What NCLC Offers
Advice & Analysis
NCLC’s staff of consumer law experts is available to provide free advice on consumer law issues to legal services lawyers and advocates working with low income and elderly consumers in the disaster areas. Attorneys seeking advice should call 617-542-8010 (Monday-Friday, 8:30a.m.-5:30p.m) and ask to speak with an intake attorney.
Trainings
NCLC and the Mississippi Center for Justice co-sponsored a training February 8th-9th in Jackson, MS. The training addressed predatory lending concerns and other consumer credit issues arising as a result of Hurricane Katrina.
NCLC, the Mississippi Center for Justice, Mississippi Legal Services, and West Tennessee Legal Services co-sponsored a training in Oceans Springs, Mississippi on April 6th. The training covered surviving debt and issues regarding access to utilities.
NCLC, Mississippi Center for Justice and Mississippi Legal Services co-sponsored a training on the new bankruptcy law and its impact on consumers on April 11th.
NCLC gave a training in New Orleans in collaboration with New Orleans Legal Services on the affects of the new bankruptcy law on May 18th.
For more information about past or upcoming trainings send an email to NCLC Staff Attorney Alys Cohen.
Advocacy
- Joint Letter to Urge Mortgage Industry to Maximize Opportunities for Gulf- Area Victims to Maintain and Rebuild Their Homes, 12/20/2006
- Letter to Secretary Jackson Regarding Louisiana Recovery Authority Plan, 5/15/2006
- Letter to Secretary Alphonso Jackson regarding spending Community Development Block Grant funds for housing recovery in Mississippi and Louisiana, 4/3/06
- Letters: NCLC has issued letters to the Chairman and the Ranking Member of the House Appropriations Committee supporting supplemental appropriation of $4.2 billion and seeking to direct the funds toward low and moderate income homeowners and renters, 3/6/06.
- Joint Statement and Press Release: NCLC joins a broad-based coalition of groups including unions, civil rights organizations, consumer groups, and members of the financial service industry calling on the federal government to increase aid to homeowners in the Gulf Coast region, 2/27/06.
- Joint Statement : AFL-CIO, Civil Rights Groups, Community, and Consumer Organizations Challenge Lenders to Grant 90 Day Extensions on Gulf Loans, 12/06/05
- Press Release: Credit Reporting Agencies Reject an Important Step to Help Hurricane Survivors: Many Katrina Victims Will Face Additional Economic Difficulties as Credit Scores Drop Due to Disaster, 10/06/05
- Letter to the Senate Banking Committee and the House Financial Services Committee re: Katrina Victims and Financial Services, 9/23/05
- Letter to House Financial Services Committee on Katrina victims and financial services, 9/23/05
NCLC Publications
For Lawyers
NCLC’s Consumer Bankruptcy Law & Practice Manual and Special Guide to the 2005 Act is now available. The Special Guide, written by Henry Sommer, Collier’s Editor-in-Chief, and John Rao, NCLC’s bankruptcy expert, provides complete coverage of all consumer bankruptcy issues following the 2005 changes.
NCLC’s Unfair and Deceptive Acts and Practices manual contains everything an attorney needs to know about handling a deceptive practices case in all 50 states relating to automobile leases and financing, automobile selling techniques (including "yo-yo" sales), service contracts, credit card abuses, deceptive credit practices, loan brokers, home improvement contracts, insurance practices, federal and state telemarketing law, the FTC Holder Rule, attorney fees, federal preemption of UDAP claims, cancellation and rescission, punitive damages, failure to disclose, unfairness standards, federal and State RICO statutes, state Attorney General enforcement, UDAP litigation tactics, practice tips and much more.
NCLC’s Repossessions manual is a unique guide to motor vehicle and mible home repossessions, threatened seizures of household goods, statutory liens, and auto leases and rent-to-own default remedies.
NCLC’s Foreclosures is a new volume covering VA, FHA and other types of home foreclosures, workout agreements servicer obligations, and tax liens.
NCLC’s Consumer Banking and Payments Law manual addresses issues surrounding credit, debit, ATM and stored value cards, checks, money orders, e-sign and UETA, and electronic banking and benefit payments.
Stop Predatory Lending: A Guide for Legal Advocates is a detailed roadmap for legal and community challenges to predatory lending involving first and second mortgages, home improvements, mobile homes, rent-to-own transactions as well as payday, refund anticipation, and auto title pawn loans.
NCLC’s Home Improvement Scams Alert brochure provides important information for advocates and consumers relating to home improvement contracts. It covers deceptive sales tactics and financing schemes, issues to consider when problems such as mortgage liens occur, potential remedies, litigation tips, tips for homeowners and includes a model home improvement statute.
