FDIC TIP- Advance-Fee Loan Scams: ‘Easy’ Cash Offers Teach Hard Lessons

Advance-Fee Loan Scams: ‘Easy’ Cash Offers Teach Hard Lessons


Looking for a loan or credit card but don’t think you’ll qualify? Turned down by a bank because of your poor credit history?

You may be tempted by ads and websites that guarantee loans or credit cards, regardless of your credit history. The catch comes when you apply for the loan or credit card and find out you have to pay a fee in advance. According to the Federal Trade Commission (FTC), the nation’s consumer protection agency, that could be a tip-off to a rip-off. If you’re asked to pay a fee for the promise of a loan or credit card, you can count on the fact that you’re dealing with a scam artist. More than likely, you’ll get an application, or a stored value or debit card, instead of the loan or credit card.

The Signs of an Advance-Fee Loan Scam

The FTC says some red flags can tip you off to scam artists’ tricks. For example:

A lender who isn’t interested in your credit history. A lender may offer loans or credit cards for many purposes — for example, so a borrower can start a business or consolidate bill payments. But one who doesn’t care about your credit record should give you cause for concern. Ads that say “Bad credit? No problem” or “We don’t care about your past. You deserve a loan” or “Get money fast” or even “No hassle — guaranteed” often indicate a scam.

Banks and other legitimate lenders generally evaluate creditworthiness and confirm the information in an application before they guarantee firm offers of credit — even to creditworthy consumers.

Fees that are not disclosed clearly or prominently. Scam lenders may say you’ve been approved for a loan, then call or email demanding a fee before you can get the money. Any up-front fee that the lender wants to collect before granting the loan is a cue to walk away, especially if you’re told it’s for “insurance,” “processing,” or just “paperwork.”

Legitimate lenders often charge application, appraisal, or credit report fees. The differences? They disclose their fees clearly and prominently; they take their fees from the amount you borrow; and the fees usually are paid to the lender or broker after the loan is approved.

It’s also a warning sign if a lender says they won’t check your credit history, yet asks for your personal information, such as your Social Security number or bank account number. They may use your information to debit your bank account to pay a fee they’re hiding.

A loan that is offered by phone. It is illegal for companies doing business in the U.S. by phone to promise you a loan and ask you to pay for it before they deliver.

A lender who uses a copy-cat or wanna-be name. Crooks give their companies names that sound like well-known or respected organizations and create websites that look slick. Some scam artists have pretended to be the Better Business Bureau or another reputable organization, and some even produce forged paperwork or pay people to pretend to be references. Always get a company’s phone number from the phone book or directory assistance, and call to check they are who they say they are. Get a physical address, too: a company that advertises a PO Box as its address is one to check out with the appropriate authorities.

A lender who is not registered in your state. Lenders and loan brokers are required to register in the states where they do business. To check registration, call your state Attorney General’s office or your state’s Department of Banking or Financial Regulation. Checking registration does not guarantee that you will be happy with a lender, but it helps weed out the crooks.

A lender who asks you to wire money or pay an individual. Don’t make a payment for a loan or credit card directly to an individual; legitimate lenders don’t ask anyone to do that. In addition, don’t use a wire transfer service or send money orders for a loan. You have little recourse if there’s a problem with a wire transaction, and legitimate lenders don’t pressure their customers to wire funds.

Finally, just because you’ve received a slick promotion, seen an ad for a loan in a prominent place in your neighborhood or in your newspaper, on television or on the Internet, or heard one on the radio, don’t assume it’s a good deal — or even legitimate. Scam artists like to operate on the premise of legitimacy by association, so it’s really important to do your homework.

Finding Low-Cost Help for Credit Problems

If you have debt problems, try to solve them with your creditors as soon as you realize you won’t be able to make your payments. If you can’t resolve the problems yourself or need help to do it, you may want to contact a credit counseling service. Nonprofit organizations in every state counsel and educate people and families on debt problems, budgeting, and using credit wisely. Often, these services are low- or no-cost. Universities, military bases, credit unions, and housing authorities also may offer low- or no-cost credit counseling programs. To learn more about dealing with debt, including how to select a credit counseling service, visit ftc.gov/credit.

Where to Complain

If you think you’ve had an experience with an advance-fee loan scam, report it to the FTC.

The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. Watch a new video, How to File a Complaint, at ftc.gov/video to learn more. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

Three Cheers for Chelsea Handler

http://www.huffingtonpost.com/2010/12/06/chelsea-handler-angelina-_n_792423.html

You GO Girl!!!

Resume Tips for Oldies (That's You--Baby Boomers)

Recently, AOL Jobs offered some tips for older job seekers about how to make resumes fresh and alluring. Here's Vivia Chen's  adaptation of those tips for you baby-boomer lawyers:


1. Don't describe yourself as a lawyer with "X-number of years of experience" or use phrases like "seasoned" litigator. Both terms suggest that you really are an old fogey.

2. Don't use outdated phrases like "references available upon request" or "responsible for" or "duties included." And avoid calling yourself an "out-of-the-box thinker." All those terms suggest you are simply out of it.

3. Emphasize current expertise. Some lawyers can't help themselves but list every document they've ever gotten their hands on. But resist that urge and focus on one or two areas of expertise.

4. Briefly list a history of jobs and employers. "Account for early work experience to keep the chronology consistent and transparent, but abbreviate this experience when possible." Legal recruiter Dan Binstock also advocates giving a brief reason for leaving each job, because, he says, "it makes it easier for employers to understand the move." For instance, if you got laid off because of the economy, you should mention that you had received "top reviews and billed 2,200 hours" until the slowdown, says Binstock.

5. Disclose graduation dates, but keep the education section "subtle and brief." Lawyers, more than other professionals, love to sniff out gaps, so face the music. Dropping the class year, warns Binstock, "sends the message that the person is insecure" and "reduces the trust factor."

6. Make your extra curricular activities sound dynamic. "Hobbies that suggest a vibrant and healthy lifestyle may help counter any potential age bias. So if you are an avid runner, skier, triathlete, etc., go ahead and include this information on your resume." I'd add that Pilates and martial arts are probably fine too, though I'd eliminate any reference to aerobics (smacks of Jane Fonda workout tapes from the 1980s).

The sad truth, though, is that firms and companies do screen out candidates because of age. "No one wants to admit it, but there's a lot of discrimination on the age end," says Binstock.

But in the law firm market, at least, age doesn't matter as long as you've got clients. In that case, you could be on a respirator and still find a warm home. "It all comes down to portable business," sums up Binstock.

Bk Case Update

In re Stokes

Post-petition property taxes are administrative claims which must be paid in full when the plan provides that property does not vest in the debtor until discharge or closing.

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.