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DannLaw PUA update: Lawsuit is still pending before Judge Holbrook, Important ALERT about state attempts to collect “overpayments”

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Ohio Bankruptcy LawyerI appreciate everyone’s patience with the slow progress of our case seeking payment of the Pandemic Unemployment Supplemental Benefits that were denied to Ohioans by Governor DeWine and the Ohio Department of Jobs and Family Services.  As an FYI, I emailed Judge Holbrook’s law clerk today and asked if there was anything we or opposing counsel needed to do to enable the judge to rule on the motion to amend our complaint that we filed on behalf of the plaintiffs in March of 2023 and/or the motion to dismiss the complaint that was filed by the State AG at about the same time.
That means our position is, unfortunately, no different now than it was when the motions were filed last spring.
As of this writing, she has yet to respond.When/if she responds or when/if the judge rules on the pending motions we will share that information with all of you immediately.There is another issue that I wanted to bring to your attention. Recently the Ohio Attorney General and the Department of Jobs and Family Services have begun to attempt to collect what they perceive to be overpayments to pandemic unemployment recipients. If you have received such a notice please make sure you note that there is a short period of time to appeal this finding.  Our expectation is that many of the repayment notices are inaccurate.If you’ve received one of these notices in error and are willing to speak out about your situation please email me at [email protected] and I will connect you with folks at Policy Matters.Here is the Alert that we recently shared on our Facebook Page from Policy Matters Ohio:ALERT:
Ohio has begun retroactively denying unemployment benefits to some Ohioans who received them during the COVID-19 pandemic and demanding repayment.Did you get Pandemic Unemployment Assistance (PUA)? The Ohio Department of Job and Family Services (ODJFS) recently began sending email alerts to some recipients telling them to check their PUA account for new notices. These notices may say you fraudulently received PUA and have to repay those benefits—including interest and late penalties—because you didn’t provide required identity documents. If you received PUA during the pandemic:
1. Check your email and PUA accounts immediately. ODJFS will send the alert to the email address you used when you applied for Unemployment Assistance. To log into your PUA account, visit:https://pua.unemployment.ohio.gov/Claimant/Core/Login.ASPX
2. If you did get a notice, file an appeal by the deadline and include a copy of the required identity documents. For what documents are required, see: https://jfs.ohio.gov/…/identityverificationchecklist
3. File your appeal online at https://puaa.jfs.ohio.gov OR call 877-574-0015 to provide the needed information. Call volume is often high, so we recommend filing online if possible. You can visit your local Ohio Means Jobs office if you need to access a computer.
4. If you miss the deadline, don’t panic! You can still file an appeal, but you may need to prove you had good cause for missing the deadline.
5. Once you file your appeal, watch for new notices in your PUA account and check your mail for a Scheduling Notice with a hearing date.
6. You have the right to be represented on an appeal and should arrange representation as soon as possible. If you cannot afford a private attorney, your local legal aid society or legal services program may be able to provide help at no cost. Contact your local legal aid office at 1-866-LAW-OHIO (1-866-529-6446) or visit https://www.ohiolegalhelp.org to search the legal aid directory.
7. If you didn’t get a notice, be sure to check your email frequently and log into your PUA account to read any new notices.
Marc

DannLaw joins calls to reform Federal Arbitration Act that would end use of arbitration clauses in consumer financial contracts

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Complicated and impenetrable arbitration agreements like this one from Wells Fargo cost consumers millions each year. DannLaw’s Consumer Arbitration Team helps attorneys and families fight back.

In a recent article posted on Columbia Law School’s Blue Sky Blog, Jeff Sovern argues that businesses should not be able to use the Federal Arbitration Act (FAA) to harm consumers.  We agree. This flaw in the law costs American families tens of millions of dollars each year. That’s why DannLaw has been fighting for real reform of the FAA including urging the Consumer Financial Protection Bureau to issue a new rule that would block the use of arbitration clauses in consumer financial contracts. Unfortunately, until the CFPB or Congress acts, consumers will continue to be victimized by greedy corporations.

But that doesn’t mean consumers are defenseless. That’s because the experienced, dedicated attorneys and staff at DannLaw’s Consumer Arbitration Practice Group are here to help. We work with consumers and attorneys across the nation to file, pursue, and win arbitration cases against the biggest players in the consumer financial game. 

Whether you’re an attorney battling on behalf of clients or a consumer who has been ripped off by a mortgage lender, credit card company, or retailer, contact the consumer arbitration experts at DannLaw. We’re ready to help you fight and win.  To learn more complete our contact form or call 330-294-3226.

We’ve posted Mr. Sovern’s CLS Blue Sky blog post below. To read a version with footnotes click here.

Consumer protection laws face a fundamental enforcement issue: Because consumer claims are typically for small amounts, and litigation is expensive, it rarely makes economic sense for consumers to litigate their claims individually. Partly to deal with this problem, lawmakers created class actions so the cost of litigation could be shared among many claims. But businesses have used the Federal Arbitration Act against consumers, inserting into agreements arbitration clauses that block consumer class actions. The U. S. Supreme Court has ruled these clauses are valid.[1] As a result, few consumers assert claims subject to these contracts unless a substantial amount of money is at issue.

