Oct 9

By Jake Halpern – The New York Times

NOBODY likes debt collectors. But a great many of us have to deal with them. A recent study by the Urban Institute found that roughly one-third of all Americans have a debt in collections reported on their credit file. For many debtors, that means being called, hounded and even threatened on a regular basis. But what’s it like to be the collector?

According to the Bureau of Labor Statistics, there are roughly 369,000 bill and account collectors in America, and that number is projected to grow. There is a perverse logic at play here. In a stagnant economy, we can barely pay our debts, but we can still pay people to collect on them.

For the past two years, I have been working on a book on the debt collection industry and, as part of my research, I spent time at a small agency in Bangor, Me., owned by Brandon Wilson. His collectors tend to be young men, often with troubled pasts. One of them told me, “I had a drug habit, and the only way to support a drug habit is to deal. No one [else] would hire me because of my record.”

The first step in collecting, Mr. Wilson told me, is finding the debtor. When creditors can’t collect on unpaid accounts, they often sell them for pennies on the dollar to third-party debt collectors. The seller hands over spreadsheets containing bits of information on debtors. But frequently, those bits are outdated or inaccurate. So collectors have to play detective, searching databases, calling neighbors and contacting family members. The best possible scenario, Mr. Wilson said, is to find a debtor’s scornful ex-spouse: “They’ll tell you, ‘Here is his number, here is his mother’s number, here is his slutty girlfriend’s number.’ We will usually put it on mute and say, ‘We got a rat — we got a rat!’ ” [read more]

Oct 7

By Elena Logutenkova – Bloomberg Businessweek

UBS AG (UBSN) received a U.S. federal subpoena last month seeking records related to its residential mortgage-backed securities business during the boom in sub-prime lending.

The U.S. attorney’s office for the Eastern District of New York asked in August for documents and information about the RMBS business from 2005 through 2007, the Zurich-based bank said in a prospectus to shareholders today. The New York state attorney general is seeking similar data, UBS said.

UBS said it has also been responding to inquiries from the special inspector general for the Troubled Asset Relief Program, together with the U.S. attorney’s office in Connecticut and the Justice Department. The inspector general and the Securities and Exchange Commission are questioning the bank over trading practices in connection with mortgage-backed securities from 2009 through the present, UBS said. [read more]

Oct 6

By Jann Swanson – Mortgage News Daily

The Consumer Financial Protection Bureau (CFPB) came down hard on Michigan-based Flagstar Bank both legally and verbally as it issued the first enforcement action under its new mortgage servicing rules which went into effect in January 2014. The action claims that Flagstar had “failed borrowers” at every step in the foreclosure process by illegally blocking those borrowers’ attempts to save their homes.

“Because of Flagstar’s illegal actions and unacceptable delays, struggling homeowners lost the opportunity to save their homes,” said CFPB Director Richard Cordray. “The Bureau has been clear that mortgage servicers must follow our new servicing rules and treat homeowners fairly. Today’s action signals a new era of enforcement to protect consumers against the cost of servicer runarounds.”

Flagstar is a federal savings bank and mortgage servicer which administers foreclosure relief programs provided by the owner of the loan. In a press release CFPB said that servicers “are the link between a mortgage borrower and a mortgage owner. They collect and apply payments, work out modifications to the loan terms, and handle the difficult process of foreclosure. Importantly, consumers cannot take their business elsewhere. Instead, they are stuck with their mortgage servicer, whether they are treated well or poorly.”

CFPB’s investigation found that, 2011 to the present, Flagstar failed to devote sufficient resources to administering loss mitigation programs for distressed homeowners. In 2011 for example the bank had 13,000 active loss mitigation applications but only 25 full-time employees and a third-party vendor in India assigned to review them. During one period the staff was taking up to nine months to review a single application and the application backlog numbered well over a thousand. The average wait time for a caller to Flagstar’s loss mitigation center was 25 minutes and nearly half of callers gave up and hung up. Further, CFPB said, when the new mortgage servicing rules went into effect in January Flagstar committed violations of the new rules with respect to loss mitigation. [read more]

Oct 3

By John Skiba – JD Supra

Despite popular belief that Americans are a litigious bunch always looking for a good lawsuit, I haven’t experienced this in my law practice in Arizona. Particularly when it comes to Fair Debt Collection Practices Act (FDCPA) violations by abusive debt collectors. Often the families I meet with have endured a tremendous amount of abuse and yet still haven’t taken any action to get the debt collector to stop. And typically the abuse isn’t just directed the consumer, but their families and even employers deal with the non-stop phone calls and threats.

In this article I want to go over five (5) reasons you should consider filing an FDCPA lawsuit against debt collectors who have crossed the line from aggressive collection to abuse.

#1 – A Lawsuit Will Make the Abuse Stop

The first reason is that you can get them to stop the abusive debt collection tactics. Often debt collectors will do things like contact family members about your debt, use profane or other abusive language, contact you at work after they know you are not permitted to take calls there, or use anything that is false or misleading in attempting to collect on a debt.

By filing an FDCPA lawsuit you will stop the abuse. [read more]

Oct 3

By Barbara S. Mishkin – JD Supra

The CFPB has published a notice stating that as part of its Owning a Home project, it plans to seek approval from the Office of Management and Budget to conduct a field study of the project. The project consists of a various online tools and resources developed by the CFPB to help consumers make decisions about mortgages. Comments are due by November 25, 2014. [read more]

Oct 1

By Allison Schrager – Bloomberg Businessweek

For many American households, the recession was a time to pay off debt and get their finances in order—whether they wanted to or not. But according to the latest data from the Federal Reserve’s Flow of Funds (PDF), Americans are taking on debt once again. The difference is that this time we’re borrowing to finance new cars, college tuition, and other consumer goods.

As the figure above shows, American household debt peaked in 2007 and has since fallen 15 percent. Home mortgage debt accounted for much of the decline—it’s dropped 22 percent since 2007. Consumer debt, on the other hand, has continued to increase and just reached an all-time high of $3.2 trillion.

Americans have added about $100 billion of student debt a year to their balance sheets since 2008. Credit cards and auto loans have also come roaring back, particularly auto loans. The amount of outstanding auto debt is the highest it’s ever been. [read more]