Monthly Archives: November 2015

2015
11/25

Category:
Pay Day Loans

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Son stole from his dementia suffering mum

“I accept that was something you were reluctant to do. For several years before you had encountered serious financial difficulties. You were unable to work from 2007 by reason of your medical condition.”

“You had an unsuccessful business which failed. I’m told £90,000 debts had been incurred including sums from pay day loans.

“I’m prepared to accept this was something you resorted to in desperation.”

2015
11/25

Category:
Filing Bankruptcy

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Ask the Times: Gas with ethanol prevents gas line freezing

As to gift cards and certificates as they relate to going out of business (whether by filing bankruptcy or simply closing the doors) there is very little in Iowa law that addresses some of the problems that can occur. With regard to a bankruptcy filing, doing so pretty well trumps any other concern or law, holders of gift certificates/cards are unsecured debtors and can file a claim with the bankruptcy court. But, as unsecured debtors, they are in line after secured debtors for any assets that may be available to distribute to satisfy such claims.

For a business that simply closes its doors, absent unusual circumstances, generally when the business dies so does the ability to redeem a gift certificate/card. There is no insurance, bond or escrow requirement in Iowa law to give the holder of the certificate/card any assistance. There have been various proposals over the years to change Iowa law with regard to gift certificates/cards to address some of these concerns. However, the proposals have not made it into law.

Heres our most recent general consumer advice on gift cards and gift certificates: https://www.iowaattorneygeneral.gov/for-consumers/monthly-consumer-focus/consumer-focus/paper-or-plastic-gift-certificates–gift-cards/paper-or-plastic-gift-certificates–gift-cards/.

2015
11/24

Category:
Finance

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The 2015 Fintech Finance 35: The Financiers Who Place the Bets

The origin of the term fintech is difficult to
pinpoint; only very recently has it become an accepted label
for one of the hottest segments of the technology market. The
availability of high-shy;performance computing and low-cost
distribution channels is attracting a steady stream of
entrepreneurs with ideas for improving, if not revolutionizing,
financial products and processes and investors are in
hot pursuit.

Institutional Investors first Fintech Finance
35 ranking turns a spotlight on the financiers who are abetting
this flowering of innovation. They include deal makers at
various stages of the investment cycle and facilitators of the
incubating, mentoring and capital-shy;raising ecosystems that
accelerate promising financial start-ups paths to
commercialization.

According to one global tally, by consulting firm Accenture,
fintech investment tripled in 2014, to $12.2 billion, its
growth rate dwarfing the 63 percent for venture capital
overall. Research firm CB Insights estimates that
fintechs share of total venture capital activity
quadrupled between 2008 and 2014, to 12 percent.

Thats the big picture. Here we present perspectives on
the boom through the lenses of some of its leading players. (To
account for firms partnership structures, a total of 41
individuals are recognized.) Opinions and investment theses
vary, as does the approach of a traditional venture fund
manager compared with that of a corporate strategic investor.
But all share a conviction that fintech is here to stay and an
enthusiasm for the work, which neither begins nor ends when
checks are issued. Venture capitalists typically meet with
hundreds of prospects over the course of a year before making a
relatively small handful of bets, and through board seats or
other types of advisory relationships they provide ongoing
guidance, often drawing from extensive industry experience.

2015
11/24

Category:
Credit Cards

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2015
11/23

Category:
Repairing Credit

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Convicted NAACP exec Carmen Johnson was allegedly drugged and unable to defend …

When asked how she’s holding up, Carmen Johnson responds assuredly, “Paying attention to the details in the journey.”

The former head of the Prince Georges County NAACP branchs housing committees journey took on a new meaning this past February when she was convicted on charges of conspiracy, wire fraud and making a false statement on a loan application, arising from two residential mortgage fraud schemes.

“When people are in a situation like mine, they turn into sleep walkers because you are told when to eat, when to go to bed … when to do this, when to do that.” Determined to keep her head high, Johnson, 48, is just a few months into serving a 57-month sentence in a federal prison which will be followed by five years of supervised release.

