Archive for the ‘Debt’ Category

The Compelling Case For Re-Electing President Obama

October 15, 2012 Leave a comment
Compelling Case For Obama

By Steve Sheffey


Israel should not be an issue in this election–President Obama and Romney both support Israel.  All administrations have ups and downs, but there have been fewer downs in this administration than in previous administrations, and many unprecedented successes.


Paul Ryan was wrong about President Obama’s meeting with Prime Minister Netanyahu and he was wrong about Iran sanctions.


President Obama is the clear choice on the economic and social issues that most of us care about. As the St. Louis Post Dispatch observed in its must-read endorsement of President Obama, “If more Americans were paying attention, this election would not be close. Barack Obama would win going away, at least 53 to 47, perhaps even 99 to 1.”




The Romney campaign is based on, as Joe Biden delicately put it, “malarkey.” Paul Ryan said at the debate that President Obama was in New York the same day as Prime Minister Netanyahu but went on a TV show instead of meeting him. The truth, according to Politfact, is that “the two leaders were not there on the same day: Obama was there Monday and Tuesday, and Netanyahu was there later in the week, on Thursday and Friday.” Ryan out and out lied. That’s the only way Romney-Ryan can win this election. Ryan also misrepresented President Obama’s position on Iran sanctions; more on that below. And by the way–Joe Biden was right to laugh, because the Romney-Ryan tax plan is an insulting joke on the American people.


For most of us, Israel is our threshold test. We won’t even consider voting for someone unless we are confident that he or she supports Israel. The good news is that both President Obama and Governor Romney support Israel. The bad news is that the Republican path to victory depends on denying that basic fact. So the first part of  today’s newsletter sets the record straight on Israel.


The Facts on Israel


The rest of this section is from my October 11, 2012 Times of Israel article, “Playing Politics With Israel.” I urge you to read it on-line because the links are there and because, well, it looks better on-line. Please click here.


Israel should not be an issue in the November election.  No one argues that President Obama’s record on Israel is perfect. But our legitimate concerns about Israel are being manipulated for partisan gain by those who attack Obama for policies that are no different from previous administrations.


The United States has never officially recognized Jerusalem as Israel’s capital. That’s why the US embassy is not in Jerusalem. The Jerusalem Embassy Act of 1995 requires that the US embassy be moved to Jerusalem unless the President signs a waiver every six months preventing the move. Bill Clinton signed the waiver every six months. George W. Bush signed the waiver every six months. Barack Obama signed the waiver every six months. And unless the parties to the conflict reach an agreement on Jerusalem, the next president will continue to sign the waiver every six months. We’ve seen videos of State Department officials refusing to say that Jerusalem is Israel’s capital. But we’ve never seen videos of State Department officials from prior administrations saying that Jerusalem is Israel’s capital. It’s been this way for over 60 years, and it will continue this way no matter who wins in November.


The United States has always objected to settlements. Settlements are not the root cause of the conflict. There were no settlements when the Arabs attacked Israel in 1948, nor were there any settlements prior to the Six Day War. The root cause of the conflict is Arab refusal to accept and recognize the permanent reality of a Jewish state of Israel. But every American administration since the Six Day War has opposed settlements because the more settlements there are, the more difficult it becomes to draw reasonable borders for a Palestinian state. The Bush administration publicly objected to construction even in Jerusalem, and George W. Bush publicly expressed frustration with Israel’s Prime Minister. The Bush roadmap for peace explicitly forbids “natural growth” of settlements. It’s not a new issue.


Even President Obama’s statement that “we believe the borders of Israel and Palestine should be based on the 1967 lines with mutually agreed swaps, so that secure and recognized borders are established for both states” was simply a restatement of George W. Bush’s declaration that any peace agreement between Israel and the Palestinians “will require mutually agreed adjustments to the armistice lines of 1949 to reflect current realities and to ensure that the Palestinian state is viable and contiguous.”


The policies of this administration toward Israel that some question are continuations of American policy that will persist no matter who is president. But this is what sets the Obama administration apart from previous administrations: President Obama has called for the removal of Syrian President Assad, ordered the successful assassination of Osama bin-Laden, done more than any other president to stop Iran’s illicit nuclear program, restored Israel’s qualitative military edge after years of erosion under the Bush administration, secretly sold Israel the bunker-busting bombs it requested but did not receive during the Bush administration, increased security assistance to Israel to record levels, boycotted Durban II and Durban III, took US-Israel military and intelligence cooperation to unprecedented levels, cast his only veto in the UN against a one-sided anti-Israel Security Council resolution, opposed the Goldstone Report, stood with Israel against the Gaza flotilla, and organized a successful diplomatic crusade against the unilateral declaration of a Palestinian state.


Contrary to Paul Ryan’s claim during the vice-presidential debate, President Obama did not oppose Iran sanctions-the issue was executive prerogative, and the provisions President Obama requested actually gave the President more flexibility to impose tougher sanctions.


Yet we’ve all seen the videos–some of which feature attractive young people who claim to have voted for Obama in 2008 and are now shocked, SHOCKED that his election did not usher in an era of world peace and universal love and that the US and Israel disagree on certain issues.


