Friday, December 16, 2011

FYI: Cook County Enacts Vacant Property Ordinance Similar to Chicago Ordinance

The Cook County Board of Commissioners passed a vacant building ordinance
similar to the one adopted by the City of Chicago. See our updates below.
The new Cook County Ordinance will become effective on January 13, 2012.

The text of the Cook County Ordinance is available at:
http://cookcountygov.com/ll_lib_pub_cook/cook_ordinance.aspx?WindowArgs=15
40

Among other things, the Cook County Ordinance requires the mortgagee to:

1. Within the later of 30 days after residential or commercial collateral
becomes vacant and unregistered, or 60 days after a default, file a
registration statement with the Department of Building and Zoning;

2. Pay a registration fee of $500.00, which shall be doubled if the
applicable initial registration occurs as the result of an enforcing
authority's identification of a violation;

3. Secure and maintain the building;

4. Post a sign the vacant building registration number and the name,
address and telephone number of the mortgagee, and the mortgagee's
authorized agent for the purpose of service of process; and

5. Beginning 45 days after a default, a mortgagee shall determine, on a
monthly basis, if the building on the real estate subject to its mortgage
is vacant.

Ralph T. Wutscher
McGinnis Tessitore Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
Email: RWutscher@mtwllp.com


NOTICE: We do not send unsolicited emails. If you received this email in
error, or if you wish to be removed from our update distribution list,
please simply reply to this email and state your intention. Thank you.


Our updates are available on the internet, in searchable format, at:
http://updates.kw-llp.com

-----Original Message-----
From: Ralph Wutscher [mailto:rwutscher@mtwllp.com]
Sent: Friday, December 16, 2011 3:22 PM
To: Ralph Wutscher (rwutscher@kw-llp.com)
Cc: 'socaloffice@mtwllp.com'; 'dcoffice@mtwllp.com'; 'Chicago Office'
Subject: FYI: FHFA Files Challenge to Chicago Housing Ordinance

As widely reported in the public media, the Federal Housing Finance Agency
(FHFA) filed a lawsuit on its on behalf and on behalf of Fannie and
Freddie in federal court in Chicago, Illinois, challenging the City of
Chicago's recent amendments to its Municipal Code. A copy of the
complaint is attached.

As you may recall, the Chicago City Council recently amended the Chicago
Municipal Code to make lenders and servicers responsible for maintenance
on vacant homes when they are the mortgagee, or an agent or assignee of
the mortgagee (the "Ordinance"). See our prior update below.

The Ordinance was formally published on November 9, 2011, and became
effective November 19, 2011.

The FHFA's lawsuit points out that the Housing and Economic Recovery Act
of 2008 ("HERA") provides that, while acting as Conservator, the FHFA is
not subject to the supervision or direction of any other agency. 12 U.S.C.
§ 4617(a)(7). HERA also provides that the FHFA is to be the exclusive
regulator of the GSEs and grants the Director of FHFA "general regulatory
authority." 12 U.S.C. § 4511.

The FHFA also points out that HERA provides that the Conservator
"including its franchise, its capital, reserves, and surplus, and its
income, shall be exempt from all taxation imposed by any State, county,
municipality, or local taxing authority …." 12 U.S.C. § 4617(j)(1), (2).

In addition, the GSEs are immune from state and local taxation. See 12
U.S.C. § 1723a(c) (Fannie Mae immunity); § 1452(e) (Freddie Mac immunity).
Upon placing the GSEs into conservatorships, the FHFA succeeded to all the
GSEs' rights with respect to their assets. 12 U.S.C. § 4617(a).

The FHFA therefore argues that the Ordinance:

1. Impermissibly subjects the Conservator to the supervision and
direction of the City of Chicago Department of Buildings, in violation of
federal law;

2. The provisions of the Ordinance that require the GSEs to register with
the City of Chicago and then comply with specific ongoing obligations are
a regulatory scheme that impermissibly subjects the GSEs to the governance
and supervision of the City of Chicago and its Department of Buildings, in
violation of federal law;

3. The provisions of the Ordinance which require a base registration fee
constitute an impermissible tax in violation of each entity's statutory
immunity from taxation; and

4. The Ordinance incorporates a taxing feature that would unlawfully be
applied to servicers of loans on behalf of the GSEs.

