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Another Wells Fargo Scandal?

Posted on June 28, 2017 Posted in Florida Law News Leave a comment by Roy Oppenheim

Wells Fargo is at it again… A scandal-plagued Wells Fargo has found itself in the midst of a new controversy involving “stealth” modifications of consumers’ mortgages while they are in bankruptcy.

According to The New York Times, a class action and other lawsuits have been filed against Wells Fargo alleging that since 2015, Wells Fargo has been making unauthorized charges to the loans of borrowers who are in bankruptcy. The changes involve shadowing a lengthier loan term (extensions as high as several decades) behind an enticing lower monthly payment. According to the lawsuits, the changes were made without the approval of the bankruptcy courts, which is a major no-no, and also without consent of the borrowers.

Wells Fargo’s (substantial) Financial Motive

Why would Wells Fargo want to do this? The extensions were hardly an act of kindness toward borrowers. By extending the terms of a mortgage by such an extensive period, (as in the case of the lead plaintiffs from North Carolina that had an extension of 26 years) Wells Fargo would be due substantially more in interest payments than under the original loan. In addition, the adjustments would enable Wells Fargo to receive as much as $1,600.00 for each loan that was adjusted, based upon a federal program setup with the intention of encouraging lenders to help struggling borrowers through modifications.

Ramifications in Bankruptcy Court

The filed lawsuits allege that Wells Fargo would implement these unauthorized changes by using documentation routinely filed with bankruptcy court to track new real estate taxes or homeowners’ insurance costs. Wells Fargo’s conduct is a problem for borrowers who may have been placed in danger of default and foreclosure because of the meddling with their payment plans as ordered by the bankruptcy court. Its conduct is also a huge problem for Wells Fargo itself, which is at risk of bankruptcy court sanctions and further federal investigation.

From the trenches,

Roy Oppenheim

Federal Reserve Interest Rates Take a Hike

Posted on June 21, 2017 Posted in Florida Law News Leave a comment by Roy Oppenheim

The Federal Reserve has put on its hiking boots. Last week, the Federal Reserve hiked its benchmark interest rates. Homeowners and prospective buyers alike are rightfully alarmed about what the increased interest rates could signal for the housing market. Since the great recession back in 2007, homeowners enjoyed relatively lower interest rates as the federal government attempted to rebuild the economy. A recent article from Housing Wire suggests that as a result of the Federal Reserve interest rate hike, the period of uncertainty has only just begun.

More Interest Could Mean More Money?

Typically, higher interest rates tighten the housing market as prospective buyers may not qualify for mortgages and homeowners may face higher monthly mortgage payments. As such, people may be less likely to purchase homes and/or commit to increased mortgages. However, a recent Freddie Mac mortgage report shows that interest rates are actually at the lowest level in nearly seven months. As the Housing Wire article puts it, “[T]his hike was largely priced in to markets already, so mortgage rates should remain flat or even fall slightly.”

Additionally, many economists have said that the increased Federal Reserve interest rates may actually be a positive thing for prospective homeowners. How could that be? For starters, prospective purchasers may be inclined to purchase sooner rather than later when the interest rates increase. Also, because the increased interest rate provides an additional safety cushion to creditors, the increased rate could potentially incentivize creditors to relax stringent requirements for loans. This, in turn, will allow millions of credit-worthy borrowers previously prevented from obtaining a mortgage, to have better chances to obtain home loans, as indicated in a recent CNBC article. Both factors are expected drive up demand in the housing market for the next few months.

Not All That Glitters Is Gold

Despite certain potentially positive outcomes of the Federal Reserve rate hikes, a further peak into things shows that there is a possibility that they will wreak havoc. When combined with a low rate of inflation and low interest rates on long-term bonds, increases in the interest rate may cause our economy to once again fall into a recession.

As of now, there is still a widespread lack of knowledge as to whether the Federal Reserve will continue to increase interest rates, and if so, by how much. Another four Federal Open Market Committee meetings are expected in the coming year, meaning that there are several more opportunities for rate hikes. Amid the uncertainty of the Federal Reserve’s future decisions, homeowners need to put on their hiking boots and prepare to navigate the rough terrain that may lie ahead.

From the trenches,

Roy Oppenheim.

Zillow’s Zany Estimates

Posted on June 20, 2017 Posted in Florida Law News, zillow real estate Leave a comment by Roy Oppenheim

Years after its inception, Zillow became a household name for people who wanted to purchase or sell their homes quickly without a realtor. By providing an online database of available homes for sale using “Zestimates” for the properties, Zillow gave the general public an easy-to-use format to calculate home values. Although there has been speculation as to whether Zillow will eventually replace the need for realtors, the Patel v. Zillow case may prove otherwise.

Just how accurate are these Zestimates?

Patel v. Zillow is a class-action lawsuit that was recently filed in Illinois. The action first originated because Zillow allegedly listed the Patels’ Illinois properties for sale on its website with incorrect Zestimates of the properties’ value and without the Patels’ consent. The Patels argue that not only has Zillow provided a flawed appraisal tool in violation of Illinois law, but Zillow purposely uses this practice to create marketing opportunities for its brokers. Moreover, the Patels argue that this marketing ploy causes people to go on a wild goose chase to correct the miscalculation of their properties’ appraisal. Additionally, the Zillow employees are unresponsive and unsophisticated, pressuring homeowners into retaining one of the “Zillow brokers” advertised on their website.

