Articles Posted in Consumer Protection

credit reportingNegative information on your credit report can make a big impact on your financial well-being. It can disqualify you from obtaining home mortgages and car loans, cause your interest rates to soar and may even keep you from getting the job you want. It goes without saying that you would want any negative information removed from your credit report as soon as the time limit for that debt has been reached.

So, what is that limit and how long will negative info remain on your credit report? It is important to be familiar with the two important time lines for debt—the statute of limitations and the credit reporting time limit.

The statute of limitations is the limited amount of time creditors or debt collectors have to file a lawsuit to collect a debt. It is what protects you from being sued for an old debt. The time period varies from state to state. In the state of Florida, the statute of limitations is 4 years on oral contracts and 5 years on written contracts. The clock typically starts ticking after the first missed payment to the original creditor. However, be aware that the limitations period can “restart” if you make a payment toward a debt. Debt collectors will often harangue debtors into making even a $5 payment toward a delinquent account in order to re-age the debt and add another 5 years to the limitations period!

Last August Bank of America agreed to a record $16.7 billion settlement with the Justice Department over their past mortgage practices. Part of the settlement also requires Bank of America to provide $7 billion in consumer relief over the next four years.

As this landmark settlement has faded from headlines questions regarding the payout of consumer relief have surfaced. Bank of America has told a number of borrowers that it intends to ‘forgive’ some loans that have been discharged in borrowers’ bankruptcies. But that debt has already been forgiven.

Our own Chip Parker, has been interviewed by The New York Times and had this to say on the issue: “Releasing a debt that has already been discharged is not in the spirit of the settlement. My concern is that the bank will use these cases to avoid having to give true principal reductions to people who need it.”

The servicing of thousands of mortgage loans recently transferred from Bank of America, National Association to Carrington Mortgage Services, LLC. The accounts transferred were part of a Taylor, Bean & Whitaker junk loan portfolio that has plagued borrowers for years.

Taylor, Bean & Whitaker (“TBW”) filed for bankruptcy protection on August 24, 2009. Servicing of 180,000 accounts transferred from TBW to Bank of America around September of 2009. Ever since, Bank of America has improperly servicing consumers’ loans for years. Bank of America refuses to properly review loan modifications, properly honor loan modifications, properly apply payments, and often files wrongful foreclosure complaints despite borrowers sending numerous letters. Bank of America’s mortgage servicing is nothing short of oppression for many borrowers, as borrowers undergo years of feeling as if their home could be lost at any moment–despite paying modified payments for years.

Unfortunately for the borrowers whose loans have been transferred from Bank of America to Carrington, the problems are not over. Many of the service transfers were effective August 1, 2014, and Parker & DuFresne is already seeing problems. Some borrowers have been fighting with Bank of America for years to have their loan modification honored, only to have their loan transferred to Carrington, who is immediately declaring borrowers in default despite years of modified payments made towards modifications.

DYCK-O’NEAL a nationwide collector and servicer of deficiency judgments
on mortgage promissory notes has rolled out an aggressive legal campaign to collect deficiencies on foreclosed homeowners in northeast Florida. Many unsuspecting homeowners thinking their foreclosures were a thing of the past and that life has moved on may be dumbfounded when served with a lawsuit threatening to collect thousands of dollars from them. Fannie Mae is just one of the lenders using Dyck-O’Neal.

If Dyck-O’neal or any other company has sued you to collect on a mortgage deficiency do not ignore it! Failure to take action may result in a judgment and possible garnishment of your bank accounts or wages. Your best bet is to contact an attorney knowledgeable of your options. Parker & DuFresne, P.A. has been involved in hundreds of foreclosures and can help you with a deficiency lawsuit. Our consultations are free.

Do not think your nightmare is over because you have signed and returned a permanent loan modification. Loan servicers are notorious for failing to honor permanent loan modifications. In our experience, they’re all bad, but Bank of America is the worst.

Here’s how to improve your chances of getting your loan modification honored:

First, meticulously follow the instructions provided with your loan modification. No matter how nuanced and ridiculous the instructions are, follow them exactly. For example, one servicer provides a sheet titled “Instructions for Notary,” for which there are multiple versions, but some require any months to be spelled out. If you write “Dec.” or “12” instead of “December,” the servicer will tell you months later that you have not entered into a loan modification because you did not follow instructions. This is obviously a bad faith attempt to collect additional payments from you before foreclosing on you, but nonetheless, you must not give the servicer reasons to do so.

