Archive for August, 2011

The Gold Standard

Who/what is to blame for America’s financial woes?  Wall Street?  Big banks?  Bush?  Obama?  This video makes a compelling case for a new culprit – President Nixon, who took America off of the gold standard. 

Should America return to the gold standard?  Watch the video – it’s an interesting argument.

Mark Stopa

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Mortgage Modifications by Non-Lawyers

I was perusing Facebook today and came across a non-lawyer in the Palm Beach area who “guarantees” loan modifications for clients, promising to reduce monthly payments by half and offering a money-back guarantee if he doesn’t come through. 

If you’re one of thousands of Florida homeowners facing foreclosure, this may sound really appealing.  However, there are two inescapable, insurmountable problems for this person, both of which should make you turn the other way and RUN if you encounter any non-lawyer offering such services.   In other words, there are two reasons this is a SCAM (regardless of the results people like this say they’ll provide):


1.  Under Florida Statute 501.1377, it illegal for any non-lawyer to charge up-front fees for a mortgage modification

Here is a link to the entire statute, but in case you don’t want to read the entire thing, here’s what subsection 3(b) provides:

In the course of offering or providing foreclosure-related rescue services, a foreclosure-rescue consultant may not … solicit, charge, receive, or attempt to collect or secure payment, directly or indirectly, for foreclosure-related rescue services, before completing or performing all services contained in the agreement for foreclosure related rescue services.

Lawyers are exempt from this requirement under Fla. Stat. 494.00115(1), but there is no way that any non-lawyer can get around this statute.  Quite simply, it is against the law for any non-lawyer to take up-front fees in connection with a mortgage modification. 

Some non-lawyers have tried to convince lawyers to work with them to circumvent this law, i.e. a lawyer and a non-lawyer in the same company, but aside from stealing trust money, that might be the quickest way for any lawyer to get disbarred.  No reputable lawyer would associate with a non-lawyer in this context.

This law has been in effect since 2008, so at this point, no non-lawyers should be doing loan modifications with up-front fees. 

Please don’t fall prey to this scam.

2.  Non-lawyers cannot represent Florida homeowners in court. 

Even if non-lawyers are trying to get a loan modification, they cannot defend the foreclosure lawsuit or stop that lawsuit from proceeding.  Hence, if the loan modification doesn’t happen (as it typically doesn’t), then the non-lawyer cannot stop the bank from prosecuting the foreclosure case or obtaining a Final Judgment of Foreclosure. 

This is where so many homeowners have gotten screwed.  In fact, this is why the Florida legislature enacted Fla. Stat. 501.1377.  Too many Florida homeowners thought they were going to get a loan modification based on promises from a non-lawyer, then didn’t realize until it was too late, i.e. until they had already gotten foreclosed, that the modification was never coming. 

For some of you, these may sound like basic concepts.  If so, that’s great.  However, I was and remain very concerned that the man I encountered on Facebook apparently has “hundreds” of clients.  Yikes.  He tries to make himself sound reputable, but breaking the law isn’t my concept of reputable. 

Don’t fall for this trap, folks.  Non-lawyers cannot charge up-front fees for loan modifications, and a “money-back guarantee” doesn’t change that. 

If you’re being sued for foreclosure, your best chance at getting a loan modification is to retain a competent foreclosure defense attorney, make sure you’re defending the foreclosure lawsuit against you, and negotiate for a modification while you’re defending the lawsuit.

Mark Stopa

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Pay Your Association Dues!

I recently received an email from a fellow foreclosure defense attorney, lamenting how his clients were foreclosed, and their home sold at a courthouse auction, even though they were current on their mortgage payments.  The problem wasn’t any nefarious activity by banks (first time for everything, eh?), but their failure to pay their homeowners’ association dues. 

Through some sort of oversight, these homeowners failed to pay their HOA dues for some time.  What they didn’t realize was that their homeowners’ association could sue them for foreclosure for failing to pay these dues and that, once the HOA prevailed, the court would hold a foreclosure auction/sale in much the same way it does when a bank forecloses! 

