THE RICH REPORT

YOUR POWER. YOUR RIGHTS

Volume 1, Issue 1 ©2017

How the Credit Industry Created Its Own Worst Enemy—Me

I remember being a fresh young lawyer many moons ago, standing around my mother’s kitchen table, discussing something no one ever wants to discuss—their father’s funeral.

Living in a small town made life a little easier than the few years I worked in Manhattan (more on that another issue). I was in a small town, a small town anywhere. Despite all the lawyer jokes, a semblance of civility still existed between comrades in arms.
The phone rang. I looked at the caller ID and it was from a debt collection attorney I knew. I had a client matter and I needed an extension of time to answer the complaint my client received.

I answered the phone, stepped into the cold rain and realized the cold rain, like my father’s passing, would change my life forever. The attorney lawyer extended his sympathies, granted me a two week extension with his deepest, heartfelt sorrow, and let me get back to my funeral arrangements.

A week later, he sent me a default notice.

At that moment in time, I realized debt collectors weren’t human. I picked up the phone, screamed, yelled, slammed it and more, but all the effort was to no avail. I got taken as a fool during the worst time of my life. I trusted someone who built his business deceiving people.

Have questions or comments?

Send your inquiries to cloudedtitles@gmail.com

THE DEBT COLLECTION CORNER

A Brief Overview [Really Brief] of What the FDCPA is and How
We Will Be Applying It

After years of helping people file bankruptcy, I learned that people don’t like to open their mail. They are afraid of it. I counseled people who were deeply in debt with bills, or who lost their jobs, or ravaged with illness, with nothing more to lose—even their pride had long ago been taken from them—and they always sheepishly pushed a pile of unopened debt collection letters to me. They were terrified to open their mail. It didn’t matter if they had months to live. It didn’t matter they lost their cars, their homes, their jobs, their identity, their spouse. It certainly didn’t matter that they had been prayed on by a ruthless debt collector, a scam artist, a car dealer who ripped them off. The only thing that mattered was they felt terrible because of their inability to pay their bills.

I did indeed vow revenge. I became bitter, tormented and filled with rage, and spent the next several decades extracting untold sums of settlement monies from a business that was, in my opinion at least, one of the sleaziest of them all. I provided for me family by suing debt collectors and banksters. I was suddenly the new Robin Hood, and the more I learned about this crooked business, the more fun I had.

Several years later, another client walked into my office with a debt collection letter……from the law firm that defaulted me during my darkest hour. Because the letter was computer generated, and appeared to violate Clomon v. Jackson, a case we will discuss in future issues, I figured out I had a class action on my hands. Class actions, however, are big, mean, expensive lawsuits to bring. So I did what every good American did back then: I went through the phone book, and called every lawyer in the yellow pages under the title “Creditors’ Rights.” Little did I know that I was calling the devil himself, as firm after firm hung up on me— they were debt collectors or represented banks themselves.

Not a single Consumer Advocate existed. In fact, the category was not even recognized in the yellow pages.

How did this story end? Did I in fact ever extract the revenge I wanted?

I sure did. But I never got the help from a lawyer in my area. I had to go out of town and was eventually introduced to a very, very small group of attorneys who were emailing with each other about consumer cases. The result today? Our group became one of the largest consumer rights organizations in the country. After years and years of small, well-intentioned attorneys going up against behemoth law firms and getting swatted around, we decided to stick together to level the playing field.

And the pile of unopened mail waited for me.

The first thing I did after telling them how short life is, was to open their mail. Letter by letter, I ripped the envelopes open and deciphered each and every communication, one by one. They always asked me what I was doing. I told them I was analyzing the wording of each letter, to see if it a violated a law known as the FDCPA. Then, I would review other documents regarding car loans to see if the documents violated another law known as the Truth in Lending Act, and Regulation Z. If the house was in foreclosure, I would look at two sets of documents. First, I would look at the closing documents, and review them for POC entries [always a clue for inflated charges], RESPA, fee splitting, HOEPA, Equity Theft and more. Then I would look at the second set of actual foreclosure documents to review them for accuracy, statutory compliance, FDCPA, servicing issues and more.

My customers learned: Opening your mail is step one to retaking control of your financial destiny. You must open your letters to see if your rights have been violated. Lots of consumer laws protect you, the consumer. The problem is, no one ever told you laws are there to protect you, and they certainly never taught you how to fight back. The people most down on their luck found themselves face to face with one of the largest, dirtiest, and most powerful industries in the country.

