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Questions about evictions–the feds are finally providing some answers.

Marc Dann

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Marc Dann - Marc Dann Consumer Fraud & Foreclosure Defense AttorneyAs we’ve mentioned in a couple of our COVID-19 updates, under the CARES Act renters who live in “covered properties” as defined by the law may not be evicted for non-payment of rent for 120 days retroactive to March 27, 2020. Landlords are also prohibited from imposing fees, penalties, or other charges for non-payment of rent during the moratorium period and they must provide tenants with a 30-day notice of their intent to evict when the moratorium ends.

We’re glad this protection exists, but the advice we give to homeowners applies to tenants: take advantage of the relief if you need to, but it’s a good idea to pay your rent if you can in order to avoid having to make a huge payment when the moratorium ends.

What is a covered property?

Good question. The moratorium applies to most federally assisted rental housing programs administered by the Department of Housing and Urban Development, the Department of Agriculture, and the Department of Treasury including:

Public housing

Section 8 Housing Choice Voucher program

Section 8 project-based housing

Section 202 Supportive Housing for the Elderly program

Section 811 Supportive Housing for Persons with Disabilities program

Section 236 multifamily rental housing

Section 221(d)(3) Below Market Interest Rate housing

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Housing Opportunities for Persons with AIDS

Section 515 Rural Rental Housing program

Sections 514 and 516 Farm Labor Housing program

Section 533 Housing Preservation Grants

Section 538 multifamily rental housing

Low-Income Housing Tax Credit

The eviction moratorium applies to tenants whose owners mortgages are backed by Fannie Mae or Freddie Mac. That is great news, but finding out if you live in building that falls under this definition was a real challenge.

Until today. That’s when Fannie Mae and Freddie Mac launched websites that make it easier for renters to find out if they live in a covered property. You may access the Freddie Mac site here: https://myhome.freddiemac.com/renting/lookup.html?utm_medium=email&utm_source=govdelivery

You may access the Fannie Mae site here: https://www.knowyouroptions.com/rentersresourcefinder?utm_medium=email&utm_source=govdelivery

In addition, both Freddie and Fannie have set up hotlines for tenants who have questions or need support. You can call Fannie at 877-542-9723. You can reach Freddie at 800-404-3097.

And if you still have questions and can’t get the answers or help you need contact DannLaw by emailing [email protected] or calling 877-475-8100 to schedule a no-cost consultation. We’ll be here to help throughout the COVID-19 crisis.

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Marc Dann - Marc Dann Consumer Fraud & Foreclosure Defense AttorneyIf there is one thing homeowners, consumers, and small business owners need from the federal government, their banks and mortgage servicers as they attempt to make sound financial decisions in the midst of the coronavirus crisis is reliable information.

Of course, that’s exactly what they’re not getting.

So in this ninth edition of DannLaw’s Covid-19 updates I’ll try once again to fill the knowledge gap and clear the confusion surrounding the multiple aid packages that have been enacted by Congress and the Trump Administration. Don’t be surprised if I revisit some topics we’ve addressed in the past because, and I’m sure this won’t come as a shock, many of the problems that have made it difficult for Americans to access the help they deserve and desperately need still haven’t been fixed.

Let’s start with what is quickly becoming a textbook example of a good idea gone bad: the Paycheck Protection Program (PPP). If you had the time and/or the inclination you could spend days watching and reading media stories detailing the botched rollout of the PPP. As we noted in an earlier update, the bankers responsible for accepting and submitting loan applications to the SBA favored existing clients over non-clients and bigger borrowers over small ones because bigger loans generate—wait for it—bigger fees for the banks.

This left many smaller and/or minority owned businesses standing on the sidelines as bigger companies quickly sucked up the $350 billion in available aid. Among those doing the sucking were well-capitalized firms and entities including Ruth’s Chris Steakhouse, Harvard University, the Los Angeles Lakers, Shake Shack, and Nathan’s Famous Hot Dogs.

A reasonable person might believe that the feds would address the problems afflicting the program before beginning to hand out the additional $350 billion in PPP funding appropriated by Congress at the end of April.

A reasonable person would be wrong.

Today, the government is still unable to provide definitive, reliable information that will enable business owners to determine if they should even bother applying for assistance. We still don’t know who is entitled to participate in the program, what the terms of promised forgiveness will be when the time comes to pay the money back, or if all borrowers regardless of size will be treated fairly.

