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.
A deal between the Department of Justice and the City of St. Paul is drawing the attention of congressional Republicans. According to the Pioneer Press, four Republicans leaders in Congress say the U.S. Justice Department brokered an “unprecedented” deal with the city last year, agreeing not to join two housing-related lawsuits against the city as long as St. Paul pulled out of a U.S. Supreme Court case.
According to reports, legal observers said St. Paul likely would have won the Supreme Court case had the city not dropped its appeal of lawsuits filed in 2004 and 2005. In Magner vs. Gallagher, a dozen St. Paul landlords argued that the city’s extensive efforts to inspect and condemn their properties — a “code to the max” philosophy — decreased the amount of affordable housing available to minorities. Those actions amounted to a violation of, or “disparate impact” under, the federal Fair Housing Act.
In an exchange for St. Paul withdrawing the case from review, the Justice Department allegedly agreed not to join two unrelated housing-related lawsuits that were then pending against the city. These were federal lawsuits that could have cost the city upwards of $180 million in damages.
In a statement related to the allegations a spokeswoman for the Justice Department defended the agency’s conversations with the city: “The department has broad discretion under the False Claims Act to achieve global resolutions that consider policy and other pending litigation factors.”
The reports also shine some light on the motivations behind the talks. Apparently Attorney General Eric Holder and his staff expressed concern at the time that if the Supreme Court justices gutted the Fair Housing Act it would have a ripple effect on other protections, including those necessary to win major legal fights with several banks under investigation for their lending practices during the housing boom.
Maybe that’s the real reason some are upset to see this deal happen- they’re more concerned with protecting the interests of the banking industry than of tenants.
Need legal advice? Contact the attorneys at Lord & Faris for a free consultation.
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.
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>
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.
At this point, we’ll take any good economic news we can get. According to reports, the U.S. economy expanded just slightly over this last quarter and weekly jobless claims declined, with initial filings for benefits down to 391,000 from over the 400,000 mark just a few weeks ago. But this marks another year of millions of Americans, and thousands of Minnesotans, out of work or underemployed.
The impact of joblessness on households is unavoidable. Long-term unemployment leads to more household stress, poorer performance for children in school, and an overall increase in anxiety. Depression linked to job loss or the inability to find replacement work can only add to the burdens of trying to keep a household afloat.
But what the Minnesota bankruptcy attorneys at Lord & Faris tell our clients is that there is no shame in struggling, and that they are not alone. Literally thousands of other people understand the burden and the struggle, they can empathize with the grief and the despair, and they can appreciate the sacrifices made every day to maintain some semblance of a normal life during all this economic chaos.
If the burden is too great, the bills too much and the struggle just too hard there is another way. Nobody wants to declare bankruptcy, but sometimes it is your best chance at getting a fresh start. Declaring bankruptcy does not make you a failure, nor does it mean your dreams of retirement and college for your children are unattainable.
When faced with these kinds of challenges you need a strong, knowledgeable advocate in your corner, one who knows the bankruptcy laws and how best to navigate a system that can seem technical, cold and uncaring. Those are the attorneys at Lord & Faris. Their experience and hard work combine with a genuine understanding of the challenges surrounding a decision like filing for bankruptcy MN. Turn to them to help you back toward the life you imagined.
The Securities and Exchange Commission announced another massive settlement with Wall Street, showing that while the progress may be slow-moving, federal officials are in the process of holding big banks responsible for risky and at times even fraudulent behavior.
According to the Minneapolis Star Tribune, Citigroup has agreed to pay $285 million to settle civil fraud charges that it misled buyers of complex mortgage investments just as the housing market was beginning to collapse. According to the Securities and Exchange Commission, Citigroup bet against the investments in 2007, resulting in profits and fees in excess of $160 million. Meanwhile, investors lost millions.
The penalty is the biggest involving a Wall Street firm accused of misleading investors before the financial crisis since Goldman Sachs agreed to pay $550 million to settle similar charges last year. JPMorgan also settled with federal investigators, paying $153.6 to resolve those claims.
Citigroup’s payment includes the fees and profit it earned, plus $30 million in interest and $95 million in penalties. That money will be returned to investors, said the SEC.
In the civil suit, the SEC said Citigroup traders discussed in late 2006 the possibility of buying financial instruments to essentially bet on the failure of the mortgage assets assembled in the deal. Those instruments became known as collateralized debt obligations–securities backed by pools of other assets such as mortgages. At the height of the financial crisis in 2008 federal regulators gave Citigroup $45 billion in bailout dollars after concerns surfaced that the bank was on the brink of failure. In this last financial quarter Citigroup earned $3.8 billion and its CEO Vikram Pandit received a multi-year bonus package that could net him almost $25 million. The numbers are simply staggering, especially when placed in context of the millions of Americans who lost their homes due to the foreclosure crisis these actions spawned. We are glad to see the settlement and continue to hope for justice for those Americans most deeply affected.
