Ohio AG Cordray will head Consumer Financial Protection Bureau Enforcement Division

Ohio AG Cordray to head CFPB Enforcement Division (Reuters)

Mr. Cordray was not afraid to stand up to the banks in Ohio.  I'm optimistic he'll work on behalf of consumers in Washington.


Greg Reichenbach
Bluffton OH
www.reichenbachlaw.com
Greg@ReichenbachLaw.com

Ohio Attorney General Richard Cordray on Foreclosure Fraud

Ohio Attorney General Richard Cordray speaking on Bloomberg


Ohio's Attorney General speaking on Bloomberg about the widespread foreclosure fraud on the Courts perpetrated by numerous major banks.  AG Cordray is a true consumer advocate.

It's not enough for the banks to say "Oops, sorry about filing those false affidavits".  It would be an insult to just file new affidavits.  These bad actors need to be punished by the courts.  The integrity of our judicial system is at stake.


Greg Reichenbach
www.ReichenbachLaw.com 
Greg@ReichenbachLaw.com

Foreclosure Fraud by Major Financial Institutions on a Massive Scale

Update Oct. 6, 2010: Ohio Attorney General Richard Cordray has filed a lawsuit against GMAC Mortgage, accusing it and its parent company of "filing fraudulent affidavits to mislead courts in hundreds of Ohio foreclosures."  This is part of the "robo-signing" of affidavits by many large mortgage banks.  The story is expanding faster than I can keep up with it!

Here a link to get more information:

Ohio Attorney General's law suit against GMAC Mortgage

[The original blog entry is below.]

When a bank forecloses on a consumer's home, a bank agent signs an affidavit testifying under oath as to who owns the mortgage and note. 

Typically, when you buy a house, the initial lender sells the loan to another bank.  The loan often gets transferred multiple times.  By the time a foreclosure is filed, the company enforcing the note is often one the consumer never even heard of (such as "Deutsche Bank Trust Company Americas, as Indenture Trustee for Saxon Asset Securities Trust 2006-3" -- yes, that's from an actual foreclosure case).  So, the company doing the foreclosing needs to prove to the court that it actually owns the mortgage, and has a right to foreclose.

Recently, some consumer lawyers have uncovered massive fraud in connection with the people signing these affidavits on behalf of foreclosing banks.  Through depositions (where the witness must answer questions under oath), these attorneys have found that the people signing these affidavits routinely ignore the law.  They are supposed to sign based on their personal knowledge, or based on their review of reliable business records.  But that's not what there were doing.

Some of the people signing these affidavits sit at a table and just start signing them, on a massive scale, without verifying the accuracy of the information.  In one case, a team of just eight people notarized 18,000 affidavits per month!  No oath was administered, as required by law.  The person signing was not even the person supplying the information -- it was the notary!  (The notary's involvement is supposed to be merely making sure that the document is signed and acknowledged properly, and to administer an oath to the person signing.)  In many cases, the notary was not even present when the document was signed!

You might think that these are just formalities, but keep in mind that folks are losing their homes based on these affidavits.

Two major banks recently announced a halt to thousands of foreclosures because this fraud has come to light.  But before you think the banks are "doing the right thing" keep in mind that they only put a stop to the foreclosures AFTER they got caught.  They knew this was happening, and it was part of their normal business practice!

Here's an article about JPMorgan Chase freezing foreclosures:
Washington Post - Chase 9-23-10

Ohio's Secretary of State, Jennifer Brunner, is in charge of regulating notary publics in Ohio.  As part of her duties (and to her credit), she has referred Chase Home Finance LLC to federal authorities for investigation into whether federal crimes have been committed.

Here's Secretary Brunner's letter to the U.S. Attorney:

Brunner's letter to US Attorney and a follow-up letter.

Here's Secretary Brunner's press release:

Press Release 9-30-10

Here's an article from the Washington Post:

Washington Post Article 9-23-10

Not to be outdone, a OneWest Bank executive admits that their team whips out about 24,000 affidavits a month without reading all of them, according to a Washington Post article.

This is a big development.  The foreclosing banks are thumbing their noses at the rules.  And it's not an isolated incident.

Greg Reichenbach

Bluffton, Ohio

Email: Greg@ReichenbachLaw.com

www.ReichenbachLaw.com

NY Debt Collectors face felony charges

Sometimes debt collectors deserve to be sued when they act unfairly.  Other times, they need to be put out of business and sent to prison.

