurisdictions debtors may use chapter 13 plans that adversely affect a creditor’s rights, for exam-ple including a “discharge by declaration” provision, and failure to timely raise an objection binds the creditor to the terms of the plan, as in Espinosa.

The movement toward a National Model Plan will likely be spearheaded by the NACTT’s subcommittee on Model Plans. It is also likely that courts will be on board with this as well because of the Supreme Court’s emphasis that bankruptcy courts have an obligation to perform its own independent review to determine that only proper orders are entered.

In addition to trustees and courts, creditors should also get in-volved in pushing for a National Model Plan because it will ease the burdensome task of reviewing debtors’ chapter 13 plans.

Another potential benefit for creditors is the possibility of collecting fees and costs associated with plan reviews. It is likely that any push by creditors to collect these fees will be met with an equal resistance by debtors, for sure, and maybe even courts and trustees.

However, creditors do have a convincing argument that af-ter Espinosa, the Supreme Court has placed a heavy burden on creditors to review all chapter 13 plan provisions to protect their respective interests.

This is an ideal time for creditors to come together and begin a movement towards establishing fixed fees for costs incurred by creditors for plan reviews.

CONCLUSIONThough considered to be a landmark victory for debtors and

their counsel, Espinosa offers the possibility of many benefits to creditors.

First and foremost, the decision accentuates a bankruptcy court’s duty to confirm chapter 13 plans only if the court finds, inter alia, the plan complies with the applicable provisions of the Code.

Next, the Court cautions debtors’ counsel to carefully consider both the substantive and procedural postures in which they pres-ent claims, defenses and other legal contentions, and reminds debtors’ counsel of bankruptcy court’s sanctioning power.

Lastly, creditors may use the decision to advance ideas such as, a National Model Plan and fixed fees for plan review, which di-rectly benefit creditors.

Regardless of the underlying benefits the case stands to offer, the Court’s decision holds that creditors must be active partici-pants in bankruptcy proceedings.

Thus, if a creditor is notified of a chapter 13 plan’s contents and fails to object to confirmation of the plan before the time for ap-peal expires, that creditor has been afforded a full and fair oppor-tunity to litigate, and the creditor’s failure to avail itself of that opportunity will not justify a court setting aside a previous judg-ment simply because it is or may have been erroneous.

SAMMY HOODA is a Bankruptcy Associate at Brice, Vander Linden & Wernick, P.C. In 2006 Sammy received a Bachelor of Science in Economics from University of North Texas. He went on to graduate as Valedictorian from the Thurgood Marshall School of Law at Texas Southern University, where he also served as the Editor-in-Chief of the Thurgood Marshall Law Review. During his last semester in law school Sammy served as a Judicial Intern for The Honorable Jeff Bohm, United States Bankruptcy Judge for the Southern District of Texas. Sammy was admitted to practice law in the State of Texas in November 2009.


DA

TA

ISS

UE

SPA

GE

24

FO

CU

SU

P C

LO

SE

WIT

H B

RA

D C

LO

UD

» B

Y J

OE

M. L

OZ

AN

O

HOT SEAT

THE LEDGER: What companies did you work with prior to joining NBS and in what ca-pacities?

BRAD CLOUD: CitiFinancial — Director of Loss Recovery; California Federal Bank (Auto One) — Senior Vice President of Servicing; WFS Financial — Vice President of Regional Business Center; Hibernia Bank — Vice Presi-dent of Consumer Credit.

L: How did you hear about NBS?

BC: My first management job in 1992 included handling bankruptcy cases. I had no idea what to do. I met Lance Vander Linden and began the outsourcing experience, learning a lot a long the way.

L: As a previous client of NBS, what were your expectations of a national vendor that handled bankruptcy cases?

BC: Foremost are compliance and consistency in bankruptcy. Also, it would be critical to have the ability to forecast losses, expenses, recov-ery, and liquidity on a part of the servicing portfolio that is mostly overlooked.

L: What was a common issue that you had managing bankruptcy cases in-house?

BC: Numerous issues always existed — con-sistent performance, expense management, and overall compliance. The answers always seemed to become more expensive in hourly billing.

L: How many employees did you have before and after retaining NBS as your national bank-ruptcy company?

BC: Different scenarios based on volume — the average would be roughly twenty FTE in a bankruptcy unit. After outsourcing, I usually had two to four.

L: What was your biggest concern in outsourc-ing your bankruptcy work?

BC: The data / document exchange was always the first impediment. Also, aligning our servic-

ing goals with vendor productivity, getting the real return on your spend. A challenge I strong-ly believe we have now solved.

L: What brought you to NBS and what posi-tions have you held at NBS?

