As reported in the November 17, 2009, New York Law Journal, "A real estate company defendant in a lawsuit has been sanctioned by a Manhattan judge for its failure to preserve evidence and for persisting in deleting e-mails in spite of the court's repeated warnings to comply with discovery."
What's important in this decision (which is being appealed), is that when the court orders e-mails to be presented in discovery, just going ahead and deleting them - and wiping the hard drive (of server and personal computers alike), is not going to elicit warm regards from the court.
This is a good lesson to everyone involved in litigation. I present below the article which appears in today's Law Journal.
Eighteen months after plaintiffs Harold Einstein and Jennifer Boyd sued the Corcoran Group in connection with the alleged deceptive marketing of a condominium, New York Supreme Court Justice Charles Ramos learned that three of Corcoran's brokers were continuing to delete e-mails from their individual mailboxes.
"[T]he failure to implement any litigation hold, not only after the commencement of litigation, but also after this court's repeated warnings that counsel should 'read [their] client the riot act', was grossly negligent and rises to the level of 'culpable conduct' required for a finding of spoliation" said the judge, in Einstein v. 357 LLC, 604199/07, ruling that Corcoran "willfully misled" the plaintiffs during the sale of the condominium.
Jay B. Itkowitz of Itkowitz & Harwood, who represented the condominium's buyers, called the ruling "groundbreaking."
He said in an interview that the ruling was the first in the state to send the "critical message" that "when you are sued or know you are going to be sued ... you have to take immediate and significant steps to preserve electronic evidence."
Errol Margolin of Margolin & Pierce, who represented the Corcoran defendants, said that he "disagreed completely" with the ruling, which he plans to appeal. Corcoran added in a statement that "we disagree with the discovery ruling and intend to file an appeal at the appropriate time. This case is still in the discovery phase and no decision has yet been made on the merits of the case."
Einstein and Boyd purchased a condominium in June 2007 for $1.3 million.
According to the complaint, Christina Coats, a Corcoran broker, had previously told the couple that the unit in Park Slope, Brooklyn had been taken off of the market because of a water leak, but that the condition had since been repaired.
Shortly after moving in, the buyers "experienced massive" flooding in the unit's recreation room during a period of heavy rain.
After repeated flooding, the plaintiffs retained an expert who advised them that the "water penetration to the recreation room had spawned a mold condition," and that the condominium was unsafe for the couple and their two children.
In December 2007, Einstein and Boyd sued Corcoran, three of its brokers, including Coats, and a number of other defendants in connection with the alleged defective design and deceptive marketing of the unit.
In June 2008, the plaintiffs served Corcoran and the brokers with a document demand.
The Corcoran defendants' lawyers claimed at an October hearing that the defendants had produced all e-mail traffic from the individual brokers, but the defendants later admitted that they had not handed over a relevant e-mail from Adam Paceli, the vice president of Corcoran, to a co-defendant.
On Dec. 10, 2008, Justice Ramos ordered the individual brokers to "produce their respective hard drives to a non-affiliated vendor ... for inspection and deleted file recovery."
But according to plaintiffs, the Corcoran defendants failed to supply them with a list of the devices and in February 2009, the plaintiffs moved to strike defendants' pleadings or compel compliance with discovery.
Corcoran responded with an affidavit from Terence Thomas, director of information technology for Corcoran, who testified that "all Corcoran e-mails, outgoing and incoming, are forwarded to a central server. As e-mails are sent and received, an exact replica of the central server is recorded on the hard drives of agents' individual computers."
The real estate company also turned over two hard drives, despite the fact that their attorneys had previously told the plaintiffs that they had no list of devices with potentially relevant data.
The plaintiffs hired Kroll OnTrack to search the hard drives, and discovered that certain e-mails were missing.
In May 2009, Thomas submitted a second affidavit, in which he said Corcoran had an e-mail deletion policy as a result of limited server space. If an individual deleted an e-mail from a local computer prior to a scheduled month-end backup, the file was not recoverable, Thomas said.
He later testified at a hearing that he had never spoken to the individual brokers about their e-mail deletion policies, did not investigate what types of electronic communication devices they used, and failed to advise anyone that a possibility existed that e-mails relevant to the litigation were being deleted.
'LITIGATION HOLD'
Justice Ramos concluded that the defendants' engaged in spoliation by selectively deleting e-mails and failing to implement a "litigation hold."
While New York case law and the Civil Practice Law and Rules are "silent" on the obligations of parties to implement a litigation hold, Ramos relied on cases from the Southern District of New York in concluding that the "failure to suspend the deletion policy or to investigate the basic ways in which e-mails were stored and deleted constitutes a serious discovery default on the part of the Corcoran Defendants and their counsel rising to the level of gross negligence or willfulness."
The judge also took to task Corcoran's attorneys with Margolin & Pierce for making "numerous" materially false statements, such as representing to the court that all e-mail traffic had been produced.
"This Court repeatedly warned counsel for the Corcoran Defendants that the failure to make a complete production of e-mails caused the Court great concern and needed to be remedied properly. Yet the Plaintiffs, and this Court, only learned about the manual deletion policy in May 2009," Ramos wrote.
