The Wells Fargo Wagon Keeps on Rolling

Once upon a time, as little Ronnie Howard and the future Mrs. Partridge show, Wells Fargo coming to town was news to sing about.

It was also loud and open. Something that hasn’t been the case with anything Wells Fargo has done in recent memory.  In 2016 the news was that tellers and other Wells bank branch employees were opening accounts in customers’ names without customer authorization in order to meet new account quotas and to receive bonuses. 

Now, Wells Fargo is at it again.

The New York Times reported yesterday that Wells has been  doing something similar with home mortgages,  it has been putting borrowers into unauthorized loan modifications.

That is, if someone was behind on their mortgage (and in some cases, even if they were not behind), Wells restructured the terms of the mortgage without permission of the homeowner.

They can’t do that!  A contract is a contract—if you signed up for a 30 year mortgage with a fixed interest rate of 4%, that’s what you get.

But Wells’ tactics included adding years to the loan payoff period (extending some loans out to a 40 year payoff).  That lowered the monthly mortgage payment (sounds good, right?) but if the borrower was repaying their mortgage and any missed payments through a Chapter 13 bankruptcy plan, that could mess everything up as those plans are based on income and amount of monthly expenses.

Lowering someone’s mortgage payment from $1500 to $1150 could force that homeowner out of their bankruptcy plan—and into foreclosure.  Not exactly out of the frying pan, but definitely into the fire.

Why would Wells bother?  The only logical motivation- profit.  The government provides incentives to lenders who modify mortgages (a program put in place to encourage lenders to quickly modify the glut of borrowers who went into default after the economy crashed in 2008-2009).  The Times reports that Wells may get up to $1600 per modified mortgage, plus all the extra interest that would be paid over the years that are added to the loan terms.

It should be noted that a possible warning sign that this has or may occur is a letter from Wells Fargo informing the customer that their “loans are seriously delinquent” while offering them a ‘trial loan modification’ with the admonition that “Time is of the essence. Act now to avoid foreclosure.”

I haven’t seen one of these ‘phantom’ modifications yet.  Let me know if you think it has happened to you.

About a House

In 1927 a very successful businessman bought a house in New Rochelle, NY. It was a few blocks from New Rochelle Harbor and right on top of the railroad into Manhattan.

The buyer, the son of German immigrants, earned the equivalent of $112,000 in 1927. Well-known in his field, a real up and comer, he was clearly destined to earn more. A great deal more.

He grew up in poverty, his father was an alcoholic and frequently unemployed, his mother worked as a maid. From a young age he helped his mother with her work. She was the breadwinner, the disciplinarian, and he devoted himself to her.

He worked his way to Columbia University, left early to pursue his career, had success from the beginning, always took care of his mother. He bought the house in New Rochelle as a Christmas gift for her.

It was a three bedroom, rather plain house with possibilities. He took over the $10,000 mortgage already on the house and put the title in his mother’s name. Payments were $255 every six months.

He moved in with his parents and began an extensive renovation project. The house was shortly transformed into a showplace.

Our man’s career blossomed, the house was steadily improved, things were idyllic. Then our guy got married in 1933 at age 33. Perhaps unsurprisingly, his new wife and his mother did not get along. At all. The couple moved out of the New Rochelle home in 1934, though he continued to pay the mortgage.

In 1937, in the depth of the Depression, he earned the equivalent of $436,000.  Yet, he did not pay the $3,583 (in today’s dollars) due for the mortgage. It should be noted that our man was very, very careful with money. He had the mortgage payment.

The house was foreclosed on, the parents were forced to move out. Their son received another pay raise, was earning the equivalent of $620,000/year in 1939 when he was diagnosed with a rare, terminal disease. He died in 1941.

Yes, our man was New York Yankee Hall of Famer Lou Gehrig. His life, obviously, has been well documented, he is the subject of a some very well done biographies and one iconic movie, Pride of the Yankees. And yet, no one can figure out why he let the house go to foreclosure.