The reality is that US policy toward Israel has remained remarkably consistent over the past 60 years. There have been ups and downs throughout the history of US-Israel relations, but there have been many fewer downs during this administration than in previous administrations. We don’t know what Romney will do if elected. While there are legitimate questions about his foreign policy expertise, chances are that a Romney administration would resemble a Bush administration on Israel, for better or for worse.


Israel is an election issue because Republicans need it to be an election issue: It’s their only hope for winning Jewish votes. The problem for Republicans is that while they are generally supportive of Israel, the Democrats are too. There are real differences between the parties and the candidates, but Israel is not one of them. Where the parties do differ, the Democratic party is much better on the social and economic issues that most Jews care about.


The Republicans have a choice: Admit that both parties support Israel and concede the Jewish vote on social and economic issues, or use Israel as a partisan wedge issue by denying the Democratic party’s strong record of support for Israel (you can read my reaction to the Democrats who booed Jerusalem here). Unfortunately for America and Israel, the Republicans have chosen to ignore Michael Oren’s warningabout turning Israel into a partisan issue.  Fortunately for America and Israel, the vast majority of Jews are smart enough to see through these divisive Republican tactics and will vote to re-elect President Obama.


The Facts on Social and Economic Issues


On October 7, the St. Louis Post Dispatch endorsed President Obama. If you click on only one link in today’s newsletter, click on this one.  You should really read all of it, but at least read this:


Mr. Obama sees an America where the common good is as important as the individual good. That is the vision on which the nation was founded. It is the vision that has seen America through its darkest days and illuminated its best days. It is the vision that underlies the president’s greatest achievement, the Affordable Care Act. Twenty years from now, it will be hard to find anyone who remembers being opposed to Obamacare.


He continues to steer the nation through the most perilous economic challenges since the Great Depression. Those who complain that unemployment remains high, or that economic growth is too slow, either do not understand the scope of the catastrophe imposed upon the nation by Wall Street and its enablers, or they are lying about it.


To expect Barack Obama to have repaired, in four years, what took 30 years to undermine, is simply absurd. He might have gotten further had he not been saddled with an opposition party, funded by plutocrats, that sneers at the word compromise. But even if Mr. Obama had had Franklin Roosevelt’s majorities, the economy would still be in peril.


Extraordinary, perhaps existential, economic challenges lie just beyond Election Day. The nation’s $16 trillion debt must be addressed, but in ways that do not endanger the sick and elderly, or further erode the middle class or drive the poor deeper into penury.


The social Darwinist solutions put forward by Republican Mitt Romney and his running mate, Rep. Paul Ryan, are not worthy of this nation’s history, except that part of it known as the Gilded Age.


The Dispatch says this about Mitt Romney:


Mr. Romney apparently will say anything that will help him win an election. As a president, he might well govern as a pragmatic chief executive, or he might sell himself to the plutocrats and the crazies who have taken over his party. He is asking Americans to take a lot on faith – there’s nothing to see in his tax returns; he can cut taxes and whack away debt while trimming deductions he will not specify.


Mr. Romney’s business career is the only way to judge his foundational beliefs: He did not run a company that built things and created jobs and strong communities. He became fabulously wealthy by loading up companies with tax-deductible debt, taking millions out up front along with big management fees. Some companies were saved. Others went bankrupt. Mr. Romney’s firm always got out before the bills came due, either in lost jobs, bankruptcies or both.


If the nation’s most pressing issue is debt, why elect a president whose entire business career was based on loading up companies with debt?

In picking Mr. Ryan as his running mate, Mr. Romney signaled that he’s ready to perpetuate that model in public office. The middle class hasn’t had a raise in 20 years. Income inequality has reached record heights. Mr. Romney is the very embodiment of what’s gone wrong with the economy: Too many people at the top create vast wealth that they do not share, either by creating jobs or by paying fair tax rates.


If more Americans were paying attention, this election would not be close. Barack Obama would win going away, at least 53 to 47, perhaps even 99 to 1.


But the atmosphere has been polluted by lies, distortion, voter suppression and spending by desperate plutocrats who see the nation’s changing demographicsand fear that their time is almost up. They’ve had the help of a partisan Supreme Court.


The question for voters is actually very simple. The nation has wrestled with it since its founding: Will this be government for the many or the few?


Choose the many. Choose Barack Obama.


Read the entire editorial here.


Just for fun…your reward for getting through another newsletter. Bill Clinton’s take on the first Obama-Romney debate. Click here.

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Unless explicitly stated otherwise, the views I express in my emails do not necessarily reflect the views of any candidates or organizations that I support or am associated with.

Legal issues slow foreclosures

November 6, 2011 1 comment

Legal issues slow foreclosures


In a small Bergen County courtroom one recent Friday, a sheriff’s officer auctioned off two foreclosed properties in a matter of minutes, as a handful of investors kept their eyes open for bargains.

Few buyers attended a foreclosure auction of two properties at the Bergen County Courthouse.

Few buyers attended a foreclosure auction of two properties at the Bergen County Courthouse.

It was a far cry from the typical sheriff’s auction of mid-2010, when 15 or more properties were auctioned weekly and up to 100 investors crowded the courthouse’s large jury room.

Sheriff’s auctions are among the most visible symbols of the housing crisis, which left many homeowners saddled with mortgages they couldn’t afford. But foreclosure auctions have slowed dramatically since questions arose more than a year ago about “robo-signing” — that is, sloppy paperwork by mortgage lenders and servicers.

