Dec 26

By Patrick Lunsford – InsideARM

For the past month, the debt collection industry has been abuzz over the Consumer Financial Protection Bureau’s (CFPB) Advance Notice of Proposed Rulemaking (ANPR) for debt collection. While the stated purpose of new rules is to update the aging Fair Debt Collection Practices Act (FDCPA), there have been some clues that the ARM industry might find relief from a surge in lawsuits claiming violations of another law.

As we noted in the last issue of Know Your Debtor, individual and class actions brought against debt collectors under the Telephone Consumer Protection Act (TCPA) have been growing rapidly. Not only are TCPA cases more attractive to plaintiffs’ attorneys, market forces are driving actual violations of the letter of the law.

Mobile phone use in the U.S., as with the rest of the world, has exploded in the past decade. The TCPA sits at an uncomfortable intersection between a technology that is critical to consumers – cell phones – and a tool that is critical to collection operations — automatic dialers.

The TCPA is enforced by the Federal Communications Commission. So how does the CFPB fit into the equation?

In its ANPR announcement, the CFPB made a point of noting that one area of rule reform it would be exploring is technology. In fact, the Bureau’s Director, Richard Cordray, said in his press conference, “Updating the legal framework to protect today’s consumers and to allow fair and appropriate use of modern technology is a high priority for the Consumer Bureau, which motivates this Advance Notice of Proposed Rulemaking.”

Other CFPB officials went even further. On a conference call with reporters the day before the release of the ANPR, one senior CFPB official noted that there is a need to include new communication technology in debt collection rules, using cell phones as a specific example. [read more]

Dec 20

By State of California Department of Justice – Office of the Attorney General

Attorney General Kamala D. Harris today announced a $2.1 billion multistate and federal settlement with Ocwen Financial Corporation and Ocwen Loan Servicing, LLC (Ocwen) over alleged mortgage servicing misconduct.

The settlement makes California homeowners eligible to receive up to $268 million in first lien principal reductions and nearly $23 million in cash payments to borrowers.

“This settlement will help homeowners who’ve been misled while trying to modify their Ocwen mortgages,” said Attorney General Harris, “But our work isn’t done. Too many California families are still ?coping with uncooperative banks and mortgage service providers. My office will continue to fight on their behalf.”

The settlement resolves allegations that Ocwen engaged in robo-signing, “dual tracking” of borrowers seeking loan modifications, and other misconduct in the course of its mortgage servicing activities. The settlement also resolves similar allegations against Homeward Residential, Inc. and Litton Loan Servicing, LP, which Ocwen acquired.

Ocwen holds nearly 390,000 loans in California, of which 12% are underwater. Ocwen holds approximately 6% of all California underwater loans.

The national settlement requires Ocwen to pay $125 million to borrowers whose homes were foreclosed between 2009 and 2012 and commit to $2 billion in first lien principal reduction loan modifications over the next three years. The Consumer Financial Protection Bureau was the lead agency for the negotiations. The settlement was signed by 49 states and the District of Columbia, including California.

Joe Smith, who served as the Monitor for last year’s National Mortgage Settlement, will monitor the settlement nationally. [read more]

Dec 12

By Tara Dodrill – Off The Grid News

Las Vegas government officials may be expanding their leadership roles to include the real estate business.

The city of North Las Vegas is among several cities who are debating the idea of using eminent domain to seize foreclosed homes – a controversial move that has opposition from many circles, including those opposed to government growth and waste, and firm believers in private property rights. Five towns in California already approved the much-criticized program. San Bernardino and Chicago lawmakers considered and then rejected the property seizures initiative. Cities are saying they’ll seize the homes if banks don’t agree to work with the owners.

If North Las Vegas goes forward with the eminent domain project, it will be the largest city to do so to date, according to KVVU-TV in Las Vegas. Supporters of the idea say a multitude of residents are underwater on their mortgages and in desperate need of a solution to their home ownership problems. Taking over bad mortgages, supporters say, will ultimately keep the city form losing out even more on potential property taxes. Opponents note that eminent domain is designed to take private property for public use, and not to seize private property just to turn around and keep it private.

Several thousand North Las Vegas homeowners would qualify for the municipal program. Even with bargain basement real estate prices, the taxpayers would be forking over a hefty sum to buy the foreclosed properties. Using eminent domain laws to acquire land or structures not destined for public use has also caused significant ire among area voters. The Greater Las Vegas Association of Realtors (GLVAR) opposes the eminent domain plan so strongly the organization launched a statewide commercial campaign against it.