He wasn’t showing the effects of his illness in 1937, he had the money, but, as is noted by every biographer, his wife and his mother basically hated one another. It’s possible that as the house was in his mother’s name, Gehrig never knew about the foreclosure action. It’s possible that Gehrig’s wife Eleanor simply told Lou to stop paying. It’s also possible that the family decided to walk away from the house.

It’s a mystery, but we can attest to the fact that not all foreclosures make any sense.

The house that Gehrig re-built is still there. It’s had a long, strange history. It’s exterior was used in Pride of the Yankees, though the residents at the time had to sue the the Samuel Goldwyn production company to receive compensation for allowing them the run of the house for a few days. They settled for complimentary tickets to the movie after it opened in New York.

Over the years the house has been in foreclosure several more times. The last time was in 2016. It needs work. It’s fallen behind many of the homes, all built around the same time in 1905, in the neighborhood. It seems that it’s primary value is that it was once the home of Lou Gehrig and he probably did some the renovations in the late 1920s and early 1930s himself. That seems a little tenuous and potential buyers seem to feel the same way.

The house did sell a few months ago,. The yard is overgrown, the back of the house is a mess, the interior needs work and updating, the new owner is hoping to sell it to the New York Yankees to establish a Lou Gehrig Museum on site. The Yankees don’t seem to be that interested – New Rochelle is not all that close to Yankee Stadium.

If you look at some of the other houses in the surrounding area, you can’t miss the fact that many of them are beautiful – grounds, exterior, interior – Colonials kept up over the last century.

Lou Gehrig’s house is a pretty solid example of the lingering effects of a foreclosure in the neighborhood.

The Healthcare Vote, the Media, and My Practice.

After the House vote on the Health Care bill Thursday – you may have heard about it, it’s been mentioned on a couple of TV shows – my friend and associate, Donna Convicer,  received a series of phone calls from friends and clients. They were upset, as, of course, so many people are.

The crux of their concern -does the repeal of Obamacare mean that I’ll have to choose between paying my mortgage or paying my health insurance? That’s a grim choice, but one that’s certainly being debated out there on TV morning talk shoes. Scary stuff.

I have a friend who actually gets paid to follow the news and write. He tweeted a photo of the celebration in the Rose Garden with this comment: “House members of the GOP celebrating in the Rose Garden after vote is like the Patriots celebrating a preseason win. Over the Browns.”

He wasn’t being flippant (much) he was making a very solid point – one lost over days, now,  of rampant speculation; one nailed by Saturday Night Live last night – Thursday’s vote changed absolutely nothing. It had no tangible effect whatever on healthcare, taxes, or anything else.

Until the bill gets through the Senate, it is a theory. Not a very pleasant theory for way too many people, but a theory nevertheless. The Senate may not even schedule hearings on the thing for months.  The odds on the bill even being recognizable by the time it gets through the Senate are low.

You’d never know that from the media coverage over the last few days, unless you read the full articles, or listened to the end of every show – the little tidbit about the Senate’s vital part in all this tends only to get mentioned on the back end.

So, it’s been scary for a lot of people … and what does this all have to do with my practice?

Just this – every one of my clients has gone through exactly this range of emotions before they speak with me. Getting the first notice of a court hearing; that first official, legal document served by marshal or certified mail; is a shock every bit as hard hitting as the news people on Obamacare heard this week.

But, and here’s the thing, usually, just like this week’s news, there’s a long way to go before something substantial happens. A big part of my job is telling people shaken by the initial news that it’s just that – the beginning. There’s a long way to go, there are options.

Get served, sign for that letter at the post office … call me, exhale.

 

Lawyers, Math, and Why You Can’t Buy A Third-Pound Burger at A&W.

This week’s blog was co-authored with Jenny Bradley, a Family Law Mediation Attorney in the Research Triangle in North Carolina.  

In a perfect world, any half-way serious review of fast food burgers from around the country would rank the A&W Third-Pound burger right up there with In N’ Out and Shake Shack. By all reports the Third-Pound was a burger among burgers. Fresh, grilled, delicious, and it was priced below McDonald’s latest, and biggest seller, the ubiquitous Quarter Pounder (0r, as Vincent Vega would say, the ‘Royale with cheese’).

