Apple Patents a System for Second-Hand iTunes Sales

Although the general understanding with digital goods is that you can’t resell them, Apple and other tech firms don’t necessarily agree.

On Thursday, Apple patented a system for buying and selling digital movies, music, books and software. The system would prevent the original owner from accessing the content after selling it, and could allow the original creator or publisher to receive a cut of the resale price.

As PaidContent points out, Apple isn’t the first company to patent this kind of system. Just last month, Amazon won its own patent on an “electronic marketplace,” where users could buy and sell digital goods. Again, the system would remove access for the original owner once the sale goes through, and it could even prevent additional resales after a certain number of transfers.

You may be wondering why Apple and Amazon–two companies in the business of selling music, movies and books–would be interested in creating second-hand marketplaces. The main reason, I’m guessing, is lock-in. The ability to resell content could help attract and retain more users, which in turn could encourage more sales of tablets or other devices that support their digital stores. Users might also be more willing to buy movies, music and books if they know they can resell that content later.

Of course, this assumes that rights holders are willing to play ball. All signs suggest that they aren’t.

ReDigi, a company that already offers a pre-owned marketplace for digital music, is currently being sued by the music industry for copyright infringement. ReDigi argues that it’s within its legal rights because it doesn’t technically copy the original music file. Instead, it transfers the file to an online locker, and monitors users’ computers for unauthorized copies.

I’m sure Apple and Amazon are watching that case closely. But even if ReDigi prevails, it doesn’t guarantee that other companies will move forward. After all, Amazon and Apple rely on the entertainment industry for their existing digital stores, and for Internet-based services like iTunes Match and Amazon Cloud Player. Offering a second-hand market could very well jeopardize negotiations for other services.

As with so many other Apple patents, it’s best to think of this one as a possible direction for the company, not an absolute certainty. A second-hand market for digital content would be nice, but there are still a lot of obstacles in the way of major tech companies getting involved.

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New York sues banks over electronic mortgage system (Reuters)

NEW YORK (Reuters) – New York State Attorney General Eric Schneiderman on Friday sued three major U.S. banks, accusing them of fraud for using an electronic mortgage database that resulted in deceptive and illegal practices.

Schneiderman filed the lawsuit against Bank of America Corp (BAC.N), Wells Fargo & Co (WFC.N) and JPMorgan Chase & Co (JPM.N) in New York state court in Brooklyn.

The lawsuit is over the banks' use of MERS, the Mortgage Electronic Registration System the industry created in the mid-1990s to track the ownership and servicing of residential mortgage loans.

Schneiderman claims the system is plagued by inaccuracies. The lawsuit also names MERS and its parent as defendants.

"The mortgage industry created MERS to allow financial institutions to evade county recording fees, avoid the need to publicly record mortgage transfers and facilitate the rapid sale and securitization of mortgages en masse," Schneiderman said.

Schneiderman's lawsuit claims that banks saved $2 billion in recording fees by using MERS.

The suit also said the use of MERS resulted in the filing of improper NY foreclosures and created "confusion and uncertainty" over property ownership interests.

Over 70 million mortgage loans, including millions of subprime loans, have been registered in the MERS system, rather than in local county clerks' offices, according to the lawsuit.

Schneiderman is seeking to stop the banks from filing New York foreclosure actions in MERS name, and executing false or defective mortgage assignments in state foreclosure proceedings. He is also seeking to obtain the profits the banks obtained through MERS, along with other damages.

JPMorgan spokesman Patrick Linehan declined to comment on the lawsuit. Wells Fargo spokesman Ancel Martinez said the company was reviewing the lawsuit. Bank of America spokesman Rick Simon declined comment.

Merscorp and its subsidiary MERS comply with the law and mortgage regulations, spokeswoman Janis Smith, a spokeswoman said in a statement.

"We refute the attorney general's claims and will defend the case vigorously in court," Smith said.

MERS was sued by Delaware in October and similarly accused of deceptive practices that led to unlawful shortcuts in dealing with the foreclosure crisis.

MORTGAGE SETTLEMENT NEARS

Schneiderman filed the suit in his capacity as New York attorney general, but he also serves as co-chair of a working group President Barack Obama formed last month to investigate misconduct in the pooling and sale of risky home loans.

Schneiderman is also a central figure in widely publicized negotiations to reach a federal-state settlement with the top U.S. banks over mortgage abuses.

A key question is whether holdouts, including Schneiderman and California Attorney General Kamala Harris will join the settlement.

Danny Kanner, a spokesman for Schneiderman, declined comment on what Friday's lawsuit may mean for the prospects of the settlement, which could be announced as soon as next week.

In exchange for up to $25 billion, the banks are expected to resolve state and federal lawsuits about servicing misconduct and faulty foreclosures. The states have until Monday to decide whether to sign on.

A draft settlement circulated to the states would have released the banks from liability for their use of MERS - claims at the heart of the new lawsuit.

The New York lawsuit suggests Schneiderman and other attorneys general opposed to the settlement may have been successful in working to narrow the broad releases of liability.

Last week Schneiderman told Reuters that the releases in the settlement had "become narrow enough" so that a "full investigation" by the new mortgage crisis unit could move forward.