By disclosing that fact 18 months into the litigation, the judge said, Corcoran defendants "willfully and unnecessarily caused extensive motion practice and delay without any reasonable justification."
Ramos found that a "reasonable fact-finder" could conclude that "at least some of the deleted e-mails were relevant to this litigation and favorable to the Plaintiffs," including one which suggested that the brokers cancelled an open house because of "heavy rain."
In addition to sanctioning the Corcoran defendants by finding they misled the plaintiffs about a walter infiltration problem, the judge also held that defendants' "contumacious conduct" entitled plaintiffs to attorney fees and costs in connection with reviewing the two hard drives and counsel fees spent in bringing discovery motions and sanctions.
Itkowitz estimated that the plaintiffs were entitled to roughly $100,000 as a result of Ramos' ruling.
All told, the plaintiffs are requesting $5 million plus punitive damages in the litigation.
Tuesday, November 17, 2009
Federal Regulators Issue Final Model Privacy Notice Form Nov 17 2009 Press Release
Eight federal regulatory agencies today released a final model privacy notice form that will make it easier for consumers to understand how financial institutions collect and share information about consumers. Under the Gramm-Leach-Bliley Act (GLB Act), institutions must notify consumers of their information-sharing practices and inform consumers of their right to opt out of certain sharing practices. The model form issued today can be used by financial institutions to comply with these requirements.
The Financial Services Regulatory Relief Act of 2006 amended the GLB Act to require the agencies to propose a succinct and comprehensible model form that allows consumers to easily compare the privacy practices of different financial institutions, and has an easy-to-read font.
The agencies conducted extensive consumer research and testing in developing the model form issued today. Then they solicited public comments and considered those comments in developing a model form that is easier for consumers to understand and use. The final rule provides that a financial institution that chooses to use the model form obtains a "safe harbor" and will satisfy the disclosure requirements for notices. The rule also removes, after a transition period, the sample clauses now included in the appendices of the agencies' privacy rules.
The final model privacy form was developed jointly by the Board of Governors of the Federal Reserve System, Commodity Futures Trading Commission, Federal Deposit Insurance Corporation, Federal Trade Commission, National Credit Union Administration, Office of the Comptroller of the Currency, Office of Thrift Supervision, and Securities and Exchange Commission.
The Financial Services Regulatory Relief Act of 2006 amended the GLB Act to require the agencies to propose a succinct and comprehensible model form that allows consumers to easily compare the privacy practices of different financial institutions, and has an easy-to-read font.
The agencies conducted extensive consumer research and testing in developing the model form issued today. Then they solicited public comments and considered those comments in developing a model form that is easier for consumers to understand and use. The final rule provides that a financial institution that chooses to use the model form obtains a "safe harbor" and will satisfy the disclosure requirements for notices. The rule also removes, after a transition period, the sample clauses now included in the appendices of the agencies' privacy rules.
The final model privacy form was developed jointly by the Board of Governors of the Federal Reserve System, Commodity Futures Trading Commission, Federal Deposit Insurance Corporation, Federal Trade Commission, National Credit Union Administration, Office of the Comptroller of the Currency, Office of Thrift Supervision, and Securities and Exchange Commission.
Thursday, November 12, 2009
Homebuyer tax credit extension and expansion update
On November 6, President Barack Obama signed into law the extension and expansion of the current homebuyer tax credit, an important step in ensuring a real estate and economic recovery.
The measure extends the present $8,000 tax credit program for first-time homebuyers through April 30, 2010.
It expands the program, effective November 7, 2009, to include current homeowners, who are now eligible for an up to $6,500 tax credit (10 percent of the purchase price) through April 30, 2010 provided they have lived in the home they are selling, or have sold, as principal residence for five consecutive years in the past eight years.
If potential homebuyers have a binding contract on or before April 30, they will have until June 30 to close the transaction.
Income limits for eligible homebuyers are expanded to $125,000 for single buyers and $225,000 for couples. The purchase price of the home cannot exceed $800,000. To help guard against fraud, buyers are required to attach documentation of purchase to their tax return.
Click here http://www.realtor.org/fedistrk.nsf/files/government_affairs_tax_credit_ext_chart_110409.pdf/$FILE/government_affairs_tax_credit_ext_chart_110409.pdf for detailed information about the legislation.
The measure extends the present $8,000 tax credit program for first-time homebuyers through April 30, 2010.
It expands the program, effective November 7, 2009, to include current homeowners, who are now eligible for an up to $6,500 tax credit (10 percent of the purchase price) through April 30, 2010 provided they have lived in the home they are selling, or have sold, as principal residence for five consecutive years in the past eight years.
If potential homebuyers have a binding contract on or before April 30, they will have until June 30 to close the transaction.
Income limits for eligible homebuyers are expanded to $125,000 for single buyers and $225,000 for couples. The purchase price of the home cannot exceed $800,000. To help guard against fraud, buyers are required to attach documentation of purchase to their tax return.