This leads to two unfortunate outcomes. First, in many situations, merchants employing arbitration clauses need not fear that they will face private enforcement of consumer protection laws and so are insufficiently deterred from engaging in misconduct that might otherwise lead to liability. Second, consumers lack an effective means to secure compensation unless they suffer huge losses. The problem is worsened by the fact that consumers cannot understand arbitration clauses and so surrender their rights to litigate in court without realizing that they are doing so.

In a new book chapter, I argue that Congress should amend the FAA to exclude consumer claims from the FAA’s coverage until a dispute has arisen. Otherwise, the Consumer Financial Protection Bureau (“CFPB”) should use its rule-making power to limit the use of arbitration clauses in consumer financial contracts.

Arbitration and Claim Suppression

Multiple studies show that few consumers commence arbitration claims unless substantial sums are at issue. [2]Arbitration clauses’ claim-suppression effect was illustrated colorfully by one advocacy group when it observed that in many years more American consumers are struck by lightning than win a monetary award in arbitration.[3]

Consumer products and services companies are keenly aware that arbitration clauses insulate them from liability. One lawyer defending against class actions described arbitration clauses as a “silver bullet” for defeating consumer cases,[4] while another acknowledged that a “claim that is $162 – an individual claim – is not one that any rational litigant would litigate.”[5] In Judge Richard Posner’s words: “The realistic alternative to a class action is not 17 million individual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30.”[6]

Arbitration and Consent

Arbitration derives its legitimacy from consent. As the Supreme Court has noted, “[a]rbitration under the [FAA] is a matter of consent . . . .”[7] But whether consumers genuinely agree to arbitration is debatable.

Research demonstrates that consumers cannot understand arbitration clauses or their impact. Thus, an empirical study of consumer understanding of an arbitration clause in a credit card contract found that less than 9 percent of the respondents realized both that the contract included an arbitration clause and that it blocked them from suing in court.[8] Despite that contract’s class action waiver, four times as many respondents thought they could still participate in a class action as recognized that by agreeing to the contract they would surrender their right to join a class action. Even when respondents were told to assume they had agreed to a contract barring them from joining in a class action, less than a third realized they were foreclosed from doing so. Just one respondent in 16 realized both that (1) the contract they had been shown would prevent them from joining a class action, and (2) as a general matter, class action waivers block participation in class actions. When consumers can neither recognize that they are waiving the right to participate in a class action nor that such a waiver would be given effect, it is difficult to justify the claim that they have consented.

A CFPB telephone survey found that a majority of its respondents believed they could join a class action despite having agreed to a contract that included a class action waiver.[9] Similarly, only one consumer in 14 understood that an arbitration clause would block them from proceeding in court. And a more recent study also found consumers do not understand arbitration clauses.[10]

At the end of the day, if consent – the source of arbitration’s legitimacy – means no more than signing a contract that consumers cannot understand, it is hard to see arbitration as legitimate.

Efforts to Carve Out Consumer Claims From the FAA

Members of Congress have repeatedly but unsuccessfully introduced bills to amend the FAA to eliminate consumer disputes from its coverage. In the 2010 Dodd-Frank Act, Congress authorized the CFPB to regulate arbitration.[11] The CFPB issued a rule which would have barred the use of class action waivers in arbitration clauses in consumer financial contracts.[12] But Congress invoked the Congressional Review Act (“CRA”)[13] to block the CFPB’s rule from going into effect.

The CFPB should issue a different arbitration rule. The Congressional Review Act bars administrative agencies from issuing “a new rule that is substantially the same” as the rule Congress struck down.[14] That bars the bureau from producing a rule banning class action waivers. Nevertheless, that still leaves the bureau options. Indeed, consumer protection advocacy groups recently petitioned the bureau to promulgate a new rule blocking the use of arbitration clauses in consumer financial contracts. The petition differs from the CFPB’s blocked rule because the regulation it calls for would not be limited to class action waivers and because the proposed regulation would be based on lack of consumer comprehension of arbitration clauses rather than the claim-suppression effect of class action waivers.

Conclusion

Arbitration clauses have become common in consumer contracts as a device to block the filing of consumer class actions against businesses catering to consumers. Consequently, it no longer makes economic sense to assert many consumer claims, and therefore companies are insufficiently deterred from violating some consumer protection laws. Using arbitration clauses to preclude class actions lacks legitimacy because consumers do not knowingly consent to arbitration. Congress should amend the FAA to exclude consumer claims from its coverage, or, failing that, the CFPB should use its authority under the Dodd-Frank Act to protect consumers against the use of arbitration clauses in consumer financial contracts.

