Oral argument in Midland v. Johnson was today. See the transcript here.
FTC Cracking Down on Dishonest Payday Lenders
The FTC has been going after fraudulent payday lending operations centered in Missouri and Kansas, with settlements as high as $1.266 billion.
In a press release dated January 9, 2017, the FTC announced charges against businessman, Joel Jerome Tucker, and his companies, SQ Capital LLC, JT Holding Inc., and HPD LLC, for selling portfolios made up of fake payday loans. According to the FTC, the loans listed in the portfolios were named phony lenders and debtors, including their social security and bank account numbers, and led to collection activities against consumers who had not taken out loans. The FTC previously brought actions against two debt collectors who used the fake portfolios.
In October 2016, the Kansas City Star reported that Joel Tucker’s brother, Missouri businessman and sometime racecar driver, Scott Tucker, was ordered to pay $1.266 billion to the FTC after Nevada federal judge, Gloria Navarro, determined that he and others ran a payday loan enterprise that engaged in deceit against its customers by failing to disclose terms and conditions of the loans and for charging usurious interest rates. Judge Navarro called the fraud “sustained and continuous.” Mr. Tucker attempted to evade state lending regulations by locating portions of his businesses on tribal lands, though the bulk of his operations were located in Overland Park, Kansas. Scott Tucker also has a pending criminal case against him in which he is accused of running a $2 billion payday loan enterprise that defrauded 4.5 million consumers. That case is scheduled for trial in April 2017.
In another case, a settlement was reached last summer between the FTC and payday lenders, Tim Coppinger and Ted Rowland, and their companies. Under the terms of that agreement the lenders paid almost $1 million with the threat of substantially greater judgments (up to $32 million) should they fail to honor the terms of the settlement agreement. The fraudulent activity included debiting money from the accounts of people who never requested loans but for whom the payday lender had obtained personal information. They would then charge interest and fees on those unauthorized loans. Joel Tucker had a hand in this operation through his company, eData Solutions, a “one-stop-shop” for assisting payday lenders in their start-ups and operations. eData’s involvement consisted of providing “customer/borrower leads, qualifying the leads, providing a loan management software system, and buying defaulted consumer loans to sell to third-party collectors.” Court-appointed Receiver, Larry Cook, is seeking to recover the entire $29.9 million that Coppinger and Rowland’s companies paid to eData Solutions for its services.
NCBRC and NACBA Weigh In on Midland v. Johnson
NCBRC is wrapping up its year-end funding campaign. There’s still time to make a tax-deductible contribution for 2016.
Meanwhile…NCBRC and NACBA weighed in on the Midland v. Johnson case pending before the Supreme Court. Click here for the brief. A big thank you to Whitman Holt, Robert Pfister, Daniel Bussel, and Ken Klee at Klee, Tuchin, Bogdanoff & Stern, LLP for all their work on the brief.
CFPB Takes Action Against Reverse Mortgagees
On December 7, the CFPB took action against three reverse mortgage lenders for engaging in deceptive advertising practices in violation of the Mortgage Acts and Practices Advertising Rule. The companies, American Advisors Group, Reverse Mortgage Solutions, and Aegean Financial, engaged in a misleading practice by, among other things, misinforming consumers that they could not lose their homes with a reverse mortgage. The three consent orders require the companies to cease deceptive practices, implement procedures to comply with all laws, and pay penalties ranging from $65,000 to $400,000. American Advisors Group is the largest reverse mortgage lender in the country. Because of the complexity of reverse mortgages, the CFPB has made a point of studying and reporting on advertising abuses within the industry.
aegeanfinancial-consentorder
americanadvisorsgroup-consentorder
reversemortgagesolutions-consentorder
Giving Tuesday and Beyond
This year, the National Consumer Bankruptcy Rights Center, is participating in #GivingTuesday, a global day dedicated to giving. Last year, more than 45,000 organizations in 71 countries came together to celebrate #GivingTuesday. We invite you to join the movement by supporting the work NCBRC does on behalf of consumer bankruptcy debtors.
Each year millions of individuals and families across the country struggle to pay their bills. Often financial distress follows on the heels of other unanticipated events such as job loss, divorce, substantial out-of-pocket medical expenses and natural disasters. Sometimes filing for bankruptcy is the best alternative for relieving the pressure of extreme financial distress. Bankruptcy can provide debtors with a fresh start–a new opportunity in life and a clear field for future effort. The Bankruptcy Code grants financially distressed debtors certain rights that are critical to the proper functioning of the bankruptcy system as a whole. However, bankruptcy debtors, with their limited financial resources and limited exposure to the bankruptcy system, often do not have the ability to protect the integrity of the bankruptcy system and preserve the bankruptcy rights of consumer debtors more generally. The National Consumer Bankruptcy Rights Center (NCBRC) is meant to fill that vacuum by filing briefs or providing assistance to consumer debtors’ or their attorneys, especially at the appellate level where a favorable decision will often help thousands of consumer bankruptcy debtors.
