Tick-tock goes the clock on old debts

September 10, 2015

by Cristina Miranda 

Consumer Education Specialist, FTC

ARTICLE LINK (CLICK HERE)

Here’s a fun way to think about a tricky topic. You know the scene in Lewis Caroll’s Alice in Wonderland when the white rabbit hops off saying “I’m late! I’m late! For a very important date!”? Imagine the rabbit is a debt collector. The important date? It’s his last chance to legally make you pay money you owe. Why he’s late? The debt collector has run out of time to sue you for an old and unpaid, or time-barred, debt. For more, follow me down the rabbit hole...

What is a time-barred debt?
It’s a debt that’s too old for a debt collector to sue you to make you pay. Debt collectors have a limited number of years – called the statute of limitations – to sue you to collect on money you owe. Statutes of limitations vary by state, and by type of debt.

What can I do if a debt collector calls about an old debt?
Debt collectors can contact you about time-barred debts at any time. If you get a call from a debt collector, they might come right out and say they can’t take you to court to make you pay a time-barred debt. If a debt collector doesn’t tell you this, ask for the date when you made your most recent payment. Then, ask for a validation notice – a legally required letter detailing the amount owed, and the creditor name. Once you receive the notice, send a letter back within 30 days explaining that you are 'disputing' the debt and that you want to 'verify' it. Debt collectors must stop trying to collect until they give you verification.

What if I’m sued for an old debt?
Don’t ignore it. Defend your debt collection rights. Consider talking to an attorney in order to prove that the debt is time-barred, and have the lawsuit dismissed. To do this, you may be asked to provide a copy of the verification from the collector, or any information you have that shows the date of your last payment.

Do I have to pay a time-barred debt?
It’s up to you. Here’s what can happen:

• Pay nothing. Not paying a debt may lower your credit rating. So check your free credit report first to see if a time-barred debt has been reported. If the debt appears on your credit report, this could make it harder and more expensive for you to get credit, insurance, or loans. Debts stay on your credit report for seven years after you stop paying. Although debt collectors can no longer sue you for a time-barred debt, it won’t make it go away. Debt collectors can keep contacting you to pay because you still owe the money. If you want them to stop, send a cease communications letter.
• Partially pay. If you make, or promise to make, a debt payment, the statutes of limitations clock may reset and your debt will no longer be considered time-barred. A debt collector can then sue you for the full debt amount, plus interest and fees.
• Pay it off. Before making a full payment, get a signed letter from the debt collector saying that your entire debt is being settled to release you from further obligations.

Debt or debt collection issues on your mind? Talk to us! Write your questions in the comments section below, and we will pick a few to answer. To report a scam, visit ftc.gov/complaint.

Tagged with: credit report, debt, debt collection

Blog Topics: 

Money & Credit

. . . . . . . . . . . . . . . . .

Please contact us if you need help or resources as we are here and happy to help!

Respectfully,

Dana Shafman

Managing Member

END Consulting

(888) 234-7006 Ext 101

Dana@ConsultingEND.com

www.TheDailyComplaint.com

Here's One Thing the CFPB Gets Right

BY ARI KAREN

AUG 11, 2015 5:35pm ET

ARTICLE LINK (CLICK HERE)

There are many concerning aspects of the Consumer Financial Protection Bureau's methods, not the least of which include its proclivity to regulate via enforcement and its reliance on overly broad and ambiguous languageto support its activities.

But when it comes to regulating Unfair, Deceptive, or Abusive Acts or Practices, the CPFB's actions have, for the most part, been reasonably warranted.

The CFPB recently took a series of UDAAP actions addressing a variety of wrongs in cases where, based on the allegations in recent cases, the misconduct was palpable.

In one case, a mortgage servicer was fined and forced to pay damages for allegedly failing to honor trial modification periods from prior servicers and for unnecessarily prolonging trial modification periods.

n another case, a debt collector was hit with penalties for purportedly making false threats against consumers and collecting debts consumers did not owe.

Lastly, a mortgage servicer was pounded for falsely making claims of savings by collecting bimonthly payments that did not actually result in the savings promised. In addition, the servicer allegedly did not make the payments on behalf of consumers at the times promised.

While the CFPB's self-creation, and expansion, of omnipotent power is disturbing and worrisome for the future, for the present moment it appears the agency tactically chooses cases where the potential for objection is limited. Lenders should keep this in mind this when balancing current compliance and business needs.

Ari Karen is a partner at Offit Kurman

. . . . . . . . . . . . . . . . .

Please contact us if you need help or resources as we are here and happy to help!

Respectfully,

Dana Shafman

Managing Member

END Consulting

(888) 234-7006 Ext 101

Dana@ConsultingEND.com

www.TheDailyComplaint.com

CFPB Issues PMI Cancellation and Termination Guidance Bulletin

Author: Xhevrije West in Daily Dose, Government, Headlines, News

August 4, 2015

ARTICLE LINK (CLICK HERE)

In an effort to bring mortgage servicers into compliance with the Homeowners Protection Act, the Consumer Financial Protection Bureau (CFPB) issued a bulletin on Tuesday providing guidance to servicers regarding the cancellation and termination of private mortgage insurance (PMI).

