Akron Beacon Journal…
Lawsuits without facts
August 20, 2012 

For $25 billion, five of the nation’s biggest mortgage lenders agreed early this year to settle charges that they initiated foreclosure proceedings relying on paperwork that frequently was incomplete, inaccurate or simply fraudulent. 

The “robo-signing” scandal exposed industry practices that were forcing thousands of borrowers into foreclosure every year, even though the lenders could not produce verifiable documentation that they owned the properties in question or that the borrowers were delinquent. A report by the New York Times last week identified some of the same systemic problems with debt-collection practices by major credit card companies. 

It would seem a fair, if distressing, conclusion that not all lessons from the foreclosure mess have transferred to other areas of the consumer financial market.

According to the Times, credit card companies are turning to courts more and more to collect on bad loans. Lenders confronting an estimated $18.7 billion in credit-card debt are filing lawsuits “without regard for accuracy,” many of the court cases relying on “erroneous documents, incomplete records and generic testimony from witnesses.” 

In one example, a civil court judge in Brooklyn reckons that about 90 percent of the 100 or so cases a day that he hears are flawed and can’t prove the borrower owes the debt. In some cases, lenders sue to collect on bills that already have been paid off, or they inflate outstanding debts by tagging on fees and interest charges. As in the foreclosure scandal, some lawsuits have included falsified or inconsistent transaction statements. In others, the same employee signs multiple affidavits in cases in different states. 

Read the rest of the article at the Akron Beacon Journal