Alabama Consumer Law Blog

Denise L. Evan's Real Estate Advice has posted an article about a new money scam that has been going around.

The scam works when an "overseas buyer" contacts a real estate agent and puts an offer in on an expensive house for sale. The buyer says they don't need to see the house before signing the contract because the online information is so thorough. So they sign the purchase contract and even put down a large deposit. When they send the check to the real estate agent, it looks legitimate--and is even the trust account of a large law firm. If the agent were to contact the law firm they would be told both the account and the account holder are legitimate. The check is even bigger than the money deposit amount and doesn't seem suspicious in any way.

The instructions that come along with the check say that a portion is to be used for the earnest money, and the balance should be sent to another account that the buyer will use to buy furnishings for the house. You wait ten days to make sure you have good funds. Nothing bad happens. You write a check, or you wire transfer the money, for the “home furnishings” account, and retain the balance as the earnest money.

If the real estate agent contacted the law firm's CFO or another managing partner, they would be told that the check is a "first class forgery." People usually don't take the extra step of contacting the law firm to verify the check and just wait the 10 days and assume everything is fine if the check goes through without any problem.

The genius of this type of scam is that law firms typically only check their account balances every 30 to 60 days or so. A large law firm almost always has enough in its account to cover a cashed check- real or fake- so the check doesn't bounce and no attention is drawn to the situation. Eventually, someone at the law firm will go in and balance the account and notice the forged check and will notify the bank, which will immediately put the money back in the firm's account since a "forged drawer's signature" is illegal. The firm's bank then back-charges the money to the real estate agent's bank to take the money out of the agent's account.

Since the agent was the first person to take the fake check, the whole fiasco means that they have to net the loss personally.

All this charging back and taking money out of accounts happens pretty quickly once the law firm reports the check was a forgery. If the check you received was $30,000, and $20,000 was supposed to be earnest money and $10,000 sent to the home furnishings account, then you will still have the $20,000 in your trust account. The bank will take that money—no harm to you. BUT, the $10,000 you sent to the home furnishings account will be long gone. The bank will take $10,000 of other trust funds out of your trust account, causing you all sorts of problems.

If you don’t have enough money in your account, your bank will sue you for it. You will have absolutely no defenses to any of this. Yes, you can sue the people who committed the fraud, but how are you going to find them?

To avoid a scam like this one, you should always check whitepages.com or some other source to get the phone number of a law firm that supposedly has just issued you a check. Contact them to make sure the check is legitimate and you'll save yourself a lot of grief and, ultimately, a lot of money. Calling the phone number on the check wouldn't be beneficial; you would likely end up talking to the scammer who would pretend to be the CFO of the law firm.

If you have been a victim of a scam or some other type of fraud and have questions or concerns, feel free to contact us through our website or by calling 205-879-2447.

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The New York Times has posted an article that discusses the interesting case of Ms. Elizabeth Warren, who is a law professor and bankruptcy expert and is responsible for setting up the Consumer Financial Protection Bureau. In a House hearing in March, Republicans accused Warren of overstepping her credentials and legal authority by helping state attorney generals come up with settlements for mortgage servicing cases.

The accusations are pretty vague, as it's not illegal for a federal official to give advice to state officials. Rather, it seems that the accusations against Warren might be to prevent her from actually being able to help and protect consumers.

And Republicans were clearly also hoping that if they threw enough mud, some of it would stick. For people like Ms. Warren — people who warned that we were heading for a debt crisis before it happened — threaten, by their very existence, attempts by conservatives to sustain their antiregulation dogma. Such people must therefore be demonized, using whatever tools are at hand.

Let me expand on that for a moment. When the 2008 financial crisis struck, many observers — myself included — thought that it would force opponents of financial regulation to rethink their position. After all, conservatives hailed the debt boom of the Bush years as a triumph of free-market finance right up to the moment it turned into a disastrous bust.

About 10 years ago Ms. Warren was also one of the few people who realized that household debt had doubled for the 30 years preceding the current housing crisis. Later she became and advocate for financial reform, saying that too many problems came up when lenders pushed their borrowers into "taking obligations" they didn't fully understand.

Given Ms. Warren’s prescience and her role in shaping financial reform legislation — not to mention her effective performance running the Congressional panel exercising oversight over federal financial bailouts — it was only natural that she be appointed to get the new consumer protection agency up and running. And it’s hard to think of anyone better qualified to head the agency once it goes into action.