Read the Businessweek article about the lapsed VA program that put thousands of veterans at risk of losing their homes

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US Veterans Got a Mortgage Break. Now They’re Losing Their Homes

A Covid-era program gave borrowers a year without mortgage payments. Some are finding their lenders would rather foreclose than let them pick up where they left off.

By Caleb Melby, Polly Mosendz, and Ann Choi

November 9, 2023 at 12:01 AM EST

Sharelle Rosado didn’t give a lot of thought to the legal solicitations piling up at her front door earlier this year. She’d recently gotten a speeding ticket and figured lawyers were offering their services. It wasn’t until she began opening the letters that she realized the mail was much more serious: Her house was in foreclosure.

Rosado is savvy about homeownership. She’s a licensed real estate agent and the one-time star of the Netflix show Selling Tampa, which tracked the staff of her all-female, all-Black brokerage. Her clients count on her expertise. Yet she was bewildered that her lender was moving to take her four-bedroom house outside Tampa.

It turned out to have everything to do with a Covid-era mortgage program that allowed borrowers with federally backed loans to postpone payments for a year or longer and then, at the end of this forbearance period, apply to pay the arrears over time. About 8.5 million homeowners availed themselves of the program, including about 445,000 military veterans such as Rosado, a former Army paratrooper whose loan was backed by the US Department of Veterans Affairs.

In March 2022, after her 12-month forbearance ended, Rosado filled out what’s known as a loss-mitigation application—essentially a report on her financial status, used to determine her eligibility for a repayment plan—and sent it to her lender, United Wholesale Mortgage. UWM approved her application and sent her a loan-modification agreement, under which she would resume her monthly payments and the payments she’d skipped would be due when the mortgage was paid off.

Rosado and her home outside Tampa. Photographer: Mike Adno for Bloomberg Businessweek

There was one problem: Rosado was recently divorced, and UWM wanted her ex-husband to sign the document, too. She and UWM came to an agreement, she says, that her ex didn’t need to co-sign the modification if he would instead sign a quitclaim deed, a document confirming he no longer had an ownership stake in the house. After some delay, he signed, and in August of that year, Rosado sent her signed agreement along with the quitclaim. The next month her mortgage payment of $1,282.77 was posted to her account, which she took as proof that the matter had been resolved. Not so: She was told there were still paperwork problems with her modification. She says she sent the quitclaim again.

Rosado says she had no idea the company intended to seize her home until the legal solicitations arrived on her doorstep in March. After a final failed attempt to get her loan modification approved, she faced two unappealing choices: immediately pay more than $45,000 in arrears and fees or lose her house. “I was pissed,” Rosado says. “This is embarrassing. I’m not about to lose my house.” She paid.

In a written statement, a UWM spokeswoman said the company “works hard to assist borrowers, even distressed borrowers, in servicing their loans,” but that Rosado’s account was incomplete. She said the signed agreement Rosado sent in August 2022 was an old version, and under the VA’s requirements she needed to submit a divorce decree in addition to the quitclaim. The company said it had “attempted telephone contact” with her 35 times last year and 43 times this year. Rosado says that UWM didn’t ask her for a divorce decree prior to foreclosing and that she didn’t receive any voicemails saying her file was incomplete.

At first, it looked as if the entire episode was an expensive fluke. But Rosado began hearing from friends she’d met while serving at Fort Bragg (now Fort Liberty) in North Carolina who were having their own troubles getting their loans modified. They had some things in common, including signs of financial vulnerability, such as disability, unemployment or divorce. The lenders had things in common, too: Most were nonbank companies, which issued more than 80% of the 746,000 VA loans written last year. Over the past decade, as traditional banks have retreated from the $12 trillion US mortgage market, these lenders, which mostly operate online and outside the scrutiny of bank regulators, have stepped into the void.

The mortgage forbearance program was a feature of the 2020 Coronavirus Aid, Relief and Economic Security Act, known as the Cares Act. It covered a large majority of the mortgages in the US, because most mortgages are backed by federal programs. Loan-modification agreements typically offered one of two options: The arrears would be added to the mortgage, extending the repayment period while keeping the monthly cost affordable; or, as in Rosado’s case, the arrears would be lumped into a balloon payment due when the mortgage was paid off. But the government didn’t require lenders and servicers (companies that buy and manage loans) to approve those agreements. Or to make the process straightforward and easy.

Across the US, about 4,000 veterans whose mortgages had been in the forbearance program had lost their homes as of mid-October, according to ICE Mortgage Technology Inc. Some 6,000 more are in foreclosure; 34,000 others are marked delinquent. Not all the foreclosure actions were the result of loan-modification denials. But the figures don’t include thousands of borrowers, like Rosado, who paid a lump sum, sometimes under duress.

The problem isn’t limited to veterans. Other homeowners who took part in the forbearance program have faced similar difficulties. About a half-million of them are delinquent or facing foreclosure, and an additional 87,000 have lost their homes. But the actions against veterans are notable given the lengths policymakers and regulators have gone to get them into homes and keep them there.

