Despite indicators that the U.S. economy is stabilizing, the rate of Americans falling into official poverty classification is expected to climb to historically high levels over the past 50 years. The “war on poverty” efforts produced substantial gains; however, those improvements have been offset from a stagnant and weak economy as well as a deteriorating government safety net. Based on surveys of economists, nonpartisan think tanks, and academics that there is a widespread consensus that the poverty rate could climb from 15.1% in 2010 to its highest level since 1965.
Poverty is spreading at record levels across many groups, from the unemployed and underemployed to previously middle-class suburban families to the chronically poor populations. With the discouragement at lack of employment opportunities, many who were previously employed have simply stopped looking for work. Others have had to settle for minimum wage jobs or those which provide only a fraction of what they had previously been earning. Those currently drawing unemployment are at risk as their benefits expire.
Economic analysts estimate that in 2011 nearly one in six Americans was classified as poor. As a comparison, the highest historical rate based on government records was in 1959, when it was 22.4%.
Poverty is closely tied to joblessness. While the unemployment rate improved some from 9.6 % in 2010 to 8.9 % in 2011, the actual ratio among the employment-population basically was unchanged, indicating that the real change in numbers was due to workers simply giving up seeking employment. Another indicator of poverty is that number of food stamp recipients has increased even while employment levels grew.
Combine unemployment, under-employment, and the foreclosure crisis, and what has resulted is that Americans are struggling with poverty at an alarmingly-increasing rate.
If you or your family have been affected financially by unemployment, foreclosure, or other financial crisis, you may want to consider consulting an attorney who is experienced in debt relief and bankruptcy. While not an option for everyone, bankruptcy can sometimes be the answer to get your financial life back on track.
In tough economic times, people sometimes have a hard time meeting financial obligations as a result of a divorce. And then there are those cases where people just abuse the system. A recent Minnesota appellate court decision is a good reminder that those trying to skirt the system can end up in jail.
The Court of Appeals upheld the jailing of a former Rochester, Minn., man who failed to meet support obligations for his ex-wife and 14-year-old daughter beginning 17 years ago. Markus John McGowan, 59, racked up a debt of more than $130,000 to his wife, Diane McGowan, said Thomas Kelly of the Olmsted County attorney’s office.
According to the Pioneer Press, the McGowans divorced in 1995. When he stopped making support payments, instead of appearing in court as ordered on July 21, 1997, to explain why he had not been making required housing and child support payments, McGowan fled to Florida. A warrant was issued for his arrest. He was eventually arrested while back for a visit with his mother.
The Court of Appeals said McGowan’s lifestyle “includes international and domestic travel and elegant dining.” He studied aeronautical engineering at the University of Wyoming, attended the International Flight Safety Academy in Florida, obtained a pilot’s license and worked as both an air traffic controller and a firefighter, the court said.
“Under the extraordinary circumstances present here, we conclude that the district court properly exercised its discretion,” the decision said. “There is not even a scintilla of evidence from which we can glean that, if released, father would comply” with the condition that he pay in order to be released from jail. Quite the opposite, the appeals court said, “He was brought before the district court only because of a chink in his otherwise successful efforts to elude arrest,” the court said.
The importance of this story is that those in real financial distress who can’t meet obligations work with the courts and the attorneys for a modification. If you are facing difficult economic challenges contact the attorneys at Lord & Faris.
Federal district Judge Reggie Walton dismissed a lawsuit accusing Bank of America of putting customers’ financial data at risk of surveillance by the U.S. government. The lawsuit claimed the practice of diverting customer service calls overseas left the information vulnerable and exposed by contracting in countries where U.S. laws governing financial privacy protections do not apply.
According to the complaint the bank was giving the National Security Agency potential access to private financial information without disclosing that to customers. But according to Judge Walton, the complaint failed to offer proof that Bank of America had actually provided any financial documents to the federal government, let alone that any detail that was inadvertently disclosed caused any specific injury to the plaintiffs.
