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Bankruptcy. A fresh start.

Legal Matters Blog With Ronald I LeVine

June 8th, 2016

In The News: Why you should worry about wrongly addressed mail

NJ.com – Bamboozled: Why you should worry about wrongly addressed mail

 

Identity theft continues to be an enormous problem for consumers.

About 17.6 million Americans — or 7 percent of the population — were victims of at least one incident of identity theft in 2014, according to the Bureau of Justice Statistics.

We fear that number will continue to grow.

Consumers must be vigilant.

So when a bank statement from Wells Fargo landed in Victoria Steele’s mailbox in February — with someone else’s name on it — she wanted to get to the bottom of things.

The statement was addressed to another woman — we’ll call her Jane Doe — but it used Steele’s West Caldwell address.

Jane Doe doesn’t live at Steele’s address.

Steele said she brought the statement to the West Caldwell branch, where an employee looked up the account and tried to call Jane Doe. The telephone number wasn’t working, Steele said.

The employee then offered to send a letter to Jane Doe, but Steele said that would be silly. It would end up at Steele’s address.

The rep then offered to put a “stop” on the statements to Steele’s address.

“I wasn’t entirely satisfied with that because it meant the person would still be using my address,” she said.

When March came, another statement for Jane Doe arrived at Steele’s home.

Steele said she returned to the branch and the manager looked up the account.

The manager, according to Steele, said the account was opened that past summer with a different address. He noted that Jane Doe uses a lot of ATM transactions, and said Jane Doe went online on Dec. 3 at 1:08 p.m. and changed her address to Steele’s.

Steele said the manager then called the number on the account but it still didn’t work, so next he tried a number Steele found by Googling Jane Doe’s name. (Jane Doe’s real name is a very uncommon one.) That number went to a country club, and the manager was told Jane Doe didn’t work there.

Steele said the manager told her the account can’t be closed, nor could her address be removed without the accountholder’s say so.

Steele was given a 24-hour customer service number.

“I was wasting a lot of time and getting nowhere. Why would no one remove my address from this person’s account?” Steele said. “I had to show them my driver’s license every time I talked to them, yet she had free rein to use my address with no proof of residency.”

Steele said her first call to the 24-hour number was disconnected. When she called back, she said she spoke to a supervisor named “Jennifer.”

“Jennifer told me she went into the account to suppress the statements,” Steele said. “I told her that was supposedly already done in West Caldwell but that isn’t good enough for me. I don’t want this stranger using my address.”

Steele said Jennifer told her that she’d request the account be “suspended,” but that no one would be updating Steele going forward because it would be with a different department. She wouldn’t tell Steele which department.

That call apparently did nothing, because at the end of March, another statement arrived for Jane Doe.

Steele said she returned to the branch and spoke to another manager, who offered to have the statements stopped, but Steele explained that wouldn’t fix her address being linked to someone else’s account.

The manager then said an “alert” was placed on the account so that if Jane Doe comes into any branch to do a transaction, branch employees would discuss it with her.

But, Steele said, the records showed Jane Doe only uses the ATM, so finding her at a teller window was unlikely.

By this point, Steele admits, she became “highly agitated” and she again demanded her address be removed from the account.

The manager, Steele said, told her he’d need a subpoena to do it.

“I became more and more enraged because I feel violated that this person I’ve never even heard of can just use my address without my permission and the bank is doing nothing to protect me from that but everything to protect this person,” Steele said, confessing she used some “choice language.”

Steele said she tried the post office next, but they, too, wanted a police report.

So she filed a police report, and, she said, the police called the branch.

“[The officer] came back out and told me that there was nothing they can do because simply using another person’s address is not illegal,” Steele said.

That surprised us, so we checked with Hackensack-based consumer law attorney Ronald LeVine. He said that indeed, it’s not illegal to use someone’s address unless it’s with the intent to use it for fraudulent purposes.

Another month passed, and, Steele said, another statement arrived in April.