We’d go for one now, it sounds that good. Except we can’t – and that has nothing to do with the fact there are a whole lot fewer A&W’s around these days than in the early ‘80’s.

It has everything to do with the fact the Third-Pound was a miserable failure. Sure, it was big, sure it was fresh and delicious, sure it was cheaper than a Quarter Pounder. None of that mattered, what mattered was some 40% of the hamburger eating public believed that the Third-Pounder was smaller than the Quarter Pounder. Because 4 is greater than 3.

This happened in the mid-Eighties. It’s hardly a stretch to say that America’s grasp of mathematics has not improved since the A&W fiasco.

That’s a problem.

We are both lawyers, albeit with very different focuses. We both need math – we deal with a variety of financial issues, sometimes complex. But we deal with it. Even though we have the Dr. McCoy excuse – “Dammit, Jim, I’m a lawyer not a mathematician.”

While true, when confronted with a knotty financial issue that pops up during a foreclosure or compiling a divorcing couple’s assets, we do the math. It’s never as hard as it seems before we start.

Getting clients to do the math, though is sometimes daunting. We need forms filled out and basic calculations made before we can do much. But, it’s math, and the forms look imposing, and it’s personal and in many ways it represents a finality – of a marriage, of a home. So, no one’s rushing to get it done.

That’s all fine and, somewhat, to be expected. We cajole and remind and bug and get it done.

Our ‘Third-Pound’ scenario, though, pops up when we’re asked ‘what are the odds’. “What are the odds I keep the house?” “If I take it to court, what are the odds …?” and every possible variation and scenario.

We’ve been practicing long enough and intensively enough in our respective areas of concentration to be able to answer this and be pretty damn close. If we answered. But, we are loathe to do so. Because if it’s true that the average American is not good with math, then it’s even more true that they are really bad with odds.

Not sure about this? Well, poll your friends after the local weather guy predicts a 70% chance of rain and nothing beside a few black clouds roll overhead. You’ll find that a more than a few will complain about the ‘blown’ forecast. In any group of friends and acquaintances, by the way, there is always at least one person who will say, “Ha! They always get it the forecast wrong!”

The weatherperson didn’t get it wrong, of course. Because there was a 30% chance of it not raining. Not insignificant. Yet most people never heard 70%, they heard ‘It will rain.’ Because 70 is closer to 100 than 30 is.

As most legal matters are just a little bit more important than a rain shower, you could see where giving odds could be problematic.

Then, there’s the flip side of this. The Patriots just won a Super Bowl after being down 25 points in the third quarter. At the time, the odds (they were calculated online as the game went on by various sites) gave them a .4% chance of winning. When they were down 28-20 with four minutes left, they had an 8% chance of winning.

But they won. Coming back from a deficit like that hadn’t happened in 50 previous Super Bowls. Statistics tell us it shouldn’t happen again for at least another 50. Though statistics also tell us it could happen again next year, then not repeat for another 100 or more Super Bowls.

Rare is rare, but there’s no telling when it might pop up.

Which leads to another math problem for lawyers. Instead of the Third-Pound Dilemma, it’s the ‘So you’re telling me there’s a chance dilemma’, watch:

Put these two dilemmas together and we think you’ll understand why we are really, really careful answering ‘what are the odds’ questions.

Christmas and Debt … From 1843 …

So now, as an infallible way of making little ease great ease, I began to contract a quantity of debt.

~ Charles Dickens, Great Expectations

imageWhere would Charles Dickens have been without debt? Where would English Lit, Hollywood, and Christmas be without Dickens?

The running themes through Dickens’ long – and lucrative – career were crushing debt, workhouses, courts snarled in technicalities, poverty, sour credit, low wages, foreclosures, banks, scams, mass incarceration, sweatshops, social injustice … All very much applicable today.

If Dickens came back tomorrow, he’d be astonished by the speed of today’s communications; overwhelmed by the modern technologies used in finance; awed but probably pleased with the serialized novel on TV and Netflix, et al – I imagine him binge watching Breaking Bad and The Wire.

