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Tag Archive | "debt"

JPMorgan Chase Whistleblower: ‘Essentially Suicide’ To Stand Up To Bank

JPMorgan Chase Whistleblower: ‘Essentially Suicide’ To Stand Up To Bank


I hear what she’s saying about googling her name, because I can tell you there were a ton of “Linda Almonte” searches that lead to SFF.

She’s a hero to many.

HuffPO-

When Linda Almonte alerted her boss at JPMorgan Chase about potential fraud in a major deal she was helping to close, she expected him to applaud her great catch.

Instead, he fired her.

“We went down fast,” said Almonte, 41, about her family. She had been making $100,000 a year as a division vice president at Chase, enough to support her stay-at-home husband, their four kids, ages 12 to 22, and rent a three-bedroom house in San Antonio, Texas.

Her move at Chase amounted to “essentially suicide,” Almonte told The Huffington Post. No bank in town would hire her after word spread that she had stood up to the banking giant, she said. After more than a year of fruitless job hunting, Almonte and her family left town, landing at a hotel near Disney World, paying $300 a week for a two-bedroom with a kitchenette.

[HUFFINGTON POST]

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Borrower Beware: B of A Customer Repaid Her Bill Yet Faced a Collections Nightmare

Borrower Beware: B of A Customer Repaid Her Bill Yet Faced a Collections Nightmare


American Banker-

Karen Stevens spent nearly $1,900 paying off delinquent credit card debt she owed Bank of America in 2006. She then spent another three years fending off demands from collections agencies that she repay the debt all over again. Neither a cancelled check or creditor’s letter stating that she’d fulfilled her obligations deterred the collectors.

Stevens ended the nightmare only by hiring a lawyer and counter-suing her pursuers. Bank of America was not directly involved in the legal contretemps, but it appears to have set them off by selling rights to Stevens’ account, even after assuring her she’d paid up in full.

[AMERICAN BANKER]

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Ben Hallman: Home Loans Can Walk, Your Mortgage Nightmare Explained

Ben Hallman: Home Loans Can Walk, Your Mortgage Nightmare Explained


HuffPO-

We may question the need for 17 brands of dishwashing detergent, but giving consumers choices is an excellent check against many types of harmful behavior of companies that make and sell products.

Sell pet food that kills cats and dogs, manufacture a pickup truck with an exploding gas tank, or even try to spin off your popular DVD-by-mail business, and customers will flee.

“This is the classic market response,” said Katherine Porter, a consumer law professor at the University of California. “Consumers vote with their feet.”

But when it comes to buying a home, these market forces are largely neutralized. That’s because debt also has feet. These days home loans, especially loans in default or otherwise in distress, get traded around more often than a mid-career relief pitcher. The lender that makes the loan may sell it to an investor, like Fannie Mae and Freddie Mac, or another bank. Sometimes the original lender gets bought out by another bank and the loan is transferred.

For homeowners who remain current on their payments and can avoid financial distress, it rarely matters who owns or services their home loan. But when times get tough, that changes.

[HUFFINGTON POST]

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Linda Almonte | How a Whistleblower Halted JPMorgan Chase’s Card Collections

Linda Almonte | How a Whistleblower Halted JPMorgan Chase’s Card Collections


American Banker-

No sooner did Linda Almonte show up for work on November 30, 2009 than was she escorted out the door by security at JPMorgan Chase’s Credit Card Litigation Support Group in San Antonio. A midlevel Chase executive who oversaw business process execution employees, Almonte says she was fired after just six months on the job for challenging her superiors about the accuracy of the bank’s credit card records.

Colleagues first learned of her dismissal later in the day when operations manager Jason Lazinbat, Almonte’s former boss, gathered bank staff in a conference room and announced she was no longer with the bank. Under no circumstances, Lazinbat warned, were staffers to communicate with Almonte, recalls Carole McGinn, a quality control worker who spent 14 years at Chase. The account was confirmed by second employee, who requested to speak anonymously.

[AMERICAN BANKER]

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OCC Probing JPMorgan Chase Credit Card Collections

OCC Probing JPMorgan Chase Credit Card Collections


:) Credit Cards WILL BE the NEXT robo-signing scandal! :)

American Banker-

JPMorgan Chase & Co. took procedural shortcuts and used faulty account records in suing tens of thousands of delinquent credit card borrowers for at least two years, current and former employees say.

The process flaws sparked a regulatory probe by the Office of the Comptroller of the Currency and forced the bank to stop suing delinquent borrowers altogether last year.

The bank’s errors could call into question the legitimacy of billions of dollars in outstanding claims against debtors and of legal judgments Chase has already won, current and former Chase employees say.

For the banking industry at large, the situation at Chase highlights the risk that shoddy back-office procedures and flawed legal work extends well beyond mortgage servicing.

“We did not verify a single one” of the affidavits attesting to the amounts Chase was seeking to collect, says Howard Hardin, who oversaw a team handling tens of thousands of Chase debt files in San Antonio. “We were told [by superiors] ‘We’re in a hurry. Go ahead and sign them.'”

[AMERICAN BANKER]

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REQUIRED READING | Gone, but not forgotten: Canceled debt

REQUIRED READING | Gone, but not forgotten: Canceled debt


The bleeding just does not stop.

FL REALTORS-

Like former lovers who send you friend requests on Facebook, old debts can come back to haunt you.

But while you can ignore old flames, you can’t dismiss past debts, even if your lender forgave them. Debts that were canceled or forgiven are considered taxable income – something many taxpayers don’t realize until they receive a 1099-C tax from their lenders.

During the Great Recession, lenders wrote off billions of dollars of credit card debts deemed uncollectible. Now, the tax bills on that debt are coming due. The IRS estimates that creditors will send taxpayers 6.4 million 1099-C tax forms this year, up from 3.9 million in 2010.