And she was ordered to pay $2.3 million in restitution to financial lending institutions for their losses on 10 foreclosed properties.

“Eventually my story will be told and I can’t miss one detail of this whole journey,” Johnson says hopeful that she will be released soon and will return home to her family.

Johnson claims her innocence because as she puts it, “Personally, I never did mortgages a day in my life. I am an activist. I was helping people with foreclosures.” The owner of CJ Lending and its predecessor Able Estate amp; Company, which provided credit repair services, is adamant she did nothing wrong.

Witnesses testified that in both schemes Johnson reported to credit bureaus and provided her fellow co-conspirators with false credit histories showing backdated lines of credit that were used to convince lenders to give mortgage loans.

Why did her co-defendants plead guilty? “I don’t know any of them. I know two are realtors at high-end real estate agencies. The only reason I can say they plead guilty is because they were absolutely guilty.”

Johnson persists she’s innocent of the charges. Read what else she has to say.

What do you want your constituents to know about your case?
Innocent people can go to jail.

Legally, you’ve never done a mortgage but you have been charged with fraud?
Exactly. [I was charged] with 24 counts.

Why weren’t you able to prove your innocence?
I had fired three high-profile attorneys. By the time I got to trial, I was heavily sedated on Klonopin, which is a medication the psychiatrist prescribed for me. I was ordered to go through therapy once a week. I did that for almost 18 months or so. I couldn’t even function.

[An anti-anxiety drug, Klonopin has harmful side effects which includes addiction, withdrawal, hallucination, delusional thinking, irritability, depression and suicidal thinking. Rock star Stevie Nicks is the poster child for the dangers of Klonopin addiction. “The only thing I’d change [in my life] is walking into the office of that psychiatrist who prescribed me Klonopin. That ruined my life for eight years,” she told FOX news. She also told US Weekly, “[Klonopin] turned me into a zombie.”]

Why were you “ordered” to go through therapy?
I am not sure. I don’t know if that’s part of the process. I know that I needed it, but I should have gone to my own therapist instead of a court appointed-therapist. I hear that a person should be on Klonopin 30 to 60 days. I was on it for almost two years.

Did you have any related therapy prior to the court order?
Yes. Most people need therapy or someone to talk to. Not once a week, like they ordered me to do or not being placed on some type of meds.

How are you adjusting to your residency at Alderson Federal Prison Camp?
It’s a no security campground. It’s where Martha Stewart was. I have not unpacked emotionally and mentally. I know that I am going to get out of here. There is no way that God is going to allow me to do four years and some months for something I didn’t do. As far as the adjustment aspect, meeting different women with PhDs, judges and a couple of prosecutors in here and lots of attorneys – there are a lot of professional women here. Just meeting with them and hearing their stories it just really breaks my heart. I wish God had a better plan for me, a more comfortable plan, where I was hearing these women’s stories outside of prison.

He wanted me to be in prison. Just listening to their stories, them ministering to me and healing me – making sure I am OK to complete this journey. The women have been good and sympathetic for whatever reason. As far adjusting to the rules, I am the perfect inmate. However, I refuse to sleep walk.

When you say that you are aware of every step and that God has a plan for you, do you really believe that you will get out early?

Yes. I do.

In regards to your psychiatric care, I am trying to connect the dots. Did you have an outburst?
No. A lot of people go through that. I wasn’t aware of the [processes of the] court system. A lot of women here have told them they went through the same thing. When you go through what I have been through, you’re terrified, afraid. You can’t think. Especially if you are innocent, you don’t know what is going to come next. You don’t trust anyone especially as a professional and you have an attorney. It does something to your psyche to know that people have your life in their hands. I had anxiety and felt I was going to have a heart attack. No one knew what I was going through because I continued with my activist work. I was the housing chair of the State of Maryland NAACP and an executive for them. People came to me to save them from foreclosure. Being on the therapy once a week started off being a good thing because of all the anxiety I was experiencing.

