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Decoding the General Data Protection Regulation (GDPR)

Key Aspects of the General Data Protection RegulationFinal

What is it?

On May 25th, 2018, a new law concerning privacy and data protection will come into effect in the European Union. The Guardian calls it the “biggest personal data shake-up since 1995.” The GDPR updates the 1995 European Union Data Protection Directive to apply to the advances in technology that many consumers rely on today. Overall, the legislation requires companies to adopt greater transparency when handling individual data. It also transfers much of the decision-making power from the companies to the consumers.

The Scope of the Law: Who is affected?

Although the GDPR is an act of European law, its consequences are global. Companies established in the EU must follow the GDPR, even if the actual data processing takes place elsewhere. Any firm storing or processing personal data of EU residents must comply with the GDPR. Multinational companies that handle data from European residents, therefore, must follow the GDPR wherever they are located. If your company offers goods or services to EU-based individuals, or if it monitors EU residents’ behavior, it falls under the scope of the GDPR. The new law simplifies the process to ensure that European data is protected to meet their standards, regardless of where or how far the data travels.

Data Protection Officers

If a company is under the scope of the GDPR, it may need to appoint a Data Protection Officer (DPO). The role of the DPO is to ensure that companies are operating in compliance with the GDPR. DPOs are experts on the legislation itself as well as the technological processes that must comply. Companies that handle 5,000 individual data sources or more within one year are obligated to hire a DPO. Firms affected by the law with 250 or more employees must appoint one as well.

Controlling vs. Processing

There are two types of firms that are impacted by GDPR: data controllers and data processors. Data controllers “determine the purposes and means of the processing of personal data” whereas data processors simply process the data on behalf of another entity. Examples of data processing include payroll administration, sending promotional emails, storing personal information in a database, and putting photos of individuals online. Data controllers are the firms who make the decisions to collect and process data. Under GDPR, data processors will be regulated in how they store the data, while data controllers will be regulated in how they are allowed to ask for the data.


Penalties for noncompliance will vary, depending on the severity of the breach. For the most severe noncompliance, fines can escalate to $24 million or 4% of annual turnover, whichever is higher. Fines will be allocated on a tiered system according to the severity of the infraction.


Clear and Easy to Understand Terms

Most consumers are uncertain of the level of personal information that companies may be collecting. Before submitting personal information, consumers often have to agree to a company’s “terms and conditions” regarding the consumer’s use of their service, and in return, the company’s use of their data. These terms are notoriously long and difficult for the average individual to understand. It has become a habit for individuals to simply scroll through the bulky text and select “accept.” GDPR changes this. Under this law, companies must request a consumer’s consent to process their data using “unambiguous” terms. This greater transparency levels out the playing field. It allows consumers to better control where their data is going and what it is being used for.

Additional Consumer Rights

The law gives consumers more certain “opt in” rights. Consumers must be given the clear ability to opt in to data collection, and it must be just as simple to opt out. Under the GDPR, consumers have a clear right to access their data from any firm who may be storing it. Consumers are also given the right to be forgotten; pending certain conditions, individuals may request that their data be erased. Data must also be portable. Consumers may request to have their data moved from one data controller to another.

Be Prepared

If you have any questions regarding the GDPR or think it may impact your business, contact us today at Gonzalo Law for a free consultation.

1. What are all these GDPR emails filling up your inbox? By Gavin Haynes. 5/16/2018. https://www.theguardian.com/technology/shortcuts/2018/may/16/what-are-all-these-gdpr-emails-filling-up-your-inbox. Accessed 5/16/2018.
2. GDPR FAQs. https://www.eugdpr.org/gdpr-faqs.html. Accessed 5/16/2018.
3. GDPR Key Changes. https://www.eugdpr.org/key-changes.html. Accessed 5/16/2018.
4. Rules on international transfers of personal data. https://ec.europa.eu/info/law/law-topic/data-protection/data-transfers-outside-eu/rules-international-transfers-personal-data_en. Accessed 5/16/2018.
5. Data Controllers and Processors. https://www.gdpreu.org/the-regulation/key-concepts/data-controllers-and-processors/. Accessed 5/21/2018.
6. GDPR Compliance: What is a data protection officer and do you need one? By Erika Morphy. 2/13/2018. https://www.cmswire.com/leadership/gdpr-compliance-what-is-data-protection-officer-and-do-you-need-one/. Accessed 5/23/2018.
7. What constitutes data processing? https://ec.europa.eu/info/law/law-topic/data-protection/reform/what-constitutes-data-processing_en. Accessed 5/21/2018.
8. Here are 8 things every business needs to do now to get GDPR ready, by Bernard Marr. 5/7/2018. https://www.forbes.com/sites/bernardmarr/2018/05/07/here-are-8-things-every-business-needs-to-do-now-to-get-gdpr-ready/#72482ca87cf6. Accessed 5/21/2018.