He’d find some things appallingly the same, others miraculous. He’d immediately recognize Pharma Bro, everyone running for President, the bankers in The Big Short. Give him a week and he’d be working on a new novel.

Dickens had an unfailing eye for all this because he lived it. He grew up in a imagemiddle class family, comfortable, good at school, apparently fairly happy. All that was destroyed when he was twelve and his father was tossed into debtor’s prison (right). Charles’ mother and younger siblings went with him – as was the custom. Charles,was forced to pawn his school books, was sent off to a workshop to help pay off his father’s debts.

An inheritance saved the family though Dickens’ mother was adamantly opposed to his leaving work and forced him to stay there for long, unhappy months before he left to resume his studies. He rewarded her for that particularly slight through dozens of novels and plays. (From Dickens to Bob Dylan and Alanis Morissette, it’s never a good idea to upset an artist with wide reach).

In his early writing career – he was pretty much a prodigy from the start – he covered the courts and, briefly, Parliament.

He saw the system from every angle and he set out to attack it in the only way he could, through his writing, within the flexibility and thin protection of the novel. He opened Victorian eyes to the seamy underbelly of British wealth, society, and empire.

imageIn 1843 he turned his wrath to Christmas. At the time, many – including his good friend Washington Irving – felt that Christmas season was ebbing away from the poor and increasingly put upon middle-class.

He didn’t like what he was seeing, feeling, and he sat down to write a scathing pamphlet about the issue. It soon occurred to him that a novel would work much better, reach more people. In six weeks he crafted his ‘ghost story’, A Christmas Carol.

He published it himself in an effort to not be ripped off by his usual publisher.A Christmas Carol in prose. - caption: 'Marley's Ghost. Ebenezer Scrooge visited by a ghost.' In today’s parlance, it went viral. Immensely popular, even his [many] critics extolled it. Thousands and thousands of copies were sold, many more – particularly in the United States were ‘bootlegged’ – and it was immediately adapted for the stage. Dickens himself did stage readings of the entire manuscript. It was everywhere.

Humanitarianism, redemption, a dead-on accurate portrayal of early-Victorian England, it hit a nerve in Great Britain and the United States. It hit, hard, the people bearing the burden of the Industrial Revolution, changed the way everyone thought of the Christmas season.

imageHow a man who, when first confronted with poverty and homelessness, says, “Are there no prisons? Are there no workhouses?” Finds empathy is inspiring regardless of religious belief. A Christmas Carol was a great story, a strong, bitter indictment of the times, and it worked. It changed things. It has never been out of print.

Again, no debt, no Dickens, no Dickens, no holiday season? The latter may be a stretch, but it’s not unthinkable.

So, sometime in the next few days I plan on catching the 1950 Alastair Sim, A Christmas Carol – a great adaptation (out of dozens, beginning with Thomas Edison’s version in the early 1900s!).

And to all my readers, I hope it’s obvious, “God Bless Us, Everyone.”

A Different ‘Night Before…’

We love Christmas, love the holiday season, so please take the following in the spirit in which it is written.

To all our clients and clients to be, who are thinking of presents under the tree instead putting the December mortgage payment in the mail.

‘Twas the night before Christmas, when all through the house

santa-sleigh-reindeer-jpg-500x0_q80_crop-smart_upscale-trueNot a creature was stirring, except me and my mouse;

I was moving bill payments around with care,

In hopes that Christmas presents I could Amazon there;

The children were nestled all snug in their beds,

While visions of PlayStations danced in their heads;

I, to make Christmas as great as they hopefully awaited,

Put off the mortgage payment Sarah so carefully negotiated;

And so, instead I ordered a Sanyo flat screen

With Amazon Prime, it was only eight-seventeen;

Then out on the lawn there arose such a clatter,

I sprang from my desk to see what was the matter.

Away to the window I flew like a flash,

Tore open the shutters and threw up the sash.

The moon on the breast of the new-fallen snow

Gave the lustre of mid-day to objects below,

When, what to my wondering eyes should appear,

But a miniature moving van, and a tiny auctioneer….

