Debt Collector Abuses Continue; Tougher Federal Law Needed, Advocates Say
Consumers complain of illegal, abusive conduct as collectors defy federal, state enforcers
By Mc Nelly Torres
April 19, 2010
Jennifer Ringstaff felt nothing but relief when the repo-man came to her Virginia home recently and repossessed her Dodge Caravan.
Ringstaff said she had endured months of humiliation at the hands of debt collectors who made calls and disclosed her debt to relatives and employer.
“They got so hateful on the phone that I wouldn’t answer it,” said Ringstaff, a mother of two children, ages 13 and 11. “It’s embarrassing. I was on the verge of losing my job because they [debt collectors] called my boss at home and called him a liar.”
In Tennessee, Bobbie became suspicious when her deceased husband received a bill recently from a debt collection agency based in Illinois offering to settle a debt from a cell phone carrier. Her husband died in 1999. Bobbie asked ConsumerAffairs.com not to publish her full name.
And Annette Jaramillo, of Apple Valley, Calif., was outraged when a Miami debt collector called her home and told her teen-age daughter and son – in separate calls – that their parents were going to jail.
“I don’t care how much is the debt. It could be million of dollars,” Jaramillo said. “You don’t do that to a child. My daughter was so scared and she was fearful that something would happen to us.”
Debt collector abuses are nothing new. But consumer advocates fear the abuses will grow more widespread in numbers and scope at a time when millions of Americans are struggling to pay their bills.
“There’s no doubt that the debt collection industry is thriving. You can’t get blood from a rock, but these guys are trying,” said Ira Rheingold, executive director and general counsel of the National Association of Consumer Advocates, a consumer advocacy group based in Washington D.C.
Hundreds of consumers, including Ringstaff, Bobbie, and Jaramillo, have posted complaints on ConsumerAffairs.com’s site, alleging that scrupulous collectors have threatened arrest and jail, made harassing phone calls, contacted third parties and told about the debts, called employers at work and also tried to collect a debt not owned by the consumer, all violations of the Fair Debt Collection Practices Act. More alarming, consumers have complained that debt collectors have gained access to their bank accounts and made withdrawals without their consent.
Under FDCPA, debt collectors are not allowed to tell others about consumer debts unless that other person is your spouse, attorney or co-signer. They can call neighbors or relatives in their attempts to contact the consumer, if they don’t know where they currently live. But they can’t say they are calling to collect a debt. And once they found the consumer, those calls should stop.
Even so, the Federal Trade Commission, the federal agency that collects consumer complaints against third-party debt collectors, says the debt collector industry has topped all industries for years in the number of consumer complaints filed each year.
Last year, consumers filed 119,549 complaints against third party and creditor debt collectors claiming violations of the FDCPA, up from 104,642 complaints filed in 2008. Consumer advocates say these numbers don’t reflect the gravity of the problem because most consumers don’t file a complaint.
Some of the alleged abuses included trying to collect a debt that isn’t owed or is beyond the statute of limitations, making harassing phone calls, threatening to make arrests that the debt collector has no authority to make, and collecting a debt discharged in bankruptcy.
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Foreclosure: Losing the American Dream
Homeowners get the run-around when they seek mortgage modifications
By Mc Nelly Torres
August 31, 2009
On a recent day, Michelle McCloskey began to pack her belongings from her four-bedroom Phoenix home, scheduled to be sold at auction Sept. 3. McCloskey, a litigation specialist and single mother of two teens, lost her home to foreclosure.
She tried to modify her $411,000 mortgage to lower the monthly payment after she lost income. But Litton Loan Servicing denied the application because she was not delinquent on her payments.
McCloskey, 47, stopped paying her mortgage in February in the hopes that Litton would modify her loan to a payment she could afford.
“They kept denying the application and didn’t say why,” McCloskey said, adding the value of the property is now about $150,000 lower than when she bought it. “I could never get anybody on the phone to answer my questions.”