Where do we start?

In this section, we are going to analyze a few small tidbits about my favorite law of all, the FDCPA.

The FDCPA [Fair Debt Collection Practices Act], found at 15 USC 1692, is a federal law, which means it applies in all fifty states. No matter where you live, it protects you against any abusive or deceptive act by a debt collector.

Through this saga, I learned something: Consumers have no clue what their rights area, and ignorance is a terrible thing. If you don’t know your rights, you can easily fall victim to unscrupulous banks, debt collectors, car dealers and more. They are very apt at taking advantage of people who are down on their luck.

Much, much more to share, and this story will be continued.

What I want you to take away from all this, however, is this advice: You can fight back. Laws, rules and regulations exist which put you, the consumer, in control. You have power against credit card companies, abusive debt collectors, credit reporting agencies, shady car dealers and more.

You don’t know you have power, because you’ve never been told the truth. You have only been sold debt, not rights. What a shame.

… to be continued!

COMING UP ...

ONE PERSON DID OPEN THEIR MAIL …
… AND THEY WON BIG!
“Overshadowing” Examining Conflicting Demand Claims

It does not apply to creditors or banks collecting in their own name. It does apply to banks and creditors if they are pretending to be a third party. Different states interpret laws differently, which is why you always, always, always need a qualified attorney to represent you in court.

The beauty of positive court decisions is that the FDCPA is a strict liability law. A single violation a debt collector makes triggers actual damages, punitive damages [only a thousand bucks, but hey. Actual damages can be higher], and attorney fees and court costs. You can get emotional distress damages as “actual damages” in many jurisdictions. You can be awarded attorney fees [several hundred dollars an hour], and get your court costs reimbursed.

The difficult part of this law is that it reads really, really, simple, but it is, in fact, incredibly complex. It is so complex, even courts struggle with it—and most of the key paramount wins were at the appellate level, because the district court got it wrong. We have obvious violations such as “abusive behavior”. You know, calling someone a name, belittling them, and so on. That is what most people think about when they think of collection agency abuse: Name calling.

The key to this statute lies in the concept of “deceptive” behavior, a much more limitless list of dubious behavior, so infinite in its extraction, it almost needs to be examined on a case by case basis. 15 USC 1692e states: ‘A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section.’

FDCPA Overview (cont’d.)

The key to this statute lies in the concept of “deceptive” behavior, a much more limitless list of dubious behavior, so infinite in its extraction, it almost needs to be examined on a case by case basis. 15 USC 1692e states: ‘A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section.’

What is deception? It takes many forms: Misleading wording, overshadowing, contradictory statements, trap devices and so on. The collection industry is a multi-billion dollar business: It is well-organized, well- financed, and has bags and bags of lawyers and teammates to bounce ideas off it. So “deception” can mean a series of well-designed tricks up the sleeve for the unsuspecting.

Most people get deceived, and don’t even know it.
So here is the bottom line on this initial analysis of the FDCPA: If you read the text of the law, you will shrug your shoulders and say it sounds really obvious. That is where the world makes a mistake. Like so many real world statutes, navigating it is incredibly complex. That is where this newsletter comes in.

We are going to spend the next several months analyzing various key provisions of the law, and using various cases to see how the courts.

As I said, a new case exists for every level of deception you can imagine.

THE POWER 7 FDCPA STARTER CORNER

  1. The FDCPA is a strict liability statute. That means, the debt collector is liable no matter.
  2. It only applies to third party debt collectors, or purchasers of debt. It does not apply to bankand finance companies collecting in their own name.
  3. You are entitled to receive $1,000 in punitive damages, costs, attorney fees, and “actualdamages”, which in many jurisdictions includes emotional distress.
  4. The FDCPA does not preempt other laws. That means, you can sue for the FDCPA and includeother laws such as Emotional Distress and Gross Negligence, to name a few.
  5. The list of violations is endless. Even though the law reads simple, the way it has beeninterpreted is actually very complex.
  6. The entire law is cited as 15 USC 1692. But if you read it and shrug your shoulders, you aremissing the key aspect—court interpretations.
  7. In order to truly understand your rights, you MUST open your mail, answer your phone and soon.