The fact that she’s so well qualified is, of course, the reason she’s being attacked so fiercely. Nothing could be worse, from the point of view of bankers and the politicians who serve them, than to have consumers protected by someone who knows what she’s doing and has the personal credibility to stand up to pressure.

The interesting question now is whether the Obama administration will see the war on Elizabeth Warren for what it is: a second chance to change public perceptions.

The bizarre allegations against Ms. Warren are actually offering the government the perfect opportunity to continue the debate for financial reform and to focus on crooked Wall Street practices.

If you would like more information on foreclosures, please check out our articles The Three Stages Of Foreclosure In Alabama and Wrongful Foreclosures In Alabama.

If you have further questions or concerns, feel free to contact us through our website or by calling 205-879-2447. You may also obtain a copy of our free book on stopping wrongful foreclosures and the problems of hidden fees by emailing us. We have also started handling bankruptcy cases.

You can join our Facebook Fan Page - Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

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 that discusses how LPS (formerly named Fidelity National Default Solutions), which is responsible for nearly half of all mortgages in the US, had an "epidemic of forged mortgage documents" for April...and the month isn't even over yet.

The article mentions one employee in particular- Ms. Linda Green. Ms. Green is the vice president of 20 banks and is "super human" in that she can single handedly process thousand of mortgage assignments in a single day. But it turns out she wasn't so super human, but rather about a dozen other LPS employees were signing her name on thousands of valuable documents that were used to foreclose on homes. The documents with her forged signature were then notarized by other employees, feeling that it added an "authentic touch."

Also in April, the Federal Reserve ordered all mortgage servicers to re-evaluate their foreclosure procedures and if fault was found they were to reimburse the damaged homeowners.

LPS and the other dirt-bag mortgage servicers – including Citibank, Bank of America, JPMorgan Chase and Wells Fargo – signed Consent Orders agreeing to change their evil ways and come clean. But in typical LPS double-speak fashion, an LPS representative responded to the consent order by stating, “The Order does not make any findings of fact or conclusions of wrongdoing, nor does LPS admit any fault or liability.”

A federal bankruptcy judge has used a former LPS employee's testimony to show that the company has adopted fraud as a regular business practice.

Ms. Dory Goebel was a LPS employee who was caught posing as the Assistant Secretary for Option One Mortgage Corporation and had filed an Affidavit in a bankruptcy case to allow LPS to foreclose on the family's home. Ms. Goebel testified that the family was behind on mortgage payments and thusly Option One should be removed from the bankruptcy case.

The only problem with her testimony was that the family had made all their payments. After several hearings, Option One's lawyers admitted that their only contact on the case was actually with LPS and not Option One at all.

Judge Magner, who presided over the case, certainly had an opinion:

Default affidavits are a lender’s representation as to the status of a loan. They are routinely accepted in both state and federal courts in lieu of live testimony. They are an accommodation to the lending community based on a belief by the courts that the facts they present are virtually unassailable. The submission of evidence by affidavit allows lenders to save countless hours and expense establishing a borrower’s default without the need for testimony from a lending representative. While they can be refuted by a borrower, too often, a debtor’s offer of alternative and conflicting facts is dismissed by those who believe that a lender’s word is more credible than that of a debtor. The deference afforded the lending community has resulted in an abuse of trust. [Emphasis added.]

If you would like more information on foreclosures, please check out our articles The Three Stages Of Foreclosure In Alabama and Wrongful Foreclosures In Alabama.

If you have further questions or concerns, feel free to contact us through our website or by calling 205-879-2447. You may also obtain a copy of our free book on stopping wrongful foreclosures and the problems of hidden fees by emailing us. We have also started handling bankruptcy cases.

You can join our Facebook Fan Page - Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

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 Ledger.com has posted an article that discusses how the recession and the real estate market's collapse have impacted the divorce rate in the US. For example, in 2008 the divorce rate in Orlando, Florida was at 7% but rose to 12% in 2010.

Divorcing couples usually cite financial hardship as the reason for their split, but during an economic recession, such as 2007-2009, couples usually "hunker down" and rely on each other to get through. However, this "hunkering down" has historically led to an upturn of divorces as soon as the economic outlook improves, as people are reluctant to divorce when everything is going so badly economically and when the housing market has plummeted and led to a huge rise in foreclosures.