As if all that weren’t confusing enough, the IRS just threw a new stick in the works by ruling that small business owners whose loans are forgiven can’t take tax deductions for associated wages and other expenses.

The Wall Street Journal notes that without the deductions, the program will help companies survive but it becomes a wash from a tax perspective, limiting its potential value. Employers will get tax-free income if their loans are forgiven but lose the associated deductions.

Senator Chuck Grassley, one of the authors of the PPP program said he was disappointed by the IRS ruling. “The intent was to maximize small businesses’ ability to maintain liquidity, retain their employees and recover from this health crisis as quickly as possible. This notice is contrary to that intent,” he  said.

But the IRS doesn’t give a damn about Congress’ intent. That means the House and Senate must vote to overturn the IRS directive. I’m not holding my breath.

What I am doing is talking to lots of frustrated and bewildered business owners who kept employees on their payroll because they believed the PPP would compensate them for doing so. Now it appears many of them may be left on the hook for the costs—costs they could ill afford and would not have incurred if they hadn’t been enticed by what appear to be empty promises.

We’re continuing to investigate claims and search for ways to hold the banks that played favorites during the application process accountable for their actions. If you have faced any of the issues I’ve described or believe you have been discriminated against, please feel free to share your experience with me by emailing [email protected].

Unfortunately, things are also clear as mud for homeowners searching for information about programs that may help them save their homes as the Covid-caused recession deepens. A reasonable person would begin such a search by visiting their mortgage company’s website.

Like the reasonable person who thought the government would fix the PPP, this reasonable person would be dead wrong.

How do I know?

Because the Office of the Inspector General of the United States Department of Housing and Urban Development said so in a recent report:

“Our review of the 30 servicers’ websites, which service approximately 90 percent of FHA loans, revealed that those websites provided incomplete, inconsistent, dated, and unclear guidance to borrowers related to their forbearance options under the CARES Act.” Wells Fargo, Nationstar, PHH/Ocwen, Rushmore, Fay Bayview, M&T, and Lakeview were among the companies singled out for criticism in the report which you can read  here.

This lack of clarity is especially aggravating because the FHA is offering real help for borrowers. Anyone with an FHA loan is entitled to a 60-day suspension of payments, followed by another 120 days of forbearance that can then be extended for  180 days. At the end of the forbearance period the actual amount of payments owed will be added to the back of loans at zero interest in what is called a “partial claim” silent second mortgage.  Hopefully, scrutiny from the FHA will motivate servicers to make accurate information  about forbearance more accessible to the millions of people who need it.

People who have non-FHA-insured mortgages are having an even more difficult time obtaining accurate information about their loans. That’s why we have prepared a simple Request For Information (ROI) letter you can send to your mortgage lender that will help you determine who owns and insures your loan and what relief programs your lender/servicer may be offering.

You can download the letter from our website  here. Address it to the RFI/NOE QWR Address and if you can, send it by certified mail so you can prove later that the servicer received it. If you want our help in reviewing the information you receive (or preparing the initial letter)  please schedule a no-cost video or phone conference by emailing [email protected].

Once you know all you need to know about your loan, here are important factors you should take into consideration before seeking relief:

  1. Forbearance is not Forgiveness. As a recent article in the Wall Street Journal makes clear, you will eventually have to pay the amount you owe—and lenders can demand that you pay it all at once at the end of the forbearance period.
  2. Make your mortgage payment if you can afford to do so.
  3. Understand how much your house is worth. If you have equity in your home, you should protect it.
  4. Always communicate with lenders/servicers in writing so you will be able to prove what the lender promised you and what you promised them.
  5. If you believe you are in over your head or are feeling pressured by a lender or servicer, please contact us or another lawyer. We are here to answer your questions and offer advice that could save your home and secure your financial future.