ONE PERSON DID OPEN THEIR MAIL. AND THEY WON BIG

“Overshadowing”
Examining Conflicting Demand Claims

RUSSELLv. EQUIFAX A.R.S, 74 F.3d 30 (2d Cir. 1996)

When Russell v. Equifax came down in 1996, it was groundbreaking. It started an avalanche of five star pro consumer cases, and started to truly define what the FDCPA is capable of doing for people. It all started with one, little innocuous letter, a consumer thought was suspicious, and presented to an attorney who knew the law.

15 USC 1692g mandates that all debt collectors must allow a consumer 30 days to dispute the validity of a debt. The specific language of the law is as follows:

(a) Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing—

(1) the amount of the debt;
(2) the name of the creditor to whom the debt is owed;
(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;
(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and (5) a statement that, upon the consumer’s written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

[Section 5, of course, refers to ‘factoring’ and debt purchasers, which we will discuss in subsequent issues].

Most debt collectors do give consumers the name of the creditor, the account number and the amount owed in the initial communication. This is not usually an issue, unless the initial communication was a phone call, and a written follow up within 5 business days was not complied with. What is the issue in this case are paragraphs 3, 4, and 5. The statement informing consumers of their right to dispute is often referred to as a “Mini Miranda”, or validation notice, and most debt collectors now issue a statement that says something like this (The same statement used in Russell v. Equifax)

“UNLESS YOU NOTIFY US WITHIN 30 DAYS AFTER RECEIVING THIS NOTICE THAT YOU DISPUTE THE VALIDITY OF THE DEBT, OR ANY PORTION THEREOF, WE SHALL ASSUME THIS DEBT IS VALID. IF YOU NOTIFY US IN WRITING WITHIN 30 DAYS AFTER RECEIVING THIS NOTICE:   (1) THAT THIS DEBT OR ANY PORTION THEREOF, IS DISPUTED, OR (2) THAT YOU REQUEST THE NAME AND ADDRESS OF THE ORIGINAL CREDITOR, WE WILL OBTAIN VERIFICATION OF THIS DEBT, A COPY OF ANY JUDGMENT (IF A JUDGMENT IS INVOLVED), OR THE NAME AND ADDRESS OF THE ORIGINAL CREDITOR, IF DIFFERENT FROM THE CURRENT CREDITOR, AND MAIL A COPY AND/OR PROVIDE THE NAME OF THE CREDITOR TO YOU.” RUSSELL v. EQUIFAX A.R.S, 74 F.3d 30 (2d Cir. 1996)

In Russell, this language was on the back of the letter. Placing the “Mini Miranda” on the back of the letter is ok as long as 1) the front of the letter tells you to read the back for ‘important information’, or 2) if it is on the front of the letter, the wording is written in the same font size or larger as the rest of the print, and the demand section of the letter does not overshadow the mini Miranda, i.e., is in bold or caps, while the mini Miranda is not.

The problem facing the attorney debt collector in Russell is that the Mini Miranda “g” notice allowing a 30 day right to dispute the debt was on the back of the letter, and the second demand letter, sent a mere week after the first, stated this:

FURTHER DELAY ON YOUR PART COULD BE COSTLY. AT THIS POINT ONLY YOUR ACTION WILL DETERMINE FUTURE HANDLING. WE URGE YOUR COOPERATION FOR YOUR OWN SAKE. PAYMENT IN FULL WITHIN 5 DAYS IS NOW DEMANDED. WHAT WILL YOUR ANSWER BE? Id.

The issue now facing the Second Circuit Court of Appeals was unique: We have the statutory 30 day right to dispute on our first letter. But the second notice, a mere week later, demanded payment within 5 days. How can the consumer actually take advantage of the thirty day right to dispute the debt, but have to pay within 5 days?

“The consumer was thus presented with two different and conflicting statements. If she believed the message printed on the back of the notice, she would understand, as the Act intends her to, that she had 30 days to decide whether to contest the claim. But, if she believed what was printed on the front of the notice, she would fear that unless she decided not to dispute the claim and to pay it within 10 days, the debt she owed would be “posted” to her credit file.” Id.