We are seeing this a lot, even this early in the Holiday Season, people putting off their modification plan payments in order to make Christmas special for the kids. We understand the temptation, we understand the pressures of the holidays that mount every time you put on the TV and see shiny happy people (sorry, R.E.M) buying cars for Christmas (really, really, hate those ads).

But, kids just want to be kids – with their parents and in their own beds in their own home.2af616a

We know, also, that some people put off hiring a lawyer for their foreclosure because they want to spend money on Christmas. Christmas, though, as we all know from It’s a Wonderful Life, doesn’t stop a case from moving forward or a deadline from passing.

So, please just think about that before right-clicking on order.

Things That Never Go Away

In Sunday’s New York Times, Jake Halpern revisited collection agencies. Not the boilerroommoviecollection agencies you’d normally think of, but the collections agencies that buy old debt and go after it with a vengence, They buy it for pennies on the dollar, use boiler rooms out of movies like … well, Boiler Room, to collect on it, seldom report the payments, resell the debt … as John Oliver showed a few months ago, the cycle never ends.

Halpern points out that President Elect Trump wants to roll back Dodd-Frank. A perhaps unintended consequence of this would be the almost complete unfettering of the collection industry. 

With that in mind, we thought a look back at one of our first blog posts would be in order – because some things never go away.

Last Monday a friend of mine received a phone call on his cell phone from an unidentified Rhode Island number. He went to college in Providence, has friends there, answered.

rattman_paper
Script from a ‘collection’ company a few dozen times removed from the debt.

This is what he got – “Hi, Mr. Loman, this is an attempt to collect a debt, anything – yada, yada, yada … can you confirm the last four digits of your social?”

“No.”

“Is it ‘5555’?”

“Perhaps.”

“Okay, well, I have an account here from Verizon, you owe twelve hundred dollars.”

“I’ve never had a Verizon account.”

“Well, sure, but it could also be from -”

“Could be?”

“From any one of the following companies now part of Verizon …” the guy then read off a very long list of companies, a list that pretty much summed up the telephone industry of the 21st Century.

“No,” my friend answered.

“No? Whattaya mean, no?”

“I don’t owe anything to anyone on that list.”

“Says here you do.”

“Then it’s wrong.”

“Look, Biff, I have it right here and -”

My friend has a law degree and a long history of dealing with total BS, so it finally hit him to ask, “Wait a second, what’s the date on this supposed debt?”

The guy on the phone fumbled around, Biff could hear papers being shuffled, murmurs of other voices from the boiler room, then, “Yeah, got it here, 2003.”

“You’re calling me about a twelve year old debt?”

“Well, no, see, we just received it -”

“Yeah, well, then it sucks to be you, have a nice day, don’t ever call again.”

Continue reading “Things That Never Go Away”

Gerald Watkins Mayfield …

I have a new favorite TV lawyer, or had, I  don’t think he’s going to be around very long. Gerald Watkins Mayfield (played by Geoffrey Owens – perfectly). He’s in HBO’s new series Divorce.

Divorce is the story of a successful business woman, Frances (Sarah Jessica Parker) and her not quite as successful husband, Robert (Thomas Hayden Church) living in Hastings-on-Hudson NY, a pretty, upscale town on the Hudson River an hour or so north of New York City. The town, by the way, is pretty much a character.

sarahbloghboObviously, they have marital problems. Just as obvious, as the show has been renewed for a second season and we’re only 6 episodes into the first, they are divorcing and it’s going to get ugly.

Last week’s episode saw Robert – well on his way to being the most annoying character on TV, cable and network – bagging mediation and deciding to hire a lawyer. That would be Gerald Watkins Mayfield and he is everything I’ve been writing about for the past year and a half.

In what is easily the funniest scene in the show thus far, Robert meets Gerald in his home office and ‘interviews’ him.

“So, you do mostly divorces?”

“Nope, mostly wills, trusts, estates.”

“You do some divorces?”

“You know what, Robert? Basically, it’s all law.”

That’s it, in a nutshell, perfectly put by a great character. ‘Basically, it’s all law.’

