A bankruptcy court awarded almost $70,000.00 in damages for PNC’s stay violation. In re Ogden, No. 11-19841 (Bankr. D. Colo. June 1, 2015). It is easy to feel imaginary malice behind the often frustrating interactions with impersonal, computer-operated, entities with which we all find ourselves conducting business. In this case, however, the court found that the debtor’s sense of actual ill will was confirmed by testimony from PNC’s representative in its defense to the charge of stay violation. [Read more…] about Court Rejects Bank’s “Devil Made Me Do It” Defense
Chase Gets Off the Hook, ABI Gets $7.5m, Debtors Get $20
We’ve heard on the street that the $20 checks for debtors are starting to roll in. The payments are part of a $50 million settlement between the United States Trustee Program and JP Morgan Chase, N.A. that was approved by the Bankruptcy Court for the Eastern District of Michigan on March 9, 2015.
The settlement concerns approximately 50,000 improper payment change notices filed by Chase in thousands of bankruptcies across the country. The improprieties of these notices range from failing to review the accuracy of the notices before filing, to notices signed in the names of employees or former employees who had nothing to do with the accuracy of the notices. See the Department of Justice press release here for further information.
The settlement includes a variety of remedies for affected homeowners in bankruptcy. These range from outright forgiveness of the loan (for only 325 loans), adjustments/credits to credits, suspense accounts or escrow accounts (for 30,508 loans); and/or cash payments in the amounts of $600.00 and/or $20.00 (for 18,908 loans). Some debtors have already started receiving these cash payments. The settlement also includes a payment of $7.5 million to the American Bankruptcy Institute’s endowment for financial education and support for the Credit Abuse Resistance Education Program.
There have been several concerns raised regarding the settlement. It appears no parties outside the USTP were consulted as to the practical ramifications of ongoing bankruptcies including standing chapter 13 and 7 trustees and debtors’ counsel. The USTP has been given no record or database of names of the thousands of affected debtors by Chase’s improper notices. The parties appointed an Independent Reviewer, Ms. Amy Walsh of The Morvillo law firm, to verify whether Chase fulfills its settlement obligations and to verify Chase’s numbers of incorrect notices by a sampling methodology. Of note, the Morvillo law firm lists on its Representative Clients webpage that its partners have also represented officers, directors, or partners in several financial institutions including J.P. Morgan.
The order and the settlement can be found here.
Green Tree Servicing Settles with FTC and CFPB for $63 million
The Federal Trade Commission and the Consumer Financial Protection Bureau have announced a $63 million settlement in a dispute with the national mortgage servicing company, Green Tree Servicing. The FTC and CFPB charged Green Tree with thug-like collection methods including: barraging the debtor with phone calls as early as 5 a.m. and as late as 11 p.m.; threatening debtors with arrest, imprisonment, and garnishment; yelling at consumers and using obscene language; mocking illnesses and other personal situations causing financial distress; revealing debts to employers, neighbors, family; and taking payments out of debtors’ accounts without consent. It also failed to honor loan modifications, misapplied payments, provided incorrect creditor information to consumer reporting agencies, and overcharged or demanded unnecessary fees. $48 million of the settlement will go to affected consumers and $15 million represents civil penalties.
In addition to the $63 million dollars, the settlement requires Green Tree to clean up its act by implementing “a home preservation plan to offer options to consumers whose loans were transferred to the company during the time covered by the complaint.” It must cease collection on disputed debts until the completion of an investigation and verification of amounts owed. “The proposed order also prohibits Green Tree from making material misrepresentations about loans, processing procedures, payment methods, and fees, from taking unauthorized withdrawals from consumer accounts, and from violating the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, and the Real Estate Settlement Procedures Act.” In short, the order requires Green Tree to competently and honorably perform the services a loan “servicer” is meant to perform.
$2 Million Jury Verdict Against Mortgage Servicer
On Monday, Alena Hammer obtained a $2 million jury verdict against Residential Credit Solutions, Inc. (RCS), a national mortgage loan servicer, for its breach of contract, violations of the Real Estate Settlement Procedures Act (RESPA), and violations of the unfairness and deception provisions of the Illinois Consumer Fraud and Deceptive Business Practices Act. All of Hammer’s claims dealt with RCS’s misconduct in handling and servicing the mortgage loan on Hammer’s home in DuPage County, Illinois, where Hammer has resided for the last 27 years.