To add insult to injury, I’m compelled to note that the Trump Administration is using the pandemic to pervert and subvert  the mission of the Consumer Financial Protection Bureau (CFPB). The New York Times   just reported that leaders manipulated the Bureau’s research process so they could justify creating a new rule favorable to the predatory payday lending industry. This revelation was closely followed by news that the CFPB was using the pandemic as an excuse to roll back protections for home buyers. The leaders of the National Association of Consumer Attorneys, including DannLaw’s Brian Flick, called out the CFPB in this letter .  Here is part of what they said:

“Debt collectors, notorious for their aggressive and abusive conduct, should be closely monitored (and credit) bureaus and furnishers should be made to comply with the Fair Credit Reporting Act at all times. Lenders should be strongly discouraged from making costly, high-interest loans (and the) CFPB should work with all mortgage and student loan servicers to employ practices that would help borrowers stay in their homes or avoid default.”

Finally, I want to assure everyone that DannLaw’s attorneys and paralegals have been and will continue to be available to you during the crisis. We are prepared to use every tool in our arsenal to protect homeowners, consumers and small businesses from abuse by mortgage lenders, creditors and other predators.

If you’ve lost your job, suffered a reduction in income or need guidance about how to keep a roof over your family’s head we acall or email away.

Thanks for reading the update. Be well, stay safe, and remember, we’re all in this together.

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Marc Dann - Marc Dann Consumer Fraud & Foreclosure Defense AttorneyI was mildly enthusiastic about the CARES Act immediately after it was passed because it appeared to be substantially different from the stimulus plan crafted by the federal government during the Great Recession of 2008.

That package funneled trillions of dollars to the big banks and Wall Street speculators whose unfettered greed nearly destroyed the world’s financial system but did relatively little to help working and middle-class families devastated by the collapse of the housing market. By the time the economy began to turn around 10,000,000 of them had lost their homes.

By contrast, the CARES Act appears to direct $937 billion in aid to where it’s needed most: into the pockets of the more than 20,000,000 million Americans who are now unemployed and the bank accounts of small business owners who are literally hours away from losing everything they have built.

Sure, Congress doled out hundreds of billions of dollars to corporate America, including the airlines who have been ripping off travelers for decades, but the stimulus checks, enhanced unemployment benefits, and small business loan programs funded by the Act will help millions of people weather the Covid-19 storm—at least for the next couple months.

While it appears that Congress got a few things right, there are holes in the legislation that could negatively impact consumers, homeowners and small business owners. In this update I’ll identify the gaps and provide advice on who to deal with or avoid them.

Problems with the Paycheck Protection Program 

As I mentioned earlier, hundreds of thousands of small businesses across the nation are about to go under. The Paycheck Protection Program (PPP) is designed to help keep them afloat by providing forgivable loans owners can use to pay expenses including employee wages, rent, and utilities.

In concept the program is great. In practice, not so much.

That’s because the nationally chartered banks and SBA approved lenders charged with administering the program are permitted to pick and choose which applications to accept and in what order. As a result, they’ve been playing favorites. Business owners who have an existing relationship with a PPP lender go to the front of the line. Those who don’t, including minorities, are shoved to the back—if they’re able to apply at all. I’m sure you won’t be shocked to learn that Wells Fargo and other large financial institutions are telling smaller customers to hit the road and “try other banks.”  Publically owned Ruth’s Chris Steakhouse just announced that they alone sucked up $20 Million of the funds appropriated.

This type of discrimination is especially troubling in light of the fact that  Congress did not appropriate enough money to meet the needs of all the small businesses that are in trouble. When the money runs out, thousands of hard-working entrepreneurs and their employees will be doomed simply because they couldn’t access the help they were promised and desperately need.

We launched an investigation into this situation after being contacted by frustrated and infuriated small business owners. If you think something is wrong with the way a lender is handling or, more to the point, not handling your PPP application, please give us a call or email me at [email protected]

On the positive side, a number of clients have told us that smaller community banks are eager to process PPP paperwork. We’re not surprised. Over the years we’ve learned that community banks are extremely responsive to the needs of small borrowers. If you’ve been unable to make headway with a large lender, I encourage you to contact one of the community banks listed here.

Stimulus Checks can be hijacked by Judgment Creditors and banks

Stimulus checks funded by the CARES Act are already being deposited in the bank accounts of millions of Americans. That’s the good news.

Here’s the bad news: The Act doesn’t prohibit private debt collectors from garnishing stimulus money. That means if you’re behind on debt payments and have an outstanding court judgment, a private debt collector can grab your stimulus check. Attorney Javier Merino, head of DannLaw’s New Jersey office, along with consumer lawyers Josh Denbeaux and Ira Metrick just published an op-ed in the New Jersey Law Journal dealing with this issue.

