Colorado Law Compass

The U.S. Department of Labor (DOL) announced the availability of a new tool to help America’s employers ensure their employment policies and practices do not discriminate against qualified individuals with disabilities.

The interactive, online Disability Nondiscrimination Law Advisor helps employers quickly determine which federal disability nondiscrimination laws apply to their business or organization and their responsibilities under them.  To do this, it asks users to answer a few relevant questions and then generates a customized list of federal disability nondiscrimination laws that likely apply, along with easy-to-understand information about employers’ responsibilities under each of them.

photo: http://www.flickr.com/photos/brent_nashville/ / CC BY-NC 2.0

Seems like no big deal, doesn’t it?  What harm could there be in lying on a loan application?  While the story below does seem pretty severe, if a lender finds out that you lied on a loan application, there will be consequences.  You could lose your loan or be sued for the amount of the loan, plus any penalties if the contract includes them.  Fact is, if you have to lie on your loan application, maybe it’s best that you don’t apply for it.

The Federal Bureau of Investigations announced that Richard Shaw, age 56, of Cortez, Colorado, was sentenced, March 5, 2010, by U.S. District Court Judge John L. Kane to serve 37 months (just over three years) in prison for making a false statement to a financial institution in connection with obtaining a Small Business Association (SBA) loan. Following his prison sentence, Shaw was ordered to spend five years on supervised release, and ordered to pay restitution totaling over $975,000 to the Small Business Administration and the Bank of Durango. The defendant, who is free on bond, was ordered to voluntarily report to a Federal Bureau of Prisons facility.

Richard C. Shaw was indicted by a federal grand jury in Denver on March 24, 2009. He pled guilty before Judge Kane on November 6, 2009.  He was sentenced last Friday, March 5, 2010.

According to the stipulated facts contained in the plea agreement, on August 15, 2003, Shaw applied at the Bank of Durango in Durango, Colorado. As part of the loan process, Shaw completed paperwork that included a personal history form. That form included the question “Have you ever been charged with and/or arrested for any criminal offense other than a minor motor vehicle violation?” In response to this question, the box on the form was checked “no.” The defendant signed his name to the form, under the clause: “CAUTION: Knowingly making a false statement on this form is a violation of federal law and could result in criminal prosecution.”

Shaw signed the paperwork at the Bank of Durango to obtain the Small Business Administration (SBA) loan to obtain business operating expenses for his company, Sonrise Construction of the Four Corners, LLC. The loan was for $1.1 million. At the time Shaw signed the paperwork, he knew that he had a conviction from the State of New Mexico for embezzlement and racketeering. Thus, Shaw knowingly misrepresented his criminal history and made a false statement to the Bank of Durango, intending to influence the bank to approve his loan.

“The success of this investigation is attributed to the combined efforts of our federal partners, including the Small Business Administration (SBA) Office of the Inspector General Investigations Division,” said FBI Special Agent in Charge James Davis.

Peg Gustafson, the Inspector General at SBA, stated: “Detecting and preventing fraud in SBA loan programs is especially important in these difficult economic times.  This noteworthy sentence should serve as a notice to all SBA loan participants that persons committing loan fraud will be prosecuted to the fullest extent of the law. I commend the professionalism and exemplary work by the U.S. Attorney’s Office in the prosecution of this landmark case.”

photo: http://www.flickr.com/photos/mattimattila/ / CC BY-NC-SA 2.0

The Federal Trade Commission has some helpful tips if you feel like you’re on the verge of being unable to make the payments on your home:

Know Your Mortgage

Do you know what kind of mortgage you have? Do you know whether your payments are going to increase? If you can’t tell by reading the mortgage documents you received at settlement, contact your loan servicer and ask. A loan servicer is responsible for collecting your monthly loan payments and crediting your account.

Here are some examples of types of mortgages:

• Hybrid Adjustable Rate Mortgages (ARMs): Mortgages that have fixed payments for a few years, and then turn into adjustable loans. Some are called 2/28 or 3/27 hybrid ARMs: the first number refers to the years the loan has a fixed rate and the second number refers to the years the loan has an adjustable rate. Others are 5/1 or 3/1 hybrid ARMs: the first number refers to the years the loan has a fixed rate, and the second number refers to how often the rate changes. In a 3/1 hybrid ARM, for example, the interest rate is fixed for three years, then adjusts every year thereafter.
• ARMs: Mortgages that have adjustable rates from the start, which means your payments change over time.
• Fixed Rate Mortgages: Mortgages where the rate is fixed for the life of the loan; the only change in your payment would result from changes in your taxes and insurance if you have an escrow account with your loan servicer.

