ATLANTA, March 23, 2015 (GLOBE NEWSWIRE) — Ocwen Financial Corporation (NYSE:OCN), a leading financial services holding company, yesterday sent a letter of rebuttal to Trustees and Master Servicers for 119 residential mortgage-backed securities trusts in response to a notice of alleged non-performance issued on January 23, 2015 by Gibbs & Bruns LLP. That notice was sent on behalf of a group of RMBS investors, including BlackRock Financial Management, Inc., Pacific Investment Management Company LLC (PIMCO), Kore Advisors, L.P., Metropolitan Life Insurance Company, and Neuberger Berman Europe Limited.

Ocwen’s rebuttal letter made clear the following key points:

  • The notice is the latest effort in a long campaign by Blackrock, PIMCO, Kore, Met Life and Neuberger to try and impose changes to standard servicing practices, with the goal of forcing more home foreclosures and fewer loan modifications. Ocwen is a leading provider of loan modifications under HAMP, the Home Affordable Modification Program administered by the United States Department of the Treasury. HAMP furthers the Treasury Department’s strong public policy to help struggling borrowers remain in their homes by encouraging and guiding servicers like Ocwen to pursue profitable loan modifications rather than rushing to foreclosure. Instead, these investors’ pro-foreclosure, anti-modification agenda is driven by their desire to increase their own financial returns on their specific tranche-level holdings in RMBS Trusts, at the expense of long-term gains to the Trusts as whole, through sustainable modifications.
  • The allegations in the notice are substantially the same claims that were refuted during a failed attempt to prevent Ocwen from acquiring a competitor’s servicing portfolio in 2013. Those allegations were ultimately dismissed after being found to have no merit by independent experts.
  • The current standard of servicing outlined in Ocwen’s agreements requires the company to service loans in the best interest of all investors and in conformance with accepted industry practices. Ocwen is compliant with this standard of servicing. Each modification Ocwen performs is designed to yield a higher anticipated recovery to investors than foreclosure. Nothing alleged by the investors establishes that Ocwen breached the standard of servicing called for by the agreements.
  • Unable to establish otherwise, the investors instead malign Ocwen’s modifications through selectively presented data that does not comport with the facts, as well as allegations of imprudent modification practices that are belied by Ocwen’s use of standard industry practices and compliance with applicable regulations.
  • Ocwen is uniquely positioned in the market to handle the special demands of servicing subprime loans in a manner consistent with servicing standards that achieve positive investor outcomes.

The full letter is available for review by clicking on the following link: Rebuttal Letter to Trustees.

A February 2015 independent recent research report from Morgan Stanley’s RMBS strategy team details many aspects of Ocwen’s servicing business including that Ocwen’s “modification style” is effective. The report states that “Whether a borrower first went delinquent while being serviced by Ocwen, or fell delinquent and was then transferred to Ocwen, we find that these borrowers are more likely to be in their homes today than if the MSRs were held elsewhere.” Moreover, the report goes on to say that “It doesn’t appear in investors’ best interest to replace Ocwen as servicer.”

About Ocwen Financial Corporation

Ocwen Financial Corporation is a financial services holding company which, through its subsidiaries, is engaged in the servicing and origination of mortgage loans. Ocwen is headquartered in Atlanta, Georgia, with offices throughout the United States and support operations in India and the Philippines. Utilizing proprietary technology, global infrastructure and superior training and processes, Ocwen provides solutions that help homeowners and make our clients’ loans worth more. Ocwen may post information that is important to investors on its website (

Forward Looking Statements

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Forward-looking statements and involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially.

Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, but are not limited to, the following: adverse effects on our business as a result of recent regulatory settlements; reactions to the announcement of such settlements by key counterparties; increased regulatory scrutiny and media attention, due to rumors or otherwise; uncertainty related to claims, litigation and investigations brought by government agencies and private parties regarding our servicing, foreclosure, modification and other practices; any adverse developments in existing legal proceedings or the initiation of new legal proceedings; our ability to effectively manage our regulatory and contractual compliance obligations; the adequacy of our financial resources, including our sources of liquidity and ability to fund and recover advances, repay borrowings and comply with debt covenants; our servicer and credit ratings as well as other actions from various rating agencies, including the impact of recent downgrades of our servicer ratings; volatility in our stock price; the characteristics of our servicing portfolio, including prepayment speeds along with delinquency and advance rates; our ability to contain and reduce our operating costs; our ability to successfully modify delinquent loans, manage foreclosures and sell foreclosed properties; uncertainty related to legislation, regulations, regulatory agency actions, government programs and policies, industry initiatives and evolving best servicing practices; as well as other risks detailed in Ocwens reports and filings with the Securities and Exchange Commission (SEC), including its annual report on Form 10-K/A for the year ended December 31, 2013 (filed with the SEC on 08/18/14) and its quarterly report on Form 10-Q for the quarter ended September 30, 2014 (filed with the SEC on 10/31/14). Anyone wishing to understand Ocwens business should review its SEC filings. Ocwens forward-looking statements speak only as of the date they are made and, except for our ongoing obligations under the U.S. federal securities laws, we undertake no obligation to update or revise forward-looking statements whether as a result of new information, future events or otherwise.


Stephen Swett
T: (203) 614-0141

John Lovallo
T: (917) 612-8419

Dan Rene
T: (202) 973-1325
BANK OF AMERICA, N.A., vs PATE AFFIRMED – Homeowners Awarded $250,000 in Punitive Damages Due to Unclean Hands and Fraud

BANK OF AMERICA, N.A., vs PATE AFFIRMED – Homeowners Awarded $250,000 in Punitive Damages Due to Unclean Hands and Fraud


CASE NO. 1D14-251

In this civil foreclosure case, the trial court found that Appellant Bank of America (the Bank) engaged in egregious and intentional misconduct in Appellee Pates’ (Pate) purchase of a residential home. Thus, based on the trial court’s finding that the Bank had unclean hands in this equity action, it did not reversibly err in denying the foreclosure action and granting a deed in lieu of foreclosure. In addition, the trial court did not err in ruling in favor of the Pates in their counterclaims for breach of contract and fraud, and awarding them $250,000 in punitive damages and $60,443.29 in compensatory damages, against the Bank and its affiliate, Homefocus Services, LLC, which provided the flawed appraisal discussed below. Finally, the trial court did not reversibly err in granting injunctive relief and thereby ordering the Bank to take the necessary measures to correct the Pates’ credit histories.

In the bench trial below, the trial court found that the Bank assured the Pates, based on the appraisal showing the home’s value far exceeded the $50,000 mortgage loan, that it would issue a home equity loan in addition to the mortgage loan. This was a precondition to the Pates’ agreement to purchase the home, which was in very poor condition but had historical appeal for the Pates. The Pates intended to restore the home, but needed the home equity loan to facilitate restoration.

Before the closing on the property, the Bank informed the Pates that it would close on the home equity loan “later,” after the mortgage loan was issued. The Bank later refused to issue the home equity loan, in part on the ground that the appraisal issued by Homefocus was flawed. The Pates were forced to invest all of their savings and much of their own labor in extensive repairs. Thus, the trial court found that the Pates detrimentally relied on the representations of the Bank that it would issue the home equity loan. The record supports the trial court’s conclusion that the Bank acted with reckless disregard constituting intentional misconduct by the Bank. See generally, Lance v. Wade, 457 So. 2d 1008, 1011 (Fla. 1984) (“[E]lements for actionable fraud are (1) a false statement concerning a material fact; (2) knowledge by the person . . . that the representation is false; (3) the intent . . . [to] induce another to act on it; and (4) reliance on the representation to the injury of the other party. In summary, there must be an intentional material misrepresentation upon which the other party relies to his detriment.”).

The trial court further found that the Pates complied with the Bank’s demand to obtain an insurance binder to provide premiums for annual coverage, and that the Bank agreed to place these funds in escrow, utilizing the binder to pay the first year of coverage and calculate future charges to the Pates. Although the Pates fulfilled this contractual obligation, the Bank failed to correctly utilize the escrow funds. Consequently, the Pates’ insurance policy was ultimately cancelled due to nonpayment. The Pates attempted to obtain additional coverage but were unsuccessful due to the home’s structural condition.The Bank then obtained a force-placed policy with $334,800 in coverage and an annual premium of $7,382.98, which was included on the mortgage loan, quadrupling the Pate’s mortgage payment.

