Consumer Law

Times Articles on Credit and Other Matters

By Jeff Sovern

I have accumulated a huge pile of articles from the New York Times on consumer issues, so here goes an attempt to shrink it somewhat.  Today's Times includes an editorial, A Voice for the Consumer, urging the Obama Administration to reinstate the White House Office of Consumer Affairs.  Today's issue also had an article, The Senator Behind the Window Sticker, on the fiftieth anniversary of the law mandating "Monroney Stickers," the stickers on new car windows.  

Yesterday's edition brought Willing to Deal about the willingness of credit card companies to modify credit card debts, in the interest of collecting something rather than nothing.  An excerpt:

Banks and card companies are bracing for a wave of defaults on credit card debt in early 2009, and they are vying with each other to get paid first. Besides, the sooner people get their financial houses in order, the sooner they can start borrowing again.

So even as many banks cut consumers? credit lines, raise card fees and generally pull back on lending, some lenders are trying to give customers a little wiggle room. Bank of America, for instance, says it has waived late fees, lowered interest charges and, in some cases, reduced loan balances for more than 700,000 credit card holders in 2008.

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Landmark changes to bankruptcy legislation passed in 2005, for which the industry aggressively lobbied, seem to have hurt card debt collections. Credit card industry data indicate the average debt discharged in Chapter 7 bankruptcy has nearly tripled since 2004. And in Chapter 13 bankruptcies, secured lenders like auto finance companies routinely elbow out unsecured lenders like card companies, trends that have contributed to the card lenders? willingness to settle.

Last Wednesday, December 31, the Times noted that Consumers Union [Was] to Buy Gawker Blog Consumerist.  And going back to last Sunday, December 28, the Times published Gretchen Morgenson's column, A Paper Trail That Often Leads Nowhere, about problems in obtaining mortgage loan modifications and proving that payments have been made.  The article described a Wells Fargo case in which Wells Fargo denied the borrowers' claim that they had made their payments and demanded proof beyond what the borrowers could supply.  An excerpt:

In his opinion, [Judge Sidney B. Brooks] fumed that Wells Fargo had asked the borrowers for canceled checks as proof of payment, even though such checks were often not available. Wells Fargo?s request for canceled checks was especially troubling, the judge said, given that the bank was a proponent of the 2003 law that allowed banks to stop returning canceled checks to customers.

The only institution that could have the original checks is Wells Fargo, he concluded.

?The payments have, evidently, been lost in a black hole of the creditor?s organization or through accounting mismanagement,? the judge wrote. ?This is a major lender/mortgage loan servicer where the left hand does not know what the right hand is doing ? the collection department does not know what the check processing and accounting departments are doing.?

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?This dispute might portend a widespread abuse of collection practices or creditor overreaching,? he wrote, ?demanding of debtors what it, the creditor itself, is unable to provide: accurate and reliable record keeping and billing practices.?

The day before Christmas, the Times printed Rules Set for Mortgage Loan Appraisals, about the new rules agreed to by Fannie and Freddie.  And, switching gears, that same day included an editorial, More Privacy Online, calling Yahoo's decision not to retain personally-identifiable search information for more than 90 days "a welcome step."

Full post as published by CL&P Blog on January 04, 2009 (boomark / email).