In Santa Barbara, Calif., Michele Cheverez is in the process of moving out of the only home she’s known for 20 years. Her condo was put up for auction on Aug. 10 after Litton denied a mortgage modification and began a foreclosure action.
Cheverez, a state employee, said she couldn’t afford to make her payments after her pay was cut earlier this year. Cheverez, who bought the property for $200,000 in 1988, said she sent her application and documentation to Litton three times after the staff claimed they didn’t receive the paperwork.
“My house is gone and I’m still waiting to find out why,” said Cheverez, who learned about the auction on July 21 after a “notice of trustee’s sale” was taped on her front door. “All I wanted was my payment to come back to $2,208 from $2,934 with an adjustable rate.”
McCloskey and Cheverez, 61, share something in common: both tried to modify their mortgages with Litton. Now they are homeless with their credit ruined.
Litton, based in Houston, Texas and owned by Goldman Sachs, handles the operations aspects of consumer loans including sending out statements, receiving and tracking payments, notifying consumers of overdue payments and initiating foreclosure proceedings.
ConsumersAffairs.com has received dozens of consumer complaints — including Cheverez and McCloskey — stating that Litton promised loan modifications, but the process dragged out and they were told months later that they did not qualify. In many cases, consumers sent documentation multiple times after staff claimed they never received it, putting consumers in a dangerous situation because they got closer to foreclosure because of the delays.
In April, Litton settled a class-action lawsuit alleging that the company failed to credit borrowers’ mortgage payments in a timely fashion, then turned around and charged late fees for the purportedly tardy payments. In some cases, consumers’ accounts were put into default. The suit covered all homeowners whose mortgage transaction was transferred or sold to Litton between October 2002 and February 2009, and who were charged erroneous late fees within 60 days of the transfer.
But even after the settlement, consumers continue to complain that Litton fails to post payments in a timely manner and subjects them to a run-around when they try to modify their mortgage.
Donna Marie Jendritza, a Litton spokesperson said in a written statement, that Litton Loan Servicing does not provide specific comments about its customers due to privacy restrictions. But she said the company was looking into the handling of the specific cases we inquired about.
“We take complaints from our customers very seriously,” Jendritza wrote. “Litton has a dedicated department that handles customer inquiries and determines a course of action to resolve a matter if an issue exists.”
Jendritza said that if a customer has a question or concern, he or she should contact the Customer Care Department at (800) 247–9727 or mail a written inquiry to:
Litton Loan Servicing
4828 Loop Central Drive
Houston, Texas 77081
“Litton modified more than 44,000 loans, representing about 10 percent of its loan portfolio in the 12 months prior to the announcement of the Home Affordable Modification Program (HAMP), according to the statement. Currently, Litton has offered more than 39,400 trial modifications to our customers using terms in accordance with the principles of HAMP and more than 28,900 have accepted and started their trial modifications,” Jendritza wrote.
“I never thought I would find myself in this situation,” said Gene James, a chiropractor in Phoenix, who lost his six-bedroom house where he raised five children, ages 5 to 15.
James, 52, lost the home where he lived with his family for 14 years.
James applied to modify his $520,000 mortgage after he fell behind his mortgage payments in February because his private practice lost revenue as the economy staggered, he said. An auction on the property took place in July.
“They never accepted any e-mails and I didn’t have much correspondence with anybody,” James said. “They don’t keep documentation very well.”
Nationwide, homeowners are struggling to make their mortgage payments and over a million homes have already been lost to foreclosure, according to the Center for Responsible Lending, a consumer watchdog group based in North Carolina.
Consumer advocates contend the federal government could save billions of dollars worth of mortgages if bankruptcy judges had the option to modify loans on primary residences.
“We believe we are not going to get out of this bad situation until those [foreclosures] numbers are reduced and a bankruptcy provision is passed by Congress,” said Kathleen Day, a spokeswoman for the Center for Responsible Lending. “If the government makes changes on bankruptcy law, they will be able to help millions and quickly.”
