Jay Speer and Christie Marra: Fighting Predatory Landlords, Lenders, and Realtors
This week, Michael is joined by Jay Speer and Christie Marra of the Virginia Poverty Law Center, to learn what bills the VPLC are supporting in this year's General Assembly sessions. Those bills include ones to combat shady practices from realtors, loophole payday loans, and unfair fees and rent increases from predatory landlords.
Episode Transcript
Michael Pope
Hi, I'm Michael Pope, and this is Pod Virginia. A podcast that is taking a look at greed. And the problems that can be created by predatory landlords, predatory towing companies, and predatory investment companies. We've got a great group, the power duo from the Virginia Poverty Law Center; we are joined by Jay Speer and Christie Marra. Thanks for joining us.
Jay Speer
Thank you for having us.
Christie Marra
My pleasure.
Michael Pope
Let's get right into it. You two have a bunch of super interesting bills. Let's start with junk fees. Christie Marra, explain these bills on junk fees. What exactly is the issue here? What are you trying to get at with these bills to crack down on junk fees?
Christie Marra
Over the past year, maybe two, we have been hearing from more and more tenants who are being charged large fees, sometimes $50, $75, or $100, for things that, by law, should be paid for through their periodic rent. Probably the biggest one that we hear about is that landlords are now charging tenants every time that tenant calls maintenance or puts in a request for maintenance on their portal. So your hot water isn't working, you ask for a maintenance person to come out, look at it, and fix it. That is not only what you're entitled to do as a tenant but what the law requires you to do as a tenant. And we have a lot of landlords out there who are charging that tenant, it could be $20, it could be $100, simply to have the maintenance person come out, check the hot water heater and say yes, that is broken, we have to fix it. The law says a tenant is not responsible for paying for maintenance unless the tenant caused the need for maintenance by breaking something. So these extra fees are unlawful, and yet they're being charged every day.
Michael Pope
That's landlords charging fees. Jay Speer, I understand there's another bill aimed at businesses that might tack on a fee. Let's say that you wanted to pay your bill online as opposed to sending a check; there's a fee. And so a lot of these businesses are kind of predatory with all these junk fees they throw onto everything.
Jay Speer
This really came to light when the President spoke about this in the 2023 State of the Union address. And I think it really resonated with people because all of us have seen this. Across all industries and products, consumers are paying billions of unnecessary and avoidable fees. There is a bill in the House and a bill in the Senate. All they require is that these fees be disclosed upfront so people know what they're being charged, and they can compare and shop for the best price.
Christie Marra
Similarly, a bill is being introduced in the Senate that would require landlords to list all of these fees on the front page of the lease. What they do now is hide them throughout a 20-page lease. So, as Jay was saying, we just want to make sure that consumers and tenants understand what they're being charged and what it's for.
Michael Pope
What kind of reaction are you getting from those pieces of legislation? What kind of opposition are you hearing?
Jay Speer
On the disclosure bills that don't involve landlords, there are a lot of industries that have talked to Senator Pekarsky, who brought the bill. They're talking about the fact that they are already regulated in some other way and that sort of thing. But there's a federal or another state law that says what they have to disclose that this wouldn't apply to them. So, I think changes are being made to make sure that there are no unintended consequences, but I do think a lot of folks are concerned about it. And I hope we'll get an agreement on it in the end.
Michael Pope
You say a lot of folks are concerned about this. Are we hearing from the Chamber of Commerce and the National Federation of Independent Businesses? That kind of business groups that traditionally oppose stuff like this.
Jay Speer
I'm not sure that they're necessarily opposing it, but they want some changes to make sure that they can comply with a bill,
Michael Pope
What kind of changes?
Jay Speer
I think to make sure that we understand what a fee is, what disclosure is, and also the interaction between this and other laws already on the books.
Christie Marra
I will say on the maintenance fee bill that I mentioned, we are not getting. We're not getting a lot of pushback on that from the industry, folks; I think that the professional landlord groups understand that it's the landlord's responsibility to make repairs. They appreciate what we're trying to do. There's always a divide between the professional landlord groups and slumlords. And to a large extent, we think it's the slumlords. And I will add the out-of-state corporate slumlords that are driving some of these fee issues in the housing arena.
Michael Pope
And ultimately, this would go to Republican Governor Glenn Youngkin. Is there any anticipation that he might actually put his signature on any of this stuff?
Jay Speer
Well, I don't see why not.
