The rules also would prohibit so-called “two-cycle” billing, would require that consumers receive a reasonable amount of time to make their credit card payments, and would prohibit the use of payment allocation methods that unfairly maximize interest charges. They also include protections for consumers that use overdraft services offered by their bank.

The proposed changes to the Board’s Regulation AA (Unfair or Deceptive Acts or Practices) would be complemented by separate proposals that the Board is issuing under the Truth in Lending Act (Regulation Z) and the Truth in Savings Act (Regulation DD).

It’s all part of the Federal Reserve Board’s attempt to increase protections for consumers who use credit cards. According to the press release issued in connection with the proposal, five key provisions are included:

The proposal also addresses acts or practices in connection with a bank’s payment of overdrafts on a deposit account, whether the overdraft is created by check, a withdrawal at an automated teller machine, a debit card purchase, or other transactions. The proposal requires institutions to provide consumers with notice and an opportunity to opt out of the payment of overdrafts, before any overdraft fees or charges may be imposed on consumers’ accounts.

You can see the Federal Register notices here.

A recent story in the New York Times highlights this growing, and disturbing, trend.

Encore, based in San Diego, is one of a growing number of collection agencies training and employing foreign nationals in India and elsewhere around the world for pennies on the dollar. Many Indians, at most, bring home $63.00 a month.

When outsourced employees from Indian are being trained, they take on an American name in case the consumer asks their name. Having an American name does not make them American, especially if they do not know the American lingo or their English is lacking. Consumers can routinely tell when a call is coming from abroad, and are clearly not as stupid as the debt collectors think.

This all begs the question of whether it is possible to take a foreign national and force them to adhere to the Fair Debt Collection Practices Act. Will these mild-manner folks, unschooled in the nuances of American syntax, be savvy enough to resist the urge to cross the line between legality and illegality?

More to the point, in the case of litigation against a debt collector for violations of the federal consumer protection laws, will the defending companies produce their employees for depositions? In such third-world countries it is often impossible to locate former employees due to lax record-keeping at the local level – so how would an aggrieved consumer even find the proper offending debt collector?

Consumers will receive a claim form from the FTC if they:

Consumers may call the FTC’s consumer response center at 877-382-4357 with any questions. The federal agency will handle refunds.

In television and radio advertisements that aired around the country, BlueHippo promised to ship computers to customers after a down payment of $99 to $124, followed by a series of automatic withdrawals from their bank accounts, according to the FTC. But the deductions began before the company informed consumers that it had a no- refund policy if they canceled before delivery.

The FTC attorney said some buyers paid hundreds of dollars but did not receive the equipment in the promised amount of time.

“Consumers understood that after 13 weeks of payments they would have a computer shipped to them,” he said. When the computers didn’t arrive, “people stopped making payments because their product was not delivered.” But BlueHippo did not return the money.

The FTC alleged that by failing to ship merchandise in a reasonable time frame or denying consumers the right to cancel and get a refund, BlueHippo violated the FTC’s mail-order rule. Officials said the company also might have violated the federal Truth in Lending Act and its regulations by not giving consumers written disclosures before the transactions were made. The commission also alleged that the company violated the Electronic Fund Transfer Act and its regulations by offering credit on the condition of repayment by preauthorized debits.

Source: Baltimore Sun.

The bottom line here is that anything a credit repair company can do legally, is something that you can do yourself - for free.

Credit repair services are governed by the Credit Repair Organizations Act. This law requires that the service provide you with a one-page document that tells you what your rights are if you dispute inaccurate information with credit repair companies.

And now the biggie: Make sure you don’t pay for any services upfront. By law, a credit repair organization cannot charge a fee unless and until the repair is completed.

“Operation Protect Your Home,” co-sponsored by State Sen. Diane Savino (D-North Shore/Brooklyn), is part of a citywide effort launched by the state Senate Democratic Conference and New York Banking Department.

“A lot of people are embarrassed and not willing to come forward, or they hope they will figure a way out of the mess,” said Ms. Savino. “Our message is it’s not going to go away and here is a chance for them to take control of the situation and sit down and have an honest financial work-up with the lending institution. At the end of this process, we want to see as many of these 2,031 families assisted in whatever way works for them.”

