“The Minnesota attorney general, Lori Swanson, accused Encore of fraud, saying it had filed false affidavits to collect consumer debt that was not owed or had been already paid off.”
HUGE POTENTIAL EFFECT ON FORECLOSURES
The significance here is not just that robo-signing was used, which violates even common sense rules of evidence. It is the fact that the false affidavits were used to collect debts that were not due or had already been paid. This is the same as the current foreclosure mess, where pretenders are using false representations, fabrications, forgeries and perjured testimony to collect on non-existent debt, and debt which has already been paid by parties who have expressly waived any right to subrogation, which means they paid, but they did not purchase the receivable — to protect themselves from being called “lenders” or being subject to claims from homeowners for fraudulent or predatory lending.
As you will see from the description below, this opaque construct of conflicting “deals” and “trades” created a context in which the borrower’s obligation would be paid, regardless of whether the homeowner made the payments or not. The pretender lenders stepped in to the void created by this scheme to enforce a void note, void mortgage and an obligation in which it was neither the lender nor the purchaser of the receivable.
The pretenders are able to do this under the noses of the people who were the actual lenders because the investors don’t want to accept any responsibility for the fraudulent and predatory lending and documentation.
On a basic intuitive level it would seem that if a borrower received the benefit of funding of a loan, that the borrower was responsible for paying it back, regardless of what back-room deals were made. But in the words of Renaldo Reyes, Chief Asset Acquisition Officer (i.e., “trustee”) for Deutsch bank, the whole thing is COUNTER-INTUITIVE. That is why the courts are having so much trouble with these foreclosures — AND THAT IS THE SOLE REASON FOR THE USE OF ROBO-SIGNERS, FABRICATED DOCUMENTS AND FORGERIES TOGETHER WITH PERJURED TESTIMONY.
If the creditor was actually named, the real issues would come out and the issue would be completely reframed — because the the real creditor doesn’t want the house or the foreclosure, and in many cases is still getting paid. This leaves a “floating obligation owed to nobody” which is what the pretenders are exploiting and using on their balance sheets as “assets.”
Payment came from third parties who expressly waived rights of subrogation — it is right there in the insurance, credit default swap and buy-out agreements in the bailouts. That was intentionally done to remove the insurers or counterparts from any potential liability for fraudulent or predatory lending claims. But you can’t pick up one end of the stick without picking up the other end. The payments were received by agents of the investors — and the servicers keep on paying the payments to assure the imposition of absurd fees and costs. So at no time is the borrower’s debt to the investor-lender ever in default despite representations to the contrary in court. AND THAT IS WHY THEY USE ROBO-SIGNING, FABRICATION AND FORGERY — BECAUSE IF THEY WENT TO THE ACTUAL CREDITOR, THE DOCUMENT WOULD NOT BE SIGNED. SAME THING WITH CREDIT CARDS, STUDENT LOANS AND OTHER CONSUMER CREDIT WHICH INCIDENTALLY WAS MOSTLY SECURITIZED AS WELL.
Minnesota Prepares to Sue A Debt Collection Agency
Minnesota’s attorney general accused the Encore Capital Group of cutting corners by filing “robo-signed” affidavits in debt collection lawsuits, the same practice for which banks have come under fire in home foreclosures.
Encore shares fell as much as 10.3 percent before closing with a 3 percent loss on the day.
The Minnesota attorney general, Lori Swanson, accused Encore of fraud, saying it had filed false affidavits to collect consumer debt that was not owed or had been already paid off.
Encore is one of the nation’s largest debt collection companies, and often buys debt from credit card companies.
The allegations follow an Ohio federal judge’s preliminary approval on March 11 of a $5.2 million class-action settlement of similar claims against Encore’s Midland Funding unit.
An Encore spokesman, Mike Huckman, had no immediate comment.
Robo-signing is a term coined to describe employees’ signing of litigation documents without reviewing their contents. All 50 state attorneys general are investigating robo-signing and other practices by banks in the mortgage industry.
Ms. Swanson said such practices were pervasive in debt collection. Ben Wogsland, a spokesman for Ms. Swanson, said she was investigating about a half-dozen other companies that buy debt.
Encore, which is based in San Diego, had through year-end invested $1.8 billion to buy 33 million accounts with a face value of $54.7 billion, according to its annual report.
Ms. Swanson wants the Ohio court to clarify that the proposed class-action settlement does not bar government agencies from pursuing similar litigation. She is seeking to file her lawsuit in a Minnesota state court, Mr. Wogsland said.
Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud Tagged: | borrower, consumer debt, Debt Collection Agency, default, disclosure, Encore Capital Group, false affidavits, foreclosure defense, foreclosure offense, fraud, Lender Liability, Lori Swanson, MERS, Minnesota, payment, predatory lending, rescission, robosigning, securitization, servicer