By David Koen

The Oregon Court of Appeals has decided that a borrower who has actual notice that her property is being sold at a trustee’s sale under the Oregon Trust Deed Act (OTDA) is not barred from later challenging the sale on the grounds that the entity that executed the sale was neither a validly appointed successor trustee nor the agent of a trustee. Wolf v. GMAC Mortgage, LLC, 276 Or App 541, 543 (2016).

The court rejected GMAC’s argument that “the legislative history [of the OTDA] emphasizes certainty and finality in foreclosure proceedings as the major public policy consideration and that allowing post-sale challenges like Wolf’s challenge here ‘would gut the purpose of the OTDA.’” Id. at 548. Rather, the court reaffirmed its holding in Staffordshire Investments, Inc. v. Cal-Western, 209 Or App 528, 542, 149, P3d 150 (2006), rev den, 342 Or 727 (2007), that “‘there is nothing * * * in the Act, to indicate that the legislature intended the auction to be final in the absence of legal authority to sell the property.’ . . . (emphasis in original).”

The Court of Appeals found unpersuasive Mikityuk v. Northwest Trustee Services, Inc., 952 F Supp2d 958, 962-70 (D Or 2013), which “predicted that the Oregon appellate courts would conclude that a borrower who received pre-sale notice of a trustee’s sale cannot mount a post-sale challenge to the validity of the sale.” 276 Or App at 549 n4. Mikityuk had been cited favorably no fewer than 19 times by courts including the U.S. Ninth Circuit Court of Appeals, Angels Alliance Grp., LLC v. ReconTrust Co., NA, 617 Fed Appx 740, 742 (2015), and the U.S. District Court for the District of Oregon, e.g., Hayes v. Wells Fargo Bank, N.A., 2015 US Dist LEXIS 130075, at *4-5 (Aug 26, 2015) (pro se plaintiff). The Court of Appeals decision also contrasts with that of the Multnomah County Circuit Court in Offenbacher-Afolau v. ReconTrust, Case No 1202-02429, at 2 (Jan. 16, 2013) (pro se plaintiff; “As Defendants assert in their briefing, plaintiff is statutorily barred under [former] ORS 86.770 [(renumbered as ORS 86.797)] from challenging a completed foreclosure sale of which she had no notice.”).

David Koen is a staff attorney with  Legal Aid Services of Oregon and represents homeowners and tenants under the Legal Aid Foreclosure Help program.

By Joel Shapiro

The New York Times recently reported that many consumers are being denied access to the court system through questionable legal tactics by debt collectors.   Debt collectors file lawsuits to obtain judgments on old (potentially time-barred) debts, often with no notification to the consumer.  But when consumers go to court to challenge the validity of collecting the debt, the debt collectors argue that arbitration clauses in underlying consumer contracts block the consumers’ right to sue in court or their right to pursue a class action lawsuit; and that instead consumers are restricted to arbitration.  The New York Times has reported, in previous articles in this series, that arbitration clauses infringe the rights of consumers and unfairly benefit corporations.  See the full article, and others in the series, here:

http://www.nytimes.com/2015/12/23/business/dealbook/sued-over-old-debt-and-blocked-from-suing-back.html?_r=0

Joel Shapiro is a solo practitioner in Portland. His practice includes crime victim representation, personal injury, consumer law, and legislative advocacy.

By Michael Fuller

On January 4, 2016, the Second Circuit Court of Appeals ruled that consumers can enforce bankruptcy discharge orders in small claims courts under the FDCPA.

Read the full Second Circuit opinion in Garfield v. Ocwen.

The Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act (“FDCPA”) generally makes it illegal for a collector to call a consumer to collect a debt the consumer doesn’t owe.

Most states allow consumers to stop collection calls after bankruptcy simply by filing a small claims court complaint under the FDCPA.

Stopping Calls and Fixing Credit After Bankruptcy

The Second Circuit’s ruling applies to consumers in New York, Connecticut, and Vermont.

Read the Seventh Circuit’s opinion in Randolph v. IMBS, which allows consumers in Illinois, Indiana, and Wisconsin to enforce the bankruptcy discharge under the FDCPA.

Read the Third Circuit’s opinion in Simon v. FIA Card Services, which allows consumers in New Jersey, Pennsylvania, and Delaware to enforce the bankruptcy discharge under the FDCPA.

Unfortunately for consumers in the Ninth Circuit (which includes Oregon, Washington, California, Nevada, Arizona, Montana, Idaho and Hawaii), stopping calls after bankruptcy almost always means hiring attorneys to re-open their bankruptcy cases.

