Foti Issue

Presumably this is the case:
http://dockets.justia.com/docket/court-casdce/case_no-3:2007cv00339/case_id-243362/

http://www.kaulkin.com/newsletters/bulletin/apr_07.cfm

You might also check on flyingifr's site, as they appear to be following this issue.

http://debtorboards.com


Many of these problems could be sidestepped by making the first contact by letter, with all required FDCPA notifications included. I never have understood why phone calls are somehow assumed to resolve anything, when everything I see indicates that sloppy handling of phone disputes is often at the root of messed up accounts in the first case.

Too often, the legal protections provided by consumer protection law are viewed simply as a barrier to get past, rather than as a legitimate part of the collection process necessary to ensure that the wrong party is not harassed, nor unowed debts collected.

 

RE: "However, whats to say they opened the letter and read it fully?"

I thought Mahon answered that.

 

The purpose of notifying the consumer of his rights is so that he can use them, if he believes there is an error. The purpose for calling consumers before sending letters is apparently, in too many cases, to try to attempt to collect before consumers have been notified of their right to dispute, allowing debt collectors to engage in verbal violations of law when they can be used to best effect, before the unsophisticated consumer has received even the limited legally required notifications.

Since there is often hardly compliance with the spirit of the law when initial contact is by phone, why should it be any surprise when the debt collection industry is in a catch-22 as a result? Technical compliance with FDCPA is not just some hoop to jump thru, merely to avoid the nuisance of either disputes or litigation, so that you can now ignore legitimate disputes. No legal determination has been made on the validity of the debt, and only a court could make such a determination. Lacking that, legitimate businesses, whether original creditors or debt collectors, should still choose to attempt to resolve disputes in a fair manner, as a matter of ethical business practice. Mere technical compliance with FDCPA does not accomplish this.

The telephone has become the tool of scoundrels, as witness the fraudulent behavior of telemarketers slamming phone accounts, that finally resulted in the passage of the do-not call list laws. Legitimate debt collection would not suffer from the elimination of their version of "telemarketing", any more than legitimate telecom companies suffered from shutting down their more fraudulent competitor's telemarketers. Nor would legitimate lenders suffer from the elimination of illegal collection tactics employed by JDBs years after their original loss is written off. Such abusive tactics seldom recover significant value back to the original lender, and are more likely to lead to damage against unrelated parties.

Leveling of the playing field SHOULD result in damage to businesses that depend on abusive practices for profitability.

 

collectman:

You can look at the FTC's response to ACA which lists 6 cases which are on the issues of providing the full name of the caller, and the 'debt collector' warning on phone calls.

Also, check out ACA's newsletter online which has 2 articles on this issue.

Also, there's a post by yours truly which lists the cases on this issue.

 

I'm feeling in a nice mood...

http://consumers.creditnet.com/Discussions/credit-talk/t-important-re-voicemail-messages-65315.html

 

Mahon v Credit Bureau of Placer County

This diatribe at least mentions it, with some background:
http://myarchive.8m.com/a/validation.html

It would appear that some confusion results from the FDCPA section combining the debt collector's obligation to provide validation in response to a request with the required notification language that if not disputed in 30 days, the debt will be assumed to be valid.

The Mahon's suit appears to be around whether the debt collector could prove they sent the FDCPA notification letter, which if not sent, would have been a violation of FDCPA, whereas it was established that the debt collector DID verify the debt with the original creditor, and forward that verification to the consumer, and also could show that a number of letters had been sent to the consumer regarding the debt, even if they could not show receipt of the initial one.

Actually similar to Chaudhry, in that it appears that some degree of validation obtained from the original creditor was in fact provided, or at least the dispute was not over the validation itself, but over an alleged technical violation of FDCPA that the consumer failed to prove.

Again, like Chaudhry, nonsense results from adopting some position derived from excerpts of the opinion that didn't even apply to this particular case under consideration, in an attempt to create a general justification for not responding to consumer disputes alleged to be received past 30 days.

