Filed under: credit unions, Identity Theft | Tags: elders, fraud, healthcare collections
by Sara M. Donnersbach, Esq.
As the baby boomer population passes the age of 65, the elder population is ever growing. In conjunction with this growth, is the increase of elderly Americans suffering abuse in their own homes, in relatives’ homes, and even in facilities. By learning some signs and symptoms of elder abuse and how to act on behalf of an elderly person who is being abused, the abuse can not only stop, but be prevented.
One type of abuse, which is often overlooked, is financial exploitation. Today’s troubled economy coupled with a societal expectation of entitlement, is leading to more and more family members and care givers engaging in the unauthorized use of an elderly person’s funds or property. This action involves things as simple as misuse of an elder’s personal checks, credit cards, or accounts; outright theft of cash, income checks, or household goods; the forging of the elder’s signature; and engaging in identity theft.
While in Ohio, the law requires that certain people[1] who suspect abuse “shall immediately report such belief to the county department of job and family services,” and other groups of people[2] having reasonable cause to believe that an adult as suffered abuse (including financial exploitation) “may report or cause reports to be made of such belief to the department,” the law isn’t as strong as in other states that find such abuse a crime, reportable under Federal law, by financial institutions.
Despite this, a financial institution may have a requirement under Federal law[3] to report this type of abuse to authorities. The Ohio Administrative Code[4] also has implemented the requirement to report a crime or suspected crime involving funds over $5,000.00, that occurs at the office of a credit union, within 30 days. While the law isn’t clear as to whether elder financial exploitation constitutes a “crime or suspected crime,” it is recommended to err on the side of caution, and file a Suspicious Activity Report (SAR) if elder financial exploitation is suspected.
There are several signs to look for, when elder abuse by financial exploitation is suspected. First, determine if there are significant withdrawals from the elder’s account(s). Be aware of any sudden changes in the elder’s financial condition. While the next sign may be hard to identify when an elder suffers from dementia or Alzheimer’s disease, listen and investigate the facts if there is a claim of items or cash missing from the senior’s household.
Other pertinent signs are unexpected changes in wills, power of attorney, titles, and policies, or the addition of a person to the elder’s bank signature card/account. If bills are suddenly not being paid, it may not be the elder’s fault, but instead may be a sign of abuse. If the elder had the funds to pay bills in the past, and is not in need of a guardian due to any incapacitation issue, take note of any unpaid bills or transfer of assets, even ATM withdrawals.
If elder abuse is suspected, the time to act is immediately. By taking action to stop elder abuse by financial exploitation, you may also limit losses as a health care provider to your facility, and ensure the elder’s care is properly paid. Make a record of what is observed, advise family members whom can be trusted, and other people with authority over the elder. In the U.S., you can also call Eldercare Locator at 1-800-677-1116. This number can provide local agency assistance.
Sara Donnersbach is a Partner in the Cleveland office of Weltman, Weinberg & Reis Co., LPA where she manages the Governmental, Healthcare, Commercial Utility and Landlord/Tenant Collections Groups. She can be reached at 216.685.1039 or sdonnersbach@weltman.com.
Footnotes
[1] “Any attorney, physician, osteopath, podiatrist, chiropractor, dentist, psychologist, any employee of a hospital as defined in section 3701.01 of the Revised Code, any nurse licensed under Chapter 4723. of the Revised Code, any employee of an ambulatory health facility, any employee of a home health agency, any employee of an adult care facility as defined in section 3722.01 of the Revised Code, any employee of a nursing home, residential care facility, or home for the aging, as defined in section 3721.01 of the Revised Code, any senior service provider, any peace officer, coroner, clergyman, any employee of a community mental health facility, and any person engaged in social work or counseling …” O.R.C. 5101.60(A).
[2] O.R.C. 5101.60(B)
[3] The Bank Secrecy Act, 12 CFR 21.11.
[4] O.A.C. 1301:9-2-37.
By James Doran, Esq.
Tenants of foreclosed properties have rights…or will have rights pursuant to Ohio House Bill (H.B.) No. 181. Landlords, previous owners, successors in interest and rental agreements would all be impacted by the bill as well.
