July 25, 2014
Financial Literacy Rehash
The Consumer Financial Protection Bureau released its second Financial Literacy Annual Report. In blogging about last year’s report, I noted that the CFPB assumed that financial education worked more than research had shown it to work. Unfortunately, this report seems to be mostly a rehash (in many cases an extensive word-for-word rehash) of last year’s (pace Senator Walsh). From what I could tell, the only significant new financial education research that the CFPB has undertaken since last year is its “rules of thumb” project.
“Rules of thumb” are a decision-making and education technique that uses practical, easily-implemented guidelines for making decisions. Existing research has found rules of thumb to be a successful technique for improving decision making in many areas, and more successful than comprehensive education in some instances. Thus, rules of thumb could be a cost-effective method to improve consumer decision making. However, little research exists examining the effectiveness of rules of thumb for financial decision making.
Accordingly, in 2014 the Bureau began a research project to study the effectiveness of rules-of-thumb-based approaches aimed at helping consumers decrease their credit card debt. Rules-of-thumb-based education may be particularly appropriate for improving consumer literacy about credit card use, as credit card decisions are repetitive and frequent. We have finished the first phase of the project to understand how to create rules of thumb, when they are most useful, and how they can be implemented to ensure maximum success. The second phase of the project will test a set of rules of thumb aimed at helping consumers decrease their credit card debt. When we release the final results, which are expected in 2015, we expect that this project will increase knowledge of the efficacy of a rules-of-thumb approach to financial education both within the CFPB and among a range of external stakeholders who serve consumers. (72-73, footnote omitted)
This seems like a great project for the CFPB to undertake. But the rest of its efforts to improve its understanding about the efficacy of financial literacy leaves me under, underwhelmed, particularly because the rule-of-thumb project is limited to just one consumer financial product, credit cards.
July 25, 2014 | Permalink | No Comments
July 24, 2014
Georgia Court Dismisses HOEPA, RESPA, and TILA Claims
The court in deciding Mitchell v. Deutsche Bank Nat’l Trust Co., 2013 U.S. Dist. (N.D. Ga., 2013) ultimately dismissed the plaintiff’s complaint with prejudice.
The plaintiff’s complaint alleged federal violations of the Truth-in-Lending Act (“TILA”), the Real Estate Settlement and Procedures Act (“RESPA”), and the Homeownership Equity Protection Act (“HOEPA”).
The Complaint also asserted the following Georgia state law claims: (1) fraud; (2) wrongful foreclosure; (3) quiet title; (4) slander of title; (5) infliction of emotional distress and (6) unfair business practices.
In reviewing the plaintiff’s complaint, the court found that the plaintiffs had failed to plead a cognizable claim to support their claims. Thus, after considering the plaintiff’s arguments, the court dismissed all claims with prejudice.
July 24, 2014 | Permalink | No Comments
Georgia Court Finds that the Assignment of the Security Deed from MERS to Ocwen Permitted it to Exercise the Power of Sale Under the Security Deed Even Though Ocwen did not Hold the Note
The court in deciding Thompson v. Fed. Home Loan Mortg. Corp., 2013 U.S. Dist. (N.D. Ga., 2013) granted defendant’s motion to dismiss.
Plaintiff filed this complaint challenging the defendants’ right to foreclose on his property and alleged the following: (1) the defendants failed to provide plaintiff with statutory notice of the foreclosure sale thirty days prior to November 6, 2012, in violation of O.C.G.A. § 44-14-162.2(a); (2) the defendants violated O.C.G.A. § 44-14-162.2(a) by failing to identify Freddie Mac as the secured creditor and failing to indicate Ocwen as an agent on Freddie Mac’s behalf; and (3) Ocwen lacked the authority to institute foreclosure proceedings because it only possessed the security deed while Freddie Mac was in possession of the note.
Defendants moved to dismiss plaintiff’s complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted.
In regards to the failure to record the security deed, the plaintiff further alleges that Ocwen lacked the authority to institute foreclosure proceedings because the security deed was improperly assigned and recorded in its favor. According to the plaintiff, the security deed should have been recorded in favor of Freddie Mac, the note holder and “true secured creditor.”