Since FACTA separately allows disputing with the DF ANY reported credit report information, the main remaining issue from a consumer rights perspective, is whether consumers can enforce the FDCPA prohibition to "continued collection" on alleged debts if they dispute later than 30 days after the CA alleges they "received" notification of their dispute rights, or if the FDCPA's wording about what the debt collector may "assume" allow the CA to ignore all further challenges to the validity of the debt with no consequences.

You can "assume" all day long, but the consumer can tell you your full of $hit, and to "cease communications", or dispute under FACTA. What is your next move, that you couldn't already do prior to 30 days? File suit? You could already have done that prior to receiving a request for validation.

 

So, here's a question.

I got a letter from the CA (that was written to the State AG and then forwarded to me) that says:

So isn't the CA admitting to a corporate policy of institutionalized FDCPA violations by deferring requests for validation to the OC? Am I missing something?

I'm thinking the FTC might want to hear about this.

 

Nope...

Look at the required validation notice... As well as the Wollman opinion...

The documentation for validation must come from the original creditor.

They will OBTAIN validation...

Now, they CAN'T have the validation sent BY the original creditor...

 

Yup, that's what I was thinking...

Busted!

 

SEC problems on top of FDCPA

But how many people, consumers and debt collection people alike are aware that there is most likely an even bigger problem looming ahead for the collection industry than mere FDCPA violations?

The problem is arising in the real estate arena because the original lender is not the holder in due course of the note and cannot lawfully bring suit to foreclose on the property when the buyer defaults.

Although they are now seldom seen in courts as plaintiffs MERS (Mortgage Electronic Registry Systems) has illegally foreclosed on unknown numbers of properties all across America. They have never owned any real estate nor loaned any money anywhere and never had the note or mortgage when they did foreclose. They were merely assignees and the assignments were seldom done legally either. The only way they gained the legal right to sell the home after foreclosure was by naming the original lender (who didn't own the home either) as a defendant.

Now then, how does all that work?

The major banks who loan money to purchase homes sell the notes to a second entity which they own and control. The job of the second company is to bundle notes from the various branches, register them with SEC and sell them to a Trustee under their Master Servicing and Pooling Agreements. They also prepare the prospectus for each bundle of securities.

Among the more interesting items in the Master Servicing and Pooling Agreements is a detailed provision which states that MERS has no financial interest in any of the securities being offered for sale but are merely to serve as loan servicers.

Upon completion of the process the TRUSTEE which is quite often BANK OF NEW YORK or maybe Leymon Brothers then offers the ASSET BACKED SECURITIES as they are known to investors world wide. For all practical purposes it works just like the bond markets do. Notes from prime borrowers who have high credit ratings command more money than subprime bundles do.

The TRUSTEE is the actual holder in due course of the notes, not the original lender and is the only entity that truly owns the notes having brought them from the servicing and pooling company who bought them from the issuing bank. In some rare cases both the bank and the actual trustee are actually named as plaintiffs in the foreclosure action and sometimes only the trustee is named as plaintiff.

Lawyers often claim they lost the note but this is easily provably false because under the master servicing and pooling agreement and SEC regulations any note that is lost, stolen or otherwise destroyed must be accounted for as being lost, stolen or otherwise destroyed by filing a separate and lengthy report with the Securities and Exchange Commission. If no such filing was ever completed and reported to SEC then it cannot be legally claimed that the note was lost. Any such claim in court is probably an actual fraud upon the court.

Now then, let us move on to the collection of credit card debt.

Credit card debt is also bundled and sold on the securities markets in exactly the same way as mortgage notes are. Therefore when a 3rd party debt collector buys or is assigned a credit card debt to collect by a bank he may not really have the legal right to do so since the bank which sold the debt to him for collection may not actually own the debt at all.

If you doubt that then stop to think about why it is that the banks all claim to be unable to produce the original credit card agreement. Credit card agreements are bundled and sold on the securities market in much the same way mortgage notes are. The agreements are never lost, or shredded as claimed. They are numbered and sold under a master servicing and pooling agreement just like mortgage notes.

That's how the money to stay afloat and loan more and more and more is "created". Banks never actually lose any money if the consumer defaults.

