Mortgage Rates Rise

The tracking firm reported that the benchmark conforming 30-year fixed mortgage rate rose to 4.71 percent (0.36 point) this week. That’s up pretty significantly from 4.58 percent reported by the company last week.


The average 15-year fixed mortgage increased from 3.97 percent to 4.07 percent (0.35 point) in Bankrate’s study. The larger jumbo 30-year fixed rate jumped as well, settling at 5.29 percent.

Bankrate also documented a rise in adjustable rate mortgages, with the average 5-year ARM climbing to 3.74 percent and the average 7-year ARM jumping to 4.08 percent.

Bankrate says the November unemployment report due out on Friday could be the catalyst for the next move in mortgage rates, with evidence of solid private-sector job growth fuel for higher rates.

Cool BK Site for Research

http://bankr.law.uiuc.edu/index.asp

Thanks to Professor Robert Lawless of the University of Illinois College of Law, also of the Credit Slips blog, you can now save yourself from combing through dusty old books to find the language of Bankruptcy Code provisions going back as far as 1980. Need to find how Section 547 was worded prior to the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act ("BAPCPA"), or interested in tracing the evolution of exceptions to the automatic stay of Section 362? Then navigate over to the BankrLaw Project site. Once there, select a date and the site will provide you with the Bankruptcy Code in effect at that time, free of charge. This promises to be a very useful research tool when the text of older Bankruptcy Code provisions is in issue.

Senior in Debt

More than half of those surveyed had saved less than $50,000 — and many of that group said they'd saved absolutely nothing — yet they retired anyway. Just 4% said they had delayed their retirement due to debt.


"They get to a certain age and they feel privileged," Ellington said. "They say, 'I'm going to go on that trip even though I have to put it on my credit card.'"

When you're young, you have time to pay off splurges like a trip to Hawaii, but for retirees, procrastination can lead to serious financial problems.

It's not just vacations and entertainment; one of the biggest sources of senior debt is medical expenses. More than 75% of the seniors surveyed said they went into debt for medical or funeral expenses.

Part of the reason they're not paying off their debts is they don't know where to start and they're too embarrassed to ask for help. But the financial crisis may have also played a role.

"Financial institutions haven't been perceived as the most friendly" and many people blame them for the recession, Ellington said. "They think, 'Hey, I'm not going to pay back these guys who ripped off America.'"

One of the biggest mistakes seniors make when it comes to credit cards is being late with a payment.

"That triggers a penalty APR that can exceed 30%, which can trap those seniors who can't pay their balances in full each month in a downward spiral of debt," said Ben Woolsey, the director of marketing and consumer research at CreditCards.com.

And while many retirees who are being quietly buried under a mound of debt may think they're protecting their kids by not burdening them with their financial problems, if they don't pay off their debts before they die, it will eventually become their children's burden.


Whatever that parent owes will be deducted from his or her estate before that estate is divided among the children and other beneficiaries.

Imagine a scenario where the kids are bickering over who gets mom's house and, in the end, no one gets it because it had to be sold to pay off mom's credit-card debt.

"That is a very realistic scenario," Ellington said. "A lot of kids don't find out how much their parents are struggling until they pass away."

Unfortunately, this debt denial isn't exclusive to seniors: Among those surveyed who had not yet retired, 25% said they were carrying debt of $5,000 or more — yet more than half said they didn't plan to delay retiring because of debt.

And more than one in four said they weren't worried about paying off their debt in their lifetime.

Another mistake they make is relying on debt-settlement companies when they get into trouble.

"It's much better to contact card companies directly to work out repayment plans or work with a non-profit debt-counseling service rather than a fee-based settlement company," Woolsey said.

Or declare BANKRUPTCY.

Screening Recruits the Goldman Way

http://www2.goldmansachs.com/careers/begin/interview-skills/index.html

Since the bank's vetting process is notorious for rigor, ambitious lawyers can only benefit by prepping (maybe over-prepping) the Goldman way. Here are some tidbits from the Goldman video:


First, the Dos:

1. Make a list of your qualificatons--academic and work experiences. Goldman's favorite buzz terms are "team orientation," "leadership potential," "problem-solving," and "creativity." Law firms like creative problem-solvers (translation: good legal researchers), but I'm not so sure about the leader stuff.

2. Create a narrative about why you are applying for a particular job or firm. Example: "I've had a fascination with hostile takeovers since childhood, and keep an active scrapbook of Marty Lipton.

