Lenders Fail to Meet Terms of Settlement Agreement

small__2959833537Last year, major mortgage servicers, including J.P Morgan Chase, Bank of America, and Wells Fargo, signed an agreement with 49 state attorney generals whereby they agreed to improve their loan servicing standards and help provide some much needed relief to distressed borrowers.  Under the terms of the agreement, the banks are required to assess their performance, aided by 29 different metrics.  The first round of analyses are in and the results are show a variety of violations.

The worst infractions involved servicers failing to adhere to timelines intended to force banks to make determinations on loan modification applications and maintain borrower notifications. Bank of America failed to provide accurate information in their Notice of Intent to Foreclose and failed to notify borrowers of missing documents in loan modification applications within 5 days.  Similarly, JPMorgan, CitiMortgage, and Wells Fargo also failed to meet notice requirements and maintain timelines for loan modification applications.

Servicers who failed the tests are required to come up with ways to correct the violations.  If they fail to do so, enforcement action may be taken through the courts and seek penalties of up to $5 Million.  It may also be possible for the settlement monitor to require the banks to provide some financial relief to borrowers affected by the violations.

http://www.chicagotribune.com/business/breaking/chi-most-major-loan-servicers-not-complying-with-mortgage-settlement-20130619,0,3094553.story

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The Church’s Fall From Grace

francesIt is no secret that the Catholic Church has remained the subject of much scrutiny due to numerous allegations of child sexual abuse. These allegations have also been combined with allegations of black-mail and corruption. These claims have again, become a matter of great concern yet again, as it seems the alleged victims have run out of means for recourse.

The International Criminal Court denied requests by alleged sexual abuse victims to prosecute Pope Benedict XVI for clergy sexual abuse, stating to victim’s counsel, that there matter is out of the Tribunal’s jurisdiction. This does not come as much of a surprise, since the International Criminal Court was created for the primary purpose of settling matters pertaining to serious war crimes or genocide, but victims’ counsel is making the argument that this problem does belong in the Court due to the universal harm involved.

The attorneys, who work for various human rights organizations, were quoted stating this is a “long standing and pervasive system of sexual violence.” Counsel is hoping to juxtapose these alleged crimes, against other types of matters that the Tribunal generally handles, based on its global scale, and the nature of the allegations, some of which include rape, and torture.

The Tribunal informed victims’ counsel that the crimes must be against the “international society as a whole.” Well, over the past decade, the Prosecutor has received, thousands of inquiries sent by victims all over the world. Thousands of inquiries for investigation all over the world based on not only emotional but physical harms sounds like it fits the bill, but there has still been resistance in the Hague.

At 85, Pope Benedict XVI decided he just could not take it anymore, and became the first, in nearly six hundred years, to leave this highly esteemed position. Many believe his resignation is based on the way the Vatican has been handling the criminal allegations. It seems as though the Vatican has made a change for the better, as Pope Frances became Pope Benedict XVI successor. Earlier this month, Pope Frances was quoted referring to the old regime as the “gay lobby.” This statement has caught many off-guard, and I am sure even more will find the statement rather offensive. However, since taking over the Papacy, many are hopeful that they will see a change in the way the Catholic Clergy around the world handle these allegations, even if it calls for a complete revamping of the Vatican.

http://www.huffingtonpost.com/2013/06/13/pope-benedict-international-criminal-court-_n_3436720.html

http://www.cnn.com/2013/02/25/world/europe/vatican-archbishop-resigns

photo credit: Lawrence OP via photopin cc

Low Cost Real Estate Investments

real estateIn the wake of the disastrous real estate market crash of 2008, it was inevitable that at some point the market would rebound.  Recently, investors have once again begun dipping their toes back into the market, buoyed by still-low interest rates.  However, some investors may be put off by the idea of large investments for fear that another bubble may be forming only to lead to another crash.  So how can a casual investor take advantage of an improving real estate market without taking on the high levels of risk associated with purchasing?  The answer may be a Real Estate Investment Trust (REIT).

A REIT is a company, trust, or association that is jointly owned by at least 100 people, which owns (and in many cases operates) income producing real estate.  In exchange for favorable tax treatment, the REIT agrees to distribute 90% of its taxable profits as dividends.  A REIT operates much the same way a mutual fund provides for investment in stocks.  This can be an attractive way for investors to make a low-cost investment in real estate.

