Tom Adams pointed out a story on ABC about the sleazy strong arming tactics used by a debt collection agency engaged by Bank of America debt collection agency called ACT Technologies. I imagine we are going to hear more and more about this sort of thing, not simply because high unemployment rates mean more people getting into credit trouble (yes, banks reported a fall off in new delinquencies, but a robin does not mean a spring. In addition, banks are also getting more aggressive on other fronts. For instance, banks would get a deficiency judgment when a foreclosure sale failed to recover the mortgage balance plus other charges. They would seldom pursue it, since people who lose their homes are under financial stress and you can’t get blood from a turnip. Since discussions of strategic defaults are now common, banks now appear to believe they are widespread, when the studies that have touted that idea are simply not reliable (I’m regularly called in to evaluate possible corporate investments, and my work often includes assessing consultant and academic research). So expect more debt collectors to be called in to pursue people who have lost their homes, even when there is nothing more to get.
The Bank of America case is particularly striking since the collection agency violated the Fair Debt Collection Practices Act. Bank of America continued to use the agency after a $1.5 million judgment against the collection agency, which also included Bank of America, and ABC News sent copies of abusive phone calls. It was only after they ambushed the CEO, Michael Moore style, to discuss the problem that the bank dismissed the firm.
You can also view the video here.
As Tom noted:
While the circumstances are quite different, they remind me of the way the banks ran the mortgage and CDO deals during the bubble days. They know what they are doing is wrong, but they also know it works. If they bully people, they can get what they want and the odds are very low they’ll suffer in any meaningful way. This time, BofA got caught, so they fired the agency and they move on, otherwise unaffected.
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I want to know if it is because our banana republic has nukes that the rest of the semi-civilized world still accepts US dollars given our selective repudiation of rule-of-law?
Also a fleet more powerful than all the other navies put together. Plus an air force able to deliver about 40,000 precision guided munitions anywhere in the world in 24 hours. And a cyberwar capability that can shut down communications, power plants and water utilities. Plus an unmatched capability for financial warfare. Then there’s the immense archive of NSA & CIA collected blackmail materials on nearly all persons of note in the entire world. And don’t forget the huge stable of Jason Bourne assassins possessing unrivaled operational experience.
Plus there’s our very special relationship with our Key Strategic Ally in the eastern Mediterranean with all these capabilities in miniature, plus an ability to move its agents under threat of the hue and cry of “anti-Semitism”.
With exports like these, who needs to manufacture iPods, personal computers, industrial machinery and fuels?
China is not yet in a position to stalemate this. So it will probably be another decade or two before the USSA can go the way of the USSR.
The dollar collapse crowd’s primary failings are lacking imagination and historical perspective. The above entity is ready, willing and very able to disrupt oceanic oil shipments everywhere. They have waged blockade warfare against entire populations several times before and they’ll do it again rather than tamely submitting.
Plus they paid peanuts in fines anyway. Piece of cake.
What I still foresee is something like this:
Foreclosure happens and money is still owed (since banks buy it back at a certain % anyway and there’s a difference). Could also be a short sale. Bank or collection agency may try to pursue, but likely know they can’t get anything right now, since such usually means homeowner’s broke.
Pile up deficiency amounts and “set them aside.” Wait a while..2-3 years plus. (happened in a few obscure cases)
Mark these deficiencies to something obscure. A $50K amount is impossible to collect on. A $10-15K amount is a bit more feasible, and easier to sell off.
Package and sell to debt collection companies.
Let the calls begin again…settle, sue, what have you.
Any homeowner that filed for BK is either SOL since they can’t again yet, or if stretched out far enough re-files for BK again because of this.
I guess I just assume this has always gone on – perhaps not. It’s pretty clear by now that corruption in America is just as bad as any other country so nothing surprises me anymore. Mortgage fraud around the country was so pervasive during the bubble that it’s impossible to tell anymore who was a victim and who was a criminal. Here’s but one example…
“CLEVELAND, Ohio — Mark Kellogg, accused of devastating Cleveland’s Slavic Village neighborhood, could spend decades behind bars after pleading guilty Tuesday to 103 mortgage fraud-related charges. Kellogg, 39, of Shaker Heights stood accused of leading a criminal enterprise that resulted in the sale of 78 Slavic Village homes with a total of $5.8 million in bogus mortgages.”
http://blog.cleveland.com/metro/2010/04/mortgage_broker_pleads_guilty.html
What can you do when stuff like this was going on? These people weren’t Wall Street “banksters”, they were real gangsters – drug dealers and organized criminal gangs. I say go after them and don’t shed a tear about a little name-calling.
This is a classic example of the use of the Lumpenproletariat by the Rentier Class and demonstrates one aspect of Marx’s thoughts that spot on. To me there are four social classes in America: the two parasitic classes just mentioned (rich bankers along with their brothers in bloodsucking: poor common criminals, crack hos, and meth heads), and the two productive classes, the Peasants (working class and uneducated middle) and the Bourgeoisie (educated middle and upper middle).