Click here http://www.realtor.org/fedistrk.nsf/files/government_affairs_tax_credit_ext_chart_110409.pdf/$FILE/government_affairs_tax_credit_ext_chart_110409.pdf for detailed information about the legislation.
Mortgage Program Gathers Steam After Slow Start - The Wall Street Journal, Wednesday, November 11, 2009
Some excerpts:
"Whether the program will ultimately be judged a success will depend upon how many trial modifications become permanent."
"The administration won't release figures on completed modifcations until December, but so far it appears that very few trial modifications are becoming permanent, often because of lack of documentation."
"'It's a fiasco in the making,' said Alan White, an assistant professor at Valparaiso University in Indiana, citing preliminary information about low numbers of permanent modifications and complaints from attorneys and housing counselors. "The good news is you've gotten all these homeowners in from the cold and on these temporary modifications," Mr White said. "The bad news is we are stumbling in getting all these people ... all the way" to keeping their homes.
"At Morgan Stanley's Saxon Mortgage Services, about 26,000 to 39,000 borrowers in the program have made more than three trial payments. Roughly 500 have received completed modifications." "'It's hard to get the documents in,' said Saxon Chief Executive Anthonly Meola ..."
"The Treasury department last month gave borrowers who have made three trial payments sixty additional days to hand in their paperwork and relaxed some documentation requirements."
"Freddie Mac, the government-controlled mortgage company, recently hired Titanium Solutions Inc. to go door-to-door gathering needed documents. 'Most of our borrowers got into the loan with assistance' and need similar help with the modification process, said Freddie Mac Senior Vice President Ingrid Beckles."
"Susan Cook, a real-estate broker who works as a home-retention consultant for Titanium said borrowers often report that they have sent in their paperwork 'two or three times.' But there is always some little piece that is probably missing.' she said."
"Whether the program will ultimately be judged a success will depend upon how many trial modifications become permanent."
"The administration won't release figures on completed modifcations until December, but so far it appears that very few trial modifications are becoming permanent, often because of lack of documentation."
"'It's a fiasco in the making,' said Alan White, an assistant professor at Valparaiso University in Indiana, citing preliminary information about low numbers of permanent modifications and complaints from attorneys and housing counselors. "The good news is you've gotten all these homeowners in from the cold and on these temporary modifications," Mr White said. "The bad news is we are stumbling in getting all these people ... all the way" to keeping their homes.
"At Morgan Stanley's Saxon Mortgage Services, about 26,000 to 39,000 borrowers in the program have made more than three trial payments. Roughly 500 have received completed modifications." "'It's hard to get the documents in,' said Saxon Chief Executive Anthonly Meola ..."
"The Treasury department last month gave borrowers who have made three trial payments sixty additional days to hand in their paperwork and relaxed some documentation requirements."
"Freddie Mac, the government-controlled mortgage company, recently hired Titanium Solutions Inc. to go door-to-door gathering needed documents. 'Most of our borrowers got into the loan with assistance' and need similar help with the modification process, said Freddie Mac Senior Vice President Ingrid Beckles."
"Susan Cook, a real-estate broker who works as a home-retention consultant for Titanium said borrowers often report that they have sent in their paperwork 'two or three times.' But there is always some little piece that is probably missing.' she said."
Thursday, November 5, 2009
UPDATE: The Proposed Homebuyers Tax Credit Legislation
What it is in a nutshell:
The legislation extends the availability of the tax credit to purchases made before May 1, 2010. Prospective purchasers with binding contracts in place as of April 30, 2010 will be allowed an additional 60 days to complete the transaction.
The credit will remain $8,000 for first-time buyers, while repeat buyers who purchase between December 1, 2009 and May 1, 2010 will be eligible for a credit of $6,500.
Repeat buyers must have lived in their homes consecutively for 5 of the previous 8 years. Income limits are expanded to $125,000 on a single return and $225,000 on a joint return.
Please keep in mind the income restrictions. That is a puzzle piece I find most people are not aware of.
Here's a recent Associated Press news article: http://www.google.com/hostednews/ap/article/ALeqM5hJJraNRE6DjWj2orF7SYJ12PADEAD9BPFFR01
The legislation extends the availability of the tax credit to purchases made before May 1, 2010. Prospective purchasers with binding contracts in place as of April 30, 2010 will be allowed an additional 60 days to complete the transaction.
The credit will remain $8,000 for first-time buyers, while repeat buyers who purchase between December 1, 2009 and May 1, 2010 will be eligible for a credit of $6,500.
Repeat buyers must have lived in their homes consecutively for 5 of the previous 8 years. Income limits are expanded to $125,000 on a single return and $225,000 on a joint return.
Please keep in mind the income restrictions. That is a puzzle piece I find most people are not aware of.
Here's a recent Associated Press news article: http://www.google.com/hostednews/ap/article/ALeqM5hJJraNRE6DjWj2orF7SYJ12PADEAD9BPFFR01
Monday, October 26, 2009
What's with the pricing?
