Financial Archive
Chinese Drywall: Now Finger’s Pointing at Banks
November 10th, 2010. By LucyC
Well, it seems like the perfect storm has arrived on the doorsteps of American banks. For quite some time the pressure has been building around banking practices, specifically due diligence on foreclosures, which has recently resulted in a rash of class action lawsuits in various states across the country (see above chart for the breakdown of Chinese drywall reported incidents by state), as well as investigations by Attorneys General in several states. And there will likely be more to come. Now, in a bizarre twist of fate, it seems the Chinese drywall debacle has been added to the foreclosure mess. And what a witches brew it is.
This week, the Chinese Drywall Complaint Center (CDCC)—a national watchdog group—has issued a press release stating that “we are now targeting greedy US banks, for reselling toxic Chinese drywall foreclosures in Florida, and other US States, without an oh by the way—anytime after February of 2009.” They go on to state that “by March of 2009 we do not think there was a single US bank, or loan servicer that was unaware of the toxic Chinese drywall disaster—yet they continued to sell their poisonous foreclosures AS IS—no disclosure of this toxic Chinese drywall product to unsuspecting US consumers?” And, “For clarification purposes the Chinese Drywall Complaint Center is saying, “contrary to homebuilder claims about only using toxic Chinese drywall after Hurricane Katrina in August of 2005—toxic Chinese drywall has been used in Florida since as early as 2001.”
According to the CDCC website, the organization has “now determined with 100% certainty, that imported toxic Chinese drywall has been installed all over the US Southeast including the states of Florida, Louisiana, Virginia, Mississippi, Alabama, Southeast Texas, Virginia, Georgia, and South Carolina. Tragically, we believe toxic Chinese drywall has also been installed in all other regions of the United States. However, without high thresholds of heat & humidity, it becomes much more difficult to see the worst effects of toxic Chinese drywall.”
And, they also state that “many homes in the US Southeast have toxic Chinese drywall intermixed with US made drywall. If these homes were built or remodeled after 2001, we believe a small amount of imported Chinese drywall is enough to make an entire house toxic. The net result is [that] instead of ending up with tens of thousands of now toxic US Southeast homes, we are convinced we have 100,000’s of toxic US Southeast homes.”
It’s highly likely that people have purchased foreclosures that contain Chinese drywall. Thinking about who might be liable, though, actually makes my head spin: purchasers need due diligence such as home inspections; and lenders like to make sure the property is in good nick before they finance the mortgage; but then if it’s a foreclosure, wouldn’t the bank selling the house have to disclose that it was contaminated with Chinese drywall—provided they knew? And for that matter, does anyone have to disclose that a house is contaminated with Chinese drywall? These and many more questions come to mind. For my money, finding the answers would definitely be best left to lawyers.
But—deep in the midst of the Chinese Drywall hurricane there is some good news. Recently, Chinese drywall manufacturer Knauf Plasterboard Tianjin Company agreed to pay to repair 300 homes in Florida, Louisiana, Alabama and Mississippi in a pilot remediation program. Reportedly, a Louisiana-based supplier and several home builders and insurers are contributing to the cost of the repairs. More than 3,000 claims are supposedly pending against Knauf. Let’s hope it goes well, because if it does the program might provide a framework for a larger settlement, which no doubt would be welcome.
Homeowners Latest Grind: Foreclosure Mills
October 28th, 2010. By LucyC
It seems that the banks just can’t stay out of the news these days—for all the wrong reasons. In addition to claims that they charge excessive fees and suspect overdraft charges, several banks are now facing lawsuits filed by emboldened homeowners, presumably with nothing left to lose, over their foreclosure procedures. And it looks like the homeowners may just have grounds.
Case in point, Bank of America (BoFA) was hit with a class action lawsuit in New Jersey last week by homeowners who allege the lender disregarded foreclosure process rules. Earlier this month BoFA imposed a nationwide moratorium on foreclosures and the sale of foreclosed homes after a government agency told BoFA it was worried about documentation problems.
Documentation problems? Read on…
It seems the banks have been hiring so-called “robo signers” or “affidavit slaves”—employees who literally sign hundreds of foreclosure documents a day, according to the Wall Street Journal, without carefully reviewing their contents. The Washington Post recently ran a story on a man who has signed as many as 10,000 foreclosure documents in one month. And, the suit brought against BoFA cites a statement made by a bank official in a Massachusetts foreclosure case who admitted signing thousands of foreclosure complaints without reviewing them.
Keep in mind that these people’s signatures—robo signers’ signatures—act as witness to the Read the rest of this entry »
Mandatory Arbitration Lacks Sexiness of Gekko’s Greed Speech, but…
September 29th, 2010. By Kristine B
With Wall Street: Money Never Sleeps just out, you can’t think about securities fraud and financial wrongdoing without thinking about Gordon Gekko and his classic line about greed (it’s good)…but let’s step back from fantasy and consider a bit of reality…
So you’ve invested some money and now you’re concerned that you got some bad financial advice. Or you’re concerned that your financial advisor failed to follow your advice, churned your account or invested your money in stocks that weren’t appropriate for you. Your initial instinct might be to say, “Let’s sue the guy!” but in reality, what you have to say is the less succinct but more realistic, “Let’s file a FINRA arbitration against the guy!” It’s screenplay dialog just waiting to happen, no?
So just what is FINRA arbitration you ask? Well, it’s today’s Pleading Ignorance topic, so here goes…
Here’s the thing, and it’s the most important thing you need to know. When you signed a contract with your brokerage firm, you almost definitely agreed to a clause regarding mandatory arbitration. This means that if you have a dispute with your broker or brokerage firm, you have to file an arbitration—you can’t file a lawsuit (except in certain conditions, such as in a class action).