REITs are sold like stocks and may consist of various types of real estate ranging from apartment buildings and shopping centers to billboards and cell towers. For those looking to make a low risk investment in a burgeoning real estate market, they may be a good place to start.

http://www.npr.org/2013/06/13/188979111/how-to-invest-in-real-estate-without-being-a-landlord

http://www.theintelligentreitinvestor.com/

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A Picture Is Worth A Thousand Words…Or Is It?

Trayvon Gold TeethOur country is divided. Was it out of racism? Or was he legitimately concerned about his safety?

On February 26, 2012, George Zimmerman, a neighborhood watchman for a small gated community in Sanford, Florida, fatally shot Trayvon Martin. In order to combat the charge against him, Zimmerman’s attorneys are alleging Zimmerman acted in self-defense. This claim is rather unsettling for many who feel a teenage boy, armed with a bag of skittles, is hardly threatening.

In deciding whether Zimmerman’s self-defense claim is a valid one, the fact-finder will have to determine whether Martin was a threat to Zimmerman. In an effort to do so, Zimmerman’s defense team attempted to introduce picture messages of Martin, which they say, go toward Martin’s character as a violent person.

One picture depicts the cannabis plant, another shows Martin with gold caps on his teeth. How these pictures illustrate that Martin is a violent and aggressive person, I do not know, and apparently I am in good company. Judge Debra Nelson, in an evidence hearing last Tuesday, decided that these pictures will not be utilized during trial. I am sure that the judge recognizes that showing these pictures to a jury will only confuse the matters at issue in the case. The issue is not whether a teenage boy made questionable postings on social media. The issue is whether Zimmerman’s acts were justified.

Another controversial picture message was posted on social media by Zimmerman’s brother, Robert Zimmerman. The picture featured a juxtaposition of Martin against a teenager charged with murdering a baby. He also went on to post a comment about why people may be justified in thinking “Black people might be risky.” Since the post, Robert Zimmerman made an appearance on television, publicly apologizing for his “mistake.” Not a smart move, Robert. One defense strategy, was to show that multi-racial Mr. Zimmerman could not be racist against Blacks – because he is Black. Well, Robert Zimmerman ripped a gaping hole in that argument. In Robert Zimmerman’s own words, I guess a “picture does speak a thousand words.”

http://www.cnn.com/2013/05/23/justice/florida-zimmerman-defense

http://www.cnn.com/2013/03/27/us/florida-zimmerman-brother-tweets/index.html

A Call for a National Homeowner Bill of Rights

foreclosureHomeowners attempting to defend against a foreclosure are faced with many daunting challenges. Perhaps most frustrating among them is the inability to delay foreclosure proceedings while the homeowner makes a good faith effort to modify their loan.

In many cases, homeowners were saddled with prohibitively expensive loans, the terms of which may not have been made clear at the time of signing; or they were victims of predatory lending.  Homeowners willing and able to pay their loan obligations under fair terms are shocked to find out that the banks are under no obligation to delay the foreclosure proceedings during loss mitigation efforts.  Often, these attempts to modify can take a long time during which the banks march inexorably toward a sheriff’s sale in a process known as “dual tracking”.

Recently, two consumer advocacy groups have called for national lawmakers to create a Homeowner Bill of Rights in order to prevent unnecessary foreclosures.  The policy brief by the groups outlines four rules they believe are necessary to protect homeowners: 1) requiring a duty to engage in loss mitigation analysis before the foreclosure process is commenced; 2) outlawing “dual tracking”; 3) establishing clear procedures regarding loss mitigation and the appeal process if modification applications are denied; and 4) calling on states to add private enforcement that gives homeowners a way to pause foreclosure proceedings while the servicer corrects violations of the law and encourages servicers to consider loss mitigation alternatives.