What does that mean, in layman’s terms?  Those homeowners still owe the note/mortgage, and even though they’re current on their payments, they no longer own their home.  In other words, failure to pay HOA or dues can cause a homeowner to lose their home!  The same goes for condominium association dues – failure to pay those can result in a foreclosure (regardless of the status of the mortgage).

I’m seeing more and more of this in recent months (typically with unrepresented homeowners), and it’s an absolute travesty.  I suppose it’s one thing for a homeowner to be foreclosed on a home worth $200,000 because they can’t pay a mortgage of $350,000.  But it’s quite another thing for a homeowner to be foreclosed on a home worth $200,000 because they don’t pay HOA dues of $2,000. 

At this point, we all know how mortgage foreclosure lawsuits work.  For a variety of reasons, it’s quite possible to continue living in your home for many months/years, even if you’re behind on mortgage payments and even if a mortgage foreclosure lawsuit is pending. 

However, the dynamics are much different with HOA and Condo dues. 

First, the amounts in controversy are much smaller – typically only a few thousand dollars (as opposed to hundreds of thousands).

Second, lawyers for HOAs and condo associations tend to be more aggressive than banks in pursuing foreclosure.  As a result, foreclosures can transpire more quickly. 

Third, it’s harder for lawyers like me to defend lawsuits by HOAs and condo associations.  Quite frankly, there are typically fewer defenses available in these cases.  As a result, these foreclosures tend to happen more quickly.

Combine these dynamics and what’s the result?  It’s almost always a good idea to pay your HOA and condo association dues, regardless of what you’re doing with your mortgage.  After all, you don’t want to be foreclosed over a couple of thousand dollars, particularly since, if you pay those dues, you’ll be able to stay in the home until the mortgage foreclosure suit is over. 

Personally, I don’t like to fight association lawsuits at all, so much so that I often turn away paying clients.  It’s a terrible dynamic.  Once unpaid association dues get to the lawsuit stage, a $2,000 balance quickly doubles, then quadruples, as the association includes late fees, interest, and lawyer fees.  Invariably, I’ve found it better for homeowners to pay these fees, rather than pay me to fight over a relatively small amount of money. 

I realize that many such homeowners are struggling financially, but HOA dues are typically a small price to pay to continue living in a home.  And it’s better to pay sooner, before lawyer fees, interest, and late fees turn a $2,000 balance into $8,000 or more.  After all, if the balance gets too high, you might not be able to pay, and at that point, you risk losing your home no matter what’s happening with your mortgage. 

So what’s the moral of this story?  Generally, especially if you’re living in the home, it’s almost always best to pay your association dues!

Mark Stopa

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The Solution to Court Funding Problems: “CASE DISMISSED”

This article, published on The Florida Bar’s website, explains how Florida courts are again running low on funding, a problem which nearly caused them to shut down earlier this year. 

It’s a shame to see the Chief Justice of the Florida Supreme Court pondering solutions for this problem when, to me, the solution is so obvious – DISMISS MORE CASES!

I’m not suggesting cases be dismissed without a legal basis.  My point is that there are many instances where foreclosure cases can be dismissed without prejudice, requiring the new filing fees that the courts need.  For example …

When banks lack standing at the inception of the case, trying to prosecute a foreclosure when they acquired standing post-filing, the judge should say “CASE DISMISSED” (legal authority, Progressive Express Ins. Co. v. McGrath Community Chiropractic, 913 So. 2d 1281, 1285 (Fla. 2d DCA 2005) (“the plaintiff’s lack of standing at the inception of the case is not a defect that may be cured by the acquisition of standing after the case is filed.”)

When banks refuse to comply with court Orders compelling discovery, the judge should say “CASE DISMISSED” (legal authority – Rules 1.380 and 1.420(b))

When banks refuse to attend mediation, the judge should say “CASE DISMISSED” (legal authority – Rule 1.420(b), Rule 1.720(b))

When banks fail to prosecute cases, the judge should say “CASE DISMISSED” (legal authority, Rule 1.420(e)).  In fact, as I explained, here, Chief Justice Canady should realize that the courts’ funding problems would be helped if the Court created a less rigid Rule 1.420(e), as existed for many years until a 2006 Rule amendment.  (Notably, one local judge lamented the Court’s recent Chemrock decision, in open court, just last week, so much so that I was emboldened to write her a letter asking her to express her views to the Florida Supreme Court and request that the Rule be amended, as I’ve opined.)

