- Checks written on affected accounts may be returned NSF.
- Automatic withdrawals from the account for auto loans, utilities, and other consumer debts may be denied.
- Banks may charge large, multiple overdraft fees.
- Credit scores will be negatively impacted by late or denied payments.
Consumer Fraud
Important notice for anyone who received a letter from a lodging chain regarding the TravelClick date breach: Don’t delay. Protect yourself and your family. Contact DannLaw TODAY!
Hotel chains that use TravelClick, a third-party reservation system, recently notified customers that the company allowed hackers to steal their credit card information.
As a result of the failure to protect this sensitive personal information, many people are now at high risk for identity theft and credit card fraud.
If you received a letter from a lodging chain you should contact DannLaw today. We are now investigating this data breach and believe you and other victims may be entitled to substantial financial compensation.
To arrange a no-cost no-obligation consultation about this important matter call 216-373-0539, complete the contact form found at dannlaw.brmcstaging.com/contact, or send us a direct message via our Facebook page. We are here to protect you.
A lot has changed since we posted our last update. A new president is in the White House, mortgage forbearance programs and foreclosure moratoriums have been extended by the federal government, a $1.9 trillion stimulus package is working its way through Congress, millions of Americans have been vaccinated against the coronavirus and the entire U.S. population may be inoculated by early summer.
For the first time in a very long time, there is light at the end of the COVID tunnel.
Unfortunately, that light could become an oncoming train for homeowners who make unwise or incorrect decisions when forbearance and foreclosure relief programs sunset in the months ahead. To help ensure that the end of the pandemic doesn’t mark the beginning of a nightmare for people pummeled by the virus, I’ll discuss the aid programs that are now available, how to take advantage of them, and then outline steps families should take now to secure their financial future.
FORECLOSURE MORATORIUMS
Let’s start by taking a look at the foreclosure landscape.
I’m pleased to report that there is some good news for borrowers whose mortgages are backed or owned by the federal government. The moratorium on foreclosures imposed by the Federal Housing Administration (FHA), Veterans Administration, the U.S. Department of Agriculture (USDA), Fannie Mae, and Freddie Mac will remain in effect until June 30, 2021.
While the extensions provide much-needed breathing space for homeowners who were in or were about to be in foreclosure when the pandemic struck, I must emphasize that the bans are temporary reprieves, not pardons. Mortgage servicers will begin processing judicial and non-judicial foreclosures the minute the moratoriums are lifted.
The news isn’t anywhere near as good for homeowners with loans that are not government-backed. While some states have enacted eviction and/or foreclosure moratoriums that protect borrowers whose mortgages are held by private lenders, many, including Ohio, have not. That means foreclosure is a very real and imminent threat—especially as courts in more and more jurisdictions resume normal operations.
Whether you are now protected by a federal or state moratorium or are involved in an active foreclosure proceeding, now is the time to contact experienced legal counsel like the attorneys at DannLaw for advice.
We have helped thousands of families save their homes by negotiating affordable loan modifications and utilizing groundbreaking legal strategies that stop or soften the impact of foreclosure.
We also perform a thorough review of every client’s mortgage history and case file to determine if their servicer or lender made mistakes or committed violations of federal or state consumer protection laws. Those errors and violations often enable us to defeat the foreclosure claim and recover substantial monetary damages from lenders that can put families on the path to financial security.
To learn more about our innovative and highly effective foreclosure defense strategies schedule a free consultation by completing our contact form or sending us a direct message on Facebook. But don’t delay, every day you wait could bring you one day closer to losing your home.
Forbearance
Before I dig into the details about the current state of forbearance relief, please keep this oft-repeated phrase in mind:
Forbearance is NOT forgiveness.
As I have noted in every one of our COVID updates, borrowers will be required to make the principal, interest, and escrow payments that have been deferred when their forbearance period ends. No one, not President Biden, members of Congress, nor the CEOs of major lenders and servicers has ever so much as hinted that these costs will be forgiven. That means homeowners will, at some point, be on the hook for thousands of dollars in arrearages.
That said, here is an overview of the relief programs that are available and applicable deadlines.
Borrowers with FHA, VA, or USDA loans have the right to request up to 12 months of forbearance in two six-month increments. The deadline to apply for an initial 180-day forbearance period has been moved from March 31, 2021 to June 30, 2021.