Ralph T. Wutscher
McGinnis Tessitore Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
Email: RWutscher@mtwllp.com


NOTICE: We do not send unsolicited emails. If you received this email in
error, or if you wish to be removed from our update distribution list,
please simply reply to this email and state your intention. Thank you.


Our updates are available on the internet, in searchable format, at:
http://updates.kw-llp.com


________________________________

from Ralph Wutscher rwutscher@mtwllp.com
to Ralph Wutscher <rwutscher@kw-llp.com>
cc socaloffice@mtwllp.com, dcoffice@mtwllp.com, Chicago Office
date July 29, 2011


The Chicago City Council recently amended the Chicago Municipal Code to
make lenders and servicers responsible for maintenance on vacant homes
when they are the mortgagee, or an agent or assignee of the mortgagee. A
copy of the amendment is attached.

In relevant part, the amended ordinance modifies the definition of an
"owner" to now include "any person who alone, jointly or severally with
others is a mortgagee who holds a mortgage on the property, or is an
assignee or agent of the mortgagee."

Under the ordinance, a building lacking three consecutive months of
authorized habitual human presence may generally be deemed "vacant."

Existing owner responsibilities under the Municipal Code already include a
vacant building registration and fee process, various lot maintenance
standards, such as requirements to abate grass and weeds and keep walkways
shoveled clear of snow, as well as various internal and external
maintenance standards, such as requirements to keep all entrances and
windows to the building secure, maintain plumbing and electrical systems,
and finally, a requirement to also provide continuous exterior lighting
from dusk until dawn.

The obligation to keep the building secure is also notable in that if the
building is deemed "violated" by the Commissioner of Buildings, then
additional responsibilities may accrue, such as an additional obligation
to install and maintain a burglar alarm or post a watchman.

As is the case for REO properties, fines and penalties under this section
could be as high as $500 and $1,000 per offense, per day, with the City
typically taking the position that each separate issue with the property
is a separate offense.

Ralph T. Wutscher
McGinnis Tessitore Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
Email: RWutscher@mtwllp.com


NOTICE: We do not send unsolicited emails. If you received this email in
error, or if you wish to be removed from our update distribution list,
please simply reply to this email and state your intention. Thank you.

Our updates are available on the internet, in searchable format, at:
http://updates.kw-llp.com
CONFIDENTIALITY NOTICE: This communication (including any related attachments) is intended only for the person/s to whom it is addressed, and may contain confidential and/or privileged material. Any unauthorized disclosure or use is prohibited. If you received this communication in error, please contact the sender immediately, and permanently delete the communication (including any related attachments) and permanently destroy any copies.

IRS CIRCULAR 230 NOTICE: To the extent that this message or any attachment concerns tax matters, it is not intended to be used and cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed by law.

FYI: FHFA Files Challenge to Chicago Housing Ordinance

As widely reported in the public media, the Federal Housing Finance Agency
(FHFA) filed a lawsuit on its on behalf and on behalf of Fannie and
Freddie in federal court in Chicago, Illinois, challenging the City of
Chicago's recent amendments to its Municipal Code. A copy of the
complaint is attached.

As you may recall, the Chicago City Council recently amended the Chicago
Municipal Code to make lenders and servicers responsible for maintenance
on vacant homes when they are the mortgagee, or an agent or assignee of
the mortgagee (the "Ordinance"). See our prior update below.

The Ordinance was formally published on November 9, 2011, and became
effective November 19, 2011.

The FHFA's lawsuit points out that the Housing and Economic Recovery Act
of 2008 ("HERA") provides that, while acting as Conservator, the FHFA is
not subject to the supervision or direction of any other agency. 12 U.S.C.
§ 4617(a)(7). HERA also provides that the FHFA is to be the exclusive
regulator of the GSEs and grants the Director of FHFA "general regulatory
authority." 12 U.S.C. § 4511.