When banks fail to attend court-ordered case management conferences or pre-trial conferences, the judge should say “CASE DISMISSED” (legal authority – Rule 1.420(b))

When banks fail to state a cause of action, the judge should say “CASE DISMISSED” (legal authority – Rule 1.140(b))

When banks fail to file an Amended Complaint after the prior Complaint was dismissed with leave to amend, the judge should say “CASE DISMISSED” (legal authority – here)

When banks that file suit lack the capacity to prosecute that lawsuit in a Florida court, the judge should say “CASE DISMISSED” (legal authority – Rule 1.120(a))

When banks present fraudulent evidence to the Court or otherwise try to perpetrate a fraud on the court, the judge should say “CASE DISMISSED”

So what is my point here?  Simple.  I feel badly for judges and court personnel (and, for that matter, anyone affiliated with the courts).  The Florida court system is under-funded, and it’s not fair for anyone involved. 

However, it’s wrong that our court system is so dependent on banks filing new cases to recover the filing fees the courts need to function.  Yes, I realize that increased funding is one solution, but another is for judges to have the courage to, where appropriate, say “CASE DISMISSED,” forcing banks who haven’t followed the law to pay a new filing fee.

Mark Stopa

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Non-Lawyers Giving Legal Advice on Foreclosure Defense

The information I post on this blog is accessible to the public, and I’m fine with that.  I want Florida homeowners to be aware of the issues that arise in foreclosure cases and, more generally, various political issues.  In today’s business world, knowledge is power, and without knowledge, we’re all doomed to be crushed (by big banks and a largely corrupt system spearheaded by Wall Street). 

In recent months, I’ve come to realize my posts on this blog are sometimes copied and pasted and posted by others, and generally, I’m okay with that.  If people want to share my thoughts, I see that as a compliment.  Recently, however, I’m seeing my posts being copied and pasted verbatim, without citing me, by non-lawyers who are trying to use the information I provide to give homeowners legal advice on defending foreclosures.  Sometimes, the information being posted is horribly wrong and very misleading.  I’m very concerned, so much so that I’m writing this post.   

Do I write this blog to help educate the homeowners and the public at large?  Absolutely.  Does that mean that anyone reading these posts is qualified to teach others how to defend foreclosure cases?  Absolutely not. 

I’ve worked very hard my entire career to prepare/educate myself to litigate lawsuits such as the foreclosure cases I now defend.  I keep myself abreast of emerging case law, I communicate with other lawyers in the industry on a daily basis … I do everything possible to litigate as well as possible.  For any non-lawyer to think he/she can read a few posts and start giving advice to the public is horribly misguided.  In fact, in many instances, I’m concerned this constitutes the unlicensed practice of law, which can be deemed a criminal offense in Florida.

To illustrate, I’ve recently come across a website that encourages Florida homeowners to “take back their homes.”  The site is run by a non-lawyer who seems adamant on convincing the public that homeowners should get to keep their homes, free and clear of mortgages.  Among other things, he tells homeowners that the most important criteria to consider in retaining a foreclosure defense lawyer is whether the lawyer will take the case on a contingent fee.  Apparently, this website author would have his readers believe that getting a house free and clear (eliminating the mortgage) for homeowners is so likely that foreclosure defense attorneys should be willing to take cases on a contingent fee. 

In theory, this “advice” may sound great.  Who wouldn’t want a free house?  Of course, that’s precisely the problem.  This non-lawyer is espousing a result that sounds very appealing but is terribly impractical and horribly misguided. 

I’m not going to lie.  Is it theoretically possible for a mortgage to be “eliminated” in the process of defending a mortgage foreclosure case?  Sure.  However, the chances of that in any given case are so infinitesimally small (and often the result of random luck, not any pre-planned defense strategies) that it is not something worth discussing, much less planning a defense strategy around. 

