Articles Posted in Consumer Rights

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New York is among 15 states plus the District of Columbia that have so far banned predatory payday loans, the kind that violate consumer rights and bilk customers with interest rates that exceed 1,000 percent.

And yet, these operations continue to be an ongoing problem. Even worse, some major banks are aiding payday loan collectors by allowing borrower personal accounts to be drained — even in states where such practices are illegal.
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As New York Gov. Andrew Cuomo was recently quoted as saying, such operations prey on families who are already struggling and put additional pressure on them at a time when they are at their most vulnerable. They hit them with exorbitant interest rates and a multitude of hidden fees.

For those not familiar with these practices, they are entities that offer short-term cash advances to borrowers who are living paycheck to paycheck. These firms aren’t typically associated with any major bank, and they usually give borrowers a small amount against their next paycheck. In most cases, this amount is no more than a few hundred dollars.

If all works as it should, the borrower has the money to repay that loan once he or she receives the next paycheck. Where it gets problematic is the interest rates, which are often astronomical. Customers think they are paying off the principal balance of the loan when, in reality, they are only paying off the finance charges and minimum interest.

The New York Times recently reported that big-name financial institutions, such as Bank of America, Wells Fargo and JPMorgan Chase, are coming under heavy scrutiny because they are allowing these small payday lenders to collect these charges – even in places like New York where their very existence is against the law. In some cases, customers have had their entire checking accounts completely bled dry, while they begged the banks to stop the withdrawals.

One consumer reported that she borrowed $500 from a payday lender while in a pinch. The interest rate was 700 percent. When she couldn’t pay it all back immediately, the lender began calling her incessantly – 10 to 15 times daily – and began withdrawing $200 biweekly from her checking account. This was half her paycheck. And even after paying far more than the original loan, the company was still collecting, saying those withdrawals covered only interest and fees.

As some have noted, without the help of big banks, many of these operations simply couldn’t continue to thrive.

Banks have said they are only facilitating transactions that were previously authorized by customers.

But now, the state’s superintendent of financial services has said all of it is going to stop. Within the last several weeks, the state issued more than 115 cease and desist letters. Gov. Cuomo has instructed that the board representing large banking entities work closely with the state’s Department of Financial Services to cut off payday lenders’ access to consumers’ personal accounts.

Current law in the state indicates that lenders are barred from offering loans under $250,000 with interests rates exceeding 16 percent. Any loan above $250,000 can’t have an interest rate exceeding 25 percent annually.

Still, the law has proven tough to enforce. If you have been one of those affected by these predatory lenders, contact us today.
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Shady debt collection practices are nothing especially new.

But the kinds of tactics being carried out by some of the country’s largest lenders are garnering extra scrutiny from federal regulators with dwindling patience in the wake of widespread abuses carried out by these entities at the height of the foreclosure crisis.
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Now, there is evidence of widespread consumer rights violations in New York and elsewhere. Some of these practices have long been perpetuated and simply overlooked by federal regulators. But newer allegations are beginning to surface as well.

Primarily, it involves large lenders and retailers and their contracted debt collection arms hounding consumers for unpaid debts. In and of itself, this can be a problem, as these kinds of actions are strictly regulated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, which is enforced by the Federal Trade Commission, the Consumer Financial Protection Bureau and, in some cases, the Office of the Comptroller of the Currency.

Companies can’t simply call you anytime or any place. They are forbidden from calling before 8 in the morning or after 9 in the evening, unless you’ve expressly agreed to it. They can’t contact you at work if they are informed either orally or in writing that you are not allowed to accept such calls there. A debt collector should be referring all calls to your lawyer’s office, if you are represented by an attorney. But otherwise, they can’t contact anyone other than you, except to find out your home phone number and where you work. In most cases, collectors are only allowed to contact those individuals one time. Even then, they are not permitted to discuss your debt with anyone but you, your spouse and your attorney.

Collectors are also forbidden from threatening violence or harm, publishing the names of those who can’t or won’t pay their debts, using profane language, repeatedly using the phone to annoy someone, making false claims about who they represent or about the legality of the forms they are sending, and they can’t tell you you’ll be arrested for your debt or that you’ll have your wages garnished if they don’t have the authority to do so.