The court’s ruling was a win for consumers everywhere:

“A notice is overshadowing or contradictory if it would make the least sophisticated consumer uncertain as to her rights. It is not enough for a debt collection agency simply to include the proper debt validation notice in a mailing to a consumer-Congress intended that such notice be clearly conveyed. See Swanson v. Southern Or. Credit Serv., Inc., 869 F.2d 1222, 1225 (9th Cir.1988) (per curiam). Here the initial February notice failed to convey the validation information effectively. We recognize there are many cunning ways to circumvent § 1692g under cover of technical compliance, see Miller v. Payco-General Am. Credits, Inc., 943 F.2d 482, 485 (4th Cir.1991), but purported compliance with the form of the statute should not be given sanction at the expense of the substance of the Act. Since the language on the front of the notice overshadowed and contradicted the language on the back of the notice, causing the validation notice to be ineffective, the February notice violated § 1692g as a matter of law.” Id.

Russell was groundbreaking when the decision first came down, and never lost its impact. In fact, it lead to numerous subsequent decisions, all focusing on this concept of ‘overshadowing”.

All the hate language debt collectors spew at you have significant consequences. The key here is to understand that. I swear their communications cause something akin to Post Traumatic Stress Disorder. But for the consumer that knows their rights, there’s lots of ways to fight back.

Yes, this same concept of “Overshadowing” applies to foreclosure actions. This will be addressed in the next issue.

THE RUSSELL V. EQUIFAX
TAKEAWAY

  1. Examine the letters, and find the first communication: Does it give the Mini Miranda, advising the consumer 30 days to dispute the debt?
  2. Is the Mini Miranda “overshadowed” by other language? That is, is it buried on the back, with no directions on the front, telling you to look for important information on the reverse side?
  3. Is it in regular print, while the rest is in bold? Is the font smaller?
  4. Was there communication with the consumer prior to the first letter, such as a phone call, that did not have a follow up written communication, informing the consumer of all their account information that was not in the first phone call? Did more than five days pass between the first communication and the first letter?
  5. Now, look at subsequent letters. Does all the account information stay the same or did it change?
  6. Did the name of the creditor change? [If yes, a purchaser of debt known as a factoring company bought the debt]
  7. Examine subsequent letters. Did they arrive within the thirty day “right to dispute” time listed in the Mini Miranda, but demand payment prior to the expiration of the 30 days? Were conflicting time demands to make payment received within thirty days of the initial writing?

Analysis of the Fiasco, Outline for
Defense

A full nine years after the mortgage meltdown, millions of consumers are still fighting to save their homes. I remember writing a well-known financial columnist in 2008 and telling him: “You are about to witness the largest transfer of wealth in American history, as banks steal people’s homes.” I was shocked when I found an email back from him: “I agree”.

Countrywide Home Loans may very well be one of the biggest offenders of consumer rights, in my opinion. Bank of America stepped into their shoes when they purchased huge amounts of the fraudulent loans, and that portfolio still seems to be the sticking point to this day (See below).

The defenses here are numerous, but the courts don’t seem to care. I have been to dozens of foreclosure conferences where the court asked, “Did she save the money she should be paying?” The courts seem to be part of the “Drain the Swamp” mentality we need to embrace. Some are good. Some are bad. But so many judges just don’t care about the people who elect them. It’s the dreaded ‘did she pay her bills” mentality.

Thousands and thousands of cases have since been litigated, and we will examine the key ones and updates in the issues that follow.
Most importantly? I have one defense up my sleeve…..and have never-ever heard it mentioned in a single court proceeding. That will be forthcoming, as well. With that in mind, and to pave the way for the future, let’s get a grasp on the defenses and where they arise.

(…continued below!)

SEVEN DEBT COLLECTOR POWER POINTS TO PUT YOU IN CONTROL

Debt collectors use “fake names” called desk names. In reality, when one calls you and introduces themselves as “Mrs. Smith”, you have no idea who you are really talking to.

Even demand letters are signed by an alias. Say, for example, you receive a letter from “Mr. John”. When you call and ask for Mr. John, the name “John” gets you to the right department: The late department, the 30 day department, 60 day department, charge off department, etc.

We tend to feel subservient to debt collectors because of the “power over” concept. We are made to feel terrible because we owe the money. In fact, the one that actually owes the money has the power.

When they start with, “Hi, is this Jane?” Do NOT feel obligated to answer. You have a complete stranger calling you, not using their own real name, trying to pry personal information out of you.

Debt collectors will also ask “Are you still living at–?”. “Are you still working at–?” “Is there another number I can reach you at?” Give them nothing. They will say, “I am just trying to confirm I have the right person”, or, “I am just trying to make sure our information is correct”. They are trying to figure out the chances of collecting if they sue you.

