Saturday, October 6, 2012

National Bank of Canada foreclosing Americans homes over credit card debt

Helen Jones of Oakland learned Credigy Receivables wanted to sell the house she had lived in for 37 years when a process server came to her door. At issue was a judgment against her ex-husband over debt he incurred after their divorce

Source: Press TV

The National Bank of Canada is attempting to foreclose upon hundreds of American families’ homes in California over old credit card debts, according to a published report.

Bay Citizen reporter Rick Jurgens writes that the bank’s debt collection unit, Credigy Receivables, began filing foreclosure lawsuits recently that take advantage of a loophole in California’s laws that lets them go directly for a debtor’s home even if that property was not offered as collateral for a loan.

Jurgens explained that one of the people targeted by the new legal tactic is 71-year-old Helen Jones, an Oakland resident who lived in her home for 37 years before Credigy sued in 2010 over $1,636 in credit card debt her ex-husband ran up. She claimed the bank offered to settle the debt and drop the foreclosure for $7,000, and that she ultimately paid them $3,800 just to get it all over with.

They can get away with this because California has left the relatively new practice of third parties buying and selling debts virtually unregulated, creating legal space that lets banks go directly after valuable assets that were never offered as security for loans.

California State Sen. Mark Leno (D) filed a bill in 2011 called the “Fair Debt Buyers Practices Act” that sought to make third party collectors log the transactions that led to a consumer’s debts, rather than today’s common practice of purchasing a list of names and numbers without supporting information that proves the debt.

That bill passed the California Senate, but was relegated to a quiet death in an assembly committee after banking industry lobbyists voiced concerns. Raw Story


A California Watch review of court records identified foreclosure lawsuits filed by Credigy since December 2009 in superior courts in Alameda, Fresno, Kern, Los Angeles, Marin, Orange, Sacramento, San Bernardino, San Francisco, San Mateo and Solano counties.

The buying and selling of debts on the consumer level arose in the 1990s, after President Bill Clinton agreed with Republicans and signed a banking deregulation bill that allowed the merger of the consumer and investment banking sectors and enabled the creation of credit default trading on Wall Street.

Collecting debts is big business in California. Firms that are engaged by creditors to collect overdue or defaulted consumer loans have more than 10,000 employees in the state, according to the state Department of Consumer Affairs.


More than four million Americans have lost their homes since the housing bubble began bursting six years ago. An additional 3.5 million homeowners are in the foreclosure process or are so delinquent on payments that they will be soon. Overall, 13.5 million homeowners are underwater, meaning they owe more than their home is now worth. NY Times

Housing remains the biggest impediment to economic recovery, yet Washington seems paralyzed. While the Obama administration’s housing policies have fallen short, Mitt Romney hasn’t offered any meaningful new proposals to aid distressed or underwater homeowners. NY Times

The Federal Reserve’s latest mortgage bond purchases so far are helping profit margins at lenders including Wells Fargo & Co. (WFC) and JPMorgan Chase & Co. (JPM) more than homebuyers and property owners looking to refinance, Bloomberg reported in Late September

The United States housing bubble was an economic bubble affecting many parts of the United States housing market in over half of American states. Market Watch.

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