January 17, 2014

Maryland Foreclosures: Here We Go Again!

Dollar signs coming from chimney.jpgAlthough foreclosure rates around the country are decreasing, there has been a significant spike in the rate of foreclosures being filed in Maryland. After speaking with Baltimore City's Foreclosure Auditor, James Wiggins, since December 26, 2013, an approximate 4,000 foreclosure cases have been filed in the Baltimore City jurisdiction alone - that accounts for more cases filed in Baltimore City than were filed for all of 2013! Wiggins expects that, at a minimum, an additional 5,000 foreclosure cases will be filed in Baltimore City this coming year in 2014. Although the numbers seem high, when taken into consideration that there has been an almost negligible foreclosure caseload in the city over the past several years, the uptick in filings doesn't surprise anyone who has been monitoring this situation.

In the wake of the "Robo-Signing" scandal that rocked the nation and also hit close to home, affecting lawyers at several well-known foreclosure law firms in Maryland, the fear that documents being filed in foreclosure cases are not 100% pristine has forced lenders and their lawyers to be more cautious with what is being filed and had significantly slowed the foreclosure filing numbers. Since Maryland enacted its tougher, document and notice intensive foreclosure process, the foreclosure filings over the past several years in many parts of Maryland had come to an abrupt halt. Bank attorneys blame the halt on an uneasiness with what exactly Maryland law demands. As such, a "touch and go" philosophy has arisen, whereby bank attorneys have become more judicial and have provided more scrutiny to the documents that they are filing in these foreclosure cases.

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November 18, 2013

Maryland, Nationwide Bankruptcy Filings Drop

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The latest numbers for bankruptcy filings show a decline in the number of people taking advantage of the protection under bankruptcy laws to reorganize and liquidate debt. Bankruptcy filings are down 12 percent in Fiscal Year 2013 from Fiscal Year 2012 figures, according to statistics available from the Administrative Office of the U.S. Courts. Nationwide, FY 2012 bankruptcy cases came in at 1,261,140 while FY 2013 bankruptcy filings came in at 1,107,699. In Maryland, the drop in foreclosures is even larger, coming in at 15 percent, according to Belsky, Weinberg & Horowitz bankruptcy attorney, Tony Aquia.

The fiscal year ended September 30, 2013.

But, the downward trend in bankruptcy filings could soon see a reversal. The robo-signing crisis caused many lenders to stop foreclosing. "We believe that bankruptcies will increase as lenders are beginning to ramp up foreclosures," Aquia said.

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July 15, 2013

Mortgage Modification Lawsuit Headed Back to State Court

Dollar signs coming from chimney.jpgA lawsuit alleging that two nationwide lenders violated Maryland law during a families' attempt to obtain a loan modification is headed back to state court. Brett Kelly and Patricia Borden Kelly were successful in fighting off Bank of America (BOA) and Wells Fargo's attempt to put the case in a federal forum.

The Kellys purchased their home in New Market, Maryland in March 2005 for $450,000. They took out two mortgage loans - one for $360,000 and a second for $90,000 - with NFM, Inc. (dba National Fidelity Mortgage Corporation), which funded the mortgages on behalf of WMC Mortgage Corporation (WMC), a mortgage banking company in California. BOA acquired servicing rights on July 1, 2011 and currently services the first mortgage on behalf of WMC.

The Kellys contacted BOA in September 2011 for a loan modification so as to prevent a default. They submitted an application on December 12, 2011, but BOA did not acknowledge receiving it. But, on Feb. 2, 2012, the Kellys received an offer from BOA inviting them to apply for a loan modification and they took advantage of that offer. A BOA employee requested additional documents as part of the application, which the Kellys sent on March 3, 2012. On March 12, 2012, BOA sent the Kellys and the Maryland Department of Labor, Licensing, and Regulation a Notice of Intent (NOI) to foreclose identifying Wells Fargo as the secured party of the Kellys' first mortgage. The NOI indicated BOA believed the Kellys were in default on the first mortgage loan. BOA sent the Kellys a second NOI on April 2, 2012, indicating that the Kellys had defaulted on their first mortgage loan. For the next several months, the Kellys submitted requests and paperwork for a loan modification that BOA claimed not to have received. In May, the Kellys received three letters from BOA saying they were not eligible for a loan modification because they had not provided the requested documents.

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June 21, 2013

Delay in Requesting Arbitration By Contract Assignee Was Not A Waiver

Car with down red arrow.jpgA Maryland woman's claim that she returned a used car to a Rockville, Md. car dealership because the vehicle was defective is headed to arbitration. Antonia Rota-McLarty purchased an automobile from Eastern Automotive Group in the summer of 2007. She returned the car without having made a payment on the loan. Santander Consumer USA (Santander) sought collection of the outstanding debt after repossessing the vehicle and selling it at a loss.

