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Mark Brnovich

The Mid Week Slot: Another New Name along with an Article by Michael Kosor

During our usual morning search of various websites and forums, we came across this from Mindtimeshare, it is our old friends Litigious Abogados with a new name to add to their ever increasing family.

amador-galeca-300x191

Amador Galeca is the new name to look out for, the address is one that has been used before with one of their other incarnations:

Calle de V. Sanz, N14, 16, 38002, Santa Cruz De Tenerife

With the freephone number: 0800 802 1223

Email: [email protected]

Website: http://amadorgaleca.com/

They also have some new names, which are variations of those that have been used before, and what looks like a few new faces in the photographs of the “lawyers”.

amador-malodan-galeca-243x300
Amador Malodan Galeca

Once again it is going to be the same old story, we are taking your timeshare company to court, it is scheduled for trial within the next few weeks, pay ex-amount and be part of it. Then suddenly you are told you won, as the director, (we’ll bet it is Keith Baker or Keith Balker again) has pleaded guilty.

We will be publishing a fuller post on this when we have done a little more research.

On the subject of legal action against timeshare companies, those lawyers at Canarian Legal Alliance have once again got another result from the Supreme Court. That now makes 58!!

This one from reports is against Silverpoint, with the court declaring the contract null and void with the return of over £63,000 plus legal interest and legal fees. They also had another win against Silverpoint at the Court of First Instance in Tenerife. Again the contract was declared null and void and the return of over £59,000.

So now on with the article which was supposed to have been published in last Friday’s Letter from America.

Timeshare and Asset-Backed Security Products

cash

By Michael Kosor

September 20, 2017

There has been an increase in defaults for some timeshare companies concerning timeshare loans packaged in their Asset-Backed Securities (ABS) products. The average consumer will recall the devastation its sister security, the Mortgage-Backed Securities (MBS), created that triggered financial collapse. Consumers and regulators should pay attention to the timeshare product today so similar to the products of 2007 that led to financial devastation.

I believe this is clearly and directly related to the increase in litigation by these particular developers, targeting consumer advocates and the legal community. While there definitely are attorneys practicing questionable business practices, “Kill all the lawyers” is not the answer. Every citizen has a right to legal representation if they feel they have purchased a product sold by deceit.

Developers are rightly hypersensitive to any bad press that points to increases in loan defaults as they are sure to negatively impact ABS rating/pricing. The ABS product and the associated market are by nature complicated, not part of our public market system, so limited to sophisticated players. As such, it is not a part of mainstream news. To that end, watch a very short video published by Allison Bisbey, Editorial Director, Capital Markets Newsletter.  

https://asreport.americanbanker.com/video/diamond-resorts-abs-under-pressure-from-companys-sales-tactics

Some developers are experiencing an elevated level of defaults. In the case of Diamond Resorts, it has reached a point the rating agency for DRI, KBRA (Kroll Bond Rating Agency) recently saw fit to issue a note on the issue, albeit not surprisingly, a reaffirmation of KBRA’s original rating.

https://www.krollbondratings.com/announcements/3705

A timeshare ABS is a security whose income payments, and hence value, is derived from and collateralized or “backed” by a pool of underlying assets. Contrary to popular opinion, “hard” assets do not serve as the primary collateral – only the contractual obligation to pay. However, hard assets do provide secondary security and impact overall price/return.  

Today, the vast majority of timeshare loans are not backed by any real property interest. Timeshare ABSs sold today are little more than securitized consumer loans. Yet when I talked to the Moody analysts just a couple weeks ago about their most recent Wyndham ABS rating, they stated they use criteria established in 2003 – when a timeshare loan was typically still attached to a real estate interest.

In rating an ABS, comparisons with historical loan default rates are critical. Timeshare ABSs, notably a different underlying product than the one packaged today, report very limited/zero defaults.  This is not because the consumer default rate is or was low – to the contrary. Rather, DRI (not unlike Wyndham) uses ABS structure options allowing them to repurchase or substitute all of its defaulted loans. As a result, the ABS reports defaults as 0% while actual consumer defaults are much higher. (Note a 6% – 8% default rate for “aged” loans is informally used, if any pre-option rate is reported or available at all). Aged loans have a proven repayment history of 6 months or more. The “aged” number does not include what is certainly a much higher total consumer default percentage of timeshare loans when early defaults are included.  

