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Market Snapshot January 28, 2022

Good Friday AM,

Bonds are mixed this morning with the ten-year slightly down in price and MBS slightly up. Equities are in the green as is crypto. The news today was overwhelmingly bond friendly with some very important releases like PCE Prices, Personal Income, Personal Spending and Consumer Sentiment all missing expectations. This will not be enough to offset The Fed’s hawkish remarks on Wednesday, or yesterday’s huge GDP number. If the stock market continues to crash and finds itself in solid bear market territory, we may begin to see a bigger move out of risk-on assets and into risk-OFF assets like bonds. We are not there right now. With the huge swings we are seeing now daily, it is worth locking on the up days until we see some more normalized trading patterns.

Not that any of us want to offer legal advice, but knowledge is important. And in this case, it is certainly worth recommending any clients to see true legal counsel.  There is west court of appeals which just came down with an opinion that:

A borrower’s bankruptcy discharge does not start the six-year statutory period for enforcing the entire debt!

There is a long history of cases here so I will try to be brief. The most often recited is a ruling by the Western District of Washington in Jarvis v. Fannie Mae, the Edmundson dicta took flight. The court in Jarvis stated that “(b)ecause the Edmundsons owed no future payments after the discharge of their liability, the date of their last-owed payment kickstarted the deed of trust’s final limitations period. (…) The holder of the deed of trust had six years from that date to foreclose on the Edmundsons’ home.” In the same ruling, the Court in Jarvis stated that the opinion in Edmundson “do(es) not demand that acceleration automatically accompany discharge because acceleration occurs at the creditor’s option when certain conditions are met.” The Ninth Circuit affirmed Jarvis in June of 2018 relying entirely on Edmundson. Specifically, Nevada: In Ramanathan v. Bank of N.Y. Mellon, the United States District Court of Nevada considered the effect of a bankruptcy discharge on both judicial and non-judicial options for recovery and split their opinion, relying on Jarvis for one. In the context of judicial foreclosure only, the Court accepted Jarvis in reasoning that the ability to commence a judicial foreclosure accrued when the debtor was discharged or the court lifted the bankruptcy stay because “(a)t that point, BONY knew or should have known that it had six years to pursue a judicial foreclosure based on the breach of the note and deed of trust.” While this is not precedential, as we have learned from Silvers and Jarvis, a district court ruling can take on a life of its own.

Please remain safe and healthy, enjoy the weekend and first, make today great.