3. Practice your talking points and memorize the names of the interviewers (assuming you know beforehand).

4. Develop a conversational, confident tone. This requires practice--if not an acting coach; it's not easy bragging about yourself in a nonbragging way.

And now for the Don'ts:

1. Don't come off being clueless as to why you are interviewing for the job.

2. Don't ask about mundane things like money and benefits. The mantra is to snag the offer, then ask about what you really care about later.

3. Don't get lost on the way to the interview. Studying the subway map ten minutes before your appointment is not advisable.

4. Don't send a thank-you letter by mail (too slow) or call (too awkward). But do send a thank-you e-mail.

What really makes a Goldman interview the gold standard are the "competency" questions that it throws at interviewees. The video says the idea behind a "behavioral" or "case studies" interview is to see how candidates solve problems. Take this question: "How many manhole covers are there in New York City?" The video says you could multiply 12 avenues by 150 streets to get 1,800 manhole covers. That answer "may or may not be correct," says the video, but it demonstrates "an approach."

As you might know, there's talk that law firms will eventually adopt some of these screening tools to weed out applicants. So perhaps it's a good time to practice explaining the rule against perpetuities.


Thanks Vivia Chen

Full Body Scanners.

http://www.youtube.com/watch?v=YQrsrAxul3w&feature=related

I'd rather be patted down and go through a metal dector!

Full Body Scanners.

http://www.youtube.com/watch?v=YQrsrAxul3w&feature=related

I'd rather be patted down and go through a metal dector!

Congress Considers Change to 'Red Flags Rule'

The American Bar Association has been battling for more than a year to exempt lawyers from new regulations designed to fight identity theft. Now, Congress has decided to step in.

With no fanfare and no recorded vote late Tuesday, the Senate approved legislation that could accomplish what the ABA was hoping to achieve. The bill would narrow the definition of “creditor” under the Fair and Accurate Credit Transition Act of 2003, likely ensuring that lawyers would not meet the new definition.

An ABA spokeswoman said the group is optimistic about House passage, possibly this week.

The regulations over identity theft were written by the Federal Trade Commission, and they’re popularly known as the “Red Flags Rule.” FTC regulators have interpreted the term “creditor” to include those who perform services and get paid at a later date, as many lawyers do. Other professional groups, including accountants and physicians, have protested their inclusion, too.

The bill, S. 3987, would define a creditor largely as someone who uses credit reports, furnishes information to credit reporting agencies or “advances funds…based on an obligation of the person to repay the funds or repayable from specific property pledges by or on behalf of the person.”

Sen. John Thune (R-S.D.) introduced the bill Tuesday with Sen. Mark Begich (D-Alaska) as a co-sponsor. In a prepared statement, they said the FTC was threatening small businesses.

“Small businesses in South Dakota and across our country are the engines of job growth for America,” Thune said. “Forcing them to comply with misdirected and costly federal regulations included in the FTC Red Flags Rule will hurt their ability to create jobs and continue growing our economy.”

ABA President Stephen Zack said in a prepared statement: “Last night’s Senate vote to clarify the rule so that lawyers are clearly not included was a critical step in ending a bureaucratic effort to solve a non-existent problem with paper-pushing regulations that would have increased legal costs.”

The fight over the Red Flags Rule has also played out in court after the ABA sued the FTC. In October 2009, U.S. District Judge Reggie Walton of the District of Columbia ruled in favor of the ABA. The U.S. Court of Appeals for the D.C. Circuit heard the FTC’s appeal last month.

In a recent interview with The National Law Journal, FTC Chairman Jon Leibowitz said the commission was trying to work with Congress to make the law clear. With the 2003 law, he said, “Congress didn’t give either side a lot to work with here.”

An FTC spokesman had no comment today.

 
Thanks Law.com

Attorney Defends Taking On Mortgages as Contingency Fee

http://www.dailybusinessreview.com/PubArticleDBR.jsp?id=1202475433460&hbxlogin=1

Defaulted Borrowers File Lawsuit Against Wells Fargo

The law firm of Harwood Feffer, LLP has filed a class action lawsuit against Wells Fargo Bank and its servicer, America's Servicing Company (ASC). The suit alleges that ASC induced borrowers to default on their mortgages by telling them they would not be eligible for a loan modification if they were current on payments. Harwood Feffer claims ASC was looking to boost its revenue by assessing additional penalties and fees and collecting interest on the nonperforming loans it services.

http://www.dsnews.com/articles/harwood-feffer-files-lawsuit-against-wells-fargo-2010-11-30

No Private Right of Action for Creditor’s Disclosure of Social Security Number

Recently, in Matthys v. Green Tree Servicing, LLC (In re Matthys), 2010 WL 2176086 (Bankr. S.D. Ind. 2010), a bankruptcy court held that a debtor does not have a private right of action against the creditor who listed the debtor’s full social security number on its proof of claim. This holding is consistent with what the majority of courts have held in similar cases. While the joint debtors in Matthys sought relief under various statutes, including Bankruptcy Code sections 105 and 107, the court found that no private right of action existed.