For Consumers
NCLC’s Guide to Surviving Debt, contains everything non-lawyers should know about their rights as consumer borrowers.
For more information about NCLC’s publications click here.
Important Information for Consumers and Advocates
Important Deadlines and Extensions
The deadline for applying for FEMA Disaster Assistance is March 11, 2006. To begin the process of applying for assistance online visit: http://www.fema.gov/register.shtm. For those interested in applying by phone, the toll-free number is 800-621-FEMA (3362). Speech or hearing-impaired applicants can call the TTY number 800-462-7585. The lines are open 24 hours-a-day, seven days-a-week and multilingual operators are available to take calls. For more information about the application process and details about Disaster Assistance go to: http://www.fema.gov/news/newsrelease.fema?id=22199.
The IRS has postponed taxpayer deadlines in areas affected by Katrina; individuals in the most severely damaged parishes and counties of Louisiana and Mississippi automatically have through Aug. 28, 2006, to file returns and make certain tax payments (http://www.irs.gov/newsroom/article/0,,id=154615,00.html). Also check the IRS FAQ page (http://www.irs.gov/newsroom/article/0,,id=147240,00.html) to find out what kinds of special policies are in place for hurricane victims.
Important Information for Homeowners
- On February 28th HUD announced a 120-day extension of the foreclosure moratorium for FHA mortgages; see the HUD press release for more details.
- HUD announced the allocation of $11.5 billion in disaster funding among Louisiana, Mississippi, Florida, Alabama and Texas in their long-term recovery efforts. To read more about how this increased funding affects each state visit the HUD press release.
- Freddie Mac announced in a Feb. 13th press release that it has extended the foreclosure suspension on the its mortgages to May 31, 2006 in the 21 counties and parishes in Alabama, Louisiana, Mississippi and Texas that suffered the most severe damage due to hurricanes Katrina and Rita.
- Freddie Mac compiled a helpful list of questions to ask contractors and their references as well as suggestions about what terms should be included in a home improvement contract.
- Freddie Mac announced additional temporary servicing requirements to assist borrowers who have been affected by Hurricanes Katrina and Rita in its October 7, 2005 bulletin, Servicing Relief Measures for Mortgages Affected by Hurricane Katrina and Hurricane Rita, and a change to Selling Requirements for Mortgages Affected by Hurricane Rita. These requirements were developed in conjunction with Servicer Advisory boards to ensure the requirements address the current needs that impacted borrowers and Servicers are facing in the aftermath of the unprecedented and widespread devastation and hardship resulting from Hurricanes Katrina and Rita.
- Fannie Mae has suspended foreclosures on its mortgages until May 31 in the 21 counties and parishes affected by hurricanes Katrina and Rita. The announcement was made in a letter to lenders dated February 14th, 2006. Fannie Mae encourages all victims of the hurricane who fear foreclosure to contact their lenders immediately in order to secure this protection.
- Fannie Mae Announces Mortgage Relief for Hurricane Katrina Victims in Mississippi, Louisiana, Alabama and Florida; Lenders now have more flexibility to handle insurance disbursements in wake of disasters.
- Homeowners considering refinancing their home mortgage loans should read NCLC’s What You Should Know About Refinancing.
Other Housing Information
The Department of Housing and Urban Development (HUD) has established two toll-free hotlines to assist victims of the hurricanes. A live operator answers these lines from 8:00 a.m. to 8:00 p.m. CDT, seven days a week.
- 1 (888) 297-8685 to assist any displaced individual
- 1 (800) 955-2232 for specialized help to Section 8 voucher holders and public housing residents
- Report Discrimination: If you believe you have experienced discrimination during your search for housing call HUD’s Housing Discrimination Hotline 1 (800) 669-9777 or 1 (800) 927-9275 (TTY) or File a complaint online
- Report Fraud: Report suspected fraud to the Office of the Inspector General
- Frequently Asked Questions: This page provides answers to common questions for those affected by affected by Hurricane Katrina/Rita and provides resources for those who are interested in aiding victims of the hurricanes, http://www.hud.gov/offices/hsg/sfh/faqs/katrinaqa.cfm
- The Association of Community Organizations for Reform Now (ACORN) has set up a toll-free Hurricane Hotline: 800 790 2290.
- In addition, HUD has a disaster website which contains a regularly updated synposis of key actions and information it has gathered in response to Hurricanes Katrina and Rita.
