California Credit Law Blog

A towing company towed our client's car from the public streets because the registration had expired. The towing company sold the car for nothing. Then it assigned its claim for the towing charge to a collection company, Pacific Creditors. Pacific Creditors pulled our client, Maria Pinto's credit report. Apparently it was trying to determine if she had enough assets to satisfy a judgment. Assured by her credit report that she was sufficiently well-off, Pacific Creditors then began to telephone Ms. Pintos repeatedly. Its agents told her that if she did not pay the towing charge, it would ruin her good credit. Pacific Creditors knew she had good credit because it had viewed her credit report.

Andrew Ogilvie of our firm filed suit against Pacific Creditors, charging that it had violated the Fair Credit Reporting Act (FCRA) by pulling Ms. Pinto's credit report without a permissible purpose.

Today the Ninth Circuit Court of Appeals, in Pintos v. Pacific Creditors Ass'n, issued an opinion confirming that Pacific Creditors violated the FCRA by obtaining Ms. Pinto's credit report without any Fair Credit Reporting Act-sanctioned purpose.

The FCRA only allows credit reports to be pulled “in connection with a credit transaction involving the consumer . . . and involving the . . . collection of an account of . . . the consumer.” Mr. Ogilvie did not believe that the mere fact of owning a car that was later towed constituted such a "credit transaction." The Ninth Circuit's opinion confirms that it is not a "credit transaction."

Continue reading "A Towed Car Does Not Establish A Credit Relationship Under the Fair Credit Reporting Act" »

Throwing a lifeline to homeowners under water on their mortgage obligations, the U.S. Treasury announced its Home Affordable Refinance Program in mid-February. The program is supposed to facilitate mortgage servicers in modifying troubled homeowners' mortgages so that their monthly payment is reduced to no more than 31% of gross monthly income. Eligibility requirements include that the loan have been originated on or before January 1, 2009 and that the mortgage is a first lien on owner-occupied property. The unpaid principal balance can be up to $729,750. Income must be documented and the homeowner must sign an affidavit of financial hardship.

It sounds great in principle. The trouble was that no banks seemed aware of the program.

That may be changing. According to Carolyn Said's blog yesterday in the San Francisco Chronicle, Ocwen sent out a press release this week claiming that it "is among the first servicers (if not the first) in the country to begin executing loan modifications under the U.S. Treasury Department's new Home Affordable Modification Program." And last week Bank of America/Countrywide sent out its own press release saying it would start doing trial loan modifications in two weeks.

Hopefully this indicates that other banks are becoming aware of this program and will offer it to homeowners whose mortgages they service. If you think this program can help you, print out the summary and take it to your mortgage servicer. The more educated you are, the more you can help yourself.

A report by the Pew Charitable Trusts found that most credit cards include “unfair and deceptive” practices as measured by new Federal Reserve guidelines that go into effect in 2010. Reviewing consumer credit cards issued by the 12 largest companies that represent 88% of outstanding credit card debt, the study found:

• 100 percent of cards allowed the issuer to apply payments in a manner which, according to the Federal Reserve, is likely to cause substantial monetary injury to consumers.
• 93 percent of cards allowed the issuer to raise any interest rate at any time by changing the account agreement.
• 87 percent of cards allowed the issuer to impose automatic penalty interest rate increases on all balances, even if the account is not 30 days or more past due. The median allowable penalty interest rate was 27.99 percent per year.
• 72 percent of cards included offers of low promotional rates which issuers could revoke after a single late payment.

The authors of the study call for legislation to ensure that cardholders are charged only the interest rates they agreed to pay; fees are imposed responsibly and in a transparent fashion; cardholders have sufficient time to review and pay their bills; and interest is not charged on balances cardholders have already paid.

In May 2006 a debt collector sued an Oregon consumer--in Oregon--for a credit card debt. The consumer had made her last payment in November 2001 before she defaulted. The credit card agreement said that New Hampshire law would apply to the agreement. In New Hampshire, the statute of limitations for an action on a credit card is three years.

So the consumer has a statute of limitations defense to the 2006 lawsuit, right? Wrong, according to today's opinion by the Ninth Circuit Court of Appeals in Avery v. First Resolution Management Corp. New Hampshire law also provides that the statute of limitations is tolled if a defendant is "absent from and residing out of the state at the time the cause of action accrued."

The consumer reasoned that since she had lived in Oregon the whole time, she would have to be absent from Oregon, not New Hampshire, for the limitations period to toll. No, said the court. Because the consumer was "absent from New Hampshire at all relevant times," the debt collector's claim was tolled and had not run by the time it brought the lawsuit.

Continue reading "Statute of Limitations Defense to Debt Collection? Not So Fast" »