“The last thing the community of North Las Vegas needs is a reckless program like this that jeopardizes private property rights and hurts the entire community with the mere possibility of helping a small segment of it,” the organization told KVVU.

Nevada voters have taken a stand against eminent domain, and in 2008 passed the People’s Initiative to Stop the Taking of Our Land, or PISTOL, which established a stringent set of guidelines that would govern the use of eminent domain in the state. One of the dictates in the law requires that the governmental entity pay the legal fees for both sides of the property purchase. The vast amount of money involved in legal fees along has at least one North Las Vegas Council member extremely concerned. [read more]

Dec 10

By Michael Sallah and Debbie Cenziper – The Washington Post

The firm that threatened to foreclose on hundreds of struggling D.C. homeowners is a mystery: It lists no owners, no local office, no Web site.

Aeon Financial is incorporated in Delaware, operates from mail-drop boxes in Chicago and is represented by a law firm with an address at a 7,200-square-foot estate on a mountainside near Vail, Colo.

Yet no other tax lien purchaser in the District has been more aggressive in recent years, buying the liens placed on properties when owners fell behind on their taxes, then charging families thousands in fees to save their homes from foreclosure.

Aeon has been accused by the city’s attorney general of predatory and unlawful practices and has been harshly criticized by local judges for overbilling. All along, the firm has remained shrouded in corporate secrecy as it pushed to foreclose on more than 700 houses in every ward of the District.

“Who the heck is Aeon?” said David Chung, a local lawyer who said he wasn’t notified that he owed $575 in back taxes on his Northwest Washington condominium until he received a notice from Aeon. “They said, ‘We bought the right to take over your property. If you want it back — pay us.’?”

Aeon’s story underscores how an obscure tax lien company — backed by large banks and savvy lawyers — can move from city to city with little government scrutiny, taking in millions from distressed homeowners.

The firm came into the District eight years ago with hardball tactics, sending families threatening letters and demanding $5,000 or more in legal fees and other costs, often more than three times the tax debt. [read more]

Dec 9

By Ilyce Glink – CBS News

Foreclosures in the ultra-high-end housing market — homes worth $5 million or more — have skyrocketed 61 percent over last year.

That growth bucks the trend: Overall foreclosures are down 23 percent, according to a new report from Irvine, Calif.-based real estate information site RealtyTrac.

These luxury homes — beachfront properties along the Pacific Coast Highway, estates in ritzy zip codes outside Los Angeles and mansions in the wealthiest suburbs across the country — initially experienced foreclosure rates just like any other region during the flood that swamped the real estate market in 2008.

But while most other markets were continuously producing foreclosures over the past five years, this markets has remained relatively quiet, said Daren Blomquist, vice president at RealtyTrac.

Until lately, that is. “Recently, we’ve been hearing from agents that they’re starting to see the high-end properties go to foreclosure and there turned out to be some data to support this notion that high-end holdouts are finally moving through the foreclosure process,” he said.

Blomquist calls them holdouts for a reason. It’s not a new phenomenon of high-end homeowners suddenly falling into foreclosure. Many have been delinquent for at least a year. “It’s kind of the last domino to fall of the housing crisis,” Blomquist said.

It may be a sign that lenders are now financially stable enough to start moving on ultra-high-end delinquencies and take the substantial losses these multi-million dollar homes represent. [read more]

Dec 9

By Patrick Lunsford – InsideARM

The U.S. Second Circuit Court of Appeals in New York Wednesday took aim at defining what actions taken by a creditor expose it to liability under the Fair Debt Collection Practice Act (FDCPA) by reviving an FDCPA class action against a mortgage company and three servicing and debt collection firms. The case could impact liability under first-party or flat-rate collection relationships.

On appeal from the Southern District of New York, the three-judge panel vacated the decision to dismiss FDCPA claims and remanded Vincent v. The Money Store for further proceedings. There were also Truth in Lending Act (TILA) claims that the lower court dismissed and the appellate panel upheld. One of the judges wrote a dissent that disagreed with the FDCPA ruling.

The case is quite old, with the original mortgage transactions taking place in the late 1990s and the initial lawsuit filed in April 2003. Oral arguments before the panel were held a year ago.

After the plaintiffs executed their mortgages, the accounts were assigned for servicing to The Money Store, a mortgage lender. The plaintiffs all defaulted on their loans at some point. At that time, letters were sent out under the letterhead of law firm Moss, Codilis, Stawiarski, Morris, Schneider & Prior, LLP (“Moss Codilis”) informing the borrowers of default. [read more]