These seem like reasonable demands considering the cost to the homeowners.  In my opinion, it’s a sad state of affairs when an Airline Passenger Bill of Rights sees the light of day before the same for struggling homeowners.

http://www.dsnews.com/articles/advocacy-groups-call-for-national-homeowner-bill-of-rights-2013-04-11

http://www.dsnews.com/articles/cfpb-establishes-new-servicing-rules-to-prevent-foreclosure-2013-01-17

photo credit: JefferyTurner via photopin cc

A Presumption of Sophistication

commercial leaseMany first-time small business owners are surprised to find that the high duty of care owed by residential landlords to residential tenants does not apply in a commercial setting. In an opinion published this week, the New Jersey Appellate Division recently reconfirmed this in the case of Vellucci v. Allstate Insurance Company.

In that case, the realty giant Mack-Cali had designed, built, owned, and managed a building in Bridgewater, which is and was occupied by Allstate Insurance. The plaintiff’s father, Albert Vellucci, worked for Allstate in that building and in 2004, at the age of 53, contracted Legionnaires’ disease from the building’s water supply. He was admitted to the hospital on December 14th, but on January 16th, 2005 passed away due to multiple organ failures, caused by the disease. The plaintiff brought suit claiming, among other things, negligence on the part of Mack-Cali for failure to “maintain the building’s water supply and plumbing system in a reasonably safe condition.”

Any residential landlord in New Jersey knows that had this incident occurred in a residential property to a residential tenant, the landlord would most likely be on the hook. However, as the court points out:

[P]revailing industry and regulatory standards do not impose a duty on Mack-Cali to take proactive measures to ensure that a commercial office building’s water supply is not contaminated by the Legionella bacteria. Absent evidence that Mack-Cali actually knew or should have known, through the exercise of reasonable maintenance measures, that the building’s water supply had been contaminated with the Legionella bacteria, Mack-Cali is not liable for decedent’s demise.”

Courts presume in a residential situation that tenants do not have the same ability to thoroughly inspect the property, the sophistication to negotiate the lease, or the negotiating power to insist on revisions. So certain allowances are made in favor of the tenant, such as the implied warrant of habitability, which is read into any lease and requires the landlord to maintain the basic elements and major systems of the premises in safe condition. While there is some movement towards such an implied warranty in commercial leases, most states maintain the old caveat emptor attitude towards commercial property. Business tenants are held to a higher standard and charged with the responsibility to safeguard themselves.

What does all this mean for new business owners? Become a sophisticated business tenant by having your lease reviewed by an attorney with experience in commercial leasing, asking questions and understanding what you are signing before you jump into such an important contract, and using what power you have to negotiate favorable terms.

Tax Planning Lessons from the Pros

apple-corpIt’s not uncommon for large corporations to take advantage of existing international taxation laws to reduce tax liability.  What is less common, however, is for a corporation to be successful enough with its profits and tax avoidance strategy to avoid roughly $10 billion per year.

Last week, Tim Cook and other top executives from Apple, Inc. were called to testify before a Senate Subcommittee hearing to defend its use of a “complex web of offshore entities” to avoid paying billions of dollars in U.S. taxes.  Investigations prior to the hearing revealed several of Apple’s subsidiaries were able to avoid tax liability by claiming to be a tax resident of nowhere.

One such subsidiary, Apple Operations International, incorporated in Ireland in 1980, is owned and controlled by a U.S. parent and has no employees or physical presence; but it maintains bank accounts within the U.S. and holds board meetings in California.  Ireland asserts tax jurisdiction based on corporations that are managed and controlled in Ireland, while the U.S. asserts tax jurisdiction over companies incorporated in the U.S.  Thus, neither the U.S. nor Ireland has tax jurisdiction over the entity, which has not filed a tax return for the past five years.

Apple defended its position claiming it did not use any nefarious tax gimmicks, but instead chose to keep its cash in foreign subsidiaries, in compliance with current tax law, because it is cost prohibitive to repatriate the cash.  Tim Cook went on to recommend a ”dramatic simplification of the corporate tax code” that “should be revenue neutral, eliminate all corporate tax expenditures, lower corporate income tax rates and implement a reasonable tax on foreign earnings that allows the free flow of capital back to the U.S.”

Although opinions may differ on whether such tax avoidance strategies as the ones used by Apple are beneficial to the economy, those eager to place blame on the corporations themselves may want to consider who drafts the laws with which they comply.