Read the Ninth Circuit’s opinion in Walls v. Wells Fargo, which requires consumers on the West Coast to enforce their discharges by filing motions for contempt in bankruptcy court.

​

Consumer Reporting Fairness Act

In July 2015 Oregon Senator Jeff Merkley co-sponsored a bill that would essentially overrule Walls v. Wells Fargo, at least in the post-bankruptcy credit reporting context. The bill (Senate Bill 1773), titled the Consumer Reporting Fairness Act, remains pending in the Senate Judiciary Committee.

—

Michael Fuller is a partner at Olsen Daines in Portland, Oregon and an adjunct professor of consumer law at Lewis & Clark Law School.

Oregon Federal Court Rules for Homeowner in Truth in Lending Case

By Hope Del Carlo

In November, the United States Court for the District of Oregon ruled in favor of a homeowner who is seeking to undo the non-judicial foreclosure of his home in 2009. The Opinion and Order denying the defendant bank’s motion to dismiss the homeowner’s complaint was issued by the Hon. Ann Aiken in Pataalo v. JPMorgan Chase, USDC Case No. 6:15-cv-01420-AA.

The plaintiff, William J. Paatalo, refinanced his existing home loan in 2006 into two loans with Washington Mutual Bank (WaMu), an option adjustable rate mortgage and a home equity line of credit (HELOC), both of which were secured by his home. Paatalo alleged a number of unlawful business practices against WaMu in conjunction with the servicing of the HELOC account and origination of the loans. In 2008, he sent a letter to WaMu asserting his right to rescind the loans, which WaMu declined to honor. In 2008, WaMu failed, and federal regulators seized it.

In 2009, WaMu began non-judicial foreclosure proceedings against Paatalo, culminating in a trustee’s sale of the home to itself in August 2009. WaMu began an eviction proceeding against Paatalo in 2010, then sold the property to a third party in 2011.

Then, in January 2015, the U.S. Supreme Court decided a seminal Truth in Lending Act (TILA) case, Jesinoski v. Countrywide Home Loans, 135 S. Ct. 790 (2015). Paatalo sent his lender a letter after this decision that stated that the Jesinoski case affirmed that the loan contracts were void as of the date he had rescinded in 2008. He then filed suit in July 2015 and asked the court to declare him the sole owner of the property, rendering void the foreclosure sale and all documents recorded against the home after his March 2008 rescission.

The lender  moved to dismiss the homeowner’s TILA claims, and the court ruled in favor of Paatalo, declining to dismiss. The court followed Jesinoski, which states unequivocally that under TILA a valid “rescission is effected when the borrower notifies the creditor of his intention to rescind,” not at some later point when the lender or a court recognizes or verifies the rescission. It further held that a borrower need not also file suit within TILA’s three-year statute of limitations to enforce such a valid rescission—the notice itself is sufficient to preserve the right.

Defendant argued that even if borrower’s TILA rescission efforts were valid, he could not enforce his rights in 2015, after his home had been subject to a trustee’s sale that cut off his rights to undo the sale, citing the Oregon Trust Deed Act and Mikityuk v. Nw. Trustee Servs., Inc., 952 F. Supp. 2d 958, 960 (D. Or. 2013). This argument was unavailing, as it reasoned that, “[i]f WaMu had no security interest in the property due to a rescission in March 2008, the FDIC could not have transferred any interest in the property to defendant, and defendant would have had no “legal authority to sell the property.”

The court concluded by noting that further litigation and discovery are necessary to determine the rights of the various parties with interests in the property.

Plaintiff was represented by John Cochran of Portland; WaMu was represented by Frederick Burnside, Kaley Fendall, and Kevin Kono of Davis Wright Tremaine, LLC.

Hope Del Carlo is a sole practitioner in Portland who represents consumers in disputes with creditors.

Agencies seek to maintain Congress’s vision of applying the validation process to each subsequent collector of a consumer debt

By John Adams

On August 20, 2014, the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) filed a joint amicus brief in an appeal of a Fair Debt Collection Practices Act (FDCPA) case in the United State Court of Appeals for the Ninth Circuit. The case, Maria Hernandez v. William, Zinman & Parham, P.C., focuses on the FDCPA’s debt validation notice process well known to the consumer law bar and concerns the interpretation of which communication qualifies as a debt collector’s “initial communication” under 15 U.S.C. § 1692g(a). According to the agencies, the Ninth Circuit has not previously defined the phrase.