“The plaintiffs’ allegations are literally rooted in belief and suspicion, as these two words appear frequently in the Second Amended Complaint,” Walton wrote. “And belief and suspicion are quite far from the “concrete and particularized,” and “actual or imminent, not ‘conjectural’ or ‘hypothetical’ requirements of standing.”
The plaintiffs had originally sued last year under the federal Right to Financial Privacy Act as well as local consumer protection laws, but they dropped the local claims later in the year. The bank had moved to dismiss for lack of standing and failure to state a claim, but since Judge Walton agreed with Bank of America on the standing issue the court did not need to reach the other issues.
According to reports, the plaintiffs plan to appeal.
Our financial institutions need to take extra care when dealing with consumer financial privacy data, and the fact that practices like this could leave sensitive consumer information vulnerable and parties without a remedy troubling. If you or a loved one think your private data has been compromised, contact the attorneys at Lord & Faris as you may have a claim.
A recent story in the Minneapolis Star Tribune shows the unfortunate truth that individuals seeking to get out of a difficult financial situation can oftentimes find themselves the victims of fraud.
According to the story, Edward Jonak operates a business called Affordable Law Center, advertises under “attorneys” in the Yellow Pages but he is not a lawyer, nor does he employ any lawyers. Instead, for a fee, he will provide forms, referrals to lawyers and typists or find a bail bondsman. The actions skirt close enough to the practice of law that four states have initiated legal action alleging Jonak provided legal advice or illegally prepared bankruptcy documents. In addition to the claims, the Better Business Bureau of Minnesota and North Dakota put out a clear public warning about the business describing a “clear pattern of deception on the part of this company.”
As a result of court actions, Jonak has been banned from preparing bankruptcy documents in Colorado; selling legal plans, giving legal advice and preparing bankruptcy documents in the Western District of Wisconsin; providing “any bankruptcy-related services” in the Western district of Missouri or accepting any fees from its residents.
Jonak maintains his innocence and counters that he’s providing a needed and valuable service. His clients can’t afford traditional legal services and Jonak believes the complaints are fueled by attorneys who feel threatened by his business model.
Whether or not Jonak is providing a valuable service or defrauding unwitting customers will be resolved in the litigation, but the warning in the story is clear. Not every business that advertises legal expertise has that expertise and to avoid being fleeced a consumer needs to ask for clear boundaries in the relationship and work to be performed. Bankruptcy proceedings are complicated, technical proceedings that require the skill and training lawyers posses.
The fallout from the housing market boom is far from over. According to the Pioneer Press, a 49-year-old Savage real estate agent has been sentenced to five years in a federal prison for her role in a $10 million mortgage fraud scheme.
Barbara Lynnae Puro pled guilty in March to one count of conspiracy to commit wire fraud. Puro was part of a crime ring that would arrange to sell homes in Prior Lake to “straw buyers” at inflated prices. According to reports Puro helped to dispense to proceeds from the fraudulent sales to her co-conspirators.
Between 2005 and 2008 the ring convinced the straw buyers to purchase approximately twenty-two homes in Minnesota. The loans for the inflated sales exceeded $10 million and resulted in losses totaling $5.3 million. At least a handful of other co-conspirators have already been sentenced.
This kind of scheme represents some of the most common forms of fraud to come out of the housing boom, in part because at the time the schemes were quick and easy to pull off, especially given the totally lax oversight in the industry. At the time these were seen as largely “victimless” crimes because they all happened on paper with no real expectation that a valid real estate transaction was going to happen.
But much like insurance fraud, these kinds of schemes do widespread damage to our communities. They artificially inflate housing prices and leave communities in collapse when the scheme falls apart. The thousands of incomplete housing developments are a testament to these kinds of injuries. The damages spiral, too. As housing prices spike more families are squeezed out of the market and more are pushed to the brink of foreclosure. So in fact these are not victimless crimes.