In addition, the agencies are also providing two extensions of up to three months each for homeowners who paused payments on or before June 30, 2020. The extensions will give homeowners nearing the end of their maximum 12-month forbearance period extra time to recover from financial hardships caused by the pandemic. Borrowers who qualify must apply for the additional time no later than June 30, 2021.
Homeowners with Fannie Mae/Freddie Mac loans are eligible for up to 12 months of forbearance. At this point, the agencies have not set a deadline to apply for an initial 180-day forbearance period.
Like the FHA, VA, and USDA, Fannie and Freddie are also giving borrowers approaching the end of their maximum forbearance period more time to resume making payments. Homeowners who entered forbearance on or before February 28, 2021 may now request an additional three months of relief.
With due apologies to Shakespeare, we’ve arrived at the point in the update where I must say: To forbear or not to forbear, that is the question. Although every situation is different, here are some broad guidelines that will help borrowers with government-backed loans determine if they should enter, remain in, or avoid forbearance:
- While forbearance is not a perfect solution, it is far better than foreclosure. That is why struggling homeowners should take advantage of the available relief programs. If you are in forbearance and are unable to resume making your mortgage payments stay in until you are back on your feet. If you are not in forbearance but need to be, contact your lender, and apply ASAP.
- If you are in forbearance but can now afford to make your mortgage payments, it’s time to plan and execute an exit strategy. Staying in longer than necessary will needlessly increase the amount of deferred principal, interest, and escrow you owe moving forward.
- Borrowers who have been and can continue to make their mortgage payments should avoid forbearance like the plague.
Deciding how to settle the balances accrued during forbearance is just as important as choosing whether to enter the program and when or if to leave. While the specific plans offered by each agency differ, in general, the following four options are available. It is important to note that FHA, VA, USDA, Fannie and Freddie are prohibited from requiring borrowers to make lump sum payments of the amounts due.
Repayment plan. This option enables borrowers to pay the balance due by increasing their mortgage payment for a few months.
Deferral or partial claim. This option allows homeowners who can resume making their regular payments but can’t afford more to move missed payments to the end of their loan or put them in a subordinate lien repayable only when they refinance or sell their home or terminate their mortgage.
Loan modification. Borrowers who can no longer afford their pre-pandemic mortgage payment can negotiate a loan modification. The amount owed in deferred principal, interest, and escrow will be rolled into the loan. The monthly payment will probably drop, but the term or the principal balance of the mortgage may increase.
Lump-sum reinstatement. An option to consider for borrowers who have the financial wherewithal to pay back missed payments all at once.
Your mortgage servicer should reach out to you 30 days before your forbearance period ends to discuss your options. Here are two important points to ponder:
First, remember, you cannot be forced to make a lump sum payment. If that is the only option offered by the servicer, ask them about the other plans they offer.
Second, each repayment option is complicated and carries risk. Don’t think for a minute that your servicer is looking out for your best interests. In many cases the opposite is true. That is why you should consult with DannLaw before leaving forbearance. We will work with you to devise an exit strategy that protects you and your family and helps secure your financial future.
Things are even more complicated and risky for homeowners whose mortgages are held by private lenders. If you are in forbearance, please stay in regular contact with your servicer because they have the ability to change the terms of your plan at any time. They can also require you to make a lump sum payment if you choose to leave or they decide to end your forbearance period. In addition, it is highly likely that any repayment options they offer will be designed to maximize their profit at your expense.
DannLaw’s experienced legal team knows how to deal with and hold private lenders accountable. If you have a private mortgage, don’t hesitate to contact us to arrange a free consultation so we can assess your situation and help ensure that your home and your finances don’t become victims of the pandemic.
Finally, I want to remind everyone that forbearance is not automatic. You must always contact your lender or servicer and ask to defer your payments and you must make the request no later than the deadlines I’ve listed in this update.
If you have any questions about forbearance, foreclosure, or other consumer credit or lending issues, do not hesitate to contact us. We are here to help.
Thank you for taking the time to read this update. Be well, and take heart, we’ve come a long way together and I’m confident better days are just ahead.
One of America’s most prestigious attorney rating services has just confirmed what his colleagues at DannLaw and the thousands of clients he has represented have long known: Brian Flick is a “SuperLawyer” in the field of consumer law. Super Lawyers selects attorneys using a patented multi-phase process that combines peer nominations and evaluations with independent research. Each candidate is evaluated on 12 indicators of professional achievement. Those who score highest then undergo a “blue ribbon” peer review by practice area. Only the highest-rated attorneys make the Super Lawyer list for each state and the designation is reserved for attorneys who excel in their field, contribute to their community, and abide by the highest professional and ethical standards. We are extremely proud that Brian is listed among them.
