• Consumer Protection Law and Advocacy — Chicago, IL

Posts By :


Mortgage Servicing Rules Updates

The Consumer Financial Protection Bureau recently announced mortgage servicing rules updates.  Read the alert at http://www.consumerfinance.gov/about-us/blog/weve-updated-our-mortgage-servicing-rules-provide-greater-protections-mortgage-borrowers-and-other-homeowners/.  Here are some of the important highlights:

  • When a homeowner applies for a modification, deed in lieu, or other alternative to foreclosure (known as “loss mitigation”), the servicer must let the borrower know when their application is complete.  In the past, servicers would fail to keep borrowers informed as to the status of their applications.  This rule seeks to improve servicer accountability.
  • Homeowners may now be eligible to apply for loss mitigation more than once.  For example, if a loan modification is initially rejected, the homeowner may re-apply.
  • Family members, heirs or successors shall have increased rights.  If ownership in a mortgaged home is transferred due to death, divorce or legal separation, servicers are now required to provide information and notices to these successors.
  • Only limited extensions will be given to new servicers on loss mitigation applications.  Now, if servicing transfers, generally, the new servicing entity must evaluate complete applications within 30 days.

In announcing the mortgage servicing rules updates, Bureau Director Richard Cordray stated:

The Consumer Bureau is committed to ensuring that homeowners and struggling borrowers are treated fairly by mortgage servicers and that no one is wrongly foreclosed upon … These updates to the rule will give greater protections to mortgage borrowers, particularly surviving family members and other successors in interest, who often are especially vulnerable.

If you are in foreclosure, or if you are behind in your mortgage payments and have applied for mortgage assistance, speak to an attorney regarding your options.  Keep track of all your correspondence with your servicer, maintain copies of your application paperwork, and don’t ignore important deadlines for submitting information to your servicer.

Wrongful Repossessions - Bardo Law PC

Illinois Law Governing Repossession Agents

Illinois law requires that repossession agents be licensed and have insurance.  It also requires that agents keep track of all repossessions with recovery tickets purchased through the Illinois Commerce Commission.  As the entity charged with regulating repossession agents, the Commerce Commission’s website has helpful information for you to check out if your vehicle is repossessed — https://www.icc.illinois.gov/CollateralRecovery/.

Through the website, you can examine current license information and learn your rights post-repossession.  For example, repossession agents must inventory any personal property left in a vehicle during a repossession and tell you how to get your property back.  Agents must also notify local police before a repossession occurs and provide the agency’s name, license number, and the color, make, model, VIN, and description of the collateral being repossessed.  Within 30 minutes of the repossession occurring, the agency must then inform police of the date and time of the repossession.

If your car has been repossessed, contact your local police department to see whether the repossession has been properly reported.  If you don’t receive a notice from your finance company within 3-5 days of the repossession, make sure you call to find out where your vehicle is and the identity of the repossession agency to minimize possible storage fees.  But watch out – repossession agents may force you to sign documents when picking up your belongings or your vehicle so be sure you don’t unknowingly release any claims you may have for damages or unfair conduct.  You have the right to refuse signing a release and consult a lawyer for assistance.


Tricked Into An Auto Warranty?

It’s easy to be tricked into an auto warranty.  Keep in mind that these are really not warranties but extended service contracts.  It’s often better to avoid buying extended service contracts.  In some limited instances, extended auto service contracts may be worth purchasing if:

(1) You are buying a used car that is otherwise “as is”

(2) The service contract does not specifically limit engine, transmission or other high cost repairs

(3) You’ve done your research and the company offering the contract has a solid reputation online and with the Better Business Bureau

Also, make sure you’re not buying duplicate coverage.  For example, if the manufacturer’s auto warranty is still in effect, some service contracts won’t be valid.  Don’t waste your money on a contract that won’t apply for some time in the future.  It’s an old trick to add on service contracts to increase a dealer’s profits so be especially careful if you’re offered an extended service contract on a new car that already has a manufacturer’s warranty.

Pay close attention to the warranty’s terms.  It may require you to obtain pre-authorization for any repairs and may require you to go to specific service centers.  Be sure those are terms you can live with.  And while you can normally cancel these contracts, double check the cancellation terms.