Here's a press release from the New York Attorney General on another Buffalo, NY collector who crossed the line, specifically targeting military consumers with their lies:

ATTORNEY GENERAL CUOMO ANNOUNCES FELONY CHARGES AGAINST OWNER OF DEBT COLLECTION COMPANY THAT TARGETED MILITARY PERSONNEL


Greg Reichenbach
Bluffton OH
Greg@ReichenbachLaw.com
www.ReichenbachLaw.com

Identity Theft from Public Records?

In Shreveport, Louisiana, someone left documents containing residents' private information unattended in a public area of a city building.  A potential identity thief could have simply swiped someone's social security number, address and other information, and opened a line of credit in their name.  Here's a local news story:

KSLA News report

The incident in Shreveport is (hopefully) an isolated incident.  But I see a lot of cases where this happens in Ohio courts.  When a creditor or debt collector files a collection law suit, the collection lawyer often files a copy of a contract or account statement as an attachment to the complaint.  These documents are filed with the clerk of courts.  Sometimes, these documents contain the consumer's social security number.  Court rules require that a social security number, and some other private information, be redacted (covered up) before filing with the court.

But I've seen a lot of cases where the collection lawyer files a social security number, un-redacted, with a clerk of court.  Normally, documents filed with a clerk of courts are a public record, available to anyone, without question.  Many clerks go out of their way to correct this when it happens.  But when a social security number or other private information is filed in court, this creates an unacceptable risk of identity theft.  Many consumer rights attorneys believe that filing a consumer's social security number with a clerk of courts is unfair and violates consumer protection laws.

If you've been sued on a debt, take a look at the complaint and all the attachments.  If your social security number or other private information appears, you should notify the attorney who filed it and demand that they redact it or have it sealed by the judge (ordered not to be disclosed without a court order).  Of course, you should also consult with an attorney familiar with debt collection.

For more information about identity theft, see:

FTC Identity Theft website

US Department of Justice Identity Theft website

Ohio Attorney General's ID Theft website


Greg Reichenbach
Greg@ReichenbachLaw.com
Bluffton OH

New York Attorney General arrests debt collector operating from prison

OK, not all debt collectors are this bad.  But some of the worst are from Buffalo.

Here are a couple of stories on a guy charged with illegally operating a debt collection business from prison:

New York Daily News article

New York Post article

Greg Reichenbach
Greg@ReichenbachLaw.com
www.reichenbachlaw.com

What Consumers Can Do When Sued on a Debt

Below is an article I wrote for the Ohio State Bar Association's "Law You Can Use Column".  Many people think that if they get sued on a debt, there's not anything they can do.  Many times they have questions.  Here are some answers.


Q.: I received a summons from a court on a debt. What can I do?

A. It is important to file an Answer to the complaint. To respond to a lawsuit in Ohio state courts, you or your attorney must do so in writing within 28 days of being served, or ask the court for additional time to respond. If you dispute the amount, or if you’ve never heard of the company that is suing you, you may want to consult an attorney. If your debts are overwhelming, and you won’t be able to pay them off in the future, you should find out whether bankruptcy is an option for you. On the other hand, if you know you owe the creditor the amount demanded, and you can afford it, you may want to consider working out a payment plan. If you do, make sure you get any agreement in writing.

Q.: I owed a credit card company money, but now a different company is suing me. How do I know the second company really bought my credit card account?

A.: A number of businesses buy large numbers of older accounts, like credit card debt, for a few cents on the dollar, then attempt to collect it. If a debt buyer sues you, it must prove that it owns the account and that you opened an account. You must follow the court process to force the plaintiff to prove its case. The debt buyer also must provide evidence of the credit terms as well as evidence that you owe the amount claimed due. This sounds easy, but often these debt buyer companies do not have enough evidence to prove their claims in court.

Q.: I do owe the money, but just can’t afford to pay anything now. What will happen to me?

