Oh Bank of America, From Chain Chain Chain to Shame Shame Shame

25 Sep

Looks like NakedCapitalism is way out front this week on the real stories coming out of the foreclosure crisis. So GMAC is creating fraudulent documents to foreclose and to re-arrange ownership and title to notes; and Bank of America is paying collection agencies who use harassment and racial obscenities on the borrowers.

Nice, guys, all we can say is, really nice.

Bank of America Collection Agency Harrassed Borrowers With Racist, Obscene Calls

from naked capitalism by Yves Smith

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Tom Adams pointed out a story on ABC about the sleazy strong arming tactics used by a debt collection agency engaged by Bank of America debt collection agency called ACT Technologies. I imagine we are going to hear more and more about this sort of thing, not simply because high unemployment rates mean more people getting into credit trouble (yes, banks reported a fall off in new delinquencies, but a robin does not mean a spring. In addition, banks are also getting more aggressive on other fronts. For instance, banks would get a deficiency judgment when a foreclosure sale failed to recover the mortgage balance plus other charges. They would seldom pursue it, since people who lose their homes are under financial stress and you can’t get blood from a turnip. Since discussions of strategic defaults are now common, banks now appear to believe they are widespread, when the studies that have touted that idea are simply not reliable (I’m regularly called in to evaluate possible corporate investments, and my work often includes assessing consultant and academic research). So expect more debt collectors to be called in to pursue people who have lost their homes, even when there is nothing more to get.

The Bank of America case is particularly striking since the collection agency violated the Fair Debt Collection Practices Act. Bank of America continued to use the agency after a $1.5 million judgment against the collection agency, which also included Bank of America, and ABC News sent copies of abusive phone calls. It was only after they ambushed the CEO, Michael Moore style, to discuss the problem that the bank dismissed the firm.

You can also view the video here.

As Tom noted:

While the circumstances are quite different, they remind me of the way the banks ran the mortgage and CDO deals during the bubble days. They know what they are doing is wrong, but they also know it works. If they bully people, they can get what they want and the odds are very low they’ll suffer in any meaningful way. This time, BofA got caught, so they fired the agency and they move on, otherwise unaffected.


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