FDCPA and Securitization

[antiquedave]

Do you think the process of securitization of credit card receivables can change the status of the OC to that of a 3rd party collector?

If they have sold the receivables with all right and risk and must have an assignment agreement to be able to manage the receivables doesn't that change their position on the debt?

It strikes me as one of those fine points of the law

They maintain the account but don't own the receivables, I guess you'd have to have a copy of the assignment agreement to be sure, any thoughts?

[Prosay]

WHEN ANY ACCOUNT IS SECURITIZED ( CITI, DISCOVER, BAC, CHASE, CAP !)

A document called an "8-K" is filed with the Security exchange commission. This is a very detailed document.

GOOGLE:

(CARD NAME)/8-K

OR: "CARD NAME/SECURITIZATION"

These docs usually name "the portfolio to which accounts are assigned to, the names of the holding company to which accounts are then assigned, the name of the ASSET BACKED SECURITY, and from there sold to Investments groups, and sometimes states something like" servicer of account"

BUT THE GRAY AREA IS THIS" if they have sold the account to an investment group, and have in fact been paid as the result of that sale, and now maintain the status of "servicer"...HAVEN'T THEY BEEN PAID ONCE..if so, why should they be paid once again? Would this not constitute "un-just enrichment" ?

If they are classified as "servicer of account" and no longer the owners...why is any suit being brought by the CC company...it would seem that a suit should be brought by the "owners' ...the investment groups, unless there are provisions which show that defaulted accounts are returned to the original owner"

THIS IS AN INTERESTING SUBJECT ...ONE WHICH MERITS FURTHER INVESTIGATION !

The "8-K" reveals a lot of information.

Edited March 20, 2011 by Prosay

[BV80]

This subject has been debated numerous times in the forum. One of the problems is there is no case law to back the securitization and OC as third party claim.

If a company who sells their receivables to a trust has included in the contract that they still maintain ownership, the burden falls upon you to prove they haven't maintained ownership. You must also prove that your account was sold to a trust in the first place, and if it was sold, that the cc company no longer owns it. Then you have the "repurchasing" of defaulted receivables requirement.

I'm not saying that there's nothing there. I'm simply saying that it's a pretty heavy burden of proof with no case law to back it up.

[antiquedave]

FDCPA is interpreted on a broad basis in favor of the consumer which is the one thing in our favor. I'm really just guessing a lot of the time and trying to think outside the box. I appreciate everyone that takes the time to engage these notions.

I am attemptng to amend my pleadings and I think that I need to include two more claims, a cross claim against the first collection agency that did not validate the debt that the act of not validating the debt is in and of itself a violation of FDCAP as its only purpose would be to deceive and confuse the consumer as the consumer would be led to belive that the CA did not have standing or entitlement to pursue the debt and could be safely ignored.

And a second FDCPA against the OC that when they sent the account on to another collection agency it was a violation of FDCPA in continued attempts to collect a debt without validation among other things, and that since the OC had sold the debt in securitization and has to rely on an assignment agreement to collect on the account they are in fact a 3rd part collector and subect to the FDCPA

[antiquedave]

This subject has been debated numerous times in the forum. One of the problems is there is no case law to back the securitization and OC as third party claim.

If a company who sells their receivables to a trust has included in the contract that they still maintain ownership, the burden falls upon you to prove they haven't maintained ownership. You must also prove that your account was sold to a trust in the first place, and if it was sold, that the cc company no longer owns it. Then you have the "repurchasing" of defaulted receivables requirement.

I'm not saying that there's nothing there. I'm simply saying that it's a pretty heavy burden of proof with no case law to back it up.

If a company sells its receivables they cannot maintain ownership of those receivables, the language I read in COMET addresses the lack of reddress if the portfolio doesn't perform, but they do try and maintain control, I don't understand how they can really mandate that they are the servicer of the trust, in a free market.

The trust or the investors should be able to shop around for the best deal in a servicer, that they can't gives the OC an undue influence over the pricing and other features, too much control me thinks.

The receivables are separated from the account, the OC services the account and collects a fee for doing that, thats one of the things I want to see.

[Methuss]

you would have to obtain a copy of the Master Servicing Agreement between the Trust and the Servicer to really know what rights and remedies have been conveyed to the Servicer.

This document is usually kept priviledged and confidential and you have zero chance of getting it outside of a order to produce signed by a judge in an active case. They won't even give it up in discovery.

[Flyingifr]

Actually, the OP raises an interesting question and I believe the answer may be surprising.

FDCPA Section 803(6) reads:

The term “debt collector” means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. Notwithstanding the exclusion provided by clause (F) of the last sentence of this paragraph, the term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts...