In Matthys, the debtors listed its lender as a secured creditor in their schedules. The lender’s servicing agent included the debtors’ full social security numbers when it filed an electronic proof of claim. The court granted the debtor’s Rule 9037 motion and removed the proof of claim from public access on PACER. Next, the debtors brought an adversary proceeding against the servicing agent seeking damages for violating several statutes, including Bankruptcy Code section 107, The Gramm-Leach-Bliley Financial Modernization Act, Federal Rule of Civil Procedure 5.2, Federal Rule of Bankruptcy Procedure 9037, and various tort claims such as invasion of privacy, negligent or intentional infliction of emotional distress, and negligence. The court, however, found no private right of action existed under the Bankruptcy Code or any other statute. However, the court did send the complaint for contempt to trial, since the court, but not the debtors, has the power to do so. Section 105(a) provides that bankruptcy courts “may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title.” The Matthys court concluded that it only had the power to hold the creditor in contempt, because the broad power under section 105 “is not limitless and . . . does not create a private right of action.” The court stressed that while a private right of action can be expressed or implied in a statute, courts are unwilling to go against congressional intent when searching for such a right.

Although several courts agree with the Matthys analysis, other courts do find that a private right of action exists under section 105(a). See In re Gregg, 428 B.R. 345 (Bankr. D.S.C. 2009); In re Killian, 2009 WL 2927950 (Bankr. D.S.C. July 23, 2009). For example, in McKenzie v. Biloxi Internal Medicine Clinic (In re McKenzie), 2010 WL 917262 (Bankr. S.D. Miss. March 10, 2010), the court held that it had the authority to compensate a debtor under section 105(a). McKenzie addressed similar facts to Matthys. The McKenzie court justified its decision by citing several rare cases where section 105 was used to compensate the complainant, typically for actual damages and attorney’s fees.

In re Matthys raises many concerns, both for debtors and creditors. Some courts do recognize a private right of action. Even if a debtor has no private right of action, the courts may still hold creditors in contempt under section 105. Thus, courts can and do hold creditors liable for violating Rule 9037.

Abandoned Foreclosures

http://www.gao.gov/new.items/d1193.pdf

GAO estimated that the number of abandoned foreclosures that occurred in the United States between January 2008 and March 2010 was between 14,500 and 34,600 — representing less than 1 percent of vacant homes.


The study revealed that 20 specific areas of the country accounted for 61 percent of the estimated “bank walkaway” cases, with certain cities in Michigan, Ohio, and Florida experiencing the most occurrences. Detroit topped the list.


GAO also found that abandoned foreclosures most frequently involved loans to borrowers with lower quality credit, or nonprime loans, and low-value properties in economically distressed areas.


The decision to forego foreclosure typically hinges on how much the lender expects to bring in from the subsequent sale of the repossessed property. However, GAO says it found that most of the servicers interviewed were not always obtaining updated property valuations before initiating foreclosure.
Vacant homes associated with abandoned foreclosures can contribute to increased crime and decreased neighborhood property values, the agency notes. Abandoned foreclosures also increase costs for local governments that must maintain or demolish the homes.


GAO learned that because servicers are not required to notify borrowers and communities when they decide to abandon a foreclosure, homeowners are sometimes unaware that they still own the home and are responsible for paying the debt and taxes and maintaining the property. Communities are also delayed in taking action to mitigate the effects of a vacant property.

REO

As of September 30, Fannie Mae’s inventory of single-family REO properties stood at 166,787. Freddie Mac’s REO inventory totaled 74,897 homes at the end of September. Together, the two GSEs hold about a quarter of all bank-owned residential properties in the United States.

Stern Sued by Former Employees

UNITED STATES DISTRICT COURT


SOUTHERN DISTRICT OF FLORIDA


RENAE MOWAT, NIKKI MACK,

ARKLYNN RAHMING, and QUENNA HUMPHREY individually

and on behalf of all other similarly situated individuals,

Plaintiffs,
vs.
DJSP ENTERPRISES, INC., a Florida Corporation, DJSP
ENTERPRISES, INC., a British Virgin Islands Company,
and LAW OFFICES OF DAVID J. STERN, P.A.,
DAVID J. STERN, individually,

Defendants.