The story behind the story: How Johnsons nightmare started
in the first scheme, which operated from March 2007 to November 2008, Johnson was accused of conspiring with real estate agent Edgar Tibakweitira (aka “Edgar Julian,” “Charles Edgar Tibakweitira,” and “Edgar Gaudious Tibakweitira,”), 46, and others, to fraudulently obtain residential mortgage loans by making false statements during the loan application and approval process. In the second scheme, witnesses testified that between April and July 2008 Johnson conspired with real estate agent Nsane Phanuel Ligate, 42, and others in a similar mortgage fraud scheme involving two properties in Baltimore.

A resident of Severn, Maryland, Tibakweitira’s co-conspirators were Flavia Makundi, 42, of Severn Park, Maryland, Ayoub Luziga, 35, of Bowie, Maryland, Raymond Abraham, 48, of Silver Spring, Maryland, Mokorya Cosmas Wambura, age 42, of Takoma Park, Maryland, Abdallah Suleiman Kitwara, 44, of Bowie, Maryland, have pleaded guilty to their roles in the first scheme. Luziga was sentenced to 21 months in prison and ordered to pay restitution of $999,726. Kitwara was sentenced to 15 months in prison and ordered to pay $290,954 in restitution. Abraham was sentenced to 33 months in prison and ordered to pay $999,726 in restitution. Annika Boas, 37, of Mount Rainier, Maryland, was convicted after trial and sentenced to 27 months in prison and ordered to pay restitution of $511,147. Makundi was sentenced to time served.

The US Department of Justice says Tibakweitira “used his position of as a real estate agent to build a group of co-conspirators who obtained mortgages for properties at values well above the properties’ actual market value and pocketed the excess funds.” He was sentenced to 57 months in prison and ordered to repay $2,482,856.05 in restitution.

In Johnson’s “second scheme,” her co-conspirator, Ligate, a resident of Ashburn, Virginia, was sentenced to five months in prison, followed by five months of home detention as part of three years of supervised release for conspiracy to commit wire fraud, in connection with a separate, but related mortgage fraud scheme. Ligate was also ordered to pay restitution of $352,091.82.

In comparison to those involved in the first scheme, Ligate’s co-conspirators also received much lighter punishment. Cane Mwihava, 43, of Bowie, Maryland, Larry Johnson, 58, of Capital Heights, and Gladyness Silaa, 36, of Bowie, Maryland plead guilty to their roles in the second mortgage fraud scheme. Johnson was sentenced to eight months in prison consecutive to the current sentence he is serving on an unrelated case and ordered to pay restitution of $352,091. Silaa was sentenced six months home detention and ordered to pay $378,602 in restitution. Mwihava was sentenced to six months home detention and ordered to pay $352,091 in restitution.

The US Attorney’s Office contends defendants used stolen or false identities, false documents – including W-2 forms, earnings statements, and bank statements – and false credit information to induce lenders to provide residential mortgage loans to the straw buyers.

Through her company CJ Lending, the Gambrills, Maryland resident, was accused of creating fictitious lines of credit for the straw buyers to fraudulently enhance their credit worthiness.  Large amounts of the proceeds of the fraudulently obtained loans were disbursed from escrow accounts to Destiny Property Management, LLC and Destiny Property Management Company, which were shell companies owned by Tibakweitira, for repairs and renovations that were never made to the properties. These funds were paid to the defendants. The defendants did not make or stopped making the mortgage payments and allowed the properties, including 10 properties located in Severna Park, Baltimore, Hyattsville and Silver Spring, to go into foreclosure.

As a result of the conspiracy, lenders provided over $3.5 million for fraudulently obtained loans, which resulted in losses of almost $2,309,646 to the lenders, the Federal Housing Administration which insured some of the loans, and the Federal National Mortgage Corporation (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”), who purchased some of the loans in the secondary mortgage market.

