Jun 17

By Neil Garfield – LivingLies

Hat Tip to Beth Findsen who is a good friend and a great lawyer in Scottsdale, Az and who provided this case to me this morning. I always recommend her in Arizona because her writing is spectacular and her courtroom experience invaluable.

This case needs to be analyzed further. Robert Hager (CONGRATULATIONS TO HAGER IN RENO, NV) et al has succeeded in getting at least a partial and significant victory over the MERS system, and voiding robosigned documents as being forged per se. I disagree that a note and mortgage, once split, can be reunified by mere execution of an instrument. They are avoiding the issue just like the “lost note” issue. The rules of evidence and pleading have always required great factual specificity on the path of transactions leading up to the point where the note was lost or transferred. This Court dodged that bullet for now. Without evidence of the trail of ownership, the money trail and the document trail all the way through the system, such a finding leaves us in the dark. The case does show what I have been saying all along — the importance of pleading and admitting to NOTHING. By not specifically stating that there was no default, the court concluded that Plaintiffs had failed to establish the elements of wrongful foreclosure and left open the entire question about whether such a cause of action even exists.

But the more basic issue us whether the homeowner can sue for quiet title and damages for slander of his title by the use and filing of patently false documentation in Court, in the County records etc. The answer is a resounding YES and will be sustained should the banks try to move this up the ladder to the U.S. Supreme Court. This opinion changes again my earlier comments. First I said you could quiet title, then I said you first needed to nullify title (the mortgage) before you could even file a quiet title action. Now I revert to my prior position based upon the holding and sound reasoning behind this court decision. One caveat: you must plead facts for nullification, cancellation of the instrument on the grounds that it is void before you can get to your cause of action on quiet title and damages for slander of the homeowner’s title. My conclusion is that they may be and perhaps should be in the same lawsuit. This decision makes clear the damage wrought by use of the MERS system. It is strong persuasive authority in other jurisdictions and now the law for all courts within the 9th Circuit’s jurisdiction. [read more]

Jun 12

By Ian D. Volner and Mark S. Goodrich – Mondaq

Over the past couple of months, we have been waving the caution flag in the air while attempting to warn businesses about the potential liability for violations under the TCPA. In our previous posts, we noted the numerous consumer lawsuits that have been filed against businesses throughout the country, a list which continues to grow on a weekly basis (see our TCPA Update for more recent filings). On May 19, 2014, the Federal Communications Commission (“FCC”) announced a record $7.5 million fine against Sprint Corp. (“Sprint”) in a settlement for violations of the “Do-Not-Call” law, which should send a clear message to telemarketers that class actions are not the only threat to a telemarketer’s bottom line. Indeed, the FCC’s statement on the settlement explicitly states:

We expect companies to respect the privacy of consumers who have opted out of marketing calls. When a consumer tells a company to stop calling or texting with promotional pitches, that request must be honored. Today’s settlement leaves no question that protecting consumer privacy is a top enforcement priority.

First, a brief refresher of the “Do-Not-Call” law’s history and basic statutory framework may be helpful. Under 15 U.S.C. § 6151, the “Do-Not-Call Registry Act of 2003″ went into effect in 2003, establishing a national registry for consumers to opt out of telemarketing calls for free. The statute formally ratified the FTC’s do-not-call registry provision of the Telemarketing Sales Rule, 16 C.F.R. § 310.4(b)(1)(iii). The “Do-Not-Call Implementation Act of 2003,” 15 U.S.C. § 6152 et seq. authorized the FCC to issue do-not-call regulations under the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227 et seq. As a result, in June 2003, the FCC supplemented its TCPA rules to also include a national Do-Not-Call list. As a result, businesses must comply with both FCC and FTC regulations when making telemarketing calls. Note that the FCC Guide on Unwanted Marketing Calls indicates the law applies only to personal landline and wireless phones—not business phones. The “Do-Not-Call” law also exempts calls made with express prior written consent, calls made by nonprofit organizations, or calls from a person or organization with an established business relationship. [read more]

Jun 10

By John Rossman – insideARM

The Consumer Financial Protection Bureau (CFPB) recently began a more aggressive approach to the debt collection industry, bypassing the larger market participant examination process and issuing Civil Investigative Demands (CIDs) to a number of debt collectors focused on specific complaints and alleged practices.