This week the Cororan Group released their current sales report. Their figures report an overall decline in all contracted sales of 35% since February 2008 -- it does give one "pause". Also during the last six months, only about 3% of all deals were "at" or above the asking price. In other words, deals are being done with negotiation and the asking price is rarely the contract of sale price anymore. Let those prices simply be a guideline.
This is a time where astute research will pay off for the buyer. Be aware of "like kind" properties in comparing what is being sold because there is a difference between a cooperative and a condominium sale to state the obvious. Ask your broker to present you with the hard facts and not suppositions. All brokers have access to the same information and it is all to work for the public good.
Personally I am not in support of the $8,000 tax rebate for first time buyers. I believe there has been more than enough incentive to get people out of their rental "digs" and into their first homes. I believe we need to focus on helping middle income earners who are small business owners or independent contractors who are all fighting for their financial lives right now. I'd love to hear what you have to say about it.
Thank you.
This is a time where astute research will pay off for the buyer. Be aware of "like kind" properties in comparing what is being sold because there is a difference between a cooperative and a condominium sale to state the obvious. Ask your broker to present you with the hard facts and not suppositions. All brokers have access to the same information and it is all to work for the public good.
Personally I am not in support of the $8,000 tax rebate for first time buyers. I believe there has been more than enough incentive to get people out of their rental "digs" and into their first homes. I believe we need to focus on helping middle income earners who are small business owners or independent contractors who are all fighting for their financial lives right now. I'd love to hear what you have to say about it.
Thank you.
Monday, August 31, 2009
Rents in Manhattan are falling as unemployment climbs
NYC Apartment Rents Fall as Tenants Gain Leverage (Update3)
By Brian Louis
Aug. 25 (Bloomberg) -- Manhattan apartment rents fell as much as 10 percent in August from a year ago as tenants gained negotiating power in the recession and forced landlords to offer concessions.
In buildings attended by doormen, rents on one-bedroom apartments dropped 10 percent from a year earlier to an average of $3,274 a month, according to a report by the Real Estate Group of New York. Studio prices fell 7 percent at those properties to $2,329 and two-bedrooms declined almost 6.9 percent to $5,161. Soho and TriBeCa were the most expensive neighborhoods.
Rents in Manhattan are falling as unemployment climbs. The number of job seekers rose to 402,200 in July, the most since 1992, New York City’s Comptroller William Thompson said yesterday. Landlords are offering incentives such as free rent and paying brokerage fees to lure tenants, said Daniel Baum, chief executive officer of the Real Estate Group.
“The concessions out there right now are pretty aggressive,” he said.
The city’s unemployment rate climbed to a 12-year high of 9.6 percent in July even as the national rate ticked down to 9.4 percent. The U.S. economy has lost 6.7 million jobs since the recession began in December 2007, making it the biggest employment slump in the last eight decades. Economists surveyed by Bloomberg predict the unemployment rate will reach 10 percent by early next year.
Rising U.S. Vacancies
That translates into less pricing power for landlords. U.S. apartment vacancies jumped to 7.5 percent in the second quarter, the highest level in 22 years, according to New York-based research firm Reis Inc. Asking rents dropped 0.7 percent from a year earlier to an average of $1,040 a month.
Rising vacancies and falling rents sent shares of real estate investment trusts that own apartments lower in the last year. The 13-member Bloomberg index of apartment landlords fell 36 percent in the 12 months through yesterday.
The Manhattan survey released today is based on data from more than 10,000 available apartment listings, according to the Real Estate Group.
In Manhattan’s non-doorman buildings, the average rent for studio apartments fell 8 percent to $1,931. One-bedrooms dropped 5.9 percent to $2,606 and two-bedrooms fell 8.2 percent to an average of $3,527.
On the Upper West Side, the average rent for a one-bedroom apartment in a doorman building was $3,236. In Greenwich Village, a similar apartment averaged $3,654.
Across Central Park on the Upper East Side, the average rent for a one-bedroom apartment in a doorman building is $3,276. In Gramercy Park, the price averages $3,656.
The least expensive average rents were in Harlem, where the monthly price ranged from $1,274 for a studio to $2,105 for a two-bedroom unit in a building without doormen.
To contact the reporter on this story: Brian Louis in Chicago at blouis1@bloomberg.net. Last Updated: August 25, 2009 14:09 EDT
By Brian Louis
Aug. 25 (Bloomberg) -- Manhattan apartment rents fell as much as 10 percent in August from a year ago as tenants gained negotiating power in the recession and forced landlords to offer concessions.
In buildings attended by doormen, rents on one-bedroom apartments dropped 10 percent from a year earlier to an average of $3,274 a month, according to a report by the Real Estate Group of New York. Studio prices fell 7 percent at those properties to $2,329 and two-bedrooms declined almost 6.9 percent to $5,161. Soho and TriBeCa were the most expensive neighborhoods.
Rents in Manhattan are falling as unemployment climbs. The number of job seekers rose to 402,200 in July, the most since 1992, New York City’s Comptroller William Thompson said yesterday. Landlords are offering incentives such as free rent and paying brokerage fees to lure tenants, said Daniel Baum, chief executive officer of the Real Estate Group.
