Foreclosure Date Set

[duncan65]

Chase is not working with me I am still trying. They have set a forclosure date for August 3rd, if I file a Chapter 7 a few days before forclosure date, do the have to start foreclosure over, about how much more time would that give me in the house. I am starting to feel that if they are not going to work with, then I am not going to help them at all. Also how does the Keys for Cash work?

[dealingwithHomeEq]

Beware that if you file a pro se Chapter 7 with the intent not to follow through, you may not be able to get the case dismissed if you have substantial assets.

On the other hand, a Chapter 13 filer has the right to dismiss without the court's permission. In fact, a Chapter 13 will get dismissed automatically when you don't follow through with the required schedules and plan. Actually, a Chapter 7 will too, but if you have assets, the trustee may file a motion to extend the deadline to keep the case from being automatically dismissed and try to hold you to your Chapter 7 filing.

In either case, 362's automatic stay will still apply, but the bank will go into court and move to lift the stay and they'll usually succeed. It may delay it for a month or two, depending on how busy the courts and the banks are in your area. Once they non-judicially foreclose (trustee sale), they usually have to go into state court with a forcible detainer action to get the sheriff to throw you out. That can take several weeks itself.

With all the recent foreclosures, I'm wondering how long it will be before ordinary people become angry enough to take to the streets and start torching houses that are empty and owned by the banks who have been completely compensated for their losses either through PMI, FHA insurance or the taxpayer being forced to buy up all the toxic crap so the banks can brag about how much money they made last quarter.

Where will it end? Bastille Day?

[duncan65]

Thanks, no I do not have enough assets to matter. I really want to keep my house, but I will not do a Chapter13, to long with too many restrictions. I am at a point where I qualify for a 7 through the means tset because I was laid of in Nov. 08 and just am starting a job, this monday. The repayment plan chase sent me is too much, is it negotable? I have a V.A loan, is there anything the V.A can do to help?

[dealingwithHomeEq]

I think VA loans are recourse, even in states that have laws that would otherwise make them non-recourse. VA loans are governed by federal law and the argument would be that any state anti-deficiency judgment statute would be "preempted" by the federal law. I don't know how likely it would be, though, for the government to sue you for a deficiency judgment.

Regarding filing for Chapter 13, I totally agree with you. Anyone who thinks that he will make it five years in this economy without losing his job and having his case dismissed needs to join the sunshine pumping idiots at CNBC who think the worst is behind us. Chapter 13 is simply a 5-year debtors' prison and most of the cases either get dismissed or converted to a Chapter 7 along the way.

People were holding off filing for Chapter 7, hoping that legislation would be passed to allow bankruptcy judges to modify mortgages in a Chapter 13. Now that it's dead, you're going to see an even greater surge of Chapter 7 filings.

[dealingwithHomeEq]

961 F.2d 129, *; 1992 U.S. App. LEXIS 5557, **;
92 Cal. Daily Op. Service 2768; 92 Daily Journal DAR 4369


MICHAEL L. CONNELLY; PETER MASON; THOMAS P. JONES; LAWRENCE J. WALSH; DAVID L. BURROWS, individually and on behalf of all others in the State of Oregon similarly situated, Plaintiffs-Appellants, v. EDWARD J. DERWINSKI, Secretary, Veterans Affairs; UNITED STATES OF AMERICA; VETERANS ADMINISTRATION, Defendants-Appellees.

No. 89-35543

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

961 F.2d 129; 1992 U.S. App. LEXIS 5557; 92 Cal. Daily Op. Service 2768; 92 Daily Journal DAR 4369

December 10, 1991, Argued and Submitted, San Francisco, California
April 1, 1992, Filed

PRIOR HISTORY: [**1] Appeal from the United States District Court for the District of Oregon. D.C. No. CV 88-867-RE. James A. Redden, District Judge, Presiding.

CASE SUMMARYPROCEDURAL POSTURE: Appellant veterans challenged an order from the United States District Court for the District of Oregon, which entered summary judgment for appellee Secretary of Veterans Affairs in appellants' action to enjoin appellee from proceeding against them to collect a deficiency from the foreclosure of homes.

