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Archive for April 26th, 2012

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In a twist of irony, a West Virginia woman is trying to collect money from a collection agency. Diana Mey, of Wheeling, W. Va., won the largest judgment ever against an abusive debt collection company — more than $10 million.

“I’m a mom, and I’m a housewife, and I’m an accidental activist,” Mey said.

From her small-town home base in Wheeling, Mey went after a debt collection empire that hounds people nationwide and won. But she still hasn’t received any money.

“I don’t know that I’ll ever collect a dime, but if I can get their operation shut down, that would make me very happy.” 

Two years ago, a debt collector with a company called Reliant Financial Associates, or RFA, left a message implying that her house was in jeopardy if she didn’t pay a debt. The message stated:

“I’m calling in regards to a preliminary asset liability investigation. They are in the process of serving some court documents in regards to case 29369… They have some information now pending questions at the property,… Springdale Avenue, in Wheeling, West Virginia. It is in your best interests to contact the department. You are required to contact 866-764-9779.”

It is illegal for debt collectors to make empty threats about serving people with a lawsuit or seizing their home. And it was especially galling to Mey, who says she is debt-free.

“They threatened to take legal action against our property and it wasn’t even our debt,” Mey said.

Millions of Americans are victims of this kind of mistaken debtor identity, partly because of a new breed of collectors called “debt buyers.” They purchase old debts for pennies that the original creditors have given up on and then try to collect them for a big profit. Critics say debt buyers sometimes use outrageous tactics to get the money where others have failed. RFA is a debt buyer.

Debt buying is one way the agencies dice and divide up our personal information and it is profitable for others. Investment banking made money while it lasted. Below is how fools went about wrecking nation’s economy. It is heartening to know fools are in no hurry to change their ways or take extra precaution while doing their job.

Background info: 

In the old system, when homeowners paid their mortgage every month, the money went to their local lender.  And since mortgages took decades to repay, lenders were careful.

In the new system, lenders sold the mortgages to investment banks.  The investment banks combined thousands of mortgages and other loans — including car loans, student loans, and credit-card debt — to create complex derivatives, called collateralized debt obligations, or CDOs.  The investment banks then sold the CDOs to investors. Now, when homeowners paid their mortgages, the money went to investors all over the world.

The investment banks paid rating agencies to evaluate the CDOs, and many of them were given a AAA rating, which is the highest possible investment grade. 

This made CDOs popular with retirement funds, which could only purchase highly rated securities.

This system was a ticking time bomb.  Lenders didn’t care anymore about whether a borrower could repay, so they started making riskier loans.  The investment  banks didn’t care, either; the more CDOs they sold, the higher their profits.  And the rating agencies, which were paid by the investment banks, had no liability if their ratings of CDOs proved wrong.

 

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