Bay Citizen reporter Rick Jurgens writes that the bank’s debt collection unit, Credigy Receivables, began filing foreclosure lawsuits recently that take advantage of a loophole in California’s laws that lets them go directly for a debtor’s home even if that property was not offered as collateral for a loan.
Jurgens explained that one of the people targeted by the new legal tactic is 71-year-old Helen Jones, an Oakland resident who lived in her home for 37 years before Credigy sued in 2010 over $1,636 in credit card debt her ex-husband ran up. She claimed the bank offered to settle the debt and drop the foreclosure for $7,000, and that she ultimately paid them $3,800 just to get it all over with.
They can get away with this because California has left the relatively new practice of third parties buying and selling debts virtually unregulated, creating legal space that lets banks go directly after valuable assets that were never offered as security for loans.
California State Sen. Mark Leno (D) filed a bill in 2011 called the “Fair Debt Buyers Practices Act” that sought to make third party collectors log the transactions that led to a consumer’s debts, rather than today’s common practice of purchasing a list of names and numbers without supporting information that proves the debt.
That bill passed the California Senate, but was relegated to a quiet death in an assembly committee after banking industry lobbyists voiced concerns.
The buying and selling of debts on the consumer level arose in the 1990s, after President Bill Clinton agreed with Republicans and signed a banking deregulation bill that allowed the merger of the consumer and investment banking sectors and enabled the creation of credit default trading on Wall Street.
That market was worth $62 trillion in 2008, but it grew to more than $708 trillion by the end of June 2011, according to the Bank for International Settlements, which noted that the total value represented 18 percent growth in just the first half of 2011. The World Bank says the global gross domestic product was $69.97 trillion in 2011, up from $21.9 trillion in 1990.
The Dodd-Frank Wall Street Reform and Consumer Protection Act sought to address the financial chaos caused when debt-backed derivative bubbles collapse, which was one of the key factors leading to the 2008 financial crisis that nearly put the global financial system into complete gridlock. However, new regulations issued by Obama’s Consumer Financial Protection Bureau only seek to limit derivatives speculation in certain industries, like food and oil, leaving many of the president’s own allies — including the Federal Reserve Bank of Dallas — to say that the administration’s landmark reforms didn’t go far enough.
In spite of the limited effort, a federal judge in Washington struck the derivatives regulations down just last week, ruling on a lawsuit brought by the financial services industry.
- Jobs Now, Stop The Foreclosures, & Jail The Banksters.
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- National Bank of Canada foreclosing Americans’ homes over credit card debt (rawstory.com)
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- U.S. Bankruptcy Court Rules Obama’s Foreclosure Model ‘DERIVATIVES’ Are Illegal: Obama Told Bankers Today Its OK To Foreclose On American Citizens Who Bailed You Out!
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- Massive Foreclosure Bank Fraud Lawsuit: Massachusetts Files Against Five National Banks ~ Bank of America, Wells Fargo, JP Morgan Chase, Citi, and GMAC.
- MASSIVE Foreclosure Fraud Whistleblower Found Dead: Major Red Flag Is Raised ~ Florida & Nevada!