- The United States Department of Agriculture (USDA) is offering special homeowner and rental support to victims of Hurricane Katrina. Visit their informational page for more details (http://www.rurdev.usda.gov/rd/disasters/katrina.html) or call their toll free number: 1-800-414-1226. You can also visit your states’ Rural Development web site:
Alabama
Louisiana
Florida
Mississippi
Texas
Student Loan Relief
The government has created a website that contains information about its efforts to help students living in the affected areas. Among its efforts, it has announced that student loan borrowers living in Katrina-affected areas will be automatically granted a forbearance of payments for at least three months, and deadlines for a number of the Department's higher education programs have been extended until at least December 1, 2005.
Advocacy Tips
Negotiating with Mortgage Lenders or Servicers
All consumers affected by this disaster should contact their mortgage service or lender immediately. Many consumers living in the hurricane-affected areas will be negotiating with their mortgage lenders to defer their mortgage payments in order to relieve some of the financial pressures they are confronting. Those who do so should make sure that their servicer reamortizes their mortgage (either by moderately increasing the size of each payment or by adding a few payments onto the end of the mortgage loan term) and does not add the deferred interest payments to the principal of the existing loan on its current terms. Failure to reamortize the mortgage could result in negative amortization for, potentially, the remainder of the mortgage loan term. Negative amortization occurs when monthly payments fail to cover the interest cost. Interest that is not covered is added to the unpaid principal balance, which means that even after several payments homeowners could owe more than they did at the beginning of the loan term.
In addition, homeowners should not have to bear the cost of the destruction of their home alone. Although their home may have been worth the original mortgage loan amount at the beginning of the loan term, Katrina may have significantly lessened its value. In the face of this destruction many homeowners may consider walking away from their mortgage loans, losing equity in their homes and decreasing their credit scores as a consequence. Rather than doing that, homeowners whose homes were substantially damaged or destroyed should try to negotiate with their mortgage lender to share the cost of the destruction by “cramming-down” their mortgage, i.e. reducing the size of the mortgage loan based on the change in value caused by the hurricane. A successful negotiation would yield a win-win situation for homeowner and lender by allowing homeowners to maintain some equity in their homes while ensuring that the lender receives a steady stream of mortgage payments.
In a December 5, 2005 press release, HUD announced a Mortgage Assistance Initiative. Under this initiative, HUD will make mortgage payments for up to one year for disaster victims with FHA-insured mortgages who want to start living in their homes again. To be eligible, families must have homes that are repairable and located in a presidentially declared disaster area that is designated for individual assistance. HUD will not only make mortgage payments for qualifying homeowners who are in default, its current practice, but will make advance mortgage payments on behalf of borrowers for up to 12 months.
Protecting Credit Scores
Consumers whose lives have been disrupted by Katrina may be having trouble making bill payments on time or in full, a fact which could lead to a decrease in their credit score. Those consumers should contact their creditors to explain the cause of the bill payment disruption. They should then ask their creditors not to report these negative credit events to the credit reporting agencies because the negative credit events are the result of a natural disaster. Consumers whose creditors refuse to cooperate may want to send a statement to the three major credit reporting agencies explaining that the negative information was a result of Katrina.
Some Katrina survivors may become targets of identity theft. Victims of identity theft should ask for a fraud alert to be placed on their credit reports and file a complaint with the police and the Federal Trade Commission.
Additional information on credit reports, filing disputes and identity theft:
Stopping Preauthorized Electronic Transfers
Many consumers from hurricane-affected areas are experiencing financial difficulty. Stopping pre-authorized electronic transfers from bank accounts may provide them some relief. In order to stop a pre-authorized electronic transfer, the consumer must notify the account-holding institution orally or in writing at least three business days before the date the transfer is scheduled to take place. The financial institution may require the consumer to confirm this election with a written confirmation within fourteen days. If it does, it must notify the consumer of this requirement and provide the address to which the confirmation must be sent. If the consumer fails to provide the required written confirmation, the oral stop payment order is no longer binding on the institution after fourteen days.
Consumers should note that nothing in the law prevents banks from charging fees for stopping pre-authorized transfers. However, consumers experiencing financial difficulty due to Katrina should ask their bank to reduce the amount of the stop payment, e.g., by asking the bank to charge what it actually costs to stop the payment rather than the full fee.
Consumers considering stopping their pre-authorized electronic transfers should read NCLC’s Sixteen Rules About Choosing Which Debts to Pay First and NCLC’s Guide to Surviving Debt.
Other Resources for Lawyers
General Information
The American Bar Association (ABA) has assembled a lawyer resource page with news and information links, a lawyer and firm relocation board, information for lawyers needing disaster help, information for lawyers wanting to volunteer their services, and disaster-related CLE and education programs.