The Ohio Legislature has introduced H.B.-181 to amend Ohio Revised Code Section 5321.04 and to enact Section 5321.20 of the Revised Code to require that notice of foreclosure and related sale of residential rental property be given to tenants at that property and to specify that a rental agreement for a residential property that is sold pursuant to a foreclosure action converts to a month-to-month rental agreement. H.B.-181 creates a right of action for tenants as well as potential liability for landlords and others in the form of monetary damages, injunctive relief and reasonable attorney’s fees for violations.
H.B.-181 impacts landlords, tenants, the previous owners of foreclosed properties, successors in interest to foreclosed properties, and existing rental agreements involving foreclosed properties. A summary of how they are impacted by the bill is set forth below and then the highlights of the bill are described in more detail thereafter.
Landlord: A Landlord of a residential property that is notified of a foreclosure action must provide each tenant at that property written notice of the foreclosure action and sets forth the form of the notice. A Landlord is required to provide each tenant written notice of the date, time and place of the sale of the foreclosed property at least 21 days before the sale date. A Landlord is also required to include, in any written rental agreement, a provision informing the tenant of the landlord’s obligations under the bill. Failure to do so could result in damages, attorney’s fees and injunctive relief.
Tenant: A Tenant may recover damages and reasonable attorney’s fees, obtain injunctive relief to enforce the rental agreement, or both, if a landlord or a successor in interest fails to abide by the provisions of the bill. Tenants are entitled to a month to month rental agreement or can mutually agree with a successor in interest to keep the existing rental agreement in place. A tenant is entitled to written notice of the date, time and place of the foreclosure sale at least 21 days before the sale date. A Tenant is entitled to language in the rental agreement informing the tenant of the landlord’s obligations under the bill. The Tenant is entitled to have the previous owner of the foreclosed property forward any security deposits paid by the tenant to the successor in interest to the property. The Tenant is subject to the right of entry of the successor in interest subject to current law.
Previous Owner: Previous owner, who was subject to a foreclosure, is required to forward to the successor in interest an amount equal to any security deposits paid by the tenant.
Successor in Interest: Successor in interest assumes interest in rental agreement and becomes landlord under the rental agreement once the foreclosure sale has been confirmed. Successor in interest assumes the right of entry to the property subject to current law (must give reasonable notice before entering, etc.). Successor in interest can mutually agree with tenant to have existing rental agreement remain in place and not convert to a month to month.
Rental Agreement: all rental agreements convert to month to month rental agreements when the court has confirmed the foreclosure sale. Any written rental agreement must include a provision where the landlord informs the tenant of the landlord’s obligations under the bill. Tenant and Successor in Interest may mutually agree that the existing rental agreement will continue in effect with the successor as the landlord and not convert to a month-to-month rental agreement.
Effect on Rental Agreement of Foreclosure of Residential Rental Property
The bill requires any rental agreement for a residential property that has been sold pursuant to a court order under a foreclosure action to convert to a month-to-month rental agreement upon the confirmation of sale by a court. Also, upon confirmation, the successor in interest assumes interest in the rental agreement and becomes the landlord. See R.C. 5321.20(A). Confirmation generally takes place within 30 days after the selling authority, usually the sheriff, has advised the court that the property has been sold as the court ordered. See R.C. 2329.31.
A “rental agreement” under Ohio law governing landlords and tenants (R.C. Chapter 5321.) means any agreement or lease, written or oral, that establishes or modifies the terms, conditions, rules, or any other provisions concerning the use and occupancy of residential premises by one of the parties. “Residential property” is not defined by the bill or Ohio law governing landlords and tenants. That law does, however, provide a definition of “residential premises,” which generally means a dwelling unit for residential use and occupancy and the structure of which it is a part, the facilities and appurtenances in it, and the grounds, areas, and facilities for the use of tenants generally or the use of which is promised the tenant and includes a dwelling unit that is owned or operated by a college or university. Various facilities are excluded from the definition, such as, for example, places of incarceration or correction, hospitals, boarding schools, and orphanages. See R.C. 5321.01.
