Ohio Gets Rid of Wells Fargo
Ohio decided to cut doing business with Wells Fargo due to the recent, unacceptable behavior of creating millions of fake bank accounts with customer names. So far cities in Illinois, Washington, and the Wells Fargo home state of California have already suspended business with the bank for at least one year.
Between 2011 and 2015 Wells Fargo employees created millions of fake bank accounts to meet targeted sales and collect more money in fees from their customers who were unaware of the unauthorized accounts. Wells Fargo’s actions violated the Truth in Lending Act and threatened to destroy their customers credit score.
This month Ohio announced that Wells Fargo is suspended from doing business with the state for at least one year. Wells Fargo mostly participated in funding state bonds in Ohio and is now forbidden to do so because of the loss of trust between the public and the bank. Ohio will now solicit related services from other companies even though Wells Fargo has contributed over $800 million to state bonds in the last couple years. Whether Wells Fargo will be able to gain business with Ohio again after a year will be determined at a later time.
It was settled in September that Wells Fargo will pay $185 million dollars in penalties for their fraudulent acts. Another $5 million dollars will be distributed to customers who are victims of the unlawful act and fee generating accounts.
Trash Out – Lock Out
It is illegal for a mortgage company or lender to remove a borrower’s personal belongings from a property and change the locks before the foreclosure process is complete. This action is called a “trash out” or “lock out”.
In Ohio, a lender has to wait 120 days after one missed payment to send a borrower a foreclosure notice. Then the borrower has 28 days to reply to the lawsuit or face default judgment. During this time the borrower is allowed to continue living at the property.
The lender has to notify the borrower through the sheriffs office when they are required to move – which occurs when the property is sold. Usually the borrower is not required to move out during the foreclosure process until the property has been sold. The property could have been sold by the consumer, an approved short sale, or through a sheriff sale.
The property becomes a sheriff sale if the borrower loses the lawsuit or faces default judgment. The borrower may continue living on the property until after confirmation of a sale. This could be a day or a couple months depending on how long it takes for the property to sell.
After confirmation of the sale, a writ of possession is filed. At this time the lenders will notify the borrowers of a move out deadline. If the borrowers fail to move out by the deadline, then the lenders have the right to hire a trash out company to remove the remaining possessions and change the locks for the new owner.
Mistakenly Charged Off
A bank charging off a person’s bank account is harmful to a consumer credit report. Sometimes charge-offs can mistakenly continue after a consumer has paid off their debt. Troy Doucet, the firm principal at Doucet & Associates Co., L.P.A., shares his legal advice on what a consumer can do to protect their credit report from a false charge off in Help! The Bank Charged Off My Debt – After I Paid It.
A charge-off is when the bank writes off the consumers loan on its accounting financial statements. Usually this action will appear on a credit report as a charge-off and can lower a consumer’s credit score. There are ways to correct a false charge-off appearing on a consumer bank statement and credit report.
A consumer should notify the bank when seeing an invalid charge-off on a bank statement. The consumer should question if money is still owed on a previous debt and the reason for the charge-off if it is disputed. A consumer who discovers a false charge-off on a credit report has the right to correct the problem under the Fair Credit Reporting Act (FCRA).
The FCRA protects consumer right to have an accurate credit report distributed to lenders. A consumer can send a letter to a credit reporting agency such as TransUnion, Equifax, and Experian to request a change in false information. A consumer should provide all documents possible to support why the information is false. A credit reporting agency must then re investigate the credit report and verify with the consumer that the information was corrected. A false charge off on a credit report can substantially affect a consumers ability to receive a loan and low interest rates.
More information about the Fair Credit Reporting Act (FCRA) can be found in 23 Legal Defenses to Foreclosure: How to Beat the Bank by Troy Doucet.
Check out some of our related articles about credit report errors:
Don’t Bank on Loan Modifications, A Cautionary Tale
Tim Neff was a homeowner and corrections officer at the now closed Mohican Juvenile Correction Facility. While attempting to restrain an inmate in 2009, he suffered a serious back injury that put him on worker’s compensation and effectively ended his career. Around this time, he and his wife applied for a loan modification with their mortgage company, Flagstar Bank, in an attempt to make their mortgage more affordable under their new circumstances.