2015
11/23

Category:
Finance

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Zynga’s CFO resigns and other finance moves

Struggling mobile game developer Zynga announced that Chief Finance Officer David Lee has left the company. Chief Accounting Officer Michelle Quejado will serve as interim CFO as the company seeks a permanent replacement. 

Zynga did not provide a reason for the abrupt departure. Lee joined the company in April 2014. 

The mobile developer is most known for its FarmVille and Words With Friends franchises. Those franchises have not fared well in recent months.

The company recently announced a 27% year-over-year decline in average monthly active users — a key metric for the mobile gaming industry. 

In other finance moves

Tesla scooped up Google vice president of finance Jason Wheeler as its next CFO. Wheeler was largely regarded as the CFO successor to Googles Patrick Pichette before the company chose to hire Morgan Stanley executive Ruth Porat. After 13 years at Google he will move on to replace Tesla CFO Deepak Ahjua, who announced his retirement earlier this year. 

Molson Coors named David Heede as its interim CFO. Heede, who holds the top finance spot at Molson Coors Europe, will replace Gavin Hattersley, effective November 16. 

Carrie Teffner was named the new finance chief at Crocs. Teffner will take over the role from interim CFO Mike Smith. The former PetSmart CFO was named to the companys board of directors in June. 

99 Cents Only Stores named Felicia Thornton CFO and treasurer. Thornton is replacing interim CFO Michael Fung, who will return to his board of directors position following the transition. Before joining the 99 Cents Only Stores, Thornton was the co-CEO, president, and COO of DSM. She has also held leadership roles at Albertsons and The Kroger Company.

Huntington Ingalls Industries recently announced the upcoming retirement of Barb Niland. She will be replaced by Christopher Kastner. The shipbuilder announced that Niland will step down in March. Kastner is currently general manager of corporate development at the company. 

The Bon-Ton Stores named Nancy Walsh as its next CFO. She was previously the senior vice president of finance at fashion retailer Coach. 

PGamp;E Corp. named Jason Wells CFO, effective January 1. Wells is taking over the role from Kent Harvey, who will transition to a senior vice president role and remain with the company until his previously announced retirement which will occur sometime in the first half of 2016.

2015
11/22

Category:
Repairing Credit

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CFPB Monthly Report turns its attention to credit card products

The CFPB issued its Monthly Report this week. The report is a high level snapshot of trends in consumer complaints and provides a summary of the volume of complaints by product category, by company and by state. Additionally, each month it highlights a product type and a geographic area. This months report highlights credit card products and provides some forecasting of areas regulators are likely to focus on in upcoming examinations.

Each month, the Report breaks down complaint volume by product looking at a three month average and comparing the same to the prior year. As has been the case in prior months, the Report continues to indicate that the three products yielding the highest volume of complaints are debt collection, mortgage and credit reporting. If there is good news to be had, the Report indicates that debt collection and credit reporting both showed a significant decrease in complaints in September 2015. Debt collection showed a 10% decrease and credit reporting showed at 15% decrease. Interestingly, the products showing the largest increase in claims in a 2014 vs. 2015 comparison were debt settlement, credit repair and check cashing. Taking this into account, we are likely to see a continued increase in enforcement actions in the debt settlement and credit repair industries.

This months report focuses on credit card products. According to the CFPB Reports, credit card products are one of the most complained about financial service products, fourth only to debt collection, credit reporting and mortgage. Credit card providers and servicers should pay close attention to this months report as it highlights what are likely to be points of emphasis with regulators in upcoming examinations particularly with regard to the application of payments and billing disputes.

  • The most common complaint involves billing disputes. According to the report, consumers are confused as to how and when late fees can be assessed. Other consumers indicated confusion as to how to properly and timely make a billing error dispute. 16% of all credit card complaints are categorized by the CFPB as involving billing disputes.
  • Another issue highlighted by the CFPB is the concern with credit card accounts being closed without notice due to concerns by the credit card companies as to fraud and identity theft.
  • Consumers also complained about their inability to allocate payments as they desire and expressed confusion where portions of accounts were subject to differing interest rates, promotions, and expiration dates.