“If I didn’t have that money, I’d be with some of those other people, losing everything”

The Cares Act, a $2.2 trillion economic stimulus bill, was rolled out within weeks of the pandemic’s onset. The mortgage forbearance element in the act was broad and homeowner-friendly: Borrowers didn’t have to prove they were hard up, and mortgage companies couldn’t say no. So lenders and servicers lost a huge chunk of their primary revenue stream, and the legislation contained no bailout for them. Many were unhappy. “It’s frankly frustrating and ridiculous that we do not have a solution in place,” Jay Bray, chief executive officer of the lender Mr. Cooper Group Inc., formerly Nationstar Mortgage, told CNBC in April 2020. “There is going to be complete chaos.” His company had a strong balance sheet, Bray said, but others in the industry would “start seeing problems soon.” (Instead, interest rates fell, millions of people refinanced their mortgages, and lenders made a lot of money.)

As borrowers began to exit forbearance, in early 2021, the mortgage companies needed to help them craft repayment plans, which involved more people, more paperwork and more cost. The rollout of those plans was rocky at best. Some borrowers encountered insurmountable roadblocks, with their homes on the line. Conventional wisdom has long held that lenders prefer what are called workouts, such as loan modifications, rather than foreclosing on homeowners, which can be time-consuming and expensive. But home prices were skyrocketing, the product of a Covid-inspired desire for more space, historically low interest rates and a flood of government money. “Right now, because of the property values, they don’t mind foreclosing,” Safora Nowrouzi, a lawyer in California who handles foreclosure cases, says of lenders. “And that’s why denials are much higher.”

Borrowers, lawyers and advocates describe a rudimentary playbook: requests for documents that have already been submitted, assurances that an application is complete only for it suddenly to be reopened, envelopes that don’t contain promised documents, loans transferred to different lenders and other paper-shuffling moves that force borrowers into delinquency, increase the size of their arrears and narrow their options. Borrowers are “lulled into inaction, because they’re led to believe that the lender is working something out,” Nowrouzi says.

The Consumer Financial Protection Bureau, which monitors lending practices, says it’s unable to track how many loss-mitigation and loan-modification applications go awry, or how many are denied. But complaints from service members prompted the agency and the US Department of Justice to issue a warning in December 2021 to lenders and mortgage servicers citing borrowers who had “suffered negative impacts.” The letter described “incorrect or confusing communications” and mandatory lump sum payments as things that could run afoul of protections in the Cares Act. Borrowers with government-backed loans, the warning letter said, “generally cannot be required to repay their forbearance amount in a lump sum payment if they indicate that they cannot afford to do so when exiting forbearance.”

The letter doesn’t appear to have had the desired effect. In a report that covered transactions through March 2023, the agency again made clear that something was amiss. It said it had identified lenders that delayed homeowners’ applications and that “borrowers could not reasonably avoid injury because servicers controlled the processing of applications, and borrowers reasonably expected servicers to enroll them in the options they applied for.” The report didn’t identify any lenders by name, and no enforcement actions were taken. But the agency said the unnamed companies had “ceased the practice and developed improved policies and procedures.”

That hasn’t been the experience of veterans and advocates who spoke to Bloomberg Businessweek. “Instead of bringing attention to the damage inflicted, it conceals it,” Roberto Rivera, a consultant in New Jersey who works with attorneys whose clients are going through the loan-modification process, says of the agency’s reports. A spokesperson for the CFPB says it doesn’t make supervisory interactions with companies public.

Even after everything, Rosado considers herself lucky. Her circumstances had changed since she bought her home in 2020—the Netflix show plus a recent engagement to former Cincinnati Bengals wide receiver Chad “Ochocinco” Johnson—and she could afford the one-time payment. “If I didn’t have that money, I’d be with some of those other people, losing everything,” she says.

One of those other people is Monica Rosario, a retired Army captain. When it came time to modify the loan on her three-bedroom townhouse in Fayetteville, North Carolina, she was going through a divorce and between jobs. The divorce proceedings put her taxes in disarray, so Rosario, a colon cancer survivor, sent bank statements to her lender, Freedom Mortgage Corp., showing that she was still receiving disability benefits from the Army and was able to make monthly payments. She says the documentation never seemed to stay in her file. Freedom denied her loan-modification application and told her earlier this year that she had to pay $15,000 or lose her home, she says. She didn’t have that much money on hand and forfeited the house in a short sale in July.

Her home was listed for sale at 53% more than the price she paid. Rosario, who now rents across town, says she’s so wracked with depression that she’ll go days without stepping outside. “I still don’t understand how I was expected to pay that money so suddenly and continue on with my life,” she says. “It doesn’t make any sense.” A spokesperson for Freedom, one of the largest originators of VA loans last year, declined to comment.

“The risk of being sued and the risk of being dinged by the CFPB is baked into their business model”

Someone who last bought a home a decade ago would scarcely recognize the mortgage market today. The changes began with the 2008 global financial crisis, which was triggered by risky mortgage lending practices. In the aftermath, down payments once again became standard for most conventional mortgages, variable-interest-rate loans fell out of favor with both lenders and borrowers and income-verification standards were tightened.

