Tag Archives: lender

Client Alert: From the Scheer Law Group: Servicer Claims for Mishandling Loan Modifications are Held to be the Obligations of the Lender

Client Alert: From the Scheer Law Group: Servicer Claims for Mishandling Loan Modifications are Held to be the Obligations of the Lender

To All SLG Clients and Affiliates.
From: Spencer Scheer
Date: July 7, 2016
Subject:  Client Alert: From the Scheer Law Group

Court are upholding Negligence Claims against Servicers for Mishandling Loan Modification Applications and holding that the Lender/Investor can be liable under agency Principles.

A California appellate court has held that borrowers can assert claims for both misrepresentation and negligent loan administration against a loan servicer and against an indenture trustee (lender/investor), as the servicer’s principal, resulting from allegedly mishandling a loan modification application  (See Daniels v. Select Portfolio Servicing, Inc., 246 Cal. App. 4th 1150, 201 Cal. Rptr. 3d 390 (2016)).

There is currently a split of authority under California law on whether there is a duty of care imposed by law on a servicer handling a loan modification application. The trend as evidenced by the Daniels case appears to be in favor of finding a duty of care under the law and  permitting the borrower to assert a negligence claim against the loan servicer for mishandling the modification process (Note: There is contrary authority). What should concern all lender/investors is that the Court in this case allowed claims against the lender/investor for acts of the servicer, for both the negligence and intentional misrepresentation claims, based on agency theories.

Read on.


CHARLESTON — Attorney General Patrick Morrisey today announced a $336,000 settlement with Avant, Inc. to resolve allegations the online lender’s business practices violated the state’s Consumer Credit and Protection Act.

The settlement involves allegations related to the marketing, promoting and enabling of 90 unsecured consumer loans from April to August 2014 in West Virginia.

“It is our duty to protect consumers from unscrupulous business practices,” Attorney General Morrisey said. “We work hard to enforce the state’s consumer protection laws to ensure businesses operate legally and fairly.”

The settlement alleges Avant led consumers to believe that it was licensed to make loans in West Virginia and do so with higher interest rates than permitted by state law. It also alleges Avant caused unnecessary confusion and misunderstanding, misled consumers as to its affiliation with foreign banks and advertised loans and credit services with intent not to sell the services as advertised.

Attorney General Morrisey further contends Avant operated without registering with the Secretary of State’s Office or complying with the state’s Credit Services Organizations Act.

Avant denies any wrongdoing as a part of the settlement and assures it will comply with the state’s Consumer Credit and Protection Act.

The settlement requires Avant to pay a civil penalty of $225,000.

The company must also refund and cease to collect at least $111,843.89 in interest and fees associated with the 90 loans. Additionally, all negative credit reports linked to the loans must be deleted.

View a copy of the settlement at: http://1.usa.gov/1U9s0hD.

SOURCE: http://www.ago.wv.gov

NewDay Financial banned from all lending in New York

NewDay Financial, already punished this year by the Consumer Financial Protection Bureau for its business practices and by the Multi-State Mortgage Committee for widespread cheating on licensing exams, is now completely banned from lending in the state of New York due to that same cheating on licensing exams.

According to the New York Department of Financial Services, New Day Financial, which does business as NewDay USA, will pay a $1 million penalty to NYDFS and surrender its mortgage banker’s license to do business in New York after its employees, including senior executives, engaged an extensive scheme to cheat on state-required continuing education courses and exams.

NewDay is a Maryland-based, nonbank mortgage lender owned by Chrysalis Holdings, a private company. Its primary business is originating refinance mortgage loans guaranteed by the Veterans Administration.

The charges mark the second time in 2015 that NewDay has run afoul of regulators for cheating on exams.

Earlier this year, the Multi-State Mortgage Committeeannounced a settlement agreement between 43 state mortgage regulators and NewDay, stemming from an investigation into allegations of extensive cheating on mortgage loan originator testing.

Under the terms of that settlement, NewDay was fined $5,280,000 for the violations.

Read on.




by Paul Kiel ProPublica

Alarmed by the explosion of high-cost lending in the state, cities across Texas have passed ordinances to prevent the cycle of debt that short-term, high-cost loans can create.

But some big lenders are finding clever ways around the laws 2013 like giving away cash for free.

TitleMax promises to “make getting cash easy!” To get a loan, borrowers with “good credit, bad credit, or no credit” need only turn over the title to their car.

In Dallas, San Antonio, and Austin 2013 which have all passed lending laws 2013 those loans have come with zero percent interest.

What’s the catch? After 30 days, the loan is due in full. If the borrower cannot pay 2013TitleMax’s average loan is for $1,300 2013 the borrower is sent to another TitleMax location outside of the city, where he or she can receive a new, unrestricted loan. That loan, states a contract given to one borrower, could have an annual rate as high as 310 percent.

Of course, the borrower would be free to renew the loan at that location 2013 over and over again.

“It’s a bait and switch,” said Ann Baddour of the non-profit Texas Appleseed. “The practice may not be illegal, but it’s definitely unethical and unconscionable.”

TitleMax declined to comment. Like other high-cost lenders, the company touts its products as an option for borrowers who might not qualify for other sources of credit.

An auto-title loan is similar to its better known cousin, the payday loan 2013 but larger and with more at stake. Typically, the borrower hands over title to her car and agrees to pay off the loan after one month. If she can’t do that, she can pay only the interest due and roll over the principal to the next month.

As with payday loans, the cycle can repeat itself over and over. A study by the Consumer Federation of America and Center for Responsible Lending found that the average borrower renews a loan eight times. A borrower who defaults risks having her car seized. (Disclosure: The Center and ProPublica both get significant funding from The Sandler Foundation.)

In six TitleMax contracts from Texas reviewed by ProPublica, the company actually charged an annual rate ranging from 145 to 182 percent.