Christie Marra
Just common sense and a good policy for the citizens of Virginia.
Michael Pope
But he's probably hearing from all the opponents that we just talked about that, alright?
Christie Marra
Well, again, we're working really closely with the landlord, lobbyists, and the landlord groups. And we're really close to coming to an agreement on the language of these bills.
Michael Pope
So that's junk fees. There are a number of those bills. Let's move on to zombie mortgages. This one is really interesting. I always think about Michael Jackson's Thriller, where you have zombies. So Jay Speer, are you going to be doing the Michael Jackson dance moves from Thriller in the committee room?
Jay Speer
I'm sure you'd rather not do that. But there was a Wall Street Journal article on this called Zombie Mortgages Could Force Some Homeowners Into Foreclosure. And what happened is there were a lot of these 80/20 mortgages being used to allow homebuyers. To finance 80% of the purchase price and then on another loan, the 20% for the down payment. When the mortgage crisis of 2007 and 2008 hit, many homeowners were forced to modify their first mortgage while the second mortgage was charged off. Once charged off, homeowners no longer receive statements or hear about the mortgages. Often, the second mortgage is sold for pennies on the dollar to debt buyers. Now that their homes are rising in value, the second mortgage rises from the dead, and homeowners are getting notice that their homes are in foreclosure. Typically, the zombie debt buyer is now asking for many thousands of dollars in fees and interest for the many years that the mortgage had appeared to be dead. So this is the bill that was introduced by Delegate Simon, and I actually have an example. A Virginia couple recently discovered a zombie mortgage on their home. The balance on the second mortgage at the time was charged off over 10 years ago. And when they stopped sending statements to the homebuyers, homeowners at that point were $36,000. Now, 12 years later, they want $73,000. So what this bill does is it amends the law concerning foreclosures; a second mortgage holder must detail what is owed and must prove that they have sent monthly statements to the property owner to recover fees and interests covered by the period that the mortgage appeared to be dead, or they're not going to be able to recover those fees and interest.
Michael Pope
I'm always curious about support and opposition. I can imagine lots of people supporting this. But I can't imagine what the group would be that would be in opposition to something like this, like, you know, shady people who buy mortgages, they don't really have associations.
Jay Speer
So at this point, I think there was one group that just wanted to tweak a few changes technically, but as far as I can tell, it looks like it's going to be unanimous in favor.
Michael Pope
Moving onto another interesting financial story, probate loans. Jay Speer, what's going on with the situation with probate loans.
Jay Speer
Probate lenders check local court records and contact relatives of the deceased, someone. So what happens if somebody qualifies in circuit court as the administrator and executor of an estate, and when you do that, it's a matter of public record. And you have to say what the estate is worth and who the beneficiaries are. So, these folks are checking these court records. Then, they send loans that loan offer to unlock your inheritance or empower your future. And the one I saw was actually a check for $20,000. By the way, it was sent to a minor. And on the back of the check, it says this is not a loan. But of course, it is a loan. And that's the rub now, in 2018, the Attorney General of Virginia sued a similar company called Future Income Payments. They were offering cash assistance to pensioners to meet their immediate needs. So then they were asking them to turn over their future pension payments in exchange for a loan. And they're making a lot of money off these. There was an article that came out from Consumer Reports titled How an Obscure Industry Makes Money Off the Dead: Companies Earn Millions Offering Cash Advances to Heirs with Effective Interest Rates as High as 490%.
Michael Pope
490% interest. This is APR. That's right.
Jay Speer
Delegate Coyner brought a bill to try to deal with this, and the bill is fairly simple. It basically says you can say it's not a loan on your check. But it is a loan. It's just like the company that the Attorney General went after. If you give somebody a cash advance, and they have to repay it, that is a loan. One problem we have in Virginia is we don't define a loan. Well, we do, actually. Believe it or not, the definition of a loan is a loan or forbearance of money. So we sort of have that bit of a problem. So what this bill does is just say that these types of cash advances, or for you turning over a share of your inheritance, are, in fact, loans and should be covered by our usury laws. And our usury laws are fairly comprehensive. We have a 12% cap on interest. And then there are lots of exceptions. And we just revamped all this four years ago in what was called the Fairness and Lending Act. And there are several ways that these companies could make these loans. But they've got to get a license and fall under one of these exceptions and be regulated.