Requesting a review

Homeowners who lost their homes to foreclosure in 2009 and 2010 can have their cases reviewed to see if their mortgage companies did anything wrong, the federal Office of the Comptroller of the Currency said last week.

Mortgage servicers were to begin mailing letters last week to borrowers, telling them how to request an independent review if they believe they were injured by flawed foreclosure proceedings. If the reviewer finds they were harmed, the customer may receive compensation or another remedy.

The companies are America’s Servicing Co., Aurora Loan Services, Bank of America, Beneficial, Chase, Citibank, CitiFinancial, CitiMortgage, Countrywide, EMC, Everbank/Everhome, First Horizon, GMAC Mortgage, HFC, HSBC, IndyMac Mortgage Services, Metlife Bank, National City, PNC, Sovereign Bank, SunTrust Mortgage, U.S. Bank, Wachovia, Washington Mutual and Wells Fargo.

Requests for review must be received by April 30, 2012. For more information, visit

Though lenders were given the go-ahead in August to start foreclosing again in New Jersey after showing a judge they were following the rules, they have been slow to resume activity.

The reason: an August appellate court decision, Bank of New York v. Laks, according to Kevin Wolfe, head of the state’s Office of Foreclosure. In that case, the court dismissed a foreclosure, finding the lender violated the state Fair Foreclosure Act because it didn’t properly identify itself in a notice sent to the troubled homeowners.

Under new state court rules, lawyers working for foreclosing plaintiffs have to personally certify that they have checked the facts behind a foreclosure filing with an employee of the lender or the lender’s servicer. Many have indicated to Wolfe that they are reluctant to sign such a certification, because they’re concerned that the lender’s paperwork may not meet the requirements set out in the Laks decision.

E. Robert Levy, executive director of the Mortgage Bankers Association of New Jersey, said he believed there was no “real question about the validity of the loans being put through the foreclosure process.”

“The money is still owed; it’s just a matter of making sure you meet the procedural requirements, and we agree the requirements should be met,” Levy said.

Advocates for distressed homeowners say it’s only reasonable to ask lenders to get the paperwork right when it involves a matter as serious as taking someone’s home.

“Any delay that there is in New Jersey is occurring only because lenders haven’t followed the law,” said Margaret Lambe Jurow, a lawyer with Legal Services of New Jersey, who has represented homeowners in foreclosure cases. “Had they filed these things properly, they’d be in and out.”

The implications go beyond the losses suffered by homeowners and lenders. Housing analysts say the troubled real estate market can’t recover until the large number of distressed properties are finally sold. The properties make up a so-called “shadow inventory” — not on the market yet, and likely to ultimately sell at a large discount to other properties, pulling down housing values. Foreclosed homes typically sell at a discount of 20 percent or more, according to research.

Mortgage paperwork issues stem from the fact that most mortgages are not held by the local bank; they’re bundled into securities and resold to investors. In these cases, the company that a homeowner writes monthly checks to — the mortgage servicer — probably does not actually own the loan.

In the Laks case, for example, Sarah Laks’ mortgage was serviced by Countrywide Home Loans, but the actual owner was a trust managed by the Bank of New York. When Laks, of Lakewood, defaulted on the loan, she got a notice of intention to foreclose from Countrywide, but it did not mention the real owner, as required by the state’s 1995 Fair Foreclosure Act.

A lender’s attorney who spoke on condition of anonymity said that in the years since the Fair Foreclosure Act was passed, it’s been very common for these notices to name only the servicer, not the actual holder of the loan, as required by the Laks decision.

When mortgages were being written and sold to investors at a furious pace during the housing boom, the mortgage machine allegedly cut corners on recording who actually owns a mortgage and, therefore, has the right to foreclose.



Federal investigation


The questions over robo-signing slowed foreclosures to a trickle this year in New Jersey, after the state’s chief justice ordered six big lenders to show they were following the rules last December.

As a result, New Jersey homeowners are staying in their homes, on average, for more than 2 1/2 years without paying their mortgages before they are evicted, according to RealtyTrac, a California company that tracks the foreclosure market.

On a national level, the mortgage servicers’ questionable foreclosure practices are under investigation by the federal government and most of the nation’s attorneys general. The investigation is expected to result in a settlement reported at $25 billion; in exchange, lenders would be released from some legal claims.

Ira Rheingold of the National Association of Consumer Advocates predicted that the attorneys general’s settlement will include a road map for how lenders can establish ownership of a mortgage in cases where the transfer was poorly documented.

For example, he said, lawyers sometimes use a “lost note affidavit,” where a lender’s employee with knowledge of the loan signs an affidavit certifying that the lender actually owns it, even if the documentation is missing.

“How are you going to prove ownership — that really is the big question,” Rheingold said. “At some point people really need to be able to sell their houses. … If there’s a mortgage, somebody is owed the money. How do you straighten out this mess?”

Questions about this chain of ownership are being watched by the title insurance industry. In a recent case in Massachusetts, a court ruled that a buyer who purchased a property after an improper foreclosure was not the legal owner.

So far, there haven’t been enough such cases to make title insurance companies back off from writing policies, according to the American Land Title Association. But the industry is continuing to watch the issue, an ALTA official said.

