Predatory Lending


There is no simple checklist for determining whether a particular loan or loan program is predatory. Loan terms that are helpful to one borrower may be harmful to others. For example, it is important to distinguish subprime lending from predatory lending. Subprime lending includes loans to persons who present heightened credit risk because they have experienced problems repaying credit in the past, or because they have only a limited credit history. Loans that serve these borrowers have a legitimate place in the market when they have been responsibly underwritten, priced and administered. Predatory lending, on the other hand, is not limited to one class of borrowers. Signs of predatory lending include the lack of a fair exchange of value or loan pricing that reaches beyond the risk that a borrower represents or other customary standards.

As a general rule, predatory lending involves at least one, and perhaps all three, of the following elements:

  • Making unaffordable loans based on the assets of the borrower rather than on the borrower’s ability to repay an obligation;
  • Inducing a borrower to refinance a loan repeatedly in order to charge high points and fees each time the loan is refinanced (“loan flipping”); or
  • Engaging in fraud or deception to conceal the true nature of the loan obligation, or ancillary products, from an unsuspecting or unsophisticated borrower.”

The Community Reinvestment Act (CRA) examination process reviews each bank’s record, based on the standards appropriate for its size and operation. Predatory lending can have a negative effect on a bank’s CRA performance, specifically, including violations of: the Fair Housing Act and the Equal Credit Opportunity Act involving discriminatory credit practices; the Truth in Lending Act, regarding rescission of certain mortgage transactions, and regarding disclosures and certain loan term restrictions in connection with credit transactions subject to the Home Ownership and Equity Protection Act; the Real Estate Settlement Procedures Act regarding the giving and accepting of referral fees, unearned fees or kickbacks in connection with certain mortgage transactions; and the Federal Trade Commission Act regarding unfair or deceptive acts or practices. Other practices may warrant the inclusion of comments in an institution’s performance evaluation. These comments may address the institution’s policies, procedures, training programs, and internal assessment efforts.

Predatory lending harms individuals and communities and raises risk management and consumer compliance concerns for financial institutions. Predatory loans can have a negative impact on a bank’s CRA evaluation. The loans may violate fair lending laws and other consumer protection laws, resulting in legal or regulatory action. Questionable loan underwriting and the risk of litigation raise additional safety and soundness concerns.

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To Terminate or Not to Terminate

Termination of employment document

Termination of employment document


California Labor Code §1400 affords us the following definitions: under Sec. (c) layoff means a “separation from a position for lack of funds or lack of work.” This means that there is no fault on the part of the employee for a layoff and the employee may be eligible for unemployment and other benefits.

The same paragraph, Sec. (f) defines the word “termination” as “the cessation or substantial cessation of industrial or commercial operations in a covered establishment.” Thus TERMINATION and LAYOFF are the same, but while the former refers to the termination of the business, the latter terminates the employee. Again, there is no stigma attached to “termination.”

What does “being fired” mean in this context? The state of California follows the “at will” presumption, which means that in the absence of an employment contract, there is a presumed “at will” employment. Under “at will” an employee can be fired for any reason or no reason at all, but the reason, if any, may not be unlawful. Unlike with a layoff or termination, the term “I was fired” usually carries the stigma of “for a cause,” such as being late to work, or not performing one’s duties. Employers who are “firing” their at will employees for “lack of funds or lack of work” should therefore use the term layoff or state that they are “terminating” the employment.

The most common “unlawful reason” for firing an employee is usually some kind of public policy violation, which may amount to “wrongful termination.” If there is an apparent “causal connection” between the policy violation, there may be sufficient grounds for a “wrongful termination” action. This causal connection is often in the form of a retaliation against the employee for something he or she has rightfully done:

If an employer discharged an employee in violation of rights granted by the First Amendment to the US Constitution.

If an employer violates his or her own discharge policy (written or implied).

If an employer the employment-related provisions in the Bankruptcy act or Fair Credit Reporting Act.

If an employer violates of a federal or state discrimination law.

If an employer discharged or fired an employee in retaliation for whistle blowing, wage garnishing, exercising union rights, serving in a military, and legally taking a leave under the Family and Medical Leave Act.

