Foreclosure Reform

Let's assume we can all agree that foreclosures ought be accompanied by proper documentation and that a great many foreclosures accompanying the financial crisis were not. Less clear is what can or should be done about it looking backward. Voiding foreclosures may not be the answer (legally or otherwise). After all, many of the properties have been resold to new homeowners and reversing transactions on tens of thousands (or more) properties may not be the best way to emerge from an economic downturn. I just don't know.

But future reform is another question. Are the states considering legislation aimed at avoiding these problems in the future? This Washington Post article discusses legislation being debated in Virginia that would impose penalties on lenders who foreclose based on false documents, require banks to keep current records on loan status in government offices (including public filings whenever ownership changes), and give homeowners up to 45 days (rather than the current 15) to oppose a foreclosure in court. According to the Post, "The Virginia Bankers Association strongly opposes the overhaul, saying it would gum up the process."

Health Care Reform in 2030

There's no need to work for a single-payer health care system or to worry about the Patient Protection and Affordable Care Act's repeal because Ezra Klein of the Washington Post has written the definitive work on exactly what the health care system will look like in 2030. The current Congress's efforts to repeal the Affordable Care Act will fail (okay, that's an easy one), and the Supreme Court will uphold the Act's individual mandate. What else? Here's Klein's most playful prophecy:

[I]n 2019, at the urging of President Bobby Jindal, Congress passed the Health Care Equality Act, the third major phase of health-care reform. It fulfilled long-held conservative hopes when it moved Medicaid and Medicare onto the exchanges [created by the Affordable Care Act] and allowed seniors and low-income Americans to choose between the government behemoths and private insurance. But it also opened both programs to all Americans - making them akin to the public option that Democrats had been unable to pass in 2010. And as part of the deal, both were given more freedom to use a flood of comparative data in deciding what treatments to cover or refuse, which allowed them to finally stop paying for volume and begin paying for quality.

Prentiss Cox Paper on Property Assessed Clean Energy Financing Programs

Prentiss Cox of Minnesota was particularly impressive at last May's Teaching Consumer Law Conference in Houston.  Now he's written Keeping Pace?: The Case Against Property Assessed Clean Energy Financing Programs.  Here's the abstract:

Property Assessed Clean Energy (“PACE”) is a method of public financing for energy improvements through special assessments on local government property taxes. Interest in PACE exploded from its origination in 2008, with almost half the states rapidly enacted legislation enabling local governments to use their property collection power for this purpose. The growth in PACE is now suspended, and existing programs have been put on hold, in the face of opposition from the federal secondary mortgage market regulators. Governments and environmental advocates supporting PACE have initiated litigation against the federal regulators and are seeking passage of federal legislation to revive the programs. This Article argues that the theory underlying PACE is fundamentally flawed. PACE has been promoted as an alternative to traditional real estate financing that resolves the impediments to homeowners investing in alternative energy and energy efficiency. A careful analysis of these claims demonstrates that PACE in actual practice will operate similarly to most other types of real estate financing, and that the efforts to reconstruct PACE programs through litigation or legislation are misplaced. Instead, PACE programs should be radically restructured or should be considered a creative yet failed experiment offering valuable lessons for future residential energy investment programs.

New NCLC Practice Tools

The National Consumer Law Center has just released 16 new NCLC publications, is accepting web registrations for an upcoming Fair Debt conference, and will conduct a January 20 webinar on auto dealer insolvency's impact on consumers.   

1. Eight NCLC Treatise Updates: Automatic subscribers just received the Winter 2010 Updates. Others can order at www.nclc.org/updates

• Truth in Lending (7th ed. 2010) (2 volumes, 1498 pp.): new laws and rules create substantive requirements for mortgage loans and credit cards  
• Fair Credit Reporting (7th ed. 2010) (1138 pp.)
• Student Loan Law (4th ed. 2010) (694 pp.)
• Repossessions (7th ed. 2010) (860 pp.)
• Consumer Law Pleadings (Website and 2010 Index Guide) (656 pp. guide)
• Consumer Bankruptcy Law and Practice 2010 Supplement (394 pp.
• Unfair and Deceptive Acts and Practices 2010 Supplement (350 pp.)
• Consumer Arbitration Agreements 2010 Supplement (328 pp.)