You can learn more about the SuperLawyer selection process here.
Brian was previously named to the “SuperLawyers Rising Star” list of outstanding attorneys practicing in the fields of consumer and consumer bankruptcy law.
If you are having difficulty making your mortgage payment, are in or are about to be in foreclosure, are being harassed by debt collectors, or believe you have been cheated or abused by a bank, mortgage servicer, lender, or debt collector, contact DannLaw’s very own SuperLawyer, Brian Flick to arrange a free consultation today. You can reach Brian by calling 513-951-7124 or by using our contact form.
A lot has happened since we issued our first COVID-19 on March 13. In our tenth update we’ll take a look at recent developments, discuss impending challenges and opportunities, issue a couple warnings, and dispense some sage advice…
Involuntary Forbearance can threaten your financial future
Let’s start with a cautionary tale about involuntary mortgage forbearance. As we’ve said repeatedly, while it can be a lifesaver for people who are facing financial disaster as a result of the pandemic, forbearance is NOT forgiveness. Homeowners will eventually have to make the interest, principal, and escrow payments they have been delaying.
In addition, forbearance may jeopardize court-approved bankruptcy repayment plans and could make it difficult to buy a new home or refinance an existing loan. That’s why we urged homeowners to think carefully before taking advantage of the forbearance programs made available by the CARES Act and many private lenders.
Unfortunately, a number of banks and servicers didn’t give borrowers a choice. Back in May we warned that a number of banks and mortgage servicers were putting homeowners into forbearance by “mistake.” One of the offenders, and I’m sure this will shock no one, was Wells Fargo. According to a CNBC report, borrowers who called servicers seeking information about forbearance and other relief programs were put into forbearance without their consent by swamped call center workers.
At that time we doubted that Wells, perennial winner of the worst bank in the world award, was really doing this by accident. Turns out we were right. NBC News reported on July 16 that Wells was purposely placing borrowers into forbearance without seeking or receiving their permission.
The story focused on Troy Harlow of Buchanan, Virginia who filed personal bankruptcy in 2017 after a kidney transplant put him on permanent disability. Troy never missed a house payment because his primary goal was to stay in his home.
That didn’t matter to Wells. Without his knowledge or permission, on April 29 the bank told the bankruptcy court overseeing Harlow’s payment plan that he had asked to pause his mortgage payments because he had been hurt by COVID-19. Harlow who never even thought about asking to be placed in forbearance continued to forward the full amount owed on his mortgage to Wells.
Harlow’s attorneys soon learned that he wasn’t the only victim. Wells had played the same dirty trick on homeowners in 11 states.
That news set off alarm bells here at DannLaw and led us to launch an investigation to determine if borrowers in Ohio and New Jersey have been scammed by Wells and other lenders. With that in mind, we’re asking homeowners to do two things:
First, contact your lender to determine if they have placed you in forbearance without your permission.
Second, if they have you should contact us right away so we can help rectify the problem and determine if we should file a class-action suit on behalf of every borrower who has been abused by Wells and other lenders. You can reach us by calling 216-373-0539 or filling out and submitting our contact form. Please do this right away because involuntary forbearance can cause real problems for years to come.
Is it time to take your loan out of forbearance?
If you chose to place your loan in forbearance, it’s time to start thinking about an exit strategy. If you haven’t been able to make payments because you lost your job or were laid-off when the COVID-19 crisis cratered the economy but are now back to work you should consider taking your loan out of forbearance before the amount of delayed interest, principal, and escrow you owe becomes unmanageable.
To determine if you should begin making your house payment again, consider the amount you owe on your home relative to its value. If your home is worth more than your mortgage balance it is an asset that you should protect. If it is worth less than you owe it is a liability so your mortgage payment should be viewed as a housing cost and compared to alternatives like paying rent. You should also evaluate other factors including the state of the housing market in your neighborhood, the company that owns your loan, and whether you intend to sell your house sometime in the next few years.
The moratorium on foreclosures is about to end
The moratorium on foreclosures imposed at the beginning of the COVID-19 crisis are coming to an end in some Ohio counties and will lapse for federally backed mortgages at the end of August. That means sheriff’s sales will resume soon.