Notice of Foreclosure Action
The bill requires any landlord of a residential property that has been notified by a court that the property is the subject of a foreclosure action to provide each tenant at that property written notice of the foreclosure action. See R.C. 5321.20(B)(1). “Tenant,” under Ohio’s law governing landlords and tenants, means a person entitled under a rental agreement to the use and occupancy of “residential premises” to the exclusion of others. See R.C. 5321.01. If the rental agreement is entered into before the foreclosure action is initiated, the landlord must provide the written notice of foreclosure within 60 days after having been notified by the court that the foreclosure action has been filed. If the renal agreement is entered into after the foreclosure action is initiated, the landlord must include the written notice of foreclosure in the rental agreement. See R.C. 5321.20(B)(2).
Form of Notice
The above described notice must include a statement, printed in 14-point, Times New Roman font, in substantially the following form:
“This property is undergoing foreclosure. For more information on this action, you should contact the (your county) Clerk of Courts for the Court of Common Pleas, (address), at (phone number).
A sale at auction may or may not occur as a result of this foreclosure. Currently, [the sale of this property has been set for (time, date, and place)] or [no date for sale of this property has been established]. You will receive written notice of the sale at least twenty-one days before it takes place.
If there is a sale of this property at auction, your current rental agreement will convert to a month-to-month rental agreement upon the sale of the property.
Note: With a month-to-month rental agreement, either the tenant or the landlord may terminate the agreement by providing written notice of termination to the other at least thirty days prior to a date on which the rent payment normally is due. The rental agreement then terminates on that date.” See R.C. 5321.20(B)(1).
Notice of Sale
The bill requires any landlord of a residential property that is the subject of a foreclosure action to provide each tenant at that property written notice of the date, time, and place of the sale of the foreclosed property at least 21 days before the sale date. See R.C. 5321.20(C).
Standard Notice in All Written Rental Agreements
The bill requires a landlord who is party to a written rental agreement to include a notice in the agreement that informs the tenant of the landlord’s obligations under the bill to inform the tenant in the case of a filed foreclosure action. The notice must substantially conform to the following:
“The landlord must notify you within sixty days after a foreclosure action is filed that the property you reside in may be sold at auction pursuant to that action. The landlord must also notify you of the date, time, and place of the sale at least twenty-one days before the date of the sale at auction. If the property is sold at auction, the new owner will become your landlord, the rental agreement will convert to a month-to-month rental agreement, and the previous owner is required to remit to the new owner any security deposits that you have paid.” See R.C. 5321.04(A)(10).
The bill provides an exception to the conversion to a month-to-month rental agreement if a tenant and successor agree to continue under the original rental agreement. See R.C. 5321.20(D).
Security Deposit Transfer
The bill requires the previous owner, who was subject to the foreclosure action, to forward to the successor in interest, within seven days after confirmation of a foreclosure sale, an amount equal to any security deposits paid by the tenant to the previous owner. Each security deposit that the successor receives becomes the security deposit under the converted rental agreement. The successor is liable as the landlord only for the security deposits that the successor has received. See R.C. 5321.20(D).
Successor Landlord May Enter Property
The bill provides that the successor in interest assumes the right to enter a residential premises provided that the successor gives the tenant reasonable notice of the successor’s intent to do so. See R.C. 5321.20(G). This right mirrors that of a landlord under continuing law. See R.C. 5321.04(A)(8).
Tenant and Successor May Agree to Continue the Original Rental Agreement
The tenant and the successor in interest may mutually agree that the tenant’s rental agreement, as of the date the foreclosure sale is confirmed, will continue in effect and will be enforceable with the successor as the landlord rather than convert to a month-to-month agreement. See R.C. 5321.20(D).
Tenant’s Remedies
The bill provides that in addition to any other remedy under law, a tenant may recover the greater of actual damages or one month’s rent plus the security deposit amount and reasonable attorney’s fees, obtain injunctive relief to enforce the rental agreement, or both, if a landlord or a successor in interest, as required by the bill, (1) fails to honor a rental agreement or (2) fails to provide the required written notice of the foreclosure action or written notice of sale.
The rights and remedies provided for in the bill are in addition to, and do not preempt, any other rights and remedies that a tenant or landlord may be entitled to under law. See R.C. 5321.20(E) and (F).