Rota-McLarty filed a class action lawsuit against Santander in March 2010, alleging violations of various Maryland consumer protection laws for undisclosed finance charges and other unfair business practices. Santander is the successor by mergers to Drive Financial Services (Drive). Rota-McLarty originally sued Drive. While finding that an enforceable arbitration agreement existed, the United States District Court for the District of Maryland also concluded that Santander had waived its right to enforce arbitration by its delay in making the request. Santander waited about six months before seeking arbitration because of uncertainty over how the U.S. Supreme Court would rule in a case on class arbitration that was before that court.

Mandatory arbitration clauses are becoming more and more common. Consumer-oriented attorneys prefer the option to litigate a matter when something goes wrong. Corporate attorneys prefer to keep things in arbitration. Unfortunately, many consumers and job seekers are finding that, as a condition to purchasing a product or obtaining employment, they have waived their right to a jury of their peers if things go wrong.

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May 28, 2013

Debt Collector Successfully Argues that Wrong Address was a Mistake

Business Reply Mail.jpgA debt collector that once saw thousands of cases thrown out of the Maryland court system for not being licensed by the state was successful recently in fending off charges when it used the address of the parent company that wasn't licensed in the Free State to sue Maryland residents. The United States District Court for the District of Maryland dismissed a lawsuit brought against Midland Funding, ruling that the plaintiffs had failed to state a plausible claim for recovery under the legal theories they used.

Suzanne Hill, et al. v. Midland Funding, LLC et al. is a class action brought against Midland Funding and its attorneys, Lyons Doughty, Veldius, P.C., alleging violations of the Fair Debt Collection Practices Act (FDCPA), the Maryland Consumer Debt Collection Act (MCDCA) and the Maryland Consumer Protection Act (MCPA).

According to the complaint, each of the three plaintiffs was sued once or twice by Midland to collect unpaid credit card debt that the debt collector had purchased from Chase. The plaintiffs alleged that Midland had violated the law in two ways.

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May 1, 2013

Consumer Protection Bills Passed By the General Assembly

Maryland State House.jpgDozens of consumer protection bills were introduced in this year's session of the General Assembly. Many died without a final vote; but, a few made it into law. These are the bills that will become law:

House Bill 88/Senate Bill 199 deals with mortgage refinances. If the refinanced mortgage meets certain conditions, the bill grants the same lien priority to the refinance mortgage upon recordation as the replaced first mortgage or deed of trust and requires the refinance mortgage to contain a specified notice. The bill authorizes a mortgagor or grantor to refinance the full amount of the unpaid indebtedness secured by a first mortgage or deed of trust on residential property for a lower interest rate than provided for in the evidence of indebtedness secured by the first mortgage or deed of trust without the permission of the holder of a junior lien if (1) the principal amount secured by the junior lien does not exceed $150,000 and (2) the principal amount secured by the refinance mortgage does not exceed the unpaid outstanding principal balance of the first mortgage or deed of trust plus $5,000. The bill takes effect Oct. 1.

House Bill 291 is the "Maryland Mortgage Assistance Relief Services Act." It establishes that a mortgage assistance relief service provider providing mortgage assistance relief in connection with a dwelling in the state that does not comply with certain provisions of federal law is in violation of the Act. It also authorizes the Attorney General or the Commissioner of Financial Regulation to seek an injunction to prohibit a violation of the Act and authorizes the Commissioner to enforce the Act by exercising specified powers and requiring a violator to take specified affirmative action. The law takes effect on July 1.

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April 22, 2013

Baltimore Debt Collector Successfully Uses Mistake as A Legal Defense

Checkbook and statement.jpgSometimes, even debt collectors claim mistakes were made. In a recent court case, a Baltimore-based debt collector successfully used the "bona fide error" defense when it was sued for trying to collect a debt from a man who said he did not owe the money. The case arose from the efforts of Thieblot Ryan P.A., a Baltimore law firm, to collect a debt allegedly owed to Bank of America by Alexander Young in connection with his allegedly overdrawn checking account.

Young filed a lawsuit against the firm in the United States District Court for the District of Maryland under the Fair Debt Collection Practices Act (FDCPA) in June 2011. Young said the Baltimore-based debt collector falsely represented the amount, character and status of the alleged debt in a collection letter and the lawsuit it filed to collect the funds. Thieblot Ryan claimed that Young owed $3,936.48 in the papers it filed in the District Court of Maryland for Baltimore City.

