On Wednesday May 23rd New Century borrowers faced off against Suzanne Uhland of O’Melveny and Myers in the New Century Bankruptcy proceedings. In a classic game of “I don’t know” Uhland patiently answered questions from the borrowers in regards to how New Century and its counsel (Uhland) put together the constructive bar date notice program. Uhland, famous for her role in the Blue Sonic debacle where Uhland subverted the claim of VIA Investments in favor of other creditors so Uhland could “curry favor for referral business”, demonstrated why she was selected by the likes of the New Century executives for putting together the bar date notice program.
The Global Bar Date Notice
In business bankruptcy proceedings the United States Supreme Court found, in Mullane v Central Heating, that it is not enough to know a bankruptcy proceeding has proceeded, creditors are entitled to actual (or constructive) notice of the Bar Date. New Century, while claiming that borrowers were seen as sources of income and not potential creditors, designed the Constructive Bar Date Notice to include a 1 day placement of an ad in the Wall Street Journal (in the legal font size of 6pt) which is a national publication to cover all unknown creditors, and “any such” local newspapers or publications as the Debtors so fit. This of course was the only local ad the Debtors deemed appropriate – a 1 day ad placement in the Orange County Register.
Parsing the words of the order by seizing upon the words of “any such” – it is clear that Uhland set up the bar date notice to notice as few of the consumers harmed by New Century’s predatory lending acts as possible. She did what New Century paid her to do – she earned the five million in fees paid to OMM – and what she did wasn’t illegal, just sleazy and in my book, unethical. But the law allows for unethical sleazy behavior; Uhland and the New Century global notice is proof of that.
Uhland also testified that the estate could not afford more than $12,000 dollars to invest in the Constructive Notice Bar Date – ergo why only two papers. The estate could afford fees of five million dollars to her firm, but not a measly 100,000 to put together an ethical, fair notice program.
When asked if she felt that borrowers who were subject to fraudulent appraisals from New Century should be considered as potential creditors, Ulhand testified she could not imagine a “world in which a lender would use a fraudulent appraisal” – and she said it with a straight face. Clearly she has not followed any of the Washington Mutual, Countrywide, or NEW CENTURY employee claims of using fraudulent appraisals. Uhland is a real piece of work and now ranks at the top of my Sleazy Attorneys list. Her and Treder could be real friends.
The Disgusting slimy truth that the law (and borrowers) must live with
While Judge Carey has not issued his ruling on the Global Constructive Bar Date Notice, it is clear that he is in quandary in that the bankruptcy proceedings must have“finality” and come to a conclusion; while at the same time I think he recognizes New Century and Ulhand’s Constructive Bar Date Notice was sleazy. I don’t know what his final ruling will be but I am not hopeful that he will open up the “floodgates” to allow aggrieved homeowners to submit claims. The New Century executives will get away with yet again, victimizing homeowners they preyed on. However, I do not believe that Carey will entirely close the door on an individual basis and that he will, from both a position of equitable consideration and within the law, make room for those borrowers who can prove they were not noticed properly. Only his final ruling will tell the story but it is clear from the incredibly patient, compassionate approach he took with the evidentiary hearing, he is a Judge with a conscious that is interested in doing the right thing, within the confines of the law.
Jacobs and crew (Hahn Hessen) did what any self respecting law firm and Liquidating Trustee would do
As much as I want to really dislike this crew I find it impossible. With all the law firms I have dealt with through this debacle called “homeownership” - I find the Hahn Hessen group to be professional and frustratingly likable. The evidentiary hearing crystallized for me some issues I had not considered nor understood. Jacobs is in the unenviable position that the borrowers are – none of us has any individual with “personal knowledge” of the dealings of New Century; we all must contend with what story the debtors “books and records” tell – or doesn’t tell.
Jacob’s role is to liquidate the assets of the debtors and disburse the proceeds to the recognized creditors of the estate. While most of us mistakenly believe he is “defending” New Century - the reality is he is defending the rights of those creditors who have been recognized by the Court, not New Century. I suspect deep down he finds New Century exectuives to be a bit of a disgusting lot as those executive clearly do not share the core values that Jacobs has demonstrated through out his career. Jacobs takes his position seriously and zealously protects the interest of the creditors. For those of us outside of this recognized “universe of creditors” – we are frustrated and angry at his denial of our entrance; knowing full well if we were inside the universe we would be praising him for doing such a good job of protecting our piece of the leftover pie.
Jacobs and Hahn Hessen are doing what they are supposed to do, protect the estate as per the confirmation plan approved by the Court. To not do so what be improper and probably land them into some kind of legal trouble for ignoring the plan as approved by the Court. Jacobs has no room to grant payments based on equitable restitution – if you want a piece of the pie you will have to prove you are entitled to that piece; and I suspect once you do (if you do), Jacobs with his bow tie, along with the Hahn Hessen team will work just as diligently to protect your interest in the left over pie as they have for the existing, approved creditors.
The case of New Century is not closed, though it clearly is nearing a final resolution. There are but a handful of homeowners fighting for some form of restitution for being placed into the “ticking time bombs of financial destruction” that new Century sold them. The seriousness in which each homeowner takes their claim varies – some continue to sidestep their responsibility to appear before Judge Carey with a variety of issues – ranging from “not feeling well” to “abscessed tooth” excuses to an honest explanation that they are too broke to travel to Delaware. Carey cannot judge the borrowers creditability via the phone; Carey has always maintained that any homeowner seeking an entrance into Jacob’s protection will have to appear before the Court in person.
As pro se’s most of us are gulping from the fire hose to understand the law, rules, and procedures – and Carey has given Pro Se’s a lot of leeway in staking their claims but at some point he will be forced to say “Enough!” – get it together and do what the law requires or face a complete denial of your claim.
Sitting there in the Courtroom, listening to the myriad of excuses for defying the Judge’s orders was painful. As a pro se I recognize the major handicap all pro ses work under, and having a Judge willing to work with our limited knowledge has been invaluable; for myself there is no way in which I would intentionally raise his ire by outright defying his orders. To me that is an unnecessary battle – we all need the Judge on our side as much as possible and disrespecting his position as the Judge doesn’t seem like a wise and prudent strategy. I am truly confounded by those who think they can continue down this path of defiance and suffer no consequences for doing so. The end result will be a deafening silence in which the borrower loses the only ally they may possibly have – the Judge.
The End Has Yet To Be Written
The Missal Report is a very telling document. Michael Missal did a root cause analysis of New Century’s filing false financial statements with the SEC; his report details the how and the why. It is in the why that many homeowners can begin to put together the puzzle of predatory lending practices that led to their foreclosure. Whether they seek to go after New Century through the bankruptcy or to go after investors who most likely have no holder in due course protections – downloading and reading the report is an invaluable insight into the sleazy, greedy world of Brad Morrice, Monica McCarthy and the other executives who profited so handsomely from deceiving and victimizing homeowners.
In the coming weeks there will be more motions written and Carey will soon issue his ruling as to the Global Bar Date Notice along with orders on the individual claimants. As I continue this legal battle I will keep you up to date and let you know how my claim is progressing. Until then…
KEEP UP THE FIGHT!