Of course, that hasn’t stopped some companies from engaging in these tactics.

And what’s more, harkening back to the robo-signing foreclosure scandal, some large financial institutions have been filing mountains of paperwork without having any verification of the debts or debt amounts.

The FTC recently secured a $3.2 million penalty against Expert Global Solutions, which is the world’s largest debt collection agency, amid accusations that the firm routinely harassed consumers.

Additionally, The New York Times reported, the OCC is investigating how certain banks, such as JPMorgan Chase, carry out their credit card debt collection practices. Errors were reportedly discovered in about 10 percent of all monetary judgments secured by the bank against consumers in collections lawsuits from 2009 through 2011. Those errors had consumers paying more than what they actually owed because the debt amounts weren’t properly vetted prior to trial.

Consumers on the whole acknowledge that they do owe some money here and there, though research shows fewer customers are falling behind on their payments as the economy continues to improve. However, the biggest problems arise when creditors and third-party debt collectors violate the laws that govern how they can go about trying to get paid.

If you are battling abusive debt collection practices, call our offices today.
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In the wake of the devastation wrought by Hurricane Sandy, many property owners are continuing to seek necessary home improvements. In other cases, it’s just time for an addition, or that swimming pool or sunroom.
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In the course of this process, it’s important for homeowners, as well as contractors and salespersons, to understand all applicable New York State laws regarding general home improvement contracts and general contracting.

By Downloading your free copy of the “Home Improvement Compliance Guide — What You, the Contractor and Consumer Need to Know,” you can ensure all parties are on the right side of the law. This can save you a great deal of time and money in the long run, and may potentially help you avoid costly litigation.

Specific questions pertaining to your project and/or business should be directed to an experienced home improvement attorney.

The guide contains not only applicable New York State laws, as well as county and municipality requirements, but also plain English explanation of these laws and requirements, best practice tips for all five boroughs, advertising rules, model templates for various contracts and cancellations, and detailed instructions of obligations and prohibited acts for all parties. There are even a few important notes on how one can avoid running afoul of Federal Trade Commission regulations.

Every home improvement salesperson or contractor in New York should take the time to research the information contained in this guide. Homeowners seeking improvements to their property should invest at least an hour or so, reviewing this information for a more thorough knowledge of their rights and obligations.

New York State has some of the most comprehensive rules when it comes to home improvement contracting. The intention is to protect all parties involved. However, we recognize that these strict guidelines leave plenty of room for error. That’s why, just as a carpenter measures twice and cuts once, we advise contractors and salespersons to have a full grasp of these issues before embarking on a project or new venture.

With regard to New York State law, you’ll want to pay particular attention to New York Lien Law, Section 71-a, New York General Business Law Article 36-A, “Home Improvement Contracts,” Sections 770-776 and New York Uniform Commercial Code, Section 2-718.

While specific requirements may vary from county to county, all New York home improvement contracts have to be written, signed by all parties and contain specific information, such as name, address, telephone number, license numbers, estimated work dates, work description, materials used, specified payments, and an outline of cancellation or revocation rights. These are just the very basics.

State law also prohibits contractors from “steering” activities with respect to financing. Convoluted language in these contracts is inadvisable, as the law holds that the contract must be provided in plain, legible English and that the homeowner retains the right to sue based on false or fraudulent written representations or statements.

This information represents a starting point for those embarking on a New York home improvement project. We hope you will take some time to review the guidelines herein and then come to us with any additional questions or concerns regarding either your company or the project at hand.
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When it comes to consumer rights and consumer litigation, sometimes the most effective way to ensure a positive outcome is to file or join a class action.
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A class action case is one in which a larger group of similarly-situated people or businesses collectively band together to file civil action against a defendant or group of defendants for some alleged wrongdoing.

There are a number of advantages to class action cases, including:

  • Lowered cost of litigation;
  • Improved chances that all parties will receive relief;
  • Claims made by a larger group tend to have more credence than those filed by individuals.

But in recent years, and most notably with the June 20th U.S. Supreme Court decision in American Express Co. v. Italian Colors Restaurant, class action status in a tort case is becoming tougher and tougher to obtain.