If you have a hybrid ARM or an ARM and the payments will increase – and you have trouble making the increased payments – find out if you can refinance to a fixed-rate loan. Review your contract first, checking for prepayment penalties. Many ARMs carry prepayment penalties that force borrowers to come up with thousands of dollars if they decide to refinance within the first few years of the loan. If you’re planning to sell soon after your adjustment, refinancing may not be worth the cost. But if you’re planning to stay in your home for a while, a fixed-rate mortgage might be the way to go. Online calculators can help you determine your costs and payments.

If You’re Behind On Your Payments

If you are having trouble making your payments, contact your loan servicer to discuss your options as early as you can. The longer you wait to call, the fewer options you will have.

Many loan servicers are expanding the options available to borrowers – it’s worth calling your servicer even if your request has been turned down before. Servicers are getting lots of calls: Be patient, and be persistent if you don’t reach your servicer on the first try.

• You may qualify for a loan modification under the Making Home Affordable Modification Program (HAMP) if:
• your home is your primary residence;
• you owe less than $729,750 on your first mortgage;
• you got your mortgage before January 1, 2009;
• your payment on your first mortgage (including principal, interest, taxes, insurance and homeowner’s association dues, if applicable) is more than 31 percent of your current gross income; and
• you can’t afford your mortgage payment because of a financial hardship, like a job loss or medical bills.

If you meet these qualifications, contact your servicer. You will need to provide documentation that may include:

• information about the monthly gross (before tax) income of your household, including recent pay stubs.
• your most recent income tax return.
• information about your savings and other assets.
• your monthly mortgage statement.
• information about any second mortgage or home equity line of credit on your home.
• account balances and minimum monthly payments due on your credit cards.
• account balances and monthly payments on your other debts, like student loans or car loans.
• a completed Hardship Affidavit describing the circumstances responsible for the decrease in your income or the increase in your expenses.

For more information, see www.makinghomeaffordable.gov/modification_eligibility.html

If you’re interested in refinancing to take advantage of lower mortgage rates, but are afraid you won’t qualify because your home value has decreased, you may want to ask if you qualify for the Home Affordable Refinance Program (HARP) or the HOPE for Homeowners (H4H) program. For more information, see www.hud.gov/foreclosure.

Avoiding Default and Foreclosure

If you have fallen behind on your payments, consider discussing the following foreclosure prevention options with your loan servicer:
Reinstatement: You pay the loan servicer the entire past-due amount, plus any late fees or penalties, by a date you both agree to. This option may be appropriate if your problem paying your mortgage is temporary.

Repayment plan: Your servicer gives you a fixed amount of time to repay the amount you are behind by adding a portion of what is past due to your regular payment. This option may be appropriate if you’ve missed a small number of payments.

Forbearance: Your mortgage payments are reduced or suspended for a period you and your servicer agree to. At the end of that time, you resume making your regular payments as well as a lump sum payment or additional partial payments for a number of months to bring the loan current. Forbearance may be an option if your income is reduced temporarily (for example, you are on disability leave from a job, and you expect to go back to your full time position shortly). Forbearance isn’t going to help you if you’re in a home you can’t afford.

Loan modification: You and your loan servicer agree to permanently change one or more of the terms of the mortgage contract to make your payments more manageable for you. Modifications may include reducing the interest rate, extending the term of the loan, or adding missed payments to the loan balance. A modification also may involve reducing the amount of money you owe on your primary residence by forgiving, or cancelling, a portion of the mortgage debt. Under the Mortgage Forgiveness Debt Relief Act of 2007, the forgiven debt may be excluded from income when calculating the federal taxes you owe, but it still must be reported on your federal tax return. For more information, see www.irs.gov. A loan modification may be necessary if you are facing a long-term reduction in your income or increased payments on an ARM.

Before you ask for forbearance or a loan modification, be prepared to show that you are making a good-faith effort to pay your mortgage. For example, if you can show that you’ve reduced other expenses, your loan servicer may be more likely to negotiate with you.

Selling your home: Depending on the real estate market in your area, selling your home may provide the funds you need to pay off your current mortgage debt in full.

Bankruptcy: Personal bankruptcy generally is considered the debt management option of last resort because the results are long-lasting and far-reaching. A bankruptcy stays on your credit report for 10 years, and can make it difficult to get credit, buy another home, get life insurance, or sometimes, get a job. Still, it is a legal procedure that can offer a fresh start for people who can’t satisfy their debts.
If you and your loan servicer cannot agree on a repayment plan or other remedy, you may want to investigate filing Chapter 13 bankruptcy. If you have a regular income, Chapter 13 may allow you to keep property, like a mortgaged house or car, that you might otherwise lose. In Chapter 13, the court approves a repayment plan that allows you to use your future income toward payment of your debts during a three-to-five-year period, rather than surrender the property. After you have made all the payments under the plan, you receive a discharge of certain debts.

