Consumer Credit

MERS Is Not A Trust Deed Beneficiary in Oregon

Many home lenders use an entity called Mortgage Electronic Registration Systems, Inc., or “MERS” as a nominal party in loan transactions to facilitate an electronic central registry of note holders and servicers.  On its website, MERS claims many benefits to use of their services.  According to the website, MERS should be named in security instruments as a “nominee for the lender” in order to “eliminate the need for assignments and realize the greatest savings.”  In an Oregon deed of trust instrument, MERS is often named as “Beneficiary” in its nominee capacity.

A recent decision in the Oregon Bankruptcy Court by Chief Judge, Frank R. Alley, III, complicates matters dramatically for institutional trust deed holders using the MERS system when they attempt to foreclose defaulted home loans. 

Retail Therapy: This Antidepressant has High Addictive Potential

 Since the Chicago Tribune coined the phrase in a 1986 editorial, stating “We’ve become a nation measuring out our lives in shopping bags and nursing our psychic ills through retail therapy”, shopping with the primary purpose of improving the buyer’s mood or disposition has achieved a certain legitimacy – and has become a contributing factor in out-of-control credit card use leading to bankruptcy.

 Shopping for mood enhancement surely contributes to compulsive shopping disorder.  There is some evidence that compulsive shoppers experience the same kind of surge in brain chemicals when they anticipate buying something that an alcoholic does when he anticipates drinking. 

 A research team at Stanford University, conducted a study to determine whether antidepressants classified as selective serotonin uptake inhibitors could curb compulsive shopping behavior.  They interviewed 2500 randomly selected adults, scoring them against a standard compulsive buying scale.  They classified the 6% who fell more than 2 standard deviations from the mean as suffering from compulsive shopping disorder and noted that behavior as measured by self-evaluation improved with medication.  Does this mean only 6% of the American public is addicted to unnecessary shopping as a means of personal gratification? Not necessarily – the real measure of an addiction is whether an individual can voluntarily cease or curtail the behavior or substance in the face of overwhelming evidence that it is doing more harm than good. Judging from the prevalence of out-of-control credit card debt among Americans with stable incomes, the number of addicts may be much higher.

 A search under “Retail therapy” on the internet revealed a number of tempting campaigns to encourage irresponsible shopping by tying that shopping to a good cause, a tactic which lottery promoters also use to overcome consumer resistance. A fundraiser in Kansas City raised $1 million for a prominent medical charity by selling $25 cards entitling the holder to a 20% discount at participating retailers. While the actual dollar amount of purchases explicitly tied to charitable campaigns is a small proportion of consumer spending, the high profile of such schemes serves as negative reinforcement for thrift in general – something retailers no doubt count upon when they allow service organizations to peddle coupon books and cookies and trinkets in the mall. 

The addict is a marketer’s dream. The addict attaches the highest priority to his “drug” of choice, assigning it a market share ahead of the necessities of daily living, ahead of his or her family, and ahead of a stable financial future. The rush a retail junkie receives from a purchase is short-lived, requiring increasingly frequent fixes. In a world of shopping channels, internet emporia, megastores and easy credit, there is not much room for savoring the contemplation of buying.   

Bankruptcy can be viewed as the debtor’s equivalent of an intensive inpatient rehabilitation center for substance abuse. As with substance abuse, some people will be able to get their lives on the right track before reaching this stage. Those in the earlier stages of a financial debacle should be wary, however, of agencies which promise a ‘lite’ solution requiring neither major modification of behavior nor a good faith effort to make good debts that can realistically be paid. Such half measures may produce temporary relief, but allow the person to dig him- or herself into a much deeper hole down the road.

By |Sep 29, 2008|Categories: Uncategorized|Tags: , , , |

Debtor’s Anonymous – Can Bankruptcy Help?

There is a national organization, Debtor’s Anonymous, which is based on the principles of Alcoholics Anonymous and uses AA’s 12 Steps to address the problem of unmanageable debt. This program is not a substitute for bankruptcy by any means, being primarily aimed at helping people avoid incurring additional debt, but it is potentially a very useful tool for anyone with debt problems. 