Benefits for Hurricane Katrina Survivors, prepared by Kate Meiss and Abby McClelland of Neighborhood Legal Services of Los Angeles County, and Beth Osthimer of Children's Defense Fund of California, is an authoritative, detailed 87-slide PowerPoint presentation created for the training of Legal Services and Pro Bono Attorneys in Louisiana.
The California Handbook for Disaster Legal Services, published by the State Bar of California, is a comprehensive compilation of the collective experience and wisdom gained from those in the legal services community who have been actively involved in disaster response since the Loma Prieta earthquake in October 1989.
The Corporation for Supportive Housing has compiled a list of links intended to provide the supportive housing community with information about hurricane recovery resources.
Florida’s Legal Assistance Disaster Manual, published by the Florida Bar Foundation in July 2005, contains a synopsis of federal disaster assistance law as well as useful insights and observations regarding the advocacy issues that have arisen in past Florida disasters.
The Louisiana State Bar Association compiled an Emergency Disaster Training Manual for Louisiana Lawyers.
The Mississippi Bar Young Lawyers’ Division compiled a Disaster Legal Assistance Reference Manual for Mississippi Lawyers.
The National Legal Aid & Defender Association (NLADA) compiled a number of resources and links for attorneys working in Katrina-affected areas.
The National Legal Aid & Defender Association (NLADA), the Legal Services Corporation (LSC), ProBono.net and the American Bar Association (ABA) created a centralized portal of information for legal aid and defender programs.
The Sargent Shriver National Center on Poverty Law created a webpage devoted to legal resources on the Internet that may be helpful to advocates assisting low-income and displaced persons.
State bar associations’ disaster websites:
Bankruptcy Related Links
The U.S. Department of Justice, Executive Office of the U.S. Trustees (EOUST) released the following press releases relating to enforcement guidelines for bankruptcy debtors affected by natural disasters and announcing the waiver of the credit counseling requirement in Katrina-affected areas:
Additional bankruptcy-related links:
Consumer Federation and the National Association of Bankruptcy Attorneys urge Congress to give Katrina victims financial relief by delaying sever new bankruptcy law. To view their joint statement visit: http://www.consumerfed.org/pdfs/LawKatrinaDelayRelease090705.pdf.
Insurance Related Links
The Legal Case for Payment of Katrina Victims’ Insurance Claims, published by Americans for Insurance Reform, addresses the legal issues presented when homeowner’s insurance policyholders have policies covering wind and rain damage, but not flooding.
Guide to Insurance Coverage Losses from Hurricane Katrina, by Kirk A. Pasich, Barry J. Fleishman, Randy Paar of Dickstein, Shapiro, Morin & Oshinsky, LLP, contains information about filing insurance claims in the wake of Katrina as well as a helpful claims-filing checklist.
Natural Disasters Pose Difficult Challenges for Insurers, by Thomas W. Brunner and Dale E. Hausman of the law firm Wiley, Rein & Fielding, LLP, contains a discussion of general claims-handling issues, causation issues that arise in disaster contexts, and questions concerning what losses are covered and excluded under an insured’s policy.
Other Resources for Consumers
General Information
The American Bar Association (ABA) created a special link for victims of Hurricane Katrina, that contains information concerning pro bono networks and lawyer referral services, tax, health and property-related issues, insurance claims, and shelter and housing. The ABA has also compiled a helpful summary of the types of aid available and the applicable contact information.
The Katrina Helping Handbook was compiled by the law firm Morrison & Foerster, in conjunction with the Center for Pro Bono, a project of the ABA Standing Committee on Pro Bono and Public Services. This comprehensive 216-page manual contains information and advice on issues concerning FEMA and other disaster-related assistance programs, housing, personal finance, government benefits, taxes, jobs, replacing lost documents, insurance, death, victims of crime, veterans, pets and animals, mental health resources, small businesses, and lawyer referral services. It also provides contact information for federal and state government offices and other relief organizations.
The Consumer Reports Hurricane Recovery Guide offers consumer guidance and practical advice in the aftermath of Hurricane Katrina. The guide includes information on rebuilding, security & safety, personal finance, cars (including information on how to spot flood damaged cars) and travel.
The National Legal Aid & Defender Association (NLADA), the Legal Services Corporation (LSC), ProBono.net and the American Bar Association (ABA) created a centralized portal of consumer information relating to bankruptcy, housing, tax, health and property-related issues, and insurance claims.