The appearance of an unexpected tax bill “creates a financial nightmare for people who have already been through financial hell,” says Gerri Detweiler, personal finance expert for Credit.com.

Fortunately, if unemployment or other financial calamities forced you to default on your debts, there’s a good chance you won’t have to pay the tax bill. You qualify for an exemption from taxes on forgiven debt if:

READ MORE [FLORIDA REALTORS]

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Banks face crisis in bungled commercial mortgages

Banks face crisis in bungled commercial mortgages


Oh yes, MERS is in this rabbit hole as well: From a 10/10 post EXCLUSIVE | NYSC COMMERCIAL (CMBS), MERS and a $65 MILLION NOTE

If this doesn’t do them in then look for the Next Robo-Signing Scandal: RePOST: CHASE BANK v. GERGIS | NY Civ. Court “ROBO-TESTIMONY, WAMU, CREDIT-CARD DEBT” Dismissed w/ PREJUDICE

Either way the banks are screwed on these as well.

CBS-

The nation’s banks are looking at a robo-signing problem with commercial real estate which may dwarf the one for home mortgages, according to a new study.

Research by Harbinger Analytics Group shows the widespread use of inaccurate, fraudulent documents for land title underwriting of commercial real estate financing. According to the report:

This fraud is accomplished through inaccurate and incomplete filings of statutorily required records (commercial land title surveys detailing physical boundaries, encumbrances, encroachments, etc.) on commercial properties in California, many other western states and possibly throughout most of the United States.

[CBS NEWS]

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RePOST: CHASE BANK v. GERGIS | NY Civ. Court “ROBO-TESTIMONY, WAMU, CREDIT-CARD DEBT” Dismissed w/ PREJUDICE

RePOST: CHASE BANK v. GERGIS | NY Civ. Court “ROBO-TESTIMONY, WAMU, CREDIT-CARD DEBT” Dismissed w/ PREJUDICE


Note: This post went missing shortly after it was on the site back in June 2011 and IMO may be a clue as to why the recent massive halts nationwide, but in reality, this began last June :)

This is far worse than the foreclosure fraud robo-signing scandal and they do not want this to get out of control…it’ll spell doom.

I’d also like to point you to another case that they are aware of that deserves credit: “Robo-Affidavit” Class Action Settles for $5.2 Million | MIDLAND FUNDING v. BRENT

 Decided on June 15, 2011

Civil Court of The City of New York, Kings County


Chase Bank USA, N.A.

against

Shady A. Gergis

EXCERPTS:

UNDERLYING FACTS:

For its first witness, plaintiff called Martin Lavergne, who worked for CHASE BANK USA, N.A.(“Chase”) in various roles over a period of approximately 17 years. Presently, he holds the title of “custodian of records.” While Mr. Lavergne maintained that he had personal knowledge of the practices and procedures that Chase utilized in creating and maintaining consumer credit card account records, he never described these practices and procedures and never testified as to how he acquired personal knowledge of them.

[…]

Notably, some of the records that were shown to Mr. Lavergne were apparently created by Washington Mutual Bank. Mr. Lavergne explained this by stating that at some point in time, Chase had acquired Washington Mutual Bank. No testimony was elicited from Mr. Lavergne that he had worked for Washington Mutual Bank or that he had personal knowledge of the practices and procedures that Washington Mutual Bank employed in creating and maintaining consumer credit card account records.

[…]

Here, Mr. Lavergne’s foundational testimony was essentially a verbatim recitation of the statutory elements set forth in CPLR 4518[a]. He gave absolutely no testimony as to how the electronic records concerning defendant’s account statements came into existence nor did he indicate that he even knew how such information was collected. It would appear that credit card statements contain information that is conveyed from multiple entities, from the reporting merchant through various intermediaries, until the information is ultimately incorporated into plaintiff’s business records (see Discover Bank v Williamson, 2007 NY Slip Op 50231[U] [App Term, 9th and 10th Jud Dists]). Certainly, Mr. Lavergne did not demonstrate that the person or persons who inputted the electronic data had actual knowledge of the events inputted or that such person or persons obtained knowledge of those events from someone with actual knowledge of them and who had a business duty to relay information regarding the events (see Corsi v Town of [*4]Bedford, 58 AD3d 225, 229 [2d Dept 2008]; Capasso v Kleen All of America, Inc., 43 AD3d at 1347).

[…]

Further, Mr. Lavergne’s testimony was highly suspect. As stated above, some of the records that plaintiff sought to introduce into evidence through the testimony of Mr. Lavergne were apparently prepared by Washington Mutual Bank. The foundational testimony given by Mr. Lavergne concerning these records was identical to the foundational testimony he gave concerning the Chase records. It is well settled law that in order for a witness to lay the foundation for the admission of a document as a business record pursuant to CPLR 4518[a], the witness must demonstrate personal knowledge of the business practices and procedures pursuant to which the document was made (see Reiss v Roadhouse Rest., 70 AD3d 1021, 1025 [2d Dept 2010]; Lodato v Greyhawk N. Am., LLC, 39 AD3d 494, 495 [2d Dept 2007]; Vento v City of New York, 25 AD3d 329, 330 [1st Dept 2006]; Dayanim v Unis, 171 AD2d 579 [1st Dept 1991]; Midborough Acupuncture, P.C. v New York Cent. Mut. Fire Ins. Co., 2006 NY Slip Op 51879[U] [App. Term, 2d & 11th Jud Dists]). Because Mr. Lavergne never worked for Washington Mutual Bank, it defies logic that he would have personal knowledge of Washington Mutual Bank’s business practices and procedures. For these reasons, the Court gives Mr. Lavergne’s “robo-testimony” and plaintiffs’ no weight or credit (People v Barrett, 14 AD3d 369 [1st Dept 2005]; see also Washington Mut. Bank v Phillip, 2010 NY Slip Op 52034[U] [Sup Ct, Kings County]).