Background

In cross motions for summary judgment filed in the U.S. District Court for the District of Arizona, the issue became whether the statutory language of § 1692g(a) obligated the defendant (debt collector) to comply with the requirements of the validation notice process[1] if the defendant’s communication to the plaintiff was not the initial communication that the plaintiff received about the alleged debt. The defendant’s argument, which the district court adopted, reasoned that since an earlier, initial debt collector’s communication to plaintiff activated the §1692g requirements, defendant’s communication—sent as a subsequent debt collector—was not subject to the validation notice requirements. The district court reached this conclusion by determining that the statutory language suggested that there would be only a single initial communication, and that subsequent debt collectors—by their later-in-time status unable to be considered the sender of the initial communication to the consumer about the debt—were not responsible for sending the statutory validation notice.

In granting summary judgment for defendant, the district court’s plain text interpretation of the section anticipates only one initial communication, thereby releasing subsequent debt collectors from the requirements of the debt validation process. This has obvious adverse implications for consumers attempting to challenge the validity of debts which may have been sold multiple times before collection begins in earnest.

The Bureau and Commission’s argument for the reversal of the district court takes a two-prong approach, beginning with a textual analysis that emphasizes the consistently broad meaning given to “a debt collector” and the absence of an “initial” limitation that the district court mistaken inserted into the broader phrase that Congress actually used in the statute. The agencies seek to clarify that statute’s use of the phrase “the initial communication” has been read to mean each debt collector’s intial communicaiton with a consumer, and that interpretation is the most likely one in light of the legislative history that demonstrates that Congress’s purpose for enacting §1692g was to end the frustrating issue of debt collectors collecting the wrong payments from incorrect individuals.

Lastly, the agencies’ brief reminds the Court that as the federal agencies responsible for enforcing the FDCPA, their reasonable construction of the statute deserves great weight in the Court’s ultimate interpretation of the statutory language.

The Bureau and Commission’s Joint Amicus Brief

The District Court’s Memorandum of Decision and Order

[1] The validation notice process under 15 U.S.C. §1692g(a) involves the following:

Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing—(1) the amount of the debt; (2) the name of the creditor to whom the debt is owed; (3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector; (4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of the judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and (5) a statement that, upon the consumer’s written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

By David Venables

On August 18, 2014, the 9th Cir. Court of Appeals issued its opinion in Nguyen v. Barnes & Noble.  The Plaintiff, Nguyen, filed a lawsuit in California Superior Court on behalf of himself and a putative class of consumers whose HP Touchpad orders had been cancelled, alleging that Barnes & Noble had engaged in deceptive business practices and false advertising in violation of both California and New York law.  Barnes & Noble removed the action to federal court and moved to compel arbitration under the Federal Arbitration Act (“FAA”), arguing that Plaintiff was bound by the arbitration agreement on the Barnes & Noble website’s Terms of Use.  The issue before the 9th Cir. was whether Nguyen, by merely using Barnes & Noble’s website, agreed to be bound by the Terms of Use, even though Nguyen was never prompted to agree to the Terms of Use and never in fact read them.

Held:

•Plaintiff  had insufficient notice of Barnes & Noble’s Terms of Use, and thus did not enter into an agreement with Barnes & Noble to arbitrate his claims.

•There was no evidence that the website user had actual knowledge of the agreement.

•Where a website makes its terms of use available via a conspicuous hyperlink on every page of the website but otherwise provides no notice to users nor prompts them to take any affirmative action to demonstrate assent, even close proximity of the hyperlink to relevant buttons users must click on – without more – is insufficient to give rise to constructive notice

http://cdn.ca9.uscourts.gov/datastore/opinions/2014/08/18/12-56628.pdf

Ninth Circuit Says Diversity Removal Deadline Is Not Jurisdictional

By Michael Fuller, The Underdog Lawyer ®

By David Venables

In 1991 the Telephone Consumer Protection Act (TCPA) (47 U.S.C. 227 et. seq) was passed into law, allowing individuals to file actions for receiving unsolicited telemarketing calls, faxes, pre-recorded phonecalls or automated calls.  In 2012, the Federal Communications Commission (FCC), which implements the TCPA, revised its regulations and on October 16, 2013, those new protections for consumers went into effect.

The new TCPA regulations require that businesses have prior express written consent for (1) all autodialed and/or pre-recorded calls or texts sent to cell phones and (2) all pre-recorded calls made to residential land lines for marketing purposes.  This rule eliminates the “prior business relationship” exception that allowed businesses to contact consumers with pre-recorded messages or automated dialers if there was a prior business relationship, such as a prior purchase from the business.  Additionally, the new rules require that consumers provide unambiguous written consent before receiving automated phone calls.  Consents obtained before October 16, 2013 will not apply and a business cannot require consent as a condition of purchasing the goods or services.  Consumers who have received these prohibited calls, texts, or faxes are entitled to statutory damages for each call, and may be entitled to treble damages if the violations are found to be willful.  47 U.S.C. 227 (b)(3).