Michael Pope
When I used to cover my local courthouse in Alexandria, I would hang out in the clerk's office trying to get files, and these people that you're talking about hang out at the clerk's office. They go through all these probate documents. I would imagine this is probably an industry that would be weary of the General Assembly tampering with its business model. I can imagine there would be some opposition to that.
Jay Speer
Not so far. But I think I've heard through the grapevine that they are potentially hiring some folks to fight this. But so far, I have passed out a subcommittee unanimously.
Michael Pope
Unanimously, okay, all right. But was there opposition in the subcommittee?
Jay Speer
No.
Michael Pope
No opposition?
Jay Speer
That's right.
Michael Pope
All right. Well, congratulations on that. What do you think the prospect of that getting to the governor is?
Jay Speer
I think it's pretty good. I mean, so far, it's gone well. One of the folks on the subcommittee made a point, saying that he enjoyed being in the General Assembly so he could deal with scams like this.
Michael Pope
I mean, the way you laid it out, I mean, this just sounds like a horrible scam, that you're that is taking advantage of people and that their worst moment.
Jay Speer
That's exactly right. And that's I think that's why the Delegate is so upset about it.
Michael Pope
Let's move on to a perennial topic. The towing wars and predatory towing have been an issue for years and years and years, especially in Northern Virginia and Arlington. Here we are in the conference room of Delegate Alfonso Lopez, who represents Arlington. And this is an issue that is talked about every year. Trying to figure out ways to crack down on these predatory towing companies. And you were telling me earlier that there are seven bills on this.
Jay Speer
Right, there are seven bills. Most of them have to do with what fees these folks can charge. One senator's bill dropped their fees from $150 to $50. Then, other bills raised the fees they could charge. What Delegate Lopez's bill does is something different. We have several things in our law that two companies are prohibited from doing. The problem is there's no way to enforce that law. So, Delegate Lopez's bill says that these prohibitions can be enforced under the Virginia Consumer Protection Act. And there are about 50 other statutes that are enforced that way. So it makes a whole lot of sense to have this enforcement mechanism. And yes, you are right. People are very upset with one particular towing company, especially in Northern Virginia.
Michael Pope
Which towing company?
Jay Speer
I think it's called Advanced Towing, if I'm not mistaken. And I have heard that other towing companies are likely to support Delegate Lopez's bill because they don't like these practices going on in their industry.
Christie Marra
One of the things that we're hearing about in regards to Towing is that the tenants that we work with, who are living in mobile home communities, who own their mobile homes and who park on the lot that they have, that they're renting from the park owner, they are experiencing a lot more incidents of their cars being towed off the lots. And when they try to find out who is towing them. The park owner blames the county, and the county blames the park owner. And it's really unclear what's happening, except that they're not getting notice of this. And I think that there may be a bill that deals, at least, with providing adequate notice to residents. I don't know if it necessarily covers mobile home communities. Still, we certainly hope it will be amended along the line to do so because it's a big problem.
Jay Speer
In all the years I've been in legal aid, which is over 30, I've heard of this exact same problem. This happens all the time, particularly in low-income housing.
Michael Pope
Alright, so we talked about zombie mortgages, probate loans, the towing wars, and junk fees. What else are you guys working on at the Virginia Poverty Law Center in terms of making sure that people don't get caught up in scams? And I mean, these things that we talked about just sounds like horrible behavior that you would imagine the General Assembly would be like. Yeah, let's stop these horrible scams from taking advantage of vulnerable people when they're in the worst moments of their lives or struggling to make ends meet. That's the theme that we wrapped all these around, greed. What else are you guys doing to crack down on excessive predatory greed?
Jay Speer
Well, there is another bill that we will support, but we're not the ones behind it. AARP, and I believe the Realtors are behind it. It's called The Real Estate Fairness Act.
Christie Marra
The Real Estate Settlement Fairness Act.
Jay Speer
Real Estate Settlement Fairness Act.
Michael Pope
I thought they weren't supposed to name their bills. On a previous episode of Pod Virginia, Marcus Simons said that there was an unwritten rule that they weren't supposed to name their bills. Still, I think they've abandoned that this year.
Christie Marra
It's a new day, Michael. It's a new General assembly and a new day.
Michael Pope
Everything seems to have a name these days. So what is this? You're not directly involved but in AARP.
