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DannLaw Spring 2024 Update

CFPB

By

DannLaw founder Marc Dann
Attorney Marc Dann

Spring is celebrated as a time for renewal. Here at DannLaw, we’re marking the beginning of the season by renewing our commitment to seeking and securing justice for consumers who have been ripped off by credit card companies, banks and retailers, homeowners abused by mortgage lenders and servicers, and victims of identity theft and other cybercrimes resulting from data breaches.

That commitment, along with our knowledge of the law, experience, expertise, and ability to develop and utilize highly effective, innovative legal strategies have made DannLaw a consumer protection powerhouse people trust to safeguard their families, their homes, and their family’s future.

Building upon that and assisting more clients than ever before are our primary goals for 2024. Here’s a look on how we plan to achieve them…

DannLaw’s Forced Arbitration Practice Group battles for consumers trapped in an unfair system

Fueled by a series of Supreme Court decisions handed down over the past 40 years, forced arbitration clauses have been adopted by tens of thousands of companies that provide a seemingly limitless array of goods and services.

This has not exactly been a positive development for consumers. Shennan Kavanagh, the director of litigation at the National Consumer Law Center (NCLC) explains why:

“Forced arbitration robs consumers of their basic Seventh Amendment right to access the courts. These fine print traps allow predatory lenders, fraudsters, unscrupulous banks, and other repeat offenders to escape accountability by depriving consumers of choice and forcing disputes into closed-door, biased proceedings where consumers rarely win.”

By the way, “rarely” is an understatement. According to NCLC attorney Lauren Saunders, consumers who take on companies alone lose 96% of the time.

To make matters worse, a recent study released by NCLC revealed that the vast majority of Americans have no idea what a forced arbitration clause is or does or that they unwittingly agreed to clauses buried in the fine print of contracts they clicked “yes” to online or physically signed.

That lack of knowledge can have an extremely high price tag, a fact that doesn’t hit consumers until they become embroiled in a dispute with a company and discover they have no path to justice or reasonable opportunity to recover what they are owed.

The inequities in the system cry out for reform. That is why DannLaw has joined the NCLC and other consumer advocates in calling on Congress and the Consumer Financial Protection Bureau (CFPB) to end the forced arbitration reign of terror. To date, both have refused to act.

In reaction to their inexcusable inaction, DannLaw has formed a Forced Arbitration Practice Group led by attorneys Alisa Adams and Kurt Jones who have extensive experience pursuing and winning forced arbitration claims. Alissa, Kurt, and the Group’s talented paralegals are ready, willing, and more than able to take on banks, financial services firms, and any company that is using forced arbitration to prey upon, rip off, or exploit their customers.

If you or someone you know is a victim of forced arbitration, click here to arrange a free consultation with our Forced Arbitration team.

We are also available to co-counsel with attorneys who now represent clients with forced arbitration claims. To learn more about collaborating with us or to refer a client to us, please click here.

The companies and industries that have been inducted into the DannLaw Forced Arbitration Hall of Shame are among the worst abusers of the process, but they are not alone. As we noted above, thousands of other providers of goods and services use it to exploit consumers. We are prepared to battle them all.

 

 

Consumer Class Action Cases

In addition to helping our clients win forced arbitration cases, DannLaw regularly files suit on behalf of individual and groups of consumers whose claims are not subject to the unfair process.

We are currently litigating a number of class action suits in courts across the nation, and we will continue to seek justice and just compensation via the courts when that is the appropriate course of action. Here is a brief overview of some of the most interesting and consequential cases we are currently pursuing:

Financial Services Wells Fargo

Wells FargoIt should come as no surprise to anyone that we have once again filed class action suits against Wells Fargo. Despite having paid more than $27 billion in fines since 2000, Wells remains a serious serial abuser of its customers and other consumers. \The cases against Wells involve:

Mortgage Discrimination. We allege that during the time interest rates were low, Wells denied loans to applicants who were members of minority groups at a much higher rate than other lenders.

Adding services to customer accounts without authorization. We have filed a series of class action suits alleging that Wells made millions of dollars by adding services including credit protection, supplemental hospital insurance, life and disability Insurance and others to consumers’ accounts without authorization or permission. If you recently received a letter from Wells apologizing for this conduct, we would like to hear from you. Please click here to arrange a free consultation that will enable us to determine if you are entitled to financial compensation from the company.

Financial Services: Bank of America

We recently filed suit in North Carolina alleging that Bank of America opened unauthorized consumer accounts. If BOA opened an account in your name without your consent or permission, please click here to share your story with us. Like people who have been victimized by Wells, you may be eligible for financial compensation.