Overall, the Report did not contain any surprises. So what might the credit card industry expect to see from regulators? Based upon the current complaint trends, the credit card industry is likely to continue to see a continued focus on to their application of credit card payments, as well as scrutiny as to the accuracy of their disclosures for 0% balance transfers and other promotions.

2015
11/22

Category:
Repairing Credit

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Cass & Polk County Sheriff’s Offices report IRS scam phone calls

Cass County (Valley News Live) The Cass and Polk County Sheriffs Departments have received multiple reports of scam phone calls claiming to be from the IRS.

According to reports the caller is demanding money to clear up a tax situation and claim that legal action will be taken if they do not receive payment.

The Cass County Sheriffs Office believes these calls are a “phishing” scam, to collect personal information.

The Cass County Sheriffs Office says the IRS and other legitimate organizations do not conduct business in this manner and offer these tips to avoid additional scams:

oBe cautious when dealing with individuals outside of your own country.

oBe leery if you do not remember entering a lottery or contest.

oBe cautious if you receive a telephone call stating you are the winner in a lottery or a prize

oBeware of lotteries that charge a fee prior to delivery of your prize.

oBe wary of demands to send additional money to be eligible for future winnings.

oIt is a violation of federal law to play a foreign lottery via mail or phone.

oNever give your personal details to people you dont know – If you receive a call from someone who claims to be from your bank or any other organization, dont give them your details. Call the organization in question to check it is really them calling. Never click on a link or call a phone number in an email – use a phone directory to look up the correct number.

oCheck your bank statements – If you see any unusual transactions, contact your bank or credit card provider.

oReview your credit report – Get your credit report from a credible agency. This allows you to check that no-one is using your name to borrow money or run up debts. See credit reports and credit repair for tips on how to check your report.

oCarry only essential information – Avoid taking important documents out of your home to minimize the chance of them being lost or stolen
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oSecure personal documents at home – Store your important documents in a fire and waterproof container or a safe deposit box in case your home is burgled or damaged.

oDestroy personal information – Shred or cut up your bills, statements and expired cards to prevent thieves from using them.

oSecure your mail – Secure your letter box with a lock and collect your mail regularly. If you move to a new house, notify the post office to redirect your mail. Mail sent to the wrong address could be used to steal your identity.

oProtect your mobile or Smartphone – Be wary when installing applications onto your phone. Scammers may send you applications designed to download malicious software onto your phone and steal bank account details.

2015
11/21

Category:
Credit Cards

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Beware signing up for store credit cards this holiday season

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It sounds like free money, and who couldnt use some of that this holiday shopping season?

But 28-year-old firefighter Dustin Werner learned the hard way how unpaid store cards debts ding your cheer.

When his ex-fiancÃe broke off their engagement six years ago she took all the home goods with her. He found himself without a bed or pots and pans. He quickly racked up thousands replenishing his nest across three store cards from Bed Bath amp; Beyond, Sears and Best Buy.

I wasnt really thinking about the future and how to pay them off, said the father of four from Dallastown, Pennsylvania. More like how to cook things in the kitchen and sleep. At first he made his monthly payments, then he stopped keeping up as his new life got underway.

Now he has new wife, a growing brood of children, and theyd like to buy a house. But the old cards are in collections, damaging his credit. Until they get the debt from the cards straightened out, theres pretty much no point in trying to get a mortgage.

Werner tries to not let it bother him and said it doesnt hurt them in everyday life much. It doesnt stop them from buying groceries. But theyre largely on a cash-only basis.

Its something I knew Id have to take responsibility for, said Werner. Its just money. And when you die, you dont have any of it.

Experts warn that the store credit cards like the kind Werner signed up for may entice with offers of 10 to 20 percent off for signing up, or several months of zero interest, but can have hidden dangers.