The Fair Debt Collection Practices Act (“FDCPA”) provides that a mortgage loan servicer is not governed by the FDCPA–because the servicer is not a “debt collector.” However, federal appellate courts and trial courts have held/ruled that a mortgage loan servicer who is assigned a mortgage loan debt while it is in default is a “debt collector,” and is thus governed by the FDCPA.

The reason behind this distinction is as follows: Debt collection laws were meant to protect consumers from debt collectors because these entities do not have a reason to maintain a good relationship with consumers. Thus, debt collectors may employ extraordinary means of collecting a debt. But, the need to protect consumers from the original loan servicer is not as great because, in theory, the loan servicer will want to maintain a good public image and gain your repeat business. A loan servicer that has been assigned a debt that is in default, is more akin to a debt collector because it chose to be in the business of default loan servicing.

This means that if you are behind on payments and you receive a letter from a loan servicer notifying you that your loan servicer has changed, your loan servicer is governed by the FDCPA. Likewise, if you were behind on your payments and filed a Chapter 13 bankruptcy, and you server changes in the middle of your bankruptcy, your servicer is likely governed by the FDCPA–depending on your specific Chapter 13 plan.

Overly aggressive consumer debt collectors are usually breaking Federal and Florida law. As we all know, times are tough and many Americans are falling behind on debts. The debt collection industry, too, is struggling to squeeze every possible penny out of debtors who have defaulted on various debts. This has lead to debt collectors acting extremely aggressively and, often, illegally.

In many instances, once a debt, for example a credit card debt, goes unpaid for a certain amount of time, the credit card company will sell it to a debt collection company for pennies on the dollar. The debt collection company then tries to collect as much of the debt as possible. There is nothing illegal about this arrangement. The major problem is that debt collection companies, in their attempt to make a profit, often attempt to collect debts in an overly aggressive and, ultimately, illegal manner.

The problem of debt collectors attempting to collect debts in an aggressive and illegal manner, is prevalent across the country. The Federal Trade Commission and the Consumer Financial Protection Bureau are trying to crack down on this problem, but as consumers are often not aware that the debt collectors’ actions are illegal or that they have any recourse, the problem persists.

Illegal debt collection is often the result of poor record keeping by debt collectors. In today’s tough economic times, it comes as no surprise that many Americans are finding it difficult to make ends meet. Increasingly, Americans are falling behind on debts such as credit cards, loans, and medical bills. This has lead to an increase in attempted collection of these debts, often by debt collectors acting illegally.

In many instances, once a debt, for example a credit card debt, goes unpaid for a certain amount of time, the credit card company will sell it to a debt collection company for pennies on the dollar. The debt collection company then tries to collect as much of the debt as possible. There is nothing illegal about this arrangement. This can lead to problems, however, because the credit card company often sells the debt to the debt collection company with incomplete or inaccurate information as to the identity of debtor and/or the amount of the debt. NPR’s Diane Rehm recently discussed the consumer debt buying industry with a consumer attorney, a representative of the Federal Trade Commission (the “FTC”), and a representative of the credit card industry.

This becomes a problem first when a debt collector begins contacting you, but becomes even more of a problem if the debt collector actually files a law suit against you. Initially, when you find out that a debt collection company is attempting to collect a debt from you, you should request validation of the debt. If you request validation, under the Fair Debt Collection Practices Act (the “FDCPA”), the debt collector is required to provide it. It is also a requirement that the debt collection inform you of the right to request validation within five days of its initial communication with you. It is important that you request validation within thirty days of receiving this notice. If you do not receive the notice, you can still request validation, but, again, it is important to do so within thirty days. If you request validation before the end of the thirty day period, the debt collector must stop attempting to collect the debt from you until it has responded to your request. A letter from the FTC clarifies that is it the debt collector who must provide the validation of the debt, not the original creditor. Failure to respond to your request for validation and continuing to attempt to collect the debt before responding to your validation request are both violations of the FDCPA.