Mirabile Dictu! Debt Collection Robo Signers Make Bank Foreclosure Robo Signers Look Good

The Alice Through the Looking Glass practices, of at best adherence to the mere appearance of legality, increasingly appears to pervade the nether world where financial players go in search of money they think might be due to them. And the big problem is the word “might”. Banks proceed as if there right to collect was an ironclad certainty, when both the high error rate in their own processes, their cutting of legal corners to save costs, shows their confidence is unwarranted.

While we have seen abuses aplenty in mortgage-land over the last six weeks, they pale compared to normal practices in the debt collection arena. Some factoids from a :

Debt collection robo signers way outdo their mortgage peers in productivity. The highest output figure I recall seeing for a foreclosure robo signer is 10,000 affidavits a month, while the Times identifies a debt collection robo signer, Cherie Thomas, who executed 2000 affidavits a day. Her former employer now claims that workers like her now sign a mere “several hundred” affidavits per day.

Because these debts (auto loans, student loans, credit card debt) are traded several times, errors creep in and compound. One JP Morgan Chase employee found errors in 5000 of 23,000 delinquent accounts the bank was in the process of selling. When her manager ignored the information she provided, she alerted the general counsel. She was fired within days, apparently in retaliation.

The debt collector records and practices are so bad that the attorneys who represent borrowers report extremely high success rates, with one claiming he has lost only four cases out of roughly 5000.

From the New York Times:

Banks have been under siege in recent weeks for widespread corner-cutting in the rush to process delinquent mortgages. The accusations have stirred outrage and set off investigations by attorneys general across the country, prompting several leading banks to temporarily cease foreclosures.

But lawyers who defend consumers in debt-collection cases say the banks did not invent the headless, assembly-line approach to financial paperwork. Debt buyers, they say, have been doing it for years.

“The difference is that in the case of debt buyers, the abuses are much worse,” says Richard Rubin, a consumer lawyer in Santa Fe, N.M.

“At least when it comes to mortgages, the banks have the right address, everyone agrees about the interest rate. But with debt buyers, the debt has been passed through so many hands, often over so many years, that a lot of time, these companies are pursuing the wrong person, or the charges have no lawful basis.” …

In some instances, banks are selling account information that is riddled with errors.

More often, essential background information simply is not acquired by debt buyers, in large part because that data adds to the price of each account. But court rules state that anyone submitting an affidavit to a court against a debtor must have proof of that claim — proper documentation of a debt’s origins, history and amount.

Without that information it is hard to imagine how any company could meet the legal standard of due diligence, particularly while churning out thousands and thousands of affidavits a week…..

That was made vividly clear during the deposition last year of Jay Mills, an employee of a subsidiary of SquareTwo Financial (then known as Collect America), a debt-buying company in Denver.

“So,” asked Dale Irwin, the plaintiff’s lawyer, using shorthand for Collect America, “if you see on the screen that the moon is made of green cheese, you trust that CACH has investigated that and has determined that in fact, the moon is made of green cheese?”

“Yes,” Mr. Mills replied.

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18 comments

  1. Skippy

    A way back I mentioned I was helping a few people with debt problems, mostly of old collections gone wacky…cough already resolved yet collectors sayn it aint so. It seems all debt is digitized and does laps around the planet, used as stocking stuffers, sold and resold like trading cards over and over again to accuracies demise…funny that.

    Try telling some off shore operative that what he’s gawking at on the computer monitor_is not_a legal document, that any opines of a personal nature or chain of events leading to their call is governed by law to include wire/mail fraud, threatening harassment, blackmail, that all postal correspondence must be by certified mail with wet ink signatures (HA!) etc.

    Wake up sheeple…you have been digitized by your FICO scores, like a slaves irons, your personal GINI coefficient / value to the masters of debt. Behavioral studies assisting in lessening the beasts natural anxiety as its brought before the slaughterhouse so the enzymes don’t spoil the meat. This state of affairs is the most profitable human exercise since human ownership….oh the neoliberal ownership society…the one that gets rid of the ickyness of actually having to tend your chattel…we have matured as humans past that point…eh…its the deadbeats fault…get in the pit.

