Filed under: Current Issues in Credit Unions | Tags: bankruptcy, director liability, due diligence cost mitigation, election, IAT, privacy, reg-flex
This month we are joined by David Reed of Reed and Jolly. In other news, Victor Khaze has taken over the sound editing duties from Rob which should be a nice improvement. Here are the topics:
–International ACH Transactions (IAT) Tips and Traps.
–The risks associated with being a credit union director.
–Managing the costs and time tables in vendor due diligence.
–Katherine Weber’s Big K Roundup:
Is Your Candidate Credit Union Friendly?
Reg-flex Loses Some Flexibility
The Latest Approved CUSO Service: Taxi Cab Medallion Broker
Corporate Credit Union “Bailout” Gives Banks a “Reason” to Put the Credit Union Tax Exemption Back on the Chopping Block–Seriously??
Sound editing by Victor Khaze
The CIiCU hosts are:
Farleigh Wada Witt,
Attorneys at Law
121 SW Morrison Street, Suite 600
Portland, Oregon 97204
Telephone: 503-228-6044 503-228-6044
Messick & Weber P.C.
211 North Olive Street
Media, PA 19063
American Airlines Credit Union
P.O. Box 619001
DFW Airport, TX
AFCU Director of Regulatory Compliance
NAFCU – National Association of Federal Credit Unions
3138 10th Street North
Arlington, VA 22201-2149
Weltman, Weinberg & Reis Co., L.P.A.
323 W. Lakeside Avenue, Suite 200
Cleveland, Ohio 44113
Telephone: 216-739-5004 216-739-5004
Subcribe to the show via iTunes Music Store: http://phobos.apple.com/WebObjects/MZStore.woa/wa/viewPodcast?id=151785964&s=143441
Direct download: CIICU_53_Final.mp3
Filed under: foreclosure, mortgages | Tags: foreclosure, kenton county, kentucky, mortgage, philip ratliff
By: Philip Q. Ratliff, Esq.
Kenton County, Kentucky Circuit Court, Kentucky’s second-largest in terms of foreclosure filings, has issued a general order affecting the documentation required in all new foreclosure complaints filed after November 15, 2010. These changes may significantly affect foreclosure timelines in this county, including the first legal date. Given that this is a relatively large county and that other counties often follow Kenton County’s lead, the possibility exists that this requirement could spread to other counties within Kentucky. These changes in Kenton County, Kentucky are similar to the requirements adopted by many Ohio Courts in recent years.
Effective November 15, 2010 and thereafter, all new foreclosure complaints must include a copy of the note and all endorsements, a recorded copy of the mortgage, and a copy of any and all assignments of the note and mortgage. Most importantly, the assignment of the note and mortgage to the named plaintiff must be executed prior to the filing of the complaint. The assignment need not be recorded prior to the filing of the complaint, although it must be recorded prior to filing a motion for judgment.
In addition to the foregoing, the complaint must include an affidavit by plaintiff, its representative, its attorney or servicer (a) documenting that the named plaintiff is the holder of the note and mortgage at the time the complaint is filed, and (b) identifying the plaintiff as either the original note and mortgage holder, or as an assignee, trustee or successor-in-interest of the original. Further, the order requires the complaint to include documentation establishing any succession of interest, such as a corporate merger, if applicable.
These rule changes magnify the importance of providing foreclosure counsel with copies of any and all endorsements, allonges, and executed assignments of mortgage with any foreclosure referral in Kenton County, as well as copies of any pertinent corporate merger documents (assuming the merger documentation does not readily appear on state or federal websites).
On foreclosure referrals received by our firm for Kenton County, we will notify you promptly upon receipt of the preliminary title report of the need for an assignment or assignments before proceeding and, if requested by our client, will prepare and send the necessary assignment(s) for execution to our client.
For a copy of the General Order, go here.
If you have any questions on this matter, please contact Mr. Philip Q. Ratliff, Esq. Phil is an associate focused on foreclosure and eviction in the Real Estate Default Group at Weltman, Weinberg & Reis Co., LPA. He can be reached at 513.723.2215 or via email at email@example.com.
By: Thomas R. Kendall, Esq.
Beginning next year, an affidavit of debt must be attached to all complaints on accounts filed in Indiana. The affidavit must include certain information, much of which is not currently included in client affidavits. This change stems from the Indiana Supreme Court’s recent order amending certain provisions of the Indiana Trial Rules and takes effect January 1, 2011.
Trial Rule 9.2, governing required attachments to a complaint, has been amended to include the following language: “When any pleading allowed by these rules is founded on an account, an Affidavit of Debt, in a form substantially similar to that which is provided in Appendix A-2 to these rules, shall be attached.” As a result of this rule change, credit card (and other account) Plaintiffs will be required to attach the affidavit as an exhibit to the Complaint, instead of supplying an affidavit of debt at the time of filing a judgment motion. In addition, the form of the affidavit of debt has been standardized. We anticipate that Indiana courts will systematically enforce the requirement, even in cases where the debtor has not appeared or answered.
Therefore, all creditors who refer claims for suit on credit card, medical, or other accounts, must comply with the amended rule. Accordingly, these creditors must be prepared to supply their counsel with the following data for each account:
- Whether they are the original creditor and, if not, the name of their assignor and the original creditor
- Debtor’s name
- Total account balance, as of a specified date
- Last 4 digits of the account number
- Date the account was opened
- Date the last payment was received
- Amount of the last payment received
- Type of account
- A breakdown of account fees and interest that comprise the total balance
- Whether or not the creditor is seeking attorney’s fees.