Those reforms also made the business of writing mortgages less profitable for banks, which at the time underwrote the majority of home loans. Borrowers with higher credit scores and larger down payments can still count on bank loans; they’re desirable customers who, in addition to being unlikely to default, can be sold on more lucrative services, such as wealth management. For other clients, a new generation of companies sprouted up. Nonbanks, sometimes called shadow banks, don’t take deposits and are subject to much less regulation. They figured out they could make a profit lending to not-quite-prime homebuyers. Of course, the nonbanks need money to run their businesses. They often get it in the form of credit lines from many of the same banks that pulled back from the messy business of underwriting.

Last year, nonbanks accounted for 60% of all US home loans. The two biggest, Rocket Cos. and United Wholesale Mortgage, originated more than $255 billion of mortgage debt—more than Wells Fargo, JPMorgan Chase and US Bancorp, the top three bank lenders in 2022, combined.

John Bell, who manages the VA’s home-loan program, praises the role nonbank lenders have played in the VA mortgage business. “Thank goodness we had some of these nonbanks that raised their hand and were wanting to get into the business when banks backed out,” he says.

Many mortgage companies love VA loans. They’re backed by the government, the VA doesn’t set minimum credit score requirements, and down payments often aren’t necessary. Even closing costs can be borrowed, sending loan-to-value ratios as high as 103.3%. The result: VA borrowers often begin homeownership owing more than their home is worth, creating a long earnings runway for lenders.

Nonetheless, veterans who’d been waved through when they applied for their mortgage found their lenders weren’t going to make things easy when it came time to modify their agreements. Lawyers and housing advocates say that, depending on the state, trying to beat lenders in a he-said, she-said battle over who dropped the ball in a loan modification can be almost impossible. Those who succeed say borrowers must rigorously document their cases if they have any hope of winning. And there’s a growing sense that federal agencies, far from preventing abuses, may be making things worse with complex rules that befuddle lenders as well as borrowers. “The misinformation they’re giving on those phone calls is so sickening,” says Rivera, the consultant, of calls that customers have with their lenders. “There’s nobody there who has read the guidelines. It’s absurd.”

Absurd could describe Rosie Bennett’s situation. She got forbearance for the mortgage on her home in Coeur d’Alene, Idaho, in July 2020, the month before the death of her husband, who served as a Navy medic in the 1950s. The reprieve gave Bennett, who’s 79 and has multiple sclerosis, time to settle her affairs.

In January 2022 her mortgage servicer, Dovenmuehle Mortgage Inc., mailed her an envelope that she expected to contain her loan-modification agreement. But the envelope was empty, according to a lawsuit she filed against Dovenmuehle in federal court in Idaho. Bennett says she contacted the company several times to ask for the agreement and was told it would be sent. She continued making monthly payments, but the paperwork never came. In May 2022 the company sent a notice saying Bennett would be foreclosed on if she didn’t pay $33,529 within a month.

Rosie Bennett and her Coeur d’Alene home. Photographer: Amy Osborne for Bloomberg Businessweek

Dovenmuehle started foreclosure proceedings in June. In October the company transferred Bennett’s loan to PHH Mortgage Corp. She says she reached a modification agreement with PHH, only to have it rescinded this January. She was told she “needed to have her deceased husband execute and record” a document transferring his ownership in the house to her and was again threatened with foreclosure, according to the lawsuit, which also names PHH as a defendant.

Spokespeople for Dovenmuehle and PHH say they complied with all applicable laws and guidelines. The PHH spokesperson says, however, that the company no longer intends to foreclose. Bennett is pursuing her lawsuit anyway. The two-year saga has rattled her. “I’m just such a nervous wreck right now,” she says. “My whole body is just shaking all the time.”

One possible takeaway: Choose your lender carefully. But Bennett hadn’t contracted with Dovenmuehle or PHH. She and her husband had gotten their mortgage from Federal Savings Bank, based in New York. There are no rules preventing banks from selling mortgages or hiring nonbanks to service them. “This is the one consumer contract where you don’t get to pick who you do business with,” says Marc Dann, Bennett’s lawyer and a former Ohio attorney general, who now specializes in consumer lending cases. “She can’t say ‘Oh, I don’t like Dovenmuehle. I’m going to go down the street to Wells Fargo.’ She can’t do that.”

Settlements from cases such as Bennett’s tend to be small, and there’s little disincentive to avoid abusing borrowers, Dann says. “The risk of being sued and the risk of getting dinged by the CFPB is baked into their business model,” he says. “We could really use another 1,000 law firms doing the work that I do. At that point, maybe we would have an impact on the behavior of these companies.”

