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Tag: Collection agency

Banks Poor Record Keeping Strikes Again

 

Debt collectors assisted by poor bank record keeping.

Debt collectors assisted by poor bank record keeping.

Banks Poor Record Keeping Strikes Again

Big Banks Face Investigation Into Whether They Helped Debt Collectors Pursue Faulty Judgments

The largest U.S. banks face a multi-state investigation into whether they helped debt collectors pursue faulty judgments against credit card customers, according to people familiar with the matter.
At issue is whether weak record-keeping by banks or a failure to pass accurate information to collection agencies harmed consumers.
The allegations against the banks echo those central to last year’s $25 billion federal-state mortgage settlement to resolve charges that the banks “robo-signed” documents and pursued foreclosures with faulty information.
This latest probe targets the same banks, including Bank of America, JPMorgan Chase, Citigroup and Wells Fargo, said the sources who spoke on condition of anonymity because the investigations are continuing.
As with the mortgage cases, the investigation focuses on the banks’ poor paperwork and their weak tracking of the debts.

Big Banks Face Investigation Into Whether They Helped Debt Collectors Pursue Faulty Judgments

The banks poor record keeping or phrasing it differently, a reckless indifference to the property rights of mortgage holders, is in the news again.  The banks originally used their record keeping to facilitate seizing properties they lacked proper title to. But that wasn’t the only damage being done. It would appear they sold to debt collectors, debts owed to them by the mortgage holders dependent on the very same records they misused for years. You would think they would have noticed there would be a problem but no, people don’t like to think about their mistakes and crimes. So, we have former bank clients who owe no money being hounded by debt collectors.

Has anything been done to discourage these practices? It seems the profit never ends and no one is penalized? Does that mean that the banks can preserve for use over the next decades? Are these going to become standard bank practices?

These practices of banks poor record keeping and lying affidavits are illegal but with scarcely any penalty imposed they are undeniably profitable.

Aren’t these what Milton Friedman referred to as the “rules of the game,” and if you play by those, isn’t everything okay, you know – free choice, freedom to choose?

I suppose the feds will follow the usual practice of fining the banks a pittance and then allowing them to choose who should receive monetary relief if anyone at all.

This may not discourage the banks from continuing these kinds of acts. Shouldn’t the practice of banks poor record keeping put up a red flag for some regulator?

James Pilant

From around the web.

From the web site, Living Lies.

http://livinglies.wordpress.com/2012/12/20/if-the-bank-filed-foreclosure-ppapers-thats-good-enough-for-me-judge-alan-schwartz-dade-countyz/

From the comments by Matthew Bavaro

So, the bank rested and I got an opportunity to cross examine the witness, or so I thought. I was barely allowed to even ask a question. He shot me down almost every time I asked something. When I went to put my position on the record, he would not allow me to open my mouth. Well, I am not a wall flower, I am going to stand up for my clients.

 The acceleration notice that Bank of America sent was invalid in my opinion and about a dozen other judges around the state have found in favor of the homeowner on this very issue with the same acceleration letter from Bank of America. When I raised this to him, he could not believe that I had the audacity to actually ask him to rule in favor of my client. He implied that he is not going to allow a homeowner to stay in their homes without paying their mortgage even if the bank screwed up. When I asked to read the appellate opinions into the record regarding the paragraph 22 defense, his response was basically that he did not care about the letter they sent and the fact that they filed a foreclosure action alone is good enough for him.

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Prosecutors Enabling Debt Collector Misconduct

Adam Levin: The Alarming Ties Between Debt Collectors and District Attorneys

Consider what’s happening here. The debt collection companies are using the letterhead of the prosecutor’s office to threaten consumers with criminal prosecution and possible jail time. In reality, they’re in no position to back that threat up — but from reading the letter, the consumer has no way to know that. The truth is that in the vast majority of cases, the prosecutor’s office has no idea when these letters are mailed or who is receiving them, and has conducted no investigation to determine whether the claim of unpaid debt is actually true. Thus, the debt collectors are apparently mailing official letters without effective oversight — and often without even having the evidence they would need to prove that the recipients actually owe the alleged debts. In short, no case.

“I would say that roughly 90 percent of the credit card lawsuits are flawed and can’t prove the person owes the debt,” Noach Dear, a civil court judge in Brooklyn who sees up to 100 such cases a day, told the New York Times.

This is, indeed, outrageous. To have prosecuting attorneys renting out their letterhead to private companies at all diminishes their office and, at the end of the day, betrays the public trust. To do this without weighing the merits of each individual case betrays the fundamental American ideal of due process and turns the phrase “innocent until proven guilty” on its head. Finally, to allow private companies to use the power and prestige of public office to coerce consumers, using the fear of criminal charges and imprisonment to bully them into compliance — well, that is so clearly abusive that it’s hard to imagine how anyone could defend it (not that they haven’t tried).

Adam Levin: The Alarming Ties Between Debt Collectors and District Attorneys

Debt collectors have a terrible reputation in this country for misconduct and often direct law breaking. For prosecutors to form an alliance with them, loaning them some of the powers of the state, is simply unconscionable.

I’m not the only one that thinks so – here’s J.F. Quackenbush from the web site, Disinformation:

So here’s the deal, it’s a crime to write a bad check if you know that the bank isn’t going to honor the instrument. But in most states, in order to be convicted the State has to prove that you knew the check was going to bounce when you wrote it. That’s hard which is as it should be, because the crime here is not owing a debt, it’s fraud. We don’t do debtors prisons anymore, and for good reason. Bankruptcy law is explicitly mandated by the Constitution because it has long been understood that not all debts are equal, and sometimes it’s for the best in our society if we just let people off the hook and give them a clean financial slate to start over.

This, of course, drives the vampires of the collection industry, who make money by buying debts for pennies on the dollar and then brutalizing the people who owe those debts who can’t afford to pay them, and in the meantime making all manner of threats and coercive promises to keep those debtors out of bankruptcy so that the vampires can continue to feed.

And here are some more thoughts on the subject from Caveot Emptor, Seeking Justice for Consumers

Prosecutors’ job is to enforce the law. One important part of that job is exercising some discretion over who to prosecute. That’s especially important in bad check cases. People bounce checks all the time, usually unintentionally. That doesn’t make them crimes. So a prosecutor’s job is to sort out the crimes from the accidents. Under the new arrangement, everybody gets contacted by a debt collector, which then demands even more money for a budgeting class — the profit from which goes into the collector’s pocket.

Here are some thoughts from Naked Capitalism

The excuse for this program is that district attorneys’ offices were overwhelmed with merchant requests to go after bounced checks where they were unable to collect the debt and alleged fraud. Um, what about saying “no” unless the amount at issue was significant, say at least a few hundred dollars, or having the merchant provide evidence of intent? Instead, this scheme allows the debt collectors to get a windfall from people who’ve stuffed up on relatively small checks (the two examples in the article were each under $100) as well as contributing to erosion of public faith in the legal system.

Consumer attorneys did succeed in getting one debt collector that engaged in this practice, American Corrective Counseling Services, to file for Chapter 11 in the face of class action suits. But its successor CorrectiveSolutions carries on with the same dubious practices and has “partnerships” with more than 140 district attorneys’ offices.

And here is a comment from Tech Dirt
The DAs office, it appears, is literally selling the use of their stationary. In exchange for letting debt collectors appear both a lot more official and for falsely suggesting that law enforcement is pursuing criminal action, the debt collectors “sell” a “financial accountability” class, from which some of the proceeds get kicked back to the DAs’ offices.
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