By Anna Braun, Consumer Law Section Executive Committee

The Oregon Foreclosure Avoidance Program goes into effect August 4.[1] After that date, most lenders must request a face-to-face meeting (called a “resolution conference”) with the homeowner prior to commencing a judicial or non-judicial foreclosure. A homeowner does not have to wait for the lender and may initiate the process through any approved housing counseling agency.

Only those lenders that commenced fewer than 175 foreclosures in the prior calendar year are exempt from the requirement. (Lenders claiming the exemption must submit a sworn affidavit to the Oregon Department of Justice.)

BEFORE COMMENCING A FORECLOSURE

A non-exempt lender that intends to foreclose must request a resolution conference and receive a Certificate of Compliance before filing a complaint for judicial foreclosure or recording a Notice of Default. The request is submitted to the service provider, Mediation Case Manager (MCM),that was chosen by the Attorney General’s office to coordinate this program.

A homeowner will receive an initial notice with instructions and a date range for the resolution conference. At this point a HOMEOWNER MUST PAY A FEE WITHIN 25 DAYS TO PRESERVE THE RIGHT TO A RESOLUTION CONFERENCE.  The fee is $175 but will be reduced to $50 if the homeowner is low income.

If no fee is paid, MCM will cancel the resolution conference. At that time the foreclosing lender will receive a certificate to file when commencing a foreclosure that shows they complied with the program and the homeowner did not participate.

If the fee is paid, the homeowner will receive a second notice with the exact date and time of the resolution conference, which will be scheduled within 75 days of the first notice. Between that notice and the conference, a homeowner must meet with a housing counselor and submit required documents to the lender through a secure online portal. A housing counselor will assist the homeowner at no charge in preparing the best possible proposal to the lender.  After the homeowner submits his documents, the lender must provide the homeowner with information about the loan, including the owner’s name, a payment history, and an itemized list of all fees and charges.

At the resolution conference, an agent of the lender must attend in person and either have complete authority to negotiate and commit the lender to an agreement or have another person with authority participate by phone. The homeowner must also attend in person. The conference will be conducted by a facilitator trained in mediation and basic foreclosure issues.  Any agreement reached must be in writing and signed by both parties. A lender is not required to offer a modification if the homeowner is not eligible.

After the resolution conference concludes, the lender will receive a certificate of compliance good for one year that the lender must record if foreclosing nonjudicially or attach to the complaint if foreclosing judicially. The certificate must be valid and unexpired at the time the foreclosure is commenced (but not at the time the foreclosure is completed).

If the lender does not comply with the program requirements, it will receive a non-compliance notice and must foreclose judicially. To foreclose judicially, a lender must attach to the complaint either an affidavit showing they were exempt from the program or a certificate of compliance or a notice of non-compliance.

If a lender commences a foreclosure either with a notice of non-compliance or no attachment of the documents listed above, a party may move to abate or dismiss the foreclosure and if a motion is granted the court may award attorney fees and costs to the moving party.

Other enforcement of the program is the responsibility of the Oregon Attorney General’s office.[i]

By David Koen, Past Chair, Consumer Law Section Executive Committee

The Financial Fraud and Consumer Protection section of the Oregon Department of Justice (DOJ) has several new consumer protection resources that may be of interest.

They include:

•           A new brochure titled, “Top Ten Consumer Tips to Protect You and Your Family.” The DOJ says it created the brochure in the hope that it will become a quick-reference guide to help Oregonians make wise consumer decisions and protect themselves, their family, their money, and their personal information. The brochure is available online – in both English and Spanish – at the Financial Fraud and Consumer Protection section of the Oregon Department of Justice’s website www.oregonconsumer.gov.

•           A Facebook safety and privacy public service announcement (PSA). The DOJ says it created the PSA to advance safety and privacy education and help raise awareness of how teens can make safe, smart and responsible choices online. The PSA, tips sheets, and other online resources are available online at http://www.doj.state.or.us/consumer/Pages/facebook_safety.aspx.

Although not new, DOJ also encourages you to join the Scam Alert Network. You can sign up online at www.oregonconsumer.gov and follow the Network on Twitter at https://twitter.com/oregonscamalert. DOJ says that as a member of the Scam Alert Network you will get immediate access to information on emerging frauds and scams and hear about events as they happen.