CL&P Blog

Attention homeowners: your lender can help you avoid foreclosure

According to a Freddie Mac study, 57% of homeowners are unaware of the workout options that could help them avoid foreclosure. And this is an improvement, up from 61% in 2005. Will the lender actually work something out? It's worth a try, and lenders do know that allowing a house to go into foreclosure is bad for everyone, lenders included.

[via Consumerist]

Edit: Phuong Cat Lee from Consumer Smarts linked to a number of helpful resources for consumers looking to get help from their lenders.

Lexis Willing to Abandon Unfair Arbitration Clause

by Paul Bland

It’s no secret that Westlaw an Lexis are in a fierce competitive battle for customers and marketshare. In light of this situation, I’ve always been curious that Lexis’s standard contract with law firms contains a long set of provisions that require the arbitration of any disputes between Lexis and its customers.

It’s not enough that Lexis’s contract provides (in a weird irony) that its customers must abandon a number of basic legal rights in order to get access to its legal research service, but it’s also a particularly unfair arbitration clause:

Lexis’s arbitration clause includes a gag order on its customers requiring tem to keep all arbitrations confidential. A number of courts have struck down similar secrecy provisions in consumer arbitration clauses as unconscionable.

Lexis’s arbitration clause requires any customer with a claim against it to arbitrate the claim in the headquarters city of Lexis, which is apparently Dayton, Ohio. What a deal if the customer lives in Seattle or Maine! A number of courts have struck down similar provisions requiring consumers to travel long distances to arbitrate claims.

Would you like fries with your mandatory binding arbitration clause?

Stephanie Mencimer at Mother Jones reports on an amazing new low in mandatory binding arbitration:

Mandatory arbitration agreements forcing people to give up their rights to sue are now standard fare in everything from cell phone contracts to Hooters’ employment agreements. But the owner of an East Texas Whataburger has apparently taken arbitration mania to a new level. Every public entrance to the burger franchise displays a sign informing people that simply setting foot on the premises means that they are giving up their right to sue the company for any reason, even if, for instance, they get a little e coli along with their fries. Instead, customers will be forced to arbitrate their claims before the American Mediation Association, an organization that seems to consist of three lawyers in Dallas hired by the Whataburger (part of a 58-year-old fast food chain deemed a “Texas treasure” by the state legislature).

Here's what the signs say:

ARBITRATION NOTICE 

By entering these premises you hereby agree to refer any and all disputes or claims of any kind whatsoever, which arise from the products, services or permises, by way of binding arbitration, not litigation.  No suit or action may be filed in any state or federal court.  Any arbitration shall be governed by the FEDERAL ARBITRATION ACT, and administered by the American Mediation Association.

Why stop at burger joints?  Why not post arbitration notices like these at the entrance to every business, from used car dealerships, to hospitals, to banks?  And why stop at buildings?  How about food, cars, and people?

New Times Reports on Conning the Elderly, FDA Inspections, and Lead in Toys

by Jeff Sovern

On Tuesday, the Times reported here about a study that confirms what many consumer lawyers already know about the elderly.  Here's the first paragraph of the article:

For the especially unscrupulous con artist, the elderly are a tempting target. Now researchers have confirmed in the lab what frauds already knew instinctively: as they grow older, even people who seem perfectly on top of things may have trouble making good decisions.

The Times also reported here on GAO reports that discuss just how depressingly far behind the FDA is in inspecting overseas plants that make medical devices, drugs, and food for the US.  An excerpt:

The Food and Drug Administration is so understaffed that, at its current pace, the agency would need at least 27 years to inspect every foreign medical device plant that exports to the United States, 13 years to check every foreign drug plant and 1,900 years to examine every foreign food plant, according to government investigators.

Computer systems at the drug agency are so inadequate that it can only guess the number of the plants, and it cannot produce a list of those that have not been inspected. The situation is particularly dire in China, which has more drug and device plants than any other foreign nation but where F.D.A. inspections are few.

The rest of the article is not any more cheerful.  But can we at least depend on toy manufacturers to protect our health?  Well,  maybe not.  Federal law reportedly bars lead in paint on toys, but not in other toy parts.  The Times reported yesterday, in an article titled "Lawmakers Say Mattel Broke Word on Lead," that Mattel has recalled a toy with lead in a plastic part in Illinois, which apparently limits the amount of lead in plastic, but not in the rest of the nation.  The article states that Mattel's "recall page on its Web site does not include information about the toy."