[…]

In sum, the offered “robo-testimony” was insufficient to establish its case by a preponderance of the credible evidence. [*5]

Based on the above, it is hereby

ORDERED that judgment be entered in favor of defendant SHADY A. GERGIS and against plaintiff CHASE BANK USA, N.A. and that plaintiff’s complaint be DISMISSED with prejudice on the merits.

The foregoing constitutes the Decision and Order of the Court.

[ipaper docId=58601475 access_key=key-13b7jr4qpkf19xlbsusy height=600 width=600 /]

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JPM Chase Quietly Halts Suits Over Consumer Debts

JPM Chase Quietly Halts Suits Over Consumer Debts


American Banker-

JPMorgan Chase & Co. has quietly ceased filing lawsuits to collect consumer debts around the nation, dismissing in-house attorneys and virtually shutting down a collections machine that as recently as nine months ago was racking up hundreds of millions of dollars in monthly judgments.

[AMERICAN BANKER]

 

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Florida HB 65 – Foreclosure Debt Relief

Florida HB 65 – Foreclosure Debt Relief


General Bill by Soto

Foreclosure Debt Relief: Creates “Foreclosure Debt Claims Act”; authorizes creation & administration of deficiency judgment reimbursement program by Florida Housing Finance Corporation contingent upon occurrence of certain conditions precedent; provides for future termination of program; authorizes continuation of program after depletion of funds; provides procedures & eligibility requirements for homeowners & financial institutions to file specified monetary claims.

Effective Date: upon becoming a law

Original Filed Version

[ipaper docId=77032644 access_key=key-gwakxpa8ppkmoa721o2 height=600 width=600 /]

 

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‘Warning: Predatory Lender’–A Proposal for Candid Predatory Small Loan Ordinances – Christopher L. Peterson

‘Warning: Predatory Lender’–A Proposal for Candid Predatory Small Loan Ordinances – Christopher L. Peterson


Christopher Lewis Peterson
University of Utah – S.J. Quinney College of Law

Washington and Lee Law Review, Vol. 69, No. 2, 2012

Abstract:     
Over a hundred different local governments around the country have adopted ordinances restricting high cost, small loans. This trend reflects the solid majority of the American public that opposes the legality of triple-digit interest rate loans and the long historical tradition of treating “payday” and car-title lending as a serious civil offense or even a crime. Nevertheless, perhaps owing to limits on municipal power, local payday lending law has generated relatively little scholarship or commentary. This paper describes the existing local law governing small, high-cost consumer loans and proposes a more emphatic ordinance that better reflects the policy judgment of many local leaders and a solid majority of the America public. In particular, this paper (1) introduces the historical background of regulation of usurious lending; (2) analyzes the recent growth in local ordinances attempting to control small, high-cost loans; (3) discusses the evidence of market failure in the small high-cost loan market; (4) proposes a model ordinance requiring that lenders who offer loans in excess of 45% per annum display a cautionary message that reads: “Warning: Predatory Lender,” on their street, storefront, and other on-premises signs; and, (5) argues that the well-established municipal authority over signage provides a solid statutory and constitutional basis for such a law. An appendix with a model ordinance suitable for adoption by most local governments follows.

[ipaper docId=76189048 access_key=key-qf71ytid5b8j4007iww height=600 width=600 /]

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James Surowiecki: “Homeowners are getting lambasted for doing what companies do on a regular basis”

James Surowiecki: “Homeowners are getting lambasted for doing what companies do on a regular basis”


When people aren’t wealthy or part of the elite, you must follow the rules

The New Yorker-

Paying your debts is, as a rule, a good thing. But the double standard here is obvious and offensive. Homeowners are getting lambasted for doing what companies do on a regular basis. Walking away from real-estate obligations in particular is common in the corporate world, and real-estate developers are notorious for abandoning properties that no longer make economic sense. Sometimes the hypocrisy is staggering: last winter, the Mortgage Bankers Association—the very body whose president attacked defaulters for betraying their families and their communities—got its creditors to let it do a short sale of its headquarters, dumping it for thirty-four million dollars less than the value of the building’s mortgage.

When it comes to debt, then, the corporate attitude is do as I say, not as I do. And 

[THE NEW YORKER]

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MUST READ: Prisoners of Debt

MUST READ: Prisoners of Debt


A fresh start with bankruptcy? Big lenders keep squeezing money out of consumers whose debts were canceled by the courts

BUSINESS WEEK-

In a financial version of Night of the Living Dead, debts forgiven by bankruptcy courts are springing back to life to haunt consumers. Fueling these miniature horror stories is an unlikely market in which seemingly extinguished debts are avidly bought and sold.

The case of Van Rathavongsa illustrates how canceled debts regain vitality. The Raleigh (N.C.) factory worker pulled himself out from beneath a mountain of bills by means of a bankruptcy proceeding that wrapped up in 2002. One of the debts the judge canceled, or “discharged,” was $9,523 Rathavongsa owed to Capital One Financial (COF), the big credit-card company. But Capital One continued to report the factory worker’s discharged debt to credit bureaus as a live balance, according to documents filed in U.S. Bankruptcy Court in Raleigh.

[BUSINESS WEEK]

Image source: Business Week

The document submitted by a former Equifax employee. It asserts that credit files with incorrectly reported pre-bankruptcy debts were “an extremely frequent and reoccurring problem.”

 

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Robo-signed mortgage docs date back to late 1990s

Robo-signed mortgage docs date back to late 1990s


In case you missed it.. I put together Special Events that Happened in 1999 …Welcome to the 99 Club. It’s incomplete but it was a start to the mess we have today.

AP- By PALLAVI GOGOI, AP Business Writer

Counties across the United States are discovering that illegal or questionable mortgage paperwork is far more widespread than first thought, tainting the deeds of tens of thousands of homes dating to the late 1990s.

The suspect documents could create legal trouble for homeowners for years.