“The concessions out there right now are pretty aggressive,” he said.
The city’s unemployment rate climbed to a 12-year high of 9.6 percent in July even as the national rate ticked down to 9.4 percent. The U.S. economy has lost 6.7 million jobs since the recession began in December 2007, making it the biggest employment slump in the last eight decades. Economists surveyed by Bloomberg predict the unemployment rate will reach 10 percent by early next year.
Rising U.S. Vacancies
That translates into less pricing power for landlords. U.S. apartment vacancies jumped to 7.5 percent in the second quarter, the highest level in 22 years, according to New York-based research firm Reis Inc. Asking rents dropped 0.7 percent from a year earlier to an average of $1,040 a month.
Rising vacancies and falling rents sent shares of real estate investment trusts that own apartments lower in the last year. The 13-member Bloomberg index of apartment landlords fell 36 percent in the 12 months through yesterday.
The Manhattan survey released today is based on data from more than 10,000 available apartment listings, according to the Real Estate Group.
In Manhattan’s non-doorman buildings, the average rent for studio apartments fell 8 percent to $1,931. One-bedrooms dropped 5.9 percent to $2,606 and two-bedrooms fell 8.2 percent to an average of $3,527.
On the Upper West Side, the average rent for a one-bedroom apartment in a doorman building was $3,236. In Greenwich Village, a similar apartment averaged $3,654.
Across Central Park on the Upper East Side, the average rent for a one-bedroom apartment in a doorman building is $3,276. In Gramercy Park, the price averages $3,656.
The least expensive average rents were in Harlem, where the monthly price ranged from $1,274 for a studio to $2,105 for a two-bedroom unit in a building without doormen.
To contact the reporter on this story: Brian Louis in Chicago at blouis1@bloomberg.net. Last Updated: August 25, 2009 14:09 EDT
New Consumer Protections for Credit Cards and Mortgages: How They Can Help Borrowers
With all the discussion of Health Care Reform, much of what has occurred with other legislation has gotten a bit lost in the news. I believe the credit card reform bill is one of them and people should be informed to the rights that have been reinstated to them regarding notice; and also there is an important segment related to home mortgages and disclosures (see more by scrolling below).
The FDIC's press release today, lists many of the key issues - and since they have done better than what I could only hope to summarize, I'm reprinting here in its entirety their release for your convenience and information.
New Consumer Protections for Credit Cards and Mortgages: How They Can Help Borrowers Avoid Surprises Other Topics in the Latest FDIC Consumer News Include Making the Most of Bank Rewards Programs and New Resources Explaining Deposit Insurance Coverage
FOR IMMEDIATE RELEASE August 31, 2009
Media Contact: Jay Rosenstein (202) 898-7303 jrosenstein@fdic.gov
New federal consumer protections for credit cards and mortgages -- including prohibitions against abusive lending practices and requirements for clearer, more timely disclosures -- will help people avoid surprises. The Summer 2009 issue of FDIC Consumer News from the Federal Deposit Insurance Corporation features key changes in the rules and what they mean for the public. The protections for credit cards are the result of a new law passed in May that is intended to help shield consumers from abusive fees, penalties, interest rate increases and other unwarranted changes in account terms. Most of the provisions start next year, but some took effect August 20, 2009, including a requirement that card issuers must generally provide a 45-day advance notice of a rate increase or other significant changes in account terms, up from 15 days.
The expanded notice period should give consumers more time to react to rate increases or other adverse account changes.
As for mortgages, the new rules feature prohibitions by the Federal Reserve Board against a variety of unfair or deceptive lending practices involving loans made on or after October 1, 2009. Some of the Fed's rules apply to all home mortgages except for home equity lines of credit, and they include prohibitions against inaccurate appraisals (to prevent a consumer from overpaying for a home or borrowing too much) and the unfair handling of loan payments (to avoid unnecessary fees).
Other parts of the Fed's rules protect subprime borrowers obtaining high-cost mortgages. More broadly, there are new requirements from the Fed and the U.S. Department of Housing and Urban Development for early disclosures of mortgage terms and costs.
Also in this issue of the FDIC's quarterly newsletter for consumers are tips on making the most of bank rewards programs, such as credit cards that enable users to gradually accumulate cash rebates or "points" good for free travel or merchandise, and checking accounts that offer cash or other prizes for frequently using a debit card. The publication says that these programs can be great deals for consumers, but the key is to be on guard against potential pitfalls that include allowing the rewards to overshadow the more important features of an account when comparison shopping, and overspending (in pursuit of the free benefits) that can result in interest charges and unmanageable debt.
The newsletter also notes the availability of a new FDIC brochure and video to help consumers understand their deposit insurance coverage, including how to have far more than $250,000 protected at the same bank. The latest FDIC Consumer News can be read or printed at www.fdic.gov/consumers/consumer/news/cnsum09. To order up to two free paper copies, consumers can use the online form on that same Web page or call the Federal Citizen Information Center toll-free at 1-888-8-PUEBLO (1-888-878-3256) weekdays from 8:00 a.m. to 8:00 p.m. Eastern Time and ask for Department D96.