Let’s put it this way.  I’ve been defending foreclosure cases as aggressively as anyone in Florida, perhaps the country.  Don’t you think if there was any reasonable chance of getting my clients a free house that I’d be incorporating that approach into my defense strategies?  I’d love to get my clients a free house.  Hell, I’d love to get a free house for myself.  But I’m not going to blow smoke to people, giving false hope where it isn’t warranted, and I’m certainly not going to do so just because it would help me collect a fee.  There’s right and there’s wrong, and misleading consumers is wrong. 

I know there are some lawyers in the industry who incorporate a contingent fee into their fee agreements with homeowners.  However, I know of no lawyers who charge a straight contingent fee – those who charge these fees view them as a “bonus,” something in addition to the hourly rates or monthly fees charged by that firm.  I’ve spoken out against those types of fee agreements before, so I see no reason to do so again, as that’s not the point.  The point, in my view, is that I cannot envision a scenario where a competent foreclosure defense attorney is going to charge a contingent fee, without any other fees, to defend a foreclosure case.  Hence, if anyone is encouraging you to find a lawyer who will do so, I strongly encourage you to take a moment and evaluate with whom you’re communicating.  Unfortunately, there are a lot of non-lawyers passing off advice as lawyers, and often, this advice is terribly misleading and, possibly, a criminal violation of Florida’s prohibition against the unlicensed practice of law.

Mark Stopa

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Honest, Disturbing Memo from Florida’s Assistant Attorney General

Andrew Spark, an Assistant Attorney General with Tampa’s Economic Crimes Division, just disseminated a refreshingly honest, 16-page memo expressing his concerns about events in Florida regarding the AG’s office. 

Mr. Spark begins the memo with a telling introduction:

[T]he people of the State of Florida are entitled to fair and honest government, independent of personal connections and powerful interests, and I have decided to speak out.

He then expressed well-founded concern about how Mary Leontakianakos, the former Director of Economic Crimes, has taken an employment position with foreclosure mill Marshall Watson – the same Marshall Watson that the AG’s office just investigated and the same Marshall Watson forced to pay a $2 million fine.  What troubled Mr. Sparks, as he explained in the memo, wasn’t just Leontakianakos’ employment, but the fact that she and Marshall Watson have been trying to hide her employment from the public. 

But that’s just the tip of the iceberg. 

Mr. Sparks shed light on ProVest and other process servers, who are notorious in the foreclosure industry for deceiving courts about the legitimacy of service of process to assist banks in foreclosure cases. 

Mr. Sparks lamented the Florida AG’s failure to prosecute lawsuits.  In his words: 

Prosecutors are in court all of the time, on a virtually daily basis, and civil litigators are also in court all the time.  On the other hand, since [current Florida AG Pam] Bondi has taken over, the 30 or so attorneys of the Economic Crimes Division have filed a total of approximately only 15 lawsuits. … Even when we do file suit, we often take pains not to take the lead … None of the lawsuits are against sizable companies such as Lender Processing Services or ProVest …

The paucity of lawsuit filings, and what is effectively concomitant toothlessness, is not something unique to Bondi’s tenure – it’s long been endemic to the Division of Economic Crimes.  The Division of Economic Crimes has long fostered an atmosphere in which … bold action is rare.  The people of the State of Florida have the right to better, but under its current management, the situation can only get worse.

Those are some of the highlights, but please read the memo for yourself.   As you do, remember – these are the thoughts of a current Assistant Attorney General in Florida.

Mark Stopa

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Dylan Ratigan – Unplugged

In this refreshingly honest video, MSNBC host Dylan Ratigan angrily ranted Tuesday on MSNBC against economic proposals by both Democrats and Republicans, which he described as “reckless, irresponsible and stupid.”

He said he was tired of Republicans and Democrats, because Republicans “want to burn the place to the ground” and Democrats only care about their reelection, even if it means “screwing” Americans.

“Tens of trillions of dollars are being extracted from the United States of America. Democrats aren’t doing it, Republicans aren’t doing it. An entire integrated system, financial system, trading system taxing system, created by both parties over a period of two decades, is at work on our entire country right now.”

Ratigan said President Barack Obama should not work with Congress. Instead, he should tell Americans that “their Congress is bought” and incapable of making legislation because they fear losing political funding.