The following is a summary of the bill:
- Requires any rental agreement for a residential property that has been sold pursuant to a court order under a foreclosure action to convert to a month-to-month rental agreement when the court has confirmed the sale.
- Provides that a successor in interest to a property, subsequent to a foreclosure sale, assumes interest in the rental agreement and becomes the landlord under the rental agreement.
- Requires any landlord of a residential property that is notified of a foreclosure action to provide each tenant at that property written notice of the foreclosure action and prescribes the form of the notice.
- Requires the landlord to provide each tenant written notice of the date, time, and place of the sale of the foreclosed property at least 21 days before the sale date.
- Requires a landlord to include, in any written rental agreement, a provision informing the tenant of the landlord’s obligations under the bill.
- Requires the previous owner, who was subject to a foreclosure, to forward to the successor in interest an amount equal to any security deposits paid by the tenant.
- Provides that a successor in interest assumes the right of entry subject to current law.
- Provides that a tenant and successor in interest may mutually agree that the existing rental agreement will continue in effect with the successor as the landlord and not convert to a month-to-month rental agreement.
- Permits a tenant to recover damages and reasonable attorney’s fees, obtain injunctive relief to enforce the rental agreement, or both, if a landlord or a successor in interest fails to abide by the provisions of the bill.
H.B.-181 impacts landlords, tenants, previous owners of foreclosed property, successors in interest to foreclosed property, and rental agreements. If the bill becomes law, the various parties must be familiar with its requirements and start implementing them immediately or run the risk of being found liable for violations. Violations of the requirements could lead to injunctive relief, an award of damages as well as the payment of attorney’s fees.
If you have any questions on this matter, please contact Mr. James Doran, Esq. James is an associate practicing in Consumer Collections and based in the Cleveland office of Weltman, Weinberg & Reis Co., LPA. He can be reached at 216.685.4289 and jdoran@weltman.com.
By Rob
It’s mid-summer and time to catch up on that summer reading. Here are some books that you may find interesting.
Thinkertoys by Michael Michalko
Out of ideas? This book is for you! Michalko has created a smorgasbord of ways to get your brain going to help you work through pretty much anything. Truly, the book is overwhelming at times because of its depth and its ability to address so many different types of thinking. I like to imagine that I can be creative, but my goodness, Michalko is in a class by himself. In one chapter, he documents the brainstorming process and how to do it alone or with a group. He also describes some techniques on how to involve one’s unconscious thoughts that I have yet to try but sound very intriguing. It’s like a treasure chest for people who like to think.
In The Plex by Steven Levy
Say what you will about Larry Page and Sergey Brin, but they pretty much changed the world. Levy documents how this happened and what it’s like at Google’s headquarters. I think it is always helpful to understand how successful people do things, and this book provides many examples. In the credit union world, what if executives were empowered to spend 20% of their time pursuing their own creative initiatives? I think that would unleash many powerful ideas. I doubt that many credit unions are going to install their own gourmet cafeterias anytime soon, but I do know of one that has a coffee shop.
Making Things Happen by Scott Berkun
Did you know that project management is a science and that it can be taught? I didn’t. But now I do, and after reading this book, I think I know how. If you read no other book on this list, this is the one that will probably do your organization the most good. The efficiencies taught here provide real value and will save people a lot of time in preventing them from doing project management incorrectly.
A Whole New Mind by Daniel H. Pink
I like Daniel Pink’s work. I think that his latest book drive is actually better than a whole new mind, but it is still worth reading. This book extolls the value of creative thinking in the 21st century as well as the power of developing multiple skills. That’s right up my alley. It also tells a couple of whoppers. While developing creative skills and depth in many areas is certainly a great idea, it in no way ensures success. Getting along with people is still probably more important. In fact, if you haven’t read Dale Carnegie’s “How to Win Friends and Influence People”, you might want to read that before you pick up any Daniel Pink.