If you’re facing foreclosure, contact the attorneys at Lord & Faris.
According to reports, a Texas community bank will file what lawyers say is the first suit directly challenging the constitutionality of the Dodd-Frank Act and the creation of the Consumer Financial Protection Bureau.
Represented by former White House counsel C. Boyden Gray, the State National Bank of Big Spring, Tex., along with The Competitive Enterprise Institute and the 60 Plus Association allege that the law lacks effective checks and balances to assure the public of accountability.
The suit, to be filed in U.S. District Court for the District of Columbia, targets Title 1 and Title 10 of Dodd-Frank, Gray said in an interview. Title 1 focuses on the government’s designation of systemically risky enterprises, while Title 10 covers the creation of the CFPB. The suit also challenges the January recess appointment of CFPB head Richard Cordray on the grounds that the Senate was not in recess, Gray said.
According to a news release detailing the complaint, which is not yet available, the plaintiffs complain that Congress “exercises no ‘power of the purse’ over the CFPB, because the agency’s budget — administered essentially by one person — comes from the Federal Reserve, amounting to approximately $400 million that Congress cannot touch or regulate.”
Courts have held the president lacks the power to remove the leaders of all independent agencies on policy grounds (as opposed to gross wrongdoing) based on the U.S. Supreme Court’s 1935 decision that President Franklin Roosevelt acted unconstitutionally when he fired a member of the Federal Trade Commission. Gray said the suit seeks to give the president authority to fire the head of the CFPB, much like cabinet members can be fired. The lawsuit is likely the first in a series of challenges to the new agency from conservatives and business groups opposed to heightened scrutiny.
By <a href=”mailto:email@example.com “>Priscilla Lord Faris</a>
According to reports, U.S. homeowners who endured a range of unfair foreclosure practices in 2009 and 2010 could get up to $125,000 or more under new guidelines recently issued. Federal bank regulators also extended the deadline for people who were in some stage of foreclosure during that time-frame to request a free foreclosure review. People now have until Sept. 30 to apply. All in all, excellent news for homeowners.
The moves stem from sweeping federal enforcement actions last year against 14 large mortgage providers — including U.S. Bank and Wells Fargo Bank — for unsafe, unsound or deficient foreclosure practices. The independent foreclosure reviews are separate from the $25 billion national foreclosure “robo-signing” settlement reached with mortgage servicing companies earlier this year over a range of abuse allegations.
Consumer advocates called the deadline extension crucial to reaching more of the nearly 4.4 million people who received original notices from mortgage providers. But some are arguing that the remedies as too little, too late. The Center for Responsible Lending issued a statement calling the effort “deeply inadequate.” For example, the center said, borrowers who were wrongfully denied loan modifications and lost their homes might only get $15,000, for example. “The banks made such a big, big mess there’s probably no way that they could afford to adequately compensate people for the harm that’s been done,” said Kathleen Day, a spokeswoman for Center for Responsible Lending. “Having said that, is this enough? We don’t think so.”
The two largest banks in Minnesota, U.S. Bank and Wells Fargo, are among those subject to the enforcement actions and required to comply with the ongoing foreclosure reviews.
It would be great to see more wronged homeowners get more back from lenders but it is also crucial to recognize important first steps in recovery and this is such a step.
In the ongoing battle to curb predatory lending practices the federal government announced plans to use the newly created Consumer Financial Protection Bureau as another tool to reign in bad lenders.
Specifically, the Consumer Financial Protection Bureau will target discriminatory lending practices, including a new focus on peer-to-peer lending groups. The Wharton School of Business at the University of Pennsylvania found evidence of significant racial disparities in this new type of credit market. According to the report “Loan listings with blacks in the attached picture are 25% to 35% less likely to receive funding than those of whites with similar credit profiles.” The report further found that “[d]espite the higher average interest rates charged to blacks, lenders making such loans earn a lower net return compared to loans made to whites with similar credit profiles because blacks have higher relative default rates. These results provide insight into whether the discrimination we find is taste-based or statistical.”