According to the CFPB, private mortgage insurance provides protection to the lender if the borrower stops making payments on the loan. Private mortgage insurance is usually required by lender if the borrower's down payment is less than 20 percent of the sales price or appraised value of the home and are added to the borrower's monthly mortgage payment.

Congress passed the Homeowners Protection Act of 1998 to provide borrowers with cancellation and termination rights with their private mortgage insurance policy, the CFPB says. The law requires automatic termination of private mortgage insurance once the mortgage balance is reaches 78 percent of the original value of the property, among other criteria.

Private mortgage insurance is a huge cost to consumers, but the Homeowners Protection Act provides specific cancellation and termination rights to protect consumers from unnecessary costs. The CFPB advises that if a servicer does not cancel a borrower’s private mortgage insurance in a timely manner, it can lead to the borrower paying significant amounts of money on unnecessary premiums.

“Consumers should not be billed for unnecessary private mortgage insurance,” said Richard Cordray, CFPB director. “We will continue to supervise mortgage servicers to ensure they are treating borrowers fairly, and today’s guidance should help servicers come into compliance with the Homeowners Protection Act.”

The CFPB noted that this bulletin does not advise of any new responsibilities or requirements, but summarizes existing requirements under the law.

In addition to reaching the 78 percent loan-to-value (LTV) threshold, the borrower must meet certain other requirements for borrower-requested private mortgage insurance cancellation:

• The borrower must have a good payment history.
• The borrower must be current on the loan.
• The borrower must satisfy any requirement of the holder of the mortgage for certification that the borrower’s equity in the property is not subject to a subordinate lien.
• The borrower must satisfy any requirement of the holder of the mortgage for evidence (of a type established in advance and made known to the borrower by the servicer) that the value of the property has not declined below the original value.

Click here to view the CFPB's Private Mortgage Insurance Advisory Bulletin. 

Click here to view the CFPB's Summer 2015 Supervisory Highlights. 

. . . . . . . . . . . . . . . . .

Please contact us if you need help or resources as we are here and happy to help!

Respectfully,

Dana Shafman

Managing Member

END Consulting

(888) 234-7006 Ext 101

Dana@ConsultingEND.com

www.TheDailyComplaint.com

Why Default Servicing Processes Haven't Improved Since the Crisis

BY KARL FALK

AUG 4, 2015 12:32pm ET

ARTICLE LINK (CLICK HERE)

After years of historically high levels of distressed and default mortgages, servicers are still over-reliant on human mediation and interaction when there should be no subjectivity in the process.

Despite recent headlines indicating a normalized environment, significant residual issues persist that undermine the default servicing industry's potential for true healthiness. For example, the truly abysmal rate of borrower participation in traditional default servicing processes is a trend that continues to confound servicers and compromise their compliance strategies.

What the origination side has learned, and what servicing needs to understand, is that throwing bodies at a problem does not solve the problem, and changing internal processes is not the smoking gun, either. The servicing industry should adopt greater automation to more efficiently clear out its backlog of defaults and better manage spikes in the future.

What's needed is a fundamental shift in servicers' relationships with customers that modifies communication to speak the "language" of borrowers in a healthier way.

This begs two questions: "Is the default servicing process any better than it was in 2007?" And, "Have we learned from the faults of our past?"

Every lender/servicer has documented guidelines regarding foreclosure alternative qualifications, which are based on a set of calculations. Excise the always fallible, often-biased human element from default servicing calculations and get right to the facts.

Mediation, in states requiring judicial review of foreclosure, is redundant and a drag on the process. Self-service makes a non-mediated default resolution possible.

In automating as much as possible, servicers can devote their human capital to outliers or exceptions, and process finalization, instead of managing the entire process start to finish.

Mortgage delinquency rates increased a scant 1.46% from March to April, but the national mortgage delinquency rate is down 15% from one year ago. In addition, though non-foreclosure solutions outpaced foreclosures in Q1 2015, overall loan modifications, short sales, deed in lieu transactions, foreclosure starts and foreclosure sales, as well as serious loan delinquencies, continue to decline.

What these numbers don't address is the enormous backlog of defaults that have yet to be resolved. According to Federal Deposit Insurance Corp. data, banks have $57.9 billion residential loans in the process of foreclosure, representing 48% of all nonperforming loans.

Defaults are absolutely trending downward, but this cyclical industry guarantees that everything comes around again. Being better prepared for them helps ensure the waves don't knock you down.

Self-service options would enable borrowers to participate in a process that isn't really designed around the average consumer's level of understanding. The prevailing thought on how to fix the default industry and increase distressed borrower engagement is to change the documentation so that borrowers can better understand them, but the problem isn't with the documents. It's with the process itself.

Take tax preparation software, for example. Tax documents are difficult for even financially educated consumers to understand, and yet, every year, millions of consumers prepare and file their own taxes using tax preparation software. If the documents weren't filled out correctly, the software companies would be out of business.