  2. Eight Recent NCLC REPORTS Issues (contact publications@nclc.org for back issues or to subscribe):

• Consumer Credit & Usury Ed.: Nov./Dec.: FRB bans yield spread premiums, steering; remedies for TIL credit card violations; Sept/Oct: Mortgage discrimination class litigation; NCUA raises usury cap for small loans; municipalities regulate pay day lenders
• Deceptive Practices & Warranties Ed. Nov./Dec.: Importance of little-known federal record retention requirements; selecting and using a forensic document examiner Sept./Oct.: Implications of FTC's new Mortgage Assistance Relief Services Rule on consumer attorneys; 10 things every attorney should know about CROA
•  Bankruptcy & Foreclosures Ed.: Nov./Dec.: State law mandates of loss mitigation as foreclosure pre-condition; Social Security benefits excluded from projected disposable income in ch. 13 Sept/Oct.: Robosigning just tip of the iceberg; testimony in bankruptcy case signals trouble for mortgage industry
• Debt Collection & Repo Ed: Nov./Dec.: Important new Circuit Court of Appeals FDCPA decisions; courts dismissing debt buyer collection suits Sept./Oct: FDCPA requirements for mortgage loss mitigation process; new Senate and FTC proposals; new FDCPA cases

3. The Fair Debt Collection Practices Conference is in Seattle, March 3-4, 2011. Register online at: www.nclc.org/conferences-training/fair-debt-collection-practices-conference.html. Get up to speed on your first debt collection abuse cases and proceed to more in-depth sessions on developing fair debt collection cases and a fair debt collection law practice. Faculty includes the top Fair Debt Collections Lawyers from across the country. CLE credit.

4. NCLC Webinar Series has resumed: January 20 at 2PM: Dealers Going Out of Business, Leaving Consumers Out of Luck. Contact jhiemenz@nclc.org for this and future webinars. Go to www.nclc.org/conferences-training/webinars.html for FREE downloads of past webinars.

What Is The Legal Status Of A Property Bought After An Unlawful Foreclosure?

Alan White and I blogged last week about the decision from the Massashusetts Supreme Judicial Court in U.S. Bank v. Ibanez that nixed foreclosures by major banks because the banks could not document title to the properties. Now, Paul McMorrow has penned this article in the Boston Globe on the ruling discussing, among other things, the legal status of property bought after an insufficiently documented foreclosure. He writes:

Last week's Supreme Judicial Court decision, in which the court upended a pair of Springfield foreclosures and upbraided Wells Fargo and US Bank for maintaining sloppy records is great news for homeowners facing foreclosure. Mortgage-servicing banks, which were in the habit of trading mortgages around like cheap baseball cards, will be forced to slow the pace of foreclosures even more, and carefully verify that they actually own the mortgages on the properties they want to foreclose on. But the decision brings uncertainty to buyers of foreclosed properties — buyers who might not have clear title to their homes anymore. * * * Because of the Ibanez case, and the staggering volume of sloppy paperwork that accumulated during the housing boom and bust, those other 44,000 foreclosures are suddenly subject to new scrutiny. It’s highly unlikely that just two properties, out of more than 44,000, were seized based on deficient records. I took a random sample of 30 foreclosure deeds from Chelsea (one of the cities hit hardest by foreclosures) since the beginning of 2006. Of those 30 foreclosure cases, 10 had paperwork on file with the Registry of Deeds that raised the sort of chain-of-custody concerns at the heart of the Ibanez decision. In one case, no mortgage was on file with the registry. Another showed no paperwork assigning the note to a mortgage servicer. In other cases, mortgage originators didn’t sign off on documents transferring the notes into mortgage pools, or transfer paperwork was filed after a foreclosure occurred. All of the properties have since been re-sold. * * * [The decision in Ibanez] presents a series of terrible questions to anyone who bought a foreclosed house from a big bank. Among them: Is my mortgage valid? Will I be able to refinance or sell my home? Do I even really own my house?

I am not an expert on these issues, and perhaps there are easy answers to these questions. Are there?

OT: Job-Killing Madlibs

by Jeff Sovern

I recently spotted this in the office of a politician of a certain party:

Want to know how to attack the arguments of the other party?  Just describe their proposals as "job-killing." For example, insert the proposal in the following:

The other party supports a job-killing _____.  Not only will this kill jobs, but it will raise your taxes.  Oppose the job-killing _____!  instead, vote for my plan to [do the opposite].