Here’s what happened in this case:

A number of restaurants, retailers and other merchants filed suit against American Express, alleging that the credit card company violated antitrust laws by strong-arming them into accepting its credit cards.

In case you aren’t familiar, charge cards mandate that the card holder pay the full outstanding balance at the end of each bill cycle. By contrast, credit cards are those for which users are only required to pay a portion of at the end of a billing cycle.

The big issue in the case was an arbitration clause. These are clauses in a contract that stipulate how disputes must be resolved in the event they arise. Most often in consumer law, these clauses tend to be more advantageous to the company or, in this case, the larger company.

The plaintiffs in this case sought class action status, saying that the arbitration clause makes it all but impossible for smaller firms to seek individual redress, due to the cost of litigation. Individual consumers often run up against the same problem, which is why consumer advocates were watching this case very closely.

However, American Express argued that it had acted in accordance with the Federal Arbitration Act, and the Supreme Court ultimately agreed by a margin of 5-4.

Justice Antonin Scalia, in writing for the majority, posited that antitrust laws don’t guarantee that plaintiffs will have an affordable path to vindication of every claim.

This ruling is only the latest to support businesses’ rights to require people or other businesses to sign arbitration clauses, with the intention of keeping disputes out of court.

Back in March, the court sided with Comcast in a case where a group of cable television subscribers in Pennsylvania accused the company of overcharging them as an effort to monopolize the market. The court ultimately ruled that the group couldn’t file the case as a group with class action standing because they couldn’t adequately measure the damages for the class members.

And in 2011, the Supreme court tossed the class action status claim in Wal-Mart Stores Inc. v Dukes, saying that the female members suing for discrimination did not have enough in common to be allowed to file suit together.
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A New York furniture company has been ripping off consumers of funds totaling hundreds of thousands of dollars, according to a lawsuit filed by Attorney General Eric Schneiderman. furniture.jpg

Our New York consumer law attorneys understand that the biggest problems occurred as FWS Home Furnishings was spiraling deeper into debt, closing in October without warning. Ultimately, this left many customers who had made advance or down payments with no furniture – and no refunds.

Stock has been sold during a foreclosure auction, and a developer is planning to snatch up the store property on Elmwood Avenue.

Schneiderman’s Buffalo branch investigation revealed that the total consumer losses is likely somewhere in the range of $250,000. While this might not seem like a great deal of money in the grand scheme of business deals, particularly when spread out among many victims, the fact is that people save up for years to make these type of big-ticket purchases. To be completely left out in the cold – with little recourse to recover their money – is unconscionable and, based on the facts so far provided, illegal.

New York Code, Article 22-A, Section 349, covers deceptive acts and practices. This statute holds that deceptive acts or practices in the conduct of any business, commerce or trade or in the providing of any service are unlawful. Deceptive practices are generally held to be any business practice that involves fraud or misrepresentation or unconscionable or oppressive acts. If the court finds that the defendant willfully violated this law, it may increase the award damages to an amount that equals three times the actual damages, plus attorney’s fees. Additional awards may be given if the victim is elderly.

Although the furniture store had been in business for more than 30 years, the most recent two owners purchased it in the spring of 2010. Under new ownership, the business began hemorrhaging funds. Just this year alone, the company is believed to have lost more than $400,000. This prompted creditors to effectively shut it down.

The Attorney General’s investigators later learned that whenever the company made an order on behalf of a customer, the company required customers to make advance payments. However, the company didn’t separate those funds into a different account. Instead, it spent the money before merchandise was even delivered. Had the company continued to stay open and thrive, this may not have been a major issue. But when FWS did close, it’s estimated there were about 700 open orders in which consumers had made some sort of payment, but hadn’t received the merchandise. In all, this amounted to roughly $420,000.

Since then, some of those customers have been able to either stop payment they had made with credit cards or were able to actually get the furniture for which they had paid.