[Read more…] about $2 Million Jury Verdict Against Mortgage Servicer
Charbono v. Sumski, No. 14-2151 (1st Cir.)
Type: Amicus
Date: February 25, 2015
Description: Whether bankruptcy court had authority to impose a monetary sanction on the chapter 13 debtor for failure to provide copy of his request for extension of time for filing federal tax return.
Result: Affirmed, June 15, 2015
Crack-Down On Bankruptcy Petition Preparers
A bankruptcy petition preparer who preyed on vulnerable mortgage debtors was sanctioned by the court in In re Shelvin, No. 12-39045, A.P. No. 13-3004 (Bankr. S.D. Tex. Oct. 4, 2013). [Read more…] about Crack-Down On Bankruptcy Petition Preparers
NACBA Amicus Filed in Supreme Court Exemption Case
The NACBA membership filed an amicus brief in the Supreme Court case of Law v. Seigel (In re Law), No. 12-5196 (Sept 3, 2013), in an effort to defend the debtor’s homestead exemption against surcharge. In that case, the lower court, ostensibly pursuant to its power under section 105(a), imposed the surcharge to pay trustee fees resulting from litigation necessitated by debtor misconduct. See Law v. Siegel (In re Law), 435 Fed. Appx. 697, 2011 WL 2181198 (9th Cir. 2011). [Read more…] about NACBA Amicus Filed in Supreme Court Exemption Case
Wells Fargo Socked with Damages in Excess of $3 Million – Again
Upon the death of its mortgagor, the hulking beast that is Wells Fargo blindly slouched toward foreclosure heedless of the fact that it had sold an accidental death insurance policy to the mortgagor. The decedent’s personal representative, filed a complaint in state court alleging: 1) Wrongful foreclosure and breach of the covenant of good faith and fair dealing; 2) unconscionable and unfair trade practices; 3) breach of contract; 4) violation of the Home Loan Protection Act; and 5) attorneys’ fees under NMSA § 48-7-24. The court found Wells Fargo liable under each of the five claims except the claim for violation of the Home Loan Protection Act. Dollens v. Wells Fargo Bank, CV 2011-05295, Letter Decision (N.M. Dist. Ct. Aug. 27, 2013). [Read more…] about Wells Fargo Socked with Damages in Excess of $3 Million – Again
Wells Fargo Financial Finally Moving to Claims Review and Compensation
In 2011, the Federal Reserve Board issued a cease and desist order and assessed an $85 million civil money penalty against Wells Fargo & Company of San Francisco, a registered bank holding company, and Wells Fargo Financial, Inc., of Des Moines. (as distinguished from Wells Fargo Home Mortgage or by Wells Fargo Bank, N.A.) The order addresses allegations that Wells Fargo Financial employees steered potential prime borrowers into more costly subprime loans and separately falsified income information in mortgage applications. The order affect certain mortgage loans made between January 1, 2004, and September 30, 2008. In addition to the civil money penalty, the order requires that Wells Fargo compensate affected borrowers.
Wells Fargo Financial made subprime loans that primarily refinanced existing home mortgages in which borrowers received additional money from the loan proceeds in so-called cash-out refinancing loans. The order addresses allegations that Wells Fargo Financial sales personnel steered borrowers who were potentially eligible for prime interest rate loans into loans at higher, subprime interest rates, resulting in greater costs to borrowers. The order also addresses separate allegations that Wells Fargo Financial sales personnel falsified information about borrowers’ incomes to make it appear that the borrowers qualified for loans when they would not have qualified based on their actual incomes.
According to both the Federal Reserve Board and Wells Fargo, some current and former customers of Wells Fargo Financial will receive notices that they may be eligible to file a claim. For more information, you can visit the Wells Fargo Financial Consent Order Website.
Creditor Must Return Repossessed Vehicle upon Bankruptcy Filing
The Second Circuit upheld sanctions against vehicle loan creditor SEFCU for refusing to return the debtor’s repossessed vehicle without a court order and adequate protection. Weber v. SEFCU, No. 12-1632 (May 8, 2013). SEFCU had lawfully repossessed the debtor’s pick-up truck under the loan agreement, but when the debtor filed for bankruptcy, SEFCU refused to return the vehicle. The bankruptcy court determined that SEFCU’s actions did not violate the automatic stay. The district court reversed. Weber v. SEFCU, 477 B.R. 308, 311 (N.D.N.Y. 2012). [Read more…] about Creditor Must Return Repossessed Vehicle upon Bankruptcy Filing