The State Of Louisiana has established an official website for dissemination of information concerning hurricanes Katrina and Rita. It contains information and resources regarding relief and assistance provided by the state government for citizens impacted by the hurricanes.
If you are a recipient of Veterans Benefits you should seek information about additional assistance, pensions, and insurance at the Veterans Benefits Administration web site http://www.vba.va.gov/hurricane_info.htm#exceptions.
Homeowner's Insurance
J. Robert Hunter, of the Consumer Federation of America made a statement regarding legislation to retroactively provide flood insurance to properties damaged by Hurricanes Katrina and Rita.
Consumer organizations have called on insurance commissioners to protect homeowners devastated by Hurricane Katrina. http://www.consumerfed.org/pdfs/Katrina_Commissioners_Release092205.pdf
What Consumers Should Do to Get Fair Claims Payment in the Wake of Hurricane Katrina, by Robert J. Hunter of the Consumer Federation of America.
The National Association of Insurance Commissioners (NAIC) has compiled a webpage for survivors of Hurricane Katrina that contains information about reporting hurricane/ flood insurance claims and provides links to other helpful insurance-related information for consumers.
Americans for Insurance Reform (“AIR”), a coalition of more than 100 public interest groups from around the country has a toll-free KATRINA INSURANCE HOTLINE: 1 (888) 450-5545. The hotline (open Monday through Friday, 10 am to 6 pm EST) will be a clearinghouse for complaints by Hurricane Katrina victims who are being unfairly treated or denied claims by insurance companies on their hurricane-related insurance policies. While AIR will not be able to directly solve victims’ insurance problems, it will monitor complaints, refer them to government officials where appropriate, such as insurance departments and Attorneys General, keep records and generally act as a clearinghouse for information. More information about insurance-related issues in the wake of Hurricane Katrina, including tips for dealing with your insurance company, is available at http://www.insurance-reform.org/.
Gilbert Heintz & Randolph LLP has produced a DVD to educate homeowners and small business owners about insurance coverage issues. The DVD contains an 18-minute video on homeowner insurance issues, as well as a 13-minute video on small business owner insurance issues. Gilbert Heintz & Randolph LLP is making copies of these DVDs available for free to nonprofit organizations and other groups working to help those impacted by Hurricanes Katrina and Rita. If you would like a copy of the DVD, please send your mailing address to Tina Hsu at hsuc@ghrdc.com. The videos are also available on the GHR website as streaming media from this link: http://www.ghrdc.com/katrina.html.
Links to Departments of Insurance in the affected states:
Home Improvement Contracts
NCLC’s Home Improvement Scams Alert brochure provides important information for advocates and consumers relating to home improvement contracts. It covers deceptive sales tactics and financing schemes, issues to consider when problems such as mortgage liens occur, potential remedies, litigation tips, tips for homeowners and includes a model home improvement statute.
The American Association of Retired Persons (AARP) published a fact sheet that identifies the range of issues associated with home improvement contracts and related predatory practices, and discusses regulatory approaches used by states to protect consumers.
Consumers interested in obtaining information about home improvement contracts should read the Federal Trade Commission’s Consumer Release Home Sweet Home Improvement. This FTC publication contains a list of dos-and-don’ts of hiring home improvement contractors and provides helpful guidance on understanding and negotiating payment options and recognizing and avoiding home improvement scams.
The United State Department of Housing and Urban Development (HUD) has put together a resource page for victims of Hurricanes Katrina and Rita. It contains information about who to contact for information regarding FHA Mortgage Relief and HUD’s 203(k) program, HUD’s primary program for the rehabilitation and repair of single family properties.
Other relevant articles:
Hurricane-damaged Vehicles
For tips on how to avoid buying a flood damaged car, visit The Consumer Reports Hurricane Recovery Guide.
The National Insurance Crime Bureau (NICB) has compiled a database of vehicles and watercraft affected by Hurricanes Katrina and Rita. The information in this database was gathered from a number of sources, including insurance companies, salvage yards and state and local authorities. The NICB has not independently verified most of the information in this database and cannot, therefore, vouch for the accuracy or the completeness of this information. However, the NICB is allowing people to check Vehicle Identification Numbers (VINs) and Hull Identification Numbers (HINs) free of charge as a public service to help determine whether a specific vehicle or watercraft that has come to its attention, was involved in either Hurricane.
FOR MORE INFORMATION ABOUT DISASTER-RELATED FRAUD AND ALERTS IN YOUR STATE, OR TO FILE A CONSUMER COMPLAINT, CONTACT THE CONSUMER PROTECTION DIVISION OF YOUR STATE’S ATTORNEY GENERAL’S OFFICE:
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