FINRA is the Financial Industry Regulatory Authority and it basically oversees the financial industry (hence the name). Its members have to agree to mandatory, binding arbitration to resolve disputes. So that means that if you have a complaint against your financial advisor or brokerage firm, you file an arbitration.
Although it sounds like a downer—you don’t often hear about multimillion dollar awards in arbitration cases—there are some very good points to mandatory, binding arbitration:
1. Arbitration often takes less time than a lawsuit. Lawsuits, from the date the lawsuit is Read the rest of this entry »
14 Signs of Financial Elder Abuse
June 3rd, 2010. By Kristine B
There are few things we at LawyersandSettlements.com cover that are as heartbreaking as financial elder abuse. The stories about senior citizens who have worked their entire lives to care for family members while ensuring that they, themselves, would be financially stable in their later years—only to have loved ones steal from them—arouse a combination of fury and sadness. The sad truth is that very few incidents of elder abuse are ever reported by the senior, leaving it up to other family members or close friends to figure out what’s going on.
The sad truth also is that in difficult economic times when many are facing financial hardship, sometimes the “easiest” route to some cashflow can involve the proverbial apple going back to the tree—uninvited. That’s why now, more than ever, it’s important to be aware of the signs of elder abuse and protect those who may be victimized.
This week, Pleading Ignorance examines financial elder abuse, signs it’s occurring and what you can do.
Financial elder abuse occurs when someone (a loved one, a close friend or even a stranger) preys on a senior citizen and cheats the senior out of money or property. It is a heinous crime and one that goes vastly underreported. The senior may be embarrassed at having been swind
led, may be afraid of retaliation if the abuser is a family member or caregiver, may be conflicted about reporting a family member to the authorities or may be unable to comprehend that he was, indeed, the victim of a crime.
Seniors have lost their life savings, their homes, their valued jewelry or other property to abusers. At the same time, the abuser may take advantage of the senior’s condition by providing less care than is necessary or putting the senior in a care home that doesn’t meet the senior’s needs.
I’m fairly certain there’s a special place in hell for those who would do this to their elder family members. But before they get their due from a higher power, there are some signs to be aware of right here, right now, in order to help someone who may be the victim of elder abuse.
Signs that indicate a senior may be the victim of financial elder abuse:
- Senior can’t spend money the way he wants
- Senior’s bills aren’t paid on time even though he has the financial resources to pay his bills
- Senior is forced to sell or give away property, sign over Power of Attorney, or change title of property to someone else
- Senior is offered care in exchange for property or access to bank accounts
- Senior’s account shows activity the senior couldn’t have done, such as making an ATM withdrawal when the senior is bedridden
- Senior’s financial situation suddenly changes
- Senior’s belongings are missing
- Senior’s will is suddenly changed
- Senior’s bank account shows unusual activity
- Senior makes changes to financial decisions but seems incapable of comprehending those decisions
- Senior is isolated from friends and/or family
- Senior is afraid to speak in front of caregiver/companion/family member
- Senior has purchased items he can’t use, such as a lifetime membership at a gym
- Senior receives care well below the level he can afford.
In many cases it’s up to family and friends to discover the wrongdoing and file a complaint. In the situation of Brooke Astor, a New York socialite and philanthropist, the victim’s grandson filed a complaint against his father—Astor’s son—alleging that Astor wasn’t being properly cared for even though she could afford a high quality of care. In the end, charges were laid against Astor’s son, he was found guilty and sentenced to time in jail.
The financial abuse may not have ever been discovered if Astor’s grandson hadn’t filed a complaint.
If you suspect a senior is being financially abused, report the situation to the proper authorities, who can then make a decision about whether or not to investigate. Every state has at least one toll-free number—either an elder abuse hotline or an elder abuse helpline—to call to when elder abuse is suspected.
Some states, such as California, have an Elder Abuse Act to provide remedies for elders who’ve been financially abused.
AG Edwards Settlement has Plaintiffs Ticked Off
March 29th, 2010. By AbiK
And I have to say, I’d be ticked too.
Plaintiffs got a little gift in their mailboxes last week: they received notice of the proposed settlement from the AG Edwards class action. Guess how much some plaintiffs are receiving? The initial report of the proposed settlement put the average payout at $20-25 customer. One commenter at LawyersAndSettlements.com quotes his notice as saying he’ll receive $20.42. You can read the notice yourself at agedwardsclassactionsettlement.com. (Note the name change of the website—prior to the proposed settlement, the site was agedwardsclassaction.com; the URL has been updated to reflect that the case now has a propsed settlement.)
Keep in mind, if you’ve read the comments that came flowing in from our post on where the AG Edwards class action suit was heading, many of the Class Members claim they lost their “life savings” compliments of AG Edwards. And remember, this was back during a class period of 2000 – 2005—not post-2008 when we all saw our savings take a dive.
The AG Edwards class action had been brought against the brokerage firm in 2005 claiming that AG Edwards breached its fiduciary duties to the Plaintiffs (folks who owned AG Edwards accounts) and that AG Edwards was “unjustly enriched by receiving millions of dollars in improper payments from mutual fund companies whose funds were held by Plaintiffs“. The Class Period had covered five years—and getting to a proposed settlement then took five years.
That’s a long time to wait for some resolution and ideally, restitution.
Another aspect of the proposed settlement is what the lawyers’ take will be. Apparently it’s $21 million—plus $600,000 in expenses. That’s 35% of the total proposed settlement of $60 million—and Read the rest of this entry »
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