 

http://www.npr.org/blogs/thetwo-way/2013/05/20/185639686/apples-complex-web-helped-it-avoid-taxes-panel-finds

http://www.forbes.com/sites/connieguglielmo/2013/05/23/apples-cook-on-taxes-being-an-american-innovator-transcript-of-senate-testimony/2/

http://www.bbc.co.uk/news/business-22615146

photo credit: Thomas Hawk via photopin cc

A Matter of Life or Death

jodi-arias32 year-old Jodi Arias was convicted of first degree murder for the death of Travis Alexander on May 8, 2013. Allegedly, Ms. Arias had stabbed Mr. Alexander, slit his throat and shot him in the face. Though the jury was able to determine, within a couple of hours, that Ms. Arias was guilty of murdering Mr. Alexander in an “exceptionally cruel” manner, they encountered quite a bit of trouble trying to determine the what type of punishment should be imposed for these atrocities. Jurors left the jury room and informed Judge Sherry Stephens of their inability to come to a decision. Unsatisfied with this conclusion, Judge Stephens sent the jury back to the jury room to reconvene. With the jury still unable to come to an agreement, Judge Stephens dismissed the jury on Thursday, May 23, 2013.

In order for the jury to sentence Ms. Arias to death, the decision must be unanimous. Failure to reach unanimity means that Ms. Arias most likely will be destined to fulfill a life sentence in prison. This discord among jurors seems to be a direct reflection of the discord between individuals living in this country. What is the end goal here? Is it to try to make the victim gain some sense of vengeance, or is it about making the defendant pay for their wrong? Perhaps it is both. Along those same lines then, what will constitute just punishment under these circumstances? Is life without the possibility of parole a more serious punishment than death? Is the death sentence an easy way out?

Weeks ago, Ms. Arias was quoted by KSAZ (a local Fox channel in Arizona) saying “I believe death is the ultimate freedom, so I’d rather just have my freedom as soon as I get it.” Recently however, Ms. Arias has changed her tune. Lately, Ms. Arias has tearfully been pleading for her life, and professing her desires to perform charitable works while serving her sentence. A plea which very possibly may land on deaf ears.

A new set of jurors will be plagued with the responsibility of determining Ms. Arias’ fate as the penalty phase is scheduled to begin again on July 18, 2013. These new jurors will bring with them their own ideals and their own morals, which in turn, will shape each juror’s stance on what will constitute “just punishment.” The makeup of these selected few will be crucial to the ultimate determination of whether Ms. Arias is sentenced to life or death. If sentenced to death, Ms. Arias will join three other women who are currently on death row in Arizona.

http://www.cnn.com/2013/05/22/justice/arizona-jodi-arias-trial/index.html

http://www.azcorrections.gov/inmate_datasearch/Minh_NewDeathRow.aspx

Employee Complaints on Facebook: Unionizing Speech?

facebookclayAccording to the Bureau of Labor Statistics, only about 11.3% of American workers are part of a union. As the National Labor Relations Board (NLRB) sees it, the other 88.7% are potentially in the process of unionizing, and it is up to the NLRB to safeguard the rights of those workers to do so. So the NLRB gets involved when employees engage in “concerted activity,” which includes “circumstances where individual employees seek to initiate or to induce or to prepare for group action” and when employees bring “truly group complaints.” Meyers Industries 281 NLRB at 887 (1986). In those cases, the employees’ speech is deemed protected under Section 7 of the National Labor Relations Act (NLRA).

So the question that has begun to plague the NLRB in recent years is what sort of Facebook statuses, Twitter tweets, Tumblr blog posts, LinkedIn updates, YouTube videos, Pinterest pins, and other social media posts constitute a first step towards group action, and what sort  are merely public outbursts. Two recent cases bound the issue on each side, but also left some interesting questions.

In Hispanics United of Buffalo, Inc. and Carlos Ortiz. Case 03–CA–027872, a Ms. Cole-Rivera posted on Facebook that she was concerned that another employee, Ms. Lydia Cruz, might complain to an executive at the company that certain employees were not adequately doing their jobs, saying “Lydia Cruz, a coworker feels that we don’t help our clients enough at Hispanics United. I about had it! My fellow coworkers how do u feel?“ Several other employees commented on the post, objecting to the idea that their performance was substandard and Ms. Cruz also commented “stop with ur lies about me“. Hispanics United fired Ms. Cole-Rivera and four of the commenting coworkers stating that the comments were harassment and bullying. The NLRB, however, found that the speech was protected because it was engaged in “was concerted for ‘the purpose of mutual aid or protection’ as required by Section 7.”