Interestingly, some courts (though not all) also recognize the Good Faith and Fair Dealing exception to At-Will Employment. This is a contract concept, which states that although employees are employed “at will,” there is a covenant of good faith and fair dealing between them and the employer, prescribing the latter to treat them fairly: the employer may not be transferring employees to prevent them from collecting sales commissions, misleading them about their chances for promotions and wage increases, fabricating reasons for firing an employee when the real motivation is to replace that employee with someone who will work for lower pay, repeatedly transferring an employee to remote, dangerous, or otherwise undesirable assignments to coerce the employee into quitting without collecting severance pay or other benefits that would normally be due.


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Rescission, Reformation, Replevin

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How Often Can Rent Be Raised?

How often can rent be raised? if you have a lease for more than 30 days, your rent cannot be increased during the term of the lease, unless the lease allows rent increases.
If you have a periodic rental agreement, your landlord can increase your rent, but the landlord must give you proper advance notice in writing. the written notice tells you how much the increased rent is and when the increase goes into effect.
California law guarantees you at least 30 days’ advance written notice of a rent increase if you have a month-to-month (or shorter) periodic rental agreement.
The landlord must give you at least 30 days’ advance notice if the rent increase is 10 percent (or less) of the rent charged at any time during the 12 months before the rent increase takes effect. Your landlord must give you at least 60 days’ advance notice if the rent increase is greater than 10 percent. In order to calculate the percentage of the rent increase, you need to know the lowest rent that your landlord charged you during the preceding 12 months, and the total of the new increase and all other increases during that period.
Civil Code Section 827(b). Longer notice periods apply if required, for example, by statute, regulation or contract. (Civil Code Section 827(c).) Tenants in Section 8 housing must be given at least 30 days’ written notice of a greater-than-10-percent rent increase if the increase is caused by a change in the tenant’s income or family composition, as determined by the local housing authority’s recertification. (Civil Code Section 827(b)(3)).
Normally, in the case of a periodic rental agreement, the landlord can increase the rent as often as the landlord likes. However, the landlord must give proper advance written notice of the increase, and the increase cannot be retaliatory. Local rent control ordinances may impose additional requirements on the landlord.
Increases in rent for government-financed housing usually are restricted. if you live in government-financed housing, check with the local public housing authority to find out whether there are any restrictions on rent increases.
A landlord’s notice of rent increase must be in writing. the landlord can deliver a copy of the notice to you personally. In this case, the rent increase takes effect in 30 or 60 days, as just explained.
The landlord also can give you a notice of rent increase by first class mail. In this case, the landlord must mail a copy of the notice to you, with proper postage, addressed to you at the rental unit. The landlord must give you an additional five days’ advance notice of the rent increase if the landlord mails the notice. Therefore, the landlord would have to give you at least 35 days’ notice from the date of mailing if the rent increase is 10 percent or less.
If the rent increase is more than 10 percent, the landlord would have to give you at least 65 days’ notice from the date of mailing.

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Unlawful Discrimination

housing-rentA landlord cannot refuse to rent to a tenant, or engage in any discrimination on the basis of group characteristics specified by law that are not closely related to the landlord’s business needs: race, color, religion, sex (including pregnancy, childbirth or medical conditions related to them, as well as gender and perception of gender), sexual orientation, marital status, national origin, ancestry, familial status, source of income, age, and medical condition. This includes such discrimination in all oral or written statements (e.g. advertisements for rent).

The landlord may, however, properly inquire into a prospective tenant’s credit history and his ability to pay the rent and security deposit. In disability cases, as a condition of making modifications, the landlord may require the person with a disability to enter into an agreement to restore the interior of the rental unit to its previous condition at the end of the tenancy (excluding reasonable wear and tear). Making such accommodations (including, for example, accommodations for a companion or service dog) is landlord’s obligation. (See Government Code Sections 12926(p), 12927(c)(1),(e), 12948, 12955(d); Civil Code Sections 51, 51.2, 55.1(b). See Moskovitz et al., California Landlord-Tenant Practice, Section 2.27 (Cal. Cont. Ed. Bar 2011).)