If you fall in this category you should keep a close eye on your bank account and withdraw the money as soon as it is deposited. To stay one step ahead of judgment creditors you can track your stimulus payment here.

Here’s more bad news: if you owe money to the bank where your stimulus payment is being direct-deposited the bank can grab it. For example, if you have a bank account that’s been overdrawn, and your stimulus payment is deposited into that account, the CARES Act does not prevent the bank from taking part or all of the stimulus payment to pay back the debt. So far J.P. Morgan Chase and Wells Fargo have said they will not seize stimulus funds. Bank of America, Citibank, and U.S. Bank have yet to clarify their positions.

Waiver of Federal Student Loan interest is in doubt 

Federal Student Loans servicers have not been completely transparent about how they are going to implement the six-month zero interest, zero-fee forbearance included in the Act. In addition, some observers speculate that Navient, Greatlakes, and Nelnet don’t have the technology needed to properly track accounts. If you are taking advantage of the forbearance program please pay close attention to your loan statements and contact DannLaw or other attorneys if you notice a discrepancy in your account.

The CARES Act does not provide relief for federal loans originated before 2005 and private student loans 

The CARES Act does not provide forbearance for federal student loans originated before 2005 that were not consolidated or private student loans. If your loan falls into these categories you must continue to make your payments. If you are unable to do so, contact your servicer in writing and request a modification, forbearance or another type of accommodation.

Monitor your credit if you are taking advantage of the mortgage forbearance provisions of the CARES Act.

As we’ve noted in previous updates, the CARES Act provides for up to 12 months of payment suspension/forbearance for borrowers with federally-backed loans owned by Fannie Mae, Freddie Mac or insured by the FHA, VA and the Department of Agriculture. To determine if you have a qualifying loan send a request for information (RFI) to your mortgage servicer. We’ve drafted a simple RFI you can use. To obtain a copy email us at [email protected].

Please remember forbearance isn’t forgiveness.  That means you may be subject to higher mortgage payments, escrow payments, and other fees when you begin making your payments after the forbearance period. If you do take advantage of the Act’s forbearance program you should look closely at your monthly statement to make sure it is correct. You should also subscribe to a credit monitoring service and check regularly to make sure your servicer is not entering negative information on your credit report. If you notice discrepancies contact us at [email protected] so we can help protect you and determine if you have legal claims that may entitle you to financial compensation.

Bankruptcy may be the solution to your financial problems 

My parents always encouraged me to hope for the best but prepare for the worst. Today, their advice is more valuable than ever before because the COVID-19 emergency is causing unprecedented damage to our economy and levels of unemployment not seen since the Great Depression. Study after study has shown that a majority of Americans would have a difficult time meeting their obligations for more than a month or two if they lost their source of income. The ongoing crisis has validated those studies.

The $1200 stimulus checks and small business loans may ease the pain in the short term, but when that money is gone many business owners and individuals will be forced to consider filing bankruptcy in the months ahead. And while many people are loathe to do so, bankruptcy protections may provide the best option for dealing with the devastation caused by the crisis—a crisis none of us created or could have anticipated.

The fact that the courts and collection activity are essentially shut down gives business owners and individuals a unique opportunity to closely examine their financial situation and begin planning for the future—including a future that includes bankruptcy. Doing so will put you in a good position to move forward once the crisis ends if you don’t have to file and will help ensure that bankruptcy provides the maximum protection for your family and your business if filing proves to be the best alternative.

If you would like to schedule a phone or video conference with one of our experienced bankruptcy attorneys to discuss your financial future and the options that are available to you, please email [email protected]  We are here to listen, to advise, and to help.

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Marc Dann - Marc Dann Consumer Fraud & Foreclosure Defense AttorneyMany of our clients are still sorting through the various types of assistance offered via the CARES Act and the various executive orders signed by the President and the governor of the state in which they live. But learning about the programs and benefits that are now available is only half the equation. The other: deciding whether it’s in your best interest to take advantage of them.

Making those decisions won’t be easy. The CARES Act itself is more than 800 pages long and the rules and regulations the federal government is developing to implement it are only making things more complicated. Throw in the things individual states are doing and you have a nearly impenetrable mass of guidelines, requirements, and instructions that would make any bureaucrat proud.

