FACTS
Michele SimmsParris sued Countrywide Financial Corp. and Countrywide Home Loans under the Fair Credit Reporting Act to recover for the reporting of what she asserts was false information about her mortgage repayments. The United States District Court for the District of New Jersey, determining that SimmsParris had not properly presented her claim as required by the FCRA, granted summary judgment against her. She appealed.
The 3rd Circuit Court of Appeals said affirmed. SimmsParris obtained a mortgage loan from Countrywide Home Loans in 2007. CHL maintains that, although SimmsParris' payments were due on the first of each month, her December 2007 payment was not received until Dec. 31, and her January 2008 payment was not received until Jan. 25. CHL states that, as a part of “common business practice,” it “reports the status of its entire active loan portfolio to Experian, Equifax, TransUnion and Innovis every month,” and it followed this practice by reporting that SimmsParris' payments were not timely received. In February of 2008, SimmsParris learned that CHL had furnished information to credit reporting agencies that her December 2007 and January 2008 mortgage payments were late. She immediately had the law firm in which she was a partner draft a letter to CHL and its parent company, Countrywide Financial Corp. to inform them that CHL had furnished false information. Even after SimmsParris reported this alleged error to CFC and CHL, they did not alter the information that they provided and continued to report that her payments had been delinquent.
SimmsParris filed suit on May 19, 2008, seeking to recover for defamation, false light invasion of privacy, breach of contract, negligence, negligent supervision, conversion, fraud, and violations of the FCRA. She also sought and received a temporary restraining order that enjoined CHL from reporting false information to third parties regarding SimmsParris' loan payments. CHL and CFC filed a motion to dismiss on June 25, 2008, contending that the FCRA preempted SimmsParris' claims, and later filed a motion for summary judgment on March 27, 2009.
CHL and CFC filed a motion for summary judgment, which the District Court granted. In doing so, the District Court concluded that a private litigant seeking to recover against the furnisher of information under FCRA must first make a complaint to the a consumer reporting agency before the furnisher of the information could be liable under the statute.
FCRA is intended “to protect consumers from the transmission of inaccurate information about them, and to establish credit reporting practices that utilize accurate, relevant, and current information in a confidential and responsible manner.” It places certain duties on those who furnish information to consumer reporting agencies, including that the furnisher of information has a duty to provide accurate information. Additionally, it imposes a duty to conduct an investigation into the completeness and accuracy of the information furnished in certain circumstances. A consumer must first inform the credit agency that s/he disputes the information after which the credit reporting agency must reinvestigate promptly based on that dispute.
Although a private citizen may bring an action under FCRA this action can only be brought after the furnisher of the information receives notice of a dispute with regard to the completeness or accuracy of any information provided by a person to a consumer reporting agency. The notice first must be given by a credit reporting agency and cannot come directly from the consumer.
A private citizen wishing to bring an action must first file a dispute with the credit reporting agency, which then must notify the furnisher of information that a dispute exists. Only after this notification can the furnisher face any liability to a private individual. The notification triggers the furnisher's duty to investigate. It is only when the furnisher fails to undertake a reasonable investigation following such notice that it may become liable to a private litigant. The court ruled SimmsParris did not comply with the statutory framework before filing suit and thus, the District Court did not err in granting summary judgment. Judgment of the District Court is affirmed. (simmsparris v. countrywide financial corp.; countrywide home loans d.c. no. 2:08-cv-02434) usca – 3rd cir 09-4542)
MORAL
Before you sue read the statutes that allow you to sue very carefully. When an attorney fails to do so, they generally lose as was the case here. If an attorney had done this for an ordinary consumer, it could be considered malpractice. However, the consumer in this case was the attorney.
CALIFORNIA MAN ARRESTED FOR MORTGAGE FRAUD
FACTS
A federal grand jury returned a two-count indictment charging Tony Huy Havens of Modesto with conspiracy to commit mail fraud and mail fraud in a mortgage fraud scheme.
According to the indictment, Havens was a promoter for “The Gift Program,” where real estate buyers and sellers would get together and establish a sales price on a property. They would then agree to set a fictitious sales price of approximately $100,000 to $150,000 above the negotiated fair market value price. The buyer would obtain a loan based on the much higher value, and the loan proceeds that exceeded the sales price would be kicked back to the buyer to use as the down payment on the purchase. The indictment alleges that eight homes were purchased using this “program” in San Joaquin and Stanislaus Counties, causing a total loss to lenders of $3,256,279.
If convicted, Havens faces a maximum statutory penalty of 20 years in prison and a $250,000 fine. (usattyedca72811)
MORAL
New name for an old game.