Retailers: Dollar General

Despite being exposed in media reports like this one featuring DannLaw founder Marc Dann, Dollar General continues to charge higher prices at the register than are posted on shelves.  We are now pursuing cases in New York, New Jersey and Oklahoma, but believe the company is engaging in the practice in other states. If this has happened to you at Dollar General or another store click here to tell us your story

Retailers: Walmart

We are investigating reports that Walmart is treating customers who use two forms of payment unfairly when they are due a refund. If this has happened to you, please let us know.

Data Breaches

Data breaches that enable cyberthieves to steal and misuse victims’ sensitive and confidential information is a growing problem in the U.S. That is why we are expanding our Data Privacy and Security Practice Group and working with the legal community to develop strategies that will ensure we can pursue and secure justice and just compensation for those put at risk when corporations, government agencies, and other entities fail to protect the personal data in their possession. As part of that effort, I am pleased to report that I was recently invited to serve on the prestigious Sedona Conference Data and Privacy Liability Working Group which is working to address challenging questions related to legal liability and damages.

You should be aware that health care companies and insurers have become a prime target for hackers and cyber criminals, a fact underscored by the class action suits we recently filed against Merch Health and Optimum Health.

If you have been or are ever notified that your personal data including but not limited to your driver’s license, social security, credit card and other account numbers, confidential health or medical records, or other identifying information has been hacked, stolen, or compromised, please contact our  data privacy team. immediately so we can begin protecting you, your family, and your future. Do not delay, every moment your data is exposed increases the chances it will be misused.

 Automobile and Motorcycle dealerships:

We regularly file class action suits against car, truck, and motorcycle dealers that add unauthorized products or services to vehicles, misrepresent the amount of the sale, and/or add hidden and opaque charges like “Documentary Fees” to sales agreements.

We have secured multiple multi-million-dollar awards for classes of auto purchasers and we will continue to actively and aggressively pursue claims on behalf of consumers who have been cheated or abused. If you are troubled or suspicious about something related to your vehcile purchase contact us today to arrange a no-cost, no-obligation consultation.

Foreclosure Defense and Mortgage Servicing Litigation Update

 DannLaw began by representing borrowers and homeowners who were in or about to be in foreclosure. Today, after helping thousands of people save their homes and their financial futures, stopping foreclosures and negotiating loan modifications continue to be a primary focus of our practice—and needed as much as ever.

That is because Ohio and New Jersey lead the nation in foreclosures, due in part to a surge in attempts by debt buyers to collect “zombie mortgages”— debts that homeowners thought were forgiven or satisfied long ago but still exist.

The key to our ability to save a home is timing: the earlier we get involved, the more we can do to battle mortgage lenders and servicers who engage in unethical or illegal activities like dual tracking—promising to modify a loan while moving ahead with a foreclosure action.

If you are in or are facing the threat of foreclosure DannLaw will utilize the tested, highly effective legal strategy that has helped thousands of families just like yours.

First, our experienced foreclosure defense team will aggressively defend and foreclosure action that has been filed,

Second, we will identify, document, and pursue claims you may have against your mortgage servicer for dual tracking, misapplying payments, failing to pay taxes or insurances, and other abuses, and,

Third, the members of our talented mortgage modification team will use their expertise to work out an agreement with your mortgage company that will enable you to stay in your home.

Remember, time is of the essence. Every minute you wait brings you one step closer to losing your home, do don’t delay, click here to contact DannLaw’s Foreclosure Defense team today.

Thanks for taking the time to read our Spring 2024 update and, as always, DannLaw is here to help you.

Marc

By

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.

By

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!”

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The following is an abridged version of a story by Hayley Fowler that was published by Law 360…