To help you cut through the mountain of red tape that’s wrapped around the various relief packages we’ll be conducting a series of free Facebook Live legal clinics beginning this week. During the live sessions, we’ll answer questions about the CARES Act and address consumer, foreclosure, and student-loan related issues.

To participate in the clinics, please visit and like the DannLaw Facebook page. The first session will begin on Tuesday, April 7, 2020 at 6:00 p.m. EDT and will deal with the Act and a wide range of issues. You may submit a question during the broadcast or submit questions in advance by emailing [email protected].

Our second free live legal clinic dealing with student loan issues will be broadcast on Thursday, April 9, 2020 at Noon EDT. You may submit questions during the show or in advance by emailing [email protected].

Right now, we’d like to share some of the insight and info we’ve been able to distill from the rapidly evolving situation:

Housing

Borrowers whose loans are “federally backed,” i.e. insured by the FHA, VA, or Department of Agriculture or owned by Fannie Mae, Freddie Mac are entitled to a 60-day payment suspension followed by 12 months of forbearance.

Forbearance is not Forgiveness. Borrowers who take advantage of this type of relief will eventually have to pay the piper.

If you have an FHA, VA, or USDA loan, the principal and interest deferred will be rolled into a zero-interest second mortgage when the forbearance period ends. This is known as a “partial claim.” In addition, your escrow payment will be recalculated so your mortgage servicer can recoup the payments for taxes and insurance advanced during forbearance. The bottom line: if you take advantage of this benefit, your payment will increase when forbearance ends. You can learn more about the FHA’s policies here.

Forbearance is even less attractive for borrowers whose loans are owned by Freddie Mac or Fannie Mae because it is unlikely that either will adopt borrower-friendly solutions similar to those implemented by the FHA, VA, and USDA. That means servicers will do one of two things when forbearance ends: demand a lump sum equal to one year of one year’s worth of mortgage payments or offer to modify the loan in an as-yet-unspecified way.  This uncertainty means you should think long and hard about taking advantage of the opportunity to defer payment of your Freddie or Fannie loan.

There’s also a lot of uncertainty regarding non-federally backed loans. No one knows if servicers will offer relief to borrowers who lost their jobs or experienced a loss of income due to the Covid-19 crisis. The only way to find out is to ask. When you do, please remember the guidelines we laid out for communicating with mortgage servicers and other creditors:

  1. Communicate in writing when you can.
  2. If you are unable to communicate in writing, record your conversation if it is legal to do so in your state. Recording is permitted in Ohio and New Jersey.
  3. Contact us to arrange a free consultation if you are uncomfortable with the information provided by your servicer. Rule of thumb: if something doesn’t seem right it probably isn’t. Don’t hesitate to protect yourself.

Student Loans

The CARES Act enables people with federal student loans originated or consolidated after 2005 to defer payments for six months. No interest or late charges will accrue during the deferral period.

Similar relief is not available to borrowers who have Perkins Loans, private loans, or federal loans that were originated before 2005 and not consolidated thereafter. You must continue to make your payments. The only good news: most courts are staying hearings for 60 to 90-days so borrowers have some time to work things out before having a judgment issued against them.

If your student loan is in the collections process please pay attention to any service of process or other court documents that you may receive. If you don’t understand something sent to you by a debt collector, law firm, or Court seek advice from DannLaw or another attorney.

Small Business Loans

Businesses with less than 500 employees are eligible for three programs:

  1. Payroll Protection Program a forgivable loan for 2.5 times the business’s monthly payroll. These loans are available from banks or other Small Business Administration (SBA) Lenders.
  2. SBA Emergency Loans are available to businesses under distress as a result of the COVID-19 Crisis. Ten thousand dollars of the loan amount is forgivable.
  3. SBA Disaster Loans are available to businesses located in states in which a Federal Emergency has been declared.

It’s important to note that the implementation of these loan programs has been disorganized and haphazard.  Banks have been slow to develop and implement their application process and many have limited applicants to existing customers.  In addition, the transfer of funds to the SBA Emergency and Disaster Loan programs has been moving at a snail’s pace. The roadblocks and delays are incredibly frustrating at a time when many small businesses need immediate help if they are to survive the crisis. We’re constantly monitoring the situation so we can help clients receive the assistance they need.

Please visit the SBA Website for additional information about these loans.