Ultimately, the Attorney General’s office is hoping to get the two former owners to repay the money they owe to the remaining customers, and to bar the owners from opening another business in the state unless they post a $500,000 performance bond. Additionally, Schneiderman’s office is requesting a temporary restraining order that would prohibit the company and owners from destroying any business records or transferring any funds.
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New York consumer rights have been trampled in recent years by a host of varying fraud schemes.
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As our New York City Consumer Rights Attorneys understand it, the state’s attorney general has now issued a list of the top 10 consumer fraud complaints from New Yorkers last year. The announcement came at the outset of the National Consumer Protection Week.

Attorney General Eric Schneiderman said that arming consumers with information on how to protect themselves is one of the most effective defenses to thwarting scams, adding that the ultimate crime scene of our century is unequivocally the internet. While he vowed his office would vigorously go after those who perpetuate fraud on the greater population, he underscored that giving consumers the knowledge of how to recognize a scam, and further to report it, will make a huge difference in curbing the reach of these crimes.

The complaints received by his office were broken down like this.

10. Telecommunications. In this category, which includes cellular service, pay-per-call and phone cards, the state’s attorney general received about 1,020 complaints. With calling cards, start off with one card purchased for a small amount to test and make sure additional fees don’t apply.

9. Mail order. These scams involved purchases that were made either from a catalog or online. In this category, the attorney general’s office received about 1,065 complaints. Before you order anything through a catalog, make sure it is a reputable company with an actual service line and a real address.

8. Construction and home repair. These would generally involve home improvement projects in which the work either wasn’t completed or was done very poorly. Complaints in this category numbered about 1,210. Shop around for estimates and other consumer reviews before agreeing to a contract.

7. Retail sales. These would involve any purchase of goods, which include gift cards, rent-to-own products or clothing. In this category, Schneiderman’s office received about 1,220 complaints. Know the laws and company policy regarding gift cards before you buy.

6. Mortgage fraud. This has been big all across the country, and includes loan brokers and mortgage officers, as well as deceptive practices within the foreclosure process. Of those, the attorney general’s office received about 1,600 complaints. Keep an eye out for companies that offer to delay your foreclosure for an upfront payment, as well as companies that claim to be working for the government.

5. Tenant and landlord issues. These would include failure to complete repairs, harassment or failing to release security deposits. The AG’s office received about 2,700 of these complaints. Ask your landlord for proof that the building is up to code, and keep your own scrupulous records.

4. Consumer-related services. This would encompass anything from restaurant or catering services to tech repairs to security systems. Of these, there were about 3,700 complaints. Have a written contract in place before you allow the work to begin.

3. Vehicle issues. These would include anything relating to the purchase, lease, repair or rental of a motor vehicle. There were about 3,300 of these complaints. Make sure you research the state’s vehicle leasing laws before you sign on the dotted line.

2. Credit. This involves a host of problems involving credit card billing to debt collection to debt settlement. Schneiderman’s office received about 3,840 complaints regarding these issues. You should know that debt collectors are not allowed to abuse or harass you and they aren’t allowed to offer you misleading information (which doesn’t mean they never do).

1. Internet. The internet was No. 1 when it came to complaints filed with the AG’s office – about 4,000 in all. These included a wide range of issues, from consumer fraud to spyware to privacy problems. The attorney general’s office advised to always make sure websites are secure before you give any personal or financial information.
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In a New York education law case, the state’s supreme court has issued a clear message to students: It’s up to you – not your school – to determine your employment prospects.
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Our New York education law attorneys understand that the case is one of a growing trend of similar suits filed across the country. Basically, students at colleges across the country – including New York Law School in lower Manhattan – say the schools misled them about what kind of future they would have once they graduated.

The plaintiffs, nine students from the New York Law School, said the school took great efforts to misconstrue the truth about their job prospects. They equated it to false advertising when school officials, in promoting the large number of recent graduates who had secured employment, failed to stipulate that many of those graduates were working only part-time or in fields that didn’t even require a law degree.

Students pay premium prices to attend a prestigious law school (or any law school, really) on the expectation that they will find employment when they graduate. The students were collectively seeking $225 million in damages.

The Supreme Court, however, tossed their claim – while still expressing sympathy for the students – saying that those who are contemplating law school are generally a “sophisticated subset” of education buyers, who are fully able to weigh all their options before deciding to enroll. So basically, it’s up to the student to do his or her research prior to accepting an offer to attend.