The repurchase and substitution option in an ABS is typically capped at around 15% of the total. More importantly, the rating agency should not (but appear to nonetheless) give credit to the option to repurchase or substitute defaulted loans. Gross loss expectations are increasing also. It is reported in the investor literature as 11 – 12% in prior years to 13-14% today; dangerously close to underwriting limits.  

Wyndham and DRI would like its debt investors to believe the increase in defaults is due to an uncharacteristically high number of borrowers being solicited by lawyers and “scammers” offering to get consumers out of their timeshare. Thus, we see the rise in Cease and Desist letters and litigation targeting consumer “friendly” legal providers.

What is more, ABS investors, thus the developers selling timeshare ABSs, are hypersensitive to cash flow. Admittedly a bit desensitized since 2007, they will nonetheless respond when issues or news challenge a specific ABS or a class of ABS, such as timeshares.

Timeshare regulators (assuming any exist and/or pay attention) also need to be reminded that in 2007 investors experienced losses because they made decisions on bogus ratings, guarantees from mono-line insurers, and a blind faith in historically real-estate prices.  Simplistically, people ignored the quality of the contractual cash flow, relying instead on history (home price appreciation in the case of the MBS). This sounds analogous to timeshares today.  

With the rise in Social Media, timeshare members are more and more expressing increased owner unrest, disturbed by a rise in consumer complaints, as evidenced by Mark Brnovich’s issuance of Diamond’s Assurance of Discontinuance AOD fueled by over 900 consumer complaints. Is anyone paying attention?

I spoke to a Wyndham executive last month at my VOAs annual meeting. He saw this issue as a problem caused by lawyers seeking timeshare members and a major problem. With an aging population of original buyers who no longer want or need their timeshare, many don’t know where to turn when there is no secondary market and the contract is perpetual.

On a similar line, most all ABS, to include timeshares, are supported by significant “credit enhancements” to protect the investors from higher than anticipated (historical) default rates. Overcollateralization (issuing less debt than total assets held) is a particularly valued credit enhancement technique used. However, overcollateralization becomes tricky, even suspect, when the assets held by the seller have no explicit face amount/market established price as with the non-viable timeshares resale market. My impression is most agency raters, while sophisticated financial types, are not educated on the underlying change of the timeshare product pool being securitized, as most are reliant on the developers for their information and understanding.

Finally, as I noted earlier, reported default rates are zero. As a result, most rating agencies, I argue to retain clients, and many investors, dependent on industry reporting, do not dig any deeper. Both sides see no news as good news – once again analogous to the 2007 mortgage back securities fiasco. This needs to change.

risk1

Thank you Michael, not being of a financial mind, the article has been a bit of an education, I just didn’t know these things went on.

There we have it, look out for the article on Amador Galeca, more important beware of any calls or emails promising that you have money waiting for you. The truth is you haven’t, all they want is your money, so stay safe, keep your money in the bank and do your homework before parting with it.
homework kid

My Thoughts Today: End of January

We began January with an update on “bogus” law firms Litigious Abogados and Litigar Abogados, with the addition of a third firm called Abogacia Española, with the founder being Fernando Holaci. All three websites are the same except for minor alterations such as colour and the names of the founder and the lawyers.

The method of enticing timeshare owners to pay is also very sophisticated, with fake court documents, copies of compensation cheques and official looking documents from the so-called Procurator, Davido Harstun Jaime.

LIT

They begin by sending or calling prospective clients about the court case they are about to conduct against their timeshare company, that they are eligible to participate. In order to be registered on the coming court case, a sum of around 1,500€ is required. This has to be paid quickly as the case is due to be heard within the month.

Once this sum is paid, the client receives another email with the fantastic news that their case has been won, with the court awarding many thousands back to them. All this is done within weeks, a feat not seen in a Spanish court or any other court for that matter. Now comes the main part of the “sting”, in order to get this sum paid out court taxes etc need to be paid first, the amount varies from client to client depending on the court award. But they are in the region of £4000 to £8000. For further information see the link below or search Litigious Abogados in the search area for all the posts.

http://insidetimeshare.com/litigious-abogados-plot-thickens/

Inside Timeshare with Irene, also broke the news of a settlement between the Arizona Attorney General Mark Brnovich and Diamond for $800,000 which revolved around “Allegations of Consumer Fraud Act Violations”. This is a story that we have been following all month. (see following articles).

arizona-ag-seal

After the “Breaking News” of the settlement, a joint article by Charles and Irene on the role and use of OPC´s in the timeshare sales cycle. It began with an outline on what regulations various countries in Europe have on controlling how these “scratchcard touts” operate. Going on to explain how they work in the US, with Irene laying out the information they are after. She also spoke about an OPC that she knows personally. It was an insight into how you ended up on the presentation.