Law360 (July 14, 2023, 4:11 PM EDT) — Bank of America NA has been hit with a proposed class action alleging it opened credit cards without customers’ knowledge to meet sales goals, just days after the bank agreed to a nine-figure settlement with federal regulators over alleged transgressions involving its credit card rewards and overdraft policies.
DannLaw founder Marc DannDAnnLaw filed the suit in North Carolina federal court on behalf of Ohio resident Nadine Ballard and a proposed class of consumers who said they unknowingly had credit card accounts opened in their names between 2012 and 2022, which allegedly resulted in penalties for unpaid fees and impacted their credit scores. In the suit DannLaw and Ms. Ballard said the accounts were opened by employees desperate to reach “unrealistic sales quotas” as part of a money-grabbing scheme by the Charlotte-based bank.
“BoA allowed this fraud to fester for over a decade, profiting off of the harm it directly caused to the consumers who trusted BoA,” the lawsuit states. The complaint in the case, maybe viewed and downloaded here: Bank of America credit card scam complaint.
Ballard’s complaint comes on the heels of a collective $150 million in fines levied against Bank of America on Tuesday by the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency.
About $30 million of those penalties was attributed to the bank’s alleged failure to provide credit card sign-up reward bonuses as advertised and opening unauthorized credit card accounts to meet sales targets, which have since been eliminated.
Bank of America did not admit any wrongdoing in agreeing to pay the fines, and the CFPB said only a “small percentage” of the bank’s new credit card accounts opened between 2012 and 2020 were found to be unauthorized.
Still, Ballard said Thursday that the bank’s alleged “fee generating scheme” has impacted “many thousands of members.”
“Until the CFPB took decisive action against BoA, BoA had every incentive to continue this illegal conduct because it is a fee-generating machine that produced extraordinary profits for the bank at the expense of its consumers,” she said.
According to the complaint, Ballard discovered in March that the bank had previously opened an allegedly unauthorized account in her name. Since then, Ballard said she has “spent substantial time to correct her credit report as well as to lodge complaints with the appropriate government agencies, including the CFPB.”
Ballard blamed Bank of America’s “intense sales pressure” for the allegedly unauthorized accounts, which she said often required employees to pull consumer reports to determine a customer’s eligibility.
Bank of America allegedly knew about the scheme and took steps to hide it, she said, saying the bank was fully “aware its quotas are unrealistic for employees during normal working hours.”
Oftentimes customers only found out about the accounts when Bank of America asked them to update their account information, new debit or credit cards arrived in the mail, or missing deposits showed up in the allegedly unauthorized account, Ballard said.
As a result, customers were allegedly forced to pay monthly service fees, suffered damages to their credit reports and had to pay for identity theft protection, the lawsuit states.
“As a result of opening new accounts, BoA was able to inflate the key metrics regarding new account holder information in its [U.S. Securities and Exchange Commission] filings, and — equally troubling — was able to accrue associated fees from those accounts opened without consumer consent,” DannLaw claims in the suit.
Thursday’s complaint asserts claims for unjust enrichment and violations of the Electronic Funds Transfer Act, the Truth in Lending Act, the Fair Credit Reporting Act and North Carolina’s Unfair and Deceptive Trade Practices Act.
Ballard is seeking class certification, treble damages, restitution, attorney fees and pre- and post-judgment interest.
“The brazen way that Bank of America encouraged and allowed fraud to be committed against perhaps millions of its customers is one of the greatest travesties in the history of American business,” Marc Dann told Law 360. “…we look forward to holding the bank and its officers and board members accountable.”
In addition to DannLaw, Ms. Ballard and the proposed class are represented by Scott C. Harris of Milberg Coleman Bryson Phillips Grossman PLLC, Israel David and Blake Hunter Yagman of Israel David LLC, James M. Evangelista of Evangelista Worley LLC, Jennifer Czeisler of JKC Law LLC, and Marc E. Dann and Brian D. Flick of Dann Law Firm.

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DannLaw founder Marc DannWhile the $3.7 billion settlement between Wells Fargo and the Consumer Financial Protection Bureau is welcome news, it doesn’t resolve all the issues surrounding the bank’s bad behavior–a point made by CFPB Director Rohit Chopra who noted that Wells’ rinse-repeat cycle of violating the law has harmed millions of American families.” He also said the company is a serial offender that puts one third of American households at risk of harm and that finding permanent resolution to this bank’s pattern of unlawful behavior is a top priority.
As most of you know, holding Wells accountable is also a top priority for DannLaw. We successfully represented clients in a class action suit related to the same issues outlined in the CFPB order and we are currently pursuing cases in California and New Jersey.
In addition, we continue to recieve calls and emails from homeowners who are involved in home mortgage disputes with Wells. If Wells is your lender or servicer and you believe you are being abused by the bank please contact DannLaw today by calling Lisa at 216-250-4012, emailing [email protected], or visiting https://dannlaw.com/contact/ to schedule a no-cost consultation that will enable us to determine if you are entitled to financial compensation.
Under the terms of the agreement with the CFPB Wells will provide $2 billion in compensation to consumers for engaging in the following activities:
• Unlawfully repossessing vehicles and bungling borrower accounts: Wells Fargo had systematic failures in its servicing of automobile loans that resulted in $1.3 billion in harm across more than 11 million accounts.
• Improperly denying mortgage modifications: During at least a seven-year period, the bank improperly denied thousands of mortgage loan modifications, which in some cases led to Wells Fargo customers losing their homes to wrongful foreclosures.
• Illegally charging surprise overdraft fees: For years, Wells Fargo unfairly charged surprise overdraft fees – fees charged even though consumers had enough money in their account to cover the transaction at the time the bank authorized it.
• Unlawfully freezing consumer accounts and mispresenting fee waivers: Customers affected by these account freezes were unable to access any of their money in accounts at the bank for an average of at least two weeks.
The terms of the agreement require Wells to contact its victims. Eligible consumers don’t have to take any action.
We wish we could say we believe Wells will now clean up its act. But we don’t. We know the bank is taking advantage of homeowner and consumers every day. If you are one of them, please contact DannLaw today wo we can protect your rights, your family and fight for the compensation you deserve.