Still, the courts did say that they realized the students were entering one of the worst job markets in history, particularly for those with a legal degree.

An attorney for the New York Law School graduates said there will likely be an appeal.

This was just one case, however – a class action lawsuit that involves students from the Syracuse University College of Law, as well as 34 other schools, is still pending.

To some extent, students may expect some form of inflation when it comes to data released by the schools. The fact is, statistics can be skewed just about any way you can imagine – and still technically be accurate.

Universities in New York are governed by the state’s Office of Higher Education and the state’s education law, which begin in Federal Trade Commission Act, which essentially says that all advertisements have to be true and non-deceptive, there must be proof to back up the claim and they must be fair.
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New York City foreclosures are again on the rise, as banks reported seizing more homes the first month of year than in December.

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The news comes after the foreclosure rate dropped significantly in 2011, when financial institutions were forced to stop and sort out claims of foreclosure abuse – something with which our New York foreclosure attorneys are all too familiar.

In one month, foreclosures across the country jumped by 8 percent, though that is still down 15 percent from 2010. That’s according to RealtyTrac listing firm.

When the month of January came to a close, RealtyTrac reported there had been more than 210,000 homes in the country that were either issued a notice of default, repossessed or were slated for the auction block. That breaks down to roughly one every 625 homes in the country.

Other states that reported a very high increase include Massachusetts (75 percent) and new Hampshire (62 percent).

It’s a pattern that is expected to continue following the $25 billion settlement that was signed off on by 49 state attorneys general (including New York Attorney General Eric Schniederman). The settlement was largely intended as a punitive measure following widespread misdeeds within the industry, as well as to aid some American homeowners who were either underwater on their mortgage or who had lost their homes to banks that never proved they were legally entitled to take them.

In the wake of a lot of these revelations, many banks put a hold on the filing of new foreclosures while they worked to retrace their steps (some would say cover their tracks) on previous filings. They also had to put measures in place to ensure the same errors wouldn’t be recurring.

Under the settlement terms, the banks agreed to streamline the way they move through the foreclosure process. Part of the idea is to increase transparency.

Now, banks are once again beginning to turn their attention back to new foreclosure filings, so the numbers are again beginning to jump. RealtyTrac’s vice president, Darn Blomquist, told USA Today Money that lenders are going to be playing catch up on the foreclosures that have accumulated over the past year, though it may happen somewhat slowly, as lenders will want to make sure they are in compliance with the new federal regulations.

In New York state, the month of January saw one of out every 4,849 homes handed a notice of foreclosure. There are currently more than 30,000 homes in the midst of a New York foreclosure. Of those, the average foreclosure sales price is around $323,000.

Some additional New York foreclosure statistics, according to RealtyTrac:

The following counties had the highest foreclosure activity in the state for the month of January:

  • Kings, 292 filings
  • Nassau, 229 filings
  • Suffolk, 194 filings
  • Monroe, 124 filings
  • Bronx, 99 filings

Some mortgage bank economists say the real measure of whether the economy is returning to health is the employment rate. The higher employment is, the fewer people are going to miss their mortgage payments and ultimately, the less foreclosures there will be.

Unfortunately, however, it may be some time before we see that scenario become reality.
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There has been a constant cry from those affected by the real estate mess in this country: Why haven’t more banks and bank officials been held accountable for the many New York foreclosures that have caused our economy to crumble?

The news media has spent a lot of time during the last several years documenting the collapse of the real estate market. Some have found that bank officials specifically directed workers to create false documents, backdate them in order to meet deadlines for foreclosure and robo-sign documents in order to move them quickly through the court system to steal away peoples’ homes.
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Yet, even though this fraud has been uncovered from Long Island to Los Angeles, few criminal actions have been taken against the people who clearly have violated homeowners’ rights with these unlawful actions. A mortgage may seem like some to be a simple process, but today it likely appears much more complex.

The fabled American Dream included owning a house and that was expected by many people if they were to be seen as successful in life. Yet, now, given the economic climate in our country, some have found that signing the paperwork of home loan to have much more significance.