Lewis Rutherford’s maddening journey to a foreclosure notice began more than a year ago. A 63-year-old truck driver who played keyboards in bands at US Army bases across Europe in the 1980s, Rutherford hadn’t always paid his mortgage on time. After exiting forbearance, he thought he could avoid future problems by sending money in advance to his lender, Caliber Home Loans Inc. But when he sent $3,333 in August 2022 to cover three months of payments for his home in New Castle, Delaware, about $2,500 appeared to go missing.

Rutherford was irate and refused to make additional payments until the matter was resolved. In March, before he could get to the bottom of it, Caliber sold his loan to Shellpoint Mortgage Servicing. Rutherford says a Shellpoint representative told him the company had no record of his advance payments. With his money still missing, Rutherford insisted he wasn’t going to make any additional payments until the matter was straightened out. That’s a risky strategy for any borrower in a fight with a lender. In May, Shellpoint moved to foreclose.

What Rutherford didn’t know was that Caliber and Shellpoint were owned by the same company, Rithm Capital Corp. The paperwork Shellpoint said it couldn’t find existed within the same corporate family. As he fought to keep his home, “Rithm had one of its best quarters ever,” its CEO told investors in August. The company, which has been rolling up finance businesses for years, is now closing in on an acquisition of Sculptor Capital Management, a $33 billion hedge fund.

“Something ain’t right with these people,” Rutherford says. “If they see an opportunity to snatch a house, they will.”

He says that in June, after he told Shellpoint he’d spoken to Businessweek, the company said it didn’t need to foreclose on him after all. Court records show the company withdrew its foreclosure case a week later. A spokesman for Rithm’s mortgage division says the company made an error in how it applied Rutherford’s advance payments. “We have since corrected this error and are actively addressing any potential credit reporting impact caused by this issue,” the spokesman said. “In addition, we are ensuring that no other borrowers were negatively affected by this issue.”

In Charlotte, Makeda Young, a major in the National Guard who’s studying to be a physician assistant, took matters into her own hands. She says she paid more than $19,000 to clear her forbearance arrears after delays by her lender, Mr. Cooper, pushed her into default. Records show her application for a modification was accepted three times, followed by demands for documentation that Young says she’d already provided, ultimately leading to a foreclosure warning and her credit score dropping by 111 points.

Makeda Young and her Charlotte home. Photographer: Mike Adno for Bloomberg Businessweek

Not all borrowers are meticulous record keepers, but Young is. She compiled a dossier of all documents and emails and pulled her phone records to show how many hours she’d spent dealing with the company. In June she took her case to the consumer protection unit of the North Carolina Department of Justice, which contacted Mr. Cooper. In a letter, the company told the agency it had tried to reach Young on several occasions and that she hadn’t responded. But Young sent her phone logs to state officials in an email describing Mr. Cooper’s description of events as “misleading and inaccurate.”

It worked. In a new letter, Mr. Cooper described Young’s efforts to get her loan modified and erased its claims that she’d been delinquent, which restored her credit score. A spokeswoman for Mr. Cooper says Young’s application ultimately was denied after all documentation had been received. The company “is committed to finding solutions to keep our customers in their homes” the spokeswoman said.

“I’m going to make sure they investigate every single case,” Young says. She’s been documenting her efforts on Facebook. One post highlights the portions of Mr. Cooper’s letter that portrayed her as a nonresponsive customer and an amended letter showing she had in fact been in frequent contact with them. And there’s a tearful video after Mr. Cooper relented.

The replies show how common the problem has become. “Dealing with this RIGHT NOW!!!” wrote one borrower. “This just HAPPENED TO ME!!!!” posted another. “My folks in NC whom are Veterans are going thru the almost same scenario real time. Thank you Sista! ARMY STRONG!”

An Important Notice for homeowners with VA loans who are dealing with the threat of foreclosure

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The Department of Veterans Affairs just announced that it is asking mortgage servicers not foreclose on veterans and service members who are delinquent on their VA home loans until May 31, 2024. The VA’s action comes in response to an NPR investigation that discovered thousands of veterans who utilized a COVID forbearance program offered by the agency were at risk of losing their homes even though they had done nothing wrong.

The Partial Claim Payment program (PCP), set up by Congress in the midst of the pandemic, allowed borrowers to skip making mortgage payments for six or 12 months and offered those who used it an affordable way to resume making payments and deal with arrearages. For reasons that are unknown at this point, the VA allowed the program to expire in October of 2022. As a result of the unexplained lapse, more than 6,000 people are now in foreclosure and another 34,000 are delinquent.

In a letter dated November 15, 2023, Ohio’s Sherrod Brown and six other senators implored Denis McDonough, the Secretary of Veterans Affairs, to pause foreclosures until the VA developed and implemented a replacement for PCP that will enable veterans and service members to keep their homes and enter into affordable loan medication agreements with lenders.
The letter, combined with the disturbing findings in the NPR report motivated the Secretary to call a halt to existing and potential foreclosure actions for six months.

If you are a veteran or servicemember impacted by the end of the PCP program or are experiencing other problems related to a VA home loan, please contact DannLaw today by calling 216-342-9901 or completing our online contact form to arrange a no-cost consultation. It will be our honor and privilege to discuss your situation and assist you.