Where is the mortgage insurance?

by Richard Alderman

As a general rule, we read blogs for information. It is a great way to find out what is going on and who is doing what. But a blog is also a great way solicit information--and that is the point of this post.

I may be showing my ignorance, but I don't understand how mortgage insurance (PMI) fits into the recent mortgage crisis. I assume most, if not all, of these mortgages are insured. If that is the case, one of two things should happen. Either the lenders should not take the losses they are reporting, or, the insurers should go bankrupt. If it is the later, what happens to the insurance that everyone else has been paying for?

I am sure that someone reading this has much more knowledge about this subject than I do, and hopefully, he or she will post a reply comment explaining how PMI fits into the mortgage crisis equation.

Consumers Beware -- ABA IP Section Is on the Move

by Paul Alan Levy

Corynne McSherry  and Eric Goldman have posted a timely joint warning about an effort within the Trademark Litigation Committee of the American Bar Association to put forward a series of resolutions that are apparently designed to revive the hitherto unsuccessful litigation efforts by trademark owners to prevent their competitors (and occasionally critics) from using keyword advertising and similar techniques to promote comparative and critical advertising on search engines.  Because of the important consumer benefits from rules that protect the ability of businesses to engage in truthful comparative advertising, Public Citizen has litigated that right over the years in a line of cases running from Virginia Pharmacy Bd. v. Virginia Consumers Council to our current cases challenging bar rules that unduly limit lawyer advertising in Florida and New York.   

Most of the major search engines, which show “sponsored links” as well as unpaid “organic” search results when Internet users enter specific search terms, now allow bidding on search terms that include trademarks.  Thus, just as the local Ford dealer could buy a huge billboard next to the Chevy dealership saying “Don’t buy a Chevy until you have looked at our cars – they’re better,” or just as General Motors could buy a comparative newspaper ad on the automobiles page on just the day when Warren Brown is reviewing that snazzy new Ford model, and just as a drug store can strategically locate its generic products right next to the brand name products for which many consumers come looking, competitors can buy search engine advertising that appears when a given trademarked term, such as Chevrolet or Ford, is entered into a search engine.  Search engines are able to put messages in front of an audience that has expressed an interest in learning more about a specific subject, which may often include a trademarked term (such as the name of a company or the name of a product or service).  Trademark owners have been trying to invoke theories of infringement or dilution to prevent rival sites from being displayed to search engine users, but keep getting their cases dismissed. 

I have participated in a number of bar meetings related to this issue, and the trademark owner interests on the plaintiff side of these cases admit that newspaper ads, billboards, and product placement would not violate anybody’s trademark.  They have had a great deal of trouble, however, explaining why keyword advertising is any different from a trademark perspective.

Arbitrator Certifies Class Action

by Alan M. White

If the purpose of mandatory pre-dispute arbitration clauses in consumer contracts is to prevent class actions, it does not seem to be working. An AAA arbitrator has apparently certified a class of 70 million Verizon wireless subscribers, with damage claims approaching $1 billion.

MBA & CRL duke it out on Bankruptcy reform

by Alan M. White

The Mortgage Bankers Association issued a press release yesterday denouncing the Center for Responsible Lending for misstating facts about foreclosures and loan modifications in its reports. Both groups are trying to influence the bankruptcy legislation being considered in Congress at a hearing today.

According to MBA, bankruptcy reform is not the answer. MBA asserts that many foreclosures are “avoided” not just by loan modifications, but also by repayment plans and short sales. If Congress gives bankruptcy judges power to modify mortgages, interest rates will rise and refinancings will be curtailed, says the MBA.

Let’s examine the MBA’s facts.

Pres. Clinton and Gov. Schwarzenegger Team Up To End Payday Loans

U.S. PIRG's Consumer Blog has this interesting post about a Bill Clinton-Arnold Schwarzenegger op-ed in the Wall Street Journal last week discussing their joint effort to end payday loans. As the PIRG blog summarizes: "They want to terminate demand for payday loans by opening up a supply of better-priced, affordable bank accounts." Another chapter in the Terminator's activist political career. Take a look.

Mortgage Fraud Enforcement Reportedly Not Keeping Up

by Jeff Sovern

I've been meaning to post for some time a link to this story in the Times, "Officials Say They Are Falling Behind on Mortgage Fraud Cases" which ran on Christmas day.  An excerpt:

The number of mortgage fraud cases has grown so fast that government agencies that investigate and prosecute them cannot keep up, lenders and law enforcement officials have said.

Reports of suspected mortgage fraud have doubled since 2005 and increased eightfold since 2002. * * * *