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A Cause to Support – the ARM Industry Needs To Occupy Wall Street!

A Cause to Support – the ARM Industry Needs To Occupy Wall Street!

I know, I know, we're getting into the game a bit late, but this may be our final, great chance to not only get positive press but to further our own agenda as well.  It's time to Occupy Wall Street.

What's that, you say?  Leave our comfy desks and auto-dialers and join a bunch of recycled or reincarnated Hippies to bite the manicured fingers on the hand that feeds us, to attack the very same financial institutions which has filled our calling queues and pockets for oh-so-many glorious years?  Yes.

Hear me out as I present a considerable number of reasons for us to weigh in on the side of these protestors and others of us who comprise the "99ers."  (1% rich; 99% poor)

#OccupyWallStreet (on Twitter) is a movement that began in NYC on September 17 with an encampment in the financial district.  The occupiers proclaimed their methods to be non-violent and their purpose to be the ending of the moneyed corruption of this country.

Like a spark to tinder, it caught fire.

What started out as an isolated protest group unacknowledged in the mainstream press has spread nationally and internationally, reaching Madrid, San Francisco, Los Angeles, Madison, Toronto, London, Athens, Sydney, Stuttgart, Tokyo, Milan, Amsterdam, Algiers, Tel Aviv, Portland, Chicago, Palestine, Phoenix, Montreal, Cleveland, Atlanta, Kansas City, Dallas, Orlando and Miami…and on and on.

Notice any positive parallels?  Our industry is certainly people-powered, we can be found in cities nationally and internationally, we assert that our methods are non-violent, and our purpose is to…make a buck or two?  (That last doesn't seem catchy enough.)

And, we have common ground in attacking Wall Street transgressions.  After all, have these people not undermined the very source of our revenue – uncontested debt?  Legitimate debt, legitimately owed, has always given our industry a fairly decent shot at working hard to both satisfy our clients and make a fair return on that effort.

Thanks to Wall Street, this is becoming impossible. 

Think about it.  Even if a debt we are pursuing is undisputed and acknowledged by the debtor, thanks to the ripple effects of the Great Recession (which no one disputes was brought on by the greed and excesses of Wall Street), fully one-sixth of U.S. citizens live in poverty and overall some 18% of our workers are either unemployed or underemployed. 

A few examples of the getting-blood-out-of-turnips problem we are facing:

Medical.  Roughly 40% of consumer collections is in the medical field.  With roughly 50,000,000 Americans without health insurance and health-profiteering unencumbered by legal strictures adding to what is owed, how do we expect to collect from a shrinking pool of those who are still well and still employed?

School Loans.  Wall Street moved into "Higher Ed" a few years back by bankrolling For-Profit Colleges.  They, in turn, charged excessive tuition (by any standard) and then annually proceeded to dump students into the workforce burdened by tens of thousands of dollars in loans.  Student debt is reaching 1 Trillion dollars – already having passed credit card debt – and is seen as the next "meltdown bubble."  Student loan default rates are vaulting into the teens, and fully 50% of these defaults are from students who attended for-profit colleges.

Our industry has already begun to collect on those accounts, and we are surely "feeling their pain." Try getting as much as a $50/Month payment out of a kid flipping hamburgers at a local fast-food outlet who is saddled with as much as $100,000 in debt.   

In fact, there is a major student-stoked national campaign that is demanding that ALL student loan debt be forgiven – and it is gaining momentum.  Put THAT in your portfolio and smoke it.

Credit Cards.  Speaking of credit cards – a major source of lust and revenue for debt purchasers as well as traditional agencies – but is it really profitable – or even ethical to collect on?  Banks not only ran up these losses by the unconscionable escalation of interest rates and service fees, but then sold our industry hundreds of millions of dollars in "tainted" write-off's which never should have been sent out to third-parties to start. 

I am referring, of course, to the famous "Linda Almonte" whistle-blowing case at JP Morgan Chase which is still wending its way through the halls of government oversight agencies.  That shoe, when it drops, will not land lightly.  It will shake the banking – and our – industry.

Mortgage/Home Loans.  Faulty foreclosure paperwork, loans proven to be incomplete and in some cases downright fraudulent, and the outrageous robo-signing of mortgage with or without proper authentication; how it is that not one banker or wall street executive has been arrested?

Things are so rotten in Bankster Land that the Attorney Generals in a number of states are refusing to release a number of our major banks from lender liability.  Banks have been seeking broad releases to protect them from legal claims growing out of securitization, servicing, loan costs, unresponsiveness to requests for modification and robo-signed foreclosures, etc.  Santa will not grant them their wishes this year.

Collateral Damage.  Yep, you know them well – the people who acknowledge their debts, are more than willing to pay them off, but due to job or home loss brought about by a bankrupted economy – have barely enough to meet even basic needs for food and shelter.

Now, let's get back to our thesis – that the ARM Industry would be well-served by joining our young and unemployed friends on the protest lines.  Let's let them know that they are not the only ones who feel, in their words, "wronged by the corporate forces of the world" and that "upon corruption of that system, it is up to the individuals to protect their own rights, and those of their neighbors."

As responsible citizens and business owners, we must stand up for the legitimate rights of the debtors, our neighbors. 

After all, we want our neighbors to stand up for OUR legitimate rights, yes?  See you at "Liberty Square."

Understanding the New Maryland Rules for Collecting Debt

Beginning January 1, 2012, new Maryland rules will make it tougher for debt buyers to collect their debt

Middle Class Families vs. Big Banks

Do we need more proof Washington's not working for middle class families? We got it once again this week.