The FHFA also points out that HERA provides that the Conservator
"including its franchise, its capital, reserves, and surplus, and its
income, shall be exempt from all taxation imposed by any State, county,
municipality, or local taxing authority …." 12 U.S.C. § 4617(j)(1), (2).

In addition, the GSEs are immune from state and local taxation. See 12
U.S.C. § 1723a(c) (Fannie Mae immunity); § 1452(e) (Freddie Mac immunity).
Upon placing the GSEs into conservatorships, the FHFA succeeded to all the
GSEs' rights with respect to their assets. 12 U.S.C. § 4617(a).

The FHFA therefore argues that the Ordinance:

1. Impermissibly subjects the Conservator to the supervision and
direction of the City of Chicago Department of Buildings, in violation of
federal law;

2. The provisions of the Ordinance that require the GSEs to register with
the City of Chicago and then comply with specific ongoing obligations are
a regulatory scheme that impermissibly subjects the GSEs to the governance
and supervision of the City of Chicago and its Department of Buildings, in
violation of federal law;

3. The provisions of the Ordinance which require a base registration fee
constitute an impermissible tax in violation of each entity's statutory
immunity from taxation; and

4. The Ordinance incorporates a taxing feature that would unlawfully be
applied to servicers of loans on behalf of the GSEs.

Ralph T. Wutscher
McGinnis Tessitore Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
Email: RWutscher@mtwllp.com


NOTICE: We do not send unsolicited emails. If you received this email in
error, or if you wish to be removed from our update distribution list,
please simply reply to this email and state your intention. Thank you.


Our updates are available on the internet, in searchable format, at:
http://updates.kw-llp.com


________________________________

from Ralph Wutscher rwutscher@mtwllp.com
to Ralph Wutscher <rwutscher@kw-llp.com>
cc socaloffice@mtwllp.com, dcoffice@mtwllp.com, Chicago Office
date July 29, 2011


The Chicago City Council recently amended the Chicago Municipal Code to
make lenders and servicers responsible for maintenance on vacant homes
when they are the mortgagee, or an agent or assignee of the mortgagee. A
copy of the amendment is attached.

In relevant part, the amended ordinance modifies the definition of an
"owner" to now include "any person who alone, jointly or severally with
others is a mortgagee who holds a mortgage on the property, or is an
assignee or agent of the mortgagee."

Under the ordinance, a building lacking three consecutive months of
authorized habitual human presence may generally be deemed "vacant."

Existing owner responsibilities under the Municipal Code already include a
vacant building registration and fee process, various lot maintenance
standards, such as requirements to abate grass and weeds and keep walkways
shoveled clear of snow, as well as various internal and external
maintenance standards, such as requirements to keep all entrances and
windows to the building secure, maintain plumbing and electrical systems,
and finally, a requirement to also provide continuous exterior lighting
from dusk until dawn.

The obligation to keep the building secure is also notable in that if the
building is deemed "violated" by the Commissioner of Buildings, then
additional responsibilities may accrue, such as an additional obligation
to install and maintain a burglar alarm or post a watchman.

As is the case for REO properties, fines and penalties under this section
could be as high as $500 and $1,000 per offense, per day, with the City
typically taking the position that each separate issue with the property
is a separate offense.

Ralph T. Wutscher
McGinnis Tessitore Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
Email: RWutscher@mtwllp.com


NOTICE: We do not send unsolicited emails. If you received this email in
error, or if you wish to be removed from our update distribution list,
please simply reply to this email and state your intention. Thank you.

Our updates are available on the internet, in searchable format, at:
http://updates.kw-llp.com

CONFIDENTIALITY NOTICE: This communication (including any related attachments) is intended only for the person/s to whom it is addressed, and may contain confidential and/or privileged material. Any unauthorized disclosure or use is prohibited. If you received this communication in error, please contact the sender immediately, and permanently delete the communication (including any related attachments) and permanently destroy any copies.

IRS CIRCULAR 230 NOTICE: To the extent that this message or any attachment concerns tax matters, it is not intended to be used and cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed by law.