The court found that the assignment of the security deed from MERS to Ocwen permitted it to exercise the power of sale under the Security Deed even though Ocwen did not also hold the note. Thus the court decided that the plaintiff was unable to state a claim for wrongful foreclosure, and the defendants’ motion to dismiss was granted. The court likewise rejected the plaintiff’s remaining claims.
July 24, 2014 | Permalink | No Comments
Georgia Court Finds that MERS Was Within Its Right in Transferring and Assigning Deed, Along with Power of Sale, to Another Party
The court in deciding Brannigan v. Bank of Am. Corp., 2013 U.S. Dist. (N.D. Ga., 2013) found that MERS could transfer and assign the deed, along with the power of sale, to another party.
After Plaintiffs defaulted on their mortgage, U.S. Bank initiated non-judicial foreclosure proceedings. Plaintiffs Wade and Angelina Brannigan initiated this action and requested that the court set aside a foreclosure sale on the grounds of wrongful foreclosure.
Plaintiff asserted that U.S. Bank, Bank of America, the Albertelli Firm, and MERS conspired to file an alleged ‘Transfer and Assignment,’ whereby MERS purported to transfer, sell, convey and assign to U.S. Bank all of its right, title and interest in and to the security deed. Plaintiffs argued, “MERS retained no interest in their security deed to transfer, and said transfer and assignment were not only fraudulent but a legal nullity” as plaintiffs’ mortgage loan had already been assigned to LaSalle Bank.
In regards to the plaintiff’s claim against MERS, the court found that the plaintiffs executed a security deed listing MERS as grantee and nominee for the lender and its successors and assigns. By the terms of the security deed, MERS could transfer and assign the deed, along with the power of sale, to another party, and did so by transferring it to U.S. Bank. Moreover, the court noted that under Georgia law, the security deed assignee “may exercise any power therein contained,” including the power of sale in accordance with the terms of the deed. O.C.G.A. § 23-2-114.
Therefore, even if Plaintiffs had standing to challenge the assignment, by the terms in the security deed U.S. Bank was within its authority to foreclose after Plaintiffs’ default.
July 24, 2014 | Permalink | No Comments
California Court Denies Plaintiffs’ Claims for Breach of Express Agreements, Breach of Implied Agreements, Slander of Title, Wrongful Foreclosure, and Violations of California Civil Codes
By Ebube Okoli
The court in deciding Zapata v. Wells Fargo Bank, N.A., 2013 U.S. Dist. (N.D. Cal. Dec., 2013) dismissed the plaintiff’s action for failure to state a claim.
This action boiled down to an attempt made by the plaintiff to avoid foreclosure by attacking the mortgage securitization process. Plaintiffs Christopher and Elaine Zapata took out a promissory note and deed of trust with Family Lending Services, Inc. The deed of trust named S.P.S. Affiliates as trustee and MERS as nominee for the lender and as beneficiary.
Plaintiffs alleged a host of violations, including the claim that the defendants allegedly violated the terms of the deed of trust by executing an invalid and false notice of default because they were not the true lender or trustee.
Plaintiffs also alleged that the defendants violated the pooling and service agreement for the ARM Trust by failing to record the assignments. Also, Wells Fargo allegedly failed to sign the loan modification agreement or provide plaintiffs with a copy Wells Fargo had signed.
According to plaintiff, defendants also allegedly recorded invalid substitution of trustee, assignment of the deed of trust, and notice of default because of various alleged recording errors and delays. Plaintiffs also allege that defendants intentionally confused them.
Plaintiffs sought declaratory relief and claim breach of express agreements, breach of implied agreements, slander of title, wrongful foreclosure, violation of California Civil Code Section 2923.5, violation of California Civil Code Section 2923.55, violation of 18 U.S.C. 1962, and violation of California Business and Professions Code Section 17200 of California’s Unfair Competition Law.
As an initial matter the court noted that, courts in this district as well as the undersigned have rejected plaintiffs’ central underlying theory. Further, the court noted that neither their court of appeals nor the California Supreme Court had ruled on whether plaintiffs may challenge the mortgage securitization process, but the undersigned has held, in agreement with persuasive authority from this district, that there was no standing to challenge foreclosure based on a loan’s having been securitized.
Accordingly, after considering the plaintiff’s litany of claims, the court ultimately granted the defendant’s motion to dismiss.
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July 25, 2014 | Permalink | No Comments