Thank you for your service, and remember, DannLaw is here to support the veterans and servicemembers who protect us and the USA.

DannLaw Update, September 2023

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Dann Law

The DannLaw legal team has been incredibly busy this summer. We have opened more than 100 new class action cases and Brian Flick, I and the members of our Class Action Litigation Practice Group have been appointed to leadership roles in a number of very significant cases including a mortgage discrimination case against Wells Fargo and actions seeking compensation for consumers impacted by data breaches that occurred at Snap Finance, Last Pass, Carrington Mortgage, Key Bank, Overby-Seawell, payday lender Advance America, Bet MGM, and others.

We also want to welcome two outstanding attorneys, Kurt Jones and Alisa Adams, to DannLaw. Their addition to our stellar lineup of legal talent will enable us to represent thousands of people involved in consumer arbitration cases. We invite anyone who is facing arbitration with a bank, credit card company, lender, or other entity to contact our office today. Kurty, Alissa, and our highly talented and experienced team ready, willing, and more than able to fight for you.  

We’ve moved and expanded! Our Columbus-area office has moved to 25 North Street in Dublin, Ohio. The phone number is 877-475-8100.  The new location features ample  parking and is more accessible access for our clients and DL attorneys from around the state. We have also opened an office in California at 26100 Towne Centre Drive, in Foothill Ranch. The phone number is 213-320-5706

Our offices in Cleveland, Cincinnati, New York and New Jersey have not moved and are located at:

Firm Practice Area Update:

Loss Mitigation and Foreclosure Defense: 

We continue to assist homeowners who are transitioning from Covid-era mortgage Forbearance programs to permanent loan modifications that make mortgage payments more affordable. If you are currently attempting to negotiate a loan mod and need assistance, please contact us right away. Our knowledgeable and experienced Foreclosure Defense team, which includes Whitney Kaster, Andy Engel, Javier Merino, Karen Ortiz, Amanda Severt and Roberto Rivera, are here to help homeowners in Ohio, New Jersey, and New York. 

In Ohio and New Jersey, two states with extremely high foreclosure rates, our team is fighting hard every day to enable our clients to stay in their homes. If a foreclosure action has been filed against you or someone you know, please remember that involving us early substantially increases our prospects for success. So don’t delay, let us begin securing your financial future today.

We’ve also encountered instances in which mortgage servicers are slow-walking responses to or are refusing to accept money made available to homeowners under the federal government’s Covid-era “Save the Dream” program. If you applied for these funds and were rejected because of something your servicer did or did not do, please contact us right away so we can work to rectify the situation and help secure the funds you need and deserve. 

Litigation against Mortgage Servicers: 

Dan Solar, Mike Smith, Javier Merino, Saher Chaudhary, and Kimberly White from our Mortgage Litigation Team continue to bring groundbreaking individual and class action cases against mortgage loan servicers that mistreat, mislead, and abuse borrowers and homeowners. Contact DannLaw right away if you have encountered any of the following issues: 

  1. Mistakes in calculating escrow payments. We have sued servicers that failed to pay taxes for homeowners even though they have collected the funds needed to make the payments from homeowners, Paid taxes on the wrong property, or placed insurance on homeowners who were already insured. 
  2. Failure to properly apply payments or adding charges that are not warranted under the note.
  3. Failure to follow investor or government rules, failure to work diligently to resolve issues, or failure to properly process paperwork when evaluating loan modification applications. applications.
  4. Mistakes made by servicers in transitioning borrowers from Covid forbearance to performing loans. 

Consumer Class Actions:

Wells FargoBringing class action lawsuits on behalf of consumers and other parties damaged by corporations, banks, lenders, and other entities is the fastest growing part of our practice. If you believe a company, no matter how large or small, is systematically cheating you and other customers, please give us the opportunity to investigate and determine if class action claims exist. Our Class Action Practice Group which includes Javier Merino, Brian Flick, Andrew Wolf, Jeff Crossman, Saher Chaudhary, Marita Ramirez, Kim White and Liza Marigliano has filed significant cases against these and other companies:

  1. PHH Mortgage for charging “pay-to-play” fees
  2. Wells Fargo for discriminating against people of color seeking mortgages
  3. Failure to disclose itemize documentation fees in car sales contracts.
  4. Bank of America for opening fake accounts in customers’ names 
  5. Walmart for violating its own refund policy. 
  6. Dollar General for charging more at the register than the price indicated on the shelf 

Data Breach and Identity Theft: 

Far too many companies have failed to adequately protect their customers’ and/or employees’ confidential personal information. As a result, cyberthieves have been able to access and utilize victims’ social security numbers, medical records, bank account information, and other sensitive data at an alarming rate. 