To learn more about Chapter 13, visit www.usdoj.gov/ust; it’s the website of the U.S. Trustee Program, the organization within the U.S. Department of Justice that oversees bankruptcy cases and trustees.

If you have a mortgage through the Federal Housing Administration (FHA) or Veterans Administration (VA), you may have other foreclosure alternatives. Contact the FHA (www.fha.gov) or VA (www.homeloans.va.gov) to talk about them.

Contacting Your Loan Servicer

Before you have any conversation with your loan servicer, prepare. Record your income and expenses, and calculate the equity in your home. To calculate the equity, estimate the market value less the balance of your first and any second mortgage or home equity loan.

Then, write down the answers to the following questions:

• What happened to make you miss your mortgage payment(s)? Do you have any documents to back up your explanation for falling behind? How have you tried to resolve the problem?
• Is your problem temporary, long-term, or permanent? What changes in your situation do you see in the short term, and in the long term? What other financial issues may be stopping you from getting back on track with your mortgage?
• What would you like to see happen? Do you want to keep the home? What type of payment arrangement would be feasible for you?

Throughout the foreclosure prevention process:

• Keep notes of all your communications with the servicer, including date and time of contact, the nature of the contact (face-to-face, by phone, email, fax or postal mail), the name of the representative, and the outcome.
• Follow up any oral requests you make with a letter to the servicer. Send your letter by certified mail, “return receipt requested,” so you can document what the servicer received. Keep copies of your letter and any enclosures.
• Meet all deadlines the servicer gives you.
• Stay in your home during the process, since you may not qualify for certain types of assistance if you move out. Renting your home will change it from a primary residence to an investment property. Most likely, it will disqualify you for any additional “workout” assistance from the servicer. If you choose this route, be sure the rental income is enough to help you get and keep your loan current.

Housing and Credit Counseling

You don’t have to go through the foreclosure prevention process alone. A counselor with a housing counseling agency can assess your situation, answer your questions, go over your options, prioritize your debts, and help you prepare for discussions with your loan servicer. Housing counseling services usually are free or low cost.

While some agencies limit their counseling services to homeowners with FHA mortgages, many others offer free help to any homeowner who is having trouble making mortgage payments. Call the local office of the U.S. Department of Housing and Urban Development (www.hud.gov) or the housing authority in your state, city, or county for help in finding a legitimate housing counseling agency nearby. Or consider contacting the Homeownership Preservation Foundation (HPF) at 888-995-HOPE or www.hopenow.com. HPF is a nonprofit organization that partners with mortgage companies, local governments, and other organizations to help consumers get loan modifications and prevent foreclosures.

When choosing a counselor, beware of anyone charging large up-front fees or guaranteeing you a loan modification or other solution to stop foreclosure. They shouldn’t be charging you high fees or making any guarantees. Take your business elsewhere.

Consider Giving Up Your Home Without Foreclosure

Not every situation can be resolved through your loan servicer’s foreclosure prevention programs. If you’re not able to keep your home, or if you don’t want to keep it, consider:

Selling Your House: Your servicers might postpone foreclosure proceedings if you have a pending sales contract or if you put your home on the market. This approach works if proceeds from the sale can pay off the entire loan balance plus the expenses connected to selling the home (for example, real estate agent fees). Such a sale would allow you to avoid late and legal fees and damage to your credit rating, and protect your equity in the property.

Short Sale: Your servicers may allow you to sell the home yourself before it forecloses on the property, agreeing to forgive any shortfall between the sale price and the mortgage balance. This approach avoids a damaging foreclosure entry on your credit report. Under the Mortgage Forgiveness Debt Relief Act of 2007, the forgiven debt on your primary residence may be excluded from income when calculating the federal taxes you owe, but it still must be reported on your federal tax return. For more information, see www.irs.gov, and consider consulting a financial advisor, accountant, or attorney.

Deed in Lieu of Foreclosure: You voluntarily transfer your property title to the servicers (with the servicer’s agreement) in exchange for cancellation of the remainder of your debt. Though you lose the home, a deed in lieu of foreclosure can be less damaging to your credit than a foreclosure. You will lose any equity in the property, although under the Mortgage Forgiveness Debt Relief Act of 2007, the forgiven debt on your primary residence may be excluded from income when calculating the federal taxes you owe. However, it still must be reported on your federal tax return. For more information, see www.irs.gov. A deed in lieu of foreclosure may not be an option for you if other loans or obligations are secured by your home.