Steele wrote on the envelope in capital letters: “Return to sender. This person is fraudulently using this address. Does not and never has lived here. Please remove this address from this account.”

But the next month, on May 2, she said she received yet another statement for Jane Doe. That’s when Steele called Bamboozled.

GETTING ANSWERS?

Bamboozled reviewed Jane Doe’s bank statements and Steele’s timeline of events.

We reached out to Wells Fargo, and while it investigated, we tried to find Jane Doe.

There were three phone numbers associated with either her name or her former address. We left a message at one, and the other two didn’t have answering machines.

This Jane Doe doesn’t have a criminal record, at least.

Then Steele reported she received two letters from Wells Fargo.

One said the bank was investigating. The second, dated a day later, said it had completed its research about the “misdirected mail.”

Wells said it updated Jane Doe’s address in its records, and that even though Steele’s personal information was never compromised, it would give her a free year of identity theft protection.

We contacted Wells again, and it said a review of its records showed Steele wasn’t a victim of identity theft.

“Wells Fargo has determined an isolated internal error resulted in the wrong address being inserted in the bank’s computer system,” a spokesman said. “Wells Fargo is identifying the reasons for the internal error and taking steps to insure such an error does not occur in the future for any customer.”

The spokesman said for privacy reasons, he couldn’t explain what action was or wasn’t taken with Jane Doe.

We then turned to West Caldwell Police Chief Gerard Paris.

He said his officers found Jane Doe and determined the wrong address was a mistake — not attempted fraud — but that Steele was right to be concerned.

“If someone was using my address and they were doing it on purpose, it could rise to the level of fraud,” Paris said. “There’s an identity theft concern.”

We asked the Essex County Prosecutor’s Office about this specific instance, and it said generally doesn’t comment on active investigations.

“Whenever you see some sort of banking irregularity, one of the first things you look for is identity theft,” said Deputy Chief Assistant Prosecutor Walter Dirkin.

Steele finally received confirmation that Wells changed the address on Jane Doe’s accounts on May 19 — in a letter addressed to Jane Doe.

On May 24, she received more junk mail for Jane Doe, but she hasn’t seen another bank statement.

Still, she hopes the change has been made on the accounts.

“I appreciate that Wells is offering a year of ID theft protection at no charge, however I am disappointed that I had to go to such great lengths to get the change made,” Steele said.

February 24th, 2016

In The News: Auto Loans Could be the Next Consumer Credit Bubble to Burst

Bloomberg Media: More Subprime Borrowers Are Falling Behind on Their Auto Loans 

More borrowers with spotty credit are failing to make monthly car payments on time, a troubling sign for investors who have snapped up billions of dollars of securities backed by risky auto debt.

Delinquencies on subprime auto loans packaged into bonds rose in January to 4.7 percent, a level not seen since 2010, according to data from Wells Fargo & Co.

Rising delinquencies come as a warning sign that more loans may end up in default down the road, said John McElravey, an analyst at the bank. What may be most troubling, however, is that the default rate is already climbing, up to 12.3 percent in January from 11.3 the prior month. That is the highest rate since 2010, the data show.

Securities backed by auto loans are structured to absorb a portion of anticipated defaults, but concerns have mounted over the last year that cumulative losses on auto loan securitizations may end up exceeding initial estimates, thanks to declining underwriting standards.

Loan performance may be worsening because of a number of factors, including a rise in initial jobless claims, said McElravey.

He identified an auto finance company in Texas, for example, that began experiencing a noticeable increase in net losses six months ago. The increase coincided with a rise in unemployment in Texas, where the oil industry has been hit hard by prolonged low prices, he said.

The data are worth watching closely, he added, “especially against the backdrop of sub-par economic growth.”

