By Jessica Karmasek – Legal NewsLine
The owners of two law firms offering debt relief services may be held liable by the Consumer Financial Protection Bureau for allegedly violating federal consumer protection laws, a Wisconsin federal judge recently ruled.
Judge Barbara B. Crabb of the U.S. District Court for the Western District of Wisconsin also concluded that the defendants misrepresented their services and collected advance fees in violation of Regulation O.
Regulation O, under the Consumer Financial Protection Act of 2010, prohibits a mortgage assistance relief service provider from requesting or receiving payment of any fee or other consideration until the consumer has executed a written agreement between the consumer and the consumer’s dwelling loan holder or servicer “incorporating the offer of mortgage assistance relief that the provider obtained from the consumer’s dwelling loan holder or servicer.”
The CFPB, an independent agency of the federal government responsible for consumer protection in the financial sector, filed its lawsuit against the now-defunct The Mortgage Legal Group LLP and Consumer First Legal Group LLC and attorneys Thomas G. Macey, Jeffrey J. Aleman, Jason E. Searns and Harold E. Stafford in 2014.
The bureau alleged that while providing mortgage relief services to more than 6,000 consumers in 39 states, the defendants made misrepresentations about their services, failed to make certain disclosures required under the CFPA and impermissibly collected advance fees.
The CFPB also argued Macey, Aleman, Searns and Stafford — all attorneys with a background in consumer law, according to the federal court — should be held liable because they either participated directly in the illegal acts or had the authority to control the actions of the corporate defendants.
The defendants argued their debt relief services were offered as part of their law firms, making them exempt from the bureau’s authority. [read more]
By Shira Schoenberg – MassLive.com
The effects of the Great Recession may be receding, but many Massachusetts homeowners remain underwater. The number of foreclosures is rising, and that trend is expected to continue.
The reason, experts say, is a backlog of old foreclosures that were stalled due to a state law that are only now proceeding. But advocates for homeowners say the state is also not doing enough to help struggling homeowners.
Elyse Cherry, CEO of Boston Community Capital, which invests in affordable housing in low-income communities, was part of a 2014 task force that made recommendations to state government to address foreclosure impacts. “The fact that they haven’t been implemented at all speaks to the current interest of state government in terms of dealing with it, and the fact that as a country we have moved on,” Cherry said.
The foreclosure crisis began around 2007, as real estate values nationwide plummeted and many homeowners were trapped in high-interest mortgages they could not afford. The recession and high unemployment exacerbated the problem.
Massachusetts has not suffered as much as other parts of the country, like California and Nevada. It had fewer subprime loans, which offer money at high interest rates to people with poor credit. Homes are built at a relatively slow rate here. But Massachusetts homeowners were still hurt, and foreclosures have continued until today. [read more]
By Susannah Snider – U.S. News and World Report
Getting a call from a debt collector is always worrying. But it’s even more unsettling when the collector is calling about a bill you don’t remember owing.
Is it a loan that you forgot exists? Did the collector mix you up with someone else? Is it a scam? Here’s how to clear up the confusion.
1. Ask for more information. A legit debt collector will be able to provide you with information about who they are, the company they represent and the debt they’re collecting.
If you can’t get clarity over the phone, you have a right to hold off on discussing the debt until the collector sends a written notice, within five days, which verifies who and how much you owe.
“They can’t continue collecting unless they provide original information for you,” says Cara O’Neill, bankruptcy, credit and debt editor for Nolo, a publisher of do-it-yourself legal books and other legal information. [read more]
By Chris Morran – Consumerist
If you ask any American to name the things they love the most, they are sure to reply, “debt collectors, intrusive pre-recorded phone calls, and the federal government!” So today — under orders to do so from a piece of rushed, tacked-on legislation — the Federal Communications Commission released its final rules allowing the federal government and some of its contractors to make debt-collection robocalls to wireless lines.
By way of background, the Telephone Consumer Protection Act (TCPA) generally prohibits businesses from making a non-emergency robocall to a wireless number without the recipient’s prior consent. Then in late 2015, Congress tacked on a last-minute addition to must-pass budget bill, revising the TCPA to explicitly exempt robocalls that involve the collection of debts owed to the federal government.
The law directed the FCC to come up with new rules defining exactly when and how frequently these new robocalls could be made.
An initial draft of the rules released in May showed that the FCC was going to try to place limits on these calls in order to minimize their annoyance.
The final FCC report and order [PDF] now gives us a better idea of what to expect when the deluge of robocalls begins. [read more]
By Jim Hightower – Common Dreams
Some corporations engage in such abusive consumer rip-offs that they’re just plain evil. But then there are some profiteers that dig even deeper into the dark void of their corporate souls to achieve the ultimate status: TRULY EVIL.
Consider the gang of debt collection firms that are thugglishly and lawlessly rampaging across the country ruthlessly abusing consumer rights and common decency. Susan Macharia, a California administrative employee, is one of thousands of middle-income and low-wage workers each year who get robbed by these relentless money grabbers. Out of the blue, she got a rude call in January from a collector demanding she pay $10,000 for a credit card debt she ran up in 2003.
Only, Ms. Macharia had no such debt. In fact, as she told the New York Times, she didn’t even have a credit card until 2013. Yet, the collection agency declared that it had a copy of a 2006 court judgement for non-payment filed against her, addressed to her California residence — so, pay up, or else! But wait, she lived in Atlanta in 2006, not California. Nonetheless, ignoring facts, the callous collection outfit got a court to rubber stamp an order to let the creditor garnish Macharia’s paycheck, effectively stealing $800 a month from her. [read more]
By Jeff Bater – Bloomberg
Banks may have dodged the brunt of new Consumer Financial Protection Bureau proposals on debt collection, but they won’t escape compliance costs for documentation requirements third-party collectors face under the agency’s regulatory framework.
The bureau announced a regulatory outline July 28 that would overhaul the debt collection market by capping collector contact attempts and by helping to ensure that companies collect the correct debt. The proposals under consideration would increase protections pertaining to third-party debt collectors and others covered by the Fair Debt Collection Practices Act (FDCPA), including many debt buyers. The CFPB plans to address consumer protection issues involving first-party debt collectors, such as banks and other lenders, at another time.
Nevertheless, banks are likely to be affected by tougher standards the debt collection industry faces in verifying debts.
“This one really does have a direct effect on banks in terms of the costs that will be incurred to try to satisfy the requirements that the third-party debt collectors will inevitably be asking for in terms of documentation and making sure that the amount of the debt, the identification of the borrower, and all those things are verified across the board,” Kevin Petrasic, a partner at White & Case, told Bloomberg BNA. “I think that’s a big deal.”
The proposals, which are awaiting feedback and are a long way from final, are likely to have an “upstream effect” on creditors, including banks, Dong Hong, vice president and regulatory counsel for the Consumer Bankers Association, said in a phone interview. “So if there are more stringent requirements or more onerous requirements regarding documentation on the substantiation of debt, then that’s going to place pressure upstream on the banks to provide that information to their collectors. And if the pressure is large enough, it may shift the economic pros and cons of using third-party collectors.” [read more]