5 Keys to Expanding Your Non-Profit Abroad


You began your organization with a mission. You provide services or aid to a target population. Whatever your charitable purpose, you are driven by a desire to see change. After establishing your organization, ensuring governmental compliance, building a network of sustainable donations, and seeing your work create change in your community, what’s next?

Your organization may be ready to grow internationally. This ambitious goal requires preparation. Here are five keys to expanding your non-profit abroad.

1. Mission: As you grow, keep your organization’s mission as your main motivator. Many things are going to change, such as your office location and the population you can reach. However, you want to ensure that your mission is not one of those things. Consider the different ways you will need to leverage your donations and how your volunteer needs will change as well. Strategic growth is key to ensuring your purpose does not get lost along the way.

2. Legal Structure: Determine the proper legal structure in your new location. When your organization crosses an international border, its tax status, tax benefits, and other legal requirements will likely change. Familiarize yourself with these requirements before making the move. A qualified legal expert will work to translate the differences for you to set your organization up for success.

3. Culture: Research cultural and language differences between your countries of operation. While some regions may appear to be culturally similar, such as the U.K. and Australia, each location will carry its own cultural nuances that can impact work-related interactions. As you and your volunteers begin working with individuals in your new location, get to know the social norms. Approaching every interaction with respect and understanding will create a more enjoyable work experience. It may even result in new opportunities for your organization.

4. Network: Connect with other organizations. Find other groups who are working towards the same or a similar goal as you. Ask for advice, connections, and resources to help your international launch succeed. This may make your work easier by working in conjunction with those who have already worked through several of the same requirements.

5. Donors: Review your donors. You will likely need increased funding to sustain the organization’s international activity. Revisit your reliable donors and funding sources. Determine where there is room to expand or consider new options for funding. Consider creating an extra incentive, such as a special title, for donors who contribute specifically to global expansion.

1. How to Guide Your Nonprofit Toward Mission-Friendly Growth, by Kevin Xu. 12/06/2017. https://www.forbes.com/sites/forbesnonprofitcouncil/2017/12/06/how-to-guide-your-nonprofit-toward-mission-friendly-growth/#308a47df725b (Accessed 4/16/2018).
2. A Nonprofit’s Guide to International Expansion. https://www.galvininternational.com/resources-news/a-nonprofits-guide-to-international-expansion/ (Accessed 4/16/2018).
3. How Nonprofits Get Really Big, by William Foster & Gail Fine. 2007. https://ssir.org/articles/entry/how_nonprofits_get_really_big (Accessed 4/16/2018).


Top 10 Ways the New Tax Law Affects Your Business


On December 20, 2017, the U.S. Congress passed one of the most significant overhauls of the U.S. tax code in more than forty years. The tax reform act (formerly known as the Tax Cuts and Jobs Act or the “Act”) has far reaching effects on businesses in the U.S. as well as those abroad. We will highlight ten key areas of the new law and its effect on your U.S. based business.

1. A New Lower Corporate Tax Rate.
Under the new law, C corporations (and businesses taxed as C corporations) are taxed at a rate of 21%. This is reduced from the previous rate of 35%.

2. Territorial Taxation.
Under the previous worldwide taxation regime, US companies were taxed on income, regardless of where in the world it was generated. The new method of territorial taxation means earnings abroad are exempted from taxation in the US and taxed only by geographic region.