Eight lenders will be attending the workshop, to be held at the College of Staten Islandfrom noon to 8 p.m. in the college gymnasium. Those lenders include Chase, Citibank, EMC Mortgage, Home Loan Services, Option One Mortgages, Regional Capital (GMAC), Washington Mutual, Wells Fargo, and Wilshire Credit Corporation.
Those banks identified for the Democratic Conference just how many delinquent loans they hold in each of four boroughs. On Staten Island, the number of mortgages delinquent for 30 to 60 days totaled 2,031. In the Bronx, the figure was 2,854; Brooklyn, 8,114, and Queens, 9,574.

“On this day, not only will you be able to address your concerns directly with your mortgage lender or your loan servicer, and possibly begin to agree on new mortgage terms, you will also be able to meet with HUD-approved housing and credit counselors from all over New York City to receive assistance in keeping your home,” claims the invitation sent to over 2,000 Staten Island residents.

The help comes at a key time. A monthly report produced by the State Foreclosure Prevention Working Group, a multi-state task force that includes the New York Banking Department, found that seven out of 10 seriously delinquent homeowners across the United States are not on track for any help from lenders, largely because of a lack of interaction between mortgage servicers and homeowners.

The Richmond County Bar Association is in the process of incorporating The Richmond County Bar Association Volunteer Lawyers Project to help people with predatory, subprime loans. Rather than asking individual lawyers to take on such cases and risk liability, the bar association believed it was best to incorporate an organization to work on such lawsuits.

This initiative, though a bold one on paper, fails to take into account the fact that the mortgage servicers have only limited control over the ability to restructure loans on the spot. The process of loss mitigation, as the process of avoiding foreclosure, is a long one that involves significant paperwork and, ultimately, approval by the servicer after ensuring compliance with the agreement that governs how the servicer acts towards borrowers.

This agreement, called a Pooling and Servicing Agreement, is a complex one. When a mortgage loan is made, it is usually transferred to a trust and securitized; from that point on, the loan is serviced in accordance with the applicable loan documents and the Pooling and Servicing Agreement (PSA) for the trust. The PSA governs the allocation and distribution of loan proceeds and losses to the bondholders. It also describes in detail how the loans are to be serviced and includes guidance to ensure that the trust continues to comply with the REMIC provisions of the tax code in order for the trust to maintain favorable tax treatment. This allows for standardization of practices and procedures.

All servicers are required to act in accordance with the “servicing standard” as defined in the applicable PSA. So if a borrower comes to a mortgage servicer with a problem, that servicer is required to review the situation in light of the PSA - they have no real control over how the loan is treated, they merely follow the rules laid out for them.

The upshot is this - if you are a borrower looking for help from a mortgage servicer, be prepared to work hard and endure no small amount of effort in getting the deal done. Don’t expect to sit down with a representative

Source: SILive.com

Rawlins & Rivera, Inc. and Ryan & Reed, Inc., both of Florida and Georgia, have been ordered by the Federal Trade Commission to cease all collection activities that run afoul of the Fair Debt Collection Practices Act (FDCPA) and pay a judgment of $3.4 million. According to the government, the firms “used misleading dunning letters and abusive telephone calls to falsely threaten that consumers would be sued, their property seized, and their wages garnished if they did not pay the money that the defendants said they owed.” But the larger violations involved collectors representing themselves as attorneys.

In February 2007 the FTC said that the company’s agents were claiming to be attorneys and calling debtors and threatening legal action after “case reviews.” A Florida lawyer whose letterhead was used by the business was also named in the suit.

However, the big fine is full of sound and fury . . . signifying nothing.

The FTC reported it suspended much of the $3.4 million judgment because the firm is unable to pay it. Rawlins may continue to operate as a collection agency.

What would be interesting, however, would be to ask the owners of the collection agency whether they would ever suspend their harassment if a debtor said that he or she could not pay. Somehow, I doubt that.

Double standards abound, apparently.

So why is it that most people don’t take the time to read and understand the documents they sign at the closing table? Simple - there are too many documents and not enough time. The table is filled with people, the bank representation just wants to get out the door to another closing, and there are too many documents (I know I said it already, but the pile is daunting).

Over at Caveat Emptor, my colleague Sam Glover recommends that you demand to see the closing documents a few weeks in advance of the closing. I’ve been an attorney for awhile and have done my fair share of real estate closings, but have never thought to ask for documents in advance - even when it was my own home. Thanks to Sam, I will now recommend this course of action to every one of my clients and friends who are buying real estate.

A Security Freeze is placed on your credit file, and prevents most lenders and others from gaining access to your credit report for review prior to granting a new line of credit. If there is a Security Freeze on your credit file, the lender won’t be able to get a copy of your credit history and, as a result, most lenders will refuse to open a new credit account.