In most cases, an additional affidavit will not need to be filed with the judgment motion. Therefore, the two most significant aspects of the rule change are (1) the affidavit must be supplied to counsel before the suit can be filed; and (2) the affidavit must contain additional account information that creditors may not be accustomed to providing with their credit account referrals. For a copy of the Affidavit of Debt, go here.
WWR will immediately begin contacting clients individually, to establish procedures for preparation of the required affidavit prior to suit filing, to ensure compliance by the effective date of the rule change.
If you have any questions on this matter, please contact Mr. Thomas R. Kendall, Esq. Tom is an associate in Consumer Collections focused on general collections and subrogation located in the Cincinnati office of Weltman, Weinberg & Reis Co. LPA. He can be reached directly at 513.723.6052 or via email at firstname.lastname@example.org.
Filed under: Viewpoint | Tags: fraudulent ach transfers, viewpoint, w.cory phillips
The following is an article reprinted with permission from the Summer 2010 edition of Viewpoint (WWR’s Governmental Collections newsletter):
By: W. Cory Phillips, Associate
Taking into consideration the costs of operation, a decrease in tax payments, the large number of foreclosures filed and pending, along with the amount of abandoned homes in neighborhoods, municipalities cannot afford having their bank or escrow accounts swindled by thieves preying on unsuspecting finance departments. Many municipalities, in an effort to more quickly realize revenues, have instituted an online payment system. With this increased efficiency, however, comes possible exposure to fictitious or fraudulent ACH transfers.
A blog post from April 6, 2010* reports on a recent string of governmental bodies across America that have seen their coffers cleaned out by organized crime, who specialize in looting online bank accounts. Accordingly, it is important that notice is taken of this recent trend, and proper safeguards are established to protect against a potential financial disaster.
Most financial institutions and finance departments are aware of the standard check schemes that take advantage of the Funds Availability rules**. Under the Funds Availability rules, depository banks are required to make a portion of the funds. Here, checks are drawn on accounts in an amount unsupported by the necessary funds. The Funds Availability rules require depository banks to make certain amounts available to the payee before the funds have actually been verified and cleared. As a result, by the time the dishonor of the check has been discovered, it is often too late to reverse payments in order to minimize or eliminate liability for the losses.
Recently, organized thieves have become more technical, tapping into online accounts held by municipalities in order to make ACH transfers from such accounts. For example, online crooks have recently managed to steal $100,000 from a New Jersey township, $130,000 from a public water utility in Arkansas, $378,000 from a New York town, $160,000 from a Florida public library, $500,000 from a New York middle school district, and $415,000 from a Kentucky county***.
Another recent example of how online crooks have taken advantage of municipalities took place in the Village of Summit, a town outside of Chicago. A town administrator logged into the town’s online account and submitted the necessary credentials to gain access. Upon providing the credentials, the administrator was redirected to a page telling her that the bank’s site was experiencing technical difficulties. This redirection, however, was a scam, allowing the thieves to create an interactive session with the town’s bank account. The following day, the Village of Summit was notified by their bank that someone had completed several ACH transfers from the account. As of last month, the town has been unsuccessful in retrieving the funds transferred from their account****.
ACH transfers are automated with a vast majority of them processed without personal review. Accordingly, municipalities need to establish safeguards or security procedures to prevent such thievery. Ohio Revised Code (“O.R.C.”) actually provides greater protection to those who establish and use security procedures with their banks in the transmission of funds*****. The O.R.C. defines “security procedure” as a “procedure established by agreement of a customer and a receiving bank for the purpose of verifying that a payment order or communication amending or cancelling a payment order is that of the [municipality], or detecting error in the transmission or the content of the payment order or communication******.” A security procedure may require the use of algorithms or other codes, identifying words or numbers, encryption, callback procedures, or similar security devices********.
By creating and properly using security procedures, the municipality would not bear the loss created by an electronic payment order purporting to be that of the municipality or its authorized agents if the payment order was fraudulently transmitted by a person who did not have authority to act for the municipality. Instead, the receiving bank would be responsible for the loss********. This protection is based upon the assumption that losses due to fraudulent payment orders can be best avoided by the use of commercially reasonable security procedures*********.
Accordingly, municipalities who use ACH transfer systems need to establish a security procedure with their bank. The security procedures should use various levels of security such as passwords, codes, identifying words, and encryption; however, based upon the fraudulent activity reported above, callback procedures are likely to be the most effective. Because municipalities do not typically have a high volume of outgoing electronic transfers in a single day, it would be reasonable to incorporate a callback system into the security procedure.
The law provides bank customers with protections and limited liability for fraudulent transactions if, and only if, reasonable security procedures are in place. Accordingly, check with your bank to either verify or establish a security procedure that incorporates passwords, codes, identifying words, encryption, and most importantly, callback procedures. As always, WWR is readily available to answer any question you may have regarding this topic or others.
W. Cory Phillips is an Associate in Consumer Collections; Consumer Collections (General), Governmental Collections and Healthcare Groups. He is based in the Cleveland office and can be reached at (216) 685-1157 or email@example.com.
** 12 USC § 4002.
***** ORC 1304.58.
****** ORC 1304.56.
******** Official Comment no. 2 of ORC 1304.58.
********* Official Comment no. 3 of ORC 1304.58.