Debt Collectors Face "Robo-Signer" Scrutiny

While much attention has been paid to the documentation issues in foreclosure proceedings, lawyers who defend consumers in debt-collection cases say that the banks did not invent the "robo-signer" approach to financial paperwork, but that debt buyers have been utilizing these shady practices for years, the New York Times reported today. "The difference is that in the case of debt buyers, the abuses are much worse," says Richard Rubin, a consumer lawyer in Santa Fe, N.M. The debt in these cases - such as credit cards, auto loans and utility bills - is sold by finance companies and banks in a vast secondary market, bundled in huge portfolios, for pennies on the dollar. Debt buyers often hire collectors to commence a campaign of insistent letters and regular phone calls. Or, in a tactic that is becoming increasingly popular, they sue. Nobody knows how many debt-collection affidavits are filed each year, but a report by the nonprofit Legal Aid Society found that in New York City alone more than 450,000 were filed by debt buyers, from January 2006 to July 2008, yielding more than $1.1 billion in judgments and settlements.

http://www.nytimes.com/2010/11/01/business/01debt.html?adxnnl=1&adxnnlx=1288627315-BaHTyz1wRCxX6Yih5aC7dQ