The Pates offered to pay the original $496.34 monthly mortgage payment, but the Bank refused, demanding a revised mortgage payment of $2,128.74. The trial court found it “disturbing that Bank of America could financially profit due to [the Bank’s] failure to pay the home insurance. . . . [T]he profits for one or more months of forced place insurance would have been substantial.”

The trial court further found that during the four years of litigation following the Pates’ default, the Bank’s agents entered the Pate’s home several times while the Pates resided there, attempted to remove furniture, and placed locks on the exterior doors. Following the Bank’s action, the Pates had to have the locks changed so their family could enter the residence. During two of the intrusions, the Pates were required to enlist the aid of the sheriff to force the Bank’s agent to leave their home. The trial court found as fact that, due to the Bank’s multiple intrusions into their home, the Pates were forced to obtain alternative housing for 28 months, at a cost of thousands of dollars.

The Bank’s actions supported the trial court’s finding that punitive damages were awardable. In Estate of Despain v. Avante Group, Inc., 900 So. 2d 637, 640 (Fla. 5th DCA 2005), the court held that “[p]unishment of the wrongdoer and
deterrence of similar wrongful conduct in the future, rather than compensation of the injured victim, are the primary policy objectives of punitive damage awards.” See also Owens-Corning Fiberglas Corp. v. Ballard, 749 So. 2d 483 (Fla. 1999); W.R. Grace & Co.-Conn. v. Waters, 638 So. 2d 502 (Fla. 1994).

In Estate of Despain, the court held that “[t]o merit an award of punitive damages, the defendant’s conduct must transcend the level of ordinary negligence and enter the realm of willful and wanton misconduct . . . .” 900 So. 2d at 640. Florida courts have defined such conduct as including an “entire want of care which would raise the presumption of a conscious indifference to consequences, or which shows . . . reckless indifference to the rights of others which is equivalent to an intentional violation of them.” Id. (quoting White Constr. Co. v. Dupont, 455 So. 2d 1026, 1029 (Fla. 1984)). Here, the Bank’s intent to defraud was shown by its reckless disregard for its actions. The facts showing the Bank’s “conscious indifference to consequences” and “reckless indifference” to the rights of the Pates is the same as an intentional act violating their rights. See White Constr. Co., 455 So. 2d at 1029. The record evidence provides ample support for the trial court’s ruling in favor of the Pates’ claim for punitive damages against the Bank.

The learned trial judge found that the Bank’s actions demonstrated its unclean hands; therefore, the Bank was not entitled to a foreclosure judgment in equity. Unclean hands is an equitable defense, akin to fraud, to discourage unlawful activity. See Congress Park Office Condos II, LLC v. First-Citizens Bank & Trust Co., 105 So. 3d 602, 609 (Fla. 4th DCA 2013) (“It is a self-imposed ordinance that closes the doors of a court of equity to one tainted with inequitableness or bad faith relative to the matter in which he seeks relief[.]”) (quoting Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 814 (1945))). The totality of the circumstances established the Bank’s unclean hands, precluding it from benefitting by its actions in a court of equity. Thus, the trial court did not err by denying the foreclosure action.


Click here for a link to the PDF of the decision.

Foreclosures Drop to Lowest Rate Since July 2006

Foreclosure activity in the United States fell last month to the lowest rate in nearly nine years as banks started the process on fewer homes and scheduled fewer auctions than in the previous month, industry firm RealtyTrac said on Thursday.

A total of 101,938 properties across the United States were at some stage of the foreclosure process, which includes foreclosure notices, scheduled auctions and bank repossessions, the group said.

That drove overall foreclosure activity down 4.3 percent from January and down 9.4 percent from the same time last year. Lenders started the foreclosure process on 48,079 properties in February, down 4.9 percent from last month. That was a 7.3 percent decline from February 2014. A total of 45,880 properties were scheduled for foreclosure auctions last month, a 13.4 percent drop from January, and down 3.9 percent from a year ago.

Bank repossessions however climbed last month as lenders reclaimed 9.2 percent more properties than in January. A total of 24,305 homes were repossessed in February. Still, repossessions were down 19.8 percent from year-ago levels.

CoreLogic Reports January 2015 National Foreclosure Inventory Down 33.2 Percent Year Over Year

—43,000 Completed Foreclosures Reported in January 2015—

/ PR Newswire / — CoreLogic® (NYSE: CLGX), a leading global property information, analytics and data-enabled services provider, today released its January 2015 National Foreclosure Report which shows that the foreclosure inventory declined 33.2 percent and completed foreclosures declined 22.5 percent from January 2014. The report also shows there were 43,000 completed foreclosures nationwide in January 2015, down from 55,000 in January 2014 and representing a decrease of 63 percent from the peak of completed foreclosures in September 2010. Completed foreclosures have declined every month for the past 37 consecutive months. On a month-over-month basis, completed foreclosures were up 14.7 percent from the 37,000* reported in December 2014. As a basis of comparison, before the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.

Completed foreclosures are an indication of the total number of homes actually lost to foreclosure. Since the financial crisis began in September 2008, there have been approximately 5.5 million completed foreclosures across the country, and since homeownership rates peaked in the second quarter of 2004, there have been approximately 7 million homes lost to foreclosure.

As of January 2015 the national foreclosure inventory was down 33.2 percent year over year, and approximately 549,000 homes were in some stage of foreclosure.  This compares to 822,000 homes in January 2014 and represents 39 consecutive months of year-over-year declines. The foreclosure inventory as of January 2015 made up 1.4 percent of all homes with a mortgage, compared to 2.0 percent in January 2014. On a month-over-month basis, the foreclosure inventory was down 2.7 percent from December 2014. The current foreclosure rate of 1.4 percent is back to March 2008 levels.

“Job growth and home-value appreciation have worked to push the serious delinquency rate to the lowest since mid-2008 and foreclosures down by one-third from a year ago,” said Frank Nothaft, chief economist at CoreLogic. “With economic growth in 2015 expected to be better than last year, further declines in both delinquencies and foreclosures are projected for this year.”

“The foreclosure inventory continues to shrink with declines in all 50 states over the past 12 months,” said Anand Nallathambi, president and CEO of CoreLogic. “Florida, one of the hardest hit states during the foreclosure crisis, experienced a decline of almost 50 percent year over year which is outstanding news.”

Highlights as of January 2015:

  • The number of mortgages in serious delinquency declined 23.8 percent from January 2014 to January 2015 with 1.5 million mortgages, or 4 percent, in serious delinquency (defined as 90 days or more past due, including those loans in foreclosure or REO). This was the lowest delinquency rate since June 2008.
  • The foreclosure inventory has experienced 39 months of continuous declines and year-over-year double-digit declines for 28 consecutive months
  • The five states with the highest number of completed foreclosures for the 12 months ending in January 2015 were: Florida (111,000), Michigan (51,000), Texas (34,000), California (30,000) and Georgia (28,000). These five states accounted for almost half of all completed foreclosures nationally.
  • Four states and the District of Columbia experienced the lowest number of completed foreclosures for the 12 months ending in January 2015: South Dakota (22), the District of Columbia (66), North Dakota (336), West Virginia (511) and Wyoming (532).
  • Four states and the District of Columbia experienced the highest foreclosure inventory as a percentage of all mortgaged homes: New Jersey (5.2 percent), New York (4.0 percent), Florida (3.5 percent), Hawaii (2.7 percent) and the District of Columbia (2.5 percent).
  • The five states with the lowest foreclosure inventory as a percentage of all mortgaged homes were Alaska (0.3 percent), Nebraska (0.4 percent), North Dakota (0.4 percent), Arizona (0.5 percent) and Montana (0.5 percent).

*December data was revised. Revisions are standard, and to ensure accuracy, CoreLogic incorporates newly released data to provide updated results.