The debt collector moved for summary judgment, arguing that Young's claims were barred by the FDCPA's statute of limitations, which provides that claims must be brought within one year of the date on which the violation occurs. Thieblot Ryan also claimed that it was protected by the 'bona fide error" defense under the FDCPA. A debt collector may not be held liable under the FDCPA if the debt collector shows that the violation was not intentional and resulted from a bona fide - genuine -- error.

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April 4, 2013

Homeowners' Lawsuit Over Failed Mortgage Modification Dismissed by Trial Court

House on seesaw with dollar sign.jpgHomeowners facing foreclosure often seek a mortgage modification, while the popular loan restructuring programs can be useful, there can also be difficulties. Maryland's federal trial court recently dismissed the lawsuit brought by a couple that sued their bank after their attempt to modify their mortgage fell through.

In an attempt to stave off foreclosure, Robert and Shirley Goss sought a loan modification with their bank under the federal government's HAMP program. The Gosses had financed their Pasadena, Md. home with a mortgage serviced by the Bank of America that was recorded in 2007. They fell behind on their mortgage in December 2010 because of unemployment and other circumstances.

The homeowners received a letter from the bank in June 2011 that said their account had been referred to the "Home Retention Division" and that a workout counselor had been assigned to their account to assist them in being reviewed for the program and other workout options. The Gosses submitted an application directly to HAMP on May 14, 2012 and calculated that their modified monthly mortgage payment would be $1,653. However, according to a letter they received from the bank, their request for a loan modification was approved, but the suggested modified payment was $2,634.67 -- an amount that was nearly the same as their regular mortgage payment. The Gosses rejected the modified mortgage payment because it would not have improved their circumstances. And, in what some might say was insult added to injury, the homeowners said they received a letter from the bank several days later stating that the workout assistance they requested was not an option.

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March 27, 2013

National Banks Assigned Car Loans in Maryland Must Abide by State Law

Car icon with up arrow and dollar sign green background.jpgNational banks that take over automobile loans in Maryland will have to follow a state law that requires the bank to cancel the remainder of the loan if the car is totaled and debt cancellation insurance has been purchased. One of the nation's biggest lenders had challenged the state law arguing that, because it is a national bank, it did not have to follow state law.

The ruling by the federal appellate court stemmed from the purchase of a used Chrysler Pacifica in 2007. Philip Decohen financed the transaction with a loan from a Maryland car dealer. The amount financed included a charge for $600 for a "debt cancellation agreement." Under the Maryland Credit Grantor Closed End Provisions (CLEC), such an agreement requires a lender to cancel the remaining loan balance when a car is totaled and the insurance payout does not cover the entire outstanding balance. Decohen's car was totaled in 2010. The insurance company paid all but $1,504 on the vehicle. Capital One, assigned the loan by the dealership, demanded payment of the remaining loan balance.

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March 15, 2013

Consumer Protection Bills Under Consideration by Maryland's General Assembly

State House, Plaque in front of building.jpgAdditional disclosure requirements for debt collectors, expanding the definition of consumer under the Maryland Consumer Protection Act and second mortgage loans maintaining a subordinate position without the need to seek the permission of the loan's holder are some of the consumer protection bills being considered by Maryland state lawmakers.

Senate Bill 432 requires debt collectors to make the following written disclosures in any communication with a debtor relating to an alleged debt: (1) the total amount of the debt; (2) the portion of the debt that is principal, as defined by the bill; (3) the portion of the debt that is interest; and (4) any fees that have been added to the debt total. This is the first time that this bill has been introduced. There is a companion bill in the House -- HB 1157.

The Maryland Consumer Debt Collection Act (MCDCA) contains many prohibitions against actions and disclosures by debt collection agencies. Debt collectors that violate the MCDCA can be liable for any damages caused by violations, including damages for emotional distress or mental anguish suffered with or without physical injury.

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March 8, 2013

Lawsuit Against Debt Collector Dismissed for Lack of Specific Statements

business man with horns.jpgA Maryland woman who took a debt collector to court was unsuccessful in her claim that she was harassed - a violation of debt collecting laws. Priscilla Quander's lawsuit claiming violations of the Fair Debt Collections Practices Act (FDCPA) was dismissed by a federal trial court.

Quander allegedly incurred a $1,200 debt provided by Platinum Protection. Quander said she only discovered the debt when she checked her credit report in May 2012. Hillcrest, Davidson and Associates LLC became involved with collecting the debt. She said she then contacted Hillcrest in an attempt to resolve the issue but claimed that she was not able to reach an amicable resolution. As a result, Quander said, Hillcrest employees called her up to two times a day to collect on the debt. She said they used "bullying tactics" and accused her of being "lazy" and of failing to pay her bills. She also claimed that she was falsely accused of attempting to evade collection efforts by repeatedly changing her telephone number and was warned that she would be called twice a day until the debt was paid. Quander told the court that she had had the same number for the past 10 years. She said the calls caused her to feel "oppressed, frustrated and scared." Quander said that when she asked to speak to a supervisor about the matter, the supervisor claimed that the line connection was "cutting out" in order to avoid speaking with her.