"When the economy goes down, many people just don't have the money or will to do it (divorce)," he said, "but when they feel that financially they can get out of a bad marriage, they're more willing to take on the fight."

"There's a sort of pent-up demand for divorce after people get through tough times," he said. "We saw that in what happened after the Great Depression, when the Depression lifted and divorce increased toward the end of the 1930s."

More wealthy couples are divorcing too, not because of the economy, but rather because of their financial portfolio. The bottom line is that the recession has affected everyone- rich or poor- and has certainly caused financial worries.

"I think the biggest mistake people make when things start to go downhill is waiting too long to seek help," she said. "They should seek professional help sooner rather than later -- don't wait too long. There's no shame in having financial problems. Many people do these days."

If you would like more information on foreclosures, please check out our articles The Three Stages Of Foreclosure In Alabama and Wrongful Foreclosures In Alabama.

If you have further questions or concerns, feel free to contact us through our website or by calling 205-879-2447. You may also obtain a copy of our free book on stopping wrongful foreclosures and the problems of hidden fees by emailing us. We have also started handling bankruptcy cases.

You can join our Facebook Fan Page - Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

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:

AJC.com has posted an article that discusses select mortgage companies were ordered by the government to overhaul their foreclosure practices. The order came after an investigation showed that the 14 mortgage companies were not doing enough to help struggling homeowners and were improperly documenting their paperwork.

The companies are required to hire consultants to re-evaluate foreclosures from 2009 and 2010 and will have to reimburse homeowners if discrepancies are found in the foreclosure's processing.

The settlement between the servicers and federal banking regulators could help the U.S. Justice Department determine the size and scope of fines for the flawed practices, regulators said. The department is negotiating a global settlement that, if realized, would include fines from regulators as well as state officials.

“There will be civil money penalties. The issue is time and amount,” acting Comptroller of the Currency John Walsh told reporters in a conference call.

Some of the mortgage include big-name companies like Sun Trust Mortgage, Bank of America, JP Morgan Chase, Citigroup and Wells Fargo. Sun Trust reported in February of this year that it recognized problems with about 4,000 foreclosure cases and will do what it can to cooperate with the government's new requirement. Sun Trust also says it has taken steps to amend documentation errors being called "robo-signing," but stressed that there is not a problem with its internal servicing. Banks claim the reason most foreclosure errors occur is because they are overwhelmed by the sheer volume and are unable to process and document each one individually.

All of the affected mortgage servicers have agreed to stop executing "dual track foreclosures," which is when the bank goes ahead and seized a home even in the midst of negotiation with the delinquent homeowners. JP Morgan said it may add as many as 3,000 new employees to double check their foreclosures, which will cost roughly $1.1 billion.

“The enforcement orders issued today are important, but they are only a first step in setting out a framework for these large institutions to remedy these deficiencies and to identify homeowners harmed as a result of servicer errors,” the FDIC said in a written statement.

Several other mortgage servicers are included in the government's crackdown to improve internal processing methods, including:

the GMAC unit of Ally Financial Inc., Aurora Bank FSB, EverBank Financial Corp., HSBC Holdings Plc, OneWest, MetLife Inc., PNC Financial Services Group Inc., Sovereign Bank, and US Bancorp also signed consent agreements with regulators. Mortgage Electronic Registration Systems Inc., or MERS, of Reston, Va., and Lender Processing Services Inc. of Jacksonville, Fla.

So far it's unclear how much this required reimbursement to homeowners will end up costing the banks, but it certainly sends a clear message to mortgage servicers: be honest and thorough regarding foreclosure practices.

If you would like more information on foreclosures, please check out our articles The Three Stages Of Foreclosure In Alabama and Wrongful Foreclosures In Alabama.

If you have further questions or concerns, feel free to contact us through our website or by calling 205-879-2447. You may also obtain a copy of our free book on stopping wrongful foreclosures and the problems of hidden fees by emailing us. We have also started handling bankruptcy cases.

You can join our Facebook Fan Page - Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

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 New York Times has posted an article that discusses how divorced homeowners are undertaking the difficult task of having their spouse's name removed from the mortgage after buying out their share, which leads many people to assume that refinancing is the only option for them.

There is another much less complicated option that most people don't know about. You can contact your lender about obtaining a release of liability, which will remove your ex-spouse's name from the loan note, leaving it solely in your name. It's much simpler and cheaper than refinancing.

