Tag Archives: Economy

Class Action Lawsuit On Behalf Of Homeowners Against Bank Of America Alleging Abuses In Its Force-Placed Flood Insurance Program Allowed To Proceed In U.S. District Court

18 Jul

Finally FastWorld News from the Finally Fast team

On Wednesday, July 11, 2012, Judge Michael Simon of the United States District Court for the District of Oregon issued a ruling that permitted the Plaintiffs’ breach of contract claims to proceed in a nationwide class action alleging that Bank of America (NYSE: BAC) improperly force-placed high-premium flood insurance policies on homeowners across the United States.

In their Complaint, Plaintiffs Ronda and Larry Arnett allege that Bank of America has a practice of force-placing flood insurance coverage above the amounts required by borrowers’ mortgage contracts and by federal law.  Bank of America asked the Court to dismiss the case, asserting that its mortgage contracts with borrowers permit it to force-place high premium flood insurance coverage in any amounts that it deems necessary.  The Court denied Bank of America’s motion to dismiss and decided that Plaintiffs’ claims alleging breach of contract and conversion of funds should proceed to trial.

“When it comes to flood insurance, Bank of America and other companies in the mortgage servicing industry have engaged in a classic bait-and-switch, in which borrowers are informed of one set of flood insurance requirements at closing and then, later, Bank of America demands additional, unwarranted flood insurance coverage,” said Shanon Carson of Berger & Montague, P.C., one of the lead attorneys for the Plaintiffs.  “Through this scheme, Bank of America has harmed tens of thousands of consumers by force-placing excessive and unnecessary flood insurance at extraordinarily high prices.  Moreover, each time Bank of America force-places flood insurance policies on its borrowers it receives a kickback from the flood insurance companies with whom Bank of America has an exclusive relationship.”

“All homeowners in the United States with mortgage loans serviced by Bank of America who have been force-placed with flood insurance policies are potentially affected by the Court’s decision in this case,” added Brett Cebulash, another of the Plaintiffs’ attorneys.  “By virtue of this decision, they will now have their day in court.”

A similar case, brought on behalf of Bank of America borrowers with home equity lines of credit (“HELOCs”), that also alleges abuses in the force-placement of flood insurance, has been brought by the same group of plaintiffs’ attorneys and is also pending before Judge Simon in the United States District Court for the District of Oregon.

Borrowers who have been subjected to force-placed insurance policies and customers of Bank of America who are potentially affected by this decision can obtain additional information by calling Shanon J. Carson, Esq. at (215) 875-4656 or Patrick F. Madden, Esq. at (215) 875-3035, both of the law firm, Berger & Montague, P.C.  Mr. Carson and Mr. Madden can also be contacted by email at scarson@bm.net or pmadden@bm.net.

The Plaintiffs in this case, Arnett, et al. v. Bank of America, N.A., Civil Action No. 11-cv-1372 (D. Or.), are represented by the law firms of Berger & Montague, P.C., Taus Cebulash & Landau LLP, and Stoll Stoll Berne Lokting & Shlachter P.C.

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Increased Worry Among Retirees Doesn’t Equate to Action

2 Apr

Finally FastEconomy news from the Finally Fast team

While American retirees are more concerned about retirement risks than in previous years, a new study by the Society of Actuaries (SOA) shows there has been little change in their risk management strategy over the past two years and concern among the survey researchers that many may be at risk of running out of assets.

“The 2011 Risks and Process of Retirement Survey,” sponsored by the SOA, is the sixth biennial study of post-retirement risks and offers insight into Americans’ awareness of retirement risk, how their awareness has changed over time, and how these perceptions have affected the way they manage their finances.

The survey of 1,600 adults, ages 45 to 80 (800 retirees and 800 pre-retirees), found the greatest retirement planning concerns include protection against inflation, the ability to pay for healthcare, and the cost of long-term care.

“Except for health coverage, insurance products such as annuities and long-term care insurance are not seen as major components of retirement planning,” said actuary and retirement expert Anna Rappaport, FSA, MAAA, who serves as chairperson of the Society of Actuaries’ Committee on Post-Retirement Needs and Risks. “As a result, many retirees continue to be at risk of running out of assets and having to rely solely on Social Security.”