In Karl Knauz Motors, Inc. d/b/a Knauz BMW and Robert Becker. Case 13–CA–046452, a salesman at a BMW dealership, adjacent to a Land Rover dealership owned by the same employer, posted about an accident at the Land Rover dealership. The salesman, Mr. Becker, posted several pictures on Facebook and commented “This is what happens when a sales Person sitting in the front passenger seat (Former Sales Person, actually) allows a 13 year old boy to get behind the wheel of a 6000 lb. truck built and designed to pretty much drive over anything. The kid drives over his father’s foot and into the pond in all about 4 seconds and destroys a $50,000 truck. OOOPS!” Other employees at the dealership commented, but limited their to responses such as “How did I miss all the fun stuff?“ and “Finally, some action at our Land Rover store.” Mr. Becker was fired over the incident, as well as other pictures and comments on his Facebook page. The NRLB found in that case that the posts and comments amounted to a “lark,” rather than concerted activity.

So, to summarize, when an employee discusses on Facebook another employee’s criticism of her coworkers, and there is the potential for a complaint to management, this is concerted activity. However, when an employee discusses on Facebook a funny accident at work, this is not concerted activity, and thus no protection is afforded under Section 7 of the NLRA.

These two decisions leave a number of interesting questions about social media policy in the workplace. Does reposting a coworkers gripes mean you are discussing the issue? How many comments from other employees do you need before your speech gets Section 7 protection? Chairman of the NLRB, Mark Pearce, even said in a recent speech that the Board is currently considering a case which hinges on whether Facebook Likes constitute participation by other employees. And how will Google Glass affect all this? With the pace of change in social media, the Board will have no shortage of interesting questions to contemplate regarding the nature of collective action in the workplace.

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New Diversionary Program Proposed for Municipal Court Offenders

small_464762700Diversionary programs such as Pre-trial Intervention (pursuant to N.J.S.A. 2C:43-12) and Conditional Discharge (pursuant to N.J.S.A. 2C:36A-1) are currently available to criminal defendants charged with indictable offenses in Superior Court. These diversionary programs enable criminal defendants (generally first time offenders), to avoid ordinary prosecution by participating in rehabilitative services and undergoing supervisory treatment. These diversionary programs have the primary purpose of utilizing alternative methods to ensure that criminal defendants will not recidivate or create a crime in the future. Earlier this month, Bill A-3598 was forwarded to the Judiciary Committee for review. This Bill, if passed, will expand the application of diversionary programs to defendants facing disorderly persons, and petty disorderly persons offenses in Municipal Court.

The proposed bill will, among other things, mandate that the defendant has:

1) not been previously convicted of a disorderly persons or petty disorderly persons offense in the United States, New Jersey or any other state;
2) not previously participated in a conditional discharge under NJSA 2C:36A-1, supervisory treatment under NJSA 2C:43-12 or a conditional dismissal;
3) applied for the program through the Court prior to conviction;
4) notified the Prosecutor of the desire to enter the program
5) satisfactorily complete the program
6) submitted to fingerprinting

In addition to all of the above, the court may also consider other facts relevant to the case. Some of the factors include the nature and circumstances surrounding the offense, the needs and interests of the victim and the community, and the motivation, age, character, and attitude of the defendant.

The program will not be available for defendants who are charged with offenses involving organized crime, gang activity, continuing criminal business or enterprise, breach of the public trust, crimes against the elderly, children, or domestic violence. Defendants charged with offenses under these provisions will have to rely upon the traditional municipal court procedures.

Implementing the proposed Bill will have tremendous implications for municipal court practice. It would enable those who otherwise may be facing criminal sanctions (upon a showing of remorse/ rehabilitation and successful completion) to avoid conviction. It will also allow those defendants to obtain expungement for their records sooner than they would be able to had they pled to a disorderly person or petty disorderly persons offense. If the Bill passes muster, it is to take effect 120 days after enactment. Municipal Court defendants will subsequently be eligible to participate in the program after the effective date.

ftp://www.njleg.state.nj.us/20122013/A4000/3598_E1.PDF

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