Lodinews.com

default avatar
Welcome to the site! Login or Signup below.
|
||
Logout|My Dashboard

Steve Hansen: Think twice before joining a class-action lawsuit

Print
Font Size:
Default font size
Larger font size

Posted: Wednesday, August 13, 2014 12:00 am

About 18 months ago, a letter came from a New York law firm inviting me to participate in a class-action lawsuit. The case involved a mortgage company that had gone broke during the big housing bust of 2007.

There were a number of reasons why the real estate market crashed. One was that some powerful members of Congress were insisting banks and loan companies provide home mortgages to those who really couldn’t afford them. Another was a popular financing scheme — sarcastically known as NINJA loans (no income, job or assets).

During the “boom,” everyone wanted part of this moneymaking action. Loan companies began to appear out of nowhere. They filled small offices in suburban strip malls across the country. Once the momentum was underway, becoming a homeowner was as simple as signing a loan application.

I wanted my piece of the pie by investing in a home loan mortgage company. It was not a fly-by-night outfit, but one with a reputable name on Wall Street that was traded on the New York Stock Exchange.

However, staying ethical for these guys was apparently just too much. No doubt they looked around and saw their competitors making money hand-over-fist with NINJA loans. It was an irresistible temptation.

When the crash finally came, it hit hard. Millions of homes were in foreclosure. As most remember, Stockton was reported to be the worst in the country for these unprecedented financial failures.

The company in which I had invested lost hundreds of millions of dollars. Their stock went from $24 per share to just a few pennies and was delisted from the Exchange — hence, the reason for the class-action litigation.

“Why not participate in the suit?” I thought. If I could recover a fraction of my losses, it would be worth the effort.

Of course, the law firm’s agent didn’t make it easy. You see, the more victims who join as claimants, the less assets of the bankrupt company are left to split “fairly,” as determined by a court.

First of all, I had to “prove” that I owned the stock during the period of unscrupulous activity. That meant going through old records from years past and making copies of these statements.

Next, I had to fill out a four-page form — duplicating some of the copied information, along with my standing as a claimant in the suit. I also had to sign a disclosure stating my participation barred me from pursuing any claim as an individual against the bankrupt loan company.

Finally, I rechecked everything to make sure all the paperwork was in order. The legal-sized envelope was sealed, taken to the post office and sent by certified mail. Two weeks later, I got a form letter confirming my claim had been received.

Months went by, and I heard nothing. When a year had passed, I’d actually forgotten about the whole issue.

Then last week, I was sifting through the mail. There, among the bills and pizza coupons, was what appeared to be a check. The return address was “Litigation Settlement Fund.” My ship had come in — or so it seemed.

I didn’t open the letter at the post office. Instead, I headed home — dreaming of what my settlement share would buy: Perhaps dinner for two at a fine restaurant? How about a weekend in Carmel? Maybe a trip to Disneyland?

I sat at the breakfast table and cut open the correspondence with a kitchen knife. Suddenly, my mind went blank. I couldn’t believe what my eyes were telling me. There was an official cashier’s check in the full amount of $2.23!

Two dollars and twenty-three cents? This was all that remained of my few thousand-dollar investment? Well, I’m sure the law firm handling the case had no problem taking the first cut, which probably amounted to several million.

I had just completed another lesson in life. As a result, I’ll think twice the next time I receive an unsolicited letter to join a class action suit.

After filling out the paperwork and waiting more than a year for a “proportionate share,” the final settlement didn’t even pay my postage!

Steve Hansen is a Lodi writer.

More about

Rules of Conduct

  • 1 Use your real name. You must register with your full first and last name before you can comment. (And don’t pretend you’re someone else.)
  • 2 Keep it clean. Please avoid obscene, vulgar, lewd, racist or sexually oriented language.
  • 3 Don’t threaten. Threats of harming another person will not be tolerated.
  • 4 Be truthful. Don't lie about anyone or anything. Don't post unsubstantiated allegations, rumors or gossip that could harm the reputation of a person, company or organization.
  • 5 Be nice. No racism, sexism or any sort of -ism that is degrading to another person.
  • 6 Stay on topic. Make sure your comments are about the story. Don’t insult each other.
  • 7 Tell us if the discussion is getting out of hand. Use the ‘Report’ link on each comment to let us know of abusive posts.
  • 8 Share what you know, and ask about what you don't.
  • 9 Don’t be a troll.
  • 10 Don’t reveal personal information about other commenters. You may reveal your own personal information, but we advise you not to do so.
  • 11 We reserve the right, at our discretion, to monitor, delete or choose not to post any comment. This may include removing or monitoring posts that we believe violate the spirit or letter of these rules, or that we otherwise determine at our discretion needs to be monitored, not posted, or deleted.

Welcome to the discussion.

1 comment:

  • Christina Welch posted at 9:04 pm on Fri, Aug 15, 2014.

    Christina Welch Posts: 368

    Good article, Steve. And, you're right about those lawyers! Clarence Darrow once said, "The trouble with law is its lawyers." I think that is pretty accurate. Not in all cases, there are some who do great work, but those ambulance chasers and opportunists, they give what should be a noble profession a very bad name.

     

Recent Comments

Posted Yesterday by Christina Welch.

article: Gwin Paden: September’s garden, book se…

Another wonderful column, Ms Paden, and thought-provoking. I am saddened to hear Lodi High doesn't have a newspaper, but I guess that's a …

More...

Posted Yesterday by Jerome Kinderman.

article: General Mills announces ‘preliminary de…

Oops, I sure hate it when I get "it's" and "its" mixed up. I chose not to send my previous remarks through the spelling…

More...

Posted Yesterday by Jerome Kinderman.

article: General Mills announces ‘preliminary de…

Some call it greed, others call it the decline of a company and maybe others might just think its the way of America these days. Considerin…

More...

Posted 2 days ago by M. Doyle.

article: General Mills announces ‘preliminary de…

Kevin, this article has absolutely nothing to do with minimum wage hikes. Why you would bring it up here is a mystery. Big plants like th…

More...

Posted 2 days ago by Doug Chaney.

article: General Mills announces ‘preliminary de…

Welcome to corporate America!

More...

Video

Popular Stories

Poll

Loading…

Your News

News for the community, by the community.

Featured Events

Mailing List

Subscribe to a mailing list to have daily news sent directly to your inbox.

  • Breaking News

    Would you like to receive breaking news alerts? Sign up now!

  • News Updates

    Would you like to receive our daily news headlines? Sign up now!

  • Sports Updates

    Would you like to receive our daily sports headlines? Sign up now!

Manage Your Lists