CB, the New Zealand Appeals Court made a decision you'd be interested in. nbr.co.nz
As you know, laws are based on individual cases [or class action suits and what have you], so this doesn't necessarily transfer as law to the USA, but legalisms seem to flow over borders in an osmotic process.
The USA has plenty of consumer protection laws, and doesn't allow fraud, dishonesty etc.
Contract law requires parties to be compos mentis and better than half-witted in the case of ignorant consumers who can't be expected to have more than a trivial understanding of financial relativity theory and the half-witted are not allowed to be defrauded by manipulative fraudsters.
GE Finance contracted illegally with that elderly couple who had little understanding of what they were doing. The court found that a casual reading of their financial circumstances showed that there was no way in Hell they could fund the mortgage. So the mortgage was voided and the High Court is to now determine an "appropriate remedy".
Excerpt: <NZPA | Thursday May 6, 2010 - 04:41pm
The Court of Appeal has allowed an appeal by elderly Blue Chip investors Bruce and Dorothy Bartle, and said that loans they took out to buy an apartment in Auckland were oppressive.
The appeal is seen as a test case for many elderly investors who face losing their homes because of dealings with the failed Blue Chip group, whose largest shareholder was Mark Bryers.
Earlier the High Court declined to reopen the transaction and the Bartles' claims were dismissed.
"We declare that the loan agreements at issue in this case are oppressive within the meaning of the Credit Contracts and Consumer Finance Act 2003," the judgment released today said.
The case has been remitted to the High Court to determine relief for the Bartles
The Whangarei couple are described as naive, but also very poorly served by their solicitor Jonathan Mathias, who is bankrupt, and was found in the High Court judgment to be negligent.
The Bartles sought to avoid the credit transaction which supported the purchase of an apartment and the potential loss of their home, which was mortgaged to support the transaction. They argued it was unconscionable or oppressive under the Credit Contracts and Consumer Finance Act.
Bruce and Dorothy Bartle were aged 66 and 65 respectively, had a combined pension income of $21,736, and owned a house worth $400,000 in Whangarei when they saw an advertisement for an investment opportunity from Blue Chip New Zealand Ltd. They had about $48,000 in the bank, owned a campervan, a car and personal effects.
The investment opportunity became a "Trojan Horse" to access the equity investors had in their homes. The Bartles mortgaged their freehold home and the apartment to engage in the scheme. Blue Chip failed and the Bartles faced the prospect of a mortgagee sale on their Whangarei home.
The idea was that after four years the investment apartment would be sold. The Bartles would receive a small share of any capital gain and rent of $451 per fortnight before tax.
In fact, the Bartles were borrowing money to pay that sum to themselves. They purchased an apartment in Symonds Street in Auckland for $552,000, which was later sold for $250,000 after the mortgage fell into default.
"In short, the Bartles were unwittingly borrowing very heavily in order to facilitate a relatively small income stream for four years paid from borrowed monies and with only the possibility of a small capital gain, and with a good chunk of what they had borrowed going to Blue Chip's various pockets."
The fortnightly payments of $451 dried up shortly after the purchase of the unit.
The judgment said the loan was an asset lending scheme and Blue Chip was entitled to nearly all of the potential gains and substantial underwriting and other fees. ... continued... >
Maybe plenty of people in the USA and your clients are in similar circumstances.
Mqurice |