The Neffs claimed that Flagstar made repeated assurances to them that their request would be processed. The loan modification was necessary for the Neffs to keep their house now that Tim was on worker’s compensation and making a fraction of what he made while working as a corrections officer. Throughout the next two years, the Neffs would repeatedly call Flagstar inquiring about the status of their loan modification, to which their representatives allegedly responded by stating it was processing and requesting more documents. The Neffs readily provided Flagstar any documents that they asked for, and maintained that the bank led them to believe that the much needed loan modification was just around the corner.
In contrast to this, the Neffs alleged to receiving several notices from Flagstar and their attorneys stating that their mortgage was in default, and eventually foreclosure. They claim that when they asked Flagstar about this, the company responded by again requesting more documents and assuring the Neffs that the loan modification was still being processed. According to the lawsuit, Flagstar’s representatives even went as far as to describe the foreclosure as a “formality.” When the Neffs asked Flagstar whether or not they should hire an attorney to answer the complaint, Flagstar allegedly responded by telling them it was unnecessary and that they could do everything an attorney could.
In December of 2011, the Neffs learned through their local newspaper that their house was due to be sold. Their decision to put faith in Flagstar’s alleged assurances proved to be a fatal mistake. It became apparent to them that Flagstar had made the decision to proceed with the foreclosure process, despite the assurances the Neffs claimed to have received. According to claims made by Flagstar, the company decided to reject the Neffs’ application for a loan modification in December 2010 due to their failure to provide a singular tax document. However, the Neffs maintained that they were led to believe their loan modification was still being processed until they were made aware of the sale of their property.
The Neffs immediately sought counsel upon learning of this sale, but unfortunately it came too late to stop anything. Doucet & Associates fought hard for the Neffs, going as far as the US Sixth Circuit Court of Appeals twice, but we were ultimately unable to prevent the foreclosure or obtain monetary justice for their horrible ordeal. This should serve as a warning to anyone dealing with a mortgage company to not take anything at face value, especially if you are concerned about foreclosure. Flagstar likely spent hundreds of thousands of dollars in legal fees rather than working out a loan modification with the Neffs, which ultimately led to the Neffs losing their home.
Time is often a critical factor, especially when it comes to foreclosure defense. If you believe foreclosure may be imminent, seek legal advice. Feel free to call our Ask a Lawyer Hotline at (614) 221-9800 if you are concerned about your mortgage.
What is the difference between bankruptcy and a loan modification?
Bankruptcy is a section of federal law that enables people who owe money from having to pay it back. Bankruptcy is actually mentioned in the Constitution, and is recognized as a way for people to obtain fresh starts, usually after some catastrophic life event caused them to acquire significant amounts of debt. Studies have consistently shown the leading cause of bankruptcy is due to significant medical bills, job loss, business failure, or family turmoil.
Bankruptcy is the process of having your debts organized and either discharged (legally forgiven), or having them repaid in an organized way over time, or a mixture of both.
In the foreclosure context, Chapter 13 bankruptcy is the tool that enables homeowners to force their mortgage company to accept repayment and causes their loan to become current over time. You basically begin making your normal mortgage payment immediately, plus an extra amount to pay back the accumulated arrears. You will make these payments pursuant to a formal plan overseen by the bankruptcy court, over a period of several years. Once you complete all your payments, the plan is done and your loan is current. You then continue with just your normal mortgage payments.
On the flip side, a loan modification is where you and your mortgage company agree privately to terms that enable you to begin repaying the loan. The process is not part of any formal bankruptcy filing, nor is it overseen by a judge. Instead, a loan modification usually comes from your mortgage company realizing you are facing financial hardship and thus deciding to offer you (or is forced to offer you by the government) a lower interest rate or longer repayment period, which lowers your payment. Alternatively, a loan modification could mean you pay a higher payment for a period of time to repay any arrearages. It could be any combination of a series of terms and is only limited to everyone’s imagination and the existing consumer laws.