If you were in foreclosure when the pandemic struck you should contact your attorney right away. If you have not retained a lawyer contact us to arrange a no-cost consultation so we can review your case and discuss ways we may be able to help save your home. To learn more about the options available to you click here to visit the Foreclosure Defense page on Dannlaw.com.
Evictions set to resume
Today it is estimated that more than 8 million Americans, including tens of thousands of Ohioans, are behind on their rent payments and may soon be evicted from their homes. This number could rise substantially when the CARES Act’s Pandemic Unemployment Insurance payments sunset at the end of July.
While distressing, the situation is not hopeless if renters and landlords communicate with each other and work together to overcome the challenges caused by the pandemic. Here are some important steps to take:
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- Renters should communicate in writing with their landlords about their ability to pay, partially pay, or not pay rent. Both renters and landlords are trapped in a dilemma they did not cause, so landlords may be willing to work out payment arrangements. No one benefits from a vacant apartment.
- Check this list to determine if your landlord has a federally backed mortgage and is therefore prohibited from evicting tenants. If you are a landlord with a federally backed mortgage you may apply for forbearance if your tenants are unable to pay their rent. The eviction moratorium/forbearance program will end in late August unless Congress extends it.
- If you reach an agreement with your landlord regarding late or partial payments put it in writing. We will soon post a form on our website that will make it easy to create written versions of tenant/landlord agreements.
- Do not ignore letters or emails you receive from a court and always attend hearings when ordered. While there are legal defenses available to renters and strict procedures that must be followed before a landlord can evict a tenant, ignoring notices and/or failing to appear just about guarantees that your belongings are going to end up on the street.
- Retain legal counsel. If you cannot afford an attorney call your local legal aid office. As a service to people impacted by COVID-19, we are making DannLaw’s Cleveland and Cincinnati offices available if you need a computer or internet access to participate in a virtual eviction hearing. A member of our legal team will also be on hand to answer general questions about evictions.
- I and Jeff Watson, General Counsel to a number of real estate investor groups will conduct a virtual seminar for landlords and tenants on Thursday, July 23 at 8:00 P.M. This informative session, titled, “The Eviction Tsunami: Facts and Strategies that Lawyers, Landlords and Tenants Must Know,” will feature a discussion of the growing eviction crisis as well advice and strategies that will help landlords avoid insolvency and tenants escape homelessness. To register for the seminar click here.
Collection firms are up to their old (dirty) tricks
While debt collectors are typically shameless, there has been noticeable slow-down in activity since the onset of the COVID-19 crisis in March. But as states take steps to restart their economies and courts begin to reopen, we’ve received reports that collection lawyers, debt buyers and creditors are ramping up operations. That means debtors must be on the lookout for and pay close attention to any legal notices they receive.
As we noted in our discussion about evictions, the quickest way to lose a case and have a judgement entered against you is to ignore the problem. Trust me, it’s not going to go away simply because you toss a letter in File 13 or don’t show up for court. So please, respond in writing to communications you receive and appear in court when ordered.
In addition, you should contact us to arrange a no-cost consultation. We’ll be happy to discuss your situation and your options. We’ll also determine if debt collectors have violated any of the laws and rules that protect consumers. If they have, you may be entitled to financial compensation. Here’s a brief overview of the rules that govern the collections industry:
- The Fair Debt Collections Act (FDCA). Enacted in 1978, the FDCPAis the most well-known federal consumer protection statute. Its primary purpose is to prevent third-party debt collectors from using abusive, unfair, false, or deceptive practices to collect debts. To put it simply, collectors may not lie to or mislead consumers in the course of attempting to collect a debt. Violators of the Act may be liable for statutory damages, actual damages, and attorney’s fees.
- Telephone Consumer Protection Act (TCPA) The TCPAlimits the use of automatic telephone dialing systems (ATDS) and artificial or prerecorded voice messages by telemarketers. Since its passage in 1991, the TCPA has been expanded to cover the use of ATDS’s and voice messages by debt collectors and now applies to cell phones if an affected consumer does not have a landline. Under the law collectors may not call a cell phone unless the owner gives consent. That means it’s important for consumers to deny consent verbally during the initial call and then to immediately withdraw consent in writing.
Statutory damages under TCPA range from $500.00 to $1,500.00 per call and may be applied to each and every call made if it is found that a debt collector willfully violated the Act. The ability to “stack” damages serves as an effective deterrent and provides just compensation for consumers who have been victimized by aggressive debt collectors who willfully violate the law.