______________________________________/



EXCERPT:

CLASS ACTION COMPLAINT

Plaintiffs Renae Mowat, Nikki Mack, Arklynn Rahming, and Quenna Humphrey individually and on behalf of all others similarly situated, for their Complaint against Defendants, DJSP Enterprises, Inc., a Florida corporation, DJSP Enterprises, Inc., a British Virgin Islands Company, (collectively hereinafter referred to as “DJSP”), Law Offices of David J. Stern, P.A., (“Stern, P.A.”) and David J. Stern (“Stern”) state as follows:

NATURE OF CASE

1) Plaintiffs bring this action on behalf of themselves and other similarly situated former employees who worked for the Defendants in Plantation, Florida and who were terminated as a consequence of mass layoffs by the Defendants beginning on September 23, 2010 and who were not provided sixty (60) days advance written notice of the mass layoffs by Defendants as required by the Worker Adjustment and Retraining Notification Act, 29 U.S.C. § 2101 et seq.

(“WARN Act”).

2) Plaintiffs and all similarly situated employees seek to recover back pay for each day of WARN Act violation and benefits under 29 U.S.C. § 2104.

3) This Court has jurisdiction pursuant to 28 U.S.C. §§ 1331, 1334 and 1367, as well as 29 U.S.C. §§ 2102, 2104(a)(5).

4) Venue over this matter is appropriate in this Court pursuant to 29 U.S.C. 2104(a)(5) because the acts constituting the violation of the WARN Act occurred, and the claims arose in this district. Venue is also proper under 28 U.S.C. §1391(a) and (b). The acts complained of occurred in the State of Florida and, at all relevant times, material hereto, the Defendants conducted business with and through the other named Defendants who also conducted business with and through the other Defendants and their subsidiaries and the named individual Defendant, David J. Stern, resides in this judicial district, and all of or a substantial part of the events or omissions giving rise to this action occurred in this judicial district.

http://stopforeclosurefraud.com/2010/11/29/fl-class-action-violation-of-warn-act-former-employees-mowat-v-djsp-enterprises/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+ForeclosureFraudByDinsfla+%28FORECLOSURE+FRAUD+%7C+by+DinSFLA%29

Bankruptcy Judge Sanctions Lawyer for $110,000 , Warns About Being ‘Sequaciously

ABA Journal

A Nevada bankruptcy judge has sanctioned a lawyer $110,000 in legal fees for being too trusting. A lawyer for one of the owners of the Blue Pine Group told lawyer David Winterton that all of the corporate directors had passed a resolution authorizing a bankruptcy filing. Winterton believed the lawyer—and that was his mistake, according to U.S. Bankruptcy Judge Bruce Markell in his opinion. The Las Vegas Review-Journal has the story.

http://www.abajournal.com/news/article/bankruptcy_judge_sanctions_a_sequaciously_servile_lawyer


http://www.abajournal.com/files/BluePine.pdf

FTC Issues Final Mortgage Assistance Relief Services (MARS) Rule, Banning Advance Fees and Requiring Various Disclosures

The FTC issued its final Mortgage Assistance Relief Services (MARS) Rule and Statement of Basis and Purpose concerning the practices of for-profit companies that, in exchange for a fee, offer to work on behalf of consumers to help them obtain modifications to the terms of mortgage loans or to avoid foreclosure on those loans.


In sum, the Final Rule, among other things, would: (1) prohibit providers of such mortgage assistance relief services from making false or misleading claims; (2) mandate that providers disclose certain information about these services; (3) bar the collection of advance fees for these services; (4) prohibit anyone from providing substantial assistance or support to another they know or consciously avoid knowing is engaged in a violation of the Rule; and (5) impose recordkeeping and compliance requirements.

A copy of the final rule is available online at: http://www.ftc.gov/os/2010/11/R911003mars.pdf

Advance fee ban

Under this provision of the Final Rule, MARS companies may not collect any fees until they have provided consumers with a written offer from their lender or servicer that the consumer decides is acceptable, and a written document from the lender or servicer describing the key changes to the mortgage that would result if the consumer accepts the offer. MARS companies also must remind consumers of their right to reject the offer without any charge.

Disclosures

In their advertising and in communications directed at individual consumers (such as telemarketing calls), MARS companies must disclose that:

• they are not associated with the government, and their services have not been approved by the government or the consumer’s lender;

• the lender may not agree to change the consumer’s loan; and

• if companies tell consumers to stop paying their mortgage, they must also tell them that they could lose their home and damage their credit rating.