However, not all lenders offer release of liability as an option. The lenders will most likely run a credit check on both of you and require that you meet a minimum credit score standard and cannot be behind on monthly mortgage payments. The lender may also require that any investors in the loan agree to the deal after the loan is sold off.

If you're behind on mortgage payments, then release of liability is not an option.

“This is a common and often messy business,” said Jack Guttentag, a mortgage expert and emeritus finance professor at the Wharton School of Business at the University of Pennsylvania. “Lenders seldom have a reason to take a co-borrower’s name off the note.”

But, he added, if a homeowner can prove that he or she can afford the payments and meet the required credit criteria — typically those of the investor in the loan — then release of liability may work.

Neil B. Garfinkel, a real estate and banking lawyer in New York, says the lender will require the borrower to prove that they are able to meet the mortgage payments without their former spouse. This can be proved through bank statements, investment statements, and tax returns. Having one name removed actually protects the credit score of both people. If the former spouse was late on paying other debts then a lien could be placed on the home had their name not been removed. If the spouse taking over the home's mortgage became delinquent on payments, then the former spouse's credit score wouldn't be impacted at all.

Most divorce settlements stipulate one of two outcomes for marital property. Either the house must be sold, or the person wanting to keep the property must buy out the other’s share, usually within months of the date of the settlement, and get the other party’s name off the mortgage — either through refinancing or a release of liability — typically within a year.

Under the second option, the former spouse signs a quit-claim deed at the divorce settlement, relinquishing his or her claim to the property. But while that action takes the former spouse off the house’s title and leaves it in one name only, it does nothing to remove his or her name from the actual mortgage.

Participating servicers and lenders charge anywhere from $300 to $1,000 to execute a release of liability. An additional application fee is required, which usually costs $250 to $500. The process usually takes between 30 to 90 days.

If you would like more information on foreclosures, please check out our articles The Three Stages Of Foreclosure In Alabama and Wrongful Foreclosures In Alabama.

If you have further questions or concerns, feel free to contact us through our website or by calling 205-879-2447. You may also obtain a copy of our free book on stopping wrongful foreclosures and the problems of hidden fees by emailing us. We have also started handling bankruptcy cases.

You can join our Facebook Fan Page - Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

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 New York Times has posted an article that discusses one of the problems that may arise when homeowners fall behind on their mortgage payments: Who really owns the loan?

The article specifically mentions the case of Ms. Zella Mae Green from Georgia who had filed for bankruptcy back in 2004 to save her home from foreclosure. She and her lawyer needed to know two things that were very complicated to find out: Did she owe any back payments on her mortgage? And if so, to who? Those questions seem simple enough, but it took Wells Fargo until this year to answer them for her.

Ms. Green's records showed that she was only behind 4 payments on her $40,250 mortgage due to being laid off and having to pay medical bills. However, Wells Fargo insisted that she owed 113 back payments, adding up to $48,000. But Wells Fargo wasn't the only institution claiming to own her mortgage; two other institutions were claiming it as well... at the same time.

Howard Rothbloom, a foreclosure defense lawyer in Marietta, Ga., represents Ms. Green. “The point of this whole case is that inaccurate, incomplete and conflicting information has been provided to Ms. Green over the course of seven years,” he said. “Determining the balance due on her loan should not have to be so difficult.”

Mr. Rothbloom filed a suit in May 2006 with the intent to find out who actually owned Ms. Green's loan. While in court, three Wells Fargo employees each gave different representations about where Ms. Green's note was. Each story was very different. One said the note was lost, another said the note was never transferred to Wells Fargo and couldn't possibly have been lost by them, and the last said that the company had found the note and it was on file in Maryland.

Regardless of the complications, it appears that Ms. Green has won her lawsuit after 7 years. She and Wells Fargo reached a confidential settlement in February of this year.

If you would like more information on foreclosures, please check out our articles The Three Stages Of Foreclosure In Alabama and Wrongful Foreclosures In Alabama.

If you have further questions or concerns, feel free to contact us through our website or by calling 205-879-2447. You may also obtain a copy of our free book on stopping wrongful foreclosures and the problems of hidden fees by emailing us. We have also started handling bankruptcy cases.

You can join our Facebook Fan Page - Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

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:

StarTribune.com has posted an article the state of Minnesota's lawsuit against a debt collection firm. The case is actually the first "enforcement action" case in the country against a debt collector for the use of robo-signing.