Mark Stopa

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Learning a Lesson from a Crooked Bank

This article explains how JP Morgan Chase foreclosed on a homeowner, refusing a permanent modification, even after accepting nearly $50,000 from that homeowner.  I’ve read commentary on this story in other places expressing contempt for Chase, and I’m certainly not disagreeing.  This is truly disgusting stuff, even for banks. 

However, instead of just pointing fingers, let’s use this as an opportunity to educate ourselves.  There are some lessons to be learned here – things I’ve been harping on for a long, long time…

1.  Don’t spend all your money on your mortgage if you can’t afford the monthly payments.  You may think this falls in the “no, duh” category, but apparently it didn’t for this woman, so it bears repeating.  Don’t spend your savings on your mortgage when you can’t afford the monthly payments.  Otherwise, you risk doing precisely what this woman did – spending your last dollar on your mortgage, and still facing foreclosure because the monthly payment obligations continued yet you ran out of money.

2.  Don’t hold your breath waiting for a permanent loan modification.  Unfortunately, mortgage modifications are few and far between, especially with principal reductions. 

Here’s the article. …

When Mardee Jerde’s bank threatened to foreclose on her house if she didn’t immediately make up nearly $50,000 in overdue mortgage payments last year, she paid up — even though it left her virtually penniless.

Two days after J.P. Morgan Chase acknowledged receipt of Jerde’s $49,825 money order, however, the bank told her she didn’t qualify for the one thing that would have made it possible for Jerde to remain in her home in Rush City, Minn.: a permanent loan modification.

Jerde said she feels betrayed by the banking giant. She said she did everything demanded by Chase, including making partial mortgage payments for 11 months after a car accident left her unable to work. To satisfy the bank, she wound up using the entire settlement she won from her lawsuit over the crash.

“If I had known that [the bank would foreclose anyway], I never would have sent that money,” said Jerde, 68. “I would have been out of my mind. That was given to me to live on. Now I have nothing.”

Chase officials said Jerde’s first request for a permanent loan modification was rejected because she didn’t have enough income. Her second was rejected after the bank said she failed to turn over all required paperwork on time.

But after being contacted by Whistleblower, bank spokeswoman Christine Holevas said Chase will try to intercede on her behalf. Without the bank’s help, Jerde could be forced from her home as soon as Aug. 23.

“I will try and find a solution,” Holevas said last week. “I can’t promise that I will. I can reach out to some folks.”

Through the end of 2010, more than 700,000 mortgage holders who received temporary help were subsequently booted from the government’s $50 billion Home Affordable Modification Program, or HAMP. The program has been widely criticized for abusive practices and for failing to help those who most need mortgage relief.

“The banks put out their hand and say, ‘We’re going to help you,’ and then stab people right in the back,” said Carl E. Christensen, a Minneapolis attorney who specializes in real estate and consumer litigation.

“Nobody ever gets loan mods,” Christensen said. “I meet with up to a dozen people a week and have been doing this for 2 1/2 years. I’ve only seen five modifications and only one that ever gave any substantive benefit.”

Bank has been ‘uncooperative’

Jerde’s problems began in March 2008, when she was broadsided by another driver on Hwy. 10 as she drove home from a Walmart in Elk River. Injuries made it impossible for her to keep working as a food safety inspector, so she immediately called her bank to explain she could no longer make her monthly mortgage payment of $1,763.10.

Jerde, who earned nearly $40,000 a year before the crash, didn’t make any mortgage payments until July 2009, when the bank agreed to a trial loan modification. Her new monthly payment: $875.59.

Jerde said she thought her troubles were over until May 2010, when Chase returned her most recent payment, saying it wasn’t enough. The following month, Jerde was hit with a letter demanding $49,825 in overdue mortgage payments, late fees and other charges.

Holevas said the demand was not related to Jerde’s request for a permanent loan modification. In fact, she said the bank first notified Jerde that it had rejected her application in March 2010, well before the request for nearly $50,000.

Jerde said she didn’t get that news until July 23, 2010, two days after Chase acknowledged payment of her overdue mortgage balance.

Unable to cover the higher monthly payments, Jerde stopped paying the bank, which began foreclosure proceedings. Her two-bedroom house was officially sold to the government at a sheriff’s auction in February, but Jerde can reclaim her house if she is able to pay off her outstanding mortgage balance of $209,008 by Aug. 23.

Jerde’s only hope has been getting the bank’s permission for a permanent mortgage reduction. Despite telling her ‘no’ last year, Chase continued to dangle the possibility of help. Jerde’s attorney, Randall Johnson, said Chase representatives told him as recently as last week that Jerde’s loan modification was still under review and “had been sent to the executive offices.”

Holevas, however, said Jerde’s application was rejected a month or two ago because she failed to submit all of the required documents on time. She said the government requires such applications to be “absolutely perfect.”

Johnson said the bank screwed up his client’s application. He said Jerde provided tax returns and all other documents requested by Chase, sometimes sending the same records three or four times.

“They’ve been very uncooperative in processing that application,” Johnson said.

Meanwhile, Jerde is getting more and more nervous as the end of her six-month redemption period approaches.

“The only thing I’ve got bought and paid for is a lot in the cemetery,” Jerde said. “And I might be camping on it.”

Mark Stopa

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“What Are Taxes, Daddy?”

“What are taxes, Daddy?”  That was the question posed by my seven-year-old daughter as she counted change in her piggie bank, hoping to have enough for a certain toy. 

Five years ago, I would have answered with something like “Taxes are something our government charges people to pay for public services like police, firemen, schools, and courts.”

Today?  I’m not so sure.  What would you tell my daughter?  What, exactly, are taxes for?  

Many have opined that Social Security will be obsolete within my lifetime, despite those who worked and paid into the system their entire career.  Recently, Social Security recipients stopped receiving cost-of-living increases, even though those on fixed income need these increases the most.  I guess helping the elderly, even those who worked their entire lives, is not what taxes are used for.

Our court system is so grossly under-funded that rocket-dockets and senior judges were installed, to the frustration of homeowners and consumer advocates, yet that system was scrapped for budgetary reasons.  Now, many judges feel the need to adjudicate motions in foreclosure cases without a hearing.  I guess the courts are not what taxes are used for, either. 

Governor Scott recently signed a bill that took took away tenure for Florida’s teachers (even though Florida teachers are underpaid by any measure, compared to other states).  I guess public education is not what taxes are used for, either. 

Meanwhile …

America spends trillions of dollars overseas, fighting wars ad infinitum for which the average American can’t explain the purpose.  31 soldiers just died towards this cause.  Is this what taxes are for?  

The St. Pete Times recently showed a story where BB&T proceeded with foreclosure against a local businessman because he was one day late on his monthly mortgage payment, then refused to drop the case even when he repeatedly offered to pay all arrearages.  As I explained in a recent blog, it did so because our government ensures, through the FDIC, that banks in this situation are paid in full.  Is this what taxes are for, to pay banks who have already been bailed out?

How, exactly, do I answer my daughter’s question?  I’d like to say something like …

Taxes are monies our government charges people to help pay for things we need, things like police, firemen, schools, and courts.  Unfortunately, the system has become so corrupt that our tax dollars are often allocated inappropriately towards services that aren’t needed for the benefit of people and companies that don’t need them.  Now, America is now trillions of dollars in debt as a result of this improper spending, and you and your siblings will have to re-pay that money when you enter the workforce. 

A little too intense for a seven-year old?  Certainly.  And that’s a shame.  It’s a shame that when my daughter asks “What are Taxes, Daddy,” that I struggle to give her a fair answer.

Mark Stopa

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Putting the U.S. Debt Problems in Perspective

I can’t believe the gall of people who are complaining how S&P downgraded America’s credit rating from AAA to AA+.  What does everyone expect? 

As I read somewhere recently, America is like a family that earns $58,000/year, spends $72,000/year, and has $350,000 in credit card debt.  Do you think a family in that situation has good credit?  Obviously not.  So why should the U.S. be any different?  Because it has the ability to print more money endlessly … like that’s a solution?

I can’t blame S&P for recent statements that more downgrades are coming.  For the people complaining?  Maybe they should spend more time fixing the problem than blaming the independent companies who compile the rankings.

Mark Stopa

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