3. A New 20% Pass-Through Deduction. Establishes a 20% deduction of qualified business income from certain pass-through businesses. Specific service industries, such as health, law, and professional services, are excluded. However, joint filers with income below $315,000 and other filers with income below $157,500 can claim the deduction fully on income from service industries.

4. Expenses Treated as an Operating Cost and Deducted from Income. Allows full and immediate deduction from taxpayer income (expensing) of short-lived capital investments for five years. Increases the section 179 expensing cap from $500,000 to $1 million.

5. Enacts a Mandatory One Time Tax on Accumulated Foreign Profits (AKA Deemed Repatriation). Enacts deemed repatriation of currently deferred foreign profits, at a rate of 15.5 percent for cash and cash-equivalent profits and 8 percent for reinvested foreign earnings.

6. No Corporate Alternative Minimum Tax. The new law eliminates the corporate alternative minimum tax.

7.Net Operating Loss Carry Backs are Eliminated and Carry Forwards are Limited. The Act eliminates net operating loss carry backs and limits carry forwards to 80 percent of taxable income.

8.No Domestic Production Activities Deduction. Eliminates the domestic production activities deduction (section 199) and modifies other provisions, such as the orphan drug credit and the rehabilitation credit.

9.Increased U.S. Gross Domestic Product, More Jobs, and Decreased Federal Revenue. Our analysis finds that the Tax Cuts and Jobs Act would reduce marginal tax rates on labor and investment. As a result, we estimate that the plan would increase long-run GDP by 1.7 percent. The larger economy would translate into 1.5 percent higher wages and result in an additional 339,000 full-time equivalent jobs. Due to the larger economy and the broader tax base, the plan would generate $600 billion in additional permanent revenue over the next decade on a dynamic basis. Overall, the plan would decrease federal revenues by $1.47 trillion on a static basis and by $448 billion on a dynamic basis. The remaining difference is explained by temporary dynamic revenue growth from the bill’s numerous expiring provisions.

10.Estate Tax. For companies that have a trust or estate plan as part of their succession planning, it is important to note that the new tax law doubles the estate tax exemption from $5.6 million to $11.2 million. This exemption expires on December 31, 2025 yet will increase with inflation.

** Please note that the above is provided as an overview of the new tax changes and how they will change the corporate tax landscape yet does not constitute tax or legal advice. All information should be further discussed with your tax professional or corporate legal counsel.


Gonzalo Law Bright Futures Award

Gonzalo Law’s core values are driven by their passion to make a difference in the community. In conjunction with NUMA Speed & Performance in Gainesville, FL., they recently awarded the Gonzalo Law Bright Future’s Scholarship to a local high school student.

The Gonzalo Law Bright Future Award is in partnership with NUMA Speed & Performance Owner, Tim Montgomery, a former two-time U.S. Olympian in track and field. NUMA Speed stood out as a partner because of their unique training and focus in comparison with other gyms. Their training is driven by young high school, college, and professional athletes with goals to perform better in their sports, to obtain college scholarships, and more. Tim focuses on speed training and rigorous athletic conditioning for all of his athletes.

Award applicants were required to write an essay in regards to their talent in a particular area, how a lack of resources has prevented them from reaching their full potential, and why this scholarship would be helpful.

Gonzalo Law representatives reviewed the applications in light of how the potential student demonstrated the core values of Gonzalo Law. NUMA Speed reviewed all of their very talented athletes to consider who could benefit the most, and who has shown the most promise throughout the years.

After reviewing numerous applicants, Gonzalo Law was pleased to award their Bright Futures Award Scholarship to Ms. Kerissa Grieves, a sophomore in high school from a rural area outside of Gainesville, FL. Kerissa has broken all of her school’s records in track and field since elementary school. She is an extremely gifted athlete, and with no formal training, placed 3rd in the state of Florida.

She was identified by Tim as a rising star and encouraged to apply for this scholarship. Due the distance from her home to Gainesville, and working with limited resources, Kerissa has not been able to train with Tim more than 5 times in 2 years. This scholarship will enable her to train 5 days a week every week. This will put Kerissa on track to accomplish her goals of a college scholarship, and possibly even an opportunity at the Olympic games.