Be Alert to Scams

Scam artists follow the headlines, and know there are homeowners falling behind in their mortgage payments or at risk for foreclosure. Their pitches may sound like a way for you to get out from under, but their intentions are as far from honorable as they can be. They mean to take your money. Among the predatory scams that have been reported are:

• The foreclosure prevention specialist: The “specialist” really is a phony counselor who charges high fees in exchange for making a few phone calls or completing some paperwork that a homeowner could easily do for himself. None of the actions results in saving the home. This scam gives homeowners a false sense of hope, delays them from seeking qualified help, and exposes their personal financial information to a fraudster.

  Some of these companies even use names with the word HOPE or HOPE NOW in them to confuse borrowers who are looking for assistance from the free 888-995-HOPE hotline.

• The lease/buy back: Homeowners are deceived into signing over the deed to their home to a scam artist who tells them they will be able to remain in the house as a renter and eventually buy it back. Usually, the terms of this scheme are so demanding that the buy-back becomes impossible, the homeowner gets evicted, and the “rescuer” walks off with most or all of the equity.
• The bait-and-switch: Homeowners think they are signing documents to bring the mortgage current. Instead, they are signing over the deed to their home. Homeowners usually don’t know they’ve been scammed until they get an eviction notice.

photo: http://www.flickr.com/photos/mcsd888/ / CC BY-NC-ND 2.0

This is not good news for Wal-Mart.  In a sharply divided, 6-5, opinion, the 9th Circuit Court of Appeals certified a class action sexual discrimination lawsuit against the world’s largest private employer.  Under the ruling, Wal-Mart will have to face charges that it pays women less than men for the same jobs and that female employees receive fewer promotions and have to wait longer for those promotions than male counterparts.

This lawsuit is going to be massive, and that was one of Wal-Mart’s arguments against class certification.  In 2001, the class was estimated to be 1.5 million women.

At this point, Wal-Mart’s only options are to either appeal to the Supreme Court.  Or settle.  I can’t imagine settlement will happen any time soon.  And I’m sure Wal-Mart will be fighting every inch of the way.  This will be a slow slog.  It’s taken almost 10 years to get to this point.  Wal-Mart’s employments practices have been scrutinized for a long time, and now they will have to answer for some of them.

photo: http://www.flickr.com/photos/jeff-barnes/ / CC BY 2.0

I live in a neighborhood with lots of kids.  When one of them has a fundraiser, they know I’m an easy mark.  Every February I dread the onlsaught of Girl Scouts, well not so much the Girl Scouts, but the cookies they bear.

But when it comes to strangers soliciting me, I have a simple rule: I just say no.  No, I won’t sign your petition.  No, I don’t want any steaks from the back of your truck.  And, no, I don’t want any magazine subscriptions.  I appreciate the nerve it takes to approach total strangers and ask them to buy something.  Nevertheless, this lesson comes hard earned.  I have been burned before.  Even by junior high school girls who told me they were fundraising for their school.  I never did get those chocolate covered cashews.

Well, the Colorado Attorney General has issued a warning:

Beware of scammers traveling door-to-door to sell fake magazine subscriptions. The Attorney General’s warning comes after his office has seen a sharp increase in the number of complaints about fraudulent magazine sales since the end of March.

“Consumers should always be wary of salesmen who show up on their doorsteps proffering goods or services,” Suthers said. “You should never enter into a contract or make a purchase solely based on a doorstep sales pitch. Always take the time to do your homework before making a purchase. That, in and of itself, will save you the headache of working your way out of a bad or fraudulent deal.”

According to the complaints, door-to-door salesmen offering magazine subscriptions are contacting consumers primarily in and around Boulder and south Denver. The salesmen are representing both known and unknown magazine companies and are offering magazine subscriptions at a discount. The salesman are pitching the discount magazine subscriptions as a means to pay for their education, medical expenses or to assist a family member in need. Consumers are reporting the subscriptions never arrive and the contact information they were provided for the subscription is invalid.

When dealing with door-to-door salesmen, remember:

• Obtain the name, address and phone number of the company the salesman represents. Verify the company’s details through your local Better Business Bureau;
• Contact the company directly to verify legitimacy of the salesman;
• Get the details of the offer in writing and carefully review them. Do not accept verbal promises not included in the contract;
• If you decide to conduct business with the company, make the check payable to the company and not the salesman;
• Never pay cash; and,
• Never allow salesmen into your home.

Consumers who encounter door-to-door scams should report them to their local police, sheriff’s department or district attorney’s office. Consumers also can file a complaint with the Office of the Attorney General at www.coloradoattorneygeneral.gov/complaint or via 1-800-222-4444.