Under California law, a landlord cannot use a different financial or income standard for persons who  will be living together and  combining their incomes than standard used for married persons who combine their incomes. in the case of a government rent subsidy, a landlord who is assessing a potential tenant’s eligibility for a rental unit must use a financial or income standard that is based on the portion of rent that the tenant would pay – see Government Code Sections 12955(n),(o). A landlord cannot apply rules, regulations or policies to unmarried couples who are registered domestic partners that do not apply to married couples, nor can a landlord inquire as to the immigration status of the tenant or prospective tenant or require that a tenant or prospective tenant make any statement concerning his or her immigration or citizenship status. However, a landlord may request information or documents in order to verify an applicant’s identity and financial qualifications. (See Harris v. Capital Growth  Investors XIV (1991) 52 Cal.3d 1142 [278 Cal.Rptr. 614]; Civil Code Section 1940.3; California Practice Guide, Landlord-Tenant, Paragraph 2:569.1 (Rutter Group 2011); California Practice Guide, Landlord-Tenant, Paragraph 2.553 citing Koebke v. Bernardo Heights Country Club (2005) 36 Cal.4th 824  [31 Cal.Rptr.3d 565]. See Civil Code Section 1940.3. 46 42 United States Code Section 3607(b), Civil Code Section 51.3(b)(1).).

Finally, “housing for senior citizens” includes housing that is occupied only by persons who are at least age 62, or housing that is operated for occupancy by persons who are at least age 55 and that meets other occupancy, policy and reporting requirements stated in the law. The owner cannot discriminate on the basis of medical condition or age. A person in a single-family dwelling who advertises for a roommate may express a preference on the basis of gender, if living areas (such as the kitchen, living room, or bathroom) will be shared by the roommate. (See Government Code Sections 12927(a)(2)(A), 12955(c); Civil Code Sections 51,51.2, Government Code Section 12948; Government Code Section 12927(c)(2)(B).).

If a landlord refuses to rent to you because of your race or national origin), you may have several legal remedies, including:

  • Recovery of out-of-pocket losses.
  • An injunction prohibiting the unlawful practice.
  • Access to housing that the landlord denied you.
  • Damages for emotional distress.
  • Civil penalties or punitive damages.
  • Attorney’s fees.


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Non-Compete Clauses

non-competeA Non-compete clause limits the employment of the employee after termination for a specific amount of time in a given area and field of expertise. Its purpose is typically to: (1) protect trade secrets, and (2) limit employees who possess the knowledge and skills in the given area.

(1) Trade secrets are limited by a non-disclosure agreement, which contains a list of particular secrets of the trade. It may also contain sales strategies and client lists. (2) Employment limitation is focused on the market niche and geographic area, usually for up to three years. Overbroad limitations will be stricken and deemed unenforceable, especially where they are overly restrictive.

A provision should be included, which clearly states that “in the absence of any provision thereof deemed unenforceable,” the remaining portion of the Agreement shall be enforced.

What is more, non-compete agreements must involve some give-and-take (consideration). If a non-compete is signed only after the employment began, without any extra payment or advantage to the party, the proffering party (employer) is running the risk of the clause being stricken by the court (for lack of consideration). The employer is traditionally the drafter of the non-compete, thus bears the burden of proof that any restriction is reasonable and necessary to protect against unfair competition.

In California, the employer must show that the non-compete agreement actually concerns proprietary information (objectively understood, not merely because the employer says so). If this information, be it client lists or sales tactics or pure data, can be obtained by some other means (e.g. internet search), the non-compete will be deemed invalid.

Finally, the employer may not force the employee to sign a non-compete under threat of termination. Such a forced clause would be held unconscionable and invalid, and the employer would be liable to the employee for damages in a wrongful termination action.

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King v. Burwell

The U.S. Supreme Court has ruled 6-3 that the Affordable Care Act allows subsidies for low-income people who purchase health insurance through federal exchanges. The majority opinionby Chief Justice John G. Roberts is a big win for the Obama administration and the viability of its health-care law.