We are honored to support the passion of others and to encourage excellence in the community.


Top Places to Locate a Vendor

Top Places to Locate a Vendor or Business Client.

Top Places to Locate a Vendor or Business Client.

If you have recently started a business or are in the process of growing it, it is likely that you are looking for additional businesses and organizations in which to work with and from which to purchase goods. With over 300,000 wholesale distributors in the United States, the question arises, “Where are the best places to look for additional business?”

1. Government Contracts.
The U.S. government is one of the largest employers in the United States. As such, there are many government contracts that are available for small and medium-sized businesses. Business owners can identify several places to look for available opportunities with the U.S. government.

o System for Award Management (SAM). Businesses are able to search for their business resume to the government at this site which then allows other businesses to search their business based on size, location, capabilities, experience, and ownership after submitting their business resume to the government at this website.

o Dynamic Small Business Search (DSBS). This is the database that allows small businesses to register for SAM. It provides the opportunity to fill out a company profile that other businesses can view. This is yet another way for small businesses to be awarded government contracts and possibly join other small businesses to create a joint venture.

o Federal Business Opportunities (FedBizOpps). This is a collection of all federal business opportunities. All federal agencies are required to use this site to notify potential contractors and vendors of openings.

o General Services Agency (GSA). This is a site used by state and local government agencies to locate goods and services. Becoming a contractor on this list offers many benefits to a small business.

o Office of Small and Disadvantaged Business Utilization (OSDBU) or Office for Small Business Programs (OSBP). These are two agencies whose goals are to locate and include small businesses as vendors in their databases. Being a part of these databases can prove to be very beneficial to small business owners. This is because it will allow small businesses owners to become active in either or both agencies.

2. Networking (Traditional and Online). This is a great way to not only find vendors but to also increase your business. Join your local Chamber of Commerce and other local Social Networks for business owners. By networking you can meet vendors in your area and also other business owners who may be able to direct you to quality vendors and possibly find which suppliers to avoid. Seminars are also a networking option that allow you to interact with others who have similar interests.

3. Trade Shows. By attending Trade Shows you will have the opportunity to speak directly to vendors and see the type of products that they have to offer. This will give you the opportunity to see the quality of the products and get a feel for their company.

4. Internet. The internet is a great place to begin your search because it permits you to search by product and by location. You can read reviews that other clients have posted, review the history of the company, and do intensive research about the company. You can find out how long they have been in business and if they have any negative reviews. Once you find a vendor in which you may be interested, you can check the company out with the Better Business Bureau (BBB). The BBB has a website that allows you to search online. The internet offers a wealth of information that can assist you in locating vendors.

Now that you know where to look for vendors, you need to know what makes a vendor a “good vendor.” There are several things that you should look for when choosing vendors or suppliers.

• Price- While the price of the merchandise being offered is important it may not be the most important indicator of a good vendor. Beware that the lowest price may not always be the best price, especially if they do not meet the other qualifications of an outstanding vendor.

• Reliability- This is one of the most important features of a good vendor. The vendor you choose must be able to deliver the correct number of items or merchandise that you need, on time and in good condition. It will cost you not only time and money but the possibility of losing customers if the merchandise they request is not available to them when it was promised or if it arrives damaged.

• Established- Although you may want to give another new business a chance, if the stakes are high, it may be wise to choose a company that is well-established and stable. However, if you have an opportunity that you can offer a new supplier that will not negatively affect your business in the event of any set-backs along the way, then working with a new supplier can be effective. This is especially true while they work to build their reputation and earn your trust.

When trying to select a vendor or supplier for your business, always be sure to investigate them thoroughly. After choosing the best vendor for your business, it is then time to locate an experienced business attorney. Our firm offers several professionals in this area who are able to help you prepare a contract between your company and your new supplier.


3 Reasons Having An Attorney Is Always Better than Using Online Contracts

There is a serious confidence that comes from having sound legal counsel for your business legal matters. This piece of mind cannot be replaced.