The Mortgage Bankers Association reported recently that 1 of every 12 borrowers was seriously delinquent, defined as 90 days delinquent or in foreclosure. The report, released on Aug. 20, shows record levels of delinquencies in the second quarter of 2009 compared with last year, when 1 in 22 borrowers was delinquent and two years ago, when 1 in 40 was.
“Moreover, no segment of loans (subprime, prime and FHA) has been immune to this deterioration,” the MBA report stated. “Clearly loan servicers are not helping enough troubled borrowers through voluntary loan modification efforts and, as a result, prospects for an improved housing market remain distant.”
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‘High-Return’ Investment Schemes Target Affluent Seniors
International Banking Group’s ultra-high-interest claims can’t be verified
By Mc Nelly Torres
Copyright © 2009 All Rights Reserved
November 2, 2009
An attractive brochure express-mailed by the International Banking Group to seniors living in affluent areas claims the company’s certificates of deposit (CD’s) earn above average interest rates.
IBG lists 12 U.S. banks and several international institutions as the banks that supposedly issue the high-interest CDs, and claims that since its retail division was founded in 2008, the company has serviced over 35,000 new accounts worldwide.
But five of the seven banks contacted by ConsumerAffairs.com said they have never heard of IBG and at least one of them is in the process of seeking legal action because they claim that IBG uses their logo without permission. And state officials in California, where the company claims to have a Beverly Hills office, opened an inquiry after ConsumerAffairs.com asked questions about the registration requirements for corporations operating in the state.
“It looks like they [IBG] should be registered and that would make them in violation of the law,” said Mark Leyes, a spokesman for the California Department of Corporations. “Because we are aware of it, we are looking into the matter.”
Consumers in California and Florida have complained that IBG staff is making cold calls to seniors living in exclusive retirement communities, making sales pitches on the phone before mailing its brochure overnight. Database searches of incorporation records in California and Florida did not produce any registration records for IBG or its Web site, http://www.ibgmutual.com, ConsumerAffairs.com has found.
IBG denies any wrongdoing but recently took down its Web site.
Robert, who asked not to have his full name used, said a long-time friend asked him to look into IBG’s background after receiving an unsolicited call. The 85-year-old widow who lives in Timber Pines, an exclusive retirement community near the Tampa, Fla., area, got a package from IBG days after receiving the call.
“I told her don’t send them any money,” said Robert, who contacted Florida Attorney General’s office and other state officials in Florida and California. “She was a little nervous about it.”
Harry T., of Camarillo, Calif., also received a brochure after getting a cold call from a salesman. The 92-year-old man, who lives in a retirement community, turned the brochure over to his son, an attorney, and said that other Leisure Village residents had also been contacted. Both asked that their names not be published. The son checked out the Beverly Hills office and found that it was a short-term “executive suites” operation that offers mail-forwarding for clients wanting to appear to have an established operation.
Until recently, IBG’s Web site, http://www.ibgmutual.com, listed an array of awards, including “Best Worldwide Private Bank in Western Europe” and “Best Private Bank in the United Kingdom,” both supposedly awarded by The Economist in 2008 and 2007, respectively.
But Sal Genna, an executive with the London-based magazine, said: “The awards that IBG claims on its Web site to have received from The Economist were not awarded to IBG by The Economist.”
The site, which was created on June 18, 2009, according to registration data listed at HostMonster.com, is now “under construction” and not accessible for view. HostMonster.com said the site administrator is Jason Santos, who listed an address in Singapore.
ConsumerAffairs.com contacted seven financial institutions in the U.S., Canada and Great Britain. JP Morgan Chase, Citibank, Royal Bank of Canada and Wells Fargo said that they have no relationship with IBG.
Neil Brazil, a spokesperson for HSBC North America, said: “Following a thorough investigation I can confirm that HSBC Bank USA, N.A. has no relationship with a company named IBG Group. The issue of inappropriate use of the HSBC logo is currently being addressed.”
Bank of America and Lloyds TBS did not respond to several requests for comment.
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