As with all 12-step programs, getting involved is easy and requires minimal commitment.  The Debtor’s Anonymous Website has links for local contacts and schedules of meetings.  If you live in an urban area, there is probably a regularly-scheduled meeting nearby.  If you think you have a problem with debt, you are welcome to attend, listen, and decide whether you might benefit from exploring the program further.  A typical meeting will involve some study of literature and some sharing among members about how they deal with budget problems.  There are no dues or fees involved – the low costs of maintaining a program that runs almost entirely on volunteer labor are met through small voluntary contributions from members.  Buying some inexpensive literature may also be recommended.

Working the program involves attending meetings, getting a sponsor, and putting together a “Pressure Relief Group” consisting of two program members who have gotten their finances under control, with who work with the debtor on a spending plan (to manage a budget without incurring additional unsecured debt) and an action plan (to retire existing debt).

The first aim of Debtor’s Anonymous is to change people’s behavior so that they stop incurring additional unsecured debt.  Philosophically, Debtor’s Anonymous encourages people to take responsibility for their prior debts, which could include steering people away from filing bankruptcy when they were eligible to do so. If you are truly overwhelmed by debt that you cannot possibly repay, especially if it involves large obligations such as medical debt that are not the result of improvident spending, you need a bankruptcy attorney, not Debtor’s Anonymous. The same is true of a home foreclosure or other crisis situation that can’t wait until a budget is repaired.

Debtor’s Anonymous is not a debt relief agency. It cannot help you file bankruptcy, provide required credit counseling certificates or negotiate with lenders to settle debts.  It does not offer legal advice.  A sponsor or Pressure Relief Group can probably suggest financial management strategies that reduce the burden in small ways.  

Debtor’s Anonymous can be very useful if you are not now facing bankruptcy, but see your debts mounting and will soon be facing bankruptcy if you cannot rein in your spending.  Having a neutral and knowledgeable third party to talk to about financial matters is invaluable.  When working through a Chapter 13 plan, participation a a DA support group can help you adhere to its terms.  After discharge, continuing with the program may help to prevent slipping back into old spending habits.  It is the nature of 12-step programs that people who have some time in them volunteer their services to help newcomers – a great way to reinforce one’s own continued solvency or sobriety, and a source of general satisfaction.

Usury and Subprime Home Loans

In the bankruptcy practice where I work, I am seeing an increasing number clients caught in financial binds caused by usurious home loans. Oregon has an explicit exception to the statutes limiting interest and fees charged on loans set forth in ORS 82.010(4).  On the other hand, there are many state and federal statutes including RESPA and HOEPA which have provisions either restricting loan terms or requiring lenders to be explicit when disclosing the costs of a loan. When examining loan documents I sometimes find clear violations of existing laws, but far more often what surfaces is a contract which is legal, but unconscionable.

Usury, once associated with organized crime, has become institutionalized in credit-card lending, subprime home loans, and, increasingly, private student loans.  Home loans and easy credit have driven the economy for the last decade, generating obscene profits for banks and lending institutions.  Congress, meanwhile, adopted a laissez-faire attitude.  If it wasn’t obviously broken, no-one wanted to expend effort to fix it.

By |Dec 14, 2007|Categories: Uncategorized|Tags: , , , , , , , |

Bankruptcy is A Christian Idea

Bankruptcy in many ways is a Christian concept.  American bankruptcy laws have Biblical roots.  The seven-year waiting period between personal bankruptcies that was the law until 2005, for example, is based upon Deuteronomy 15:1-2

At the end of every seven-year period you shall have a relaxation of debts, which shall be observed as follows. Every creditor shall relax his claim on what he has loaned his neighbor; he must not press his neighbor, his kinsman, because a relaxation in honor of the LORD has been proclaimed

and Leviticus 25, which describes the regulations both for a seventh year Sabbath and a fiftieth year of jubilee.

By |Dec 12, 2007|Categories: Bankruptcy|Tags: , , , , , , , , |

A Real Free Credit Report!

When is a free credit report not free?  A credit report is not really free, or at least you could easily be charged for it, if you use one of the commercially advertised websites.  The television commercial advertising this service is really a for profit venture trying to sell you a service for a fee.  You must first give them your credit card information (if you have an active credit card) and to avoid a charge you must cancel the service within a specified amount of time.

To paraphrase my friend Jay Fleischman who writes in the Consumer Help Central Blog in New York. The three primary national consumer credit reporting companies are required by a federal law, the Fair Credit Reporting Act (FCRA), to provide you with a free copy of your credit report, at least once every 12 months if you ask for it.

By |Dec 12, 2007|Categories: Uncategorized|Tags: , , , |