MARS companies also must explain in their communications to consumers that they can stop doing business with the company at any time, can accept or reject any offer the company obtains from the lender or servicer, and, if they reject the offer, they don’t have to pay the company’s fee. MARS companies also must disclose the amount of the fee.

Prohibited claims

The MARS Rule prohibits mortgage relief companies from making any false or misleading claims about their services, including claims about:

• the likelihood of consumers getting the results they seek;

• the company’s affiliation with government or private entities;

• the consumer’s payment and other mortgage obligations;

• the company’s refund and cancellation policies;

• whether the company has performed the services it promised;

• whether the company will provide legal representation to consumers;

• the availability or cost of any alternative to for-profit mortgage assistance relief services;

• the amount of money a consumer will save by using their services; or

• the cost of the services.

In addition, the rule bars mortgage relief companies from telling consumers to stop communicating with their lenders or servicers. MARS companies also must have reliable evidence to back up any claims they make about the benefits, performance, or effectiveness of the services they provide.

Attorney exemption

Attorneys are generally exempt from the rule if they meet three conditions: (1) they are engaged in the practice of law; (2) they are licensed in the state where the consumer or the dwelling is located; and (3) they are complying with state laws and regulations governing attorney conduct related to the rule.

In order to be exempt from the advance fee ban, attorneys must also meet a fourth requirement: they must place any fees they collect in a client trust account, and abide by state laws and regulations covering such accounts.

The FTC and states may enforce the Rule. However, before a state brings such an action, states must give 60 days advance notice to the Commission or other “primary federal regulator” of the proposed defendant, and the regulator has the right to intervene in the action.

All provisions of the rule except the advance-fee ban will become effective December 29, 2010.

The advance-fee ban provisions will become effective January 31, 2011.

Wells Fargo Short Sales Criteria for Foreclosure Postponement

Wells Fargo advised NAR that it has modified its existing guidelines to allow the postponement of a scheduled foreclosure in connection with a short sale, but only in limited situations.


NAR explained that for loans owned by Wells Fargo, including those inherited with the bank’s Wachovia acquisition, as well as other loans serviced by Wells Fargo but owned by an investor, the policy allows for one foreclosure postponement, but only if: (1) Wells Fargo has a short sale sales contract in hand that has been approved (including approvals from junior lien holders and mortgage insurers, if applicable), (2) the buyer has proof of funds or financing approved, and (3) the short sale can close within 30 days of the scheduled foreclosure sale.

However, Wells Fargo noted that not all investors allow for such postponements and stressed that in jurisdictions where the courts will not approve the delay, the postponement policy will not apply. Wells Fargo told NAR that it is willing to address situations that do not qualify under these guidelines on a case-by-case basis.

Last month, it was reported that Wells Fargo had stopped delaying foreclosures in order to allow distressed homeowners to complete short sales. But as NAR outlined, the foreclosure timeline can be pushed back for a short sale as long as Wells Fargo’s specified criteria are met.

1th Cir Says "Discount Points" Not RESPA "Settlement Service"

The U.S. Court of Appeals for the Eleventh Circuit recently affirmed the dismissal of a class action complaint that raised allegations of improper fees under Section 8(b) of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C § 2607(b), in connection with charging loan discount payments, or discount points, for a below-market interest rate.


A copy of the opinion is available at:

http://www.ca11.uscourts.gov/opinions/ops/200811245.pdf

Two sets of borrowers brought a class action lawsuit against Quicken Loans, Inc. ("Quicken Loans") claiming to represent everyone who obtained a residential mortgage loan from Quicken and was charged discount points without receiving the below-market interest rate allegedly promised. The borrowers' complaint essentially claimed that Quicken charged the borrowers discount points for a below-market interest rate without providing the below-market interest rate, arguing that this violated RESPA's prohibitions against charging for real estate settlement services other than for services actually performed.

The Eleventh Circuit affirmed the district court's dismissal of the borrower's complaint, holding that discount points such as those charged in this case are not settlement services under RESPA.

It rejected the borrowers' argument that discount points are settlement services because they are included on the HUD-1 Settlement Statement ("HUD-1") of the U.S. Department of Housing and Urban Development ("HUD") under the title “Items Payable in Connection with the Loan' and the HUD-prepared settlement cost information booklet refers to such items as settlement costs.