Finally, watch out for telemarketers selling auto service contracts.  Today, the Federal Trade Commission announced $4 million in refunds for one such scam – https://www.ftc.gov/news-events/press-releases/2016/07/ftc-providing-4-million-full-refunds-people-tricked-buying-bogus.

Don’t be pressured into auto add-ons – take your time, shop around, and know what you’re getting.  Even if the dealer says otherwise, that car will likely be on the lot tomorrow.


What if I get a Citation to Discover Assets?

Bankruptcy Filings Impact Debt Collectors

Bankruptcy filings impact debt collectors.  When a consumer seeks protection under either Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code, debt collectors are typically notified of the bankruptcy filing.  They should not continue to try and collect a debt while the consumer is in bankruptcy.

Courts differ on whether contact with the consumer during bankruptcy is just a violation of the bankruptcy stay or if it also means the debt collector violates the Fair Debt Collection Practices Act, 15 U.S.C. 1692 (“FDCPA”).  Also unclear was whether a debt collector could try and collect in bankruptcy – by filing a proof of claim – if the debt was too old.  A new court decision helps consumers by confirming debt collectors may violate the FDCPA when they file bankruptcy proofs of claim on time-barred debts.  These time-barred debts are too old to sue on and therefore, consumers have the right to file claims under the FDCPA when this happens.

The Eleventh Circuit Court of Appeals stated, “Although the Code certainly allows all creditors to file proofs of claim in bankruptcy cases, the Code does not at the same time protect those creditors from all liability.  A particular subset of creditors – debt collectors – may be liable under the FDCPA for bankruptcy filings they know to be time-barred.”  This May 24, 2016 ruling was in the consolidated cases of Johnson v. Midland Funding, LLC and Brock v. Resurgent Capital Services, L.P. and LVNV Funding, LLC, Nos. 15-11240 and 15-14116.

Because it’s unlawful to make false, deceptive or misleading representations when collecting a debt, it should also be unlawful for debt collectors to make bankruptcy filings that misrepresent the age or ability to sue on a particular debt.  This decision makes good sense for consumers and helps keep collectors honest.

If you filed bankruptcy and have questions about debt collection in bankruptcy, talk to your bankruptcy attorney or turn to a consumer protection attorney for help.

Handling Old Unpaid Accounts

Handling old unpaid accounts continues to cause a lot of confusion for consumers.  Often times, after a debt is “charged off” by an original creditor, another entity will buy the debt.  Companies that buy old debts — called debt buyers — will send collection letters encouraging you to pay.  These letters will offer special deals and settlements if you “pay now.”  But watch out for these tactics.

There is a limited period of time by which an unpaid debt can be sued on.  This time period, known as the “statute of limitations,” can vary from state to state and depends on the type of account. For example, in Illinois, there is generally a five-year statute of limitations to sue on a consumer credit card debt.  And if your vehicle was financed and repossessed, there is generally a four-year statute of limitations in Illinois to sue on any deficiency balance from the vehicle loan.

Why is this important?  Because if you make a payment in response to a collection letter, even if it’s only a $5 or $10 payment, you re-start the statute of limitations.  If you can’t or don’t intend to pay the whole debt, you may make it easier for the debt buyer to sue you on that whole debt.  And this can lead to court fees, possible judgments, and garnishment or citation proceedings.

Worse, if it’s a debt you don’t recognize, making a small payment thinking the problem will go away can obligate you on a debt that wasn’t even yours to begin with.  This so-called “zombie debt” was the subject of a fabulous John Oliver segment (watch it at http://www.rollingstone.com/tv/news/watch-john-oliver-forgive-15-million-in-debt-20160606) and multiple news articles, including this one from the Guardian: https://www.theguardian.com/money/us-money-blog/2015/nov/08/zombie-debt-is-menacing-america-and-mine-even-has-a-name-kathryn.

If you have any questions about collection letters on old or unrecognizable debts, talk to an attorney BEFORE you pay.