Thursday, December 15, 2011

FYI: 8th Cir Holds FDCPA "Consumer" Includes Non-Debtor Subjected to Collection, But Debt Collector Sufficiently Verified the Debt

The U.S. Court of Appeals for the Eighth Circuit recently held that: (1)
a "consumer" under the FDCPA includes a non-debtor targeted by
debt-collection efforts; and (2) the debt collector did not violate the
FDCPA where it sufficiently verified the payment obligation that the
consumer allegedly owed. A copy of the opinion is attached.

The plaintiff (Plaintiff) received a form notification letter from a debt
buyer (Defendant) requesting payment of a debt. The plaintiff sent a
letter to Defendant disputing the liability, and demanding validation of
the payment obligation.

Defendant then sent a form validation letter ("D4 letter"), which provided
the Plaintiff additional information related to the payment obligation,
including the debtor's name, address, last four digits of the debtor's
social security number, date of the payment obligation, date Defendant
purchased the obligation, and current outstanding balance. The D4 letter
also attached an affidavit from one of its employees.

Upon receiving the D4 letter, the Plaintiff recognized that while the
debtor's name was the same as his, the last four digits of the social
security number did not match his own. The Plaintiff therefore knew
Defendant had erroneously contacted him, and he never responded to the
letter.

Instead, nearly a year later he commenced a putative class action lawsuit
alleging Defendant's D4 letter violated §1692g of the FDCPA "because it
failed to include information that Defendant verified with the original
creditor." The parties filed cross-motions for summary judgment.

The district court ruled in favor of Defendant, concluding that the
Plaintiff was not a "consumer" under §1692g. As you will recall, the
FDCPA defines "consumer" as "any natural person obligated or allegedly
obligated to pay any debt." The district court found that the Plaintiff
was not a consumer because he was not obligated to pay the debt owed by
another individual. The court also denied the Plaintiff's motion for
class certification, ruling that he was "not a proper representative of
the class where he himself lacks standing to pursue the claim." The
matter was then appealed.

The first issue on appeal was whether the Plaintiff was a "consumer" under
the FDCPA. The Eighth Circuit noted that "resolution of whether the plain
language of §1692a(3)'s 'consumer' definition encompasses [the Plaintiff],
someone mistakenly contacted by a debt collector, turns on the proper
reading of the phrase 'allegedly obligated to pay.'"

The Eighth Circuit noted that the district court read the FDCPA in such a
way that it would "not provide a remedy to non-debtors mistakenly targeted
by debt-collection efforts." The Eighth Circuit held that a reading of
"consumer" that did not include a person contacted by mistake, "would read
the phrase 'allegedly obligated' to only apply to those who actually owe
or owed the specific debt at issue, despite whether a debt collector
asserted a person owes the specific debt." The court held that "a
mistaken allegation is an allegation nonetheless," and therefore it read
"§1692a(3) to include individuals who are mistakenly dunned by debt
collectors."

Despite ruling that the Plaintiff was a "consumer," the Eighth Circuit
nonetheless affirmed the lower court's judgment "because we find that
[Defendant' sufficiently verified [its] debt." The court noted that
"verification is only intended to eliminate the . . . problem of debt
collectors dunning the wrong person or attempting to collect debts which
the consumer has already paid." The court held that Defendant's D4 letter
sufficiently notified the Plaintiff he was not the same individual who
owed the debt.

The Plaintiff argued that Defendant was further required to "obtain
verification, . . . meaning that it must acquire additional information
about the debtor from the original creditor and send that additional
information to [the Plaintiff]." The Eighth Circuit disagreed. It held
that under different facts "perhaps the debt collector must do more than
what [Defendant] did here," but that in this instance "[Defendant] sent
[the Plaintiff] enough information to put him on notice that [Defendant]
dunned the wrong person."

Ralph T. Wutscher
McGinnis Tessitore Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
Email: RWutscher@mtwllp.com


NOTICE: We do not send unsolicited emails. If you received this email in
error, or if you wish to be removed from our update distribution list,
please simply reply to this email and state your intention. Thank you.

