Given all of the more recent high-profile financial failures, it might be easy to forget the fall of Bear Stearns, the first investment bank to go down in our current economic downturn. But we were interested to read recently that the firm recently settled charges that it violated the Fair Debt Collection Practices Act, a federal law our Chicago, Naperville and Oak Brook debt collection abuse prevention lawyers work with often in our Chicago consumer rights litigation practice. According to the Chicago Tribune, Bear Stearns and its mortgage debt collection subsidiary, EMC Mortgage, settled multiple FDCPA charges with the Federal Trade Commission for $28 million in September, and also agreed to change its loan servicing policies.
As with so much other economic news in 2008, the problem started with subprime and other non-standard mortgages. Bear Stearns was heavily invested in these (by buying them from the original lenders), a choice that is largely blamed for its failure. EMC serviced those mortgages, and according to the FTC, committed multiple violations of the FDCPA in its dealings with mortgage holders. The FTC complaint charged EMC with failing to check into the information provided by the original lenders on the mortgages, which led to incorrect charges and incorrect reports to credit bureaus that hurt the homeowners’ credit. EMC was also charged with:
• Charging fees homeowners never authorized, including a $500 fee for “loan modification”
• Failing to report to the credit reporting agencies that homeowners disputed the incorrect debts
• Fabricating “property inspections” to gain access to private homes
All of these are violations of the Fair Debt Collection Practices Act, which was designed to protect consumers from just this kind of unfair and predatory lending. As consumer attorneys, we applaud the FTC for protecting homeowners’ rights and hope this settlement helps more of them keep their homes under realistic terms.
The FDCPA applies to any type of debt collector — not just mortgage servicing companies. It prohibits these and other types of lies and deception, as well as harassment, foul language and threats by collection agencies. If you are a victim of these unfair and abusive practices, the law allows you to sue the collection agency for damages and attorneys’ fees. Lubin Austermuehle handles a variety of Fair Debt Collection Practices Act lawsuits for clients in Chicago, Naperville, Oak Brook and throughout Illinois. If you believe you’re a victim of harassment, incorrect charges or outright lies by a mortgage company or any other debt collector and you want to fight back, please contact our firm to learn more about how we can protect your rights.