A.: If the company suing you proves their case, a judgment may be entered against you (meaning that the court determines you must pay). Up to 25 percent of your wages may be garnished in Ohio, and the creditor may take money from your bank accounts, unless your bank account contains only exempt funds. Examples of exemptions are Social Security money, student loans and certain other government benefits. Exempt funds will be garnished, however, unless you inform the court and the plaintiff, in writing, that the money in the account is exempt. If the creditor cannot prove its case, the creditor will not get a judgment against you, and will not be able to garnish your wages or bank accounts. You cannot be put in jail for simply owing money.

Q.: I have a dispute with the business that is suing me. How does that affect the lawsuit against me?

A.: If you have a claim against the company suing you, you can bring a counter-claim. In some cases, if you do not bring a counter-claim in response to being sued, you will not be able to bring your claim later. A counter-claim is basically a lawsuit against the creditor, but the creditor’s claim and your counter-claim will be decided by the court in the same case. Examples of counter-claims include claims against a debt buyer for unfair or deceptive methods of debt collection, claims against car dealers for deceptive sales practices, and violations of other consumer protection laws. A company that buys accounts may also be responsible for claims you have against the original business from whom it bought the account.

Q.: I think I need a lawyer, but I can’t afford one. What can I do?

A.: Some attorneys may represent you in your debt case for a flat fee. Some consumer protection laws may force the business to pay your attorney fees if you win. If you have a claim against the company suing you for a violation of certain consumer protection laws, an attorney may represent you without pre-payment of the fees, and attempt to collect your attorney fee from the business. Call your local bar association for a referral. If you make under a certain income, you may qualify for representation by a legal aid organization.

Greg Reichenbach

Greg@ReichenbachLaw.com

www.reichenbachlaw.com

Additional resources:
Ohio State Bar Association - consumer resources

Debt Settlement Company Scams

Debt settlement scams are one of the fastest growing consumer problems.  It works like this:  you're drowning in debt.  Before you have a chance to consult with someone who knows how to give you good advice, you respond to an email, TV, radio or website advertisement advertising debt relief.  A debt settlement company convinces you that bankruptcy is not a good option for you, and sets you up with a plan to save money to settle your unsecured debts (like credit cards, medical accounts and signature loans).

The company tells you that you pay them a setup fee, stop paying your debts, and eventually they will negotiate with your creditors for lump sum settlements at reduced rates.  They tell you they have a 95% success rate.  It sounds good.  The setup fee is paid in monthly installments for maybe six months or so.

After the setup fee is paid, they start negotiating with your creditors, and maybe they actually get you a deal of 50% off or so on one account.  At this point, you have paid the company $5,000 in fees, but if they cut all your debts by half, it's still a good deal, so you hope....

Then reality sets in:  you get your first collection law suit from a creditor who refuses to deal with the debt settlement company.  The DSC says they don't practice law and therefore cannot defend you against the collection suit (maybe contrary to what they implied when they were convincing you to sign up), but they "help" you write your own response to the law suit.  Your "response" is not sufficient, and the creditor gets a judgment against you and begins to garnish your bank account and wages.  Eventually, you realize that the DSC is not going to solve your financial problems and you end up filing bankruptcy, which costs less than what you've already paid to the DSC.

I have seen this pattern over and over again in my practice.  Yesterday a smart young woman called to get my help on a collection law suit.  At the end of the conversation, she happened to mention something about a debt settlement company.  It turns out she has paid them over $10,000 over several years, and they have not settled a single account of hers.  These predators are so good at scamming people that she still didn't realize how badly she had been taken.

The bad news is that there are a lot of these companies out there, doing a lot of marketing to vulnerable consumers.  The companies tend to hide their identity and create multiple corporations to make it hard to find out who they even are and to discourage law suits against them.  They typically require payment of their fee first, and also take a percentage of money saved in any settlements.  They prey on working people.

The good news is that Ohio law protects consumers, outlawing the kind of payments these companies charge.  But the law does not stop them.  They are willing to break the law because they make so much money in the process.  In some cases, a law suit against the debt settlement company is appropriate, to recover the money lost, including attorney fees and court costs.  I have found that with a proper investigation into who took my client's money, most DSC's will settle the claims against them.

So, what should you do instead of signing up with one of these horrible predatory corporations?  You may want to consult with a bankruptcy attorney.  Many do not charge for the initial consultation, or may charge a small fee.  (I'll make bankruptcy the topic of a future blog.)  Another option is consulting with a legitimate, non-profit, credit counseling service.  How do you tell the difference?  The legitimate credit counseling services charge a very low fee (maybe $25/month), or are free.

