Chapter 7 Bankruptcy: Mortgage Reaffirmations and Modifications, Part II
October 16, 2009
Here is more information on reaffirmation of mortgages in bankruptcy, including implications for modifications. The linked article was written by Orlando, Florida bankruptcy attorney Jonathan Alper.
Mortgage Companies Refusing Loan Modifications to Some Chapter 7 Debtors
U.S. District Judge Finds Midland Credit Management Submitted False Affidavits in Debt Lawsuits
October 4, 2009
It hasn’t been a good couple of weeks for Midland Credit and its various related entities.
Earlier, Midland Portfolio Services LLC, and its parent company, Encore Capital Group, Inc. were ordered to cease all collection activity in Maryland, including pending court cases. See this link for more information.
U.S. District Judge for the Northern District of Ohio David Katz recently ruled that Midland Funding LLC and Midland Credit Management Inc. have been routinely submitting false affidavits in filing debt collection cases. Read more about this case at this link.
Specifically, Judge Katz found that clerks at Midland Credit routinely signed affidavits stating that the individual clerk had Âpersonal knowledge of the debt being collected when they did not have such knowledge.
This situation is common in Maryland court filings as well. Many of the debt collectors submit affidavits that cannot possibly be based on the clerk’s personal knowledge of the debt– after all, the clerks are the employees of the debt purchaser / collector, and not the original creditor.
And, it is very unlikely the clerks review the accounts in question before signing the affidavit saying they have “personal knowledge” the debt is calculated correctly and is actually owed by the Defendant.
It is a mystery as to why the debt collector’s attorneys are willing to put these obviously false affidavits into evidence.
In an effort to try to get around this problem, some debt collection attorneys attempt to put old credit card statements into evidence as “self-authenticating” records.
But, for the records to be self-authenticating, a very specific procedure must be used under Maryland Rule 5-902(b). Among other steps, the rule requires the so-called “self-authenticating” records to be certified by an affidavit from the Custodian of Records. Many of these affidavits– if they are produced at all– include false statements.
But whose Custodian of Records must submit the Certification of Records affidavit? It would seem the required language of the Affidavit of Certification could only be truthful if signed by the Custodian of Records of the original creditor.
See Maryland Rule 5-902(b)(2) for the required language. You will need to click on the “Maryland Rules” FOLDER (in the middle of the list), then “Evidence,” then “Title 5,” then “Rule 5-902.”
But, in order to object to the faulty self-authentication of old account statements, the Defendant must act very quickly to (1) examine the documents in question (this may require a trip to the debt collector’s attorney’s office) and (2) file a written objection to the faulty self-authentication. Read Maryland Rule 5-902 here.
But, remember: even if a Defendant successfully challenges the faulty use of affidavits, the debt collection attorneys still have the option of proving their case the old fashioned way– by producing witnesses to authenticate any evidence they want to put into the record. (But do they have any evidence? That’s another question for another post.)
But, because they file hundreds and even thousands of cases each month, debt collection attorneys try to streamline the process as much as possible by relying on affidavits rather than producing witnesses for every case. This is understandable.
But the use of false affidavits is not.
Thank you to Minneapolis Consumer Attorney Sam Glover for the link to this story.
Midland Funding Ordered to Cease Unlicensed Collection Activities in Maryland; Statute of Limitations and FDCPA Issues Also Addressed
October 3, 2009
The Maryland Department of Labor, Licensing and Regulation recently issued a Cease and Desist Order to a group of San Diego-based debt collectors alleged to have engaged in extensive unlicensed and illegal collection activities in Maryland.
The Order also addresses statute of limitations and Fair Debt Collection Practices Act requirements.
All Collection Activities Must Stop
Midland Credit Management, Inc., Midland Funding, Midland Portfolio Services LLC, and their parent company, Encore Capital Group, Inc. were ordered to immediately stop all collection activities in Maryland.
The order requires the companies to suspend (or “stay”) all current court cases filed against consumers in Maryland state courts.
The companies must also stop making collection phone calls and sending collection letters to Maryland residents.
Statute of Limitations Issue and Possible Fair Debt Collection Practices Act Violations
In addition to the licensing issue, the Cease and Desist order requires the companies to cooperate in a review of the companies’ files to identify any cases that were filed past the Maryland statute of limitations. The order also requires a review of the companies’ debt validation procedures.
However, the Order does not make clear exactly what triggered the DLLR file reviews.
What if I sent money to one of these companies or their attorneys when the companies were conducting unlicensed collection activity?
The companies have the right to an administrative hearing on the issue, but could eventually be required to pay penalties and restitution of more than $40 million.
In other words, they may be required to eventually return at least some of the collected funds to consumers.
What if I have a pending court case with Midland as a Plaintiff?
The Cease and Desist Order requires Midland Fundling LLC to submit court motions “staying” every case in which it is a Plaintiff. You can check your court file online to see if the required motion has been filed in your case.
What if you are contacted by one of these business entities or their attorneys while the cease and desist order is in effect?
Notify the Maryland Department of Labor, Licensing and Regulation immediatly. Use this link to file a complaint with the Maryland Department of Labor, Licensing, and Regulation.
How do I know if I have been contacted by an unlicensed debt collector?
Check here to check whether the debt collector who contacted you is licensed in Maryland.
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