These companies succeed not by changing the documents to make them easier to understand or by changing the tax laws, but by changing the process by which consumers calculate their tax responsibility. Document fulfillment is simply a byproduct of making the process easier.

Default servicing via a self-service platform can work much the same way. On average, borrowers are not well versed in the particulars of foreclosure alternatives.

Although borrowers are not loss mitigation experts, they are experts on their current situation. Borrowers can tell if you if they want to stay in their home, if they have income, what their current monthly expenses are. With self-service technology allowing borrowers to direct their own loan workout process, default servicers can capture data at the point of entry and use the information to drive the rest of the process, rather than requiring paperwork up front before an assessment is even made.

There is something fundamentally wrong with the way the default servicing process operates today, and it will not fix itself. If we have learned anything from the foreclosure crisis, it is that the default servicing process must be managed better, and servicers need to reimagine how this process works to avoid becoming buried by volume and ill-will during spikes in defaults.

Karl Falk is CEO and co-founder of ShortSave.

. . . . . . . . . . . . . . . . .

Please contact us if you need help or resources as we are here and happy to help!

Respectfully,

Dana Shafman

Managing Member

END Consulting

(888) 234-7006 Ext 101

Dana@ConsultingEND.com

www.TheDailyComplaint.com

NATIONSTAR MORTGAGE

NATIONSTAR COMPLAINT:

Submitted:      July 2015

Reported By:     Bob in Kansas City, Missouri

Report Link:   CLICK HERE

Loan Modification Fraud

Have been dealing with Nationstar as a mortgage servicer for the last 4-5 years.  Several instances of unexplained charges on billing, but nothing of a major issue.  Until now.  Was injured on the job June of 2013, have been unsuccessful in collecting workers comp. Wages a have declined due to my injury to around 35-40% of my previous income.  have used savings to keep up until january 2015.

Received invitation from Nationstar in Marrch 2014 to Refinance.  Responded by phone, to initiate process.  Had an assigned " Loan Specialist"  Called back next day to provide additional information that had been requeested, and was advised that the individual that had been assigned as my "loan specialist" was no longer employed by nationstar. Next "loan specialist" after requesting income and employment verification sent me a letter approximately a week later that stated that I did not meet criteria fror a refinance.

Received letter from Nationstar dated March 9, 2015, stating that upron their review, my mortgage qualified for modification.  The letter states" To accept this option, within 14 days of the date of this letter you must call us at (877)450-8638 to confirm your participation or make your first Trial period payment.  If you follow the terms of the enclosed Trial Period Plan, your loan will be permanently modified."

The last sentence in the previous paragraphcan be interpreted in a legal proceeding as nothibng but an absolute confirmation of actiion!  But that's not the Natiionstar way.  After making three timely payments that the Trial Period Plan called for, I recieved a Letter from Nationstar on June 18,2015 with the following statement.  " We recently received a payment on your behalf in the amount of $807.04.  We are  returning these funds as they are insufficient to bring your account current.  As of the date of this letter, the total amount required to bring this account current is $6,732.79."

To date there has been no accounting from Nationstar of the disposition of the first 2 Trial Plan payments, nor has the payment referred to in the June 18.2015 letter been returned.  Current status is threat to resume foreclosure proceedings.

My intent is to use my limited resources to file an action against Nationstar and their "Dedicated Loan Specialist" Kyle Lindgard for Fraud. 

END CONSULTING ADVICE:

Hi Bob,

It is absolutely disgraceful how Nationstar Mortgage has treated you not to mention a violation of your consumer rights. With that said, you do have rights and by simply understanding them and knowing how to exercise them, you can hold Nationstar Mortgage accountable for their actions while securing a permanent loan modification since you have already complied with the Trial Period Plan (TPP).

I would first suggest that you visit the CFPB's website (click here for CFPB website) to learn more about your consumer rights and you will also want to contact the Making Home Affordable (MHA) Home Affordable Modification Program (HAMP) escalations team to get them involved with your mortgage loan and successful TPP completion.

We battle Nationstar Mortgage daily and win with a trial period plan issues as well as other debt restructuring issues so just keep fighting until you get the solution that you are seeking. We would be more than happy to educate you as to how to fight for your rights.  My firm routinely seeks out complaints online so that we can educate as to how to fight back on our weekday show called "The Daily Complaint" where we review a complaint and how to tackle it successfully.

We reviewed your Nationstar Mortgage complaint on the show if you would like to listen, click here.

In addition to submitting complaints to the CFPB and MHA HAMP escalations team, I would always suggest preparing a QWR or Request for information for Nationstar Mortgage that you can submit via fax or email – you can learn how through the CFPB by typing in QWR in their search bar.

Nationstar Mortgage is required to acknowledge the QWR or Request for information per RESPA in 5 business days and answer it in 30 business days or you do have recourse, so listen to us address the Nationstar Mortgage issues on The Daily Complaint today and contact us if you need further information on how to not only attack your problem but to get the solutions that you are seeking.

Good luck!

Respectfully,

Dana Shafman

Managing Member

END Consulting

(888) 234-7006 Ext 101

Dana@ConsultingEND.com

www.TheDailyComplaint.com