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The U.S. Supreme Court has declined to hear a bankruptcy case in which a lender had contended that it did not violate the automatic stay in bankruptcy when it exercised its rights under the Real Estate Settlement Procedures Act ("RESPA") and reanalyzed a debtor couple's escrow account to determine how much money the couple needed to deposit to cover taxes assessed after they had filed their bankruptcy petition (Countrywide Home Loans Inc. v. Francisco Rodriguez, No. 10-1285, Chapter 13, U.S. Sup.; See 7/6/11).

After Francisco and Anna Rodriguez filed for Chapter 13 bankruptcy in the U.S. Bankruptcy Court for the District of New Jersey, the couple filed an adversary complaint against their lender, Countrywide Home Loans Inc., contending that it had violated the automatic stay by requiring them to deposit more money into their escrow account.

Steven J. Baum, P.C. was dropped by Fannie Mae and Freddie Mac, the mortgage-finance companies operating under U.S. conservatorship, from their list of law firms eligible to handle foreclosures.

Fannie Mae said that, "After Nov. 15, 2011, servicers may not refer any new Fannie Mae foreclosure or bankruptcy cases in New York to Steven J. Baum PC..."

On November 10, 2011, Freddie Mac announced its ban. So, both companies said the Baum firm would continue to work on matters referred before the effective dates. Neither said why the firm was being suspended.

Last month, Steven J. Baum PC, one of the largest foreclosure law firms in New York state, agreed to pay the United States approximately $2 million so to resolve a probe of its foreclosure filings. The agreement concluded an investigation into whether the firm filed misleading pleadings, affidavits and mortgage assignments in courts, according to a statement by U.S. Attorney Preet Bharara in Manhattan. The settlement didn't constitute a finding of wrongdoing.

It seems that such non-compliances truly burden the homeowners the most because they are the ones that have to ultimately face eviction. The lenders will recover losses from the TARP funds or mortgage insurance if applicable.

Click here to read on how to avoid foreclosure.

The bankruptcy filing by Jefferson County that includes Birmingham is the largest ever municipal bankruptcy. According to sources, county commissioners decided to declare bankruptcy because creditors balked at economic concessions outlined in a September deal.

The county is facing $4.23 billion in debt, according to the Birmingham News. The largest creditor, JPMorgan Chase & Co., owns about $1 billion of the county's $3.14 billion in sewer construction bonds. Reuters says the sewer bonds had soured in the mid-2000s amid corruption that led to bribery and fraud charges.

The county, listed assets and debt of more than $1 billion in Chapter 9 bankruptcy petition filed on November 9, 2011 in U.S. Bankruptcy Court in Birmingham.

The threat of bankruptcy has loomed over the county for more than three years and inspired provisions in the federal Dodd-Frank law seeking to protect localities from complex financial trades involving derivatives.