November 11th, 2015

Borrowers Benefit From Lender’s Misdeeds

Ocwen Loan Servicing had a practice of sending out letters to borrowers dated earlier than the mailing date. Since many of the borrower’s rights are time-sensitive, this back-dating process could unfairly deprive the homeowner of opportunities that would otherwise be available. A claim process has been set up to provide compensation between $300 to $3,000 per loan. The forms can be accessed on www.OcwenMisdatedLetterClaims.com. Forms must be filed by May 2, 2016.

November 6th, 2015

Beware of Scams!

Well, we’ve probably all heard of the grandparent scam and the IRS scam. I’ve personally had friends tell me they received urgent calls claiming to be the IRS threatening arrest unless money is wired immediately. BUT now there’s a new one. Vermont Attorney General William Sorrell put out a warning that scammers are calling folks that filed bankruptcy, claiming to be from their lawyer, telling them to immediately wire money. Seems that the record of the filing indicates the lawyer’s name, making it easy pull off this impersonation. Generally, no lawyer will call with such instruction, and anyone receiving such a call should hang up and call the lawyer at the usual number to confirm the scam call. The scammers call after business hours making confirmation difficult. Assuming it is a scam, it should be reported to the local police.

July 27th, 2015

In The News: Uptick In North Jersey Foreclosures

Fuller impact of home foreclosure debacle hits NJ – The Record 

Uptick in North Jersey Foreclosures

These figures are interesting, they indicate that lenders are beginning to process foreclosures again. Folks involved with the foreclosure process report no urgency on the part of their lenders. The simplest borrower-initiated request is for a deed-in-lieu whereby the lender accepts the house back. Given that lenders in NJ almost uniformly avoid deficiency claims (where the lender chases the borrower for its loss), it is unfathomable why a lender will not accept the property back early rather than run out the full foreclosure process. After all, isn’t that what the lender is seeking in its foreclosure? That having been said, my experience with such requests has been negative, with most requests being rejected or ignored.

 

Unfortunately, during this mortgage crisis, lenders did a terrible job at managing their loans. Maybe the process of slicing and dicing the loans and leaving customer dealings to the “servicer” is a defective model that needs changing. It may well be that the servicer’s financial incentive is in keeping the loan in limbo as long as possible rather than reaching a resolution of the loan.

July 6th, 2015

Hope for Student Loan Borrowers

Student loan debt is the largest type of consumer debt outstanding in America, except for mortgages, with over 1.2 trillion dollars outstanding. That’s about $10,000 for each household in America. More than 40 million borrowers owe student loans. In a relatively recent development, for-profit companies have ramped up their operations. These institutions typically get more than half of their income from student loans and have been criticized for spending more on marketing than instruction. The largest for-profit company, Corinthian Colleges, had been under investigation for falsifying placement rates, deceptive and predatory recruiting. It signed a consent decree with the federal government and closed or sold off its 100 campuses under the Everest, Heald, and Wyotech names last year.

Federal student loans have a provision for student loan cancellation if the school closes either while the student is enrolled or within four months. Students have to make application for debt forgiveness, which has been difficult and complicated. The federal government announced a few weeks ago that it would appoint a special master and streamline the forgiveness process to accommodate the tens of thousand of affected students.

Congress made student loans largely immune from Bankruptcy as part of the 2005 law change, so we note that help for students is an important first step towards rationalizing the student loan mess. This affects everybody, not only students, since new graduates burdened with student loan debts will be less likely to buy cars, houses, or retirement investments and thereby depress the prices of these assets. Forward-thinking organizations, like realtors’ groups, have already sounded the alarm about the shortage of younger buyers due to student loan debt.

June 29th, 2015

HELOC Resets Risk Endanger Homeowners

Homeowner advocates are particularly concerned about HELOC loans. These loans generally have a reset provision that allows 10 years of interest-only payments but then much larger payments over the last 15 years. This reset problem will be a serious issue as more loans hit the 10-year mark and reset. For example, a $200,000 loan with interest only at 3% will carry a $500 monthly payment that will increase to $1,381 upon reset. Very few homeowners are even aware of the reset provision. We anticipate more difficulty ahead for homeowners who hit the 10-year mark, which may cause a second wave of mortgage defaults.

