Tag Archives: predatory loans

HERA and LEGAL SERVICES CENTER OF HARVARD LAW SCHOOL FILE CLASS ACTION COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF

December 20, 2017, Oakland, California:

This morning, borrowers represented by HERA and the Project on Predatory Student Lending at the Legal Services Center of Harvard Law School filed a nation-wide class action against the Department of Education for illegally and unfairly denying relief to tens of thousands of former Corinthian students who the Department already decided are entitled to have their loans discharged and their payments refunded.  Not only were they lied to by Corinthian, they have now been lied to by the federal government.

The case was brought by three named plaintiffs:

  • Martin Calvillo Manriquez was talked into WyoTech’s automotive technology program over community college. He didn’t really have an opportunity to even touch cars or car parts while he was enrolled. The school didn’t have tools or certified instructors. While he was in school, he worked at an oil change shop earning $8 an hour. He kept seeing classmates who had graduated from his program applying for the same low-paying, non-technical job he already had. Most of them didn’t even get jobs changing oil. Martin has never had a job related to auto repair. Even though the Department determined that Martin was misled and cheated, and even though he applied to have his loans discharged, the Department has taken two years of tax refunds and garnished his wages to pay back his loans.
  • Rthwan Dobashi owes more than $20,000 for the same program. He has also never worked in the field.  He is married, has two kids, and is expecting a third. In early 2016, he found out from the attorney general that he was eligible to have his debts from WyoTech cancelled, and he applied. He also told one of his friends from school, and his friend applied, too. His friend’s loans were discharged almost a year ago, while Rick still hasn’t heard anything from the Department.
  • Jamal Cornelius’s attended the Information Technology-Emphasis in Network Security program at Heald College, and borrowed more than $25,000. His debt from Corinthian is the only line on his credit report. He has been waiting more than fourteen months for any response to his application for relief.

All three borrowers, and all class members, are entitled to relief pursuant to the Department’s Corinthian Job Placement Rate Rule, which it has established through countless public statements, previous discharges, and direct notice to tens of thousands of covered individuals. The Department may not now change this rule and apply changes retroactively. In other words, it is unlawful for the Department to go back on its word.

See the full complaint here.

Please contact us at inquiries@heraca.org or (510) 271-8443 ext. 300.

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Predatory Lending Class Action Against CashCall Opens New Chapter as Federal Courts Turn to California Supreme Court for Guidance

Senior Asian Couple At Home Relaxing On Sofa TogetherOakland, California, May 26, 2017- The nine-year marathon class action litigation attacking CashCall’s exorbitantly high interest loans entered a new phase last month when the federal Ninth Circuit Court of Appeals took the unusual step of requesting guidance from the California Supreme Court on relevant state law.

CashCall pioneered the high-interest $2,600 personal loan in 2005.  California’s usury law does not place fixed interest rate limits on personal loans in excess of $2,500. CashCall took advantage of this loophole to make $2,600 loans in California at interest rates as high as 135%. Other lenders followed suit, charging rates as high as 200% to Californians seeking short-term loans.

These loans are “subprime,” and typically offered to borrowers with low credit scores, uneven credit histories, and who are in financial distress. CashCall uses saturation TV advertising urging viewers to just get up and “make the cash call.” CashCall’s website says you can “APPLY IN MINUTES & GET CASH TODAY!” with an easy online application.

The class action, filed in June 2008, challenges CashCall’s loans under California’s “unconscionability” law.  This law empowers courts to strike down loans that are unreasonably one-sided or unfair. The case ended up in the federal Court of Appeals after a San Francisco federal judge ruled the courts do not have the authority to invalidate consumer loans or to provide relief to borrowers.

In April 2017, the Ninth Circuit Court of Appeals issued a decision invoking the unusual procedure of certifying a question of state law to the California Supreme Court. The federal appeals court asked the California Supreme Court whether loans over the dollar amount of the usury limit ($2,500) can be invalidated under California’s unconscionability doctrine.

Plaintiffs in the case are hopeful that the California Supreme Court will take advantage of this opportunity to issue a ruling protecting California borrowers against predatory loans and validating court power to curb unconscionable lending in California.

HERA’s Director of Litigation, Arthur Levy, is co-lead counsel in the CashCall case with four other law firms.

For more information please contact, Maeve Elise Brown Executive Director, Housing and Economic Rights Advocates, at melisebrown@heraca.org or (510) 271-8443.