Hey all, I love this site tremendously as it's helped me a bunch. I am in the middle of some litigation with Capitol One that is not going well for them. In the midst of research, I have been reading some of the major banks prospectus and discovering some very interesting things that raise some questions for me in a big way. It seems just about every Bank out there does this the same way, I'll use Cap One as an example: You apply for a credit card and Cap One opens an account. Capitol One (after a certain period, I think to the tune of $50Mil) takes these accounts in tranches and sells/transfers/assigns these accounts to Capitol One Funding LLC, where they are securitized and move again to Capitol One Multi-Asset Trust. Capitol One Bank (USA) N.A. no longer owns this debt, but becomes the servicer of the accounts for a fee. These securities are sold to investors like Barclay's, Salomon etc.. Upon default of a credit card account, these securities are transferred back to Capitol One Funding LLC. The Charge Off process happens between COMET and the transfer back to CAP ONE FUNDING LLC. My questions become deep at this point. Since Cap One no longer owns these debts and Cap One Funding LLC does: 1. Can Cap One collect these debts legally? 2. Can Cap One legally sell a debt to a JDB? 3. Can CAP One report these as a Charge Off? 4. Can Cap One even sue on the account or hire a collection agency? 5. Doesn't the entry on any CRA report become subject to scrutiny? The information I found on the SEC web site while I was looking this up is easily available, but very dry to read. A company like Chase in their prospectus even goes as far to tell the public and investors that the will mark the contracts the sell through this process to reflect the sale or transfer. Somebody help me interpret this a little deeper. I don't want to turn into one of the silver bullet rookies who mis-interpret the data and jump to conclusions.
Hi Epistiphan...glad you love the site! These are some deep questions. My guess is that all these Cap One subsidiaries you mention fall under the same holding company (Capital One Financial Corp). So, even though they're moving the debt around on their books, it's all still in the same family and thus they have the right to charge it off, sell it to a JDB, or try to collect the debt themselves if they want to. Just my 2 cents.
That's what I thought initially. However, these contracts are being sold in large blocks of securities. They are by company moved to other organizations. This might also explain why so many attorney's have no contract from the OC when they appear in court. Again as I explained in the previous, CHASE is actually marking these contracts as transferred of sold. Sounds like a good case of securities fraud!?
Interesting, but I'm still not sold on the whole idea. If they are transferred back to Cap One Funding upon default and then charged off, it seems to me like the debt is still sitting on their books under the same holding company.