June 22nd, 2015

Substantial Help for Second Mortgage Borrowers

Bank of America, among other banks, was alleged to have engaged in various violations in its mortgage practices. As a result of the large banks’ agreements with the governmental regulators, these lenders have been releasing second mortgages to fulfill their obligations for mortgage relief. In my practice, I have found many homeowners receiving unsolicited letters advising that their second mortgage is being canceled. When we first saw these letters, we feared it “was too good to be true”, but time proved that lenders were actually canceling second mortgages without even the homeowners’ request. Others are using Chapter 13 to strip off second mortgages and still others are negotiating substantial reductions in the range of an 80% discount.

June 15th, 2015

Supreme Court Decision Leaves Strip Off Alive & Well

Strip-off is the name for the process in bankruptcy where a second mortgage is removed from property. As background, mortgages are paid in order of priority in a foreclosure sale, meaning that the first lien is paid in full before any money paid to the second one, and that one must be paid in full before the third one, etc. So, for example, if a property sold for $200,000 and has 3 mortgages, for $180,000, $50,000 & $40,000, the first would get its full 180K, the second $20 and the 3rd would get zero. From an insolvency approach, the first is fully secured, the second is partially secured and the 3rd is unsecured. The property is known as “under water”.

 

As readers undoubtedly know, bankruptcy provides a resolution of the claims of debtors and creditors. In Chapter 7, individuals receive a discharge of their personal liability in exchange for giving up their assets that over a certain amount that varies from state to state and is a minimum of $13,000 in NJ. So while the debtor leaves Chapter 7 owing nothing (excluding non-dischargeable debts), secured claims are generally left unaffected, meaning that the lender continues to have the right to its collateral (car loan or mortgage). For that reason, most debtors will continue to pay their mortgages and car loans to keep the property.

 

There are 11 Federal Circuit courts, NJ is in the 3rd Circuit. While most circuits (including the 3rd Circuit) prohibit it, the 11th Circuit (FL & other Southeastern states) allowed Chapter 7 debtors to strip off second mortgages. Chapter 7 debtor Floridian David Caulkett who owed $183,000 on his $90,000 home was able to strip off (eliminate) not only the personal debt but also the mortgage lien from his property. The US Supreme Court released a decision Monday stopping that practice, so Mr. Caulkett is now left with the mortgage lien intact even through he cannot be forced to pay it.

 

The good news, however, is that this decision will have little impact in NJ, since Bankruptcy lawyers never used Chapter 7 for strip-off. Instead, the NJ practice utilizes Chapter 13 for that purpose. A person such as Mr. Caulkett who filed Chapter 13, under current interpretation, is able to strip off the second mortgage. However, Chapter 13 is more cumbersome and expensive and requires debtors to make at least some payments for 3 years. While Bankruptcy lawyers around the country were hoping for a favorable decision from the Supreme Court, Justice Thomas, writing in a unanimous decision, dashed their hopes, while leaving Chapter 13 alive & well.

 

February 9th, 2015

COMING SOON: Ronald LeVine to Be Panel Member in New Consumer Fraud Act Seminar

Ronald LeVine will be a member of the faculty for a new seminar entitled, “ Practical Tips for Litigating Cases Under the Consumer Fraud Act”. This seminar is presented in cooperation with the NJSBA Consumer Law Protection Committee. It will be held on:

Tuesday, April 7, 2015 9:00 AM to 1:00 PM at the NJ Law Center in New Brunswick, NJ

According to the flyer:, consumer fraud cases dominate New Jersey’s court docket with respect to a myriad of different causes of action. Our panel of attorneys, who have entrenched their practices in handling these cases, will begin by addressing the basics of consumer fraud actions, and then dovetail into a discussion of the most prevalent cases in 2015, procedural issues, tops for presenting and defending CFA claims, as well as many of the challenges raised in handling specific types of consumer fraud cases.

For further details, check out the flyer.