Here is how it works in practice:

The other party supports a job-killing program to hire people.  Not only will this kill jobs, but it will raise your taxes.  Oppose the job-killing hiring plan!  instead, vote for my plan to fire people.

And another example:

The other party supports a job-killing program to make students recite the Pledge of Allegiance.  Not only will this kill jobs, but it will raise your taxes.  Oppose the job-killing Pledge of Allegiance program!  instead, vote for my plan to ignore the Pledge of Allegiance.

Consumer Product Safety Commission to Launch Online Consumer Complaint Database

In March, the Consumer Product Safety Commission will launch a web-based public database containing all consumer complaints about products. Previously, much of this information was effectively kept secret under an exemption to the Freedom of Information Act.

The Washington Post claims that the business community is "working behind the scenes to delay or revamp the project."  Meanwhile, CPSC Chair Inez Tenebaum says that the database will go forward on schedule. Businesses claim that the database will be contain inaccurate information, while consumer advocates are praising the new system under which the CPSC generally will post complaints within 15 days of receipt.

The CPSC has established a website that will link to the database and that currently contains information on the new program, including introductory webinars for the public and industry.

Serwin Paper on History of FTC Privacy Enforcement

Andrew B. Serwin of Foley & Lardner has written The Federal Trade Commission and Privacy: Defining Enforcement and Encouraging the Adoption of Best Practices.  Here's the abstract:

This article examines the history and path of privacy enforcement by the Federal Trade Commission, as well as the FTC's recently issued "Protecting Consumer Privacy in an Era of Rapid Change: A proposed Framework for Businesses and Policymakers", in which the FTC suggested the adoption of best practices, including a "privacy by design" framework. The article examines the history of Section 5 jurisdiction, the privacy enforcement cases by the FTC, the new proposed framework, and proposes that the FTC take the proposed framework and implement it in a way that includes a focus on the sensitivity of data, provides a "safe harbor" from enforcement for businesses that choose to adopt the framework, and link the framework in a meaningful way to existing EU processes, such as Binding Corporate Rules. By combining these elements, the FTC can achieve meaningful and focused self-regulation and provide appropriate protection to consumers, while giving business an incentive to adopt best-practices, and also increase the level of international cooperation regarding privacy.

Stanley Fish Leads the Charge Against Immunity for Internet Hosts -- But Ignores the Costs

by Paul Alan Levy

The New York Times’ online edition carries a column by Stanley Fish, touting a book of essays by several law professors who, according to Fish, decry the ease with which offensive accusations and opinions can be published online and call for new limits on this freedom of expression.   To hear Fish tell it, “The answer given by the authors in this volume involves the repeal or modification of Section 230 of the Communications Decency Act” coupled with a drastic curtailment of the protections for the right to speak anonymously online.  Not having read the whole book yet, I can't vouch for the accuracy of Fish’s summary.

According to Fish, “Saul Levmore (Nussbaum’s co-editor) suggests that immunity might be conditioned on the willingness of a provider either to take down a message after notice of its falsity or defamatory character has been given, or 'to enforce non-anonymity' and thus open the way for an injured party to seek redress. The law, writes Anupam Chander, 'should allow the individual to find information to lead her to the person who committed the privacy invasion.'”

If Fish accurately portrays their essays as using these theories to curtail section 230, then Saul Levmore and Anupam Chander, and the other authors to whom Fish attributes the desire to wipe out section 230, haven’t taken a careful look at what the law is now.   Fish plainly hasn't.

Will Cars of the Future Prevent Drunk Driving?

The Washington Post reports that

Researchers funded by auto manufacturers and federal safety regulators are working on sensory devices - to be installed as standard equipment on all new vehicles - that would keep a vehicle from starting if the driver has had too much to drink. ... The new technology would not require that the driver blow into a tube, like the interlock devices some states require after drunken-driving convictions. Instead, either a passive set of sensors permanently installed in the vehicles or touch-sensitive contact points on a key fob or starter button would immediately register the level of alcohol in the bloodstream.

The car industry says that the technology could be on the market in 5 to 7 years. But whether it will be marketable that soon depends in large part on cost (which could affect the industry's desire to install the technology) and consumer acceptance.