It is a common error, especially on the Left, to view the desolate poor Lumpenprolatariat as a potential revolutionary class. But this is dead wrong and history has shown over and over again (look just at the example of Organized Crime) that the Lumps will combine with the Rentiers to suck the blood out of the productive classes. Although they never combined with the rich, the Black Panthers also had high hopes of organizing the Lumps but that story had already ended badly well before Huey Newton got capped in the ass by a Lump.
So any signs of a growing Lumpenproletariat are a sign of Rentier class STRENGTH – not weakness. Obviously the best defence for the Peasants and Bourgeoisie is continued diligence in making sure the economic conditions do not arise that force people into a parasitic existence.
But once in place the productive classes must combine to fight BOTH parasitic classes on their flanks. The battle is not rich vs. poor but instead productive vs. parasites. But in the US the two classes productive classes remain divided by the “culture wars” which pit a refined politically-correct Bourgeoisie against an angry and emotional Peasant worldview. IN the meantime as this post and the video show, the Rentiers and Lumps are combining to suck even more blood out of the productive classes.
Watch most any Western and you’ll see the same four groups you describe in action. This is not new, and it’s not going anywhere. Fantastic analysis.
I especially enjoyed “making sure the economic conditions do not arise that force people into a parasitic existence.” The reason this can never happen, unfortunately, is because people believe they “should not” have to proactively ensure anyone else’s economic conditions. Because humans “should” not be parasites, this “should” never be a problem. Ah, humans and their world of “should.” Delusions are very strong in this species!!!
Thankfully, I’m immune to all of it. (kidding…)
Hopefully the bourgeousie can quit being snobs soon and realize that they’re only peasants, and unite with their post-secondary less educated brethren, who can teach them how to shoot their firearms.
Whining like this is why people remain among the peasants (or Lumpen, or whatever derogatory name you prefer). You could google what to do when a debt collector is threatening you or trying collect on an invalid debt, find your way to fatwallet or creditboards, and learn how to sue the collection agency for $1K per offence (that means per offending contact, not per debt) under the FDCPA in small claims court – no lawyers necessary.
Anecdotally, people have claimed to stop getting calls even on valid debt after winning a few of these judgements.
One debt collection abuse I am waiting to see in the mortgage arena is where debt collectors will call the relatives of a dead person and try to get them to take on the debts of the deceased. Amazingly, some kinds of people/certain cultures can be made to feel an obligation and will sign on the dotted line!
Maybe if a kid or parent defaults on a mortgage, someone will adapt this approach and try to get a relative to assume the obligation.
I’ve had that happen with medical bills. The collectors weren’t as abusive as ACT; they didn’t call early in the AM or use racial slurs (though they probably didn’t realize that I’m partly Hispanic so it’s hard to know what they would have said if they would have suspected). However, they called me a f’ing deadbeat, gd bloodsucker, cheat, f’ing loser, mouthbreather, f’ing trailer trash, etc. Some called several times a week. These weren’t my medical bills and I had no obligation to pay them (although the collectors said I did). The collectors just wanted to harass me, hoping that I wouldn’t realize that I didn’t owe them anything. It greatly exacerbated my Tourette’s (and other medical problems) and made it difficult to function. I’m pretty sure the collectors would have viewed that as a very good thing since, solely because they were exacerbating my medical problems, I often considered paying them off just to stop the calls.
Utility companies and municipal water departments are really bad about this also and will
1. Shut off electric and gas where the deceased formerly had residence and then require the new occupants to pay off the bill or pay a tremendous deposit to get the utilities back on.
2. Water Department will place a lien on the property and force the next occupant to pay the whole of any unpaid services.
Just do what I have done. Have caller-ID but NO voice mail or answering machine. I drives them NUTS!!!
BAC said the investigative report had nothing to do with them firing the agency (2 days after ABC confronted the BAC CEO with the report)?? That’s an incredible display of arrogance.
I got an anonymous call from an anonymous source asking me about some neighbor family, and calling them deadbeats. I guess that is legal but it’s not ethical.
If the person went bk and did not list the deficiency on their list of debts they were stupid. BK can discharge an inactive debt as well as an active one. So the lawyer should be sure to list in on the form. The deficency will either be paid off cents on the dollar in chapter 13 or wiped out in chapter 7. So that should not be a problem for someone who filed a BK petition in a competent manner.
We have a sleazy outfit (Portfolio Associates or something). They demanded payment of 2K plus 5K interest on an account that was not ours and had had no activity for 8 years. They have made the statement “we know the statute has run and we cannot sue, but we can harass you until you pay on this account. Of course if we pay anything the statute begins to run again. We have now blocked all their robo calls. I guess they buy either fraudulent or long past due accounts for a couple of pennies on the dollar and make a career as an ass.
I got loads of calls from a BAC collection agency for over a month a while ago, despite the fact that I didn’t have any debt with BAC and they were actually looking for someone else. They refused to accept that they had an incorrect number and I had to bring in the FCC to finally get them to stop calling.
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