Already, mortgage papers are being invalidated by courts, insurers are hesitant to write policies, and judges are blocking banks from foreclosing on homes. The findings by various county registers of deeds have also hindered a settlement between the 50 state’s attorneys general who are investigating big banks and other mortgage lenders over controversial mortgage practices.

The problem of shoddy mortgage paperwork, which comprises several shortcuts known collectively as “robo-signing,” led the nation’s largest banks, including Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., and other lenders to temporarily halt foreclosures nationwide in the fall of 2010.

At the time, “robo-signing” was thought to be contained to the affidavits that banks file and use to prove they have the right to seize a home for foreclosure. Companies that process mortgages said they were so overwhelmed with paperwork that they cut corners.

But now …

[ASSOCIATED PRESS]

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Billions Meant for Struggling Homeowners May Pay Down Deficit Instead

Billions Meant for Struggling Homeowners May Pay Down Deficit Instead


The screwing of homeowners just don’t quit!


by Lois Beckett
ProPublica, Aug. 25, 2011, 3:28 p.m.

With housing prices dropping sharply, and foreclosure filings against more than 1 million properties in the first half of this year, the Obama administration is scrambling for ways to help homeowners.

One place they won’t be looking: an estimated $30 billion from the bailout that was slated to help homeowners but is likely to remain unspent.

Instead, Congress has mandated that the leftover money be used to pay down the debt.

[ProPUBLICA]

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“Robo-Affidavit” Class Action Settles for $5.2 Million | MIDLAND FUNDING v. BRENT

“Robo-Affidavit” Class Action Settles for $5.2 Million | MIDLAND FUNDING v. BRENT


From the Memorandum Order from Ohio District Court…

MIDLAND v. BRENT [pdf]

According to that relationship, JBR requested an affidavit to support the Brent debt using the Midland “You’ve Got Claims” computer system, which is a system that allows attorneys like JBR to log on and request certain supporting documentation be generated.

Whether through the “You’ve Got Claims” system or otherwise, Midland receives and fulfills about 200 to 400 requests for affidavits per day. Ivan Jimenez, one of Midland’s ten “specialists” in the department that supports law firms, personally signs between 200 and 400 of such affidavits per day. (Ivan Jimenez Dep., Doc. 35, Ex. E at 15). He finds the stack on a printer, signs them, and sends them by internal mail to the notary. (Id. at 16-17 (“Q: Where do your affidavits come from? A: As far as what I deal with, they just come from the printer as far as where we get them”)). Mr. Jimenez has the ability to check the accuracy of the information on the affidavit via the computer system and he does, but the percentage of those that are checked for accuracy is “very few and far between.” (Id. at 24).

Then, after receipt of the signed affidavit from Midland, JBR attached it to the complaint filed in Sandusky, Ohio Municipal Court. When the affidavit is compared to the deposition of the affiant, Ivan Jimenez, it is apparent that the affidavit itself contains many falsehoods.

In paragraph 1, the affidavit reads “.I make the statements herein based upon my personal knowledge.” It is apparent from the Jimenez deposition that Mr. Jimenez actually had no personal knowledge of Ms. Brent or her account. For instance, while Mr. Jimenez is assigned to support and work with ten law firms, JBR is not one of them, leading to the logical conclusion that he would not have personal knowledge of any matter they were handling. (Jimenez Dep., Doc. 35, Ex. E at 7-8; Id. at 16). It appears to be an entirely random act that he signed this affidavit: he was the signer based entirely on when it came off the printer rather than based on his personal knowledge of Ms. Brent or her account. (Id. at 16-17). Mr. Jimenez never had any contact with Ms. Brent at all, leading to a logical conclusion that he could not have had the “personal knowledge” claimed in paragraph 1. See Id. at 25-26 (“Q: Did you ever have any contact with Ms. Brent, any business contacts at all? A: I did not personally.”).

In paragraph two of the affidavit, the affiant states:. I have personal knowledge of all relevant financial information concerning Midland Credit Management Inc.’s account number 8524186453, which includes the following information: that the defendant did fail to make payments on the account and that demand has been made for defendant to make payment of the balance owing on the account described above more than thirty (30) days prior to making this affidavit; that the attorneys representing the plaintiff Midland Funding LLC were retained on Midland Funding LLC (sic) behalf by me or persons reporting to me for the purpose of collecting the delinquent debt owed on the defendant’s account number set out above; and that there was due and owing to Midland Funding LLC the sum of $4,516.57. (Jimenez Aff. ¶ 2). As is evident in the discussion supra regarding paragraph one of the affidavit, Mr. Jimenez has no personal knowledge about the Brent account. He was not familiar with this account, did not know the last time a payment was made and did not know the outstanding balance. The paragraph also represents that the law firm, JBR, was hired by Mr. Jimenez or one of his employees. However, the following exchange during the deposition makes clear this is not true:

Q: So were you aware when you signed this affidavit that it was going to be used as part of a collection action in a lawsuit?

A: I was not.

Q: Are you aware of any other reasons that affidavits are completed, except for the collection actions that are filed in the courts?

A: I wouldn’t know what the firm uses the affidavits for.

Q: So you simply sign them?

A: Yes.

Q: You work for Midland Credit Management; correct?

A: Yes.

Q This affidavit lists at the top as a plaintiff, Midland Funding, LLC. What’s the relationship between Midland Credit Management and Midland Funding LLC?

A: I wouldn’t be the best person to ask that question. I don’t know.

Q: Okay. If you look at paragraph 2, four lines from the bottom of paragraph 2, you’re attesting to the fact, “that the attorneys representing Plaintiff Midland Funding LLC were retained on Midland Funding LLC behalf by me or persons reporting to me for the purpose of collecting the delinquent debt.” Is that what it says? Did I read that correctly?

A: Yes

Q: When did you retain the attorneys representing Midland Funding LLC?

A: I don’t know when the people in my department retained the attorneys.