Looking at the bolded, we see the following in plain language: If a creditor uses a business name other than their real business name, they are subject to FDCPA and are a "debt collector".

When an OC securitizes a credit card portfolio, it sells the ownership of the accounts in the portfolio just as if it had been sold to a JDB, the only exception being these accounts probably are not delinquent. The OC simply collects for the owners, but by using the OC's name. Now, re-read the bolded part and remember, the owners of the debt are now 100 anonymous entities, the OC is simply the collector.

While you re considering this, keep repeating "Least Sophisticated Consumer Standard...." No matter how you slice it, IMHO once the portfolio is securitized, the OC becomes a "debt collector" under FDCPA.

Edited March 21, 2011 by Flyingifr

[antiquedave]

you would have to obtain a copy of the Master Servicing Agreement between the Trust and the Servicer to really know what rights and remedies have been conveyed to the Servicer.

This document is usually kept priviledged and confidential and you have zero chance of getting it outside of a order to produce signed by a judge in an active case. They won't even give it up in discovery.

The document was specifically mentioned in my discovery which they blew me off on of course BUT I have a Motion to Compel hearing coming up

[Prosay]

The document was specifically mentioned in my discovery which they blew me off on of course BUT I have a Motion to Compel hearing coming up

Very good,antiquedave..please keep us informed on your motion to compell !

Thanks !

[Dr. Evil]

Actually, the OP raises an interesting question and I believe the answer may be surprising.

FDCPA Section 803(6) reads:

Looking at the bolded, we see the following in plain language: If a creditor uses a business name other than their real business name, they are subject to FDCPA and are a "debt collector".

When an OC securitizes a credit card portfolio, it sells the ownership of the accounts in the portfolio just as if it had been sold to a JDB, the only exception being these accounts probably are not delinquent. The OC simply collects for the owners, but by using the OC's name. Now, re-read the bolded part and remember, the owners of the debt are now 100 anonymous entities, the OC is simply the collector.

While you re considering this, keep repeating "Least Sophisticated Consumer Standard...." No matter how you slice it, IMHO once the portfolio is securitized, the OC becomes a "debt collector" under FDCPA.

Good Lord flyingifr, I don't know what you are smoking out there in China, but you probably passed out before you read the full section of the statute. But like you said, the accounts probably aren't delinquent, so is it possible that there may be some language in the fdcpa exempting our heroes, the OC from the fdcpa?

6) The term "debt collector" means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. Notwithstanding the exclusion provided by clause (F) of the last sentence of this paragraph, the term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts. For the purpose of section 808(6), such term also includes any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests. The term does not include --

F) any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity (i) is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement; (ii) concerns a debt which was originated by such person; (iii) concerns a debt which was not in default at the time it was obtained by such person; or (iv) concerns a debt obtained by such person as a secured party in a commercial credit transaction involving the creditor.

Damn you fdcpa, damn you to hell!!!!!!!!!!!!!!!!!!!!

It's tiring policing your posts all over the internet flying but for God's Sake flyingfr, please explain how "IMHO the OC became the debt collector"

[mad as hell]

I agree with you that the securitiazation of the account, the OC is not the owner of the assset. when you give up ownership of the asset you lose control of that asset.

One more strong point is that the OC must have been damaged by your default. If you default on your CC the OC was not damaged becasuse they only service the loan. The damaged party is the trust, because when you miss payments the trust is damaged not the OC

Good luck with discocery, I have been sued 3 times and sent out discovery all 3 times and cant even get date of last payment or date of default from the scum bags.

[Prosay]

I agree with you that the securitiazation of the account, the OC is not the owner of the assset. when you give up ownership of the asset you lose control of that asset.

One more strong point is that the OC must have been damaged by your default. If you default on your CC the OC was not damaged becasuse they only service the loan. The damaged party is the trust, because when you miss payments the trust is damaged not the OC

Good luck with discocery, I have been sued 3 times and sent out discovery all 3 times and cant even get date of last payment or date of default from the scum bags.

Date of last activity should show in your credit reports, and unless the OC can prove otherwise, those dates should pass muster in court.

[antiquedave]

The only way I might get any documents would be if the Court orders them to comply, The level of their screaming at this point makes me think that an order by the court to submit documents happens so seldom that they don't even consider the possibility.

[Prosay]

The only way I might get any documents would be if the Court orders them to comply, The level of their screaming at this point makes me think that an order by the court to submit documents happens so seldom that they don't even consider the possibility.

They do "scream a lot" ...when the "least sophisticated consumer" backs them into a corner !