The retirement risks that most concern both retirees and pre-retirees are:

  • Keeping the value of their savings and investments up with inflation (69 percent of retirees, 77 percent of pre-retirees)
  •  Having enough money to pay for adequate health care (61 percent of retirees, 74 percent of pre-retirees)
  •  Having enough money to pay for long-term care (60 percent of retirees, 66 percent of pre-retirees)
  •  Being able to maintain a reasonable standard of living for the rest of their life (59 percent of retirees, 64 percent of pre-retirees)
  • Varying income as a result of changes in interest rates (57 percent of retirees, 64 percent of pre-retirees)
  • Depleting their savings (54 percent of retirees, 63 percent of pre-retirees)

“Notwithstanding this increased concern, retirees and pre-retirees are no more likely than in previous years to report they have used the various risk-management strategies examined in the survey,” said actuary and retirement expert Carol Bogosian, ASA.  “However, retirees are more likely than in 2009 to report they have cut back on spending, saved as much money as they can, and purchased a product or chosen an employer plan option that provides them with guaranteed income for life.”

A major concern is that many people have a shorter planning horizon than their future expected lifetime, according to the SOA. Despite this, retirees are more likely than in 2009 to say their planning horizon is at least 10 years (34 percent, up from 23 percent), while pre-retirees are more likely to say it is at least 20 years (19 percent, up from 13 percent).  Meanwhile, more than one in three pre-retirees feel retirement will not apply to them due to finances or a desire to continue working.

Still, Bogosian points out while more people expect to delay retirement, the “how” and “when” people retire remain key factors pre-retirees need to carefully consider. And, many pre-retirees may be ignoring the possibility of involuntary early retirement.

“There is a major disconnect between when people say they plan to retire and when they actually do,” Bogosian said. “The survey found half of retirees had retired from their primary occupation before age 60. And, though other studies show an increase in the percentage of people over age 65 who are employed, many who lose jobs in their 50s and early 60s experience more difficulty finding new employment than younger people.”

If they were to live five years longer than expected, retirees indicated they would be more likely than in 2005 to:

  • reduce their expenditures significantly (64 percent, up from 53 percent)
  • dip into money that might otherwise have gone toward an inheritance (49 percent of retirees, up from 42 percent), and
  • deplete all of their savings (45 percent, up from 35 percent).

Pre-retirees show no significant change from 2005 in the consequences they anticipate should they live five years longer than expected. In fact, only one-third (35 percent) of pre-retirees have a plan for financing their retirement. Meanwhile, nearly six in 10 retirees (57 percent, up from 44 percent in 2005) report they have a plan for how much money they will spend each year in retirement and where that money will come from.

Since this question was last asked in 2005, the increase in reported prevalence of plans for retirement is encouraging; however, the percentage without plans indicates there is still a long way to go, according to actuary and retirement expert Cindy Levering, ASA, MAAA, EA.

“Retirees who use all of their assets or accumulate debt they cannot realistically expect to repay may face major difficulty,” said Levering. “This can be particularly troublesome for the survivor of a couple after the spouse’s death.”

Planning to use home equity to finance retirement is a precarious strategy, especially in times of reduced housing prices, considering the illiquid nature of real estate, Levering added.

Both retirees and pre-retirees are significantly more concerned about inflation than in 2007, the year the question was previously asked, said Levering. More than four in 10 retirees (43 percent) and pre-retirees (47 percent) report they think inflation will affect the amount of money they will need in retirement a great deal.

“Although Federal policy and unemployment have worked to keep overall reported inflation low in the last few years, retirees feel seriously affected by increases in health care costs, their share of these costs, and by food and energy prices,” Levering said.

The survey also found maintaining a healthy lifestyle is preferred to the purchase of insurance as a means of managing health and long-term care costs. About four in 10 own or plan to buy long-term care insurance, while, just one in 10 indicate they have turned to or will turn to a continuing care retirement community.

“The survey results continue to show the importance of earlier and better planning as well as a more systematic approach to managing all aspects of retirement risk,” Rappaport said.

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Bank Customer Switching Rates Rise Again

2 Mar

Finally FastBusiness news from the Finally Fast team

Consumer backlash against bank fees, coupled with poor service and unmet customer expectations, has fueled increases in defection rates among customers of large, regional and midsize banks, according to the J.D. Power and Associates 2012 U.S. Bank Customer Switching and Acquisition Study.

On the heels of “Bank Transfer Day” on November 5, 2011, the beneficiaries of the increased exodus from larger banks are primarily smaller banks and credit unions. Acquisition of new customers by smaller banks and credit unions has increased by 2.2 percentage points to an average of 10.3 percent in 2012 from 8.1 percent in 2011. Among big banks, regional banks and midsize banks(1), switching rates average between 10.0 and 11.3 percent, while the defection rate for small banks and credit unions averages only 0.9 percent, a significant drop from 8.8 percent in 2011.