The goal of FDIC Consumer News is to deliver timely, reliable and innovative tips and information about financial matters, free of charge. To find current and past issues, including special editions, visit www.fdic.gov/consumernews or request paper copies by contacting the FDIC's Public Information Center toll-free at 1-877-275-3342, by e-mail to publicinfo@fdic.gov, or by writing to the FDIC Public Information Center, 3501 North Fairfax Drive, Room E-1002, Arlington, VA 22226. There are two ways to subscribe to the quarterly FDIC Consumer News. To receive an e-mail about each new issue with links to stories, go to www.fdic.gov/about/subscriptions/index.html.
To receive the newsletter in the mail, free of charge, contact the Public Information Center as listed above. The FDIC encourages financial institutions, government agencies, consumer organizations, educators, the media and anyone else to help make the tips and information in FDIC Consumer News widely available. The publication may be reprinted in whole or in part without advance permission. Organizations also may link to or mention the FDIC Web site.
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 8,195 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed.
The FDIC receives no federal tax dollars -- insured financial institutions fund its operations. FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically (go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information Center (877-275-3342 or 703-562-2200). PR-158-2009
The FDIC's press release today, lists many of the key issues - and since they have done better than what I could only hope to summarize, I'm reprinting here in its entirety their release for your convenience and information.
New Consumer Protections for Credit Cards and Mortgages: How They Can Help Borrowers Avoid Surprises Other Topics in the Latest FDIC Consumer News Include Making the Most of Bank Rewards Programs and New Resources Explaining Deposit Insurance Coverage
FOR IMMEDIATE RELEASE August 31, 2009
Media Contact: Jay Rosenstein (202) 898-7303 jrosenstein@fdic.gov
New federal consumer protections for credit cards and mortgages -- including prohibitions against abusive lending practices and requirements for clearer, more timely disclosures -- will help people avoid surprises. The Summer 2009 issue of FDIC Consumer News from the Federal Deposit Insurance Corporation features key changes in the rules and what they mean for the public. The protections for credit cards are the result of a new law passed in May that is intended to help shield consumers from abusive fees, penalties, interest rate increases and other unwarranted changes in account terms. Most of the provisions start next year, but some took effect August 20, 2009, including a requirement that card issuers must generally provide a 45-day advance notice of a rate increase or other significant changes in account terms, up from 15 days.
The expanded notice period should give consumers more time to react to rate increases or other adverse account changes.
As for mortgages, the new rules feature prohibitions by the Federal Reserve Board against a variety of unfair or deceptive lending practices involving loans made on or after October 1, 2009. Some of the Fed's rules apply to all home mortgages except for home equity lines of credit, and they include prohibitions against inaccurate appraisals (to prevent a consumer from overpaying for a home or borrowing too much) and the unfair handling of loan payments (to avoid unnecessary fees).
Other parts of the Fed's rules protect subprime borrowers obtaining high-cost mortgages. More broadly, there are new requirements from the Fed and the U.S. Department of Housing and Urban Development for early disclosures of mortgage terms and costs.
Also in this issue of the FDIC's quarterly newsletter for consumers are tips on making the most of bank rewards programs, such as credit cards that enable users to gradually accumulate cash rebates or "points" good for free travel or merchandise, and checking accounts that offer cash or other prizes for frequently using a debit card. The publication says that these programs can be great deals for consumers, but the key is to be on guard against potential pitfalls that include allowing the rewards to overshadow the more important features of an account when comparison shopping, and overspending (in pursuit of the free benefits) that can result in interest charges and unmanageable debt.
The newsletter also notes the availability of a new FDIC brochure and video to help consumers understand their deposit insurance coverage, including how to have far more than $250,000 protected at the same bank. The latest FDIC Consumer News can be read or printed at www.fdic.gov/consumers/consumer/news/cnsum09. To order up to two free paper copies, consumers can use the online form on that same Web page or call the Federal Citizen Information Center toll-free at 1-888-8-PUEBLO (1-888-878-3256) weekdays from 8:00 a.m. to 8:00 p.m. Eastern Time and ask for Department D96.
The goal of FDIC Consumer News is to deliver timely, reliable and innovative tips and information about financial matters, free of charge. To find current and past issues, including special editions, visit www.fdic.gov/consumernews or request paper copies by contacting the FDIC's Public Information Center toll-free at 1-877-275-3342, by e-mail to publicinfo@fdic.gov, or by writing to the FDIC Public Information Center, 3501 North Fairfax Drive, Room E-1002, Arlington, VA 22226. There are two ways to subscribe to the quarterly FDIC Consumer News. To receive an e-mail about each new issue with links to stories, go to www.fdic.gov/about/subscriptions/index.html.
To receive the newsletter in the mail, free of charge, contact the Public Information Center as listed above. The FDIC encourages financial institutions, government agencies, consumer organizations, educators, the media and anyone else to help make the tips and information in FDIC Consumer News widely available. The publication may be reprinted in whole or in part without advance permission. Organizations also may link to or mention the FDIC Web site.