So if they never lose any money on defaulted notes or credit cards then why do they bother to sue debtors? They have no choice but to pursue defaulted notes and cards because if they didn't it would not be long before they couldn't sell their asset backed securities. Their own credit ratings and the ratings of their securities would fall so badly that they couldn't sell them anymore.

So, if a 3rd party debt collector buys or is assigned debts to collect does the bank who did the assigning or selling actually have the legal right to do that since they are not the holder in due course of the note?

Does the collection industry ever stop to think about or research such things to find out whether or not they actually have been handed or bought the debt?

Now then, there is some real food for thought, but if anyone doubts what I have said here all they have to do is say so, give me the name of any major bank and I will gladly post a link to their servicer on an actual SEC web page where they can then spend the next few days studying the bank's master servicing and pooling agreements, prospectus lists and more.

But I will warn you ahead of time that if you do that you will find that the master servicing and pooling agreements alone are usually well over 100 pages long and usually have several pages of amendments on top of that.

 

I realize that I am not totally correct on the credit card end of it all. That is because so far I have concentrated most of my research on mortgages, notes and foreclosures and have only looked at credit cards superficially but enough to understand that they are also bundled and sold on the securities market just as mortgage backed securites (notes) are.

So then, if the debtor demands a copy of the original agreement the debt collector could not provide it in less than maybe 90 days or so and at a much higher cost than just using a copy of recent credit card agreements which can be had for little or no cost and he foists that off on the debtor claiming it is a copy of the agreement he signed.

If the debtor demands a copy of the original agreement and IF the courts allow that demand to be honored the usually fictitious plaintiff who is not the true holder in due course of the debt also foists a copy of the bank's current version off on the court falsely claiming it to be a true and certified copy of the agreement signed by the debtor.

Is that true or not?

So if the court does demand that the putative plaintiff produce a true and certified copy of the original document that might very well delay them granting judgment by at least 90 days or more so that's why they seldom enforce demands for certified copies of the original agreement. At least that's what I think.

I've spent months researching this whole SEC filings thing and I'm still not done by a long ways. It isn't just FDCPA but also TILA, RESPA, FACTA, SEC and much more where serious violations can and usually do occur. Lawyers who collect debts don't even know it all. They just know enough to get by for the most part and they really howl when they get tripped up and defeated by a pro se litigant. That's happening more and more all the time.

 

I understand your point here, but this is a complicated twist to the situations usually presented here. My point is to not confuse readers, and not set them on a false course.

Please note that there is a difference between selling the "debt", and selling the "account". The scenario above for ABS products is similar to "factoring" accounts receivable. A servicer is required in these packaged securities as the ABS is an interest in the pool, not the purchase of individual debts. The ABS instrument has purchased a legal right to the asset. As an example, often on CA notices, you will see some reference to the "creditor" being some Limited Partnership (LP), or security entity.

There is also a difference between "debt" packaged and sold as an ABS, and "accounts" packaged and sold as bad debt to CAs. In the end, it is the entity that has the interest, and/or custodial responsibility for that interest who can bring suit for collection purposes. In effect, what party was damaged. It is also common language for terms and conditions of these ABS products to have the right to "exchange" underlying assets, in other words "pull out a bad debt and replace with a good debt". This is where selling off of individual debts comes in.

In general, these securities are no different than any banking system. When a bank "lends" money, it is not lending the "banks" money, it is lending the depositors' monies.

Again, I understand your point and logic here. I can attest that these "agreements" are usually well thought out, and have been scrutinized by competent legal counsel. I know, as I have experience in the ABS market, and the offering of securities such as this type. I have dealt hands on with MBS (Mortgage Backed Securities) where "non performing notes" were pulled from the pool and returned for collection activity.

 

Then in the recent cases involving Afni collection of old GTE/Verizon debt, where consumer inquiries to Verizon show no account, and Afni employees (with questionable knowledge) claim "There is no balance showing in Verizon's records because all records were transfered to us when we bought the debts", based on industry practice, Verizon probably still has the original records archived, and Afni's claims are probably false?