At issue was a provision of the law allowing subsidies for people participating in exchanges “established by the state.” Challengers had argued the law nixes subsidies in the nearly two dozen states that use federal, rather than state-run, insurance exchanges. Justice Roberts (joined by Justices Anthony M. Kennedy, Ruth Bader Ginsburg, Stephen G. Breyer, Sonia Sotomayor and Elena Kagan) said that the provision should be read in context of the entire law.

Roberts’ decision was based on a reading of the law rather than “Chevron deference,” which allows federal agencies to fill in gaps in a statute on the theory that the ambiguity is an implicit delegation of power from Congress (viz. Chevron USA v. Natural Resources Defense Council).

If Roberts had ruled the Internal Revenue Service had “Chevron deference” to interpret the law, future administrations could give a different reading to the law. Roberts said the law was ambiguous, but Chevron deference didn’t apply because the tax credits are among the key reforms of the health law, affecting the price of health insurance for millions of people.

Instead, Roberts said, the ambiguity required an analysis of the broader structure of the law. Reading the law to bar subsidies in states using federal exchanges would likely create “death spirals” in the individual insurance market that the law was designed to avoid, Roberts said. “It is implausible that Congress meant the act to operate in this manner,” he said. What the Congress meant, however, the Congress did not know as it did not read the law in order to learn “what’s in it” (Palosi).

On the other hand Scalia’s dissent (joined by Justices Clarence Thomas and Samuel A. Alito) said the majority advanced “feeble argument” made up of “interpretive jiggery-pokery.” In particular, the dissent attacked the clear mis-construction that “[the] exchange [shall be] established by the state” should (pursuant to Roberts) mean “[the] exchange [shall be] established by the state or the federal government.” “That is of course quite absurd, and the court’s 21 pages of explanation make it no less so,” concludes Scalia.

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Bill Defending Workers’ Rights

The California Assembly approved a bill Thursday backed by the Consumer Attorneys of California that would protect the legal rights of California workers who face the prospect of being forced to sign arbitration agreements as a part of employment.

AB 465, authored by Assemblyman Roger Hernandez (D-West Covina), will ensure that important employment rights and procedures can be waived only by the voluntary consent of employees in writing. These waivers, including waiving the right to trial by jury and requiring the use of arbitration to settle disputes, eliminate significant guarantees of fairness and due process that are cornerstones of the American civil justice system.

These clauses are often buried in the fine print of employment applications and employee handbooks. As a result it is nearly impossible for an employee or prospective employee to evaluate and make an informed choice about how a dispute will be resolved before a dispute exists.

Employers frequently require agreement to such waivers, including mandatory arbitration, as a condition of employment, meaning Californians will not be hired unless they give up their right to resolve employment claims in a court of law. AB 465 would ensure these waivers of rights cannot be made a condition of employment.

“When claims are settled behind closed doors in arbitration, we all lose,” said CAOC President Brian Chase. “AB 465 will ensure that workers do not face coercion from an employer that forces them to sign away their rights to resolve disputes in a court of law.”

AB 465 is sponsored by the California Labor Federation, AFL-CIO.


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Sports Injury Work Comp

In Dennis McKinley v. Arizona Cardinals, California’s Workers’ Compensation Appeals Board declined to exercise the state’s jurisdiction over the case, in effect upholding the terms of the athlete’s original contract with the team. The contract states: “… Claims for workers’ compensation shall be filed with the Industrial Commission of Arizona, and the parties agree that they shall be subject to the workers’ compensation laws of the State of Arizona, and of no other state.”

In this case, McKinley spent his entire four-year career (1999-2003) as a professional football player with the Arizona Cardinals. He was not a California resident, entered his

Employment contracts in Arizona, and played only seven of his 80 professional games in California, along with a five-day training camp.

When a trial judge ruled in favor of the Cardinals, the player’s counsel appealed. The Workers’ Compensation Appeals Board subsequently held that while California technically has jurisdiction over the Cardinals and the player’s claim, it may decline to exercise that jurisdiction when there is a “reasonable mandatory forum selection clause” (such as the clause in McKinley’s contract with the team).

Although California’s labor code has an exemption for employers who meet certain criteria, the board did not affirm that the court should automatically exercise California jurisdiction if the employer cannot meet those criteria. The Workers’ Compensation Appeals Board in the McKinley case acknowledged the defendant failed to introduce evidence for such an exemption, but continued analyzing the issue of jurisdiction.