[antiquedave]

http://www.resolvingdiscoverydisputes.com/

This Blog has some great information, its Cailfornia Specific but has good information to review that may help address how to pursue and address Discovery Issues.

I like these attorney blogs and I've been collecting links

http://usdebtweb.com/index.php?page=us/usblogs

[Guest usctrojanalum]

you would have to obtain a copy of the Master Servicing Agreement between the Trust and the Servicer to really know what rights and remedies have been conveyed to the Servicer.

This document is usually kept priviledged and confidential and you have zero chance of getting it outside of a order to produce signed by a judge in an active case. They won't even give it up in discovery.

This. But you will also have to convince a judge that the reason why you need this document is going to be relevant to the underlying cause of action. That would be the hardest part.

[antiquedave]

This. But you will also have to convince a judge that the reason why you need this document is going to be relevant to the underlying cause of action. That would be the hardest part.

determination of the true party in interest standing and entitlement?

[BV80]

determination of the true party in interest standing and entitlement?

In my opinion, that's only part of it.

This is not like the typical JDB whose company has one name, but purchases debts from companies with different names. For example, Midland purchases a debt from Citi and sues you. They send you copies of statements that say "Citibank" along with a copy of a cardmember agreement that says "Citibank". In that case, the name of the Plaintiff and the name on the evidence is different. It's easy to see the JDB is not the OC and ,therefore, must prove they are the real party in interest.

In your case, the name of the Plaintiff matches the name on the statements, cardmember agreement, etc. It's not so easy to see that they may not be the real party in interest. You have to show that although they are the original creditor, they may not be the real party in interest. Then you have to convince the judge that it's a valid argument.

Edited March 22, 2011 by BV80

[antiquedave]

Then you have to convince the judge that it's a valid argument.

Already past that hurdle, is included as an issue of fact to be determined with discovery approved.

[antiquedave]

There are a lot of issues around securitization as an affirmative defense, and I'm just thinking out loud, I wonder if part of the problem with Judge's in general is that they think you are trying to say because of securitization that there is no one with standing?

Securitization can't be the only thing that you are hitting either, there is no silver bullet that I can see but it does strike me that regardless this is a valid fact of law to pursue.

The OC (or anyone else claims standing) the standard operating procedures in credit card banking today is to securitize and sell receivables ultimately for purchase by investors. In order to be a valid sale the receivables must be sold with all rights and interests otherwise its a problem with the SEC or IRS.

The prospectus of any OC has to be filed with the SEC are public documents and should make a statement somewhere in it that outlines the basic procedures of the sale so anyone making a claim under securitization to challenge the OC's standing should be able to produce a document that is filed and official that states receivables are sold with all rights and interests.

That gives you an issue of fact and law to challenge standing, being an original creditor is a red herring issue, thats nice that you are the original creditor but it has no bearing on standing to bring and sustain a lawsuit because the receivables were sold, so they claim to own the credit card account, but the account has a zero balance so where is the injury?

So the only real means by which an OC has to validate standing is to provide the documents, Master Agreements, Pooling Agreements and since the receivables move through several entities the sale or assignment agreements because there may be an overlap of rights or possibly some actions were taken outside of the time that the entity actually had the right to pursue it.

Maybe the holding company did not have the rights to assign to an outside collection agency at the time that they made the assignment, or accessed your credit report. These are closely related entities but are intertwined in such a way that I suspect they take a lot of liberties as to who does what and when they do it but legally, as a fine point of the law do not have the legal right to take the action at the time.

There has to be a reason why they fight so hard to not provide any of the documents, what are they hiding? The devil is in the details.

So in a securitization defense you are not saying that there is no party with an interest but that you want the party to be properly identified and that the party can prove they have an injury, if the receivables were sold and the OC was paid, there is no injury, If the holding company had a bad debt insurance policy and were paid there is no injury to them it would be the insurance company that had recourse if they paid off.

If the investors were not reimbursed somehow with a credit default derivaitves swap where the defaulted accounts were swapped out with one in good standing then the investors sustained a loss, and since when do investors get to sue when they lose money in the market? Does the prospectus not have a disclaimer that the investors have no recourse in the event of a loss?

Who has standing and who was or was not paid and who had what kind of risk for recourse are all issues imho.

So you get a generic credit card agreement as validation of the debt and their standing, BUT Credit card receivables are sold by class, the companies issue credit cards by class, the class of the card determines many things from terms and rates, to fees etc. So you got a card agreement BUT is the card that the agreement is purported to cover identify the CLASS? The agreement probably does not, If you know the class you can identify the information in the prospectus that may pertain o that class and when it was sold, and some of the terms of the sale, not the details but there are bread crumbs to follow.