The big banks and their army of lobbyists couldn't stop the creation of a new Consumer Financial Protection Bureau, so now they are trying to undermine its work, enlisting their Republican friends on the Senate Banking Committee to stop the nomination of Richard Cordray to lead the agency -- just to try to slow up the agency from doing its work.

It's outrageous -- and we've got to hold them accountable.

I'm starting a petition: Sign on now to call on the Republicans on the Senate Banking Committee to protect the interests of middle class families, to confirm a director for the Consumer Financial Protection Bureau, and to let the agency do its work.

The goal of this new agency is to protect consumers by ending the tricks and traps and fine print banks have used to make it hard to understand and compare the costs of mortgages and credit cards. We need to hold Wall Street accountable for issuing the kinds of deceptive loans that nearly brought our economy to its knees in 2008.

I fought hard for these new protections and faced an army of lobbyists to hold the banks accountable. I am proud to have been part of the David vs. Goliath effort that led to the passage of this new agency. I was also proud to help set up the new agency over the past year as an assistant to the President.

We've made a lot of progress toward fixing the broken credit markets and preventing the next crisis, but the enemies of reform are at it again.

It's time for Republicans in the Senate to put the interests of hard working middle class families over the special interests of large financial institutions. We've got to speak out and make sure our fellow Americans know the truth.

Sign my petition to Senate Republicans now: Urge them to put the interests of families first and to allow this consumer protection agency to do its work!

We need clear rules to fix broken credit markets, protect consumers, and get our economy growing and creating jobs.

I've made my life's work fighting for middle class families and pushing back against special interests. I know what it means to live one pink slip or one health crisis away from economic disaster, because I did. That's why I'm working so hard to change things.

But I can't do it alone. I need you to stand with me, today. I need you to make this an issue that the Republicans can't duck.

Sign my petition to Senate Republicans now: Urge them to put the interests of families first and to allow this consumer protection agency to do its work!

And I'll make sure the petition and our signatures get delivered to the Republicans on the Senate Banking Committee.

Thanks so much for your help.

The Return of the Debtor's Prison

Judges have signed off on more than 5,000 warrants allowing borrowers who don't pay to be jailed since the start of 2010. Portfolio Recovery Associates, a debt buyer, made $44 million last year on $281 million in revenue, a 16% net margin.

You wouldn't be crazy to think that debtor's prisons are a thing of the past. Debtors have historically been treated pretty poorly: under Roman law, a debtor's body could be chopped up and the pieces given to his creditors (although they were more likely to be turned into slaves). So debtor's prisons, in comparison, might seem less harsh. But they were squalid and debtors weren't given any provisions. No sentences were set; you were there until you paid up. Borrowers owing as little as 60 cents could be jailed indefinitely. They were officially abolished in the United States in 1883.

But they're now making a comeback in a modern form. As the debt-collection industry buys up bad debt and then seeks payment, it's started relying on arrest warrants to get its way, throwing those who miss court appearances or don't pay in jail. The Minneapolis StarTribune was one of the first to report on the resurgence: after analyzing court data it found "the use of arrest warrants against debtors has jumped 60 percent over the past four years, with 845 cases in 2009." The practice is inconsistent, varying state-by-state, and the actual punishment varies. But there have been some cases that stand out:

In Illinois and southwest Indiana, some judges jail debtors for missing court-ordered debt payments. In extreme cases, people stay in jail until they raise a minimum payment. In January, a judge sentenced a Kenney, Ill., man "to indefinite incarceration" until he came up with $300 toward a lumber yard debt.

It's impossible to say how widespread this is across the country as no national statistics are kept. But the Wall Street Journal recently reported on the same phenomenon:

More than a third of all U.S. states allow borrowers who can't or won't pay to be jailed. Judges have signed off on more than 5,000 such warrants since the start of 2010 in nine counties with a total population of 13.6 million people, according to a tally by The Wall Street Journal of filings in those counties.

In Minnesota, arrest warrants have been issued for debts totaling as little as $85. It's not free to put people in jail, either, and taxpayer dollars cover the cost. Not to mention the distraction from pursuing violent offenders. Law enforcement "can't quickly access arrest orders for dangerous criminals because their computer system is clogged with debt cases," reports the WSJ.

And there's something else we're being distracted from. In Joe Nocera's weekend NYTimes column, he told the story of Charlie Engle, a marathoner who has been serving a 21-month sentence for mortgage fraud. Was he a lender who suckered borrowers into loans they couldn't afford? A banker who sliced and diced mortgages into securities with AAA ratings? No. He's a borrower who supposedly lied on two liar's loans (although as Nocera reports, the evidence for that is pretty fuzzy). So while Angelo Mozilo walks free, making a nice profit for his company and himself, Engle goes to jail.

Banks and debt collectors are making a tidy profit, while the customers they prey upon are being thrown in the slammer. "We have now imprisoned one generation of debtors after another," Samuel Johnson observed in 1758, "but we do not find that their numbers lessen." His words ring true today.

The long arm of Dodd-Frank

 In my last blog, I explored the ramifications to a bank’s borrowers and depositors when the FDIC takes over the bank. I now want to bring to your attention a recent and further expansion of the powers of the FDIC contained in the “Dodd-Frank Wall Street Reform and Consumer Protection Act,” commonly referred to as “Dodd-Frank.”