Our updates are available on the internet, in searchable format, at:
http://updates.kw-llp.com

CONFIDENTIALITY NOTICE: This communication (including any related attachments) is intended only for the person/s to whom it is addressed, and may contain confidential and/or privileged material. Any unauthorized disclosure or use is prohibited. If you received this communication in error, please contact the sender immediately, and permanently delete the communication (including any related attachments) and permanently destroy any copies.

IRS CIRCULAR 230 NOTICE: To the extent that this message or any attachment concerns tax matters, it is not intended to be used and cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed by law.

Monday, December 12, 2011

FYI: Maine Sup Ct Upholds Limited Sanctions in Alleged "Robo-Signing" Case

The Maine Supreme Judicial Court recently held that the limited sanctions
imposed by a lower court against Fannie Mae, in connection with the
alleged submission of a foreclosure affidavit in bad faith, were within
the lower court's discretion, and therefore rejected a borrower's
contention that more severe contempt sanctions should be imposed. A copy
of the opinion is attached.

Fannie Mae instituted foreclosure proceedings against a borrower, naming
the loan servicer as a party in interest. Fannie Mae moved for summary
judgment, relying in part on an affidavit prepared by an employee of the
servicer. The borrower deposed that employee, who testified that he "does
not read the affidavits he signs, reviews only the computations of amounts
owed, does not review the exhibits to affidavits, and does not execute the
affidavits before a notary."

Fannie Mae filed a motion for a protective order to prevent the testimony
from becoming public. The borrower filed a motion alleging that the
affidavit was presented in bad faith under Maine's equivalent of Fed. R.
Civ. P. 56(h), sought attorney fees and costs, and asked the court to hold
both Fannie Mae and the servicer in contempt for submitting the affidavit.


The lower court denied Fannie Mae's motion for a protective order, found
that the affidavit was submitted in bad faith, and awarded $23,779.36 in
attorney fees and costs to the borrower. The attorney fees and costs
awarded covered the costs incurred in demonstrating that the affidavit was
submitted in bad faith, but not the costs incurred in opposing Fannie
Mae's motion for a protective order. Finally, the lower court determined
that the award of costs was a sufficient sanction for Fannie Mae, and
declined to hold either Fannie Mae or the servicer in contempt. The
borrower appealed.

Like Fed. R. Civ. P. 56(h), Maine Rule of Civil Procedure 56(g) provides
that where a summary judgment affidavit was submitted in bad faith, "the
court shall forthwith order the party employing [the affidavit] to pay the
other party the amount of the reasonable expenses which the filing of the
affidavits caused the other party to incur...and any offending party or
attorney may be adjudged guilty of contempt."

Although the Court noted that the affidavit at issue here is "a disturbing
example of a reprehensible practice," it nevertheless affirmed the
judgment of the lower court. The Court did so because "the decision of
whether or not [to hold a party in contempt] rests in the considerable
discretion of the trial court." Therefore, the Court held that
"[a]lthough the [lower] court would have acted well within its discretion
in granting a much more burdensome sanction at a much greater cost to
Fannie Mae and/or [the servicer], we conclude that the sanction it did
impose was also within its discretion."

In so holding, the Court was influenced by its observation that "no court
in the nation - state or federal - has ever issued a finding of contempt
and additional resulting sanctions pursuant to the state or federal
version of Rule 56(g)."

Ralph T. Wutscher
McGinnis Tessitore Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
Email: RWutscher@mtwllp.com


NOTICE: We do not send unsolicited emails. If you received this email in
error, or if you wish to be removed from our update distribution list,
please simply reply to this email and state your intention. Thank you.


Our updates are available on the internet, in searchable format, at:
http://updates.kw-llp.com

CONFIDENTIALITY NOTICE: This communication (including any related attachments) is intended only for the person/s to whom it is addressed, and may contain confidential and/or privileged material. Any unauthorized disclosure or use is prohibited. If you received this communication in error, please contact the sender immediately, and permanently delete the communication (including any related attachments) and permanently destroy any copies.

IRS CIRCULAR 230 NOTICE: To the extent that this message or any attachment concerns tax matters, it is not intended to be used and cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed by law.