I'm amazed at the scope of advertising these companies do on "legitimate" media.  Don't fall for the scams.

Greg Reichenbach
Bluffton, Ohio
Greg@ReichenbachLaw.com


Further reading:

West Virginia attorney general
Texas attorney general
New York attorney general
Vermont attorney general
Illinois attorney general

Ohio attorney general asks the FTC for stronger regulation of DSC's

FTC to issue new rules for debt settlement companies

Consumers for Auto Reliability and Safety

This group (C.A.R.S.) fights for consumer rights in the area of automobile purchases:

Consumers for Auto Reliability and Safety


Check out this video they made about a used car nightmare:

Used car nightmare

For more information on the evils of binding mandatory arbitration for consumers:

Fight Binding Mandatory Arbitration

Greg Reichenbach
Bluffton, OH
Greg@ReichenbachLaw.com

Elizabeth Warren should head the new Bureau of Consumer Financial Protection

Update September 15, 2010: President Obama has named Prof. Warren as a "special adviser" to help set up the  Bureau of Consumer Financial Protection:
Huffington Post story



The big banks are scared. They might actually be regulated. The new Bureau of Consumer Financial Protection has that potential, if it's headed by someone who (a) understands economics and the effects on ordinary people and (b) has the backbone to stand up to powerful interests. That person is Elizabeth Warren.
I have heard Professor Warren speak, and she has got to be one of the smartest people around when it comes to debt and economics. On top of that, she also has the ability to communicate clearly, and the moral backbone to stand up for what is right.
As a reminder, the banking industry – specifically subprime lending, combined with the drastic de-regulation begun in the 80's, is widely blamed for our current economic problems. So far, our approach to fixing things has been to give banks a bunch of money, with no strings attached. Not surprisingly, that has not worked.
Over the past several decades, the "regulators" in various administrations (Republican and Democrat alike) have tended to be industry lackies. That hasn't worked, because if the banking industry was trustworthy enough to police itself, then they wouldn't need to be regulated in the first place. Left unchecked, banks do what is best for the banks. We need the banks to do what is best for the country, and for regular people. The alternative is too costly, in terms of shattered lives, poverty, and health problems.
You would be amazed at how many people I've talked to who are sick because they work too much to take good care of themselves, and can't get medical care because their job doesn't provide insurance and they can't afford to pay for a doctor visit. That is a vicious catch-22 that should not happen anywhere, let alone in such a rich county as the USA.
We need to restore consumer protections that were stripped away, and re-regulate Wall Street. Elizabeth Warren is the woman for the job.

For more information, see:
http://en.wikipedia.org/wiki/Elizabeth_Warren
http://www.nytimes.com/2010/07/25/opinion/25sun3.html
http://www.nytimes.com/2008/10/24/business/economy/24panel.html
http://motherjones.com/politics/2008/05/foreclosure-phil

To take action:
http://act.boldprogressives.org/cms/sign/petition_warren_ads/?source=gwa_ews

And, for a funny but interesting, take on the issue:
Steven Colbert interviews Barney Frank

Introduction - What is consumer law?

Welcome to my consumer law blog. I want to start by describing what I think consumer law is. When someone has a dispute with a business about goods or services meant for personal, family or household use, that is a consumer law problem. Examples might be abusive debt collection or a used-car rip-off.

Why is it called "Consumer" law? I'll be honest -- I've never liked that term. It brings to mind the kind of over-consumption we tend to engage in in the United States, at least compared to many other places in the world. I think the reason the term came to be used is that consumer law looks at everyday transactions from the point of view of the person who buys (or consumes) something. Well, the term stuck, so I guess I'll use it too, since it is widely used among lawyers.

I want this blog to have some appeal to both lawyers and non-lawyers. So, I'm not going to use a lot of fancy legal terms and Latin phrases. But, I will occasionally use a little of each, to educate anyone who is interested.

Some of the things I'll post here:

• News items
• Examples of consumer law cases - either my cases or significant cases affecting Ohioans
• Introductions to different consumer law topics

I'll be tweaking the blog as I go. Feel free to leave a comment or drop me an email.

Sincerely,

Greg Reichenbach
Bluffton, Ohio
Greg@ReichenbachLaw.com