It’s not clear when the foreclosure pipeline will start moving again in New Jersey, though foreclosure lawyers are watching another case that brings up issues similar to the Laks case. That case, U.S. Bank v. Guillaume, is scheduled to be heard by the Supreme Court soon. In the Guillaume case, an appellate court made the opposite decision as was made in the Laks case, and upheld a foreclosure action against an East Orange homeowner who said the notice of intention to foreclose didn’t properly identify the lender.

The lender’s lawyer, speaking anonymously, said the Supreme Court could get the pipeline moving again by requiring that the lender be identified in notices going to troubled homeowners, as the Laks ruling requires — but only in the future, not in cases already filed.

“We’re hoping the Guillaume case clears this up,” said the lawyer.


New Jersey Mortgage Default Rate Is Country’s Third Highest, Report Says

August 25, 2011 1 comment

New Jersey Mortgage Default Rate Is Country’s Third Highest, Report Says

A new report by the Mortgage Bankers Association says New Jersey is third in the nation in the number of loans either in foreclosure or on the brink.

Mary Pat Gallagher


A new report by the Mortgage Bankers Association says New Jersey is third in the nation in the number of loans either in foreclosure or on the brink.

More than one in 10 New Jersey mortgage loans are already in foreclosure or are 90 days or more in arrears, says the association’s National Delinquency Survey for the second quarter of 2011, which looked at almost 43.9 million mortgage loans across the country, including 1,252,958 in New Jersey.

The state’s 11.36 percent rate of “seriously delinquent” mortgages was third highest in the U.S. Florida topped the list with 18.68 percent, followed by Nevada, with 14.34 percent.

At the opposite end of the scale were North Dakota with a 1.76 percent rate, and Alaska with 2.24.

In addition to serious delinquencies, another 3.18 percent of New Jersey mortgages are 30 days late and an additional 1.24 percent are 60 days late, says the report, released Monday..

New Jersey’s ranking was driven by a high number of pending foreclosures, nearly 8 percent. Again, only Florida (14.39 percent) and Nevada (8.15 percent) have more.

The report does not state the number of loans in foreclosure, but Kevin Wolfe, assistant director for the Administrative Office of the Courts’ Civil Practice Division, says 107,464 residential foreclosure cases filed since 2009 remain open. He points out that the figure includes settled cases for which no stipulations of dismissal have been filed.

The glut of foreclosures is the product of a flood of filings that crested in 2009, at 66,717, including non residential foreclosures, and dropped to 58,445 for 2010.

Filings slowed to a trickle at the end of last year, after the judiciary froze uncontested residential foreclosures by the six biggest lenders so it could address robo-signing and other abuses that had come to light.

Wolfe estimates that those six — Bank of America, JPMorgan Chase, CitiBank, Ally Financial, OneWest Bank and Wells Fargo — file at least 70 percent and possibly more than 80 percent of uncontested residential foreclosures.

Their sizeable share of foreclosures has been evident in the precipitous plunge in filings since theirs were suspended last December. Only 6,090 foreclosures had been filed in 2011 as of the end of July, a drop of 90 percent from 2010.

Monthly filings fell from 4,358 last November, the month before the freeze, to 399 in January. They have inched back up since then, to 1,368 for July.

Filings are sure to rebound much faster now that the courts have resumed processing foreclosures for five of the big six foreclosers. All but Ally Financial, formerly known as GMAC Mortgage, got the go-ahead to resume foreclosures during the week of Aug. 15.

The five persuaded a court-appointed special master, retired judge Richard Williams, that they have stopped offensive practices — such as signing court documents that falsely stated personal knowledge of the facts of the mortgage; failing to review documents on which certifications or affidavits were based; and forging signatures — and have taken steps to prevent recurrence.

In her Dec. 20, 2010, order, Mercer County Presiding General Equity Judge Mary Jacobson said the court had “become increasingly concerned about the accuracy and reliability of documents submitted to the Office of Foreclosure” and was acting on an exigent basis “to protect the integrity of the judicial foreclosure process.”

In addition to requiring lenders to prove they have adopted and are following proper procedures, the Court has amended the rules governing foreclosure.

Among other changes to Rules 4:64-1 and 2 that took effect in June, lenders’ lawyers are now required to attach a Certification or Affidavit of Diligent Inquiry to foreclosure complaints and motions describing the lawyer’s communication with an employee of the lender or loan servicer who has personally reviewed the mortgage file and confirmed the accuracy of the information in court filings.

The courts are bracing for a spurt in new filings as well as “the large pent-up pool of cases to be moved,” by adding staff at the Office of Foreclosure and around the state, says Wolfe.

As of Tuesday, he had not yet seen the anticipated surge in filings but planned to talk with Williams about how to handle the monitoring of foreclosure filings to ensure that the new safeguards are being followed. The six lenders agreed to the monitoring in a stipulation in March.

The press release accompanying the Mortgage Bankers report suggested another cause for the New Jersey backlog. It called the existence of a judicial foreclosure system, which some states like California and Michigan do not have, the “single biggest factor” in why some states have big backlogs because it “lengthen[s] the foreclosure timeline and increase[s] the number of loans that sit in foreclosure, all other things being equal.”

Does Clicking ‘I Agree’ Create a Binding Contract?

August 21, 2011 Leave a comment

Does Clicking ‘I Agree’ Create a Binding Contract?