# # #
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 8,195 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed.
The FDIC receives no federal tax dollars -- insured financial institutions fund its operations. FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically (go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information Center (877-275-3342 or 703-562-2200). PR-158-2009
Thursday, July 23, 2009
Can I prevent a foreclosure on my home?
The best defense in a foreclosure is to prevent it. Whatever the reason – be it lack of employment, medical bills - thousands of people are discovering that they can no longer make their loan / mortgage payments.
This is not the time to fall into a daze of denial. You must remain in a pro-active position. Act while you are still in the bank’s good graces!
You can stop a foreclosure.
This is not the time to fall into a daze of denial. You must remain in a pro-active position. Act while you are still in the bank’s good graces!
You can stop a foreclosure.
First:
- Contact your lender – ask for the loss mitigation department. You will need your loan number. Tell them your situation and what steps you are taking.
- Do not ignore any notices.
- Keep all records of your contacts with the lender – who you spoke to, what day and time, what was the result of your conversation. Even if no one will speak with you – record that note.
- If you need to send anything in writing, send it by certified mail return receipt.
A foreclosure defense attorney can intercede on your behalf. I have found that too many people are in such denial that they ignore the proceedings until the auction is scheduled and then that week they call my office for help – and there are few options at that point!
Remain pro-active – many laws have been passed to protect homeowners and you can benefit from them.
Monday, June 15, 2009
Beware of Neighbor’s Home Foreclosure
Today, the media reported on the escalating number of foreclosures across America.
Forbes Magazine via a Reuters Report additionally spoke on the impact in Manhattan. This story by Bob Tedeschi in the New York Times, speaks on the subject of what happens to you if your neighbor falls into foreclosure. With respect to him and the New York Times, I am publishing it below for your convenience to read. The excellent graph which accompanies the article can be found at the Times website http://www.nytimes.com/2009/06/14/realestate/mortgages/14mort.html?nl=your-money&emc=b2
If you know anyone in the position of facing foreclosure, I represent sellers in foreclosure defense. Please contact my office for further information at 800.461.3190.
Beware of Neighbor’s Home Foreclosure
The New York Times
By BOB TEDESCHI
Published: June 12, 2009
WHEN it comes to selling your house or planning your next home equity line of credit, being a nosey neighbor could very well pay off.
That’s one implication of a recent report from the Center for Responsible Lending, a consumer advocacy group based in Durham, N.C.
The report, which was released in May, focuses on the ripple effects of home foreclosures, and suggests that homeowners who are concerned about their home’s value should watch for signs of trouble among their closest neighbors.
This year alone, it says, foreclosures will cause an estimated 69.5 million nearby homes to suffer price declines averaging $7,200 per home. The loss in property value could total $500 billion.
The resulting loss in financial flexibility is significant. “Homeowners who had counted on using their home equity to finance their retirement, cover tuition costs, start a small business, or pay medical bills in many cases no longer have this option,” the report said.
Ellen Schloemer, the executive vice president of the Center for Responsible Lending, said that over the next four years, foreclosures would affect an estimated 91.5 million neighboring homes.
“As the foreclosure crisis continues to worsen, the contagion is spreading,” Ms. Schloemer said. “You can’t just say those foreclosures are hurting someone else.”
The rate of home foreclosures has rise sharply since 2007, when the first subprime adjustable-rate mortgages began resetting to higher rates. But even borrowers with good credit have defaulted on their loans as the economy has faltered.
According to the Mortgage Bankers Association, an industry trade group, about 1.4 percent of all first mortgages entered foreclosure in the first quarter of this year, a 20 percent jump from the fourth quarter of 2008, and a record high.
The center’s report relied on forecasts from Credit Suisse, which said late last year that about nine million homes would probably go into foreclosure in 2009 to 2012. The center also used late 2008 data from the Mortgage Bankers Association to estimate this year’s foreclosure figures (about 2.4 million homes).
Two earlier reports released by the Center for Responsible Lending examined the spillover effects of the mortgage crisis. But this year it relied on new research about how a foreclosure affects neighborhood home values — specifically, a 2008 study that includes researchers at Fannie Mae, the government-sponsored agency, and the University of Connecticut.
This study found that homeowners who lived within 300 feet of a foreclosed residential property experienced a drop of 1.3 percent in home value; those living 300 to 500 feet of the foreclosed home typically see a drop in value of 0.6 percent.
John P. Harding, a professor at the University of Connecticut’s Center for Real Estate and Urban Economic Studies, and an author of the study, said the properties that are most affected by a foreclosure are the ones close enough to see the peeling paint, broken windows and overgrown lawns that often accompany such situations.
The worst time for immediate neighbors to sell their homes, refinance or cash out some of their home equity, Mr. Harding said, is just before the bank takes title to the property, because that is the point of greatest neglect.
After that point, Mr. Harding said, many lenders will at least maintain the property’s appearance well enough to attract prospective buyers.