Always keep a diary of calls. Who you spoke to, where they are calling from, what they are calling about, and how often they call you. A diary is a must.

Assume the collector is using a Trap Device—what you know as Caller ID. If you call them, your number will be trapped.

There is nothing illegal about caller id, but it is tricky, especially the way debt collectors use extensions. For example, dial ext “343” (after you dial the 800 #). “343” may be the extension used just for you. When you call in and dial “343”, they know “343” is you, because it was the extension set up just for you. The collector now confirmed your correct address and phone number, because you received the letter with the extension only you had been provided.

Enter HAMP

The Home Affordable Modification Program (HAMP) was passed as law in 2009, to help people save their homes. Banks were paid billions to participate. In my opinion, the program was wonderful on its surface: Banks could write down huge sums of money, modify loans, and we could put the fiasco behind us. [Mind you, the “Note and Mortgage” under the modified loans would also be reunited, thereby making moot many of the legal defenses that existed, especially those under the UCC.]

The HAMP hearings have been a disaster. People attend these hearings for several years, submitting and resubmitting the same documents, over and over and over again. Every time we got to court, we were told something didn’t arrive. ‘We didn’t get this’. ‘We didn’t get that’. ‘We need updated this’. Hearings on individual cases went on for years, as consumers sat with piles of copies and return receipts to prove they provided every document requested of them.

We have come to find out (read below), it is alleged that at least one bank, Bank of America—who took over that Countrywide Portfolio—may have intentionally wrongly denied receiving documents and kept dragging the HAMP modification process along. In short, what we all suspected to have happened, actually did: Forms were willfully misplaced, the law suit says, because banks make more money on defaulted loans than they do on modifying them. All those late fees and interest keep adding up, and the banksters make a whole lot more than simply reinstating you. At this time, this is opinion—as Discovery proceeds, we will find out what actually occurred. On the following page is one seriously interesting case we need to keep an eye on:

Mortgage Corner (continued) …

When the mortgages were written, they were immediately transferred to various trusts. Here, the Notes went one way, the mortgage went the other. The Notes then got “bundled” in a process known as securitization, and ended up in Wall Street investment trusts.

Those trusts are all listed on the web site for the Securities Exchange Commission, as are the opening date and the closing date, and other supporting trust documents.

With that brief analysis in mind, here is a timeframe of the transaction, and which defenses apply at which stage:

1. You sign the mortgage papers, and your mortgage gets approved. You sign a whole stack of paper work. You got the house appraised and inspected, and your mortgage broker that helped you get the mortgage was paid.

Initial Defenses

Inflated appraisal
RESPA violation (inflated fees)
HOEPA violation (high risk loan)
Illegal fee splitting (more RESPA)
Illegal points to Mortgage Broker (more RESPA)
Improper Fees on Truth in Lending Form (TIL and UDAP violation)

2. As soon as you left the table, your loan documents were sent to a representative at the mortgage office and were assigned to a trust or to another party until the loan ended up in the trust. Each of these “assignments” were most likely forged along the way by what we now know as a “robosignor”.

(…continued below!)

10th Circuit Court of Appeals Allows RICO Action Against Bank of America to Proceed on Grounds it Mislead Homeowners on HAMP Modifications

RICO, the Racketeer Influenced Corrupt Organizations Act, initially was used mostly to bring down organized crime. In groundbreaking litigation, it has now been applied against Bank of America and its mortgage modification process. The law makes it illegal to use an “enterprise” to illegally obtain money. RICO too is immensely complicated, but the beauty is it provides for “triple damages”, and allows someone to sue for “dishonest services”, which is extremely open ended (This “open services” aspect has been used with mixed success to bag corrupt politicians).

The Tenth Circuit has now allowed RICO to be used against Bank of America and the HAMP modification process. If you have a loan serviced by Bank of America and have been trying to get it modified, this case is huge.

Anyone who ever tried to modify a mortgage under HAMP that was in default knows what a nightmarish procedure it is. In court again and again, every sixty days, and just when you think you submitted the paperwork for the thirtieth—and hopefully last time —the modification lawyer asks you to start the entire process over again. “They didn’t receive this paper,” they say, even though you have photocopies and the return receipt from the post office. “The time expired,” they say.

On and on. Then, you need to make your three sample payments and end up getting denied anyway.
Hagens Berman, one of the leading class action firms in the nation (who also lead the class litigation against Volkswagen for Dieselgate), filed suit against Bank of America for just such processes.