The study, which examines the bank shopping and selection process, finds that 9.6 percent of customers in 2012 indicate they switched their primary banking institution during the past year to a new provider. This is up from 8.7 percent in 2011 and 7.7 percent in 2010.

The study finds that, not unexpectedly, fees are the main reason customers shop for a new primary bank. In particular, one-third of customers of big and large regional banks cite fees as the main shopping trigger.

“When banks announce the implementation of new fees, public reaction can be quite volatile and result in customers voting with their feet,” said Michael Beird, director of the banking services practice at J.D. Power and Associates. However, according to Beird, customers weigh the price they pay against the value of their experience.

“It is apparent that new or increased fees are the proverbial straws that break the camel’s back,” said Beird. “Service experiences that fall below customer expectations are a powerful influencer that primes customers for switching once a subsequent event gives them a final reason to defect. Regardless of bank size, more than one-half of all customers who said fees were the main reason to shop for another bank also indicated that their prior bank provided poor service.”

In capturing customers who are shopping for a new bank, several of the more successful banks achieve higher acquisition rates through the use of promotions and cash incentives. At one of the highest-performing big banks, 19 percent of customers indicate these promotions were the reason they selected their new bank. However, according to Beird, doing a good job for customers is not just about dollars, but also about loyalty and retention.

“Only 32 percent of customers who selected a new bank because of promotional offerings said they definitely would not switch banks again in the next 12 months,” said Beird. “In comparison, 46 to 51 percent of customers who chose the new bank because of either good service experience or positive recommendations say they definitely will not leave within the next year.”

For customers thinking about switching banks to find one that is better aligned with their expectations and needs, J.D. Power and Associates offers the following tipss:

  • Shop around to compare terms and service before deciding on a bank, the same way you might before buying a vehicle. Don’t forget about direct online banks, as their competitive fees and rates may offset any inconvenience due to lack of physical branches.
  • Don’t be swayed by promotion gifts/cash alone. It is more important to ensure the bank that you are selecting offers the right products to meet your needs and that the fees associated with the products are in line with what you are willing to pay.
  • Read account brochures and disclosures carefully and don’t be afraid to ask questions about the products you are about to open. It is important to fully understand how fees are charged and how fees can be avoided.

The 2012 U.S. Bank Customer Switching and Acquisition Study is based on multiple evaluations from 5,062 customers who shopped for a new banking account or new primary financial institution during the past 12 months. The study was fielded in November and December 2011, and includes Bank of America; Bank of the West; BBVA Compass; BB&T; Capital One; Chase; Citibank; Comerica Bank; Fifth Third Bank; Harris National Bank; HSBC; Huntington National Bank; KeyBank; M&I Bank; M&T Bank; PNC Bank; RBS Citizens; Regions Bank; Sovereign Bank; SunTrust Bank; TD Bank; U.S. Bank; Union Bank; and Wells Fargo.

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Silicon Valley Bank Expands Operations to Arizona

9 Jan

finallyfastBusiness news from the Finally Fast team

Silicon Valley Bank (SVB), financial partner to the innovation sector and the premium wine industry, is expanding its operations to Arizona, creating hundreds of well-paying, financial sector jobs in the state over the next few years. SVB will open a new IT and operations facility in Tempe in 2012 to support its continued growth. Arizonans will benefit from 220 jobs and millions of dollars invested into the state’s economy.

Silicon Valley Bank offers diversified and innovative financial services to companies in the innovation sector and their investors. These companies range from start-ups to multi-million dollar corporations looking to do business in the U.S. and internationally.

SVB’s mission aligns closely with the types of companies Arizona hopes to attract. SVB is focused on helping entrepreneurs and high-growth innovation companies carry their ideas to the next stage of development, and has been instrumental in providing financial services to technology and life science companies for nearly 30 years. This in turn helps create jobs and strengthens the economy. Seventy percent of Businessweek’s Top Entrepreneurs and 68 percent of the Wall Street Journal’s top venture capital- backed companies are SVB clients.

“We see first-hand how innovative companies and their investors are improving the status quo: making technological and medical advancements and creating jobs, which are all essential to the US economy,” said Greg Becker, president and CEO of Silicon Valley Bank. “We are constantly growing in support of our innovative clients. The Phoenix area is a great environment with talented financial candidates to fill our open positions, affordable living for our employees, proximity to our headquarters, and a growing number of technology and life science businesses in the region.”

“The mission of Silicon Valley Bank to provide financial services to the technology, clean-tech, life science and winery industries is in perfect harmony with Arizona’s vision for the future of economic development,” said Governor Jan Brewer. “This is exactly the kind of company that Arizona is courting as we build an economy that is diversified and stable.”