Ultimately, the board’s ruling that California jurisdiction did not apply hinged on two factors:

1. The forum selection clause in the Cardinals’ contract: The parties had already agreed on a forum convenient and reasonable to both (and the board had a prolonged discussion as to why Arizona was the best forum).

2. The board repeatedly stressed the applicant’s limited connections with California (only seven games out of 40 out-of-state games stretching over 16 states, and an additional 40 games in Arizona) as a reason to decline jurisdiction.
Significantly, the board deemed forum selection clauses to be presumed valid, unless:

They were the product of fraud or overreaching (assuming the contract is valid).

There is not a reasonable forum for workers’ compensation for the applicant.

The forum is not convenient for the applicant.

The clause is contrary to California fundamental public policy.

The decision affirms that the appeals board can decline to exercise California jurisdiction over certain workers’ compensation cases. However, in cases involving California-based teams or contracts formed in California, the board will likely enforce California jurisdiction.

McKinley’s counsel has appealed the decision with the California Court of Appeals. Even so, the door may be open for non-California sports teams, their workers’ compensation insurers, and other defendants to argue the court should not exercise jurisdiction for out-of-state players for out-of-state teams, even if there is no forum selection clause.

Subsequent to the decision in McKinley, the appeals board issued another decision in the case of Michael McKenzie v. Green Bay Packers. There, the McKinley analysis was applied and the appeals board declined to exercise California jurisdiction on account of the forum selection clause. McKenzie played for the Packers and the New Orleans Saints from 1999 through 2008, and during his career, participated in a short training camp and approximately nine to 12 games in California. He was not a California resident and did not sign his contract in California. He started his career with the Packers and was traded to the Saints in October 2004, but did not sign a new contract with the Saints until July 2005. All contracts included a forum selection clause for Wisconsin and Louisiana, respectively.

The trial judge declined to exercise California jurisdiction and the player’s attorney appealed, arguing that after McKenzie was traded from the Packers to the Saints, the forum selection clause of the Packers contract was void as a new contract with the Saints was not executed until July 2005. This argument was rejected.

Also in McKenzie, the appeals board rejected the application of the “relation back doctrine.” This doctrine typically allows an injured worker to search backward through his or her employment history until an employer is found with sufficient workers’ compensation insurance coverage. McKenzie’s attorney tried to go back through his client’s playing career to find a time when he played without a forum selection clause in his contract and burden that team with the provision of California workers’ compensation benefits. This was rejected as the court refused to allow this doctrine to be used to avoid enforcement of a forum selection clause.

While the appeals board is taking a strong stance, a bill that would limit the rights of out-of-state professional athletes to collect California workers’ compensation benefits is slowly moving through the California Legislature. AB 1309, which has passed the Assembly and awaits action by the Senate, would amend the current laws defining a cumulative trauma injury with respect to professional athletes. Typically, employers within the last year of the cumulative trauma injury period are liable to provide benefits: This currently is defined as the year prior to the last game played in California for any team. The bill would change this, defining the last year as the actual last year the athlete played for a professional team.

More importantly, the bill would define out-of-state athletes as temporary employees, who are exempt from California workers’ compensation benefits if the team has workers’ comp coverage in their home state and that other state has reciprocal extraterritorial provisions recognizing the California workers’ comp system. The Assembly added the “Joe Montana Exception,” where an athlete may pursue a claim if employed for eight or more consecutive seasons by a California-based employer, or at least 80 percent of the athlete’s employment occurred while with a California-based employer. The bill would apply these changes to all pending claims for benefits.

We anticipate significant changes within the next several months, from both the California legislative and judicial bodies, which may eliminate the complexity and sheer volume of out-of-state athletes filing for claims in California.

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My Advice to Potential Users:

If you don’t have what it takes, forget about it – no drug can give you willpower, determination and hard discipline!

That being said, in my law practice as well as in my days as an Olympic athlete, I have encountered the abuse of steroids on every level, sometimes justifiable (such as in treatment of injuries) but mostly only in order to improve recovery and performance. I have also seen athletes use cocaine and abuse alcohol in order to recover faster and regain composure before the race.