Refining the ‘fair and forthright’ standard for online consumer agreements
Refining the ‘fair and forthright’ standard for online consumer agreements

Elliot D. Ostrove andBrian W. Disler


As consumers continue to buy more and more products over the Internet, courts are being presented with opportunities to examine the validity of online agreements.

For example, on May 13, the Appellate Division decided Hoffman v. Supplements Togo Mgmt., LLC, 419 N.J. Super. 596 (App. Div. 2011), holding that the forum-selection clause contained on the defendant’s website did not meet the “fair and forthright” standard, and was therefore presumptively unenforceable. The court in Hoffman foreshadowed the likelihood of growth of this area of the law, stating: “[C]onsumers are increasingly purchasing products and services over the Internet. As those Internet transactions have become more prevalent, so too have legal disputes proliferated over the contractual rights created in cyberspace between buyers and sellers.”

Prior to Hoffman, courts in several jurisdictions, including New Jersey, had decided cases involving the validity of online agreements. The New Jersey Appellate Division first dealt with this issue in Caspi v. Microsoft Network, 323 N.J. Super. 118 (App. Div. 1999). In Caspi, the plaintiffs, members of the defendant’s Internet service, filed suit claiming, among other things, consumer fraud. The defendant moved to dismiss the complaint for lack of jurisdiction, claiming that the suit could only be brought in the state of Washington, as per a forum-selection clause found in the membership agreement plaintiffs allegedly agreed to when they clicked through the website.

The court in Caspi looked at the circumstances under which the plaintiffs were presented the online agreement. Before becoming a member of the defendant’s service, a prospective subscriber was prompted to view a membership agreement containing the forum-selection clause. The membership agreement appeared on the webpage next to blocks providing the choices I Agree and I Don’t Agree . Registration could proceed only after the potential subscriber had assented to the membership agreement by clicking on I Agree .

In determining the enforceability of the forum-selection clause, the court in Caspi applied a “fair and forthright” standard. The court stated that, “[i]f a forum selection clause is clear in its purport and has been presented to the party to be bound in a fair and forthright fashion, no consumer fraud policies or principles have been violated.” (Emphasis added.) The court found that the contractual terms were presented in a fair and forthright manner as the plaintiffs “were free to scroll through the various computer screens that presented the terms of their contracts before clicking their agreement.” The court therefore upheld the enforceability of the online contractual terms, including the forum-selection clause.

The Second Circuit Court of Appeals dealt with a similar dispute in Specht v. Netscape Communs. Corp ., 306 F.3d 17 (2d Cir. N.Y. 2002). In Specht, the plaintiffs brought suit in the Southern District of New York against the defendant, a provider of computer software programs. The defendant moved to compel arbitration, arguing that the plaintiffs’ claims were subject to an arbitration provision contained in a contract the plaintiffs had allegedly accepted when they downloaded the program.

The court in Specht applied California law, which, similar to New Jersey law, required reasonable notice of the online contract as a prerequisite to its enforceability. Unlike the contractual provisions in Caspi, however, the provisions in Specht were located in a “submerged” portion of the webpage. The submerged portion could not be seen by the consumer unless he or she scrolled down the webpage, beyond the material that initially filled the screen. The court in Specht found that the submerging of the contract terms did not meet the standard of reasonable notice. The court stated, “a reference to the existence of license terms on a submerged screen is not sufficient to place consumers on inquiry or constructive notice of those terms.” The arbitration provision was therefore found unenforceable.

More recently, the Eastern District of Pennsylvania dealt with the enforceability of an online agreement in Feldman v. Google, Inc., 513 F. Supp. 2d 229 (E.D. Pa. 2007). In Feldman, the plaintiff sued Google regarding its AdWords service. This service allowed a customer, after signing up for an account, to advertise his or her business on Google. Google sought to transfer the case to California, citing a forum-selection clause in the online agreement they claimed the plaintiff agreed to when signing up for AdWords.

In determining whether the forum-selection clause was valid, the court looked at whether the plaintiff was given “reasonable notice” of the online contract. Unlike the defendant in Specht, Google had taken several steps to ensure that its online contract was prominently displayed. Toward the top of the page displaying the contract, a notice stated, “Carefully read the following terms and conditions. If you agree with these terms, indicate your assent below.” Additionally, a link to a printer-friendly version of the contract was offered at the top of the contract window. At the bottom of the webpage, viewable without scrolling down, was a box with the words: Yes, I agree to the above terms and conditions . If the customer did not click on that phrase, and instead tried to click the Continue button at the bottom of the webpage, the customer could not activate the account.

The court in Feldman found that the manner in which Google displayed its online contract was reasonable. The court distinguished Google’s online contract from the online contract in Specht, pointing specifically to the fact that Google’s customers had to take affirmative action when agreeing to the contract terms. The court stated:

Unlike the impermissible agreement in Specht the user here had to take affirmative action and click the “Yes, I agree to the above terms and conditions” button in order to proceed to the next step. . . If the user did not agree to all of the terms, he could not have activated his account, placed ads, or incurred charges.

The court therefore upheld the enforceability of the forum-selection clause.

