I’ve always liked the introduction to the Fair Debt Collection Practices Act.
There is abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors. Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.
I don’t think it goes far enough, though. Abusive debt collection practices also spread depression and contribute to the number of suicides. That’s true for the current foreclosure crisis, as well, according to Martin Andelman, who blogs at the Mortgage Lending Implode-O-Meter. He thinks homeowners are showing signs of Legal Abuse Syndrome, a type of Post-Traumatic Stress Disorder.
Last week I wrote about the various ways that consumers can afford a foreclosure defense attorney. New York has passed a law allowing consumers to recoup attorney fees and at least one attorney in Florida is allowing clients, under certain conditions, to take a mortgage with his firm.
That practice might be short lived—he is now under investigation by the Florida bar.
Even before a number of big banks stopped foreclosure proceedings because of issues with robo-signers, consumers with money were fighting foreclosures across the nation. New York recently passed a law (effective next year) that allows consumers to recoup their attorney fees if they fight a foreclosure and win.
Not every state has a similar law, however. As a result, some consumers are agreeing to a new mortgages with their foreclosure attorneys.
The foreclosure mess got messier over a month ago, when GMAC, Bank of America, and others were caught faking (essentially) affidavits supporting their foreclosure lawsuits. The irony of banks acting irresponsibly with their finances was not lost on the media. Of course, robo-signing, as it was soon termed, was already commonplace in another kind of business: debt buyers.
“February saw an unexpected jump in foreclosure filings as the weak economy puts more pressure on borrowers.” Rise in foreclosures ‘a shock’ | CNN
Lots of high-cost subprime lenders bit the dust in 2007, so subprime lending fell dramatically that year. In Massachusetts, there were 5,085 subprime home-purchase loans made, down from 14,639 in 2006. As a percentage of all home-purchase loans, subprime loans fell from 19% to 8%.
What didn’t change was the intense targeting of these loans to black and Latino borrowers and neighborhoods. Among homebuyers in Greater Boston, 22% of all loans to blacks and 20% of all loans to Latinos were subprime, compared to just 5% of all loans to whites. If you look only at high-income homebuyers, the disparities are even greater: 32% of loans to high-income blacks and 24% of high-income Latinos were subprime, compared to just 4% of loans to high-income whites. Keep Reading »
Dateline NBC’s Chris Hansen followed sheriff’s officers in three states (Florida, Nevada and Michigan) in a heart wrenching piece on the victims of the recent mortgage crisis: families.
Millions at Risk of Foreclosure Fraud | The Red Tape Chronicles
Its good to be a well-informed voter. Should Biden Share Blame for Foreclosure Crisis? | ABCNews.com
Mark Ireland, former Minnesota Assistant Attorney General, took a look at what the three remaining presidential candidates are saying about the foreclosure crisis and translated their campaign-speak into good ol’ American English.
According to Ireland’s commentary, only Obama has a real plan. He would increase penalties for fraudulent lending, create a foreclosure-prevention fund, create a standardized scoring system for rating borrowers’ obligations, and more. (Although Obama does not mention it, I hope he would also earmark funding to prosecute the frauds, who are pretty much going unpunished.)
Ireland says Clinton wants to offer shelter to the mortgage servicers who helped create the problem, while McCain’s “proposal” is basically to do nothing.
The Issues: Housing [NYT]
Clinton, Obama, McCain On Foreclosure Crisis [Consumer Rights Watch]
(photo: The Joy Of The Mundane)