Bizman Reading

Three main reasons legal counsel will always outperform online templates are as follows:

1. Your Lawyer Should Care About Your Success.
For many companies, their business is a reflection of what they have spent the better part of their life building. They have invested a great amount of care and time into developing and growing what many refer to as “their baby.” Hiring legal counsel is better than downloading an online form because, you can select an attorney who truly cares about the success of your business. Your lawyer will prepare contracts tailored to the specific needs of your business and find the most effective ways to protect your company.
Sadly, many well-meaning businesses rely on online contract templates or services offering “legal like” assistance to create their legal documents. Although these services are an excellent option if you are conducting a small transaction such as selling furniture or low cost personal property. They are not your best choice when protecting your life’s work in business. For that you will want to rely on your own detail-oriented legal counsel.

2. Your Lawyer Can Help Prevent or Limit Future Expenses. The old adage that price is king still rings true for most businesses. However, making the investment in quality legal services from the start of your transaction, will help prevent the expense of correcting mistakes down the road. In addition, there are risks in relying on the lowest cost provider that are not always apparent. Oftentimes, online templates are broad and do not contemplate your specific situation. Also, they may not reflect the laws of the specific state where you will be using it.

As a result, if there is a dispute with the contract, your company may find itself litigating to settle unclarified issues.

That moment you realize you should have hired a lawyer first.

That moment you realize you should have hired a lawyer first.

Then a company will have to consider the average cost to bring or defend a lawsuit. If it is small that price can be from $5k-$10k on the low end and upwards of $15-$50k on the higher end. In comparison, the cost of preparing detailed and customized contracts can be several hundred dollars on the low-end to a couple of thousand on the high end. This is much more affordable. One may consider contract templates a good alternative for the convenience and price. Ultimately, hiring traditional legal counsel turns out to be the most affordable choice for the most protection.

3. Your Lawyer Can Provide Additional Counsel with Your Agreement. The advice your lawyer provides to help you execute your agreement can be invaluable. Even if the idea of handling your own legal matters may sound good, especially if it involves easy-to-use legal forms that require only filling out blank boxes, think carefully about it. Often generic templates do not take into account the additional legal counsel or specific business requirements that you should consider. For example, you may download a partnership agreement for your new accounting firm thinking that will be all you need. However, your business will not only need to consider drafting the partnership agreement, it will also need to consider the following:

PERMITS. The contract should confirm that the accounting professionals have the state required permits and licensing for CPAs.

EMPLOYEES. The agreement will need to set forth if any employees will need to be contemplated in the business operations. If so, the agreement should identify the person who will set-up the registration with the Unemployment Offices, Bureau of Workman’s Compensation, and Department of Taxation.

REGULATORY COMPLIANCE. The agreement should outline if the Accounting business will be sending any direct mailers. If so, it must ensure that those mailers comply with the Federal Trade Commission’s regulations as well as those with the Consumer Sales Practices Act at the state and local levels.

TAX. If forming a partnership of any kind, the business owners will want to determine if there is sale tax collected or remitted in the business that would necessitate obtaining a vendor’s license and registering with the Attorney General.

These are just some of the considerations that downloading an online template alone cannot provide. Consequently, if companies want to add more detailed language to the contract, or negotiate a particular clause, template forms do not allow it. Contact a knowledgeable and effective lawyer to assist you today.

1. The disadvantages of using standard contracts, by Kevin Johnston, Demand Media.
http://smallbusiness.chron.com/disadvantages-using-standard-contracts-31472.html (Last visited 4/5/2016).

2. Understanding the pros and cons of standard form construction contracts, by Steven C. Beckman. 07/31/2010. http://www.macdonaldillig.com/understanding-the-pros-and-cons-of-standard-form-construction-co.html

3. Good contract terms and conditions are vitally important and need to reflect both good risk allocation and post execution contract, by X. Paul Humbert and Robert C. Mastice. http://www.europeanfinancialreview.com/?p=4102 (Last visited 4/5/2016).


4 Types of Employment Contracts

Bringing aboard new employees? When considering which employment contracts would work best for your business, consider what an employment contract is and how your business can benefit from it? An employment contract is an agreement between employer and employee setting forth the terms of employment. An employment contract may be written, oral, or implied. There are four types of contracts that fit into these three categories. Businesses can offer At-Will Employment Contracts, Written Employment Contracts, Oral Employment Contracts, or Implied Employment Contracts.