Scams:

All individuals and small businesses should be on the lookout for fraudulent and/or criminal behavior. Here are some warning signs:

  1. SBA backed Loans can only be originated by SBA Lenders. Make sure you are providing your information to an accredited SBA Lender. There are no fees associated with applying for these loans and most businesspeople should be able to fill out the relatively simple applications. If you need help only deal with licensed CPAs or attorneys.
  2. There is no fee to apply for the stimulus checks of $1200 or more per family that will be distributed under the provisions of the CARES Act. Indeed, there is no application at all. All you need to do is to verify that your most recent tax return has all of your correct address and bank account information.

You may view our previous updates here.

That’s it for now. Be well, stay safe and if you need help or information please call 877-475-8100 or email us at [email protected]

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Marc Dann - Marc Dann Consumer Fraud & Foreclosure Defense AttorneyNow that we’ve had additional time to review the CARES Act, we would like to share some clarifications and observations along with advice about how to deal with bills and other financial obligations that may be coming due on April 1.

Here are some things to consider about paying your bills:

1. Pay your bills if you can. You should take advantage of options that allow you to delay making payments if you need to, not just because they are available.

2. If you don’t have enough money to make your mortgage payment and pay your other bills, please consider the following factors before deciding how to allocate the funds you have:

3. First, consider the amount you owe on your home relative to its value. This is known as the loan to value ratio. If your home is worth more than your mortgage balance it is an asset that you should protect. If it is worth less than you owe it is a liability so your mortgage payment should be viewed as a housing cost and compared to alternatives like paying rent. You should also evaluate other factors including the state of the housing market in your neighborhood, the company that owns your loan, and whether you intend to sell your house sometime in the next few years.

As we noted in earlier updates, borrowers whose loans are “federally backed” can apply for up to 12 months of forbearance. But remember, forbearance is not forgiveness. At the end of the forbearance period you will owe the payments you did not make and you will most likely need to modify your loan. At this time, there is no way to determine what the terms of such modifications will be. In addition, if you pay taxes and insurance via your mortgage and the servicer has paid those costs on your behalf, your escrow payment may well rise substantially when the forbearance period ends. In either case, you could be looking at steep increases in costs when you begin making payments again.

4. If you are unable to pay your mortgage you are entitled to suspension/forbearance under these circumstances:

  • Your mortgage is “Federally Backed” and covered under the CARES Act which provides a 60-day suspension and 12 months of forebearance;
  • You live in New Jersey, California, New York. These states have issued blanket orders suspending mortgage payments.

5. If the investor and/or loan servicer that holds your mortgage is not legally obligated to offer suspension or forbearance you should contact them to determine if they are offering programs that will help you manage your payments. Consider taking advantage of them if they make sense for you.

6. Although the CARES Act prohibits negative credit reporting in the short term for borrowers who were not behind on their mortgage or student loans when the Covid-19 pandemic began, creditors are not prohibited from reporting negative information during and after the crisis. If you rely on credit you should take steps to prevent your hard-earned credit score from dropping.

7. Remember: NOTHING prohibits many creditors from pursuing debt collection during this crisis. Do not ignore legal notices you receive. If you do, a creditor could obtain a judgement that will enable them to garnish your wages and attach your bank accounts. Keep control of you finances by communicating with your creditors.

8. If you are married or cohabitate, it is important for you to talk to your spouse or partner about finances. Be open, honest and transparent about your debts and thoroughly discuss the options and choices available to you. Don’t add to the stress associated with the Covid-19 emergency by concealing financial problems from your loved ones until it is too late to deal with them. This is especially true if one person is primarily responsible for  paying the bills. In our experience, being less than forthcoming about your financial situation can be a relationship killer. Don’t let it happen to you.

9. If you are not going to pay a bill, please inform your creditor or mortgage servicer in writing. You should also ask them if they are offering programs or plans that will help you manage your debt.

Communicating with your creditors in writing is important for three reasons:

Reason 1: Employees at most companies are now working at home which means it could take hours to a, reach them and b, discuss the situation which means you may miss a crucial scene on Tiger King.

Reason 2: The only records of a phone call will be the notes taken by the creditor, which you will not be surprised to learn, will not be written in your favor.

Reason 3: We can tell you hundreds of stories about creditors who broke promises because they know no record of the promise being made exists.