BC: As a client since 1992, I took part in many discussions over the years for improving pro-cess from the loan servicing perspective with NBS / BVW. When approached by Lance Vander Linden (president of Brice, Vander Linden & Wernick, P.C.) with the opportunity to improve NBS’ operational effectives, I thought it would be a great fit. My roll has been consistent with daily operational management and sales.

L: What have you learned as the COO of NBS in processing a bankruptcy portfolio that you were unaware of as a client?

BC: Complexity of Bankruptcy. As a client you understand bankruptcy to be a federal law — the same everywhere. Now as you get into bankruptcy this deep, every Judge, district, ju-risdiction and trustee has different interpreta-tions, agendas, and views. I have learned and am still learning the need to be very reactive in the world of bankruptcy servicing.

L: Do you have any insight as to the next big-gest issue(s) car and mortgage servicers should watch for?

BC: I continue to read and watch the loan modi-fication / loss mitigation progress or lack there of very closely. HAMP and other creditor programs have been mostly unsuccessful to this point, along with many borrowers still with negative equity and delinquencies rising. I would look for increased bankruptcies and bankruptcy judges having the ability to modify loans.

L: What interesting personal fact do most cli-ents not know about you?

BC: Most of the clients know me pretty well. In this industry the one fact everyone is most surprised to find out is that I do not play golf. I get many opportunities but have never played.

If two words were to be used to describe Brad Cloud, they would be “natural leader.” After five years of working with Brad, first as a Senior Vice President and eventually as NBS’ Chief Operating Officer, he has been successful in his approaches with staff, clients and colleagues. His demeanor is relaxed, which I attribute to his Louisiana upbringing, while his analyses are impressive and astute. With a laugh akin to Roscoe P. Coltrane from the Dukes of Hazard, Brad is a “good ol’ boy” who’s easy to work with and even easier to follow.

As the Chief Operating Officer at NBS and a former client, it was interesting to gain Brad’s perspective on managing a bankruptcy a portfolio then and now. To that end, he offered the following thoughts and experiences.

BY JOE M. LOZANO

Up Close with Brad CloudC

LO

UD

OUR MISSION IS SIMPLE. We strive to improve the bottom line performance of our clients’ bankruptcy portfolios through careful, efficient and client-specific management of each individual case.

NBS provides nationwide bankruptcy management services to the following types of organizations:

* Residential Mortgage Lenders

* Automobile Finance Companies

* Banks and Financial Institutions

* Consumer Lending Organizations

* Portfolio Servicers, Owners and Investors

Learn more about how our services, our technology and our people can help your organization today. Contact us and let us have the opportunity to discuss how we can work together.

NBS is a leader in bankruptcy servicing for the con-sumer finance industry. NBS is a subsidiary of Advent International.

ABOUT NBS

NATIONAL BANKRUPTCY SERVICES COMPANY NEWS

NBS NEWS DESKWWW.NBSDEFAULTSERVICES .COM

NBS APPOINTS DANIEL D. GRAY AS GENERAL COUNSEL National Bankruptcy Services’ President and Chief Executive Officer, Paul Bourke, announced today that DANIEL D. GRAY has been appointed Executive Vice President, General Counsel and Corporate Secretary for NBS. Mr. Gray brings over 20 years of legal experience and 24 years of experience in the housing and mortgage fi-nance industries. Gray comes to NBS from Fannie Mae where he served as Associ-ate General Counsel in Fan-nie Mae’s Legal Department.

During his twelve year tenure at Fannie Mae, Gray managed a team of attorneys providing support for Fannie Mae’s Credit Loss Management Division. Gray also provided support for Fannie Mae’s National Ser-vicing Organization, eBusiness and Southwestern Housing and Community Development Divisions. Gray received special recognition from Fannie Mae for his contribution to the company’s Hurricane Relief Effort.

Most recently, Gray played a key role in the devel-opment of Fannie Mae’s REO Rental Policy. Gray’s pri-or experience in bankruptcy includes serving as Fan-nie Mae’s Consumer Bankruptcy Lead. In this capacity, Gray managed consumer bankruptcy issues for Fan-nie Mae nationally.

Gray received a Juris Doctor degree from Suffolk University Law School and a Bachelor of Arts degree in Political Science and Economics from the University of Massachusetts, Amherst. Gray is licensed to prac-tice law in Texas, Massachusetts, Rhode Island and Pennsylvania.

LATEST NEWS

GR

AY

Headshots of Cloud and Gray courtesy of Nathan Whitney Photography.

TH

E L

ED

GE

RJ

ULY

20

10

NBS Ledger v01 i01

Documents

Transcript of NBS Ledger v01 i01