This was followed by more Litigious Abogados updates and the article “Thinking of Buying a Timeshare”. It was closely related to the previous article on OPC´s as it explained how the scratchcards work, then going on to ask “Is it worth buying one”?

It came to the conclusion that it depends on what you are after, it also weighed up whether to buy from the developer or a resale. There was also a link to Mike Finn of the Finn Law Group, who also gave some very sound advice.

Again we went across The Great Lake for more news from the US,

http://insidetimeshare.com/timeshare-news-across-atlantic/

In this article Irene gave her analysis of the importance of the Arizona Attorney General’s settlement with Diamond. Irene told the story of the nightmare suffered by Irina Allen and her purchases, along with the fact she had her membership suspended on false allegations of being a “mega renter” with an AirBnB account. She had even been advised by a sales rep to buy more points as renting will help pay the maintenance.

Another article we published was on the subject of plagiarism, this was prompted by posts appearing on the TCA website which more than resembled articles written by myself and Irene. Any author will recognise their own writing style and use of words. Especially as the grammar used by the TCA writers is to say the least very poor.

But, the main point was the use of information not just from Inside Timeshare but also from Canarian Legal Alliance. In all the posts on the TCA site, no mention or accreditation to where  this information had come from. It all appeared  the TCA was taking credit for the information and the Supreme Court victories achieved by CLA. Whenever Inside Timeshare publishes any article that uses information or news from another source, that source is always credited for it. That is the basic rule of any journalist or writer.

http://insidetimeshare.com/tca-using-others-work/

plagiarism

The next article on US timeshare had a very happy ending, back in November Irene explained that Wyndham had launched “The Ovation” surrender programme. After receiving this news Inside Timeshare contacted one of our readers, Steve, who owned at Wyndham. Due to his personal circumstances he wanted to surrender his ownership, he did not have a claim, so relinquishment was the only option.

It was explained to Steve about the Ovation news and he duly contacted them to surrender his ownership. Within two months he got the news that they had indeed accepted his surrender request. Since then Diamond have also accepted the surrender of his European membership, although due to his statement of events at the point of sale, Diamond are investigating and we hope to report on that in the near future.

http://insidetimeshare.com/wyndhams-ovation-surrender-program-latest-news/

On the day President Trump was inaugurated Inside Timeshare along with Irene published the question “Attorneys General and Timeshare under Trump”. The article explained how the business and politics are linked, including the role of the “lobbyist”.

This was a subject being asked by many owners of timeshare in the US and only time will tell what effect his presidency will have on them.

http://insidetimeshare.com/attorneys-general-timeshare-trump/

In the article “And So it Begins”, it followed Irene being banned from the Diamond Resorts International Members facebook page. The reason, a few thought her posts and links to our articles were political, Inside Timeshare posed the question “what is not political nowadays”?

The real reason of her ban is simple, she asks questions about Diamond, she writes about Diamond, she questions Diamond, she questions the practices of the sales reps, but she also has dialogue with Diamond. She brings to their attention the concerns of thousands of members, she has also had statements from senior Diamond employees which she has used in her articles.

In her following article she called for advocacy in timeshare, highlighting Diamond creating an Advocacy Department, even contacting Maya Pogoda, Diamonds Public Relations Representative, who is also helping to launch the Diamond Advocacy and Clarity programme. But to some on the facebook page she was attacking Diamond, when in reality she and Inside Timeshare are calling for dialogue. Yes we do highlight the ugly, but we also highlight the good.