2015
11/21

Category:
Mortgages

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Simple Interest Mortgages are Anything but Simple

I represent a couple facing the foreclosure of their home…My clients loan is currently being calculated as a daily simple interest loan which is causing them to be in default…Attached is a copy of the note, deed of trust, and a payment history…

Your clients had terrible payment habits, which made them ill-equipped to handle a simple interest mortgage (henceforth SIM).

A borrower with disciplined payment habits can manage a SIM at virtually the same cost as a standard mortgage with the same rate and term, but few borrowers have the required discipline. Most will slip up now and then, which will cost them more than the standard mortgage would have in the same circumstances. And for some borrowers, the SIM can be a financial quicksand from which they can never extricate themselves. This was the case for your clients.

The Major Issue Is Disclosure: There is nothing wrong with the SIM being an option that the borrower can choose, provided that the differences between the SIM and the standard mortgage are clearly disclosed. The borrower who selected the SIM would then understand the differences, and would adjust her budgetary practices to them. But I have yet to see a SIM being offered in transparent fashion. The practice is to foist the SIM on a borrower who doesnt understand the difference, which is inexcusably sneaky. And in some cases, standard mortgages are converted to SIMs because the note allows it, which is even less excusable and should be illegal.

The Major Difference Is In the Calculation of Interest Due: The calculation of the monthly payment on a SIM and a standard mortgage is the same. For example, on a 30-year loan for $100,000 with a rate of 6%, the monthly payment is $599.56 in both cases.

The major difference is that the interest due is calculated monthly on the standard mortgage, and daily on the SIM. On the standard mortgage, the 6% is divided by 12, converting it to a monthly rate of .5%. The monthly rate is multiplied by the loan balance at the end of the preceding month to obtain the interest due for the month. In the first month, it is $500.

On the SIM version, the annual rate of 6% is divided by 365, converting it to a daily rate of .016438%. The daily rate is multiplied by the loan balance to obtain the interest due for the day. The first day and each day thereafter until the first payment is made, it is $16.44.

The SIM Accrual Account: The $16.44 is recorded in a special accrual account, which increases by that amount every day. No interest accrues on this account, which is why it is called simple interest. When a payment is received on a SIM, it is applied first to the accrual account, and what is left over is used to reduce the balance. When the balance declines, a new and smaller daily interest charge is calculated. But if the payment is not large enough to pay off the accrual account, the balance and interest rate remain unchanged and the accrual account continues to grow.

Budgetary Implications: Borrowers who pay every month on day 1 reduce their loan balance on a SIM almost as well as on a standard mortgage. Over 30 years, they will have to pay a month or two longer, due to leap years which add an extra days interest to the tab.

SIM borrowers who persistently pay early will pay off the balance before the scheduled term. Persistent early payment is the way to beat the SIM. Aside from avoidance, it is the only way.

Borrowers who persistently pay late do much worse with a SIM. The SIM borrower who persistently pays on day 10, for example, wont pay off the 30-year 6% loan until the 32nd year.

Borrowers with erratic payment habits fare the worst of all because of the likelihood that at some point their payment wont cover the amount in the accrual account. That is the quicksand that your clients fell into. They fell so far behind that they could never catch up, and ended up owing far more than they had borrowed originally.

Recognizing a SIM When You See One: Your clients claim that they were never told that they were getting a SIM. I examined their note, and there is nothing in it that indicates it was a SIM. For example, the rate shown in the note is the annual rate divided by 12, which gives the monthly rate. The daily rate used in a SIM is not shown in the note. That it is permissible to show a monthly rate in the note but charge the borrower a daily rate is a glaring deficiency of the disclosure rules.

A Message to the Consumer Financial Protection Bureau (CFPB): Your new mortgage disclosure requirements continue to allow lenders to be ambiguous on whether the mortgage described in their notes is a standard monthly accrual type, or a SIM. This would be really easy to fix.

For more information on Simple Interest Mortgages , mortgages in general, or to shop for a mortgage in an unbiased enviroment, visit my site The Mortgage Professor.