OVERVIEW: Appellant veterans who defaulted on their loans and whose property was foreclosed sued appellee Secretary of Veterans Affairs to enjoin him from proceeding against them to collect the deficiency. On undisputed facts, the district court granted summary judgment to appellee. On appeal, the court affirmed and found that the Oregon anti-deficiency law denied appellee any recourse against the defaulting veteran. Appellee could not secure a deficiency judgment regardless of whether it foreclosed judicially or non-judicially. The court held that the Oregon law was preempted by Veterans Administration regulations.

OUTCOME: The court affirmed an order granting summary judgment to appellee Secretary of Veterans Affairs in a case brought by appellant veterans. The court held that an Oregon anti-deficiency law was preempted by Veterans Administration regulations.



COUNSEL: David A. Leen, Leen & Moore, Seattle, Washington, and Margaretta Eakin, Portland, Oregon, for the plaintiffs-appellants.

Malcolm L. Stewart, United States Department of Justice, Washington, D.C., for the defendants-appellees.

JUDGES: Before: William A. Norris, Robert B. Beezer, and Edward Leavy, Circuit Judges.Opinion by Judge Norris.

OPINION BY: NORRIS

OPINION

[*130] OPINION

NORRIS, Circuit Judge:

We are asked to determine, once again, whether a state anti-deficiency scheme is preempted by Department of Veteran Affairs (VA) regulations that authorize the VA to collect deficiencies on VA-guaranteed home loans. This case involves Oregon law, which forbids a deficiency judgment after either a judicial or a non-judicial foreclosure sale. See Or. Rev. Stat. § 86.770(2). In United States v. Rossi, 342 F.2d 505 (9th Cir. 1965), we held that a California anti-deficiency law, which in all material respects is identical to Oregon law, is preempted by the VA regulations. Id. at 506. Subsequently, in Whitehead v. Derwinski, 904 F.2d 1362 (9th Cir. 1990), [**2] we held that a Washington anti-deficiency law, which permits a deficiency judgment after a judicial, but not a non-judicial sale, is not preempted by the VA regulations. Id. at 1369. In Whitehead, we distinguished the Washington anti-deficiency law from the California anti-deficiency law. Id. at 1368. Because the Oregon anti-deficiency law is materially different from the Washington anti-deficiency law, but identical to the California anti-deficiency law, we hold that this case is controlled by Rossi and that the Oregon law is preempted by the VA regulations.

I

HN1The Department of Veterans Affairs provides housing assistance to veterans by guaranteeing home loans made to veterans by private lenders. Under the terms of the program, if a veteran defaults on the loan payments, the Secretary of Veterans Affairs ("the Secretary") is obligated to reimburse a private lender for up to the lesser of 60% of the loan amount or $ 27,500. The applicable regulations state that "any amount paid by the Secretary on the account of the liabilities of any veteran guaranteed or insured under [this program] [*131] shall constitute a debt owing to the United States [**3] by that veteran." 38 C.F.R. § 36.4323(e).

HN2When a guaranteed loan has gone into default, the Secretary's preferred practice has been to permit the private lender to foreclose the residential property in question. If the amount recovered in the foreclosure sale has been below the amount to which the lender is entitled under the terms of the guarantee, the Secretary has paid the difference to the private lender. He then attempts to recover the deficiency directly from the veteran.

Oregon law prohibits deficiency judgments regardless whether the creditor forecloses judicially or through a trustee sale. See Or. Rev. Stat. § 86.770(2). Relying on the Oregon anti-deficiency statute, Oregon veterans who defaulted on their loans and whose property was foreclosed sued the Secretary to enjoin him from proceeding against them to collect the deficiency. The Secretary argued that the Oregon anti-deficiency law is preempted by the applicable VA regulations which make the veterans personally liable for the deficiencies. On undisputed facts, the district court granted summary judgment to the Secretary. The veterans appeal. We review a summary judgment de novo. See Harkins Amusement Enters., Inc. v. General Cinema Corp., 850 F.2d 477, 482 (9th Cir. 1988), [**4] cert. denied, 488 U.S. 1019, 109 S. Ct. 817, 102 L. Ed. 2d 806 (1989).