In any event, a loan modification is the result of an agreement reached directly between you and your mortgage company, rather than a bankruptcy filing, which is overseen by the bankruptcy court system.
Can My Credit Card Company Take Money From My Bank Accounts?
The short answer is no, your credit card company cannot take money out of your account without your permission or a judicial order. If you live in Ohio and your credit card company is taking money out of your account without your permission, call our consumer attorneys at (614) 944-5219.
The Electronic Funds Transfers Act (EFTA) in the Consumer Credit Protection Act (CCPA), codified at 15 USC 1693a, et seq., governs electronic fund transfers to and from accounts. It’s a very short Act, with the juicy provisions located towards the end of the chapter.
In particular, 15 USC §§ 1693e requires any preauthorization to be in writing to be valid. So, the credit card company can’t take money from your account unless you allow them to do so in writing. The only exception to this is when you authorize them over the phone for a one time debit to your account, as those transactions fall outside the act under 1693(a)(6)(E).
If you don’t give the credit card company authorization over the phone, then they can’t take your money unless they get your permission in writing (or have a court order). You cannot waive this written requirement, as stated in 1693l. Also, the credit card cannot condition the extension of credit on repayment by electronic transfer, as stated in 1693k.
The civil liability provisions of the act are located in 1963m. It provides for actual damages or up to $1,000, plus attorneys fees in a successful action. Because attorneys fees are provided under the statute, our firm may be able to represent you without out of pocket cost to you. Further, a party knowingly and willfully violating the act is also subject to criminal liability under 1693n.
If an unauthorized transfer occurs, your personal bank cannot hold you liable for amounts greater than $50 or the amount stated in 1693g in certain circumstances.
If you think you need to file a lawsuit about an unauthorized transfer, call us or take a look at the definitions in 1693a to ensure the act applies to all the parties, plus look at the implementing Regulation E, 12 CFR Part 205, et seq., as it implements the EFTA, or call our law firm if you live in Ohio.
The credit card company can take money from a deposit account with court authorization. However, it cannot use a cognovits (admission of liability) to obtain an immediate judgment without your permission. Cognovits are illegal under federal law in consumer transactions, as an unfair credit practice under 16 CFR Part 444.2, meaning creditors must resort to the judicial system set up in each state to enforce debts. That is, the credit card company must normally sue you in court, obtain a judgment, then collect on that judgment through the court system. This can take months to years, depending on whether you defend the lawsuit.
For example, in Franklin County Ohio, amounts over $15,000 are under the common pleas courts jurisdiction. Judges in that court report a case load of about 1,000 cases each due to the high number of foreclosures, meaning it could be over a year before you get a trial date (if you survive the preliminary motions and motion for summary judgment). Small amounts that are able to be litigated in small claims court may generate judgments much faster.
While the court can order a freeze on your bank account at the beginning of the lawsuit, this generally occurs only when the credit card company knows which bank you have assets and there is a likelihood the funds may not be there when the lawsuit is done. It process is rather unusual, and generally the credit card company will need to wait for a judgment before freezing your assets and then taking them. If the account is transferred to a collection agency, then the Fair Debt Collection Practices Act will probably kick in. That is available at 15 USC 1692, et seq. It does not apply to credit card companies collecting on their own debt, unless debt collection is their business. It offers great protections for consumers from harassing phone calls.
If you have limited (or no) assets and lots of debt, it is wise to at least have a conversation with a bankruptcy attorney. They can provide direction or help figuring out how to protect limited assets from creditors through bankruptcy. If you are in school and rely on student loans, it would be very wise to also talk with your financial aid office to determine what, if any, effects bankruptcy will have on your ability to continue in school (stemming from the ability to obtain financing). A Bankruptcy filing can eliminate your ability to qualify for grad-plus loans without a strong co-signor (over the government subsidized $20,500 per year).