It’s not, of course, but clients still buy into it. As Robert does. Disastrously. I’ll leave it to you to watch the show to see just how disastrously it is.

Roger Ebert’s ‘Lawyer in a Movie Rule’ and My Practice

The late great Roger Ebert came up with a set of movies rules for movie viewing gleaned 20130405_roger_ebert_crop_91from his decades of amazing reviews. Things like ‘the guy in a war movie who shows everyone the picture of his sweetheart will die by the end’. Or ‘Ali MacGraw Disease’: A movie illness in which the only symptom is that the sufferer grows more beautiful as death approaches. 

Another is ‘The Lawyer With One Case Scenario.’ That’s defined as: in nearly all legal dramas, the lawyer’s involved in only one case – the case the movie is about. They are never distracted by other cases, clients, or causes.

This is certainly true for every legal drama that doesn’t involve a down-on-his-luck lawyer grasping onto one case as a lifeline. Paul Newman in The Verdict and Jimmy Stewart in Anatomy of a Murder come to mind.

For every other movie (and most TV shows, for that matter) it really is the one case goliath-600x400scenario. The one case that is really cool (or they wouldn’t be making a movie about it) and most certainly takes laser focus despite all the really neat stuff screenwriters come up with the throw in the way. Most of which have nothing to do with the with the law. (For an example of creative, if not ridiculous, ‘Hollywood-only lawyer faced with multiple obstacles while pursuing a case’, check out Amazon Prime’s Goliath.)

The typical movie lawyer, say Billy Bob Thornton, shows up and dazzles the court with legal acumen seemingly off the top of his head, while, miraculously, the lights in his office stay on, a paralegal/secretary/amusing investigator work 12 hours a day for free. Because, they believe in the case as much as the star, which is a really lucky thing as, let’s face it, the movie lawyer has no visible means of income. Needless to say, none of these legal thrillers ever starts with a client walking into the attorney’s office with a million-dollar retainer.

Half a century of ‘lawyer movies’ have had to have an effect on how people, i.e., real clients, see lawyers and law firms. Which is, on occasion, a problem.

download-1A few weeks ago I met with a prospective client. Very nice guy, the meeting was highly productive, I knew I could help him. So did he. He was all set to sign a retainer agreement when he stopped and said, “Just promise me you’ll be the only one handling my case. I only want to work with you.”

Well, a long line of movie lawyers would have agreed immediately. Everyone from Spencer Tracy to Debra Winger, George Clooney, Matthew McConaughey, and, yes, Billy Bob Thornton, and everyone in between would have taken the retainer. Because, in movie law land, there are no teams, no need to pay bills, and the only legal work a case ever needs is when the lawyer shows up in court. (By the way, movie lawyers are almost always late to court, are usually seen running down the aisle as the judge takes a seat.)

In real like, it’s about a team, it’s about research or motions or briefs getting done while somebody else is stuck in the courthouse, it’s about someone painstakingly filling out financial disclosure forms and checking scheduling and …. you get the point.

I love movies, but I live and practice in the real world.

Coming soon …

scrooged_primaryI saw a Best Buy Christmas commercial yesterday – really – and swore that I wouldn’t buy a thing from Best Buy through the holiday season as a reprisal for them RUNNING A CHRISTMAS AD ON OCTOBER 23RD. 

It did get me thinking – rather, I didn’t forget it. I had lunch today with Donna Convicer and we began to think about year end planning for the firm. Then it hit us: last year we had more foreclosure cases between Thanksgiving and New Years than in all the years previously, combined.

It used to be that court cases – at least here in Connecticut – backed off considerably during the holidays. Especially those concerning housing – as in, no one wants to evict people from their homes during the holidays, it’s just so … so, Dickensian.

If last year was any indication, banks (and, by proxy, foreclosure firms) are getting the same head start on the holiday season as Best Buy and layering in matters for year end. Unfortunately, if you’re facing a possible foreclosure you can’t handle this the way I’m handling Best Buy. Don’t ignore or assume it’s going to go away for during the holidays, be proactive.