Q: Did you personally retain the attorneys?

A: I did not.

Q: Which persons in your department did retain the attorneys?

A: I wouldn’t know specifically.

Q: Are these — how many people do you have reporting to you?

A: I have zero.

Q: Do you know the names of any persons in your department or any persons in Midland Credit who actually do have the responsibility of retaining attorneys?

A: I don’t know who in my department would do that.

Q: Would there be someone from another department that would do that?

A: I wouldn’t know. (Jimenez Dep. at 19-21).

Thus, there are two patently false claims within paragraph two: first that Mr. Jimenez had any personal knowledge regarding Ms. Brent’s debt, and second, that Mr. Jimenez was involved with the decision or act of hiring JBR to pursue legal action.

Paragraph three describes how Midland acquired the debt from Citibank, and if it is read alone, it only states a fact that is very likely true. However, when read in conjunction with paragraph one (“I make the statements herein based upon my personal knowledge”), it is apparently false. The issue of the affiant’s knowledge was raised in the deposition:

Q: Well, it says in this affidavit that, in number 3, “That Plaintiff’s predecessor in interest sold and assigned all right, title, and interest in this account to the plaintiff.” So if it was sold to the plaintiff, my assumption is it was purchased by the plaintiff. And the question I have is, did you have any role or were you involved in any way, shape, or form in the purchase of this account?

A: I was not.

Q: Do you know anything about the terms of the purchase of this account?

A: I do not. (Jimenez Dep. at 21-22). Thus, the statement in paragraph three, however true or not, cannot be based on personal knowledge.

Paragraph five is also of concern. It asserts that Ms. Brent is neither a minor nor mentally incapacitated, which are facts that are probably true. However, the affiant bases those conclusions “upon business dealings with the defendant(s),” which is clearly not possible since he had no contact with Ms. Brent. See supra.

If this is not enough, the affidavit is improperly sworn, as evidenced by the deposition:

Q: You mentioned earlier, when I asked you about that, you signed these affidavits and had them notarized. Was the notary present in the room when you were signing all the affidavits, or do you sign them and give them to the notary?

A: I sign them and give them to the notary. (Jimenez Dep. at 15). Minnesota Revised Code requires that “an oath… shall be administered… [t]o affiants[.]” Minn. Stat. Ann. § 358.07 (West 2004).

In finding assertions in the affidavit to be false and misleading, this Court is not concluding that all the information in the affidavit is incorrect. Brent has provided no evidence that the amount of the debt, the fact that it is unpaid, or other vital account information, is false. As discussed infra, the actual account information is probably either correct or likely thought correct in good faith by Midland and MCM (and likely a bona fide error if so).

However, this Court finds that the affidavit as a whole is both false and misleading for the aforementioned reasons and notwithstanding the fact that some of the data in it are correct. It is unclear to this Court why such a patently false affidavit would be the standard form used at a business that specialized in the legal ramifications of debt collection. Midland, MCM, or JBR could easily prepare a form affidavit that achieved the same goals without being misleading by reflecting the truth, plain and simple. Rather than basing the affidavit on false personal knowledge, they could base it on the accuracy of the records kept and the accuracy of the data.

3. Materiality

In a recent opinion, the Sixth Circuit held that “[a] statement cannot mislead unless it is material, so a false but non-material statement is not actionable.” Miller v. Javitch, Block and Rathbone, 561 F.3d 588, 596 (6th Cir. 2009) (quoting Hahn v. Triumph P’ships LLC, 557 F.3d 755, 758 (7th Cir. 2009)). Both Miller and Hahn allow for a statement to be “false in some technical sense” but still not in violation of the FDCPA. Miller, 561 F.3d at 596 (quoting Wahl v. Midland Credit Mgmt., Inc., 556 F.3d 643, 646 (7th Cir.2009)); Hahn, 557 F.3d at 758.

Generally, material facts are ones which, if known, might influence a person’s decision on a matter. See generally Black’s Law Dictionary 998 (8th ed. 2004) (defining material as “[h]aving some logical connection with the consequential facts [or] [o]f such a nature that knowledge of the item would affect a person’s decision-making; significant; essential[.]”). Thus, the Court evaluates statements for materiality by considering whether they make the proposed assertion more or less likely.

In general, a complaint and attached affidavit act as both a message to the court and a message to the debtor.*fn2 While the creditor seeks different action from either audience (payment from the debtor as opposed to judgment from the court), the general assertions are the same: that the debt is valid, that there is a total amount, that it is delinquent, that it is subject to interest, and that it is now due and owing. Therefore, a statement or claim based on an affidavit would be material if it makes one of those listed assertions more or less likely than if that fact were not considered.

It is unsurprising when a consumer/debtor contacted by a collection agency about a seven-year-old debt would question whether it was a valid obligation. Ms. Brent instantly questioned the validity of the debt. Both the complaint and Jimenez affidavit refer to the debt being owed to “CITIBANK USA,” and in her answer, Brent “denies that she originally owed any claim to CITIBANK USA at any time.” (Doc. 2 at ¶ 1; See also Brent Dep., Doc. 35, Ex. F at 26 (wherein Ms. Brent asserts “[t]o my knowledge, I’ve never had a CitiBank USA.”)). Thus, Ms. Brent clearly questions the validity of the debt. To further add confusion to this particular case, investigation reveals that the debt was originally owed to “Associates,” and was acquired by Citibank before it was acquired by Midland years later. Since neither the complaint nor affidavit mention “Associates” in any form, it would be extremely plausible for Ms. Brent to doubt the validity of this debt.

The claims within the Jimenez affidavit that this Court finds to be false are materially related to supporting the proposition of whether the debt is valid. The affidavit states that the affiant personally knows that this debt is valid, that he personally has “business dealings with the defendant(s),” and specifically that he has personal knowledge of this particular account. These statements are material to the issue of whether the debt is valid at all, and if relied on, help to make the proposition that it is more likely valid than it was without the statements.