4 Employment Contracts

1.At-Will Employment Contracts: This is the most common employment contract in the United States. In this type of contract the employee can quit or be fired at any time for any reason as long as it is not illegal. Illegal reasons would include discrimination such as terminating a person in a protected class or for retaliation. When a new employee is hired he receives a contract from his employer that states his salary, position, duties and hours. The employee signs the contract accepting the terms. It is also signed by the employer. Although, the employee can be terminated at-will, he still has the right to enforce the terms of the contract.

2.Written Employment Contracts: A written contract is a much more detailed contract. It sets out specific obligations for both the employer and the employee. A written contract generally runs for a specific length of time. It normally requires the employee to agree to work for a fixed period of time and for the employer to retain them for the decided on period of time. Specific terms of termination are laid out in a written contract. An Employee cannot be terminated unless they violate the terms of the contract.

3.Oral Employment Contracts: Oral contracts are legal and binding; however, they are much more difficult to prove. An oral contract may be for at-will employment which means that the employer can terminate your employment at any time, or it may be orally agreed that the employee will work for a specific amount of time as long as they are doing what the oral agreement required of them. If the employee is terminated for any reason other than the terms set forth in the oral agreement it would be considered a breach of contract. The basis for enforcing this type of contract would be the reliance of the parties, the surrounding circumstances, and any documentation that shows evidence of the oral agreement.

4.Implied Oral Contracts: These contracts are not formally documented. They can be a combination of both written and oral statements. Most implied oral contract issues do not arise until after the employee has been terminated. An employee may believe that it has been implied that he will not be terminated without good cause. The employer may argue that the employee was an at-will employee. If the employee signed an at-will agreement he will not be permitted to argue that he had an implied agreement. The court will have to determine whether there was an implied oral contract or not. Many factors will be taken into consideration including the length of time that an employee worked for the company and their performance reviews.

When trying to determine the best choice of business contract for your new company it is wise to let a qualified business attorney assist you with the difficult decisions that you are facing. The professionals at Gonzalo Law LLC can answer your legal questions regarding employment contracts and any other questions you may have regarding your business.


Businesses Should Be On Guard for Phishing Scams


Email phishing has become a widespread problem throughout the cyber world. Almost everyone is vulnerable to phishing. Phishing occurs when a fraudulent email appears to originate from a legitimate business. The business is usually a well-known organization that a person regularly conducts business with such as a financial institution, internet provider, or any other similar organizations. There is usually a link in the email that directs you to another website that is a sham. These sites will ask for personal information about you to allegedly verify your identity but in reality they are deceiving you into divulging this information so that they may commit identity theft.

These scams are generally worded in such a way as to induce panic in the recipient. They often tell the addressee that there has been fraudulent activity on their account or they may lose something such as their account if they don’t immediately respond. Another indication of email phishing would be the poor grammar and misspelled words that accompany the email. Cybercriminals are not known for having strong spelling or grammar. Legitimate companies and organizations never conduct business in this fashion. If there is a genuine issue with your account, a recognized company or organization will contact the client via telephone or a letter through the mail.
Microsoft offers the following advice on how to protect yourself from phishing scams by using the Microsoft tools that are available:

 Internet Explorer. While you are on a suspicious site, click the gear icon and then point to Safety. Then click Report Unsafe Website and use the web page that is displayed to report the website.
 Outlook.com (formerly Hotmail). If you receive a suspicious email message that asks for personal information, click the check box next to the message in your Outlook inbox. Click the arrow next to Junk and then point to Phishing scam.
 Microsoft Office Outlook 2010 and 2013. Right-click the suspicious message, point to Junk, and then click Report Junk.
Governments from around the world are taking a tough stance on phishing. Recently an Eastern European man from Moldova was arrested and charged with running an international phishing scheme which permitted him along with several others to steal $25 million from banks and various companies worldwide. He is currently being held in jail as a flight risk until he is called to trial in Federal Court.
As cybercriminals become more adept at deceiving the public, it is more important than ever that companies and individuals are constantly on the lookout for any type of suspicions activity that may occur. If you feel that you may have been a victim of email phishing, which may then lead to identity theft, you may want to consider contacting an attorney who specializes in business. They will be able to advise you of your rights. Most importantly always remember never open any suspicious emails or click on any links that were sent to you unsolicited.
1. Safety and Security. Microsoft, n.d. Web. 16 Mar. 2016. <https://www.microsoft.com/en-us/security/online-privacy/phishing-symptoms.aspx>.
2. “What Are Phishing Scams and How Can I Avoid Them?” What Are Phishing Scams and How Can I Avoid Them? The 2015 Trustees of Indiana University, 2015. Web. 16 Mar. 2016. <https://kb.iu.edu/d/arsf>.
3. “FindLaw | Legal News & Information.” Global Phishing Email Suspect to Remain Jailed until Trial. Associated Press, 2 Mar. 2016. Web. 16 Mar. 2016. <http://news.findlaw.com/apnews/2ea1ce5970344e8288b0fa856d4474f1>.


Changes in the Housing Market Since 2008? Perhaps, Yet There is Still Work to Do.

Real Estate Contracts

It has been nearly a decade since the mortgage crisis exploded in the U.S. and it does not appear to be over yet! While federal lawmakers implemented laws to aid homeowners avoid foreclosure, relief often came too late for many.  However, although the housing market is making a noticeable come back, banks appear to be more reluctant to lend to buyers. After being hit with hefty penalties for the handling of mortgage modifications and foreclosures, banks are now less willing to provide mortgage loans to their clients. For this reason, private equity firms and hedge funds have bought more than 100,000 troubled mortgages from banks and federal agencies at a discounted price. Sometimes these discounts are up to 30%. Initially, this pleased the Federal Housing Officials. They believed that the new financial firms had found ways to make more creative options available to troubled borrowers. However, it recently came to the attention of the of housing advocates and lawyers for borrowers that many private equity firms and hedge funds have actually been less effective than banks in offering loan modifications to borrowers and may be more likely to push mortgages into foreclosure.

One example, Lone Star Funds is a private equity firm which was founded in 1995 by John Grayken. It is a $60 billion dollar operation. The mortgage servicing department of Loan Star, Caliber Home Loans, received numerous complaints concerning the way they serviced their loans. Borrowers, housing advocates, and lawyers have uncovered a pattern of grievances citing the hedgefunds for being quick to begin foreclosure proceedings, regardless of how they obtained the loans.

Dozens of lawmakers recently signed and sent a letter to housing regulators admonishing them to disqualify aggressive investors such as Loan Star Funds and its subsidiary Caliber Home Loans from being permitted to purchase distressed loans. The letter which was addressed to both the Housing and Urban Development Secretary, Julián Castro, along with the Federal Housing Finance Agency Director, Melvin L Watt, states: “Entities that pay lip service to legitimate loan modification requirements while engaging in unfair or abusive practices toward borrowers should not be able to use government programs to profit from the continuing legacy of the financial and foreclosure crisis.”

Lawmakers are asking the federal agencies to consider selling the loans to agencies that are committed to foreclosure prevention. They would also like the agencies to provide greater detail regarding the loan sales, including the criteria that is currently being used to determine which loans go into the group of loans that are put up for auction. They have similarly requested data on how vacant properties are treated as compared to properties that are occupied.

Although the mortgage crisis has not come to a complete end, lawmakers are striving to protect the rights of homebuyers. If you are a financial institution that wants to ensure that you are following the proper legal requirements, you may want to enlist the aid of a qualified business attorney who will be able to discuss what legal steps you will want to take.


  1. Moyer, Liz. “Lawmakers Urge Greater Care With Sales of Distressed Mortgages.” The New York Times. The New York Times, 01 Mar. 2016. Web. 03 Mar. 2016. <http://www.nytimes.com/2016/03/02/business/dealbook/lawmakers-urge-greater-care-with-sales-of-distressed-mortgages.html?ref=topics>.
  2. Goldstein, Matthew, and Rachel Abrams. “New York Attorney General Examining Private Equity Firm’s Mortgage Business.” The New York Times. The New York Times, 06 Oct. 2015. Web. 03 Mar. 2016. <http://www.nytimes.com/2015/10/07/business/dealbook/new-york-attorney-general-examining-private-equity-firms-mortgage-business.html?ref=topics>.