Protections for Auto Loan Co-Signers

Protections for auto loan co-signers do exist but it’s more important to consider whether co-signing is the right decision BEFORE you sign.  Young adults, students, and consumers with lower credit ratings will often ask for help, especially when purchasing a vehicle, but you have to remember that you are responsible for paying that loan back if there is a default.  The Consumer Financial Protection Bureau has a helpful resource, “Take Control of Your Auto Loan” — http://www.consumerfinance.gov/consumer-tools/auto-loans/.  The Bureau also published an auto loan “shopping sheet” to help you make sure you’re getting the best loan possible, available at http://www.consumerfinance.gov/about-us/blog/arm-yourself-knowledge-when-shopping-auto-loan/.

Remember, as auto loan co-signers:

  1. You are responsible for repaying the loan; and
  2. Co-signing can impact your own credit report

Because you are ultimately responsible, you should ask the finance company to send you monthly statements.  This will help you keep track of whether your co-signer is making regular payments. Also, if the vehicle is eventually repossessed because the payments aren’t being made, be certain that you obtain the “Notice of Repossession” paperwork from the finance company and keep track of any sale dates or opportunities to reinstate the loan.

You should also always have current contact information for your co-signer.  Make sure you can locate him or her and don’t let months go by without checking on the status of their loan payments.

Don’t let your good deed be punished and really consider whether you have faith in your co-signer.  Also, seek legal advice as soon as you know a default may be coming to help minimize your losses.

Property “Preservation” or Unlawful Trespass?

Consumers continue to have their homes invaded while they are away by so-called property “preservation” companies.  If the consumer misses a payment or a foreclosure action has been filed, the mortgage company will hire property “preservation” contractors to inspect the home.  Often times, those contractors will perform lock changes, winterize the property and turn off the water supply, and take pictures of the home’s interior, all in preparation for the mortgage company to sell the home. Unfortunately, in judicial foreclosure states like Illinois, consumer advocates explain that this conduct violates Illinois’ Mortgage Foreclosure Law, which law requires consumers to be able to remain in their homes until after a judgment of foreclosure is entered and sale is confirmed.

Last summer, the Illinois Attorney General announced settlement of a lawsuit against one such company for this type of conduct:  http://illinoisattorneygeneral.gov/pressroom/2015_06/20150603.html.

Under Madigan’s settlement, Safeguard, a Delaware corporation based in Ohio, must pay $1 million, nearly all of which will be paid to Illinois residents who filed complaints over Safeguard’s practices. Safeguard must also follow 40 operating standards in conducting inspections and other services relating to Illinois properties set by Madigan’s office to ensure homeowners’ rights are protected.

Sometimes, these contractors do not enter the home but instead, conduct repeated inspection “drive-bys” and then tag on those fees to the mortgage.  Just last week, the National Consumer Law Center announced litigation relating to the fees being asserted against homeowners for similar conduct, as explained at http://www.nclc.org/media-center/nclc-sues-nationstar-mortgage.html.

If you suspect your home has been entered, or if you have received a bill reflecting multiple inspection fees for property “preservation” services, contact an attorney for assistance.

Fair Credit Reporting & Consumer Law - Bardo Law PC

Free Credit Reports?

Free credit reports are available to consumers on an annual basis at https://www.annualcreditreport.com/index.action. Beware of sites other than www.annualcreditreport.com because those sites generally do not offer free credit reports.  Why does your report matter?  Because you need to check and verify that you recognize all the accounts and your information has not been, (1) confused with someone else or (2) stolen by an identity thief.  You also need to confirm your credit report is properly updated to reflect payments you make.

Checking your credit is a more timely concern than ever before.  Memorial Day weekend represents the start of our summer family travel season, and as you use credit and debit cards at gas stations, bars, restaurants, and shops outside of your local area, it’s especially  important to practice safe habits to make sure your credit is not compromised.

First, make sure to pull your credit report at least once per year and perform weekly checks of your online checking and savings accounts and credit card statements to confirm you recognize all transactions.