“I am thrilled that Silicon Valley Bank is coming to Arizona,” said Congressman David Schweikert (AZ-05). “Their decision to expand here is reflective of the high quality of our workforce and the fact that Arizona is a great place to live and do business. I look forward to their continued growth here in Arizona.”

“I cannot overstate the importance of Silicon Valley Bank’s expansion to Arizona,” said Don Cardon, president and CEO of the Arizona Commerce Authority. “Although securing a quality employer with hundreds of new high-paying jobs is needed for our economic recovery, it is even more important that our state secured the most recognized lending institution in the country relating to venture capital. Our economic vitality rests equally on our ability to entice the emergence of new innovative enterprise. Today’s announcement significantly advances our ability to do that, and without question will be the envy of every state in the nation.”

“Silicon Valley Bank’s expansion will draw new capital sources to the region that will help fuel innovation and entrepreneurship in Arizona, while providing high- quality jobs in Tempe,” said Barry Broome, president and CEO of the Greater Phoenix Economic Council.

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EverPower acquires Patton Wind Farm in Pennsylvania

22 Dec

finallyfast.comBusiness news from the Finally Fast team

EverPower Wind Holdings, Inc., a subsidiary of Terra Firma, a leading private equity firm, and OwnEnergy, the leader in Community Wind, announced today that they have closed a transaction where EverPower will acquire and construct Patton Wind Farm, LLC. This is a project that OwnEnergy has been developing from inception with its local landowner partner.

The project will be 30 MW and will be fully operational by the end of 2012. An interconnection agreement with PJM has been secured and power will be sold on the merchant market. The Patton project is located in Elder, West Carroll, and East Carroll Townships across approximately 2,700 acres of agriculture land. According to EverPower, the project will provide approximately 100 jobs during construction, and up to 10 full-time jobs required to operate and maintain the project over the next thirty years.

As a Community Wind project, with local ownership of the farm, it enjoys unprecedented local support and will provide incremental economic development for the region. Many of the workers will be drawn from the local labor pool and non-local workers will require lodging, food and other necessities that will be also purchased locally, which will benefit local businesses. In addition to construction jobs, locally purchased goods and services will be needed. These construction materials include gravel, concrete, wood, fencing, steel rebar, cabling and fuel.

The development companies worked together to obtain funding in the amount of $3.2m from the Commonwealth Financing Authority (CFA) under the Renewable Energy program. The award will improve the project’s viability in a challenging market environment and help enable the Patton Wind Farm to provide clean, renewable energy to more than 9,000 households and move Pennsylvania closer it its renewable energy targets.

The Community Wind project was started by Saint Francis University’s Renewable Energy Center. The university installed a meteorological tower in Patton and Ebensburg and found that the area was suitable for a wind farm. The university requested proposals from Community Wind developers and in what was a highly competitive process OwnEnergy was ultimately chosen to develop the project. OwnEnergy then partnered with local entrepreneur Marty Yahner to secure land and begin development of the wind farm.

“We’re the Sixth generation of Yahners to farm and live in the Patton community,” said Marty Yahner. When I learned that a wind farm would be developed here, I was excited by the prospect, but wanted to make sure it would work for me and my neighbors. By taking this Community Wind development approach, OwnEnergy enabled us to get comfortable with the many aspects of the project, while getting involved in a more meaningful way and sharing in the profits.”

Jacob Susman, Founder and CEO of OwnEnergy, said, “This is an exciting opportunity for OwnEnergy, The Yahner Family and the local Cambria county community. EverPower will get this project built next year, which means the community will see the benefits of the wind farm immediately and for many years to come.”

The Patton Wind Project will be EverPower’s fourth Pennsylvania project and third in Cambria County. The 62.5 MW Highland Wind Farm, located in Adams Township became operational in 2009. The 75 MW Highland North Wind Farm is located in townships of Adams and Summerhill and will become operational by the end of the year. In 2012, EverPower hopes to be constructing the Twin Ridges Wind Farm, a 140 MW wind farm located in Somerset County. Combined, the three wind farms are expected to have an annual economic impact of over $4 million on the region’s economy.

“I am very excited to announce the acquisition of the Patton Wind Project,” said Jim Spencer, president and CEO of EverPower Wind Holdings. “This strategic acquisition solidifies our presence in Pennsylvania. It also helps us achieve a milestone of having over 300 MW of operating assets in Pennsylvania by the end of 2012 and to become the prominent wind energy provider in the Commonwealth.”

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