For those considering owning a home these days, it’s best to review all the relevant documents carefully. Also consider consulting with an experienced real estate lawyer to ensure that there are no hidden clauses or fees that could potentially hinder you in the future. Considering the problems many Americans have faced related to foreclosure in the last few years, it may be prudent to take all necessary precautions before signing on the dotted line.

New York’s Attorney General Eric Schneiderman has been one of a handful of attorneys general nationwide who have fought the banks and who have decided against settling their lawsuits against the major banks of this nation. While most of the rest of the states are happy to get some quick cash in exchange for not filing any future lawsuits and without any significant information being released about how this happened in the first place, this state’s top prosecutor has vowed to continue fighting.

In the most recent news, Reuters reports that Schneiderman has teamed up with the Federal Housing Finance Agency’s inspector general to investigate how the banks sold mortgages to investors before the real estate market collapsed.

Banks routinely securitized mortgages and sold them as groups to investors. But in many cases, officials have alleged, banks committed fraud when they underwrote mortgage debt. The investors ended up with bad investments.

In September, the FHFA, the regulator for Fannie Mae and Freddie Mac, sued 17 banks and financial institutions over about $200 billion in losses of subprime bonds. The lawsuits, Reuters states, are an attempt to figure out who is at fault for the financial crisis that started in real estate, moved to construction and now has affected every area of business.

Schneiderman has been among the chief opponents of the $25 billion settlement proposed by other states with major banks over the foreclosure tactics they used to take away people’s houses. The settlement wouldn’t produce a full investigation of how we got into the situation we’re in. The settlement also wouldn’t affect loans owned by Fannie and Freddie.
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The Consumer Financial Protection Bureau recently announced that it is taking credit card complaints and complaints regarding problems with mortgages in New York.


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agencies created by the government may provide some oversight for private companies, but often lack the power to create any amount of change. Typically, only legal action taken against a company can result in any meaningful response for a consumer who is wronged.
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Consumer complaints can come in a variety of ways and for a variety of reasons. Sometimes, the actions that are taken by companies can directly result in major harm to the consumer. This has been especially true in recent years in the wake of the mortgage foreclosure debacle throughout this country.

Banks have used unlawful and unethical tactics in an effort to take away people’s homes. They have used robo-signed documents — that which are signed by mortgage servicers hired by banks and are supposed to be signed by bank officials who review the paperwork for accuracy.

The banks have also filed paperwork that was intentionally altered to support their taking away of a person’s house through foreclosure. By backdating paperwork and having it notarized on dates that couldn’t possibly be accurate, the banks were able to take away millions of homes.

The government agency was created this year and was designed to take consumer complaints and pass them on to the companies and set up a tracking system for customers to follow their complaints.

The agency’s first report is on credit card complaints. An agency report states that consumers filed more than 5,000 complaints against credit card companies, the first types of complaints that were taken from consumers. Of those, more than 13 percent dealt with billing disputes as their main complaint, while another 10 percent related to identity theft and interest rates. Other complaints filed by consumers dealt with fees, payments, canceling accounts and credit reporting.

In providing its first report since being created in July, the agency reported that it has begun taking complaints about home mortgages as well. Agency officials hope to take all consumer complaints starting next year.

The agency is designed to take consumer complaints and be a go-between for consumers and the companies they deal with. The agency must produce semi-annual reports to Congress detailing the types of reports it is receiving from American consumers.

The information then may be analyzed to determine trends and patterns that may be used to help consumers. Ultimately, however, the agency has no power to make changes that could help consumers, but aims to collect data that may be applied later.

Collecting data on mortgage problems may actually help consumer protection agencies in the future, however. Banks have stripped away people’s homes — millions and counting — through bad acts and unfair trade practices. Future data may go to addressing the problem and aiding consumers.

Foreclosures are a major issue in this country and will continue to be for years in the future. Many remain hopeful that getting to the root of the foreclosure problem in America will help the real estate market recover more quickly as well. Certainly addressing where consumers have been wronged throughout the mortgage foreclosure problem in New York and nationwide will be a start.
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