It was to the above three cases — Caspi, Specht and Feldman — that the Appellate Division referred in recently deciding whether the online agreement in Hoffman was “fair and forthright.” In Hoffman, the plaintiff, a purchaser of product from defendant’s website, sued the defendant in New Jersey state court, claiming that the defendant had, among other things, violated the New Jersey Consumer Fraud Act. The defendant moved to dismiss the complaint claiming, inter alia, that the plaintiff was precluded from suing in New Jersey because of a forum-selection clause contained within a disclaimer on the defendant’s website. The trial court agreed with the defendant, dismissing the complaint, and the plaintiff appealed.

The Appellate Division overturned the trial court, holding that the placement of the disclaimer on defendant’s webpage failed to meet the Caspi “fair and forthright” standard and, as such, the forum-selection clause contained therein was presumptively invalid. The Appellate Division found that defendant’s “submerging” of the forum-selection clause — deemed impermissible in Specht — was likewise not “fair and forthright.” Specifically, the defendant placed the disclaimer in a position on the website where it was possible for the plaintiff to make his entire purchase without ever seeing the disclaimer if he did not scroll down the page. Furthermore, once the plaintiff added an item to his online “shopping cart,” the site would skip ahead to a new page that did not contain the disclaimer. The Appellate Division highlighted these points, stating that “the forum-selection clause was unreasonably masked from the view of the prospective purchasers because of its circuitous mode of presentation.” The court ruled that the forum-selection clause was presumptively invalid and reinstated the complaint.

In light of Hoffman and the line of cases preceding it, companies that sell products directly to consumers over the Internet should review and, where necessary, revise their website layouts, to ensure that they are conforming to the now further-defined “fair and forthright” standard. Even though the cases cited above all involve forum-selection clauses, the practical application of the decision is not necessarily so limited.

In order to ensure that their online agreements will be enforceable, companies can take some or all of the following steps:

Ensure that the contract provisions are not “submerged” (i.e., the online contract is visible without the customer having to scroll down the page).

If scrolling is necessary to see all of the terms and conditions, have customers take an affirmative step to show their assent to the agreement, such as clicking a button stating, “Yes, I agree to the above terms and conditions” (agreement button).

Only allow customers to make a purchase after they have clicked an agreement button, whether scrolling is necessary or not.

Require users to scroll down through the entire terms and conditions before being allowed to click on an agreement button.

Have users who click on anything other than the agreement button, directed back to the terms and conditions before being allowed to “check-out.”

Provide a link to a printer-friendly version of the contract.

Bankruptcy Filings at Five-Year High, Led by Chapter 7s

February 25, 2011 1 comment

Bankruptcy Filings at Five-Year High, Led by Chapter 7s

Mary Pat Gallagher


The number of bankruptcies filed nationwide last year was the most since 2005, driven mainly by increased Chapter 7 filings, and New Jersey had one of the biggest boosts overall, according to the latest federal judicial figures.

But the increase does not necessarily translate into more business for lawyers, as so many of them are vying to get a share of the work.

The 1,656,340 petitions filed nationally in 2010 was 8 percent higher than the 1,575,624 in 2009, though well short of the record-breaking 2,078,415 in 2005. The majority of bankruptcies last year, 1,139,601, were Chapter 7s, according to figures released Feb. 15 by the U.S. Administrative Office of the Courts.

In New Jersey, bankruptcies rose 14 percent from 2009 to 2010, from 36,240 to 41,366, of which 31,879 were Chapter 7 filings.

Only 10 of the 94 districts saw a bigger bump than New Jersey and seven of them are part of the Ninth and Tenth circuits in the West.

The largest rise, 36.2 percent, was in the Southern District of Florida, and the sixth-largest, 18.9 percent, was in the Eastern District of Pennsylvania.

New Jersey’s Chapter 7 petitions for 2010 are the highest in the past decade, other than 2005, when a record 37,397 were filed as debtors scrambled to get in the door in advance of a change in the law that imposed a means test. That total was more than 35 percent above the 27,604 the year before.

New Jersey filings for all chapters totaled 49,583 in 2005.

The means test was one of many changes enacted as part of the Bankruptcy Abuse Prevention and Consumer Pro-tection Act of 2005. It was meant to cut back on Chapter 7 filings and push people into Chapter 13, where they would have to come up with plans to repay their debts rather than erase them.

The swell of Chapter 7 filings in advance of the legislation was followed by a sharp drop to 8,126 in New Jersey for 2006. They bounced back to 12,411 in 2007, and have climbed steadily since: 18,377 in 2008, 27,485 in 2009 and 31,879 last year.

The overall number of cases in New Jersey last year, 41,366, was essentially the same as before the 2005 spike, 41,253 in 2004.

Chapter 7 cases, however, now constitute a greater portion of the whole. While they made up 67 percent of all cas-es in 2004, they now comprise 77 percent.

Consumer bankruptcy lawyer Martin Wolf says that though bankruptcies are up, business is not necessarily boom-ing because so many more lawyers have flooded the practice in response to economic conditions.

“Everyone and their mother has now gone into the field,” says Wolf, a Newark solo and co-chair of the New Jersey branch of the National Association of Consumer Bankruptcy Attorneys.

In his view, many newcomers are “amateurs” who are not up to the task.

Inexperienced lawyers are less likely to push back against Chapter 7 trustees who have become more aggressive in hunting down assets, says Wolf, who has been practicing bankruptcy law in New Jersey since 1995.