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February 21, 2013

Appellate Court Refuses to Overturn $200,000 Judgment Against Mortgage Servicer

Arrow leaning against house.jpgMaryland's Court of Special Appeals has let stand a $203,301 default judgment against a mortgage servicer over allegations that it did not comply with the terms of an agreement made with a homeowner in 2009.

Fred Nefflen refinanced his $134,036 mortgage in 1997 with Silver Financial Mortgage Group. Bank One assigned the servicing rights to Nefflen's mortgage loan to Franklin Credit Management Corporation in 2004. Before the assignment to Franklin, Nefflen had modified his loan with Bank one, which resulted in a monthly payment of $1,059 effective May 2003. When Franklin began servicing the loan, it claimed that Nefflen's payment was $1,385. After 10 months of correspondence between Nefflen and Franklin, Franklin sent a letter confirming that the monthly amount due on the loan was the amount agreed to in the loan modification. However, Franklin continued to send statements asserting that Nefflen's loan account was overdue and it reported to credit agencies that Nefflen was delinquent in his payments.

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February 19, 2013

Woman's Lawsuit Against Credit Reporting Agency Gets Second Chance

Credit cards gold, platinum, AmEx.jpgA federal trial court has granted a Maryland woman a second chance to file her lawsuit against a credit reporting agency. The United States District Court for the District of Maryland dismissed Chevera D. Brown's claims but also gave her permission to file a second amended complaint against Experian Credit Reporting.

In a civil action, the complaint is the first pleading. It details the allegations being made in the lawsuit. An amended complaint or pleading is one where information has been added or subtracted. The first time a complaint is changed, it is called a "First Amended Complaint," the second time a complaint is changed, it is called a "Second Amended Complaint."

Brown filed suit against Experian in Maryland state court in 2012. She said the credit reporting agency "had persistently reported derogatory and inaccurate statements and information relating to [her] credit history to third parties." Brown alleged violations of the Fair Credit Reporting Act (FCRA), defamation, negligence and invasion of privacy. Brown said Experian failed to correct the problems in spite of her attempts to bring the inaccuracies to Experian's attention. Experian had the case moved to the federal court system. Then, the credit reporting agency asked that the case be dismissed for insufficient service of process, lack of personal jurisdiction and for failure to state a claim upon which relief could be granted.

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February 15, 2013

Counterclaims Don't Count in Determining Amount in Controversy

100 dollar bills in diagonal rows.jpgThe amount of money at stake in a court case helps to determine which court has jurisdiction over a matter. But, what happens, when the amount being fought over balloons after the parties start suing each other? Maryland's Court of Special Appeals answered that question in McKlveen v. Monika Courts Condominium.

Monika Courts filed a complaint in the District Court of Maryland for Prince George's County in March 2011 against McKlveen, the owner of a Monika Courts Condominium unit. Monika Courts alleged that McKlveen owed unpaid assessments and claimed damages of $3,219 plus interest of $127 and attorney's fees of $724 for a total of $4,070.

McKlveen also filed a complaint - called a counterclaim -- against Monika Courts on June 6. She said Monika Courts failed to credit the payments she had made. She said that Monika Courts' debt collection action violated the Maryland Consumer Protection Act and the Maryland Consumer Debt Collection Act. McKlveen alleged damages of $11,000 and $15,000, respectively. McKlveen also requested a jury trial. The district court then transferred the case to the Circuit Court for Prince George's County.

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February 13, 2013

Notice To Tenant To Vacate Foreclosed Property Was Confusing and Premature

House Avocado Green color with red shutters.jpgWhen foreclosed properties are purchased, many buyers are unaware that tenants have rights under both state and federal law. In a recent court case, Maryland's Court of Appeals scolded a lender for acting too soon to get rid of a tenant.

Under the federal Protecting Tenants at Foreclosure Act (PTFA), a purchaser of a foreclosed residential property must provide advance notice to a tenant if the tenant will be required to vacate the residence. The new owner must provide tenants with a notice that advises the tenant of the right to occupy the residence for the remainder of the lease or, if there is no lease or the lease is terminable at will under state law, the tenant has the right to occupy the property for 90 days. However, the foreclosure must involve a federally-insured mortgage, the foreclosure must take place after the enactment of the PTFA and the tenant must qualify as a "bona fide tenant."

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