The demands are not benign; they typically require time and resources to prepare the response and can often lead to shelling out real money for defense. [read more]

Jun 9

By Kenneth R. Harney – The Columbian

Is partisan warfare on Capitol Hill over taxation of medical devices crushing thousands of homeowners’ plans to do short sales this year?

Medical devices? What connection could heart pacemakers, dentures and LASIK eye surgery machines possibly have with short sales?

More than you’d probably guess.

Just talk to Geoffrey Brencher, a high school teacher in Weston, Conn. For the past nine months, Brencher and his wife have been negotiating a short sale on their home, which has an underwater mortgage: the loan balance exceeds the property value.

The Brenchers recently received final approval from their bank to proceed with the sale provided the closing can occur no later than June 27. As part of the deal, the couple would get $75,000 of their mortgage debt canceled by the lender.

But here’s the complication: If they close and accept the debt cancellation, there is a serious risk under federal law that the Brenchers could face a $20,000-plus income tax demand from the Internal Revenue Service. That’s because the Mortgage Forgiveness Debt Relief Act expired Dec. 31, and its reauthorization is stuck in Congress.

First enacted in 2007, the law allows qualified homeowners who receive debt cancellations from lenders through short sales, foreclosures and loan modifications to be exempt from the federal tax code’s standard requirement: Any amount of debt that is forgiven by a creditor generally is treated as ordinary income to the borrower and is taxable at regular rates. During the housing bust and its aftermath, the mortgage debt forgiveness exemption has proved invaluable to large numbers of homeowners who ended up — often through no fault of their own — with underwater mortgages.

With the expiration of the debt forgiveness statute, owners who do short sales in 2014 cannot be certain that they will avoid taxation on their forgiven mortgage debt. In the absence of a reauthorization by Congress retroactive to Jan. 1, there is a real possibility that short-sellers in most parts of the country will face hefty income tax hits next year. (California residents are exempted on short sales because of an IRS interpretation of state law.) [read more]

Jun 9

By Barry M. Benjamin and Jeremy A. Schachter – Lexology

Connecticut recently passed S.B. 209, a new law aimed at aggressive telemarketing tactics. The law, which goes into effect on October 1, 2014, strengthens Connecticut’s already existing “Do Not Call Registry” by banning unsolicited commercial text and media messages and “robocalls” without prior affirmative consent by the consumer. Thus, regardless of whether a consumer has already requested to be placed on the Do Not Call Registry, the law prohibits traditional text messages; messages that contain audio, photographic, or video content; and automatically dialed calls that play prerecorded content when answered, unless the consumer has first assented to their receipt. [read more]

Jun 5

By Hunter Stuart – The Huffington Post

People with overdue bills have long complained of harassment from debt collectors, from late-night phone calls to frightening in-person visits. Now it appears the industry has found far more troubling strategy: Filing lawsuits against debtors — often, consumer advocates say, on the theory that they won’t ever show up to court to defend themselves.

The consequences are dire when the debtors don’t appear in court. A judge can put a lien on someone’s home, garnish wages, even freeze bank accounts — all without a person ever getting a chance to fight their case. And at times, collectors file suit in error. Consumers interviewed for this story described cases where they were never told they were being brought to court, or were sued for debts on credit cards they never had.

“Over the years we’ve heard from thousands of people who’ve found themselves at the end of one of these default judgments,” said Susan Shin, a senior staff attorney at the New Economy Project, a consumer advocacy group. “And most of the people we talk to haven’t received any kind of notice that they were going to be sued.”

Willie Wilson, a 69-year-old retired veteran from Elgin, Texas, lost his late mother’s home because he never received notice that a debt collector had sued him. Wilson learned when he had the house appraised in 2009 that a collection agency had filed suit against him earlier that year over an unpaid $2,500 MasterCard bill.

Wilson was troubled on two accounts: While normally Wilson would have been “served” a summons to appear in court, he said he never got one. And, he said, he never had a MasterCard.

But since he had been found liable in court, it was too late. He didn’t have the $3,500 he now owed. The law in Texas allows a debt collector to force the sale of a home if it’s not someone’s primary house. Wilson, who inherited the three-bedroom bungalow from his mother, figured he would sell it himself first.

“I really didn’t want to sell it,” Wilson said. “I was gonna fix it up and eventually pass it on to my kids.”

As the debt industry has ballooned over the past decade, collectors’ lawsuits against consumers have skyrocketed. A study published last year found there were more than 200,000 cases filed in New York in 2011 alone. [read more]