(…continued below!)

Mortgage Corner (continued) …

Defenses

MERS
Uniform Commercial Code – did separating the Note and Mortgage nullify the obligation under the Uniform Commercial Code?
Trusts – did the Trust act in accordance with its powers as proscribed by its own powers, in both accepting the note and reassigning it for collection?
UPDAP (Deceptive Acts and Practices) – Did a deceptive practice occur?
Fraud – robosignors committed a fraud in front of fake notaries.

3. When you defaulted on the loan (or were intentionally defaulted through sloppy servicing), the “Trust” that your loan was in, or Fannie Mae and Freddie Mac, transferred the loan to a foreclosure law firm, and a foreclosure was commenced.

Defenses

“Produce the Note” – I have a copy of the Note—where is the original?
Trust – Was the trust still open at the time it assigned the foreclosure?
Servicing issues – was my mortgage properly serviced?
FDCPA – did any servicer or law firm comply with the FDCPA?

Literally thousands of cases were litigated around the country, examining each and every one of these decisions—but how many have been successful? Don’t forget: It may be fraud to you, but it’s not fraud in the eyes of the law until a court says it is. Nonetheless, you use every single argument you have to try and negotiate the best deal you can.

RICO Against Bank of America (cont’d.)

From the Hagens Berman website:

“The Tenth Circuit’s decision followed other circuits in holding that the HAMP trial-plan offers contain enforceable promises to the bank’s customers, and upheld plaintiffs’ claims of racketeering, stating: “Because the plaintiffs sufficiently allege the existence of a RICO association-in-fact enterprise distinct from BOA, Urban [Lending Solution]’s participation in the conduct of that enterprise, and that both defendants engaged in a pattern of racketeering activity, we reverse the district court’s dismissal of the plaintiffs’ RICO claim and remand for further proceedings.”

“We are more than pleased the court has ruled our complaint has sufficiently alleged that Bank of America’s massive HAMP mortgage-modification program was in fact a RICO enterprise,” said Steve Berman, managing partner of Hagens Berman. “For years, we have tirelessly fought this major Wall Street kingpin to right the wrongs it committed against hundreds of thousands of homeowners and taxpayers who footed the $45 billion government bailout BoA took in, only to have it used to propagate a scheme to squeeze every dollar from BoA customers and wrongfully foreclose thousands of homes in the process.”

“The complaint states that Bank of America repeatedly lied to homeowners and masterminded a scheme to systematically fail to grant loan modifications in a deliberate and coordinated plan orchestrated by the bank. The lawsuit alleges that while BofA promised it would work with homeowners to modify their mortgages under the HAMP program in return for the bailout funds, the bank instead fought to avoid granting modifications. Former employees, according to the complaint, have confirmed that Bank of America instructed its employees to delay modifications, assert that it had not received paperwork and payments when it had received them, and declined modifications en masse in periods known internally as “blitzes.”

Cite as: https://www.hbsslaw.com/cases/ bank-of-america-rico/pressrelease/bank- of-america-rico-appeals-court-reverses-rico-fraud-class-action-against-bank-of-america-allowing-homeowners-lawsuit-to-proceed

(…continued at right:)

The full decision, in George v. Urban Settlement Services et al, 833, F. 3rd 1242, can be found here:

http://law.justia.com/cases/federal/appellate-courts/ca10/14-1427/14-1427-2016-08-15.html

We assume it will be years before this case winds its way through courts and appeals. In the meantime, this decision is exactly what millions of homeowners always wanted: Someone to finally listen to them.

Stay tuned for updates.

Got your copy yet?

Get it HERE

??????????????????? QUESTION CORNER ???????????????????

RE: ObamaCare

Q.: Honestly, Obamacare—What is so terrible about it? If it weren’t for Obamacare, my husband and I would never have insurance.

I personally think Obamacare has a lot to offer. Millions of people now have health insurance who didn’t, and preexisting conditions now get covered. People were getting diagnosed with terrible illnesses, and then unable to get insurance. I thought the half-assed program put together by the Republicans was simply ridiculous. Americans sat back and said, “Here we go—we’re getting screwed again.”

But there’s two sides to every story. I have a friend who is married with two kids. Before Obamacare, he paid $400 a month for insurance, and had a deductible of $500.