CALIFORNIA LOAN OFFICER SENTENCED TO THREE YEARS IN PRISON FOR DEFRAUDING SENIORS
FACTS
On July 20, Helen Hinojos a loan officer out of Whittier, pleaded no contest and admitted to defrauding five seniors between 2006 and 2009. She was sentenced to three years in state prison.
She was charged with taking out second mortgages on seniors' homes without their knowledge and helped others refinance their homes without their knowledge and stole the money. Hinojos was also ordered to pay more than $300,000 in victim restitution.
Alleged accomplice Ruth Farias pleaded not guilty to helping Hinojos defraud Rosie Rodelo, 85, of Whittier. Prosecutors accused Farias of posing as a loan broker and forging documents to cut a $50,000 loan in Rodelo's name without her knowledge, which was taken out against the elderly woman's home.
A third person, Esmeralda Garcia admitted to helping Hinojos by notarizing the forged signature of the victim on a deed of trust. (whitdlynws72011)
MORAL
If the deeds of trust were forged as alleged then the owners should be able to get the deeds set aside since it was not there signature and the lenders can look to the title companies to get reimbursed for the loans. But it would mean as to the elderly people whose signatures were forged that they could keep their homes. They should see an attorney if they have not already done so.
CONNECTICUT SHORT SALE FRAUD AND HOW TO GO TO PRISON FOR IT
FACTS
On July 25, Anna McElaney of Norwalk, was sentenced for short sale fraud by United States District Judge Janet C. Hall in Bridgeport to eight months of imprisonment, followed by three years of supervised release, the first six months of which McElaney must spend in home confinement.
A short sale transaction involves a mortgage holder or lender entering into an agreement to release its mortgage or lien on real property in exchange for payment of less than the total amount owed on the underlying debt. Many short sale transactions are legitimate. However, according to court documents and statements made in court, McElaney and Sergio Natera, both real estate agents, allegedly defrauded Regions Bank, which held two mortgages on a residential property in Bridgeport.
On December 5, 2007, McElaney, who was a listing agent for the property, received an offer to purchase the property for a price of $132,500. However, McElaney and Natera informed Regions Bank that the highest offer to purchase the property was for $102,375 and that BOS Asset Management LLC made it. McElaney and Natera concealed from Regions Bank that there was a higher offer from another bidder. Furthermore, they concealed that Natera owned BOS Asset Management. Based on the false and incomplete information provided to it, Regions Bank agreed to the short sale for the lower price, and released its mortgages on the property.
On June 9, 2008, the pair arranged for two sales of the property to occur on the same day. The first sale was from the owner of the property to BOS Asset Management for $102,375; the second sale was from BOS Asset Management to the original bidder on the property for $132,500. McElaney and Natera retained the difference between the two sale prices.
“This prosecution should serve as a warning to real estate agents and others who seek to take advantage of the current financial crisis by defrauding lenders through short sale fraud schemes,” stated U.S. Attorney Fein.
On Feb. 19, 2010, McElaney pleaded guilty to one count of bank fraud. Natera pleaded guilty to the same charge on Feb. 11, 2010. He awaits sentencing. (usattyct72511)
MORAL
Read this very carefully. Property that is purchased in a short sale and then sold again within 30 days at a higher price is one indicia of fraud if the listing and/or selling broker knows about the second sale before the first one is completed and that is what this is all about. So for a little over $30,000 these brokers will undoubtedly lose their license; their right to hold public office; their right to get other types of licenses and must list the felony on job applications where the questions is asked. This is a word to the wise. To those not so wise, we are available to defend you.
ELIZABETH WARREN WILL NOT BE RUNNING CFPB
FACTS
Elizabeth Warren will step down Aug. 1 from her post as special advisor to the Treasury secretary at the Consumer Financial Protection Bureau and Raj Date, a high-ranking official at the new bureau will replace her.
Warren was in the running to be the bureau's first director, but President Obama decided to nominate a less controversial figure, settling on former Ohio attorney general Richard Cordray instead. Cordray currently is chief of enforcement at the CFPB. Raj Date joined the CFPB earlier in 2011 as the associate director of research, markets and regulation. He previously worked on Wall St.
The Treasury secretary is now the acting CFPB director. Special advisor Date will be running the bureau's day-to-day operations until the Senate confirms a director. (nmn72711)
MORAL
Politics makes for strange bedfellows. It is amazing how a well-qualified person can be removed from the running when certain people do not like her liberal bent and a presidential election is upcoming and the banking industry I understand has contributed over $20 million to Obama's re-election campaign.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE
