Daily Archives: September 16, 2014

With Debt Collection, Your Bank Account Could Be At Risk

Kari Fiotti moved back to Omaha, Neb., in 2009 after a decade living in Italy. She had divorced her husband and returned to the U.S. to start a new life.

Then, Fiotti, 44, took a pricey fall.

“When I came back, I fell and I broke my wrist without insurance,” she says.

Her doctor, she says, rejected her offer to make partial payments. So, like millions of Americans, her debt — which had grown to $1,640 with interest and fees — was turned over to collectors.

Fiotti soon learned how hard they would try to collect her unpaid bills.

Court records show that the collectors sued Fiotti, but that she didn’t show up in court for the hearing about her case.

In May of last year, Fiotti suddenly realized, “My bank account’s at zero and I’m like, whoa, what’s going on?”

Debt collectors had seized her bank account because she didn’t have enough to cover the debt. Fiotti says she was stunned. “You’re taking everything that I have,” she says. “You’re not just taking a portion of it, you’re taking my livelihood.”

Fiotti says she was doing clerical work making about $10 an hour. She had a kid in college and no savings. She says she had to overdraw her checking account just to take out $50 to buy groceries. In the end, a friend put Fiotti in touch with a lawyer, and she now has the debt behind her.

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MI county sells injured mom’s home over one tax bill, and will keep extra $80,000 profit

A Michigan mother says that she is devastated because Kalamazoo County is foreclosing on her home after brain bruises from a car accident caused her to miss a single tax payment two years ago.

Deborah Calley told WITI that she paid cash for her dream home in 2010. She had thought that it would make raising two children easier while she was recovering from the traumatic car accident.

But that dream was shattered when she was notified that the county was foreclosing on her home over a missed property tax payment.

“When I paid the taxes in 2012 right there in Richland, no one said, ‘Oh, well you still owe money for 2011,’” Calley said. “So, I didn’t really have a clue. I thought I was right on time.”

Calley’s Realtor, Becky Doorlag, explained that it was not unusual for people who owned their home to forget to pay property taxes because they were usually included in the mortgage payment, which Calley did not have. Calley also speculated that her brain injury may have played a role in the missed payment.

Court documents obtained by WITI showed that notices went out about the missed payment, but Calley said that did not see a single one of them. WITI discovered that all but one of those notices were addressed to banks, instead of the homeowner.

“I’ve never been affiliated with any of those banks, ever,” Calley noted, pointing out that she paid $164,000 cash for her home and did not have a mortgage.

Read on.

SHOE COMPANY: Our CEO Just Disappeared And Most Of The Money Is Gone

“and like that: he’s gone.”

This is an actual headline from a company press release: “CEO and COO disappeared, most of the company’s cash missing.” (Via FastFT)

In a statement, German-based shoe company Ultrasonic said its CFO,  Chi Kwong Clifford Chan, has been unable to reach the company’s CEO, Qingyong Wu,  and COO, Minghong Wu,  who apparently left their homes and are untraceable.

Chan also said most of the company’s cash funds have been transferred and are no longer “in the company’s range of influence.”

So basically the money’s gone.

Shares of Ultrasonic trading on the Frankfurt Stock Exchange were down as much as 76% on Tuesday.

Tuesday’s announcement from the company also follows news on Friday that its COO, Minghong Wu,  would take a six-month leave of absence for health reasons. That announcement said CEO  Qinyong Wu  would assume the COO’s responsibilities.

Now they’re both gone.

And to add an even more bizarre twist to the story, in the same announcement that said Ultrasonic’s COO would take a leave of absence, Chan, the company’s CFO, said he would step down for family reasons on Sept. 30.

So now we’ve got two missing executives, who appear to have taken all the company’s money, and the top executive left remaining was on his way out the door.

Read on.

California man found guilty in $5.8 million mortgage fraud scheme, continued to run operation from prison cell after arrest

Wow, ran mortgage scam from prison? Unbelievable…

Alan David Tikal, 46, of Brentwood, California, was convicted yesterday on 11 counts of mail fraud and one count of money laundering in a mortgage fraud scheme through which he stole $5.8 million in fees and monthly payments from struggling homeowners.

According to evidence presented at a one-day bench trial, Tikal operated a business known as KATN and falsely claimed to be a registered private banker between January 2010 and August 2013.

Tikal and his associates targeted struggling homeowners, most of whom did not speak English, and promised to reduce their outstanding mortgage debt by 75% in return for various fees and payments. The homeowners were told they would then owe new loans to Tikal that would only be 25% of the original loan.

More than 1,000 homeowners in California and other states were convinced by Tikal and his associates to participate in the program. As a result of relying on the program, many of these homeowners stopped payments on their existing mortgages and lost their homes to foreclosure.

There was not a single instance in which a homeowner’s debt was paid, forgiven or otherwise extinguished as a result of the mortgage relief program, according to a release from the office of Special Inspector General for the Troubled Asset Relief Program (SIGTARP), Christy Romero.

The SIGTARP press release reports that Tikal took $5.8 million from homeowners. More than $2.5 million of that amount was paid into accounts controlled by Tikal and his family.

“Tikal exploited the financial crisis by setting out to hurt others and profit from that hurt, and he accomplished his mission through his crime,” said Romero.

Romero added that even after Tikal had been arrested, he continued to run the scheme that fraudulently stalled foreclosure proceedings by TARP banks from inside his prison cell.

Read on.

Remember the CEO Who Quit to Be a Dad? He’s Loving It.

Last month, Max Schireson gave up his job running a billion-dollar startup to spend more time with his family. And he couldn’t be happier.

Schireson’s departure from the helm of Internet database company MongoDB Inc., which he announced in a blog post that quickly went viral, became a catalyst for a discussion that rarely takes place in the national media: the challenges faced by fathers as they attempt to balance work and family.

I was thrilled by that. As a scholar, advocate and consultant in the area, Schireson’s story resonated with me. And the more we acknowledge the importance these issues, the better off both families and businesses will be.

A month later, with the media scrum dying down, Schireson agreed to talk with me about his decision, the aftermath and the challenges faced by working fathers. What follows is an edited transcript of our discussion.

When did you first start considering downshifting your career?

My position as CEO involved a frequent commute from San Francisco to New York, and I didn’t think I could do that forever. The decision to slow down my career had been on my mind for a while, but the timing felt right, and the transition for everyone involved—my company, my family—would just get more difficult the longer I waited.

MongoDB was getting to a point where it was a good time to make a transition to new leadership and a different skill set. I had led the company from a small group of 20 employees to a large organization of 400. In many ways my decision was a win-win; I could still stay involved as Vice Chairman but we could bring in new leadership talent to the company for the next stage in our development.

On the family side, my wife was always supportive and understanding of my demanding career, but it put a burden on her and I wasn’t seeing my kids enough. My son was just about to start high school. The desire for more family time had been building for a long time, and I couldn’t put it off forever.

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BofA Execs Promise Restraint on Mortgages

TRUST+ME

Bank of America Corp.BAC -0.24% executives seem to have a sort of mantra on some of their old mortgage practices: We won’t do that again!

In a presentation Tuesday, the two new co-heads of Bank of America’s consumer banking behemoth noted how in years past, their firm had run after non-customers and boosted its mortgage machine by buying loans from other brokers.

And while mortgages will continue to be an important arena for the bank, “we’re building it the right way,” said Dean Athanasia, who spoke Tuesday with co-head Thong Nguyen at the RBC Capital Markets financial conference in Boston.

“It is going to be a steady business for us,” Mr. Athanasia continued. “We’re not going to get into correspondent. We’re not going to do things to attract all sorts of non-customers.”

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Unseen Toll: Wages of Millions Seized to Pay Past Debts

This story was co-published with NPR.

Back in 2009, Kevin Evans was one of millions of Americans blindsided by the recession. His 25-year career selling office furniture collapsed. He shed the nice home he could no longer afford, but not a $7,000 credit card debt.

After years of spotty employment, Evans, 58, thought he’d finally recovered last year when he found a better-paying, full-time customer service job in Springfield, Mo. But early this year, he opened his paycheck and found a quarter of it missing. His credit card lender, Capital One, had garnished his wages. Twice a month, whether he could afford it or not, 25 percent of his pay — the legal limit — would go to his debt, which had ballooned with interest and fees to over $15,000.

“It was a roundhouse from the right that just knocks you down and out,” Evans said.

The recession and its aftermath have fueled an explosion of cases like Evans’. Creditors and collectors have pursued struggling cardholders and other debtors in court, securing judgments that allow them to seize a chunk of even meager earnings. The financial blow can be devastating — more than half of U.S. states allow creditors to take a quarter of after-tax wages. But despite the rise in garnishments, the number of Americans affected has remained unknown.

At the request of ProPublica, ADP, the nation’s largest payroll services provider, undertook a study of 2013 payroll records for 13 million employees. ADP’s report, released today, shows that more than one in 10 employees in the prime working ages of 35 to 44 had their wages garnished in 2013.

Roughly half of these debtors, unsurprisingly, owed child support. But a sizeable number had their earnings docked for consumer debts, such as credit cards, medical bills and student loans.

Extended to the entire population of U.S. employees, ADP’s findings indicate that 4 million workers — about 3 percent of all employees — had wages taken for a consumer debt in 2013.

Carolyn Carter of the National Consumer Law Center called the level of wage garnishment identified by ADP “alarming.” “States and the federal government should look on reforming our wage garnishment laws with some urgency,” she said.

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Virginia targets 13 banks with $1.15B toxic mortgage lawsuit

Virginia Retirement System lost $383 million

Virginia Attorney General Mark Herring announced a giant lawsuit against some of the largest commercial banks for fraud committed against Virginia taxpayers during the height of the financial crisis.

On Tuesday, the Richmond Circuit Court announced it is seeking $1.15 billion in damages against 13 banks that are each accused of fraudulently misleading the Virginia Retirement System during the sale of residential mortgage-backed securities to the state retirement fund.

Virginia lost $383 million and was forced to sell the vast majority of these toxic securities built on junk mortgages since banks purposefully included high-risk mortgages in securities and fraudulently misrepresented the quality of those loans to rating agencies.

The securities were purchased starting around 2004, and before 2010.

This is the largest financial fraud action ever brought by the Commonwealth of Virginia and is the largest case ever brought under the Virginia Fraud Against Taxpayers Act.

In addition, the Commonwealth will also seek civil penalties against each bank in the amount of $5,500-$11,000 for each violation.

The named banks are:

  • Barclays Capital
  • Citigroup Global Markets
  • Countrywide Securities Corporation
  • Credit Suisse Securities (USA)
  • Deutsche Bank Securities
  • Goldman, Sachs & Co.
  • RBS Securities
  • HSBC Securities (USA)
  • Morgan Stanley & Co.
  • UBS Securities
  • WAMU Capital
  • J.P. Morgan Securities (and as current owner of Bear, Stearns & Co.)
  • Merrill Lynch, Pierce, Fenner & Smith Incorporated (and as current owner of Banc of America Securities)

Read on.

Title Insurer Owes $4.9M for Failure of Mortgages

MIAMI (CN) – A title insurer owes $4.9 million for contributing to the failure of mortgages that caused the defunct Washington Mutual Bank to lose millions of dollars, a federal judge ruled.
The Florida-based Attorneys’ Title Insurance Fund (ATIF) issues title insurance policies in real estate transactions. Agents and attorneys in its network may also act as closing agents, supervising the final transactions between buyers and sellers and overseeing the transfer of money and property.
Between 2005 and 2007, ATIF provided closing agents for 14 South Florida residential loans extended by the now-failed Washington Mutual Bank. The Federal Deposit Insurance Corporation, which took over WaMu in 2008 and investigated 500 of its defaulted loans, alleged that ATIF’s agents caused WaMu to lend money to unqualified borrowers under false pretenses, leading to more than $9 million in losses for the bank.
The FDIC claimed in a 2012 federal complaint that the title insurer refused to honor agreements in which it promised to reimburse WaMu for losses arising out of its closing agents’ fraud or their failure to follow the bank’s closing instructions.
In addressing the parties’ motions for summary judgment, U.S. District Judge Patricia Seitz ruled that the FDIC has standing to pursue damages based on the closing indemnity agreements. Even though WaMu sold the loans in question to Chase in 2008, the indemnity agreements are separate from the loans’ title insurance policies, because they protect lenders against different risks, according to the Sept. 3 ruling.
Indemnity agreements are designed “to quell a lender’s understandable fear of entrusting an unknown agent with large sums of money and important legal documents,” while title insurance protects against defects in title, the 28-page order states.

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UBS Closed Secret Big Accounts, Class Claims

OAKLAND, Calif. (CN) – Swiss banking giant UBS converted billions of dollars for its own profit by improperly closing accounts of secret account-holders and refusing to provide records of it, the trust of a former president of the U.N. General Assembly claims in a federal class action.
Lead plaintiff AM Trust, the trust of former Indonesian Vice President Adam Malik, accuses Zurich-based UBS of shutting down the accounts of people who died or were absent for prolonged periods of time, and “withholding or destroying internal records pertaining to these accounts and converting the proceeds to their own use while wrongfully denying requests for information and accounting.”
The trust also sued the predecessors of UBS, Union Bank of Switzerland and Swiss Bank Corporation. UBS was formed in 1998 from the merger of the other two banks.
The banks “fast tracked” the closure process to use the assets for profit, rather than classify the accounts as dormant, the lawsuit claims.
When beneficiaries ask about their accounts, the banks say no records exist for accounts that have been closed for 10 years, though “a diligent search could easily reveal the ultimate fate of the accounts and their proceeds,” the lawsuit claims.
Malik was an Indonesian politician, ambassador and the 26th president of the U.N. General Assembly. Before his death in 1984, Malik had several Union Bank of Switzerland and UBS bank accounts, containing more than $5 million in cash and gold, according to the complaint.
The trust says in the Sept. 12 lawsuit that it has been trying to recover assets from the accounts for years without success.

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