However, Schneiderman said last week he was not yet ready to sign on to the settlement.

On Thursday, California AG Harris told Reuters that she is not focusing on the Monday deadline for states to sign up.

"I'm less concerned with the timeline than the details," Harris said on the sidelines of a Harvard Women's Law Association conference in Boston.

Harris said any settlement should address the priorities she has previously laid out, like enforcement.

She also said she was aware of Schneiderman's lawsuit against banks over MERS, but that MERS was less of a priority in the scope of California's mortgage problems than it was in other states.

"But we support that MERS work," she added.

(Reporting by Karen Freifeld, with additional reporting by Ben Berkowitz, Aruna Viswanatha, David Henry and Rick Rothacker; editing by Carol Bishopric)

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Haiti creating home loan system to help in crisis (AP)

PORT-AU-PRINCE, Haiti – Haiti's struggle to rebuild homes for hundreds of thousands of quake victims may be giving the impoverished nation something it has never had: loans to help people buy them.

If efforts by international donors and local agencies succeed, at least a few members of Haiti's small middle class will be able for the first time to get a mortgage. Some of the efforts reach even further, offering micro-mortgages for families who make as little as $150 a month.

The hurdles will be significant in a nation where 70 percent are unemployed, many land titles were destroyed in the January 2010 quake and banks have little experience in offering loans to anyone but the country's tiny elite, leaving most of Haiti's 10 million people to rent their housing.

Even those who would seem to qualify are finding it a struggle.

Radio journalist Hertelou Vellette, who has worked for the same company for 11 years, has waited for more than two months to learn if a state bank will help finance a $52,000 two-bedroom prefabricated house.

And that's after he submitted title deeds, a letter of employment, bank statements for the past six months, credit card statements for the most recent three months, water and electricity bills, statements from other income sources, a land survey and a copy of his identity card.

He also had to pay a nonrefundable $500 fee for the application. Most Haitians don't have credit cards or a bank account, let alone $500, a sum greater than what most earn in six months.

What is not lacking is demand. About 500,000 people like Vellette are still without homes of their own following the earthquake. Most are holed up in flimsy tent-like shelters vulnerable to heavy wind and stormy weather.

The biggest international effort so far to create a mortgage market is a $47 million package backed by former U.S. Presidents Bill Clinton and George W. Bush. It would give Haiti's private banks long-term liquidity at low, fixed interest rates so they can finance home repair loans, regular mortgages and micro-mortgages for 10,000 to 15,000 families.

The Clinton Bush Haiti Fund contributed $3 million to the plan and the World Bank's Haiti Reconstruction Fund approved a grant of $10 million. The U.S. government's Overseas Private Investment Corporation, which works with the private sector on development projects, has pledged $34 million, though the project is still awaiting approval by OPIC's board of directors.

"We were particularly attracted by this initiative because it targets the economically active poor," said Gary Edson, CEO of the Clinton Bush Haiti Fund, in a telephone interview. "We found that this market had not been served."

Haitian President Michel Martelly has launched his own housing program. Dubbed Kay Pa'm — Haitian Creole for "my own house" — it aims to provide mortgages to first-time homeowners who belong to Haiti's middle class, the approximately 10 percent of the population who have steady work.

"We focused on people who have jobs and can pay their debt," said Jean Philippe Vixamar, board chairman for the state-run National Bank of Credit, which created the project.

That still won't include most Haitians. The unemployment rate is estimated at around 70 percent, though many of those have sporadic, low-paying jobs, such as the shoe shiners and street merchants on the broken sidewalks.

Most banks aren't interested in such clients, so when most Haitians need credit, they turn to friends and family. But those networks can rarely provide the kind of loans needed to finance a home.

The Kay Pa'm program has gotten off to a slow start. It was delayed because the president of the government bank's board was killed at his home in June, a slaying that has gone unsolved.

And while it aims to give 12,500 mortgages, so far only about 300 people have expressed interest either by contacting the bank or inquiring online. Only 75 people have actually applied, and the bank has approved just 10 mortgages, Vixamar said.

Vixamar said that is partly because many Haitians don't know the program exists, and many of those who do are taking a wait-and-see attitude, perhaps hoping that free homes will be distributed and they will not need to buy one.

He said the low approval rate is largely because two-thirds of the applicants didn't have proper land titles. Haiti's land registry hasn't been updated for decades, and many of the records that did exist were lost in the earthquake.

Despite the problems, Vellette holds out hope he will finally be able to buy his home, a quiet place with a flower garden for his wife and two children, ages 12 and 2, in the town of Croix-des-Bouquets northwest of Port-au-Prince.

He meets the Kay Pa'm requirement of holding a steady job for at least three years, and he has two sisters in New York who can help him meet the monthly loan payment of $100. The home seller, Shelter-IT LLC of West Haven, Conn., is helping him through the application process. The company is one of dozens that arrived in Haiti after the quake to sell homes.

Vellette learns in December if his loan is approved. Until then, Vellette and his family will continue living with in-laws in downtown Port-au-Prince.

"That's everyone's dream, owning a house," Vellette said. "You're no longer moving around from house to house."

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