Instead, the Eleventh Circuit relied on the statutory language of RESPA and the plain and ordinary meaning of the word "service" to hold that discount points paid in the context raised are part of the loan agreement, not a service provided for borrowers. The Eleventh Circuit noted that it was limited in its interpretation of the term "settlement services" to the statutory definition and the regulations interpreting it, and stated that it could not conceive of a circumstance in which charging discount points would qualify under its definition of "service".

Moreover, the Eleventh Circuit found the borrowers' contention that Quicken did not provide them the below-market interest rate they bargained for in connection with the discount points "manifestly implausible." It reached this conclusion based on the notes the borrowers signed after reading the loan documents, including the HUD-1s and their inclusion of a loan discount amount, and the fact that the borrowers made no objection to paying the advance interest called for by the discount points, proceeding to close the loans anyway.

The Eleventh Circuit also affirmed the district court's dismissal of the borrowers" breach of contract claim under state law for the same reasons

NY Fed Ct Dismisses RESPA Challenge to Division of Title Insurance Premiums b/t Title Insurer and Title Agent

The United States District Court for the Eastern District of New York recently dismissed putative class claims asserting violations of the federal Real Estate Settlement Procedures Act ("RESPA") relating to allegations of prohibited kickbacks to and illegal fee splitting by title insurers with title agents, as barred under RESPA and under the "filed-rate doctrine."


This case began as a putative class action with Gerry Galiano as the named plaintiff, which in turn emerged out of another class action that named many of the same defendants. The plaintiff alleged that various title insurance defendants, including the Title Insurance Rate Service Association, Inc. ("TIRSA"), injured the plaintiff by setting title insurance rates that included both agency commissions -- which the plaintiff characterized as "prohibited fees, kickbacks or other things of value" -- as well as insurance risk costs, or that the division of the title insurance fee into agency commission and risk premium was a prohibited "fee splitting 'other than for services actually performed.'"

The court noted that RESPA was enacted to safeguard home buyers from abusive practices resulting in in "unnecessarily high settlement charges." However, the court also noted that Congress did not intend to empower the federal courts to serve as "roving equity tribunals" governing real estate closings.

As you may recall, Sections 8(a) and 8(b) of RESPA prohibit the giving or receiving of referral fees, kickbacks, or any other "thing of value" in exchange for the referral of real estate settlement service business involving a federally regulated mortgage loan. However, Section 8(c) of RESPA includes a "safe-harbor" provision allowing "bona fide" fees for services actually rendered.

The Court held that the plaintiff conceded the defendants performed actual services, and this admission is "fatal" to his RESPA claim. Because the services at issue, such as performing title searches and examinations, are "essential" services when insuring title, they are "bona fide" as required under RESPA. The Court noted that, given this fact, the plaintiff was in essence contesting the amounts paid for title insurance services, and that RESPA is not intended to be a "price-control statute." The Court further held that the defendants only shared fees with third parties when those parties performed essential services, and this does not constitute an improper "split charge for which no service was performed."

In addition, the District Court held that the "filed-rate doctrine" would also bar the plaintiff's RESPA claim. This doctrine states that "rates filed with a regulatory agency, such as the title-insurance rates at issue are "per se reasonable and unassailable in judicial proceedings." These rates were filed by the title insurance defendants with the New York Insurance Department. As you may recall, the filed-rate doctrine prevents courts from substituting their judgment for that of a regulatory agency applying expertise to the area in question. The doctrine also prevents price discrimination among consumers, as non-suing consumers would be at a disadvantage to those who were awarded lower rates via a lawsuit.

Finally, the Court observed that there is no fraud exception to the filed-rate doctrine, as such an exception would simply be involving the courts in deciding what constitutes a "reasonable rate." The Court also noted that the Second Circuit has "not yet spoken" on the applicability of the filed-rate doctrine to RESPA "kickback claims," and the lower court was thus not bound by a "specific line of reasoning." The District Court held that because the kickback allegations had been rejected, as actual services were performed, the payments in question could not be "illegal kickbacks" that would preclude application of the filed-rate doctrine.

Community-Caretaker Doctrine Doesn't Allow Home Search, Third Circuit Says

By Charles Toutant
New Jersey Law Journal
November 23, 2010


Police can't make a warrantless entry into a home in the guise of community caretakers, the Third U.S. Circuit Court of Appeals ruled Tuesday in a groundbreaking case.

Limiting a doctrine often used to justify automobile searches, the court said that "in the context of the search of a home, it does not override the warrant requirement of the Fourth Amendment or the carefully crafted and well-recognized exceptions to that requirement."