    Skippy…these neoliberal ass hats have created their own black hole…sucking in all the value they could…decades of future value brought to the event horizon…and now it sucks at their toes…I hope I’m far enough away to view it before my turn.

  2. Evoo Kermartin

    Ahem, auto loans, credit card debt, and student loans (collectively “consumer credit”) is also securitized.

    So one might expect more than a passing resemblance to the mortgage debacle, no?

  3. craazyman

    Another triumph for “efficiency”.

    We’re lucky indeed that this stuff is the bedrock of economics and finance, underpinning the moral progress of modern man.

  4. I have no outstanding debt except my mortgage which is up to date. I cannot tell you many times this past year I have been robo called by debt collectors, often calling my number with the wrong first name for someone who does not live here.

    I have notified the FTC, the relevant state attorney generals, and now have on my land line phone Select Call where I can block these calls.

    Debit collectors going after people who don’t owe the debt – the lowest form of life.

    1. Eclaire

      We have been getting “robo messages” for the past month. First a preface that states, rather murkily, that the message may not apply to us. But then “Denise” requests that we call her back at the 800 number and warns us that any information obtained will be used to collect the debt.

      What debt? Like you, we have only the one mortgage, paid directly from our bank account each month. We pay all our bills on time, etc. Are companies just trolling, figuring that so many people are in financial trouble and feeling guilty that they will get callbacks from delinquents just wanting to throw themselves onto the tender mercies of debt collectors?

      1. LAS

        Eclaire,

        I agree about the trolling. Two months ago someone from Texas sent me a debt collection letter for a service that is not even available in my area. They had no details to offer on this debt whatsoever as to when it was incurred or anything. It was just a random claim out of the blue to see what they could trick someone into admitting they might owe.

  5. ron tough

    I represent thousands of debtors as part of an employer provided legal plan and I can sign with confidence that nearly everyone of my deadbeat clients owe the money. I don’t even bother fighting the robosigner debts. I just file the bankruptcy. I can see the defaulted debt on the credit report. The only issue I have is that a 500 credit card after default can baloon to 2500 with interest and late fees. So you make an argument to the judge about mitigation of damages and usually win.

    1. Dana

      You can likely sign with confidence that nearly every one of your clients owes SOME money. Unless you’ve done the extremely complicated math yourself, you CANNOT sign that your clients owe the amount of money being claimed.

      I’ve represented debtors; the law is arcane and the math is complex. I hope your clients find better lawyers.

    2. Transor Z

      The principal determinant of amount owed in bk is the creditor’s proof of claim, not the amount declared in the debtor’s petition.

      An attorney has discretion in making tactical decisions on a client’s behalf in terms of whether or not to press each and every cause of action a client may have. Practical cost-benefit analysis is not merely permitted but essential to providing good representation.

      OTOH, a lawyer cannot ignore apparent abuses under FDCPA or state equivalent, causes of action for fraud or facial problems with creditor claims that come to light under a proper RESPA inquiry.

      “Bankruptcy mills” aren’t the answer to foreclosure/ collection mills…

  6. law

    We’ve taken care of all this nonsense about trivial procedural problems affecting affecting genuine, legitimate debt with our special fake court

  7. ron tough

    You seen the difference between you and me is that I know the difference practice and reality. I know that in my court system, robosigner documents are accepted for face value and its far too expensive to litigate a 5000 case. I also know that those numbers are ficitious but who cares most of the debtors file bk anyway. This isn’t like the debtor has one credit card and they’re being railroaded, they usually owe tens of thousands of dollars to dozens of creditors and they’ve defaulted on most of their debts. Fighting 25 hours to reduce a 5000 claim to 2500 isn’t worth the courts resources or anyone’s time. The debtors could settle for 25 cents on the dollar if they had any cash at all, but they never do. I will fight the cases that have a fighting chance but most of the time they owe the money to somebody. Even if they are sued by the wrong party, the can still settle with them and the issue is res judicata – adjudicated forever, and the real creditor has a claim against the creditor who settled. I’m in the trenches on these piddily credit card cases and like one jduge here always says “interest is interest, counselor. Are you disputing the underlying debt or just the amount they are claiming?”. With that kind of system there’s not much anyone can do except settle, go bk or enter a judgment.