Of course, the best time to try to sell a home or convert equity into cash is when neighbors are on sound financial footing, though it may not be easy to determine.
Job loss is the biggest cause of mortgage default, according to industry experts, so if a neighbor becomes unemployed, you should probably start your own clock ticking.
For those living outside the immediate vicinity of the foreclosure, but still in the neighborhood, Mr. Harding said home values typically bottom out around the time when the bank actually sells the home.
“My advice would be to try to ride that out, not panic, and know that this is the peak effect from lower-priced competition,” he said.
Mr. Harding said that banks, municipalities and the federal government are justified in financing foreclosure-avoidance programs, but not if they help homeowners just barely afford to stay in their homes. In such situations, neighboring homes could still see values drop.
“You want to offer help at a level at which people can still do critical maintenance to the property,” he said.
Forbes Magazine via a Reuters Report additionally spoke on the impact in Manhattan. This story by Bob Tedeschi in the New York Times, speaks on the subject of what happens to you if your neighbor falls into foreclosure. With respect to him and the New York Times, I am publishing it below for your convenience to read. The excellent graph which accompanies the article can be found at the Times website http://www.nytimes.com/2009/06/14/realestate/mortgages/14mort.html?nl=your-money&emc=b2
If you know anyone in the position of facing foreclosure, I represent sellers in foreclosure defense. Please contact my office for further information at 800.461.3190.
Beware of Neighbor’s Home Foreclosure
The New York Times
By BOB TEDESCHI
Published: June 12, 2009
WHEN it comes to selling your house or planning your next home equity line of credit, being a nosey neighbor could very well pay off.
That’s one implication of a recent report from the Center for Responsible Lending, a consumer advocacy group based in Durham, N.C.
The report, which was released in May, focuses on the ripple effects of home foreclosures, and suggests that homeowners who are concerned about their home’s value should watch for signs of trouble among their closest neighbors.
This year alone, it says, foreclosures will cause an estimated 69.5 million nearby homes to suffer price declines averaging $7,200 per home. The loss in property value could total $500 billion.
The resulting loss in financial flexibility is significant. “Homeowners who had counted on using their home equity to finance their retirement, cover tuition costs, start a small business, or pay medical bills in many cases no longer have this option,” the report said.
Ellen Schloemer, the executive vice president of the Center for Responsible Lending, said that over the next four years, foreclosures would affect an estimated 91.5 million neighboring homes.
“As the foreclosure crisis continues to worsen, the contagion is spreading,” Ms. Schloemer said. “You can’t just say those foreclosures are hurting someone else.”
The rate of home foreclosures has rise sharply since 2007, when the first subprime adjustable-rate mortgages began resetting to higher rates. But even borrowers with good credit have defaulted on their loans as the economy has faltered.
According to the Mortgage Bankers Association, an industry trade group, about 1.4 percent of all first mortgages entered foreclosure in the first quarter of this year, a 20 percent jump from the fourth quarter of 2008, and a record high.
The center’s report relied on forecasts from Credit Suisse, which said late last year that about nine million homes would probably go into foreclosure in 2009 to 2012. The center also used late 2008 data from the Mortgage Bankers Association to estimate this year’s foreclosure figures (about 2.4 million homes).
Two earlier reports released by the Center for Responsible Lending examined the spillover effects of the mortgage crisis. But this year it relied on new research about how a foreclosure affects neighborhood home values — specifically, a 2008 study that includes researchers at Fannie Mae, the government-sponsored agency, and the University of Connecticut.
This study found that homeowners who lived within 300 feet of a foreclosed residential property experienced a drop of 1.3 percent in home value; those living 300 to 500 feet of the foreclosed home typically see a drop in value of 0.6 percent.
John P. Harding, a professor at the University of Connecticut’s Center for Real Estate and Urban Economic Studies, and an author of the study, said the properties that are most affected by a foreclosure are the ones close enough to see the peeling paint, broken windows and overgrown lawns that often accompany such situations.
The worst time for immediate neighbors to sell their homes, refinance or cash out some of their home equity, Mr. Harding said, is just before the bank takes title to the property, because that is the point of greatest neglect.
After that point, Mr. Harding said, many lenders will at least maintain the property’s appearance well enough to attract prospective buyers.
Of course, the best time to try to sell a home or convert equity into cash is when neighbors are on sound financial footing, though it may not be easy to determine.
Job loss is the biggest cause of mortgage default, according to industry experts, so if a neighbor becomes unemployed, you should probably start your own clock ticking.
For those living outside the immediate vicinity of the foreclosure, but still in the neighborhood, Mr. Harding said home values typically bottom out around the time when the bank actually sells the home.
“My advice would be to try to ride that out, not panic, and know that this is the peak effect from lower-priced competition,” he said.
Mr. Harding said that banks, municipalities and the federal government are justified in financing foreclosure-avoidance programs, but not if they help homeowners just barely afford to stay in their homes. In such situations, neighboring homes could still see values drop.
“You want to offer help at a level at which people can still do critical maintenance to the property,” he said.
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