Physics of the Future by Michio Kaku
I debated putting this on a reading list for credit union people, but here it is anyway. Some might dispute it if I claim that Kaku is Carl Sagan’s heir apparent, but he’s the best we have. A brilliant man, he is more controversial than Sagan, but in this book he lays out a compelling view of the future. Given this book’s emphasis on technology, why do we care about it in the credit union movement? Because we are joined at the hip with technology in everything that we do, from data processing to compliance to lending. This book describes what we will see in the coming years. If you don’t think social media is important now, wait until people are seeing the internet in their contact lenses.
Don’t have time to read? Get an Audible account and listen to them while you drive. It makes commuting and trips fly by. I had to drive to Madison, Wisconsin and back last week which gave me 16 hours in the car across two days. I listened to a book and a half and was very grateful for it. Never stop reading folks, it’s one of the easiest ways to keep your gray matter in the game.
By Arthur D. Smialek, Esq.
Deeds can be distinguished by the types of warranties a grantor may provide and by the type of co-ownership that may be provided for in a deed. A grantor is the person who is giving the title to the land. The grantee is the person who is receiving the title.
Warranties
The following refers to what protection a grantor gives to a grantee, not to how a grantee may hold title with co-owners:
- Quit Claim Deeds: This type of deed transfers to the grantee(s) whatever title the grantor has at that time. The distinguishing factor between this and other types of deeds is that the grantor does not give any warranties. No assurances are given within the deed itself that the grantor has title or that he will defend the title against adverse claims.
- General Warranty Deeds: This transfers to the grantee the property described as well as gives the grantee a warranty that the grantor actual had title and that he will defend the title should any adverse claims arise. This is the most frequently used type of deed in residential transaction. Most contracts require this type.
- Limited Warranty Deed: This transfers the described property to the grantee, however the grantor will only defend the title against claims which would be based in the time period during which he held title. Therefore, if an adverse claim predates the time in which the grantor took title, the grantor will not defend.
- Fiduciary Deeds: This transfers property to the grantee with covenants that the grantor was duly appointed executor, administrator, guardian or trustee, that the grantor was authorized to make the sale, and that, in all proceedings, he has complied with the law.
Tenancies
The following refers to how two or more parties hold title, not to whether warranties exist in the deed:
- Tenants in common: When one owner dies, his portion of the property owned jointly will descend to and will be opened in Probate Court to prove exactly who the new owner of his interest is. If a general warranty deed or a quit claim deed is given with no survivorship language, then the co-owners will be tenants in common.
- Survivorship Tenancies: when one owner dies, his interest does not become a probate asset. Therefore, it will not descend to his heirs or devisees. Instead, his interest passes to his co-owners. The surviving co-owners must still include the property in the decedents’ estate tax return and an Affidavit of Survivor must be filed with the county recorder to show the death and to remove the name off the tax duplicate. Survivorship tenancies are created through the use of statutory survivorship forms or a general warranty deed-joint and survivorship form.
A loan officer should never advise a credit union member as to how to take title. This is a question best answered by legal counsel. When you have doubts, please call one of our attorneys. We can help you.
Art Smialek is the Supervising Attorney of Thoroughbred Title Agency, Inc. (TTA), working hand-in-hand with affiliate, Weltman, Weinberg & Reis Co., LPA. He practices in the Real Estate Default Group and can be reached at 216.685.1006 and asmialek@weltman.com.
Filed under: mortgages | Tags: GAO, Government Accountability Office, MERS, Mortgage Electronic Registration System, SCRA, Servicemembers Civil Relief Act
By Theodore Bush
The high number of mortgages in foreclosure attracted new attention last fall when problems in mortgage servicing surfaced. Concerns that documents accompanying judicial foreclosures may have been inappropriately signed or notarized, as well as ongoing judicial debate regarding the role of the Mortgage Electronic Registration System (MERS), have dominated news coverage. Media reports have correctly pointed out that employees of some law firms and lenders were executing affidavits without the requisite personal knowledge of the facts and have also highlighted cases in which foreclosures may have been conducted in violation of the Servicemembers Civil Relief Act (SCRA). Reporters, politicians and community activists have combined these anecdotes regarding improper and illegal activities with their previously held beliefs to determine that not only have lenders made fraudulent, predatory loans, but that lenders are now illegally foreclosing on them.