WHY settle for just a generic agreement issued during the year of the card? Personally I want to know what the CLASS of the account is AND all addendums.

SO the OC produces the documents and shows they have standing, then there is a question of the rights they actually have as a 3rd party because they sold the debt and the rights to pursue collection are theirs but are there State Laws in your State that have something to say about ASSIGNEES of Debt?

[donqII]

I have followed the lines of reasoning both here and on the otherboard.

It is with risk that I do want to mention that there are others who

do mention securitization, as a defense, in their books... or one in particular.

It is talked about in an e-book, but I will not name that book as I have been

accused of selling books behind the scenes, as it were.

I have never sold a book, e-book, or anything of the sort, but that is academic at this point.

Because his book is copyrighted therefore precluding me from posting

any of it here, I will just say that Allen Harkleroad does cover this as a

defense, with an explanation in his book.

He uses Capital One as his example and he does end up this subject with the statement, "Given these numbers, there is a significant possibility that this particular account has gone through the securitization process and is no longer owned by Capitol One Bank."

I do think it is definite food for thought.

[voidjudgment]

I think if you look behind the curtain, you will find that all accounts have been securitized, and why not as it is quite a racket for the credit card company. There are multiple affirmative defenses to use and securitization is gaining steam as a good one. There has to be a reason the credit card companies don't want the Master Trust Agreements exposed to the light of day. Seems to me this subject was alleged by some to be pure hokem but has exhibited amazing resilience and continues to be cussed and discussed on this forum. I know it has served me well in parts unknown.

[Noway]

I have followed the lines of reasoning both here and on the otherboard.

It is with risk that I do want to mention that there are others who

do mention securitization, as a defense, in their books... or one in particular.

It is talked about in an e-book, but I will not name that book as I have been

accused of selling books behind the scenes, as it were.

I have never sold a book, e-book, or anything of the sort, but that is academic at this point.

Because his book is copyrighted therefore precluding me from posting

any of it here, I will just say that Allen Harkleroad does cover this as a

defense, with an explanation in his book.

He uses Capital One as his example and he does end up this subject with the statement, "Given these numbers, there is a significant possibility that this particular account has gone through the securitization process and is no longer owned by Capitol One Bank."

I do think it is definite food for thought.

I have the book you mentioned and I concur. For those interested, just google"Allen Harkleroad" or "FMD Consumer Blog"...the title of the book is listed there. For your information, Harkleroad is a widely known consumer advocate residing in Georgia. In my opinion, he ranks up there with Bud Hibbs, another strong consumer advocate., residing in Texas if I am not mistaken.

[Noway]

I think if you look behind the curtain, you will find that all accounts have been securitized, and why not as it is quite a racket for the credit card company. There are multiple affirmative defenses to use and securitization is gaining steam as a good one. There has to be a reason the credit card companies don't want the Master Trust Agreements exposed to the light of day. Seems to me this subject was alleged by some to be pure hokem but has exhibited amazing resilience and continues to be cussed and discussed on this forum. I know it has served me well in parts unknown.

I agree, voidjudgement ! I have presented the question of securitization on at least three occasions to as many Oc's. I have also requested copies of their 8K and 10K documents filed with the SEC as well as a copy of their MASTER TRUST and copies of their account ledger in which accounts have been logged. Their reply was never forthcoming....but they did fall off the map ! Obviously they were not required to furnish the information in an informal reply to me...but apparently they are aware that they may have been required if a "MOTION TO COMPEL PRODUCTION OF DOCUMENTS" had been issued, if litigation had become an issue. You may be able to avoid litigation , if you ask the right questions, and...

USE ALL AVAILABLE TOOLS !

[antiquedave]

When an account is securitized they note it in the records of that account, but I don't see any scenario where they are going to provide the proof of it. You can ask the SEC in a freedom of information request, (which I did just to see what would happen) and got nothing from them, they do have some documents though that they all must file that will make reference to elements of the agreements that you can reference in your discovery.bread crumbs to follow,

my experience with the issue says that they don't want to release any documents at all and will use every trick in their playbook to secure a judgment without addressing the issue. IF they can't get past it or get your discovery suppressed then you have a place to negotiate from.

As I've said before, securitization as a defense may have value in giving you some advantages but you need a judge that is willing to listen and be open to the idea and you need to be able to bring them along, and that means you need a working understanding (as much as is possible) so that your pleading makes sense and is based in law.

personally I feel that there is something about these agreements that they don't want the public to have and outside of a disgruntled employee uploading them to google docs I don't see them being available anytime soon.