In another twist to this tale, two more people have been banned from this group, the reason? They have been highlighted in articles by Irene and published on Inside Timeshare, They are Irina Allen and the Saldana family. Do those calling for a ban who are the administrators believe in two sides to a story or are they only interested in promoting their own ego´s, one openly boasts how he owns so many points yet has never actually paid for them, one wonders how he got them? You know who you are and Inside Timeshare awaits your response.

http://insidetimeshare.com/timeshare-advocacy/

CLA Logo

Back to Europe, Canarian Legal Alliance has been hitting the news again, published on the 26 January, was the news of two Supreme Court rulings against Silverpoint / Resort Properties. In the first judgement the court announced that the Club Paradiso product was indeed timeshare and fell under the relevant laws, they also concluded that the client in this case was a consumer not an investor as Silverpoint claimed. This has significant implications for other “Club” schemes operated by other companies.

This case was picked up by The Northern Echo follow the link:

http://www.thenorthernecho.co.uk/news/15045851.Woman_wins_a_landmark_legal_ruling_on_timeshares/?ref=rl&lp=2

Within days there were another two verdicts delivered by the highest court in Spain, again against Silverpoint. In the fourth ruling, the court reiterated the earlier verdict that the “Club” scheme was timeshare, this was in relation to Hollywood Mirage and Beverly Hills Club Vacation package. Now if memory serves me correctly the second ruling on “Club” schemes now puts that into jurisprudence.

 

In the last article this month, Irene gave her views on Diamond’s Clarity programme, she had an interview with Maya Pogoda the Diamond PR and also had comments from Executive Vice President, Chief Sales and Marketing Officer Michael Flaskey. Now if this isn’t creating a dialogue, well I don’t know what is!

This will be followed next month by Part II: How Owners Feel About Clarity.

We have also been informed of a major news item that is just breaking, we hope to have an article on this tomorrow, Irene is busy on it now. But we must remember she is several hours behind us, so watch this space.

Inside Timeshare publishes these articles to keep you informed of the latest news, developments and views in the world of timeshare. Much of it you would never hear about, especially as many forums will remove posts the administrators don’t like. We will continue to publish even if it is controversial, that is what we believe in, the freedom to question, criticise and comment.

Inside Timeshare would like to thank all those who have contributed to articles this month, either through information or comments, without you the stories would not be there.

great quote

 

Latest News from Europe and the US.

Before we go on with today’s article from Irene, there has been some breaking news over the past week. The Supreme Court in Madrid has issued three rulings against Silverpoint, on behalf of three clients of Canarian Legal Alliance, all three came within days of each other.

In the first was the British Client who purchase at Club Paradiso, the court ruled that this was indeed timeshare and not a club affiliation as Silverpoint claimed. This case has taken around five years to get to this stage, with appeal following appeal.

The second case was that of a CLA client from Belgium, the court declared once again the illegality of contracts over 50 years.

Another British client of CLA who purchased the Hollywood Mirage and Beverly Hills Club Vacation Package. Again this ruling was around the “club affiliation” scheme, the court once again ruled that this did indeed fall under the scope of Spanish timeshare law, (Ley 42/98) as in the first ruling.

So far since March 2015 CLA have achieved remarkable results, with around 42 rulings from the Supreme Court, involving numerous timeshare companies, with Anfi being the most prominent. (Follow the link to The Northern Echo article on the first case).

http://www.thenorthernecho.co.uk/news/15045851.Woman_wins_a_landmark_legal_ruling_on_timeshares/?ref=rl&lp=2

In the article by Irene today, she looks at the Diamond Resorts Clarity (™) programme, it would seem that Diamond are trying to change the way they operate amid growing protests from owners, especially the elderly.

This programme at present will not be rolled out in Europe, Although Diamond Resorts in Europe have already begun to make considerable changes in their approach to owners / members. They have set in place a programme where members can surrender their timeshare under what Diamond call “exceptional circumstances”, with this there is no charge.

One reader has Steve has taken advantage of this, with Diamond accepting his surrender, but there is a twist in this story. Diamond are investigating how he was sold and how he also ended up with a finance package, they obviously believe that there is something wrong. Once this is completed, Inside Timeshare will bring you the results.

Contained within the article is an interview Irene had with Maya Pogoda the Diamond Public Relations Officer. She has welcomed the chance to speak with Inside Timeshare and has supplied numerous comments and answers to our questions. So on with Irene´s article.

Diamond Resorts Clarity (™) – The Good, the Bad and the Critical

Diamond Owners are Hopeful but Skeptical

By Irene Parker January 29, 2017

Skeptical Method

DIAMOND CLARITY(™) is the offspring of Arizona Attorney General Mark Brnovich’s issuance of an “Assurance of Discontinuance” resulting from allegations that Diamond Resorts International violated the Arizona Consumer Fraud Act.

http://insidetimeshare.com/opcs-europe-usa/#more-1518

Maya Pogoda, Diamond Public Relations spokesperson, talked to me about the new national program consisting of a series of operational procedures and enhancements, new training and compliance procedures and protocols, and other customer-friendly changes to the sales process.

Press Release excerpts:

Missing from press release: “We recognize the need for Diamond Resorts and all timeshare companies to change or improve timeshare business practices that have led to predatory lending and deceptive sales techniques, resulting in harm to timeshare owners,” suggests Irene.

I took issue with several statements made in the press release:

“At Diamond Resorts, we already excel in customer satisfaction, but we are constantly looking for ways to do even better,” said Executive Vice President, Chief Sales and Marketing Officer Michael Flaskey.

I spoke with a few timeshare attorneys. One paralegal who works for a timeshare attorney asked not to be identified. Their firm has released 10,000 owners from timeshare contracts and said Diamond is their biggest “customer”.  Timeshare attorney Mike Finn of the Finn Law Group carries approximately 500 timeshare cases with 20% to 25% against Diamond Resorts. Mr. Finn said he’s never had a Disney timeshare client.

There are also several angry Diamond owner groups:

DRIP Diamond Resort International Protestors launched by over 1000 angry British owners trying to be released from contracts.

Intrawest Embarc Diamond Facebook page has over 2500 Intrawest members. An administrator of this group recently suggested I post our last Inside Timeshare article on their Facebook page after being banned by a Diamond Influenced Member Supported 7000 member Facebook group.

I had sent the article to an Intrawest administrators individually. She receives a link to all my articles. Unfortunately, one of the administrators from the 7000 member group voiced a warning to one of the other Intrawest administrators urging a word of caution concerning the dangerous piano teacher, Irene Parker.

https://www.facebook.com/Club-Intrawest-Owners-Group-921012087982547/

The 7200 member Facebook group consists of about 50% happy/angry owners. Members who are 100% negative on Diamond Resorts are privately and quietly urged to join DRIP, according to one member who asked not to be identified. Ironically, the same administrator was banned from the DRIP website accused of being too positive.

Charles Thomas was banished within days of joining the 7000 member Facebook accused of supporting the Canarian Legal Alliance. Charles can better explain the success CLA has had fighting timeshare abuse.

Owner infighting is strongly encouraged by Diamond Resorts because United we Stand and Divided we Fall. There is a lot of that going on in the world today.

Inside Timeshare allows political commentary to enter into our articles. In fact, given the fact the Trump family is launching a timeshare in Scotland, it is even encouraged. One of President Trump’s closest friends of 20 years is David Siegel of Westgate. Westgate has been under Consumer Financial Protection Bureau investigation for the last few years.

Continuing the litany of unhappy Diamond owners:

Monarch Website of angry owners owning fixed weeks could not gain access after converting to points, resulting in a class action lawsuit.

http://www.monarchowner.com/p/our-story.html

Poipu Angry Owner website:  Assessments resulting in a class action lawsuit.

https://www.facebook.com/pages/Point-of-Poipu-Angry-Owners/148027451960608

Thousands of complaints have been voiced on Redweek, BBB and other internet complaint sites. Just yesterday a Redweek member reached out to me. I sadly informed her she made my list of top two percent timeshare horror stories. The subject of Diamond timeshare sales agent Rick Casper of Polo Towers Las Vegas will be the subject of my next article

Of course, people can always contact me directly.

Irene Card

RedWeek continues to allow me to post.  I was asked to provide a link to the article that caused me to be banned. Controversy generated by an article is a writer’s best friend.

My Facebook page has no quota on happy/angry comments. I deny I am 100% negative on Diamond. We still enjoy Diamond Resorts and find good value at times. I am encouraged by the meaningful conversations I have had with diplomat and PR spokesperson Maya Pogoda.

I find relatively few complaints on the internet about Hyatt, Hilton or Disney.

Back to the Clarity Press Release:

“It will increase transparency”

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