They are also more inclined to file petitions when it might be in the interest of the client to hold off, he says.

For instance, it makes sense for people who are underwater on their mortgages and facing foreclosure to postpone Chapter 7 until after the sheriff’s sale so the sale costs can be discharged along with the rest of their debts.

“If they file too soon, they will still be on the hook for expenses from the foreclosure because title is still in their name,” says Wolf.

High volume and recent concerns about the integrity of foreclosure proceedings have slowed things down recently, says Wolf. As a result, even though he has seen an uptick in clients, he is filing fewer cases.

The same concerns about filing too soon apply to people who expect to keep running up debt because they do not have a job or health insurance, says Wolf.

Based on his experience, that means that as high as the number of Chapter 7 debtors now is, additional people need to file and could satisfy the means test but are waiting until they get back on their feet before wiping the slate clean.

Gary Norgaard, of Stern, Lavinthal, Frankenberg & Norgaard in Englewood, notes that filing prematurely can be costly because debtors cannot file another Chapter 7 for eight years.

He also points out that the 2005 law made filing bankruptcy more expensive; lawyers are charging more because they have added obligations and clients also have to pay to satisfy new counseling requirements. The added expense is probably deterring some debtors who would otherwise file, in his view.

Norgaard says has not seen cases delayed by the increased filings.

“We have the capacity to deal with it,” Chief Judge Judith Wizmur, based in Camden, says about the filing in-creases. She notes that the district is fully staffed with bankruptcy judges and, in any event, most work in consumer cases is handled by the panel of Chapter 7 trustees, whose numbers have remained fairly constant.

Arthur Abramowitz, of Cozen O’Connor in Cherry Hill, who chairs the State Bar Association’s Bankruptcy Section, says business filings have been flat or negative. For example, Chapter 11 cases in New Jersey fell from 432 in 2009 to 345 in 2010, a 20 percent drop.

Wolf says companies are filing in other districts instead.

He also notes an accelerating trend of businesses that enter Chapter 11 being less likely to reorganize and emerge as going concerns. Many are forced to convert to Chapter 7 or liquidate because lenders are less willing to loan them money, says Abramowitz.

Anti-Robo-Signing Strictures Adopted For N.J. Residential Foreclosures

December 21, 2010 Leave a comment

Anti-Robo-Signing Strictures Adopted For N.J. Residential Foreclosures

By David Gialanella

New Jersey Law Journal

December 20, 2010

The state judiciary on Monday announced a set of measures in reaction to the “robo-signing” scandal in residential mortgage foreclosures.

Based on documented accounts of lending institutions rubber-stamping foreclosure paperwork, the court entered an administrative order directing lenders to show that there are no irregularities in their review processes.

The Supreme Court also adopted emergent rule changes that put the onus on lenders’ attorneys to police their clients’ practices. An attorney representing a foreclosing lender must now file an affidavit or certification confirming the attorney has communicated with a lender’s employees who confirmed the accuracy of the documents; to submit the names of those employees; and to file an affidavit or certification confirming that the filings comply with Rule 1:4-8(a), which mandates that attorney-filed papers have evidentiary support.


In a teleconference with reporters on Monday, Chief Justice Stuart Rabner said the additional obligations imposed on attorneys are consistent with existing foreclosure practice. “I would expect that attorneys will be able to comply with this,” he said.

Rabner said he took this action after reviewing a Nov. 4 report by Legal Services of New Jersey and a Nov. 16 report by a congressional oversight panel. Both found that lenders have been signing off on documents in support of foreclosure requests that they haven’t verified, a problem precipitated by lenders’ employees asked to sign stacks of affidavits without looking at the underlying papers.

In the administrative order, Acting Administrative Director of the Courts Glenn Grant singles out six of the state’s most prominent mortgage lenders as allegedly participating in robo-signing activities: Bank of America, JPMorgan Chase, Citi Residential, Ally Financial, OneWest Bank and Wells Fargo.

Grant listed specific instances of suspect verification practices by employees of those six lenders, including:

• A JPMorgan Chase employee whose eight-person team executed about 18,000 affidavits per month, none of which she reviewed before signing.

• A Citi employee who signed documents without review, had no industry experience and “could not even explain what precisely an assignment of mortgage accomplishes.”

• A OneWest Bank employee who executed 750 documents per week, spending no more than thirty seconds to examine each one.

• A Wells Fargo manager who signed 300 to 500 documents over a two-hour period each day. Managers who held her position were authorized to sign as “vice president of loan documentation” for purposes of executing the documents, but weren’t company officers in any other respect.

Grant also directed 24 other lenders, which each filed 200 or more New Jersey residential foreclosure actions in 2010, to demonstrate within 45 days that their foreclosure processes contain no irregularities.

A third prong of the judiciary’s plan, issued by Mercer County General Equity Judge Mary Jacobson ordered that the six lenders show why their processing of New Jersey foreclosure matters should not be suspended as a result of their implication in the robo-signing practices.

Those companies were ordered to make submissions by Jan. 19, when Jacobson will hold a hearing. As head of the Administrative Office of the Courts’ Office of Foreclosure, Jacobson is responsible for reviewing all foreclosure complaints.

Retired Union County Superior Court Assignment Judge Walter Barisonek was recalled on Monday to serve as a special master in charge of receiving the lenders’ submissions explaining their processes, beginning on Jan. 3. Barisonek will review those submissions, request testimony or other additional information, and decide whether to refer any of the lenders to Jacobson for further review.