But before you leap into freezing your credit reports, remember that it’s not for everyone. If you’ve got a security freeze in place you won’t be able to borrow money or get a new credit card until you temporarily lift or permanently remove it. The same is true of new insurance coverage and background checks that might be required by a new employer. So if you’re going to be looking for a new job, new insurance, or a loan (including a mortgage or car loan) in the near future, hold off on the security freeze for now.

But if you are going to place a security freeze on your account, you must do so in writing to each of the three major credit reporting agencies. Your letters must contain the personal information required by each credit reporting agency. This information is needed so the credit reporting agencies can verify your identify and process your request. You should send your letters by certified mail to ensure that you have proof of receipt.

The three credit reporting agencies must place a Security Freeze on your credit file within five business days of receiving your request. Within 10 days of placing the Security Freeze on your credit files, each credit bureau must mail you a letter confirming that a Security Freeze is now in place. These letters will also contain a password or a Personal Identification Number (”PIN”). When you want to temporarily lift or permanently remove your Security Freeze, you can use this password or PIN to identify yourself when contacting the credit reporting agencies. Each credit reporting agency will give you a different password or identification number.

After the first request to place a security freeze on your credit file, the credit reporting agencies may charge up to $5 fee to place, temporarily lift or to remove a Security Freeze. There is also a $5 fee for the issuance of a replacement PIN or password. If you are a victim of Identity Theft and provide a valid copy of a police report or a Federal Trade Commission ID Theft affidavit, alleging the crime of identity theft, there are no fees for any of these services.

Your requests for a security freeze may be sent to:

TransUnion Fraud Victim Assistance Department
P.O. Box 6790
Fullerton, CA 92834

Equifax Security Freeze
P.O. Box 105788
Atlanta, Georgia 30348

Experian Security Freeze
P.O. Box 9554
Allen, TX 75013

Of the requirements being placed on creditors, the most rigorous and likely to result in headaches for them is the requirement of an affidavit. Most collection lawsuits are brought by bottom-feeding debt buyers who purchase credit card debt for as little as $0.10 on the dollar. The companies receive, for their purchase price, a computer file with information on the debt but nothing more. Debt buyers who seek additional information such as documents proving the validity of the debt are required to pay significant additional sums to the originating credit card companies, which is why most times they do not bother doing so. Rather, they gamble that the consumer will default on the lawsuit and allow a judgment to be taken without any proof.

The assumptions and business model of these debt buyers is borne out by the numbers. The Urban Justice Center projected that the court last year entered judgments totaling $784.3 million in consumer credit collection actions. In 2006, the center reported, 320,000 collection cases were filed, representing 51 percent of the 618,000 cases filed that year, excluding housing and small claims cases.

The Urban Justice survey found that the vast majority of consumer credit collection actions, nearly 90 percent, are not filed by credit card or other companies that extend credit, but instead by firms that have bought debt from those companies.

The survey also discovered that consumers fail to appear to contest claims, and default judgments are entered in 80 percent of the cases filed. According to court data, however, 40 percent of the cases handled by the court in 2006 (other than housing and small claims) resulted in default judgments. But in either event, this is a significant default rate that is the result in large measure of consumers believing that if they are sued they will automatically lose.

As of January 1, 2008 court clerks will not be permitted to enter default judgments unless they are accompanied by an affidavit that asserts the original records concerning the debt have been reviewed.

Eric M. Berman, the president of the Commercial Lawyers Conference of New York, an association of debt collection lawyers, acknowledged that in a high percentage of cases brought by debt buyers, the default affidavits are supported by summaries of the amount of debt owed by the consumer at the time the debt was purchased. Many affidavits also contain representations that the original creditor had warranted to the buyer that the debt was valid, he added.

Should debt buyers be required to have access to the original debt records, their business model is likely to be negatively affected, said Steven Cohen, whose four-lawyer firm, Cohen & Krasser engages primarily in a consumer debt collection practice.

Gerard J. Felt of Pressler & Pressler, a 23-lawyer debt collection litigation firm, said that requiring access to the original records will place “an excessive burden on the debt buying industry and have “a severe negative impact.” Pressler & Pressler, which is based in Cedar Knolls, N.J., handles collection cases in the Civil Court, he said.

Severe negative impact for whom? The consumer, who is dragged into court on nothing more than a computer printout? It used to be that a plaintiff in a lawsuit was required to prove up a case in order to be granted a judgment - and this move by the New York City court system does nothing more than reinforce that rule.