Unfortunately, some top athletes who “have what it takes” have been unjustly accused of drug abuse and, given the “bad rap” all steroids have, the scales of justice and fairness are heavily tilted against them from the get-go.

Steroids are medications, drugs that have their place in medicine. Their effect is limited and side effects unforeseeable, because they depend on the individual proclivities and body and mind constitution. Further, even outside the scope of purely medical use, they can only help in certain combinations, in limited amount and for a limited time, on which account, the following needs to be emphatically stated:

  • Steroids are legally manufactured for medical uses in treatment of anemia, severe burns, and some types of breast cancer.
  • Steroids are banned in almost all sports; any athlete found using them is usually disqualified or suspended for a long time and stripped of any titles they may have gained while they were using steroids.
  • There is widespread use of steroids in the sport of body building due to the ability of steroids to increase muscle growth along with weight training.
  • Some athletes practice “steroid stacking” by using three or more kinds of oral or injectable steroids to get quicker results in their physique.
  • Injectable steroids result in the risk of spreading or contracting infections such as Hepatitis or HIV when sharing needles.
  • Steroid users risk more than 70 side effects, which includes physical and psychological reactions like jaundice, stroke, acne, liver tumors, mood swings, low or high sex drive, aggressive behavior and others included in the list of short-term and long-term effects below.
  • Steroid users often take from 20 to 200 times the recommended dosage to build muscles.

Steroids Impact on Your Body
Steroids affect your heart.

Steroid abuse has been associated with cardiovascular disease, including heart attack and stroke. These heart problems can happen to athletes under the age of 30.

Steroids affect your liver and kidneys.

Steroids can cause high blood pressure and kidney and liver tumors. Steroid use can also cause blood-filled cysts to develop in the liver. Both the tumors and cysts can rupture, causing internal bleeding.

Steroids affect your appearance.

In both sexes, steroids can cause male-pattern baldness, cysts, acne, and oily hair and skin.

Steroids can affect your growth.

Under normal conditions, sex hormones trigger growth spurts during puberty and also signal the body to stop growing when they reach a certain level. When teens take steroids, the resulting high sex hormone levels can signal bones to prematurely stop growing, stunting the user’s growth.

Steroids affect gender-specific features:

  • For women-growing of facial hair, shrinking of the breasts, deepened voice, masculine changes in the shape of the face, and cessation of the menstrual cycle.
  • For men-shrinking of the testicles, development of breasts (gynecomastia), and infertility.

Steroids affect your mood.

Steroids can make you angry and hostile for no reason. This is commonly referred to as “roid rage.” This can also include suicidal thoughts and/or attempts, fatigue, restlessness, loss of appetite, and insomnia. There are many cases of steroids causing users to become violent towards themselves and others. Some users developed behavioral problems that were so extreme that they could not function within their workplace or society.

Steroids increase your risk of infection.

Sharing needles or using dirty needles to inject steroids puts you at risk for diseases such as HIV/AIDS and hepatitis. Because many steroids are imported illegally, they can be tainted with bacteria, toxins, or other dangerous byproducts.

Steroids are addictive.

Withdrawal symptoms include mood swings, suicidal thoughts and/or attempts, fatigue, restlessness, loss of appetite; desire to take more steroids, and insomnia.

Know the Risks

Steroids are illegal to possess without a prescription from a licensed physician. It is illegal for individuals to sell steroids. Some illegal steroids are made overseas and smuggled into the United States or made in underground labs domestically. They pose greater health risks because they are not regulated by the government and may not be pure or labeled correctly.

Signs of Abuse

How can you tell if a friend is abusing steroids? Sometimes it’s hard to tell. But there are signs you can look for. If your friend has one or more of the following warning signs, he or she may be abusing steroids:

For Men

  • Baldness
  • Development of breasts
  • Impotence

For Women

  • Growth of facial hair
  • Deepened voice
  • Breast reduction

For Both Genders

  • Jaundice (yellowing of the skin)
  • Swelling of feet or ankles
  • Aching joints
  • Bad breath
  • Mood swings
  • Nervousness
  • Trembling

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