Hundreds of thousands of Americans find themselves trapped in their homes, underwater in their mortgages through no fault of their own. Traditionally lenders have been unwilling to work with these homeowners for mortgage modifications and the result has been numerous unnecessary foreclosures and bankruptcies. Hopefully that is about to change.
The Obama administration announced a plan to open up mortgage relief to those kinds of homeowners. Under this new proposal, homeowners who are still current on their mortgages would be able to refinance no matter how much their home value has dropped below what they still owe. In the past, borrowers who owed only more than 25 percent more than their homes are worth could participate in this kind of refinancing programs. Only homeowners with mortgages backed by Fannie Mae and Freddie Mac will be eligible to participate.
The Federal Housing Finance Agency estimates that up to a million borrowers will use the program and the hope is the give families a much needed bit of financial relief in the form of a reduced monthly mortgage payment. That relief could not only prevent further foreclosures from entering the market, but it could free up consumer dollars for spending elsewhere in the economy.
So far the program is set to run through 2013.
Minnesota foreclosures continue to be a drag on the state economy though, as a whole, this state fared far better than others. After working with many families as they navigate through the foreclosure process, the attorneys at Lord & Faris applaud any effort to provide relief to those who have played by the rules and still find themselves struggling to hold on to their home. For them the housing crisis has literally been dumped on top of them, and they need help.
If your family is underwater and facing foreclosure, contact the attorneys at Lord & Faris. Let us help you navigate this process so you can move on with life.
The state of Minnesota is cracking down on unscrupulous lending practices as the housing market recover sputters along. In its most recent action, the Minnesota Department of Commerce fined Mortgage Connection Inc. $40,000 and revoked the company’s state license for illegally taking advance fees to modify mortgages. The Department of Commerce also barred the company’s owner, Augustus Odoom, from residential mortgage origination and servicing in the state.
According to the state, Mortgage Connection had charged 36 Minnesotans who who were looking to modify their mortgages more than $2000 in advance fees. In the state of Minnesota it is illegal to collect advance fees for those kinds of services.
The company can avoid the fine if it refunds those fees to consumers within 30 days.
The enforcement comes at a time when more than 14 million American homeowners are in foreclosure or delinquent on their mortgage payments, and when mortgage fraud perpetrated by lenders and other predatory businesses have forced record numbers of Americans into personal bankruptcy.
This is a good first step but both the state and the federal government are going to have to do more to address the fallout from the mortgage crisis. There can simply be no sustained and genuine economic recovery in most Americans continue to struggle to pay their bills and more and more find themselves with no other option than to file for personal bankruptcy.
If this story describes you or a loved on, contact the Minnesota personal bankruptcy attorneys of Lord & Faris for a free consultation. We can work through the process with you and help you take the necessary steps to get your finances back in order, including helping you pursue a legitimate mortgage modification of necessary. Without a strong advocate in your corner you could fall victim to a scam like the one stopped by the Department of Commerce. Let us be that advocate for you.
Minneapolis St Paul Lawyers & Attorneys
Contact Lord & Faris Law Firm
Always seek the advice of a qualified legal professional regarding any legal issues you may have. You should not disregard professional advice or refrain from seeking professional advice because of anything contained in this Web site. The information contained herein is general and educational in nature and may not be current or updated. Because each case is different and each legal analysis is customized for individual clients, the information contained in this Web site should never be used to determine your legal rights. Click here for the full disclaimer.
Address: Lord & Faris Law Firm, 111 Third Ave South, Suite 110, Minneapolis, MN 55401. Phone: 612-333-5673 Lord & Faris Law Firm
Lord & Faris Law Firm
The Law Firm of Lord & Faris is a Minneapolis and St. Paul based personal injury law office that works for individuals and families throughout Minnesota including the following cities: Minneapolis, St. Paul, Plymouth, Burnsville, St. Louis Park, Golden Valley, Edina, Bloomington, Eden Prairie, Eagan, Richfield, Maplewood, Roseville, Brooklyn Park, Maple Grove, Blaine, Lakeville, Woodbury, Duluth, Coon Rapids, Lino Lakes, North Oaks, Stillwater, White Bear Lake, Minnetonka, Apple Valley, St. Cloud, Plymouth, Rochester, Wayzata, Excelsior, Chanhassen, Chaska, Mankato, Marshall, Hibbing, Brainerd.