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Robo-signing, part deux

By Janna Herron ·
Monday, August 13, 2012
Posted: 4 pm ET

Remember a few years ago when the mortgage industry was mired in the so-called robo-signing scandal? To refresh your memory, debt collection law firms hired by the big banks pushed through fraudulent foreclosure documents in a rush to take homes from borrowers.

Then, several judges got wise and demanded that banks verify the debt, who owns that debt and other basic information before kicking people out of their houses. The foreclosure machine slowed, though it didn't halt, and some homeowners took the banks to court for the fiasco.

Now, it looks like it's happening all over again, except this time it's credit card debt that's being called into question.

A report in The New York Times on Sunday -- based on interviews with regulators, judges and attorneys -- said that many of today's credit card collection cases are littered with mistakes, just like the foreclosure lawsuits before them. Some suits name borrowers who have already paid their debts, while others include inflated balances due to erroneous fees and other costs. The report cites problems at American Express, Discover and Citigroup.

The American Banker reported in January how the Office of the Comptroller of the Currency is investigating more than 20,000 Chase accounts that may have had incorrect balances.

All this is coming to a head as the Consumer Finance Protection Bureau -- the federal consumer watchdog -- prepares to release its final ruling on supervising debt collectors this fall. The ruling should define which agencies would fall under the bureau's purview, based on size and revenue, similar to its final rule on credit reporting participants.

So, what could that mean for you? It means that perhaps you will have a place to go and complain if the debt collector harassing you is wrong. In the meantime, know your rights under the Fair Debt Collection Practices Act, which outlines when a collector can contact you and what proof they must provide you. Here's a good guide to deal with debt collection calls.

Do you think debt collection firms need oversight? Do these allegations of robo-signing bother you? Sound off.

Follow me on Twitter: @JannaHerron

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Foreclosure Attorney New York
August 16, 2012 at 5:42 pm

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