A spokesperson for Zillow has argued that Zillow’s Zestimate tool is an automatic valuation model that utilizes public data to quickly price homes for consumers. Zillow’s spokesperson openly acknowledges that the company bases zestimates off a computer algorithm, which the Patels, a northwest homebuilder family that is the Plaintiff in this case, argue have no foundation in any recognized real estate valuation standards.

What could this mean for Zillowners?

Although the case has yet to be heard in court, it is apparent that quasi-artificial intelligence websites such as Zillow present a huge problem for homeowners. For homeowners interested in selling their property, a flawed appraisal tool could result in significant loss in the true value of their home, especially if homeowners neither posted, nor intended to post the house for sale on Zillow.

As stated in a recently published article, “A lowball Zestimate can thus drive away potential buyers and add ‘unnecessary expense’ to the sales process . . . driving homeowners into the open arms of Zillow-associated brokers.”

The Patel lawsuit is sure to create ripples throughout the real estate community. In fact, the Patels’ action against Zillow has already spurred yet another homeowner to sue Zillow for an injunction to remove the home from Zillow’s website. The lawsuit, Andersen v. Zillow, alleges Zillow’s Zestimate is a “sloppy computer-driven appraisal” which incorrectly appraises the home for $90,000 less than its true value. Although both cases have been filed in Illinois and will be decided under Illinois law, it will likely open doors to many Florida homeowners who have similarly been subjected to Zillow’s seemingly unreliable zestimates and seek to hold Zillow accountable.

From the trenches,

Roy Oppenheim.

When “Ghost” Debts Come Back to Haunt You… Who You Gonna Call? Oppenheim Law

Posted on May 24, 2017 Posted in Florida Law News, Oppenheim Law Leave a comment by Roy Oppenheim

www.ghostbusters.com

It seems as though there is something paranormal about the way bankruptcy proceedings will now deal with stale, old debt. Previously, creditors were not able to make claims in bankruptcy proceedings for stale debts that were time-barred by the Statute of Limitations. Generally, most creditors’ claims on these old debts were considered “unconscionable” and thus in violation of the Fair Debt Collection Practices Act. However, because of a recent, highly divisive US Supreme Court ruling, debtors now may find themselves haunted by the ghosts of debt past. Do not let debts come back to haunt you! Call on Oppenheim Law.

OLD DEBTS THAT WON’T BITE THE DUST

In states such as Florida, old debts are typically protected against lawsuits by the Statute of Limitations, depending on the amount of time that passes before a creditor tries to sue on the debt. If the time period specified in the Statute of Limitations passes, these old debts would effectively become “time-barred” or “stale”. In a turn of events, the US Supreme Court ruling in Midland Funding, LLC v Johnson has opened the gates for creditors to file proof of claims in bankruptcy proceedings on these old debts that are otherwise not collectible. The Court held that although creditors had filed time-barred claims with bankruptcy courts, it is not “unconscionable” for a creditor to file a proof of claim in bankruptcy on an old debt.

BORROWERS BEWARE OF DEBT BUYERS

A recent Bloomberg article suggests that the Court’s ruling appears to give creditors a free pass to file stale claims without fearing FDCPA liability. Debtors, as a result, face the horrors of an unfair and unconscionable practice, whereby “debt buyers” purchase consumers’ forgotten stale debts for a fraction of the cost until they take the form of a giant Stay Puft Marshmallow Man wreaking havoc on the bankruptcy process. Debt collectors have filed tens of thousands of outdated claims with bankruptcy courts knowing and hoping that most debtors won’t object. In fact, according to FTC Report 45, over 90% of consumers won’t appear in court to defend themselves against these time-barred claims, resulting in default judgments entered against them. But beware, failing to comply with these default judgments could result in home foreclosures, wage garnishments, and credit problems. The dissenting opinion of the Johnson ruling suggests that the practice has become so widespread that the Government has argued it constitutes a pattern of systemic abuse of the bankruptcy process. For some, Justice Sotomayor gravely warns, “… most debtors who fail to object to a stale claim will end up worse off than had they never entered bankruptcy at all: They will make payments on the stale debts, thereby resuscitating them… and may thus walk out of bankruptcy court owing more to their creditors than they did when they entered it.”

THE TRUSTEE’S TROUBLES

Additionally, the original debtor is not the only person burdened by the potential effects of Johnson. Trustees and debtors’ lawyers will now be under increased pressure to more closely review proof of claims to determine whether the claims are subject to a statute of limitations defense. However, the Johnson dissenting opinion argues that trustees are already overworked. In an amici curiae brief, the trustees even agree with the Government’s statement that trustees cannot realistically be expected to identify ever time-barred claim filed in every bankruptcy. What’s more, as trustee’s have an interest in the amount collected, the effect of allowing continued abuse of the bankruptcy system begs the question of whether potential conflicts of interest could arise?

THE GHOST(DEBT)BUSTERS

Luckily, the Supreme Court’s ruling doesn’t mean you have to face these poltergeists without protection – the Chapter 13 Bankruptcy protections still apply to consumers, as well as other legal defenses. If you have been hounded by ghoulish debt collectors trying to retrieve requests on old stale debt, make sure you know who you’re gonna call… Oppenheim Law.

From the Ghost(Debt)Busters,

Roy Oppenheim