Minnesota attorney general Lori Swanson has charged Midland Funding LLC, a debt collection company based in St. Cloud, with "robo-signing" thousands of collection documents and didn't verify them for accuracy. Robo-signing in such a high volume caused lawsuits to be filed against consumers all across the country. The lawsuits are being categorized as false and deceptive and attempted to scare people into paying off debts that weren't theirs. Debt buyers like Midland always allege that false debts aren't their fault because when they purchase the debt from another company, many times all the information they receive is the debtor's name and the amount owed. There is rarely any additional information to follow up with. Midland has filed more than 15,000 lawsuits in Minnesota against consumers since 2008 which makes it one of Minnesota's biggest lawsuit filers. In 2009 the company filed 245,000 lawsuits against consumers nationally.

Midland employees have admitted to robo-signing up to 400 affidavits a day and never took the time to verify the accuracy of the debts. The majority of the debts were "zombie debts" (debts that are 10 or more years old) that were purchased for cents on the dollar from credit card companies and other businesses. Midland has declined comment on the case, but says it takes the allegations very seriously.

"This company has a history of targeting people and assuming they owe them money until the citizen can show they don't owe the money," said Swanson, appearing at a capitol press conference with five Minnesotans who had been subjected to the practice. "It really flips the process on its head because a debt collector or a debt buyer shouldn't be targeting anybody for payment of a bill unless they substantiate that a person actually owes the money."

Midland has said that it changed collection practices back in 2009 after a class action lawsuit was filed against the company in Ohio. That case was recently settled for $5.7 million.

The Star Tribune reported last June that Midland had obtained $30 million in judgments against debtors in Minnesota from 2005 through 2009, the most of any collection firm. The revelation was part of the newspaper's investigative series entitled, "Hounded," which revealed the aggressive tactics used by debt collectors.

If you are experiencing a debt collector trying to collect a debt from you that isn't yours, or if you are being harassed by a debt collector, and have questions or concerns, feel free to contact us through our website or by calling 205-879-2447.

You can join our Facebook Fan Page - Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

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 Indiana Consumer Lawyer Blog has posted an article that discusses what you can use to protect yourself if a debt collector is trying to collect a debt (or an incorrect amount) that you don't owe.

The Fair Debt Collection Practices Act is a wonderful asset that was designed to protect consumers from abusive and/or inaccurate debt collection. Debt collectors usually try to force you to pay a debt by putting it on your credit report, which makes it look like the debt is legitimately yours. They can also call you, send you things in the mail, and even file a lawsuit against you. Some debt collectors even resort to harassment to try to scare you into paying. The FDCPA makes it illegal for debt collectors to try and force you to pay off a debt that isn't yours.

When a debt collector violates the FDCPA they have broken the law and can be sued and taken to Federal court. The outcome of the lawsuit can include having the debt removed from your credit report and forcing the debt collector from continuing to collect on the debt.

If you are experiencing a debt collector trying to collect a debt from you that isn't yours, or if you are being harassed by a debt collector, and have questions or concerns, feel free to contact us through our website or by calling 205-879-2447.

You can join our Facebook Fan Page - Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

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:

Boston.com has posted an article about how home appraisers are being blamed for the huge number of home sales that aren't selling for the appraised amount.

A survey in January showed that 25% of real estate agents were "left scrambling" when the actual sale price of the home was less than the appraisal. 10% of agents say they lost deals and 15% say their sellers had to lower the asking price or put more equity into the home. A third of home builders are also blaming lost sales on low appraisals.

It sounds like a good idea to blame appraisers for the continuing downward spiral of the housing market; after all, it's the appraisers' reporting low home values holding the housing market down, right?

Not exactly. That's what the big shots of the real estate market want people to believe so that appraisers are blamed and not them, but it's just not true. Home prices have fallen all over the country and the number of foreclosures continues to rise. The massive inventory of cheap foreclosures for sale is also hurting the prices and sales of new homes.

If you would like more information on foreclosures, please check out our articles The Three Stages Of Foreclosure In Alabama and Wrongful Foreclosures In Alabama.

If you have further questions or concerns, feel free to contact us through our website or by calling 205-879-2447. You may also obtain a copy of our free book on stopping wrongful foreclosures and the problems of hidden fees by emailing us. We have also started handling bankruptcy cases.

You can join our Facebook Fan Page - Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

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: