Alabama Consumer Law Blog

Mortgage News Daily has posted an article about the SEC's charges of fraud against three executives' activities at New Century Mortgage.

The U.S. Securities and Exchange Commission (SEC) has accused Brad Morrice, former Chief Executive; Patti Dodge the former CFO and former Controller David Kenneally of covering up the "rapidly declining financial condition of their firm before it filed for bankruptcy in April, 2007."

They are officially charged with not keeping investors informed about the company's financial condition, accounting violations and causing "substantial investor losses."

The company announced in February 2007 that it had to restate its 2006 financial statements at which point its stock plunged 36 percent to the high teens. It was trading at less than $1 when the company finally filed for bankruptcy.

If you have had problems with fraud, feel free to contact us. You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

CNN.com has posted an article about a woman's interesting lawsuit regarding her husband's 2005 death. Dianne McLeod, the widow of Stanley McLeod, is suing Green Tree Servicing, their mortgage company, for contributing to his death. Mr. McLeod had a severe heart condition (and was even airlifted to a hospital because of a heart attack in 2002) and went on disability, thus resulting in the couple falling behind on their mortgage payments.

McLeod said she thinks he would be alive if not for the stress caused by Green Tree's debt collectors. She said they sometimes called up to 10 times a day and also called the McLeods' neighbors.

"He would begin to sweat; he would also get very red in the face and complain about chest pains," McLeod said. "We were worried he was gonna have a heart attack right there on the phone."

Mrs. McLeod claims that the constant stress from the debt collectors' harassing and constant phone calls ultimately led to the heart failure that killed her husband in 2005. They would call the couple all throughout the day and night and left rude and threatening messages.
Naturally, Green Tree Servicing claims his death was not caused by their harassment.

"The collection activity did not lead to his death. The claim is meritless," said Senior Vice President and General Counsel Brian Corey of Green Tree Servicing.

"We deny that the content, the number or the timing of the calls had anything to do with him dying in 2005," Corey said.

Debt collection is regulated by the U.S. Federal Trade Commission, which forbids harassing consumers. Companies can be fined $16,000 per incident. This year, as the economy plunged, consumer complaints shot up. More than 45,000 complaints had been received by the FTC through the end of June, up about 20 percent over last year.

If you have problems with creditor harassment, feel free to contact us. You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

Attorney Benny Kass has an interesting article in the Washington Post about defenses to foreclosures that we recommend you read.

Read the entire article (where he answers a question about foreclosure defenses) but here are some of the highlights:

-- Active military duty. If you are on active duty, you have the right to have the foreclosure determined by a court instead of losing your home through a non-judicial sale at an auctioneer's office. The judge must postpone the process for up to nine months if you formally request that. Discuss your rights with your commander and with the judge advocate general where you are stationed.

-- Fair Debt Collection Practices Act. Typically, the lender's attorney will start the process by sending you a notice of foreclosure. That notice must contain language advising you that it is an attempt to collect a debt. If, within 30 days of receiving that letter, you question the amount claimed to be owed, the attorney is legally obligated to provide you more details as to how the amount was calculated.

-- Errors. Once you have received the verification, review it carefully. Lenders and their computers do make mistakes. Have all your payments been credited? Are the late fees consistent with the terms in your promissory note?

-- Force-placed insurance. Lenders properly require that you carry adequate homeowners insurance. In case of a fire or other damage to your house, the lender needs to know there will be insurance coverage either to repair the property or to pay down the outstanding mortgage loan. If your insurance is canceled, lenders will obtain a policy for you, and this is called "force-placed" coverage. Typically, the cost of this insurance is astronomical. Review the loan verification documents you receive from the attorney. Is there a charge for this insurance, and is it valid? If your lender has been escrowing for taxes and insurance, the lender was required to pay the annual insurance premium. Accordingly, you should not be charged for any additional insurance.

-- Escrow for taxes. We all have heard horror stories about lenders that did not pay the real estate tax, despite the fact that they were escrowing money monthly, or that paid the tax late and the borrower was charged the penalty and additional interest. Again, check to see whether this happened to you.

-- Truth in Lending Act. The lending law requires lenders to make certain disclosures to you before you sign the mortgage documents. Under certain conditions, you have the right to completely rescind the transaction. You should have received all of the documents you signed when you went to settlement. If not, ask the settlement lawyer or title company to immediately send you a complete copy of your settlement file. Review it carefully, though this is a technical law and your attorney should be consulted for advice.

Thanks to the Washington Post and Benny Kass for writing this very timely and important article.

If you live in Alabama and have questions about foreclosure issues, feel free to call us at 205-879-2447 or contact us through our website.

Our friend Denise Richards, of givemebackmycredit.com, has posted an article about Sidejacking. Sidejacking is a threat that is not really new, but many people still don't know about the risk that can lead to identity theft.
Sidejacking occurs when a person hacks into a wireless internet connection and steals your personal information. Websites like Facebook, Myspace and various emails through search engines are at risk of being hacked if you login on wireless connections at public locations such as airports, coffeeshops, hotels, etc.

The sidejacker does not gain access to your specific username and password, but he does obtain the unencrypted session ID that is transmitted over the wireless connection from the website back to you. If the hacker gains access to the session ID, then he can enter the session and gain access to most of the information in your account.

However, sidejacking doesn't attack your computer like a virus or spyware, therefore, the hacker doesn't have access to every piece of your information. You can protect yourself from being a victim of sidejacking by avoiding the wireless internet provided in public places while you're out. If you must use the internet on a public connection, try to avoid checking your bank account and other important accounts. You can check the security settings on your router at home to further protect yourself.

If you have had problems with identity theft, feel free to contact us.You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

Donna St. George of the Washington Post has a tragic story (with a slight happy ending) about a woman who made $15,000 a year being given a loan for a $700,000 house with over $5000 a month payments.

The story contains: foreclosure, fraud, ignoring warnings, promises, dreams of wealth, hitting rock bottom, and more.

I don't want to say any more about it - just read this story. The writing is excellent - the story is compelling - and you will get a taste for what the real estate boom (aided by or caused by fraud) did and is doing to real people.

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The Michigan Collection Law Blog has posted an article that gives consumers some excellent pointers on how to protect yourself from fraud...and avoid identity theft in the process.

. 1. Do not sign the back of your credit cards. Instead, put "PHOTO ID REQUIRED" or "SEE ID."

2. When you are writing checks to pay on your credit card accounts, DO NOT put the complete account number on the "For" line. Instead, just put the last four numbers. Your credit card company knows the rest of the number, and anyone who might be handling your check as it passes through all the check processing channels won't have access to it.

3. Put your work phone number on your checks instead of your home phone. If you have a P.O. Box use that instead of your home address. If you do not have a P.O. Box, use your work address. Never have your social security number printed on your checks. You can add it if it is necessary.

4. Place the contents of your wallet on a photocopy machine. Do both sides of each license, credit card, etc. You will know what you had in your wallet and all of the account numbers and phone numbers to Call and cancel. Keep the photocopy in a safe place.

Also carry a photocopy of your passport when you travel either here or abroad. We've all heard horror stories about fraud that's committed on us in stealing a name, address, social security number, credit cards.

The attorney that originally wrote this had his wallet stolen. Within a week, the thieve(s) ordered an expensive monthly cell phone package, applied for a VISA credit card, had a credit line approved to buy a Gateway computer, received a PIN number from DMV to change my driving record information online, and more.

But here's some critical information to limit the damage in case this happens to you or someone you know:

5. We have been told we should cancel our credit cards immediately. But the key is having the toll free numbers and your card Numbers handy so you know whom to call. Keep those where you can find them.

6. File a police report immediately in the jurisdiction where your credit cards, etc., were stolen. This proves to credit providers you were diligent, and this is a first step toward an Investigation (if there ever is one).

But here's what is perhaps most important of all:

7. Call any one of the national credit reporting organizations, Experian, Trans Union, or Equifax immediately to place a fraud alert on your name. By placing a temporary fraud alert on one of your credit reports, you have effectively notified all three bureaus as the one that you have notified is required to notify the others as well. You should also call the Social Security Fraud Department. I had never heard of doing that until advised by a bank that called to tell me an application for credit was made over the internet in my name. The alert means any company that checks your credit knows your information was stolen, and they have to contact you by phone to authorize new credit.

If you have had problems with fraud or identity theft, or have questions, feel free to contact us.You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

Abusive debt collectors operate from a place of intense arrogance toward consumers. They are arrogant because of two reasons:

1. You don't know the law and don't know they are breaking the law; and
2. Even if you know, you won't do anything about it.

Example Of Arrogance
Here's the best example I can think of - why do collection agencies leave voicemails where they break the law? Think about it - why would a law breaker want to record their lawbreaking? The abusive debt collector is saying "I want you to have a permanent record of me breaking the Fair Debt Collection Practices Act!" Either they are stupid or they are arrogant and don't think they will get in trouble for it.

Abusive debt collectors are many things but typically they are not stupid. They act in a way that leads to you paying them money, whether you truly owe it or not.

So This Leaves Us With Arrogance.

Arrogance that you don't know when they are breaking the FDCPA or state law. Arrogance that you don't know that it is illegal to threaten to have you arrested or to call your neighbors or family members or to lie to you, etc.

And arrogance that even if you know the collection agency is breaking the law you won't be willing or able to do anything about it. Arrogance that you can't find a lawyer to help you. Arrogance that you won't take the time to document the abuses, save the voicemails, get the statements from your neighbors who have been called, etc. Arrogance that you won't sue these jokers and make them pay for breaking the law.

Why The Arrogance?
What gives them the belief they can get away with abusing you on your phone, or threatening to sue you after you have won your collection case against them, or keeping false credit information on your credit reports, etc?

They get away with it. All the time. Well, nearly all of the time. So when they do something wrong and almost always "get away with it" and violating the law makes them a ton of money, why stop?

Putting morals and right and wrong aside, it makes good economic sense the way that abusive debt collectors run their business. That's why a lot of the owners of these places live in mansions and drive fancy cars. Remember they aren't stupid - they are being very deliberate in breaking the law in order that they can illegally profit off of you.

Three Step Solution
You want to stop them? You want them to stop harassing you? Three steps.

First, learn about your rights. Read this blog, our website, attend our seminars, research the law on line, etc.

Second, document the abuses. Use the collection log that Pete Barry (fantastic FDCPA lawyer in MN) developed. If it is legal, record their calls - we don't think its necessary but if you do it legally then it can be a big help in your case. But whatever you do, document every bit of contact you have with the collection agency.

Third, when appropriate, sue them. Sue them under state law. Or the FDCPA. Or the FCRA. Or all of these. But sue them.

Do your part to stop the arrogance of these abusive debt collectors by suing them to protect yourself and the community. Feel free to call us at 205-879-2447 or through our website.

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We have often talked about the outrageous conduct that often occurs when debt collectors start suing Alabama consumers. In general, most of them take a "presumed guilty" position with the Alabama consumers they call or sue. Then when we sue these collectors for suing the wrong person they become outraged at being sued. Ironic, huh?

A recent article in the NY Times by Jim Dwyer gives an example of the typical attitude of big collection lawfirms. [Note most Alabama collection firms are not like this - but some are...]

Here is the gist of what happened:

Clearly, they had the wrong Mark Hoyte. But that did not stop the lawyers at Pressler & Pressler from suing him. They swore out a complaint and sent a summons to Mr. Hoyte, ordering him to be in court last Monday.

Then things took a rare turn.

Every day of the year, 1,000 cases on average are added to the civil court dockets in New York City over credit card debt — a high-volume, low-accuracy moment of reckoning. The suits are usually brought by collection companies that purchase the debt for pennies on the dollar from card issuers and then work with a cadre of law firms that specialize in collection work.

Conducting a digital dragnet, they troll through commercial databases searching for debtors. Because of the vast sloppiness and fraud involved, Attorney General Andrew M. Cuomo has shut down two of the collection firms and is suing 35 law firms tied to the business.

A person who blows off a civil court summons — even if wrongly identified — faces a default judgment and frozen bank accounts. But to date, there have been few penalties against collectors for dragging the wrong people into court.

Until Mr. Hoyte turned up last week in Brooklyn.

On the trial date, the Judge probed into this matter and the collection firm wanted to simply dismiss Mr. Hoyte from the case but not compensate him for suing him even when they knew he did not owe the debt.

Take a look at the attitude of this collection firm as it will give you insight into the arrogance of collection agencies and debt collectors in general:

Under questioning by the judge, Mr. Hoyte recounted being called about the debt, providing his Social Security number and date of birth, and being summoned to court anyhow.

The collections lawyer then began to interrogate Mr. Hoyte.

“You claim you told Pressler & Pressler it wasn’t you,” Mr. Wang said to Mr. Hoyte. “Did you send them proof, as in a copy of your Social Security number with only the last four digits visible?”

“No,” Mr. Hoyte said. “They didn’t ask for it.”

“But you didn’t send any written proof of the claim that it was not you?” Mr. Wang said.

“I told them on the phone it’s not me,” Mr. Hoyte said.

Mr. Wang appeared outraged.

“So without any written proof that it’s not you, you would expect someone just, you know, to go on say-so?” he demanded. “Is that correct?”

Alice had reached Wonderland: The lawyer who had sued the wrong man was blaming the wrong man for getting sued.

You can read a list of frequently asked questions about debt buyer lawsuits on our website or you can go to our speciality site which has information about debt collection lawsuits. You can also call us at 205-879-2447 or contact us through our website.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

PS - Great article by Jim Dwyer. If you are wondering, yes this appears to be a violation of the Fair Debt Collection Practices Act even though lawyers that defend collectors argue they can sue the wrong person and take it all the way to trial (to see if the consumer will not show up so a default will be taken) and then dismiss without any penalty. That's bogus folks.....

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The Indiana Consumer Lawyer Blog has posted an article about a recent development with Carfax. Carfax has put all the vehicle identification numbers (VINs) available on its website to be searched for free.

However, Robert Duff, the author of the blog post, suspects that Carfax might be intentionally making it difficult for consumers to locate the free reports.

...I spent about ten minutes searching for it and could not find it. It wouldn't surprise me if Carfax is making it intentionally difficult to access so that frustrated consumers will just decide to buy a regular Carfax report on the car. I could be wrong. Maybe the website is set up so that no reports are sold on Cash for Clunker vehicles but instead when a person tries to buy a report on such a car a huge warning pops up. I hope so. But knowing what I know about Carfax, I have my suspicions.

Since so many vehicles were "retired" during Cash for Clunkers, it is likely that several will start showing up for sale again as lemons from dishonest dealerships.

If you have had problems with faulty Carfax reports or something similar,and feel you have grounds for a lawsuit feel free to contact us.You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

The Bankruptcy Law Network has posted an article, originally from USAA Magazine, that outlines ten easy steps for financial recovery.

1. Budget And Save

2. Cut Spending

3. Track Daily Expenses

4. Set Goals-Specific – no vagueness — Hannon’s debtor made a definite timeline and a definite amount.
Measurable–Hannon’s debtor was vague here (”Debtfree”); instead, “I want to pay off $XXX of my debt in five years.”
Attainable–the goal must be reachable. I.e., Ms. Hannon’s debtor should not make a goal of “I want to pay my entire debt of $35,000 in one year.” –not if she is making less than $60,000/year.
Realistic–The goal has to be within the realm of possibility (see above).
Timely–the goal should have smaller checkpoints within the main deadline –to make sure the goal is being approached.

5. Take a Second Job.

6. Pay Off High Interest Loans Systematically.

7. Pay Bills Automatically Online.

8. Find Out Your Credit Score.

9. Fix Credit Score Errors.

10. Do Periodic Check-ups.

We don't cover bankruptcy, but if you have questions about your mortgage or forclosure, feel free to contact us.

The New York Times discusses a trend that is helpful to individual consumers but perhaps not so helpful to the rest of us: Debt buyers buy up blocks of defaulted mortgages, offer to reduce the amount owed by individual consumers, and then get the government to back the loans.

As millions of Americans struggle to hold on to their homes, Wall Street has found a way to make money from the mortgage mess.

Investment funds are buying billions of dollars’ worth of home loans, discounted from the loans’ original value. Then, in what might seem an act of charity, the funds are helping homeowners by reducing the size of the loans.

But as part of these deals, the mortgages are being refinanced through lenders that work with government agencies like the Federal Housing Administration. This enables the funds to pocket sizable profits by reselling new, government-insured loans to other federal agencies, which then bundle the mortgages into securities for sale to investors.

While homeowners save money, the arrangement shifts nearly all the risk for the loans to the federal government — and, ultimately, taxpayers — at a time when Americans are falling behind on their mortgage payments in record numbers.

This is a good summary of this intriguing practice:

It is too early to know how the new loans will work.

David H. Stevens, the new commissioner of the F.H.A., said he was monitoring F.H.A. lenders but did not have thorough information about which ones work with distressed investors. So far he has not seen a problem from loans coming from hedge funds.

“They’re helping to protect people in their homes and they’re refinancing people from a distressed situation,” he said.

But he acknowledged that funds have an incentive to aggressively push homeowners into federally guaranteed loans, since the investors get their money back as soon as they complete the refinancing.

If you are presented with this opportunity, or any opportunity to modify your loan, its always a good idea to make sure that whatever the modification is you can live with it or otherwise you are just delaying the inevitable.

We'll keep you posted on this new approach that debt buyers are using.

If you live in Alabama and would like to discuss your experience with mortgage companies or debt buyers or if you are or have faced foreclosure, feel free to let us know and we'll be glad to meet with you to discuss your legal options.

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