As a result of theses media reports, members of Congress requested that the United States Government Accountability Office (GAO) prepare a report to address:
- “The extent to which federal laws address mortgage servicers’ foreclosure procedures and federal agencies’ authority to oversee activities and the extent of past oversight;
- Federal agencies’ current oversight activities and future oversight plans; and
- The potential impact of foreclosure documentation issues on homeowners, servicers, regulators, and mortgage-backed securities investors.”
On May 2, 2010, the GAO issued its report, titled “Mortgage Foreclosures: Documentation Problems Reveal Need for Ongoing Regulatory Oversight.”
The GAO report offers a more sober view than many recent news reports regarding the foreclosure process. The review evaluated internal controls and procedures for processing foreclosures and reviewed samples of individual loan files to assess servicers’ compliance with document preparation and file maintenance requirements. According to the GAO, the examinations revealed severe deficiencies in three primary areas, including:
- Shortcomings in the preparation of foreclosure documents, which amounted to a violation of state laws;
- Lack of adequate policies, staffing and oversight by servicers of their internal foreclosure processes; and
- Lack of sufficient oversight of activities of third party providers, particularly foreclosure attorneys.
Examples of the deficiencies included the following:
- Affidavits used in foreclosure that were signed by persons who did not satisfy state law personal knowledge requirements;
- Documents that were not properly notarized;
- Inadequate policies to outline how documents should be legally prepared and notarized;
- Lack of effective quality controls or internal procedures to detect deficiencies in the foreclosure process; and
- Insufficient staffing levels to handle increasing volumes.
However, contrary to popular opinion, while the Review revealed material
weaknesses in the servicers’ overall foreclosure management processes, it is important to note that “examiners generally did not find in the files they reviewed cases in which the borrowers were not seriously delinquent on the payments on their loans or that the servicers lacked the documents necessary to demonstrate their authority to foreclose.” Examiners did find a limited number of cases in which foreclosures should not have proceeded against even seriously delinquent borrowers. In one example, the examiners found poor communication between a servicers’ foreclosure and loan modification department where a foreclosure was initiated against a borrower in a loan modification status. Also, 2 of the 14 servicers reviewed had 50 instances where the servicers proceeded to foreclose against active duty military personnel in violation of the SCRA. As a result of their examinations, regulators are taking formal enforcement actions against each of the 14 servicers.
The GAO report notes that past oversight has been fragmented and acknowledges calls for national servicing standards, including requirements that servicers submit written attestations that the foreclosure process complies with applicable laws and that loan modifications have been pursued wherever economically feasible. The report also notes that future oversight is somewhat in limbo pending the ongoing formation of the Consumer Financial Protection Bureau. While the extent of future oversight of servicing activities has yet to be determined, all of the servicers must comply with the following requirements:
- Enhance compliance and training programs
- Align staffing levels with volume
- Strengthen vendor management processes
- Retain an independent firm to conduct a comprehensive review of past foreclosure activities from January 1, 2009, through December 31, 2010, to identify borrowers who were financially harmed by servicer deficiencies and to remediate those borrowers.
The GAO concluded that delays in the foreclosure process may have both positive and negative effects on homeowners, communities and the mortgage market. Borrowers whose mortgages are in default may benefit from additional delays in the foreclosure process by gaining additional time to bring the mortgages current. However, delays also leave borrowers unsure of how long they may be able to remain in their homes, and they may find it even more difficult to catch up on their payments due to the accrual of additional taxes and insurance. Communities may be harmed by delays in the foreclosure process, because as more properties become vacant, there is a risk of heightened crime, blight and declining property values. This leads to higher policing costs as well as continuing downward pressure on house prices and, therefore, tax receipts.
The GAO recommends that regulators develop and coordinate plans to provide ongoing oversight and establish clear goals, roles and timelines for overseeing mortgage servicers. If national servicing standards are created, the GAO suggests that they include standards for foreclosure practices.
Ted Bush is the Operations Director of Thoroughbred Title Agency, Inc. (TTA), working hand-in-hand with the Real Estate Default Group of affiliate, Weltman, Weinberg & Reis Co., LPA. His responsibilities include overseeing the daily operations of TTA. Ted can be reached directly at 216.685.1054 and tbush@weltman.com.