HAMP Deadline Is Fast Approaching
HAMP, the Treasury program that allows eligible homeowners to reduce their mortgage payment, will come to an end on December 30, 2016. The program, begun in 2009 as part of the “Making Home Affordable” initiative, was extended from its original deadline of December 30, 2015. A compilation of information provided by servicers participating in MHA under a Servicer Participation Agreement shows that, as of September, 2016, the program has processed over 9.3 million applications of which approximately 2.9 million were approved and 6.5 million denied.
To apply for HAMP, you must submit by December 30, 2016:
- A “Request for Mortgage Assistance” (RMA) form
- IRS Form 4506T, 4506T-EZ, or a signed copy of last year’s tax return
- The “Dodd-Frank Certification” (which may be part of the RMA)
- Proof of income
Forms and information about the program are available at www.makinghomeaffordable.gov.
Cert. Granted in FDCPA Case
The Supreme Court today granted certiorari in the case of Midland Funding, LLC. v. Johnson, No. 16-348, in which the Eleventh Circuit found that not only does a proof of claim on a time-barred debt violate the FDCPA, but the FDCPA claim is not in conflict with, nor is it precluded by, the Bankruptcy Code.
This issue has been circulating in various forms throughout the courts as many debt collectors have made it a business practice to file proofs of claim in bankruptcy cases on debts they know to be time-barred and, therefore, uncollectible. The success of this practice depends upon the claim slipping past the debtor and his or her attorney, if the debtor is represented, as well as the bankruptcy trustee. In many cases, trustees have conceded that they do not routinely check proofs of claim for validity based on timeliness. NACBA has taken a stand on the issue, arguing that such practices violate the FDCPA and that the debtor can prosecute the FDCPA claim notwithstanding the existence of the bankruptcy action. Owens v. LVNV Funding, LLC, ___F.3d ___, 2016 WL 4207965 (7th Cir. Aug. 10, 2016); Nelson v. Midland Credit Management, Inc., ___ F.3d ___, 2016 WL 3672073 (8th Cir. July 11, 2016).
IRS’s Planned Use of Private Debt Collectors Causing Concern
In a press release issued on September 29th, the NCLC and consumer advocates expressed concern over the IRS’s appointment of four private debt collection agencies to collect federal tax debts. The selection of private debt collectors was in response to a law passed by Congress requiring the IRS to outsource tax debts if one of three conditions applies: (1) more than one year has passed without any interaction between the taxpayer and IRS; (2) one-third of the statute of limitations has lapsed and there is no IRS collector assigned; or (3) the IRS is otherwise not working the debt due to lack of resources.
The move, described by the NCLC as “a terrible development for taxpayers,” raises concerns due to the already dubious collection practices of many debt collectors. In fact, one of the four agencies, Pioneer Credit Recovery, was terminated last year by the Department of Education for providing inaccurate information to borrowers. There is also concern over the potential for an increase in scams involving phony tax collectors.
Although debt collectors must send at least two written notices before calling the tax debtor, and debtors are permitted to tell the collector not to call, consumer advocates are seeking further protections, such as excluding from the program low-income taxpayers and those who owe taxes under the Affordable Care Act.
Cert. Petitions Filed in FDCPA Cases
Midland Funding, LLC., has filed a petition for certiorari seeking Supreme Court review of the Eleventh Circuit decision in Johnson v. Midland Funding, LLC., 2016 U.S. App. LEXIS 9478, No. 15-11240 (May 24, 2016), petition for cert. filed, No. 16-348, (Sept. 16, 2016). In Johnson, the court expanded its earlier decision in Crawford v. LVNV Funding, LLC, 758 F.3d 1254 (11th Cir. 2014), cert. denied, ___ U.S. ___, 135 S.Ct. 1844, 191 L.Ed.2d 724 (2015), to find that not only does a proof of claim on a time-barred debt violate the FDCPA, but the FDCPA claim is not in conflict with, nor is it precluded by, the Bankruptcy Code. [Read more…] about Cert. Petitions Filed in FDCPA Cases
NACBA and NCLC Enter Fair Credit Reporting Arena
On September 2, 2016, NACBA and the NCLC joined forces to file an amicus brief in a case addressing credit reporting standards under the FCRA. Abeyta v. Bank of America, No. 16-15707 (9th Cir.).
Ginny Abeyta filed for Chapter 13 bankruptcy in June 2010 and completed her plan in April 2014. In October 2014, she requested her credit report and found that Bank of America had reported her debt as “past due” as of July 2010, and in “major delinquency” as of August 2010. There was no mention of her successful Chapter 13 bankruptcy. She requested a reinvestigation of the debt, and the new credit report contained the same inaccuracies. [Read more…] about NACBA and NCLC Enter Fair Credit Reporting Arena