So far the CFPB has issued a compliance bulletin that holds lenders accountable for what the bureau calls “disparate impact” lending practices that, while seemingly above board, actually hide discriminatory lending in reality. The agency also created a “tips and warning signs” web page that educates lenders on discriminatory lenders. “We want consumers to avoid the marketplace’s silent pickpocket—discrimination,” CFPB Director Richard Cordray said in a statement. “We cannot afford to tolerate practices, intentional or not, that unlawfully price out or cut off segments of the population from the credit markets. That’s why the CFPB is educating consumers about their fair lending rights and pursuing lenders whose practices are discriminatory.”
If suspect you or a loved one has been the victim of discriminatory lending practices, or if you have questions or concerns about a current mortgage, contact the attorneys at Lord & Faris for a free consultation.
The foreclosure crisis has touched just about everyone in some fashion, including our troops. The Minneapolis Star Tribune reports on a federal lawsuit alleging that Minnesota National Guard member had his home illegally foreclosed upon while he was serving in Iraq.
Army Staff Sgt. Phillip Harry learned his home had been foreclosed upon and sold via a letter forwarded to him in Iraq in violation of the Servicemembers Civil Relief Act. The lawsuit alleges that Illinois-based HSBC Mortgage Services alleges that the company foreclosed on service members mortgages while they were on active duty and evicted them and their families without giving them a chance to challenge the foreclosures in court. It also claims that HSBC recklessly filed papers that said Harry was not a member of the military at the time of the sale despite the fact that an easy check of public records would have shown he was serving overseas.
The U.S. Treasury launched an investigation last year into 10 leading banks that may have illegally foreclosed on the mortgages of almost 5,000 members of the U.S. military, some of them activated to duty in Iraq and Afghanistan.
According to the suit, Harry bought his house in Minneapolis in 2005 and the mortgage was later assigned to HSBC. On March 25, 2008, Harry was ordered to report to the National Guard training site at Camp Ripley and then to active duty on April 15 for training to deploy to Iraq. He served in Iraq until June 2009. On the day he reported for training at Fort Sill, Okla., HSBC began a foreclosure sale, and attempted to serve Harry the notice on April 21, according to the suit. The suit alleges that without Harry’s knowledge, HSBC bought the house at sheriff’s auction for $32,602.
As a result, Harry lost his house, personal property, the equity he had built up and suffered damage to his credit rating, the suit said.
Sadly, these stories are not unique. If you or a loved one has been the victim of a wrongful foreclosure, contact the experienced foreclosure attorneys at Lord & Faris for a free consultation.
It is literally impossible to scan the news and avoid a story of some homeowner being taken advantage of or being treated very poorly in connection with the housing crisis and foreclosure fraud scandal. So far the reports have focused primarily on the lenders and those working on the behalf of such lenders, but now comes news of attorneys acting poorly and looking to capitalize on the crisis rather than help struggling homeowners. If this has happened to you or someone you love, contact our Minneapolis Foreclosure Law Firm as you may have a claim.
A Los Angeles-area law firm was sued this week for allegedly collecting illegal fees for a “forensic loan audit” from a California couple as part of a promise to stop the foreclosure of their property–a promise that was quickly broken. According to the suit, the attorneys promised that the audit would induce the couple’s lender to modify their loans, another promise that never materialized. And according to the complaint, the attorneys making these promises never had any intent to try and stop the foreclosure process and were just interested in collecting fees.
Many think this suit is a sign of many more to come. As we learn more about the depth of the bad behavior it is hard to imagine that more claims against attorneys, accountants and real estate agents won’t follow. Real estate transactions are complicated transactions, even if there are some people who, at the height of the boom, argued the opposite. Furthermore, the foreclosure process as it currently stands offers only limited protections for struggling homeowners, leaving open the possibility that homeowners can be taken advantage of at many points in the process.
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