II

In interpreting the forerunner of the current regulation, 38 C.F.R. § 36.4323(e), the VA took the position that veterans were personally liable for deficiencies even if "the creditor could not at the time [the VA] sues [the veteran] maintain a suit against the latter." Decisions of the Administrator of the Veterans' Administration, No. 625 at 1154, 1157 (Jan. 22, 1945) quoted in Whitehead, 904 F.2d at 1365. In United States v. Shimer, 367 U.S. 374, 6 L. Ed. 2d 908, 81 S. Ct. 1554 (1961), the Supreme Court agreed with the VA that the federal statutory and regulatory scheme provided an independent right to indemnity. 1 Id. at 387-88. We have held that California's anti-deficiency provisions, which the appellants concede are indistinguishable in all relevant respects from the Oregon statute, may not impair the VA's federal right to indemnification. See Rossi, 342 F.2d at 506; McKnight v. United States, 259 F.2d 540, 543-44 (9th Cir. 1958).


FOOTNOTES

1 The veterans argue that Shimer is no longer good law. We reject this argument. Not only has the Supreme Court not overruled Shimer, it has continued to cite Shimer with approval. See Fidelity Fed. Sav. & Loan Ass'n v. De La Cuesta, 458 U.S. 141, 153-54, 73 L. Ed. 2d 664, 102 S. Ct. 3014 (1982) (quoting Shimer, 367 U.S. at 383).



[**5] The veterans urge us to revisit our holding in Rossi and McKnight in light of the VA's revision of its regulations. They argue that the revised regulations do not preempt an anti-deficiency law such as Oregon's that prohibits any anti-deficiency judgment regardless whether the lender forecloses judicially or non-judicially. The veterans rely primarily on Whitehead, in which we held that the revised regulations did not preempt Washington's anti-deficiency law. The veterans' reliance on Whitehead is misplaced.

In Whitehead, we analyzed the differences between the original and revised regulations as follows:

While the regulations [still] provide for an independent right of indemnity, they do not establish specific foreclosure procedures. In contrast to the tightly woven regulation addressed in Shimer, the regulations addressing foreclosure procedures are a loose framework that takes its substance and specificity from applicable state or local laws.

Whitehead, 904 F.2d at 1368 (citations omitted). We observed that the current regulations "do not indicate an intent to displace applicable state law, as did the regulations in Shimer." [**6] Id. So long as state law provides a means that allows the Secretary to exercise his right of indemnity and receive the full measure of protection without displacing state law, we reasoned, [*132] the state law is not preempted. Id. at 1368-69.

We then evaluated the Washington anti-deficiency law in light of this analytical framework. Under Washington law, the Secretary has two options: (i) he can foreclose judicially and collect a deficiency judgment; or (ii) he can foreclose non-judicially in which event he forfeits his right to collect a deficiency judgment. Wash. Rev. Code Ann. §§ 61.24.040, 61.24.100. We held that Washington law is not in conflict with federal law because it gives the Secretary the option of securing a deficiency judgment by foreclosing judicially. We said, "Given the availability of the judicial foreclosure alternative, . . . the VA may not choose the non-judicial foreclosure alternative, and then resort to its right to indemnity." Id. at 1369 (emphasis added).

In Whitehead, we distinguished the Washington scheme from the California anti-deficiency law, which prohibits a deficiency judgment after either a judicial [**7] or a non-judicial foreclosure. After noting that a district court had found the California anti-deficiency law to be preempted by federal law even under the revised VA regulations, see Jones v. Turnage, 699 F. Supp. 795, 799 (N.D. Cal. 1988), aff'd without opinion, 914 F.2d 1496 (9th Cir. 1990), cert. denied, 111 S. Ct. 1309, 113 L. Ed. 2d 243 (1991), we said, "California, unlike Washington, precludes lenders from collecting deficiency judgments under any circumstances[; t]he California scheme was therefore inconsistent with the federal regulation's protection of the VA's right to proceed personally against the debtor." Whitehead, 904 F.2d at 1368.

In sum, like the California law, the Oregon anti-deficiency law materially differs from the Washington anti-deficiency law in that it denies the Secretary any recourse against the defaulting veteran. The Secretary may not secure a deficiency judgment regardless whether it forecloses judicially or non-judicially. Because the Oregon anti-deficiency law is identical to the California anti-deficiency law and because Rossi is not in conflict with Whitehead, Rossi is dispositive [**8] of this case. 2


FOOTNOTES

2 To remove any possible doubt about the state of the law in our circuit, we take this opportunity to express our agreement with Jones, see 699 F. Supp. at 799, which we affirmed in an unpublished memorandum disposition.



In light of the foregoing, we affirm the district court's summary judgment to the Secretary.

AFFIRMED.