Considering public policy, it is also worth noting many debt collection cases of these types place courts in the position of evaluating the validity of the plaintiff’s claim without any response from the defendant. Thus, in general terms, courts rely on the assertions in an affidavit to determine, among other things, whether the debt is valid and judgment, usually default judgment, should be granted.

This case, then, is distinguishable from those with immaterial falsehoods. In Miller, the Sixth Circuit determined that the difference between suing “for money loaned” rather than specifying that it was for an unpaid credit card debt did not amount to a violation of the FDCPA. Miller v. Javitch, Block & Rathbone, 561 F. 3d 588 (6th Cir. 2009). Miller admitted “that she ‘pretty much’ understood [the complaint]” when she received it as being an attempt to collect on a credit card that she stopped paying. Id. at 591. She was aware of the credit card and recalled that she stopped paying on it. Id. at 590.

By contrast, in the case at the bar, Brent claims that she was not aware of any obligation owed to Citibank. Upon receiving the Midland complaint and attached Jimenez affidavit, she had to evaluate whether the debt being sued on was a valid one. The contents of the affidavit itself, and in particular the fact that the affiant allegedly had personal knowledge that the debt was valid, would effectively serve to validate the debt to the reader, whether that was Brent or a court.

Therefore, the affidavit was false, deceptive, and misleading in its use in conjunction with an attempt to collect a debt, and Midland and MCM have violated FDCPA § 1692e.

Below is the Settlement Agreement set in place

[ipaper docId=62460947 access_key=key-25d1nrlzklhzplacelcb height=600 width=600 /]

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The One Hundred Billion Dollar Problem in Small Claims Court: Robo-Signing and Lack of Proof in Debt Buyer Cases

The One Hundred Billion Dollar Problem in Small Claims Court: Robo-Signing and Lack of Proof in Debt Buyer Cases


Peter A. Holland

University of Maryland School of Law

Journal of Business & Technology Law, Vol. 6, p. 101, 2011

University of Maryland Legal Studies Research Paper No. 2011-32

Abstract: Recent years have seen the rise of a new industry which has clogged the dockets of small claims courts throughout the country. It is known as the “debt buyer” industry. Members of this $100 billion per year industry exist for no reason other than to purchase consumer debt which others have already deemed uncollectable, and then try to succeed in collecting where others have failed. Debt buyers pay pennies on the dollar for this charged off debt, and then seek to collect, through hundreds of thousands of lawsuits, the full face value of the debt. The emergence and vitality of this industry presents several legal, ethical and economic issues which merit exploration, study and scholarly debate.

This article focuses on the problem of robo-signing and the lack of proof in debt buyer cases. Although this problem has received limited attention from the media and from regulators, there is a paucity of legal scholarship about debt buyers in general, and this problem in particular. This article demonstrates that robo-signing and fraud are rampant in this industry, and that the debt buyers who pursue these claims often lack proof necessary to show that they own the debt, and often lack proof even that a debt was ever owed in the first place. The fact that this lack of proof has led to consumers being sued twice on the same debt demonstrates the due process concerns which are implicated when courts enter judgments against consumers based on robo-signing and insufficient proof.

This article calls on courts to hold plaintiffs in debt buyer cases to the same standards required of other litigants. Courts must require a demonstration of personal knowledge of the matter at issue before any affidavit is accepted, before any person testifies, and before any documents are admitted into evidence.

[click image below for pdf]


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Uh-Oh: Did “Robo-Signing” Cause JPMorgan Chase to Abandon over 1,000 Credit-Card Debt Lawsuits?

Uh-Oh: Did “Robo-Signing” Cause JPMorgan Chase to Abandon over 1,000 Credit-Card Debt Lawsuits?


Wall Street Journal-

Mitch Granat, a lawyer who handles debt-collection cases for J.P. Morgan in Palm Beach County, Fla., on a contract basis, said he was told by other lawyers for the bank that the suits in Florida were dropped because of “irregularities” in paperwork used to verify the validity of the credit-card debt being pursued. Some judges have complained that J.P. Morgan and other credit-card issuers that go to court to collect what they are owed file lawsuits marred by sloppy or even fraudulent documentation of debts. J.P. Morgan hasn’t been accused of wrongdoing related to credit-card cases in any court filings.

It isn’t clear how common the problem is, though Philip Straniere, a state-court judge in Richmond County, N.Y., and other judges say deficiencies are worse than in foreclosure cases. “It’s a significant problem…that’s widespread and yet given virtually no attention,” Judge Straniere said. Last year, Judge Straniere dismissed 150 credit-card-collection suits filed by J.P. Morgan, concluding paperwork submitted by the bank “appeared to be signed in large numbers by only a few individuals.”

Continue reading [WALL STREET JOURNAL]

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CHASE BANK v. GERGIS | NY Civ. Court “ROBO-TESTIMONY, WAMU, CREDIT-CARD DEBT” Dismissed w/ PREJUDICE

CHASE BANK v. GERGIS | NY Civ. Court “ROBO-TESTIMONY, WAMU, CREDIT-CARD DEBT” Dismissed w/ PREJUDICE


Decided on June 15, 2011

Civil Court of The City of New York, Kings County


Chase Bank USA, N.A.

against

Shady A. Gergis

EXCERPTS:

UNDERLYING FACTS:

For its first witness, plaintiff called Martin Lavergne, who worked for CHASE BANK USA, N.A.(“Chase”) in various roles over a period of approximately 17 years. Presently, he holds the title of “custodian of records.” While Mr. Lavergne maintained that he had personal knowledge of the practices and procedures that Chase utilized in creating and maintaining consumer credit card account records, he never described these practices and procedures and never testified as to how he acquired personal knowledge of them.