Jay Speer
AARP just filled me in on this today; there was this company that had people going around door to door to elderly homeowners, having them sign basically listing agreements and giving them a little bit of cash for the listing agreement. Now, your average listing agreement for a realtor to sell your home is six months to a year, maybe. But these are like 40-year agreements, and then they record the agreement in your title. And then, when these folks try to sell their home years later, they have to pay this off. And pay these people thousands of dollars. Now I understand the company went bankrupt. But the aim of the bill is to try to get these things off the title records. And there are apparently several 100 of them in Virginia title records.
Christie Marra
Then the one other thing that I think might fall into this category that we are strongly supporting is the anti-rent gouging bills. So these bills are in on both sides. And they are trying to combat these excessive year-over-year rent increases that have been happening all across the state. And we know that in some places in Northern Virginia, people have seen their rent increase by 30% or 40% in one year. I spoke to one older woman; I think she was in her 80s on a fixed income and had lived in the same apartment for, I think, 13 years but had to move out because her rent went up by 30% in one year. And so that is the type of, I think, predatory rent increase that these bills are trying to get at.
Michael Pope
Before I let you go, I've got to ask you about predatory loans. There are always ways for these companies to try to get around the rules and maybe offer a payday loan online. Jay Speer, what's the latest on that?
Jay Speer
There's always some of that going on. We used to see people claiming that they were making loans from Native American tribes because they weren't subject to Virginia law. It took a lot of lawsuits to stop that. And we took a lot of money back from those folks to prove that the tribes weren't actually making the loans. Now we see some of these out-of-state banks, typically from Utah, say they're making loans, but in fact, they really are not. And that's sort of the you see those dodges. And there was this thing called predatory puppy loans, where people were buying pets and then signing up for a loan through a bank in Utah for 140% interest or something for the monthly supplies. And that was there was a story, I think, in the Washington Post about that recently. But it does go on. It's important, though, to note that in 2020, we passed the Fairness and Lending Act to deal with this so that we closed all the loopholes. These folks are all operating illegally.
Michael Pope
They're all looking for new loopholes, though. This is the thing with this industry: they're always on the lookout for some kind of loophole. And so that's why I was asking you about what the latest is. Aren't these these companies that offer these online payday loans? Aren't they looking for the General Assembly to pass legislation legalizing their shady business?
Jay Speer
What you're asking about are the earned wage access people.
Michael Pope
Earned wage access. Which is basically an online payday loan, but they don't want to call it a payday loan because they don't think it's a loan.
Jay Speer
Yeah, so what we call it is a workplace payday loan. And it's basically you pay a fee to get paid early. We're not trying to stop the practice. But what we really objected to was last year, they introduced a bill to say that they're not a loan and a whole new statutory scheme for them to accommodate their business. So far this year, they have not introduced the same bill, and I hope they don't because that's the whole problem; we've got a comprehensive usury law. We don't need to keep making exceptions just to accommodate somebody's business. Out in California, they did a study of something like six million of these loans, and they found that the average person did this 36 times a year. So it's not a one-time thing. You, it's not a huge fee. You can get these other places to bet some banks let you get paid early. I saw an ad the other day for something called Chime. It's a free way to get your pay early. There are other places people could go.
Michael Pope
Last year, I remember there was some discussion about this in terms of a law that would essentially legalize and codify this industry. But it sounds like there might not be something like that this year.
Jay Speer
Well, it was it was defeated last year. And so far, there has not been a bill this year.
Michael Pope
And the deadline has passed. So 2024 is free sailing for this particular issue.
Jay Speer
Well, the deadline has passed. We hope all the bills have shown up in the online system.
Michael Pope
All right, is there anything else that our listeners should be on the lookout for in terms of legislation that is being considered in the House or the Senate?
Jay Speer
We have we have a lot of bills. And Christie has been working on trying to help folks who are facing eviction.
Christie Marra
Yeah, we have a lot of bills related to trying to stop people from getting evicted. We have bills dealing with the rent. There are a lot of housing bills out there. We have bills trying to get people better access to justice to enforce their right to safe, habitable homes.
Jay Speer
One more thing we've worked on for several years now is utility cut-offs and reconnections. There need to be standards around when your water, your gas, and your heat are shut off. We need to have standards put into the law. It's not fair to have utilities, make their own rules, and then not even tell people what the rules are.
Christie Marra
And we're also asking the General Assembly to make some investments into homeownership programs as well as rental subsidies to help folks who are on the lower end of the income spectrum have safe, affordable, stable places to live.
Michael Pope
All right, you have been listening to the dynamic duo from the Virginia Poverty Law Center, Jay Spear and Christie Mara. Thanks for joining us.