So, please, please, please, make sure there is a written record of what you promise the creditor and what they promise you. If you are unable to communicate in writing, record the phone calls if it is legal to do so in your state. Ohio and New Jersey are both one-party consent states which means you can tape away.

If you want help thinking through your choices, our lawyers are available for free initial video or phone consultations call 877-475-8100 or [email protected]

Clarification on Student Loan Issues

In the last update we incorrectly reported that all Federal Student Loans were covered by the payment holiday. Unfortunately, we were wrong. If you have a Perkins Loan or an FFEL Loan it is not subject to the relief provisions of the CARES Act. In a nutshell, if you have a Federal Student Loan that originated prior to 2005 and you did not consolidate it later, your loan is not protected by the CARES Act at all.

We are particularly concerned about the collection of Perkins Loans. In Ohio these loans are collected by the Ohio Attorney General and have become controversial because outside counsel and debt collectors have used aggressive collection tactics and added exorbitant fees to loan balances. DannLaw attorneys Emily White and Brian Flick recently wrote to Ohio Attorney General David Yost and asked him to protect Perkins Loans borrowers during the crisis:

Because our firm represents people who accrued significant debt while attending Ohio’s state colleges and universities, we are particularly concerned about the impact the ongoing emergency will have on student loan borrowers. Many are saddled with tens of thousands of dollars in debt that will take decades to pay off.  Low income students who received Pell Grants and Perkins Loans are in a more dire position if they are forced to leave mid-semester due to financial, medical, or family difficulties: they must repay their loans and grants immediately.

To make matters worse, the tactics used by debt collectors and outside counsel hired by the Attorney General’s Office to pursue borrowers have become increasingly aggressive in recent years. Those tactics combined with the charges and fees added to balances, including the 30% surcharge outside firms have been authorized to charge since 2017, make dealing with student loan debt difficult during the best of times—and these are far from the best of times.

 In the weeks and months ahead it will become increasingly difficult for Ohioans to pay meet their financial obligations. Governor DeWine, the federal government, and many companies are taking steps to help cushion the blow. I urge you to join them by suspending collection actions and waiving interest and fees for the foreseeable future. I also ask that you consider supporting the creation of a hardship waiver process that will enable Ohioans to deal with the long-term effects of the crisis. At this time in our history, state government should not be the creditor Ohioans fear most.

If you have a chance please join us in urging Attorney General Yost to stand down on collection of Perkins loans and Pell Grants during this crisis by visiting this website: [email protected].

Clarification on Mortgage issue

 We incorrectly reported that credit reporting would continue on Federally Backed mortgage loans that are subject to suspension or forbearance under the CARES act. That is not correct. If you are current on the loan prior to taking advantage of the suspension or forbearance provision of the Act negative credit reporting is prohibited.

 Stimulus Checks

 One of the most significant features of the CARES Act are the payments of $1200 or more the vast majority of American Families will receive. But the Act does not prevent existing judgment creditors from attaching bank accounts into which the payments will be deposited. Pay close attention to which account the IRS has on record and direct it to an account that is not subject to attachment if you can do so. In addition, as has been widely reported, payments to people who have unpaid child support will be directed to their children.

Scam Alert

Anytime the government engages in significant action like the CARE Act charlatans and scam artists begin cooking up ways to cheat those who are eligible for help as well as those who are not. This happened repeatedly when the Federal HAMP program was created. Here are some bad actors you should avoid:

  1. Anyone who promises to help you access your stimulus money. There is no application for the stimulus money. Make sure the IRS has your accurate bank account and contact information and the checks will be sent directly to you.
  2. Anyone who promises to help you apply for mortgage or student loan assistance. If you are unsure or need help in deciding what to do about suspension or forbearance of mortgage or other debt only seek advice or help from an attorney licensed to practice law in your state.
  3. Anyone other than your lawyer or CPA who offers to help you access Small Business Assistance under the CARES Act.

If you sent money to someone engaged in a scam in order to profit from this crisis contact an attorney or law enforcement agency right away. Ohio and New Jersey have strong consumer protection laws that will enable you to seek and secure damages from cheaters and scam artists.

This information is not, nor is it intended to be, legal advice. You should consult an attorney for advice. We can be reached at 877-475-8100 or via email at [email protected] or [email protected].