[…]

Notably, some of the records that were shown to Mr. Lavergne were apparently created by Washington Mutual Bank. Mr. Lavergne explained this by stating that at some point in time, Chase had acquired Washington Mutual Bank. No testimony was elicited from Mr. Lavergne that he had worked for Washington Mutual Bank or that he had personal knowledge of the practices and procedures that Washington Mutual Bank employed in creating and maintaining consumer credit card account records.

[…]

Here, Mr. Lavergne’s foundational testimony was essentially a verbatim recitation of the statutory elements set forth in CPLR 4518[a]. He gave absolutely no testimony as to how the electronic records concerning defendant’s account statements came into existence nor did he indicate that he even knew how such information was collected. It would appear that credit card statements contain information that is conveyed from multiple entities, from the reporting merchant through various intermediaries, until the information is ultimately incorporated into plaintiff’s business records (see Discover Bank v Williamson, 2007 NY Slip Op 50231[U] [App Term, 9th and 10th Jud Dists]). Certainly, Mr. Lavergne did not demonstrate that the person or persons who inputted the electronic data had actual knowledge of the events inputted or that such person or persons obtained knowledge of those events from someone with actual knowledge of them and who had a business duty to relay information regarding the events (see Corsi v Town of [*4]Bedford, 58 AD3d 225, 229 [2d Dept 2008]; Capasso v Kleen All of America, Inc., 43 AD3d at 1347).

[…]

Further, Mr. Lavergne’s testimony was highly suspect. As stated above, some of the records that plaintiff sought to introduce into evidence through the testimony of Mr. Lavergne were apparently prepared by Washington Mutual Bank. The foundational testimony given by Mr. Lavergne concerning these records was identical to the foundational testimony he gave concerning the Chase records. It is well settled law that in order for a witness to lay the foundation for the admission of a document as a business record pursuant to CPLR 4518[a], the witness must demonstrate personal knowledge of the business practices and procedures pursuant to which the document was made (see Reiss v Roadhouse Rest., 70 AD3d 1021, 1025 [2d Dept 2010]; Lodato v Greyhawk N. Am., LLC, 39 AD3d 494, 495 [2d Dept 2007]; Vento v City of New York, 25 AD3d 329, 330 [1st Dept 2006]; Dayanim v Unis, 171 AD2d 579 [1st Dept 1991]; Midborough Acupuncture, P.C. v New York Cent. Mut. Fire Ins. Co., 2006 NY Slip Op 51879[U] [App. Term, 2d & 11th Jud Dists]). Because Mr. Lavergne never worked for Washington Mutual Bank, it defies logic that he would have personal knowledge of Washington Mutual Bank’s business practices and procedures. For these reasons, the Court gives Mr. Lavergne’s “robo-testimony” and plaintiffs’ no weight or credit (People v Barrett, 14 AD3d 369 [1st Dept 2005]; see also Washington Mut. Bank v Phillip, 2010 NY Slip Op 52034[U] [Sup Ct, Kings County]).

[…]

In sum, the offered “robo-testimony” was insufficient to establish its case by a preponderance of the credible evidence. [*5]

Based on the above, it is hereby

ORDERED that judgment be entered in favor of defendant SHADY A. GERGIS and against plaintiff CHASE BANK USA, N.A. and that plaintiff’s complaint be DISMISSED with prejudice on the merits.

The foregoing constitutes the Decision and Order of the Court.

[ipaper docId=58601475 access_key=key-13b7jr4qpkf19xlbsusy height=600 width=600 /]

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Attorneys General: “Don’t eat the marshmallow yet”

Attorneys General: “Don’t eat the marshmallow yet”


Please do watch this. Wonder what the AG’s do if put in this same situation? Who would be sneaky enough to eat a marshmallow behind our backs? We’re finding this out aren’t we?

Uploaded by on Aug 10, 2009

http://www.ted.com In this short talk from TED U, Joachim de Posada shares a landmark experiment on delayed gratification — and how it can predict future success. With priceless video of kids trying their hardest not to eat the marshmallow.

TEDTalks is a daily video podcast of the best talks and performances from the TED Conference, where the world’s leading thinkers and doers give the talk of their lives in 18 minutes. 

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TEXAS v. AMERICAN HOME MORTGAGE SERVICING , Inc.

TEXAS v. AMERICAN HOME MORTGAGE SERVICING , Inc.


Monday, August 30, 2010

Attorney General Abbott Charges Home Loan Servicer With Violating State Debt Collection Laws

American Home Mortgage Servicing Inc. failed to properly process requests

AUSTIN – Texas Attorney General Greg Abbott today charged Coppell-based American Home Mortgage Servicing Inc. (AHMS) with using illegal debt collection tactics and improperly misleading struggling homeowners.

According to state investigators, AHMS collections agents used aggressive and unlawful tactics to collect payments from Texas homeowners who had difficulty meeting their payment obligations. The defendant also failed to credit homeowners who properly submitted their payments on time.

LAWSUIT COMPLAINT

TEXAS v. AMERICAN HOME MORTGAGE SERVICING, INC

In other cases, AHMS agents falsely claimed that homeowners did not make payments so the agents could justify profitable late fees or escrow accounts. The defendant also failed to properly credit homeowners after AHMS agents withdrew funds from the homeowners’ checking accounts. Because of the defendant’s unlawful conduct, homeowners defaulted on their loans, leading to foreclosure proceedings.

Additionally, the defendant claimed to have a “Home Retention Team” to assist distressed homeowners. Many customers found that AHMS could not qualify homeowners and that they were of no help to halt the foreclosure process. Some homeowners who actually obtained loan modifications found that their monthly payments increased rather than decreased, which worsened their problem with foreclosure.

Today’s enforcement action charges AHMS with multiple violations of the Texas Debt Collection Act and the Texas Deceptive Trade Practices Act (DTPA). The State is also seeking civil penalties of up to $20,000 per violation of the DTPA.

