Banks trying to go it alone when collecting upon judgments and debts are now finding themselves in trouble with federal regulators. Obviously, with the unprecedented number of individuals defaulting upon loans during the past few years, lending institutions wish to find the means to have deficiency judgments paid back. However, it serves no purpose to pursue delinquent accounts only to find your bank the focus of a federal investigation.
Just a few years ago, charge-off rates for credit cards exceeded $85 billion. Though collection cases by credit card companies and banks were often brought in an attempt to collect this debt, attorneys for debtors criticized banks for not providing appropriate records to back the collection claims up. In one particular case, a bank employee of JPMorgan testified that 23,000 claims of delinquent accounts by the company were inaccurately documented.
The Office of the Comptroller of Currency (OCC) apparently is examining the practices that lending institutions have used when taking legal actions against debtors. The OCC alleges claims of robo-signing going on by officials in charge of collecting the debts, and the falsifying of records in order to gain a judgment against debtors. One judge dismissed more than 3,000 debt collection cases this past October because the judge felt that the debt amounts were inaccurately stated.
No case should be dismissed due to poor record keeping or violations of laws governing credit practices. The collection of debts in California still needs to be conducted in accordance with California and federal regulations.
Commercial collection practices require professional handling. When speaking about the amount of debt owed to lending institutions, this sort of task cannot be handed off to inexperienced or untrained collectors that will end up getting the bank sued. Attorneys that understand collections practices will make certain that every affidavit signed on behalf of a creditor was thoroughly reviewed and is up to date and accurate.
Source: The Boston Globe, “US taking harder look at debt collection practices,” by Danielle Douglas, May 29, 2013