Second, carefully examine card machines at retail establishments.  As reported by the Consumerist this week, card skimmers continue to pose a threat – https://consumerist.com/2016/05/26/card-skimmers-found-on-walmart-self-checkout-terminals-in-two-states/.  According to the article:

“[T]he skimmers used in these instances are made to overlay the existing payment terminals so that they not only go undetected, but also collect both the information from the swiped card and any data entered on the PIN pad.  A skimmer of this quality will cost the wannabe ID thief at least $200, but that’s nothing compared to the amount of money that could be drained from victims’ accounts in a short period of time.”

And third, avoid leaving your credit or debit cards to hold a tab at bars and restaurants.  Pay with cash or make sure to close out your tab immediately to avoid your card being out of your possession for a longer than necessary period of time.

Keeping these tips in mind will help ensure a less stressful return to reality after your summer vacation!

Be Wary of Wage Assignments

It’s important to be wary of wage assignments as they appear in many payday and other short-term loan contracts. Sometimes, they even appear in vehicle purchase contracts.  Many consumers do not realize they are agreeing to wage assignments until after their paychecks show unexpected deductions.  So what is a wage assignment?  A wage assignment is an agreement between you and the company you owe.  If you don’t make the payments you are supposed to make pursuant to your contract, the company can ask your employer to take the money it is due from your paycheck. Check your contract to see if it includes the words “WAGE ASSIGNMENT,” typically in bold-faced, capital letters.

Wage assignments can be embarrassing as you may have to speak to your employer (including representatives in the payroll department) about your debts to resolve the situation.  And properly executed wage assignments can mean hardship for you because your paycheck ends up being smaller.

Legislators recognized the problems with wage assignments and there are very strict laws governing them.  Most importantly, consumers need to know that in Illinois, you have the right to revoke a wage assignment at any time and for any reason.  Also:

If any person wrongfully: (1) serves a notice on an employee or serves a notice which does not conform with the requirements of 740 ILCS 170/2.2, (2) causes a demand to be served for the wages of an employee, or (3) fails to release a demand, he shall be liable to the employee and the employer for statutory damages in the sum of $500 and all actual damages occasioned by such action including reasonable attorney’s fees.

The law provides a remedy and damages if your wages have been improperly assigned so don’t hesitate to seek legal assistance if you think your paycheck is being deducted unfairly or if you need help stopping a wage assignment.

Arbitration rules are stacked against consumers

The Beginning of the End of Forced Arbitration?

Today may mark the beginning of the end of forced arbitration.  For more than a decade, arbitration clauses have been appearing in the fine print of almost every consumer contract.  If you have signed up for a cell phone, applied for a credit card, purchased a car or even agreed to an employment contract, you’ve “agreed” to a forced arbitration clause.  What does that mean?  It means you agree to give up your right to file your case in court and try it in front of a jury of your peers.  It also means, most of the time, that you agree you will not bring your dispute as a class action.  While we have had success in consumer arbitrations, and there are some very talented arbitrators, arbitration should be a choice, not a requirement.  And this choice may be on the horizon.

After completing an intensive arbitration study, the Consumer Financial Protection Bureau (“CFPB”) announced today that it is seeking public comment on a proposal that will prohibit businesses from putting mandatory arbitration clauses in new contracts that prevent class action lawsuits.  Here’s a link to the CFPB’s press release: http://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-proposes-prohibiting-mandatory-arbitration-clauses-deny-groups-consumers-their-day-court/.  As the NY Times reports:

In effect, the move by the Consumer Financial Protection Bureau — the biggest that the agency has made since its inception in 2010 — will unravel a set of audacious legal maneuvers by corporate America that has prevented customers from using the court system to challenge potentially deceitful banking practices.

Honing their plan over decades, credit card companies, banks and other lenders devised a way to use the fine print of their contracts to push consumers out of court and into arbitration, where borrowers must battle powerful companies on their own. Without the ability to pool resources, most people abandon their claims and never make it to arbitration.

The new rules would mean that lenders could not force people to agree to mandatory arbitration clauses that bar class actions when those customers sign up for financial products. The changes would not apply to existing accounts, though consumers would be free to pay off their old loans and open new accounts that are covered.

 We will continue to keep you informed of these new developments and report back when the 90 day comment period on the rule has closed.  But today is a very good day for consumers.