The court, in Ray v. Township of Warren, 09-4353, nevertheless upheld summary judgment dismissing a civil rights suit against Warren Township, its police department and two officers based on qualified immunity.

The court said it reached its conclusion given the reasonableness of the officers' actions and a split among judicial circuits on applicability of the community-caretaker doctrine to home searches.

On June 17, 2005, Theresa Ray went to the home of her estranged husband, Lawrence Ray, to pick up the couple's 5-year-old daughter for court-ordered visitation. Theresa thought she saw a man inside, but no one answered the bell. She called the police, who entered the home through an unlocked door. They found Ray's father inside, sleeping. Ray and his daughter were not home.

When Ray sued, the police raised as a defense that they were engaged at the time in community caretaking — usually defined as protecting public safety, aiding people in distress, combating hazards and preventing potential ones.

The U.S. Supreme Court, in Cady v. Dombrowski, 413 U.S. 433 (1973), held that police engaged in community caretaking could make a warrantless search of a car, for protective purposes, to locate a gun that was missing from a police officer.

Since then, state and federal courts have come to different conclusions on the extent of the doctrine. The circuit courts of appeal are split, with the Seventh, Ninth and 10th circuits holding that it applies only to vehicle searches and the Sixth and Eighth extending it to homes.

In Ray's case, U.S. District Court Judge Joel Pisano granted the township summary judgment based on qualified immunity, without addressing whether the community-caretaker function justified the officers' actions.

On Ray's appeal, the Third Circuit affirmed the qualified immunity ruling but said it was time to draw the line on use of the doctrine to justify home searches.

Circuit Judges Kent Jordan, Anthony Scirica and Julio Fuentes said the Supreme Court, in the Cady case, "expressly distinguished automobile searches from searches of a home, saying that a search of a vehicle may be reasonable 'although the result might be the opposite in the search of a home.'"

The sanctity of the home is a deeply embedded tradition and preventing physical entry of it is the chief purpose of the Fourth Amendment, they added.

But the judges also said that given the unsettled state of the law at the time Ray's home was entered, the officers were not on notice that their conduct was against the law. "Until our decision in this case, the question of whether the community caretaking doctrine could justify entry into a home was unanswered in our circuit," the panel said.

"Given the conflicting precedents on this issue from other circuits, we cannot say it would have been apparent to an objectively reasonable officer that entry into Ray's home … was a violation of the law," they added.

The attorney for the police, Juan Fernandez of O'Toole Fernandez Weiner Van Lieu in Verona, says the court's interpretation of the doctrine will have a "huge" impact on law enforcement. He calls the ruling a dual-edged sword: "We win the case, but we have to tell our clients [that] what they did they can't do in this circumstance," he says.

One of Ray's lawyers, Paul Levinson of McLaughlin & Stern in New York, says, "The one positive that came out of the decision is that the case will stand in the Third Circuit for the proposition that the community-caretaking doctrine cannot be used to justify warrantless searches of a home. It's unfortunate that they didn't take the next step and determine that this case warranted a trial."

Michael Gilberti of Red Bank's Epstein & Gilbert also represented Ray.

Last year, the New Jersey Supreme Court extended the community-caretaker doctrine to homes, ruling in State v. Bogan , 200 N.J. 61 (2009), that police investigating an alleged sexual assault properly entered an apartment, questioned a boy who answered the door and then questioned the defendant, who was lying in an interior bedroom.

Though the questioning of Anthony Bogan led to his arrest and eventual conviction, the Court found the warrantless entry and questioning sufficiently separate from the criminal investigation to invoke the caretaker doctrine.

"So long as the police had an independent basis for entering the apartment under the community caretaking exception that was not a pretext for carrying out an investigatory search, we can find no bar under Cady or under our federal and state constitutions for the police actions in this case," the Court said.

WA Sup Ct Upholds Ruling Protecting Lender Files Obtained by AG from Release to Consumer Attorney

The Supreme Court for the State of Washington recently affirmed a Court of Appeals decision holding that federal privacy laws apply to a request for information brought by a consumer lawyer under Washington's State Public Records Act (PRA), chapter 42.56 RCW, as to documents received by the state attorney general during an investigation of Ameriquest.


A copy of the opinion is available online at: http://www.courts.wa.gov/opinions/pdf/826901.opn.pdf

This case concerns documents obtained by the Washington State Office of the Attorney General from Ameriquest Mortgage Company (Ameriquest) during an investigation of Ameriquest's lending practices. These documents included loan files, e-mails, and "other papers." The AG received other information from consumers who filed complaints against Ameriquest, and also generated their own documents in relation to the investigation.