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The End of Covid Forbearance is here. Time to rework your loan. 

DannLaw founder Marc DannMortgage forbearance and other programs made available to homeowners during the COVID-19 pandemic are about to end. That means millions of homeowners are or will soon be pursuing loan modifications or other work out options with their lenders. Karen Ortiz, Roberto Rivera, and DannLaw’s highly experienced and knowledgeable legal staff are here to help families navigate the complicated process and select the payment structure that best meets their needs. Please contact us to arrange a no-cost, no-obligation consultation by calling 216-373-0539 or completing our contact form.

Changes at DannLaw

We are sad to announce that Attorney Whitney Horton is leaving DannLaw after being a valuable member of our team for more than seven years. If Whitney has been working on your case, a notice of substitution of counsel will be filed in the next few weeks. Whitney Kaster, who was at DannLaw before the pandemic is returning to the firm on Monday April 24. Attorney Kaster will work me and Emily White on foreclosure defense matters and with Brian Flick on Consumer Protection cases.  In addition, Amanda Severt who has been our administrative assistant has been promoted and will now work as a paralegal assigned to foreclosure cases and state court litigation.

 Student Loan Changes

The U.S. Department of Education is making changes to the Income Based Repayment program for Federal Student Loans that should enable lower income borrowers to fulfill their obligations faster and qualify for Public Service or other Loan forgiveness programs sooner. You may read about the changes here. Richard Cordray who served as Ohio Treasurer and AG before being named the first director of the Consumer Financial Protection Bureau and is now in charge of Student Loan Issues at the DOE drafted and implemented these significant improvements.  

Foreclosures Are Ramping Up 

Along with forbearance and other relief programs, foreclosure stays are ending.  That means hundreds and perhaps thousands of new judicial foreclosure actions will be filed in Ohio, New Jersey and other states. We have the experience, expertise, and knowledge needed to save your home.

Remember this important point: The filing of a foreclosure lawsuit is the beginning, not the end of the process. Please reach out to DannLaw or another attorney as soon as you know a foreclosure action has been filed against you. If you’ve been served with a foreclosure complaint you have a short time–28 Days in Ohio–to retain a lawyer and file an answer. The vast majority of people who retain us because they want to stay in their home are able to do exactly that.

In addition to defending the foreclosure action, we conduct a thorough investigation to determine if your mortgage loan servicer has followed all applicable rules and laws that govern mortgage lending. If we discover violations, we can bring and pursue claims against the mortgage company. Our foreclosure clients pay an affordable monthly payment into our trust account to cover the fees that we earn in their cases. We offer a free consultation. If you or anyone you know has been sued for foreclosure please contact us here, or call us at 216-373-0539. To schedule an appointment with me visit calendly.com/mdann.

 Regulation F Changes the Game for Debt Collectors and Consumers 

 The CFPB has enacted new strict rules that govern the manner in which debt collectors may contact you by mail, email, text, telephone or social media. You can read about the new regs here. In addition, Credit Reporting Agencies will no longer report most medical debt. This should help consumers improve their credit score. If you believe a debt collector has made a misrepresentation to you or contacted you by phone, letter, text, or email at an inappropriate time you may be entitled to financial compensation. Please feel free to contact us to discuss your situation.

 Data Breach Cases

Multiple courts have selected DannLaw to serve as Class Counsel in data breach Cases. A data breach occurs when a company fails to properly safeguard its customers’ personal information. Our legal staff devotes considerable time and resources to pursuing and securing just compensation for the inconvenience, expense, and aggravation data breach victims endure.

I have a new perspective on that today. I’ve been ensnared in multiple data breaches. Someone obtained my personal information and “took over” my bank account. I’ve spent 20 hours sorting out payments, ACHs and was forced to visit my bank three times. I have a renewed passion to ensure that companies who allow breaches to occur are held accountable for their actions.  If you are notified that your information is at risk due to a breach, contact us immediately so we can take all available legal steps to secure just compensation for you and other data breach victims.