Check Your Credit Report Weekly
The CARES Act allows you to obtain copies of your credit reports from annualcreditreport.com on a weekly basis. You should take advantage of this opportunity because a number of state unemployment computer systems have sustained massive data breaches. DannLaw has filed class-action lawsuits in Ohio and Arkansas related to those breaches.
In addition, several provisions of the CARES Act are inconsistent with the Fair Credit Reporting Act. Please reach out to us right away if you notice inaccuracies on your credit report because you can sue credit reporting agencies and entities that furnish information to them if they refuse to correct mistakes.
The Con Premieres August 5
Finally, I would like to extend a personal invitation for you to join me on August 5 for the premiere of “The Con,” a four-part series about the 2008 fraud and corruption-fueled collapse of America’s housing market. I’m both proud and humbled to say the series highlights the steps I took as Ohio Attorney General and at DannLaw to hold those responsible for the crisis that led to 10,000,000 families losing their homes accountable for their actions. The series provides a lesson for the risks we face as we hurtle toward a pandemic-related recession.
“The Con,” like all movies being released in the midst of the pandemic, is being released direct to video via independent theatres. To receive your invitation to the free live premiere, click here and then click on “Follow” above the video. If you like The Con on Facebook, you’ll be invited to the free live premiere on August 5. We’ll be posting more news about “The Con” in our blog and on our Facebook page in the weeks to come.
The U.S. Supreme Court’s decision in Seila Law v. Consumer Financial Protection Bureau marked the culmination of a years-long attack against the agency by the business community, Congressional Republicans, and the Trump administration. It also provided a major dose of “be careful what you wish for because you just might get it” for the powerful forces who have been trying to destroy the CFPB since it was created in the wake of the collapse of the nation’s housing market in 2007-2008.
Precipitated by Donald Trump’s decision to fire director Richard Cordray in defiance of the statute that established the agency, the suit, filed by a firm that ran a mortgage modification scam, was expected to deal a fatal blow to the CFPB. Or at least that’s what those who lined up on the side of Seila, including the DOJ, U.S. Chamber of Commerce, the National Foundation of Independent Businesses, the Mortgage Bankers Association, and a number of entities that had been tagged by the Bureau for abusing consumers, hoped.
The Court, in a 5-4 decision dashed those hopes. Yes, the majority upheld Cordray’s firing and found that the governing structure of the agency was unconstitutional, but this sentence dealt the CFPB’s foes two staggering blows:
“The agency may therefore continue to operate, but its Director, in light of our decision, must be removable by the President at will.” You may read the entire decision and the amicus briefs here.
The first blow: the CFPB may continue to operate and, thanks to this decision, constitutional challenges to its validity are now at an end. That’s not quite what the boys at the USCOC and the NFIB were looking for when they filed their amicus briefs.
And here’s the second: Kathy Kraninger, the unqualified anti-consumer political hack Trump appointed to succeed Cordray can be booted out the door 30 seconds after Joe Biden is sworn into office.
The ironic part of this entire affair is that the governing structure of the CFPB was specifically intended to shield the agency from politics. The GOP’s attacks have now made who will run the Bureau and whether they will use its immense power to protect consumers a perpetual issue in presidential campaigns.
Along with taking great satisfaction at seeing the business community’s attack on the CFPB blow up in their collective faces, we at DannLaw are also extremely pleased that the ruling preserves our ability to act as “private attorneys general” who can use the Real Estate Sales Practices Act (RESPA) and the Truth in Lending Act (TILA) to protect our clients and seek and secure damages from mortgage servicers and lenders who violate the law.
While little noticed, Director Cordray’s creation of a private right to action is one of the most important components of the laws and regulations enacted after the housing crisis. He, along with Senator Chris Dodd, Congressman Barney Frank, and then-professor Elizabeth Warren recognized that the failure of government regulators to exercise their oversight authority played a major role in bringing the nation and the world to the brink of a catastrophic financial meltdown. By giving private attorneys the power to use RESPA and TILA to hold bad actors accountable they created a second line of defense for homeowners, consumers, and the American economy.
At DannLaw, we’ve used that power to help hundreds of people fight off illegal foreclosures, obtain loan modifications, safeguard their assets, and hold onto their hopes and dreams. We’re truly grateful that those who sought to destroy the CFPB have instead guaranteed that we and lawyers like us across the country will be able to use the law to fight for our clients well into the future.
In fact, I’m so grateful, I think I’ll send the guys at Seila and the Trump Justice Department a thank you note today.