Judicial Foreclosure States Ranking (Ranked by Completed Foreclosures)

Non-Judicial Foreclosure States Ranking (Ranked by Completed Foreclosures)

Foreclosure Data for the Largest Core Based Statistical Areas (CBSAs) (Ranked by Completed Foreclosures)

Figure 1: Number of Mortgaged Homes per Completed Foreclosure

Figure 2: Foreclosure Inventory as of January 2015

Figure 3 (is a map): Foreclosure Inventory by State Map

For ongoing housing trends and data, visit the CoreLogic Insights Blog:


The data in this report represents foreclosure activity reported through January 2015.

This report separates state data into judicial versus non-judicial foreclosure state categories. In judicial foreclosure states, lenders must provide evidence to the courts of delinquency in order to move a borrower into foreclosure. In non-judicial foreclosure states, lenders can issue notices of default directly to the borrower without court intervention. This is an important distinction since judicial states, as a rule, have longer foreclosure timelines, thus affecting foreclosure statistics.

A completed foreclosure occurs when a property is auctioned and results in the purchase of the home at auction by either a third party, such as an investor, or by the lender. If the home is purchased by the lender, it is moved into the lender’s real estate owned (REO) inventory. In “foreclosure by advertisement” states, a redemption period begins after the auction and runs for a statutory period, e.g., six months. During that period, the borrower may regain the foreclosed home by paying all amounts due as calculated under the statute. For purposes of this Foreclosure Report, because so few homes are actually redeemed following an auction, it is assumed that the foreclosure process ends in “foreclosure by advertisement” states at the completion of the auction.

The foreclosure inventory represents the number and share of mortgaged homes that have been placed into the process of foreclosure by the mortgage servicer. Mortgage servicers start the foreclosure process when the mortgage reaches a specific level of serious delinquency as dictated by the investor for the mortgage loan. Once a foreclosure is “started,” and absent the borrower paying all amounts necessary to halt the foreclosure, the home remains in foreclosure until the completed foreclosure results in the sale to a third party at auction or the home enters the lender’s REO inventory. The data in this report accounts for only first liens against a property and does not include secondary liens. The foreclosure inventory is measured only against homes that have an outstanding mortgage. Homes with no mortgage liens can never be in foreclosure and are, therefore, excluded from the analysis. Approximately one-third of homes nationally are owned outright and do not have a mortgage. CoreLogic has approximately 85 percent coverage of U.S. foreclosure data.

Source: CoreLogic
The data provided is for use only by the primary recipient or the primary recipient’s publication or broadcast. This data may not be re-sold, republished or licensed to any other source, including publications and sources owned by the primary recipient’s parent company without prior written permission from CoreLogic. Any CoreLogic data used for publication or broadcast, in whole or in part, must be sourced as coming from CoreLogic, a data and analytics company. For use with broadcast or web content, the citation must directly accompany first reference of the data. If the data is illustrated with maps, charts, graphs or other visual elements, the CoreLogic logo must be included on screen or website. For questions, analysis or interpretation of the data, contact Lori Guyton at lguyton@cvic.comor Bill Campbell at Data provided may not be modified without the prior written permission of CoreLogic. Do not use the data in any unlawful manner. This data is compiled from public records, contributory databases and proprietary analytics, and its accuracy is dependent upon these sources.

About CoreLogic
CoreLogic (NYSE: CLGX) is a leading global property information, analytics and data-enabled services provider. The company’s combined data from public, contributory and proprietary sources includes over 3.5 billion records spanning more than 40 years, providing detailed coverage of property, mortgages and other encumbrances, consumer credit, tenancy, location, hazard risk and related performance information. The markets CoreLogic serves include real estate and mortgage finance, insurance, capital markets, and the public sector. CoreLogic delivers value to clients through unique data, analytics, workflow technology, advisory and managed services. Clients rely on CoreLogic to help identify and manage growth opportunities, improve performance and mitigate risk. Headquartered in Irvine, Calif., CoreLogic operates in North America, Western Europe and Asia Pacific. For more information, please visit

CORELOGIC and the CoreLogic logo are trademarks of CoreLogic, Inc. and/or its subsidiaries.

For real estate industry and trade media:
Bill Campbell

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Andrea Hurst

Peak Corporate Network Principal Eli Tene Warns of Increased Foreclosure Starts on the Horizon as a Result of Recent Increases in Loan Modification Re-Defaults

New data indicates rise in foreclosure filings for 2015 with possible links to nationwide wave of loan modification re-defaults associated with government-subsidized loan modification programs.

Woodland Hills, CA (PRWEB) March 18, 2015

Eli Tene, Principal and Managing Director, Peak Corporate Network Entities

Eli Tene, Principal and Managing Director, Peak Corporate Network Entities

Citing a newly-released housing industry analysis, Eli Tene, Principal and Managing Director of the Peak entities, expressed concern over the uncharacteristic spike reported in January 2015 Notice of Default (NOD) filings. “While an improving economy and new regulations governing lenders and servicers have resulted in a steady decline in mortgage defaults since the height of the recession in 2008,” states Tene, “this new wave of mortgage defaults is a cause for concern. Foreclosure now looms for a new wave of distressed homeowners despite prevailing sentiment that the crisis is over.”

Tene alludes to analysis from Black Knight Financial Services released earlier this month reporting foreclosures at a 12 month high, with repeat foreclosures comprising over half of recorded starts with an increase of 11% over December 2014 starts. The analysis also reflects the stark contrast in foreclosure filings occurring in judicial and non-judicial states. “While it’s encouraging that foreclosure starts for January are nowhere near the levels we saw five years ago,” he says, “the dramatic increase in repeat foreclosures foreshadows a new era of defaults, and along with it a return to increased inventories of distressed assets to investor balance sheets.” Tene is quick to point out, however, that the real victims at the end of the day are not the investors, but the “distressed homeowners who could find themselves facing eviction once again.”

Tene contends that permanent loan modifications structured under the Obama Administration’s HAMP programs factor into the rise in recent foreclosure starts. According to a January 2015 special report evaluating the ongoing progress of the government’s Troubled Asset [Relief] Program (TARP) that earmarked an initial $30 billion to fund the HAMP initiative, nearly 238,000 permanent loan modifications arranged by lenders and servicers to help distressed borrowers are now in default (defined at 90 days or more past due on payments). And, as of December 31st, 2014, 10% of active HAMP loan modifications are behind one or two months on payments increasing the likelihood of a re-default. “The can is simply being kicked down the road,” observes Tene. “At some stage of the game, many of these borrowers will have to face the prospect that they are still dealing with extenuating circumstances that will eventually find them facing a protracted foreclosure process.”

Increased activity in the default servicing sector appears to support these findings. Kelli Espinoza, Executive Vice President overseeing operations at Peak Foreclosure Services, Inc. ( which serves as the primary Peak entity specializing in a wide range of default servicing solutions to investors, acknowledges renewed file submissions from current clients, and is considering increasing staff to handle the work flow. “We’ve seen a steady flow of new files, despite reports that foreclosures are on the decline.” She continues, “Perhaps from a macro level analysis, there may appear to be a reduction in defaults, but based on current activity we’re anticipating a full pipeline of foreclosure filings for the next few quarters.”

“It’s important to note,” Tene concludes, “that past programs to assist distressed homeowners have addressed the symptoms of a previously raging housing crisis, but haven’t enacted a true cure. The fact that thousands of Americans could lose their home is still real. Lenders and servicers could face a deluge of defaults under new regulatory conditions that complicate the already complex process of loss mitigation.”

As a leading authority in the real estate industry, The Peak Corporate Network is a group of companies that provides a full array of comprehensive real estate services nationwide, including commercial and residential brokerage services, mortgage financing, insurance services, loan servicing, escrow services, short sales, foreclosure processing and 1031 exchange. For more information, visit

The Peak Corporate Network is a brand that represents a group of related separate legal entities, each providing its unique set of real estate services.

Free Web-Based Foreclosure Education Course Offered to General Public

technologyA new Web-based course that will provide city leaders with strategies to successfully address foreclosures in their cities will be offered for free to the general public, according to an announcement from National League of Cities (NLC) and Wells Fargo on Wednesday.

The course, entitled Understanding Foreclosure: A City Leader’s Guide, was initially launched in 2014 at the Congress of Cities in Austin, Texas. NLC is offering the course as part of its NLC University, which is NLC’s collaborative education and professional development initiative.

“The National League of Cities is pleased to offer Understanding Foreclosure: A City Leader’s Guide with Wells Fargo for the first time to the general public, free of charge,” said Clarence E. Anthony, CEO and executive director of NLC. “The tools in this course provide proven strategies to help city leaders across the nation understand and navigate the intricacies of the foreclosure process. Ultimately, a better understanding of this issue will lead to better outcomes for our communities and their residents.”

The course is intended to equip city leaders with the best information and resources that will allow them to take a proactive stance on foreclosures should their cities experience another mortgage crisis like the one that hit the nation in 2008.

“At Wells Fargo we understand the important role we play in helping our communities succeed,” said Wells Fargo’s Mike Rizer, head of Community Relations. “This course, developed with the National League of Cities, provides information and strategies that will help to improve quality of life in our neighborhoods, and that we hope will ultimately promote long-term economic prosperity.”

The course features three self-paced modules that informs participants as to the basics of foreclosures and the devastating impact they have on communities. The course includes a series on mortgage basics, such as who is responsible for the care of vacant and abandoned properties, and building strategies and partnerships to address foreclosures. Each module features specific learning objectives and engagement activities.

“This webinar is interactive and easy to follow,” Kansas City, Missouri, Mayor Sly James said. “A better understanding of mortgage processes can improve relations between lenders and residents, help stabilize neighborhoods and improve livability in our city.”

CoreLogic Reports 1.2 Million US Borrowers Regained Equity in 2014

5.4 Million Properties Remain in Negative Equity as of Q4 2014

/ PR Newswire / — CoreLogic® (NYSE: CLGX), a leading global property information, analytics and data-enabled services provider, today released new analysis showing 1.2 million borrowers regained equity in 2014, bringing the total number of mortgaged residential properties with equity at the end of Q4 2014 to approximately 44.5 million or 89 percent of all mortgaged properties. Nationwide, borrower equity increased year over year by $656 billion in Q4 2014. The CoreLogic analysis also indicates approximately 172,000 U.S. homes slipped into negative equity in the fourth quarter of 2014 from the third quarter 2014, increasing the total number of mortgaged residential properties with negative equity to 5.4 million, or 10.8 percent of all mortgaged properties. This compares to 5.2 million homes, or 10.4 percent, that were reported with negative equity in Q3 2014*, a quarter-over-quarter increase of 3.3 percent. Compared to 6.6 million homes, or 13.4 percent, reported for Q4 2013, the number of underwater homes has decreased year over year by 1.2 million or 18.9 percent.

Negative equity, often referred to as “underwater” or “upside down,” means that borrowers owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in value, an increase in mortgage debt or a combination of both.For the homes in negative equity status, the national aggregate value of negative equity was $349 billion at the end of Q4 2014. Negative equity value increased approximately $7 billion from $341.8 billion in Q3 2014 to $348.8 billion in Q4 2014. On a year-over-year basis, however, the value of negative equity declined overall from $403 billion in Q4 2013, representing a decrease of 13.4 percent in 12 months.

Of the 49.9 million residential properties with a mortgage, approximately 10 million, or 20 percent, have less than 20-percent equity (referred to as “under-equitied”) and 1.4 million of those have less than 5-percent equity (referred to as near-negative equity). Borrowers who are “under-equitied” may have a more difficult time refinancing their existing homes or obtaining new financing to sell and buy another home due to underwriting constraints. Borrowers with near-negative equity are considered at risk of moving into negative equity if home prices fall. In contrast, if home prices rose by as little as 5 percent, an additional 1 million homeowners now in negative equity would regain equity.“The share of homeowners that had negative equity increased slightly in the fourth quarter of 2014, reflecting the typical weakness in home values during the final quarter of the year,” said Dr. Frank Nothaft, chief economist for CoreLogic. “Our CoreLogic HPI dipped 0.7 percent from September to December, and the percent of owners ‘underwater’ increased to 10.8 percent. However, from December-to-December, the CoreLogic index was up 4.8 percent, and the negative equity share fell by 2.6 percentage points.”“Negative equity continued to be a serious issue for the housing market and the U.S. economy at the end of 2014 with 5.4 million homeowners still ‘underwater’,” said Anand Nallathambi, president and CEO of CoreLogic. “We expect the situation to improve over the course of  2015. We project that the CoreLogic Home Price Index will rise 5 percent in 2015, which will  lift about 1 million homeowners out of negative equity.”Highlights as of Q4 2014:

  • Nevada had the highest percentage of mortgaged properties in negative equity at 24.2 percent; followed by Florida (23.2 percent); Arizona (18.7 percent); Illinois (16.2 percent) and Rhode Island (15.8 percent). These top five states combined account for 31.7 percent of negative equity in the United States.
  • Texas had the highest percentage of mortgaged residential properties in an equity position at 97.4 percent, followed by Alaska (97.2 percent), Montana (97.0 percent), Hawaii (96.3 percent) and North Dakota (96.2 percent).
  • Of the 25 largest Core Based Statistical Areas (CBSAs) based on mortgage count, Tampa-St. Petersburg-Clearwater, Fla., had the highest percentage of mortgaged properties in negative equity at 24.8 percent, followed by Phoenix-Mesa-Scottsdale, Ariz. (18.8 percent), Chicago-Naperville-Arlington Heights, Ill. (18.5 percent), Riverside-San Bernardino-Ontario, Calif. (14.8 percent) and Atlanta-Sandy Springs-Roswell, Ga. (14.6 percent).
  • Of the same largest 25 CBSAs, Houston-The Woodlands-Sugar Land, Texas had the highest percentage of mortgaged properties in an equity position at 97.7 percent, followed by Dallas-Plano-Irving, TX (97.1 percent), Anaheim-Santa Ana-Irvine, Calif. (96.4 percent), Portland-Vancouver-Hillsboro, Ore. (96.4 percent) and Denver-Aurora-Lakewood, Col. (96.2 percent).
  • Of the total $349 billion in negative equity, first liens without home equity loans accounted for $185 billion aggregate negative equity, while first liens with home equity loans accounted for $164 billion, or 47 percent.
  • Approximately 3.2 million underwater borrowers hold first liens without home equity loans. The average mortgage balance for this group of borrowers is $228,000. The average underwater amount is $57,000.
  • Approximately 2.1 million underwater borrowers hold both first and second liens. The average mortgage balance for this group of borrowers is $295,000.The average underwater amount is $77,000.
  • The bulk of home equity for mortgaged properties is concentrated at the high end of the housing market. For example, 94 percent of homes valued at greater than $200,000 have equity compared with 84 percent of homes valued at less than $200,000.

*Q3 2014 data was revised. Revisions with public records data are standard, and to ensure accuracy, CoreLogic incorporates the newly released public data to provide updated results.

Figure 1: National Home Equity Distribution by LTV Segment

Figure 2: Home Equity Share by State and Equity Cohorts

Figure 3: Near-Negative and Negative Equity Share by State

Map 1: Map of Negative Equity Share by State

State Table: CoreLogic Q4 2014 Negative Equity by State*

*This data only includes properties with a mortgage. Non-mortgaged properties are by definition not included.

The amount of equity for each property is determined by comparing the estimated current value of the property against the mortgage debt outstanding (MDO). If the MDO is greater than the estimated value, then the property is determined to be in a negative equity position. If the estimated value is greater than the MDO, then the property is determined to be in a positive equity position. The data is first generated at the property level and aggregated to higher levels of geography. CoreLogic data includes 49 million properties with a mortgage, which accounts for more than 85 percent of all mortgages in the U.S. CoreLogic uses its public record data as the source of the MDO, which includes both first-mortgage liens and second liens, and is adjusted for amortization and home equity utilization in order to capture the true level of MDO for each property. The calculations are not based on sampling, but rather on the full data set to avoid potential adverse selection due to sampling. The current value of the property is estimated using a suite of proprietary CoreLogic valuation techniques, including valuation models and the CoreLogic Home Price Index (HPI). Only data for mortgaged residential properties that have a current estimated value is included. There are several states or jurisdictions where the public record, current value or mortgage coverage is thin. These instances account for fewer than 5 percent of the total U.S. population.

Source: CoreLogic
The data provided is for use only by the primary recipient or the primary recipient’s publication or broadcast. This data may not be re-sold, republished or licensed to any other source, including publications and sources owned by the primary recipient’s parent company without prior written permission from CoreLogic. Any CoreLogic data used for publication or broadcast, in whole or in part, must be sourced as coming from CoreLogic, a data and analytics company. For use with broadcast or web content, the citation must directly accompany first reference of the data. If the data is illustrated with maps, charts, graphs or other visual elements, the CoreLogic logo must be included on screen or web site. For questions, analysis or interpretation of the data contact Lori Guyton at or Bill Campbell at Data provided may not be modified without the prior written permission of CoreLogic. Do not use the data in any unlawful manner. This data is compiled from public records, contributory databases and proprietary analytics, and its accuracy depends upon these sources.

About CoreLogic
CoreLogic (NYSE: CLGX) is a leading global property information, analytics and data-enabled services provider. The company’s combined data from public, contributory and proprietary sources includes over 3.5 billion records spanning more than 40 years, providing detailed coverage of property, mortgages and other encumbrances, consumer credit, tenancy, location, hazard risk and related performance information. The markets CoreLogic serves include real estate and mortgage finance, insurance, capital markets, and the public sector. CoreLogic delivers value to clients through unique data, analytics, workflow technology, advisory and managed services. Clients rely on CoreLogic to help identify and manage growth opportunities, improve performance and mitigate risk. Headquartered in Irvine, Calif., CoreLogic operates in North America, Western Europe and Asia Pacific. For more information, please visit

CORELOGIC and the CoreLogic logo are trademarks of CoreLogic, Inc. and/or its subsidiaries.

# # #

For real estate industry and trade media:
Bill Campbell
212-995-8057For general news media:
Andrea Hurst

Warren Opposes CFPB Reforms

By Nicholas Ballasy March 13, 2015 • as reported by Credit Union Times

Sen. Elizabeth Warren (D-Mass.) vowed to oppose any changes that restrain the CFPB.


“I want to be clear about regulatory changes,” Warren said in a speech at CUNA’s GAC.

“If credit unions and community banks can show me regulations of supervisory practices that are unnecessary, then I’m ready to work together to find a better approach. But I will not support changes that hamstring the CFPB, and I will not go back to a world where big financial institutions can make billions of dollars by cheating their customers,” she added.

Warren said she wanted to increase transparency in the marketplace when she set up the CFPB.

“I wanted to level the playing field for credit unions and other small providers – that meant that we needed clear rules that give a break to those that provide transparent, valuable products to their customers,” she said. “Right at the beginning when I was trying to put this agency together, credit unions were a great partner in helping set the agency on the right path and helping keep it on the right path and I want to thank you for that.”

Warren, a member of the $476 million Harvard University Employees Credit Union in Cambridge, Mass., called credit unions a model for financial services institutions.

“I have been a proud member of a credit union for many years and I know from experience that credit unions are a model for how financial services institutions can provide real value to their customers and to their communities,” the former Harvard University professor said.

“As one Wall Street scandal after another unfolded, the credit unions have been a bright spot in the financial industry. Credit unions did not break this economy,” she added.

Warren said credit unions did not build business models around tricking their customers.

“When the economy faltered, they did not turn their backs on the families and small businesses that needed them. Instead, credit unions worked hard to lead our economic recovery, responsibly and reliably providing credit to their members who needed them,” she said.

Warren also said Congress should eliminate annual subsidies for too-big-to-fail banks.

“Let’s end the kid gloves treatment for big banks when their executives break the law, let’s prosecute them and put them in jail the same way we do other people when they break the law,” she said.

Continue here…

By Alison Frankel
March 13, 2015

 Analysis & Opinion | Alison Frankel        

After my initial take Tuesday on the 728-page report by the Consumer Financial Protection Board on mandatory arbitration clauses in consumer contracts for financial products and services – which found that class actions deliver vastly more money to vastly more consumers than arbitration – I heard from some critics of the CFPB’s process and analysis.

They’re gearing up, of course, for protests of the anti-arbitration rule the CFPB is widely expected to propose in the next several weeks. Among the arguments against the CFPB’s evidence that mandatory arbitration deprives consumers of meaningful rights are these: The study didn’t adequately track $1.1 billion in cash payments from consumer class actions to find out if that money actually went to class members; the study is misleading about the resolution of small claims outside of litigation because many consumers are able to get relief just by calling customer service representatives; and the CFPB’s consumer survey, which showed that people know pretty much nothing about mandatory arbitration, would have found the same ignorance of every other provision in the financial services contracts consumers sign. Overall, detractors assert that the CFPB overstates the benefits of consumer class actions and underestimates consumers’ opportunity to resolve disputes outside of the court system.

But within the reams of information the CFPB released is a sort of controlled experiment on class actions versus mandatory arbitration as a means of compensating consumers. Deepak Gupta of Gupta Beck pointed it out to me, and to him it’s “one of the most revealing aspects of the CFPB report.” Keep in mind that Gupta represents plaintiffs in consumer class actions, so he’s hardly an unbiased analyst of the report. But he’s indisputably on to something here.
Attorney Adam Deutsch, Esq. discusses the recent HUD report regarding the success of a program in which it claims to have sold $16.7 billion in nonperforming mortgage loans.

Attorney Adam Deutsch, Esq. discusses the recent HUD report regarding the success of a program in which it claims to have sold $16.7 billion in nonperforming mortgage loans.

Written by – Adam Deutsch, Esq., Denbeaux and Denbeaux

The U.S. Housing and Urban Development Department (“HUD”) issued a report on Friday March 13, 2015 touting the success of a program in which it claims to have sold $16.7 billion in nonperforming mortgage loans.  In all, HUD states that it sold 79,029 loans and that 16,700 homes avoided foreclsoure.  This sounds great, but the numbers don’t add up.  According to only 16% of the delinquent loans have been modified into performing loans.  Sixteen percent of 79,029 is roughly 12,644.64  leaving a difference of 4,000 loans.  Having carefully chosen to assert that 16,700 homes avoided foreclosure it is plausible that HUD believes any resolution other than a judgment and forced eviction is an avoided foreclosure and a net positive.


The bigger story is that HUD is acknowledging in the press that it owns and sells mortgage loans.  This is not a new fact, however I have never seen a single situation in which HUD has notified a homeowner that it is selling a loan.  Nor am I aware of any situation in which an entity purchasing a loan from HUD has notified a homeowner that it has acquired ownership of the loan from HUD.  Under the Truth in Lending Act 15 U.S.C. 1641(g) within “30 days after the date on which a mortgage loan is sold or otherwise transferred or assigned to a third party, the creditor that is the new owner or assignee of the debt shall notify the borrower in writing of such transfer.”  Such notices typically set forth the prior owner of the loan, in this case HUD.  In fact, I have only seen one circumstance in which HUD even executed an assignment of mortgage, and in that case the assignment was not recorded with the county but was instead kept confidential by HUD and the loan servicing company.


What makes this important is that homeowners who have loans owned by HUD are often entitled to rights not otherwise guaranteed.  Rights include access to loan counseling and modification programs.  An example of such rights is the requirement that the owner of most FHA insured loans conduct a face-to-face interview with a delinquent borrower prior to the loan becoming three months past due and before commencing any foreclosure proceeding.  12 CFR 203.604.  As with any rule there are exceptions, however in almost all circumstances the creditor must make  a minimum of “reasonable effort” to conduct the meeting.  I am unaware of any client having been contacted by an FHA lender or by HUD to conduct a face to face interview.


The fact that I have not seen HUD and its loan servicing companies abide by its own rules is problematic.  Denbeaux & Denbeaux has many clients with FHA loans, this is not an issue of scarcity within the sampling pool.  These days it seems that only the CFPB has an interest in enforcing federal regulations relating to loan ownership and servicing.  If HUD does not make sure it abides by the federal law, it is no wonder the marketplace continues to be filled with blunders by loan servicing companies and secondary market creditors.


Adam Deutsch, Esq.

Senior Associate Attorney
Denbeaux & Denbeaux
366 Kinderkamack Road
Westwood, NJ 07675
(Main Firm) 201-664-8855
(Direct Line) 201-664-9167
(Fax Line) 201-666-8589



Attorney Adam Deutsch, Esq. discusses the recent HUD report regarding the success of a program in which it claims to have sold $16.7 billion in nonperforming mortgage loans.

The recent HUD report claims to have sold $16.7 billion in nonperforming mortgage loans.

HUD Says $16.7 Billion of Loan Sales Reduced Foreclosures


(Bloomberg) — The sale of $16.7 billion in nonperforming loans by the U.S. Housing and Urban Development Department helped the owners of about 16,700 homes avoid foreclosure, the agency said.

Almost half of the 79,029 loans for which HUD has received reports were resolved as of Feb. 6, meaning they are no longer considered nonperforming after having gone through foreclosure or another outcome, the department said in a report released Friday. About 44 percent of resolutions resulted in the prevention of home seizures, and 16 percent of resolved loans were reperforming, with borrowers making timely payments.

The program “is meeting its intended goal of minimizing losses” to the mortgage-insurance fund, HUD said in the report. “Without the note-sale program, all of these loans might be foreclosed upon.”

HUD started auctioning groups of delinquent mortgages in 2010 as increasing foreclosures led to losses in the Federal Housing Administration’s mortgage-insurance fund. Friday’s report is the second to assess the results of the loan sales, following an initial report last August. The sales, aimed at reducing taxpayer losses, have garnered interest from Wall Street firms competing to buying housing debt after a rebound in real estate prices.

A total of 98,007 loans have sold since the program began in 2010, with $13 billion of debt in national pools and $3.7 billion in local portfolios, HUD said on Friday.

Rising Values

Climbing home values have prompted bidders for delinquent loans to raise their offers. Increased interest in the debt has also spurred mortgage company Freddie Mac and lenders such as Bank of America Corp. and Citigroup Inc. to accelerate their sales of soured debt this year.

The biggest buyers of HUD’s national loan pools have been Lone Star Funds, founded by billionaire John Grayken; Bayview Asset Management LLC, a Coral Gables, Florida-based company backed by Blackstone Group LP; and Selene Finance LP, founded by mortgage-bond pioneer Lew Ranieri. The largest buyers of local pools, with stricter requirements to meet goals that help stabilize neighborhoods, have been Bayview, Los Angeles-based investment company Oaktree Capital Management and Corona Asset Management, a Redondo Beach, California-based investment group.

‘Best Outcome’

“We’ll continue to bid,” Scott Shultz, managing director of 25 Capital Partners, a Charlotte, North Carolina-based firm that has bought about $1 billion of nonperforming loans since 2013, said in a telephone interview. “For us, the best outcome is to get the borrower to reperform and get back on their feet.”

As of December, about 38 percent of the borrowers in a pool of 641 Chicago loans that 25 Capital Partners purchased in 2013 were performing after modifications, Shultz said.

Friday’s HUD report leaves important questions unanswered about the auction program’s impact on communities and the performance of investors who purchased most of the debt, said Julia Gordon, an analyst with the Center for American Progress in Washington.

“To improve the program’s impact on families and communities, HUD should ensure greater involvement of community-based nonprofits in the sales, require buyers to prioritize home-retention solutions over other foreclosure-prevention alternatives, and track loan outcomes even if the loan is sold to another investor,” Gordon said in an e-mail.

To contact the reporters on this story: Heather Perlberg in Washington; John Gittelsohn in Los Angeles at; Clea Benson in Washington at

To contact the editors responsible for this story: Kara Wetzel at kwetzel@bloomberg.netDaniel Taub, Christine Maurus

201402_cfpb_photo_richard-cordray_1600Prepared Remarks of CFPB Director Richard Cordray at the Arbitration Field Hearing


Thank you for joining us for this field hearing of the Consumer Financial Protection Bureau. We are here in Newark today to discuss the subject of arbitration. At its most basic level, arbitration is a way to resolve disputes outside of the court system. Parties can agree in their contract that if a dispute arises between them at a later time, rather than take it before a judge and perhaps a jury as part of a public judicial process, they will be required to turn instead to a non-governmental third party, known as an arbitrator, to resolve the dispute in private. These contractual provisions are referred to as “pre-dispute arbitration clauses.”

Arbitration clauses were rarely seen in consumer financial contracts until the last twenty years or so. Arbitration is often described by its supporters as a “better alternative” to the court system – more convenient, more efficient, and a faster, lower-cost way of resolving disputes. Opponents argue that arbitration clauses deprive consumers of certain legal protections available in court, may not provide a neutral or fair process, and may in fact serve to quash disputes rather than provide an alternative way to resolve them.

Long ago, prior to the Great Depression, Congress provided a general framework that located the role of arbitration in federal law. Court decisions over the years refined the relationship between private arbitration and formal judicial proceedings under a number of federal business statutes, including the antitrust laws and the securities laws as well as under the labor laws. More recently, however, Congress has taken an increased interest in arbitration clauses in consumer financial contracts. In 2007, Congress passed the Military Lending Act, which prohibited such clauses in connection with certain loans made to servicemembers. That was the first occasion on which Congress expressed explicit concern about the effect such clauses may have on the welfare of individual consumers in the financial marketplace.

In the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Congress went further and prohibited the inclusion of arbitration clauses in most residential mortgage contracts. Another measure in that same law is of special interest because it leads directly to our discussion today. In section 1028 of the Dodd-Frank Act, Congress directed the Consumer Bureau to conduct a study and provide a report to Congress on the use of pre-dispute arbitration clauses in consumer financial contracts. Further, Congress provided that “[t]he Bureau, by regulation, may prohibit or impose conditions or limitations on the use of” such arbitration clauses in consumer financial contracts if the Bureau finds that such measure “is in the public interest and for the protection of consumers,” and findings in such a rule are “consistent with the study” performed by the Bureau.

We have set about this mandatory task to study the use of arbitration clauses with conscious care. We began our study almost three years ago, when we issued a Request for Information seeking public input on the appropriate scope, methods, and data sources for this work. We received dozens of written comments in response and held a series of stakeholder meetings to gather more informal input. In December 2013, we released preliminary results from our study. We wanted to provide a progress report to the public on our work, while also eliciting further comments on the work plan that we had developed. In those results, we found that arbitration clauses are commonly used by large banks in credit card and checking account agreements. We also found that these clauses can be used to prevent any litigation, including class litigation, from moving forward. In addition, we observed that roughly nine out of ten such clauses barred arbitrations on behalf of a class of consumers.

Today we are releasing the results of our study and we are providing our arbitration report to Congress as the law requires us to do. As far as we are aware, this is the most comprehensive empirical study of consumer financial arbitration ever conducted. We looked at over 850 consumer finance agreements to examine the prevalence of arbitration clauses and their terms. We have reviewed the following categories of disputes: over 1,800 consumer finance arbitration disputes filed over a period of three years; a sample of the nearly 3,500 individual consumer finance cases we identified that were filed in federal court over the same time frame; and all of the 562 consumer finance class actions we identified that were filed in federal court and in selected state courts. We also looked at over 40,000 small claims filings over the course of a single year.

We have supplemented this research by assembling and analyzing a set of more than 400 consumer financial class action settlements in federal courts over a period of five years and more than 1,100 state and federal public enforcement actions in the consumer finance area. We also conducted a national survey of 1,000 credit card consumers to learn more about their knowledge and understanding of arbitration and other dispute resolution mechanisms.

Needless to say, simply assembling – let alone analyzing – all this information was a substantial undertaking. But at the Consumer Bureau, we are committed to data-driven decision-making. With limited exceptions, the debate that has taken place over arbitration clauses has not been informed by actual empirical research into the facts “on the ground” about arbitration generally or consumer finance arbitration specifically. So we believed this was an investment well worth making, even though the process took longer than it otherwise might have taken.

It is not possible in the space of a few minutes to do justice to the depth and richness of the Consumer Bureau’s report. But I want to discuss a few key findings that shed light on some of the major questions that have been much debated by various stakeholders.

In discussing these findings, it is important to bear in mind that when it comes to consumer finance, arbitration clauses are contained in standard-form contracts, where the terms are not subject to negotiation. Like the other terms of most contracts for consumer financial products or services, they are essentially “take-it-or-leave-it” propositions. Consumers may open a new account or procure a new product without being aware of what the contract says or without fully understanding its implications. As part of the study we are releasing today, we looked at arbitration clauses in at least six different consumer finance markets.

In order to understand the effects of arbitration clauses, we wanted to know how many people use consumer products or services where the standard customer agreements include such clauses. In the credit card market, we found that credit card issuers representing more than half of credit card debt have arbitration clauses. In the checking account market, we found that banks representing almost half of insured deposits have arbitration clauses. Given the size of these markets, we can safely say that tens of millions of consumers are covered by one or more such arbitration clauses. Indeed, for credit card accounts alone, the number could be as high as 80 million consumers. Sometimes consumers are given a one-time chance to opt out of these clauses, but our research showed that consumers were generally unaware of this.

A key question we asked is to what extent individual consumers use arbitration procedures or individual litigation to challenge company behavior that they believe to be wrongful. The answer is: not very often. We looked at disputes where an arbitration case is filed with the American Arbitration Association, or AAA – the largest administrator of consumer finance arbitration disputes in the country – between 2010 and 2012. Across six consumer finance product markets covering tens of millions of Americans, just over 1,800 arbitration disputes were filed with the AAA – an average of about 600 per year. And over twenty percent of these cases may have been filed by companies, rather than consumers. Moreover, almost all of these disputes involved matters where more than $1,000 was at stake; that is, in this data consumers seem to be indicating that it rarely makes sense for them to bring an individual claim with only a small amount at stake.

We sought to study what happened in these arbitration cases, but we learned that for the cases filed in 2010 and 2011, approximately two-thirds ended without a decision from an arbitrator, either as the result of a settlement or some other informal resolution. In the cases that were decided, arbitrators awarded consumers a combined total of less than $175,000 in damages and less than $190,000 in debt forbearance. Arbitrators ordered consumers to pay $2.8 million, predominantly on debts that were disputed.

We also found that individual consumers are much more likely to bring a lawsuit in a court instead of pursuing a dispute in arbitration. During the same three-year period, we found nearly 3,500 individual consumer finance lawsuits were filed in federal court in five of the six consumer finance markets covered by the arbitration data we studied – an average of under 1,200 per year. We studied all of the cases in four markets and a random sample of credit card cases and found very few that were resolved by a court. In those that were resolved by a court, consumers won under $1 million and more than half of that total came from a single case. We also looked to small claims courts, but found little evidence of extensive consumer filings from the limited information available about those proceedings. Instead, small claims courts seemed to be used mostly by companies filing debt collection lawsuits against consumers.

The survey we conducted reflects these findings. In that survey, we asked consumers what they would do if they were charged a fee by their credit card issuer that they knew to be wrong and they had already exhausted all possible efforts to obtain relief from the company. Only two percent of consumers said they would consider bringing formal legal proceedings or would consult a lawyer. That is almost the same percentage of consumers who said they would simply accept responsibility for the fee. Most people, in fact, say they would simply cancel their card. The research thus indicates that consumers are very unlikely, acting alone, to even consider bringing formal claims against their card issuers – either through arbitration or through the courts.

Another question our study addresses is the extent to which consumer finance class actions enable consumers to get financial redress. We focused our research on class action settlements because that is generally the way consumers obtain relief in class actions. These cases rarely go to trial. (The same is generally true of individual court actions and to a lesser extent of arbitration cases as well.)

For the period from 2008 through 2012, we identified about 420 federal class action settlements in consumer financial cases. We found that those settlements totaled $2.7 billion in cash, in-kind relief, and fees and expenses. Of this, 18 percent went to attorneys’ fees and litigation and administration expenses. That means approximately $2.2 billion was available as monetary and in-kind relief for the benefit of affected consumers. Further, these figures do not account for the benefits to consumers from lawsuits or settlements that led to changes in company behavior; this value is considerable but difficult to quantify. And of course, the numbers do not include the potential benefit to other consumers from any deterrent effect associated with these settlements.

In over 100 of these settlements, payments were made to affected consumers automatically without those consumers having to submit claims forms. For those cases where numbers were available, over $700 million was paid to consumers. We were able to obtain data on payments in another 125 or so settlements in which consumers were required to file claims in order to get their money. In those cases, we found that approximately $325 million was paid to consumers. In another 25 or so cases, a combination of automatic distributions and a claims process was used, and in those cases roughly $60 million was paid to consumers. In other words, the total cash payout – excluding in-kind relief – was, at a minimum, in excess of $1.1 billion, or at least $200 million per year. These payments were provided to a minimum of 34 million consumers, which works out to an average of 6.8 million consumers annually.

The contrast between the class action system as a means of addressing consumer claims as compared to arbitration and individual litigation can be especially stark if we focus on particular markets. Consider, for example, the checking account market. Over 90 percent of all American households – roughly 114 million of them – have a checking account, making this perhaps the single largest consumer market. Between 2010 and 2012, there were a total of 72 arbitration disputes filed with the AAA and 137 individual cases filed in federal courts involving checking accounts. Yet during those same three years, six class settlements were approved involving the overdraft practices of five banks. The settlements totaled close to $600 million and covered more than 19 million consumers. The cases also resulted in changes to overdraft practices going forward – changes that brought material benefit to consumers.

A further question we studied is the extent to which arbitration clauses stand as a barrier to class actions. By design, arbitration clauses can be invoked to block class actions in court. We studied how often arbitration clauses are, in fact, used in this way. We found that it is rare for a company to try to force an individual lawsuit into arbitration. But it is quite common for arbitration clauses to be invoked to block class actions. For example, we found that when credit card issuers with an arbitration clause were sued in a class action, companies invoked the arbitration clause to block the action in nearly two-thirds of the cases. And, in the overdraft litigation to which I just referred, five banks were able to get the class actions against them dismissed because of arbitration agreements.

We also examined how often consumers seek to file class actions in arbitration. The AAA has a process that allows a consumer to pursue a dispute on behalf of a class of other consumers just as one can do in court. However, under the AAA rules, a class action arbitration can only proceed if it is permitted under the arbitration clause. We found that nearly all arbitration agreements include a provision which says that arbitrations may not proceed on a class basis. Perhaps not surprisingly, we found that only two class action arbitrations were filed with the AAA between 2010 and 2012 in the markets we studied. One of these was not pursued after it was filed and the other was pending on a motion to dismiss as of September 2014.

In addition, we looked at whether companies that include arbitration clauses in their contracts are able to offer lower prices because they are not subject to class action lawsuits. Our methodology here centered on a real-world comparison of companies that dropped their arbitration clauses and companies that made no change in their use of arbitration clauses. This was possible because in 2009, four large credit card issuers had settled an antitrust lawsuit by agreeing to drop their arbitration clauses. Meanwhile, other card issuers had either retained their arbitration clauses or continued to refrain from using arbitration clauses.

Using de-identified, account-level information from credit card issuers that represent about 85 percent of the credit card market, we compared the total cost of credit paid by consumers of some of the companies that dropped their arbitration clauses and of some of the companies whose use of arbitration clauses was unchanged. We looked at whether the elimination of arbitration agreements led to an increase in prices charged to consumers. We found no statistically significant evidence of such a price increase. We likewise found no evidence that issuers which dropped their arbitration clauses reduced access to credit relative to those whose use of arbitration clauses was unchanged.

Finally, our study examined the extent to which consumers are aware of, and understand the implications of, arbitration clauses. In our survey of 1,000 consumers with credit cards, we found that of those consumers who said they knew what arbitration was, three out of four did not know if they were subject to an arbitration clause. Of those who thought they did know, more than half were wrong about whether their agreements actually contained arbitration clauses. In fact, consumers whose agreements did not contain an arbitration clause were more likely to believe that the agreements had a clause than consumers whose agreements actually did have such a clause.

The confusion did not stop there. More than half of the consumers who were subject to an arbitration agreement and who said they knew what a class action was believed that they could participate in a class action nonetheless. Forty percent were unsure whether they could, leaving relatively few consumers who recognized that they could not participate in class actions.

We also asked consumers if they recalled being asked whether they wished to “opt out” of their arbitration clause so that they could retain their right to sue in court or to participate in class actions. Over a quarter of the credit card arbitration agreements we reviewed permit individual consumers to opt out. However, only one consumer whose current agreement permitted him to opt out recalled being asked whether he wished to do so.

In our governing statute, Congress specified that the results of this arbitration study are to provide the basis for important policy decisions that the Consumer Bureau will have to make in this area. So people are right to be interested in digesting these results and considering how we intend to fulfill the objectives established by Congress. We will be meeting with stakeholders after they have had a chance to read our report, and we are here today to invite you to share your thoughts on these issues in general and on that process in particular.

At the Consumer Bureau, we are dedicated to a marketplace characterized by fair, transparent, and responsible business practices. We believe that strong consumer protection is an asset to honest businesses because it ensures that everyone is playing by the same rules, which supports fair competition and positive treatment of consumers. We look forward to a robust and vigorous discussion today, which will bring us one step closer to achieving that vision.

Thank you.

The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit

201402_cfpb_photo_richard-cordray_1600Today Tuesday, March 10, 2015, the CFPB will hold a field hearing in Newark, N.J. on arbitration. The hearing will feature remarks from Director Cordray, as well as testimony from consumer groups, industry representatives, and members of the public. This article details more about the issue of that Director Cordray will be discussing.

International Business Times
CFPB Study: Little-Known Arbitration Clauses Are Costing Consumers Millions

By  Catherine Dunn @catadunn on March 10 2015 12:03 AM EDT

More than 75 percent of consumers don’t know whether they’ve signed a contract that could prevent them from suing their credit card company in court, according to a financial regulator’s new study of contract terms that cover common banking products.

The fine-print term that escapes so many people is known as an arbitration clause, in which either side — consumer or corporation — can require the other to bypass the courts, and settle a dispute in arbitration instead. Tens of millions of people (whether they know it or not) are covered by these clauses when they sign up for financial services, and the Consumer Financial Protection Bureau reports that arbitration clauses come with a high cost, often preventing them from joining class-action lawsuits.

“Our study found that these arbitration clauses restrict consumer relief in disputes with financial companies by limiting class actions that provide millions of dollars in redress each year,” CFPB Director Richard Cordray said in a statement on the findings.

CFPB to hold field hearing on arbitration in Newark NJ today March 10, 2015

Consumer Finance Protection Bureau

Consumer Protection for Mortgage Seekers

The CFPB will hold a field hearing today Tuesday, March 10, 2015, in Newark, N.J. on arbitration. The hearing will feature remarks from Director Cordray, as well as testimony from consumer groups, industry representatives, and members of the public.

Our expectation that the CFPB would issue its arbitration study in early 2015 coupled with the agency’s history of using field hearings as the venue for announcing new developments makes it seem highly likely that the field hearing will coincide with the CFPB’s release of the arbitration study. The CFPB is conducting the study under Section 1028 of Dodd-Frank. In April 2012, it published a request for information about the scope, methodology and data sources for the study. In December 2013, it published preliminary study results.

Foreclosures up 116.39% in NJ from January 2014 to 2015

One in every 773 mortgage was foreclosed last year, and New Jersey was leading the nation in foreclosures for several months running.

Ten states with the highest increase in foreclosures

NJ Ranks 5th Highest in Foreclosure

NJ Ranks 5th Highest in Foreclosure

It’s not spring yet, but mortgage lenders have started cleaning out the old. Repossessions jumped 23% in the first month of 2015 as compared to the same month in 2014. According to the January RealtyTrac Foreclosure Market Report, there was a 55% increase in repossessions between December 2014 and January 2015. Overall, foreclosures are declining, but certain states have seen a significant uptick in auction notices, foreclosures, and repossession notices. The ten following states have experienced an upturn in property seizures.

  1. Montana experienced a 65.22% increase in repossessions from January 2014 to January 2015. Only 38 properties were repossessed in January; however, with such a small market for foreclosed homes, a small increase can create a significant percentage increase year over year.
  1. Washington experienced a 74.6% increase in repossessions from January 2014 to January 2015. With the 10th-highest foreclosure rate and one in 888 homes or businesses on the line, there was a 247.8% increase between December 2014 and January 2015.
  1. Alabama experienced a 77.64% increase in repossessions from January 2014 to January 2015. Alabama’s foreclosure rate had started to slip down in the rankings, but they still had one in every 1945 houses or businesses in some level of foreclosure.
  1. Nebraska experienced an 88.24% increase in repossessions from January 2014 to January 2015. Nebraska had a lower repossession rate than the majority of the country with only 32 houses foreclosed. Still, one in every 3589 properties entered into a stage in foreclosure in Nebraska in January of this year.
  1. Maryland experienced a 99.8% increase in repossessions from January 2014 to January 2015. While Maryland’s foreclosure rate is declining, it still has the third highest rate of repossession in the country. One in every 611 home or business was repossessed last year.
  1. New Jersey experienced a 116.39% increase in repossessions from January 2014 to January 2015. One in every 773 mortgage was foreclosed last year, and New Jersey was leading the nation in foreclosures for several months running.
  1. Idaho experienced a 159.78% increase in repossessions from January 2014 to January 2015. Idaho had a very rough start to the year, and the state had a 313.51% increase in foreclosure starts.
  1. Ohio experienced a 197.48% increase in repossessions from January 2014 to January 2015. Idaho has the 11th-highest foreclosure rate in the U.S
  1. Mississippi experienced a 203.64% increase in repossessions from January 2014 to January 2015. One in 4483 homes or businesses were in foreclosure representing a steep increase year over year.
  1. Vermont experienced a 280% increase in repossessions from January 2014 to January 2015. While Vermont had some of the lowest foreclosure rates, it’s relatively small total population still had 11,533 homes or businesses seized.


David Seligman staff attorney at the National Consumer Law Center

David Seligman is a staff attorney at the National Consumer Law Center

Attorney Speaks Out on Behalf of Consumers

“The unfairness here is incredibly widespread,” says David Seligman, staff attorney at the National Consumer Law Center.

The Washington Post

Why it’s nearly impossible for you to sue your credit card company

March 3

The Consumer Financial Protection Bureau is expected to issue a major report next week on what consumer advocates say is one of the leading but most misunderstood ways that companies limit a customer’s rights, people familiar with the matter said.

The practice is called “mandatory arbitration,” which bars consumers from filing class action lawsuits or taking other steps to seek relief after they feel a company has wronged them. Such arbitration clauses are often found in the fine print of credit cards, payday loans and auto loans.

Consumers instead are steered into arbitration, which critics say is a secretive process that is often stacked in the company’s favor and leads to little benefit for consumers. “The unfairness here is incredibly widespread,” says David Seligman, staff attorney at the National Consumer Law Center.

Most people aren’t aware these agreements exist until after they feel they’ve been wronged and attempt to sue a company or seek some other form of retribution, the advocates say. Many consumers then learn that they unwittingly agreed to mandatory arbitration when they initially signed up for the credit card or loan.

“You either agree to give up your right to hold these companies accountable,” Seligman says, “or you don’t use a credit card, or you don’t take out a loan or you don’t use a card.”

But financial firms argue that by limiting litigation, companies pay less in legal fees and, in turn, can lower costs for all consumers.