  8. pebird

    If efficiency is the goal, why bother to even sign the documents at all?

    Just go to court, take a rubber stamp and “sign” them in front of the judge.

    Who cares any more whether a document is signed or not.

  9. Anonymous Jones

    People are interesting.

    When some person wants something done and the law doesn’t suit him, he is completely willing and able to commit fraud, perjure himself, etc.

    When this same person observes someone else running afoul of the law, he wants to string that “criminal” up by the nearest tree.

  10. Barbara Ann Jackson

    Foreclosure frauds, Foxes, hidden Elephants in Plain Sight, Havoc

    Whether or not foreclosures are halted, not much will be accomplished until authorities take action against the elephant in the room –hiding in plain sight: FORECLOSURE LAWYERS.

    Lawyers (debt collection attorneys, foreclosure mills) for mortgage lenders should be held accountable for foreclosure illegalities and for concealing malpractice against their lender-clients –as well as for committing Unfair Debt Collection Practices, extortion, and fraud against property owners; and deceiving Investors!

    Often foreclosure delays are because of lawyers, but they keep that fact from clients. Lenders –who are not required to know laws, are sometimes unaware that lawyers’ mistakes, errors, and frauds provide reasons, defenses, and basis for owners to attempt negotiating mortgage contracts. As a fundamental matter, injurious acts by such lawyers render the lawyers, as well as their mortgage clients liable for justiciable damages.

    If improper or false pleadings are filed in court by mortgage lenders, it is almost always via lawyers acting on lenders’ behalf. It is he or she (lawyer) who would file bankruptcy “Lift Stay” motions that “lack standing,” “proof of claims” different from ‘lift stays’ “movers”; and record illegal property deeds. And, lawyers, not lenders would be the persons who failed to “effect service” or failed at any substantive Civil Procedure requirement. In those instances, homeowners should not be blamed for refusing to cooperate with taking of their homes via error and fraud; and those lawyers owe $$$$$$ to their clients for fatally botching foreclosure cases.

    But, there’s an abundance of lobbyists, speech makers, “insiders,” straw buyers, and others who apparently benefit from detracting attention away from the unmitigated fact that an intentional false court pleading is tantamount to judicial fraud!

    And despite any crafted statement about “quelling” the matter of fabricated foreclosures, it is impossible to “quell” aftermaths from deliberate fraud. It is moreover impossible, and ridiculous to discount actionable wrongs from attorney-orchestrated real estate swindles. It seems that the primary incentive for silencing defective foreclosures is concealing the actors.

    This scourge might not be so obvious, but glaring are recurrent illegal foreclosures, null property deed recordations, as well as foreclosure and bankruptcy proceedings via non-existent lenders’ names. Even worse, are horrific acts of tyranny inflicted upon people who oppose fraudulent conveyances. These are just samples of foreclosure improprieties which raise flags of lawfulness, and whether entitled lenders ever legally repossessed those properties.

    It is sometimes said that matters such as the foregoing are irrelevant to defaulted homeowners. Yet not enough people realize that there are property owners who have been injured for being interferences to white collar real estate vice.

    As such, glossing over matters of falsified foreclosure is definitely not useful when people have been egregiously wronged from foreclosure frauds. Not only are injured entitled to remedy, their information would equip authorities with more details and evidence critical for reducing crime and corruption. Also, substantive information (which would not be whitewashed, and whistleblowers receive protection) will supply a clearer picture of foreclosure fraud factors that are harmful to homeowners, banks, and investors. Additionally, city revenues across this country will increase because money being used in furtherance of foreclosure and mortgage fraud will return to city coffers. ** “Foreclosure Frauds, Wells Fargo-the Fox in Charge…” @

  11. will

    There is an article in the New Yorker related to this – I read it yesterday and was struck by how debt will be resold multiple times, and people will even be pressured into paying it off multiple times by different collection agencies.

    Link Here:

  12. Shirls

    it’s appalling how widespread some of these flawed procedures are. i wish more people knew about their rights and what a difference an attorney makes in these matters:

  13. Donna Mia

    it sucks that debt collectors resort to such tactics. but the more this type of news come to light, perhaps it’ll help put an end to it:

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