After Obamacare, he has a premium of $1,200 a month, and a deductible of $6,000. Since his kids are little and always at the doctor, the $6,000 deductible is a given. In short, thanks to Obamacare, he now pays over $20,000 a year for health insurance—an amount not taken into play when he bought his house. He is functionally broke.

Every doctor I have spoken to also hates it. And insurance companies are pulling out in many markets, leaving consumers no choice in health care.

Sadly, Obamacare is over 100,000 pages, and none of us—including both those who support it and oppose it—probably ever read it. Ditto the new Republican plan that was just withdrawn: None of us were told what it does, what it doesn’t do.

There must be a fair and balanced alternative out there, and the devil is hidden in the details. I feel we may never truly understand what those details are, and which big businesses inserted them. But stay tuned, because despite a huge success with many people, I do understand why others are bankrupted by it.

RE: “Driving Upside Down”

Q. I want a new car. Mine is old, and I owe more money on it than its worth. I heard an ad on the radio that the dealer will pay off whatever I owe. Should I go for it?

I confess, I am a car fanatic. I love them. All of them. I also confess, however, that cars are the number one financial mistake people make, because they depreciate so quickly.

As soon as you drive a new car off the lot, you lose thousands of dollars. The alternative is to drive around in an old car that is rusty and outdated, but the depreciation is gone and you can probably pay cash for it. Being the car lover I am, the second alternative was never really an option. I do always buy used, just newer used.

When you owe more on the car than it’s worth, you are driving “upside down.” This can be an issue. If your car is worth $10,000, and you owe $15,000, then you are “upside down” to the tune of $5,000 dollars. If the car ever gets totaled in an accident, the insurance company will only pay you $10,000. You are still responsible for the remaining $5,000 (This also happens in lease cases, by the way. If a lease gets repossessed, they still sell the car at auction and chase you for the remainder as if you purchased it.)

When you trade a car in for a newer car, and wrap the old “under water amount” in the new car loan, you just made your problems worse. If the new car had a purchase price of $20,000, you initially owe $25,000 with the old loan rolled into it. When you drive the new car off the lot, the value will decrease immediately to about $15,000, but you still owe the $25,000. You went from being underwater $5,000, to underwater $10,000. This is not an advantageous position to be in.

Your better alternative, if you can, is to drive your current car into the ground. If there is absolutely no way you can do this because of the mechanical condition, proceed with care. Used car prices are at a premium, because no one can afford the price of a new car. Still, deals are out there. Look for something priced less than book value, with room to absorb your negative equity.

I am not a fan of leasing—people always go over the allotted mileage—but if you think your financial position will improve, anything is always worth the shot, depending on the deal you cut. Always, remember, though, that with negative equity hanging out there, you will have to pay the piper some day, and if you keep pushing it down the road, bankruptcy may eventually be your only option.

RE: Student Loans and Disability
(The Taxation of Canceled Debt)

Q. I have been recently declared disabled due to a disability. I have student loans galore. What are my options?

I am very sorry to hear about your disability, and I hope things end up ok for you.

Of all the debts and financial problems we will discuss in The Rich Report, student loans are the worse. They are the debt that never goes away and can follow you to the grave. How bad are they? I do not have any college age kids, but if I did, I would never let them go to college if it meant they needed to take out a student loan.

There are income based repayment plans and income contingent repayment plans, but other than those, these loans will haunt you forever. If we all stop sending our kids to college so that a financial catastrophe effects universities, maybe then, and only then, will laws about student loan debt disappear. You can’t even get rid of them in bankruptcy, unless strict financial rules apply.

That aside, disability can cancel your obligation—100%…..but with a catch: The amount canceled is taxable. So, you get rid of the student loan, but inherit a new problem with the IRS.

Hope is around the corner in the form of a bill known as S. 2800 (114th): Stop Taxing Death and Disability Act. It has not passed yet, but I expect it to. When the bill passes, student loan debt canceled due to disability will no longer be taxable.

In the meantime, call your student loan provider and see if you qualify for an income based repayment plan. Your repayment may be $0.00 from here on in depending on your circumstances, and can hold your credit repair in order until the above bill passes.

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DISCLAIMER: The information contained herein is for educational purposes only. At no time ever is the information in this newsletter or any other communication, including questions and answers, meant to be construed as legal advice, nor is it meant to imply there is an attorney client privilege. The case law cited varies from State to State. No information is ever better than a consultation with an attorney qualified to practice law in your home State.