Melissa A. Huelsman (Huelsman), a "member of the public", made a request for records from the investigation referencing the PRA. The AG intended to disclose some of the information collected, but Ameriquest objected to the release of any information received from Ameriquest itself. The issue before the Supreme Court is "whether, and to what extent the federal Gramm-Leach-Bliley Act (GLBA) . . . and the relevant Federal Trade Commission (FTC) rule" either preempt the PRA or otherwise prevent the AG from disclosing the information it received directly from Ameriquest.

The Washington Supreme Court described the GLBA as intended to protect customers' privacy, and to "protect the security and confidentiality of those customers' nonpublic personal information." Under the rule-making authority contained in the GLBA, the FTC adopted the "Privacy of Consumer Financial Information." These federal regulations prohibit a "financial institution" from releasing a consumer's "nonpublic personal information to a nonaffiliated third party", unless the consumer is given the chance to opt out of such release by receiving prior notice. Relevant exceptions to this notice and disclosure requirement include when the release is done "with the consent or at the direction of the consumer", or to "comply with a properly authorized civil, criminal, or regulatory investigation." The Court also noted that the federal regulations prevent a nonaffiliated third party from re-using or re-releasing any protected information received from a financial institution, and the nonaffiliated third party can share nonpublic personal information so received to its affiliates, but cannot share this information to a nonaffiliated third party unless the financial institution in question could lawfully do so.

Huelsman, an attorney representing former customers of Ameriquest, placed a request for documents which contained borrowers' "names, addresses, and loan terms and costs" but not other information such as their social security numbers. Ameriquest objected to such disclosure specifically in relation to Ameriquest's customer loan files, internal customer complaint files, employee e-mails, trade secrets and proprietary information, and the AG generated documents. The trial court denied Ameriquest's motion, while leaving in place a temporary restraining order, finding that the GLBA did not preempt state laws governing public disclosure of documents. The Appellate Court reversed this decision, holding that if the PRA conflicted with GLBA concerning disclosure, then the GLBA preempted the PRA and prohibited such disclosure. The Appellate Court held that as the AG is a nonaffiliated third party under GLBA, and Huelsman is not an affiliate of the AG, the GLBA therefore prohibited the AG's contemplated disclosure to Huelsman.

The Supreme Court affirmed the Appellate Court's ruling. The Appellate Court had remanded the case to the trial court stating, "[w]hat information in loan customers' files is public is a factual question that the trial court will need to address." The Supreme Court held that GLBA and FTC restrictions apply to the AG's proposed release of "nonpublic personal information to Huelsman." Information which meets the definition of "personally identifiable financial information", is non-public and may not be disclosed, regardless of the form it comes in, i.e.; loan files, emails, etc.

The Supreme Court further held that "the circumstances of the case" dictated that names, cases, addresses, and phone numbers of Ameriquest customers fit this definition as they were not only "personal identifiers", but would also disclose that the person in question "is or has been Ameriquest's customer." The Court further held that "[a]ny information" that constitutes "'nonpublic personal information' cannot be recast as publicly available information by the AG."

Finally, the Court held that only "aggregate information or blind data" that does not contain "personal identifiers" is exempt from the federal nondisclosure rules. The Court held that both the GLBA and FTC do not allow the AG to "newly redact or repackage the information" it already has to transform it into "blind data." Such data can only be disclosed if it is already in a "blind" or identifier-free state as delivered to the AG.

U.S. Trustees Taking on Banks in Foreclosure Mess

The U.S. Trustee Program is stepping up its scrutiny of the veracity of banks' foreclosure claims against borrowers, the New York Times reported yesterday. After examining their foreclosure practices for flaws in mortgage documentation and other procedures, many of the nation’s largest banks have resumed - or will soon resume - trying to evict defaulted borrowers. JPMorgan Chase, for example, told investors this month that it had extensively reviewed its foreclosure controls, trained personnel in the unit and started new procedures to ensure that all legal requirements would be met when it moves to seize a property in default. While banks may have booted a few robo-signers and tightened up some lax procedures, one question at the heart of the foreclosure mess refuses to go away: whether institutions trying to take back a property can prove they even have the right to foreclose at all. Trustees in other parts of the country have intervened in borrower cases, but many of these actions have been related to questionable foreclosure fees or to dubious legal or documentation practices. The shift to a broader focus on the issue of standing suggests that the courts may no longer accept at face value the banks? arguments that they have the right to foreclose or represent the institution that does.

http://www.nytimes.com/2010/11/28/business/28gret.html