FBI vs. Apple


As the accuracy and precision of technology improves, tech companies struggle to answer unavoidable and complex questions. Whether they want to or not, companies face the challenge to find a balance between the privacy rights of individual users and the national security interest of the entire public. This is most clearly demonstrated in the current stand-off between the federal bureau of investigation (FBI) and leading tech company, Apple, due to Apple’s encryption software.

The basic facts are that the FBI compelled Apple, through a court order, to decrypt an iPhone used by Syed Rizwan Farook in terrorist attacks in San Bernardino, California. Farook was one of two shooters involved in the attacks. The FBI believes relevant information belonging to the attackers will be found in the phone. Apple appealed the order, alleging that it “would set a dangerous precedent for government intrusion on the privacy and safety of its citizens.” Apple believes that “protecting security and privacy of hundreds of millions of iPhones is the right thing to do.”

In its defense, Apple representatives asserted that shortly after the attacks, Apple offered the assistance and advice of its engineers to law enforcement. However, the FBI was ultimately unable to obtain data from the iPhone in question due to a change of the password. FBI Director, James Comey, admitted in a hearing in front of the House Judiciary Committee, that the FBI made a “mistake” in the way it handled the phone immediately following the attacks. At that time, the FBI asked San Bernardino county officials to change the password on Farook’s phone. Apple’s software on the phone was designed to prevent access to the encrypted data when a user fails to type the correct password after several attempts. By trying to reset the password, the FBI locked the operating system in the phone and lost all opportunities to access electronic information stored in it without the assistance of Apple.

With time, the situation has become more complicated for both Apple and the FBI. The arguments in favor and against multiply with every passing minute. The primary question relates to the right to privacy and national security. Should tech companies, Apple in the present case, have the right (and power) via encryption software to bar law enforcement authorities from obtaining electronic information that may be considered evidence of crime? Should law enforcement force tech companies like Apple to cooperate with investigations and comply with requests to break encryption software under the national security argument? The FBI alleges that the decryption request is for Farook’s phone only; however, it seems difficult to narrow such a request solely to this specific case. This is because surely there will be similar cases in the future compelling the same collaboration from tech companies. The concern of Apple is that giving the government access defeats the purpose of encryption and its security features and this will put the personal information of every iPhone user at risk.

In the present case, Apple argues that it is unable to decrypt the phone because security features require the creation of a new product that does not exist to gain access to electronic information stored in the device. In response to that argument, the FBI has stated that Apple only has to create a software that would weaken the encryption. This would allow the FBI to unlock the operating system to access the electronic information on the device in question. The parties involved are at a point of impasse that perhaps only the courts can resolve. The encryption system created by Apple has its advantages and disadvantages as shown by the facts of the case.

The case is currently being argued in the courts. Congress, if it decides to act, will have multiple obstacles to resolving the matter through legislation. The battle between Apple and the FBI is likely a precursor to future confrontations. Similar cases will follow as tech companies develop stronger products that prevent law enforcement access. Both sides have valid arguments that require deep analysis. However, regardless of who wins the current battle; technology will constantly change and law enforcement may have to evolve with it.


  1. FBI Error Locked San Bernardino Attacker’s iPhone, by Cecilia Kang and Eric Lightblau, http://www.nytimes.com/2016/03/02/technology/apple-and-fbi-face-off-before-house-judiciary-committee.html?_r=1 (Last visited 3/2/16).
  2. FBI Director: ‘A mistake was made’ in handling San Bernardino Shooter’s iPhone, by Seung Lee, http://www.newsweek.com/fbi-director-mistake-was-made-handling-san-bernardino-shooters-iphone-432172 (Last visited 3/2/2016).
  3. Apple questions FBI’s right to compel creation of anti-encryption software, by Erin Kelly, http://www.usatoday.com/story/news/2016/03/01/apple-fbi-face-off-house-hearing-encryption/81111440/ (Last visited 3/2/16).