_________________________

DinSFLA here: A little more on AHMSI

Recently, Judge Arthur Schack said this in ARGENT MTGE. CO., LLC v. Maitland, 2010 NY Slip Op 51482 – NY: Supreme Court, Kings 2010

Successor plaintiff AHMSI is one of several companies controlled by billionaire investor Wilbur L. Ross, Jr. through his firm, W. L. Ross & Company. Louise Story, in her April 4, 2008 New York Times article, Investors Stalk the Wounded of Wall Street, described Mr. Ross as “a dean of vulture investing.” She wrote:

Almost two centuries ago, as Napoleon marched on Waterloo, a scion of the Rothschilds is said to have declared: The time to buy is when blood is running in the streets.

Now as red ink runs on Wall Street, the figurative heirs of the Rothschilds — bankers, traders, hedge fund gurus and takeover artists — are plotting to profit from today’s financial upheaval. These market opportunists — vulture investors in the Wall Street term — have begun to swoop. They are buying up mortgages of hard-pressed homeowners, the bank loans of cash-short businesses, and companies that seem to be hurtling to bankruptcy. And they are trying to buy them all on the cheap. . . .

“The only time you really know you’ve reached the bottom is when you’re back on the other side and things are going back up,” said Wilbur L. Ross, Jr., a dean of vulture investors, who made a fortune buying steel companies when no one else seemed to want them.

Such caution aside, his firm, W. L. Ross & Company, recently spent $2.6 billion for two mortgage servicers [AHMSI and Option One] and a bond insurance company. He said he planned to buy more as hedge funds and other investor sell at bargain prices.


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Posted in conspiracy, CONTROL FRAUD, corruption, foreclosure, foreclosure fraud, foreclosures, investigation, judge arthur schack, mortgage, note, servicers, stopforeclosurefraud.com, Violations, Wall StreetComments (0)

FRANKENSTEIN Real Estate | TRILLIONS in DEBT

FRANKENSTEIN Real Estate | TRILLIONS in DEBT


Frankenstein real estate market – $3.5 trillion in commercial real estate debt and $10.3 trillion in residential real estate debt. Will we reach a 50 percent underwater market where 25 million Americans sit in homes worth less than their mortgage?

The real estate market has morphed into a beast that is largely sinking the overall economy into the ground.  If we combine the commercial real estate market ($3.5 trillion in debt) with residential outstanding mortgages ($10.3 trillion) we arrive at a figure that nears the annual GDP of our country.  What makes the figure even more troubling is the amount of leverage found in the real estate market.  Many of these loans will default yet banks are maintaining the notion that at some point par value will be reached; for many the par value scenario is the worst case they have mapped out, and this is highly optimistic.  We have created a real estate Frankenstein that now has a mind of its own and will do everything it can to stay afloat going forward, even at the expense of the real economy.  In fact, the real estate monster thinks it is the economy.

There is a flip side to housing values falling which seems to be ignored since most of the mainstream rhetoric is guided by the FIRE (finance, insurance, and real estate) experts.  The most obvious benefit is those looking to buy their first home don’t need to put themselves into so much debt that they risk their entire financial future for a home.  The next subtle change is the amount of money diverted from housing related spending to other sectors of the economy.  This last change will take time to sink into the overall economy but there is definitely a benefit of moving away from an economy highly dependent on Wall Street finance and real estate.

If we look at the current nationwide situation, the amount of distressed loans is stunning:

I think that the above disaster in distressed mortgages is causing very little reaction because we have somehow adapted to the current shocking situation.  Over 10 percent of all U.S. mortgages are at least one payment behind and another 4 percent are already in the process of foreclosure.  This figure is incredible given the entire mortgage market is made up of over 51 million active mortgages.  In 2007 if you were to tell someone that prices in California would fall by 50 percent (even 10 percent) many would have ignored you.  Now, it is standard practice for the market.

As a country we are much too reliant on real estate.  Commercial real estate is the next tragic saga in the RE bubble bursting with prices already falling by 42 percent.  At one point, CRE values in the U.S. were up to $6.5 trillion (now this was a rough generous estimate at the time).  Today, CRE values are down closer to $3 to $3.5 trillion; this is roughly the same amount of CRE loans outstanding.  This has pushed defaults through the roof:

The exponential rise is cause for serious concern.  There is little energy or political will to bailout the enormous CRE market.  This probably won’t stop the Federal Reserve and U.S. Treasury to game the system yet again and put taxpayers on the hook.  They created this massive monster and now want the public to fight it off with pitchforks.  The above chart is disturbing and the amount of bank failures we are seeing is directly related to the above trend.  Many smaller banks are deep in the trenches with CRE debt and much of this is now going bad.  How many strip malls do we really need?  Maybe having 20 Taco Bells in a one mile radius probably isn’t such a good idea.  Many of the commercial projects were built in the anticipation of sky high residential prices to justify their absurd underwriting expectations.  The above results have no excuse and are largely a reflection of massive delusional speculation in all things real estate.

Now that expectations are coming more into line and the fantasy world of Alt-A, subprime, and option ARM loans are behind us, most people have to qualify to get a loan with actual real income which many are now finding less of.  Banks lending virtually all government money, are now beholden to stricter (aka basic due diligence) in order to give out loans.  Yet if we look at the negative equity situation, the real estate monster grows scarier:

Over 20 million mortgage holders are underwater.  It is amazing that a few years ago, Deutsche Bank estimated that at the ultimate trough of the housing market, nearly half of all mortgages would be underwater.  This “doomsday” scenario seemed extremely farfetched.  Today, another 10 percent nationwide price decline would put us there.  Even without prices declining further, having 20 million Americans underwater is not a good sign going forward.  You figure over 7 million people are one payment behind or in foreclosure.  But what about the other 13 million?  This enormous group is basically a large cohort of renters but in a worse financial situation.  They are stuck.

Continue reading…DoctorHousingBubble

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