Together, the 30 lenders named account for 75 percent of New Jersey foreclosure actions in 2010, Rabner said.

Ninety-four percent of the state’s foreclosure cases “proceed in the absence of any meaningful adversarial proceeding,” Grant said in the order.

“The significance of this disparity is even more striking because many of the contested proceedings are defended pro se,” Grant said. “Because these actions frequently lack an aggressive defense, the Office of Foreclosure and our General Equity judges are tasked with the responsibility of ensuring that justice is done for absent and pro se parties.”

Grant’s order said the alleged practices have the potential to call into question the validity of affidavits, certifications and other documents, as well as the integrity of foreclosure records, the judicial system and titles passed through purchase at foreclosure sales.

The New York state judiciary recently began requiring attorneys to make filings similar to those mandated in the New Jersey rule amendments, and attorneys general in at least four states and the District of Columbia have dictated such requirements, Grant said in his order.

E. Robert Levy of Levy & Watkinson in Woodbridge, executive director of the Mortgage Bankers Association of New Jersey, says the judiciary’s goals are “laudable,” but could have an unintended impact.

“When you issue a blanket order … the effect of that is the costs for consumers seeking loans generally will go up,” Levy says. “The slower the process in getting back your money [through foreclosure proceedings], the slower the process in getting money back out there [to lend].”

Levy is “also somewhat concerned from a lawyer standpoint,” he says, adding that he expects attorneys will be held to a high level of due diligence when certifying in court that their client-lenders’ employees have sufficiently reviewed foreclosure documents before signing off on them.

In the 2006 court year, plaintiffs filed 21,752 foreclosure actions; the number swelled to 65,222 in the 2010 court year.

More Diligence Required in Seeking Out-of-State Heir in Foreclosure Suit

December 5, 2010 1 comment

More Diligence Required in Seeking Out-of-State Heir in Foreclosure Suit By Charles Toutant New Jersey Law Journal December 1, 2010 A default judgment for tax foreclosure was void because the plaintiff failed to locate and serve the deceased homeowner’s out-of-state heir, the Appellate Division ruled Wednesday. The case, Fidelity Asset Management, LLC v. Faine, A-1485-09, was remanded to determine if the owner of a tax sale certificate diligently tried to find the heir, whether service by publication in a New Jersey newspaper gave adequate notice to the out-of-state heir and whether mail service on one heir is adequate for another heir at the same address. New Jersey Home Construction Inc. brought a foreclosure action in December 2006 against a home in Cinnaminson for which it held the tax sale certificate. The certificate was later sold to another company, Fidelity Asset Management, which took over as plaintiff. The redemption amount on the certificate was $19,025 plus $1,180 in costs. The homeowner, Mary Faine, died intestate in 2002. The foreclosure complaint named Faine and Toni Fleming, described as “a known heir.” The complaint also included Faine’s “heirs, devisees, and personal representatives” or “any of their successors in right, title and interest” because the plaintiff alleged it “has been unable to determine her heirs.” In May 2007, Anthony Johns and Barbara Hawkins, described as known heirs of Faine, were added as defendants after the plaintiff’s attorney, Cherry Hill solo I. Dominic Simeone, learned from the Cinnaminson tax collector that they are Faine’s grandson and daughter. On Jan. 2, 2008, Burlington County Superior Court Judge Michael Hogan entered a final judgment of foreclosure against all the defendants. On Jan. 18, an order precluding transfer was entered after a motion was filed to vacate the foreclosure judgment. The order was entered by Johns; Hawkins; Hiram Johnson, a family friend who was looking after Faine’s house; and Mallonease Scott, Faine’s other daughter. The motion contended that Scott and Hawkins, who live together in Texas, are Faine’s only heirs, and that defendant Fleming was unknown to the family. Their motion contended that Fidelity failed to engage in sufficient efforts to locate the decedent’s heirs. Fidelity said it engaged in a title search, a vital statistics search and skip-tracing procedures to look for Faine’s heirs, but only found Fleming. On May 2, 2008, Hogan denied the motion to vacate after concluding that Fidelity had satisfied the requirements of Rule 4:4-4(b)(1)(c) for mail service and Rule 4:4-5 for service by publication. On appeal, Judges Howard Kestin and Donald Coburn declined to disturb Hogan’s determinations because it was based on undisputed facts and refused to reverse the judgment of foreclosure as to Hawkins and Johns. But the panel said it could not allow the judgment to stand with regard to Scott, who was not named as a defendant and was never served. “In the face of the reality that the heirs stand to lose their right to the full value of the property, whatever that may be, for failure to pay some $20,000 on a tax sale certificate, a default judgment as to Mallonease Scott cannot be countenanced without specific findings based on further proofs as to whether engaged in reasonably diligent efforts to identify and serve her,” Kestin and Coburn wrote. The heirs’ lawyer, Moorestown solo John Poindexter III, says he will prove on remand that Fidelity’s inquiry wasn’t diligent enough. Scott “was clearly the daughter of Ms. Faine — why they didn’t find her, I don’t know. They found one of the daughters — it seems to me they should have found the other,” Poindexter says.Simeone, the lawyer for Fidelity, did not return a call.