DannLaw attorneys Brian Flick, Marita Ramirez, Javier Merino, and the other members of the firm’s data privacy team are leading the effort to hold companies accountable by bringing class actions cases that force them to compensate people whose data has been stolen and sold.   If you receive a notice that your information has been part of a data breach, please reach out to us right away so that we can take steps to protect you and your family. 

 

Consumer Arbitrations: 

While we are involved in dozens of large cases, DannLaw also specializes in helping individual consumers seek and secure justice and just compensation. Our Consumer Arbitration Practice Goup led by attorneys Alisa Adams and Kurt Jones and paralegals Madellyn Brown, Ivona Gates and Maureen Dial has developed an effective and efficient process for arbitrating consumer claims against companies whose contracts prevent customers from suing in court or bringing class action cases. If you or someone you know is involved in a dispute with companies like Paypal, Chime, Cash App, American Home Shield, Choice Home Warranty, and others that force consumers to resolve claims via arbitration, our experts are here to help.

And, remember this: we don’t get paid unless we win your arbitration case.

Significant Developments in Ongoing Cases

Unemployment PUA supplement case:  We are still waiting for the judge to rule on the Governor’s Motion to Dismiss.

Driver’s License Lamination Case: Is set for trial later this year and notices have been mailed to over 3,000,000 class members. 

Mill Creek Park Deer: We have filed a motion for a preliminary injunction to stop the scheduled hunt in the park.

Current Class Actions with Claim in Periods

If Nationstar Mortgage wrongly withdrew money from your account, we invite you to make a claim here: https://achloanpaymentlitigation.com/

Thanks for taking the time to read our most recent update and as always, DannLaw is here to serve you.

Class action suit against Ohio BMV over bogus lamination fees continues, plaintiffs who received postcards don’t need to do anything to remain part of the class

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If you received a postcard regarding the Madyda v. BMV case, it is because you are one of the people who paid a fee to have your driver’s licensed laminated by a deputy registrar between 2018 and 2020, even though the deputy registrars were not performing the service.

That makes you a member of the class of plaintiffs in the lawsuit DannLaw has filed against the BMV and the state of Ohio. If you would like to remain in the class and receive a portion of any funds or other compensation we recover on behalf of the plaintiffs you do not need to do anything. If you prefer to bring your own claim against the BMV, the postcard contains instructions for opting out.

Again, you do not need to do anything if you want to continue to be a member of the class. DannLaw will provide regular updates as the case proceeds.

Here is a detailed description of the case:

DannLaw files class action suit against Ohio Bureau of Motor vehicles to recover $3 million in bogus fees charged by deputy registrars

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Since July 2, 2018, the Ohio Bureau of Motor Vehicles (BMV) has allowed the state’s 200 deputy registrars to charge people obtaining or renewing driver’s licenses or state-issued I.D.s a $1.50 lamination fee even though the registrars were no longer producing—or laminating—the cards on site. As a result, an estimated two million Ohioans have been charged $3 million for a service that was not performed.

Catherine Turcer, executive director of Common Cause Ohio, told the Columbus Dispatch the registrars should not be pocketing the fee. “Clearly, the registrars should not be charging for something they are not providing … that’s not fair. Many of us don’t think about a buck fifty, it’s not a big deal. But it is a big deal when you think about being charged extra fees for no reason. We want to spend our money on what we expected.”

Attorney Marc Dann, founder of the Cleveland-based consumer protection law firm DannLaw agrees with Ms. Turcer. And, if the messages that have been pouring into the firm’s Facebook page are any indication, so do people who paid the bogus fee. “We posted an item on our Facebook page asking anyone who has renewed their license or state I.D. since last July to contact us,” the former Ohio attorney general said. “The response was overwhelming. Those who paid the fee were outraged. They want their money back and they want the state to stop ripping people off.”

Today the legal team at DannLaw took the first step toward recovering the unwarranted fees by filing a class action suit against the BMV in the Ohio Court of Claims. The suit asks the Court to award anyone who paid the lamination fee $1.50 plus interest. The complaint may be read/downloaded here:Madyda Alexander 2019 03 19 Complaint – Lamination Fee INITIAL DRAFT (002)

“While the dollar amount on a per-person basis may be small, there’s nothing trivial about the BMV allowing the registrars to pocket $3 million for doing nothing,” Atty. Dann said. “If everyone shrugs their shoulders and says ‘it’s only a buck fifty’ does that mean it’s ok for the state to grab five dollars or ten dollars from its citizens? Where do you draw the line? At its core, this case isn’t about the $1.50, it’s about holding government officials accountable for their actions. That’s the best way to ensure that something like this doesn’t happen again.”

According to Atty. Joe Romano of Bay Village, Ohio who is serving as co-counsel on the case the overcharges stem from the fact that in order to comply with federal regulations the BMV itself rather than the registrars began producing and mailing the licenses and I.D. cards last July. “Apparently, and this is something we hope to learn more about as the case progresses, neither the deputy registrars nor the staff at the BMV noticed that people were still being charged the $1.50 lamination fee even though the registrars weren’t laminating a darn thing,” he said.