Credit/Debt Recovery

Creditors Who Don't Get It

Yesterday I belayed my urge to spew bile in favor of a more positive posting. Not today.

With all that's gone on with Ameridebt and the NCC, thousands (perhaps over a hundred thousand!) of their clients find themselves stuck, without their credit counseling agency doing anything for them.

Naturally, other more reputable credit counselors are seeking to help all of these clients who have been left hanging; Springboard is waiving enrollment fees for former Ameridebt clients.

The problem is with some of the creditors.

By now we all know Ameridebt was taking advantage of their clients; they were charging a huge upfront fee and then providing shoddy service. In California and other states, enrollment fees are capped by law. This didn't seem to matter to Ameridebt.

My question was always "why would a creditor cooperate with them when they're so clearly evil?" The answer was, some creditors LIKED the fact that Ameridebt would charge such a high initial fee. They figured the clients who had to pay so much at the outset would be more likely to stick with their debt management plan... they'd have too much invested to quit.

Problem was, Ameridebt collected that first payment and then provided shoddy service. There was no incentive for the agency to keep the clients on the plan; they'd already made their money, and every client interaction from then on was a drain on the agency. The best case scenario for Ameridebt was a client to signed up, paid the large fee, and dropped out a month later. And they made that happen.

So anyhow, now we find those same clients adrift, hopefully hooking up with COA-accredited agencies (the kind that charge modest monthly fees for the life of the plan--so they have every incentive to keep the client successful until their debts are completely repaid). Problem is, some creditors *cough*cough*BankofOurCountry*cough*cough* are making those clients reapply as though they are signing up for a new DMP-- which is a problem, since creditors won't "re-age" more than once in a set time period (it varies from creditor to creditor). The point is, it's bad for the clients.

Other, more responsible creditors, like Citibank and MBNA, are letting those clients roll their existing plan over to a new credit counseling agency with out penalizing them for having been a victim of Ameridebt's greed. Why not Bank of TheCountryWeAllLiveIn?

Why not?

GMAC and Ameriquest get a big thumbs up

American Banker recently published a feature on GMAC's initiative with the Credit Counseling Resource Center. I'd link to it, but you'd just end up at a retarded registration screen that would force you to sign up for spam from ABonline until the end of time.

Note to all online publications: information wants to be free. Registrations don't work, and everybody hates spam. Come up with something better.

Anyhoo, I was going to spew some bile at a couple of credit card companies today, but instead I thought I'd do something more positive; I'm going to praise a couple of mortgage lenders.

From American Banker:

GMAC Backs Counseling to Prevent Foreclosures

For the last two and ahalf years GMAC Residential Funding Corp. has been supporting several programs that provide free credit counseling to delinquent borrowers.
...
Borrowers trust independent counselors more than they trust a lender's employees... The credit card industry has long been recovering 50 cents or so on the dollar by hiring counseling agencies to help delinquent borrowers pay at least part of their debt.
However, unlike card issuers, GMAC RFC pays counseling agencies a flat fee instead of a commission, so the agencies have an incentive to provide the best financial advice and not just act as debt collectors...
Ameriquest Mortgage Co of Orange, CA, itself a leader in anti-predator initiatives, has signed on to use the center.
At a New York Conference last month... an Ameriquest senior executive Vice President said it pays the credit counseling agencies "regardless of what they tell the borrower." This setup ensures the agencies act in the borrower's best interest and that the borrower does not feel undue pressure to pay.

GMAC-RFC and Ameriquest are doing big things here. They're way ahead of the pack when it comes to looking out for their customers. Contrast them with the nightmare stories you hear about Wells Fargo's Mortgage Division (when it comes to collections anyway)... I'd say GMAC and Ameriquest are far better options for those looking for a nonconforming mortgage.

If all lenders set out to create win-win scenarios like GMAC has, they'd put a lot of wretched "consumer groups" out of business. That I'd like to see.

On BK Reform and Politics

Listen, I'm not trying to slag John Kerry. I'm a swing voter; I haven't made up my mind yet. But BK reform is one of those issues I'm using to help make a decision. So I'd like a clear idea of where the man stands on the issue.

And I totally respect the notion that he feels he's protecting workaday consumers from the big scary banks and powerful corporations. We elect politicians to stand up for us; particularly for those of us who don't have the means to stand up to big businesses and the like.

But no one has acknowledged how bankruptcy hurts people. All of us; the people who file, and the rest of us who suffer increased fees and interest because of those who file.

And don't get me wrong; plenty of people need bankruptcy. I'm for that. But at the very least they should be required to think very carefully about what they're doing. And be given some education so that they don't ever have to do it again.

Bankruptcy is bad. It should only be a last resort. And it shouldn't, as Mr. Kerry says, become a lifestyle choice.

So when you say you're looking out for consumers, how about looking out for the ones who are about to throw their credit rating into the toilet for 10 years? Those who are going to be at the mercy of every scummy 23% auto loan peddler and predatory mortgage broker until the BK falls off their credit report? How about looking out for the consumers whose costs will increase because BK filings are at an all-time high?

Oh no, it's never that. It's "Those evil banks and big business types." I'll keep saying it until I'm blue in the face; that's not pro-consumer, it's anticorporate. Kerry doesn't mention the people he's protecting, he mentions the banks and insurance companies he's thwarting. That doesn't do it for me.

Does it work for you?

Kerry Revises Position

Okay, I'm not accusing Kerry of flip-flopping. It's perfectly natural to change one's mind on important issues. Especially when one is running for president, apparently.

Anyhoo, on Feb 24 of this year, Kerry said this in an interview:

I have fought against the oil companies over drilling in ANWR. I have fought developers and others who tried to change the Clean Air and Clean Water acts. I stood up to the insurance companies and banks over the bankruptcy reform bill. The votes are there. There's a consistency in my battles against powerful interests..."

So he's against bankruptcy reform. For now.

Kerry on BK Reform

Still trying to pin Kerry down on Bankruptcy reform. Here's a quote from John Kerry in 2001:

There has been a decline, as we all know, in the stigma of filing for personal bankruptcy, and certainly we would agree that appropriate changes are necessary in order to ensure that bankruptcy not be considered a lifestyle choice.

Wow. Nicely said, John. I couldn't agree more.

And certain "consumer" groups couldn't disagree more, but I digress.

I have to say, in my line of work, whenever I tell people what I do, or that I wrote "Repair Your Credit and Knock Out Your Debt," I hear bankruptcy stories. I rarely meet consumers who are reserved or embarrassed about discussing their bankruptcy filing. So I agree with John Kerry! At least this John Kerry, from 2001.

Bankruptcy Bill

I'm going to have to provide a basic education the bankruptcy bill that has been struggling through congress for the last seven years.

In a nutshell, the new bankruptcy legislation would require means testing and other steps to ensure that the person filing bankruptcy really needs it. It's designed to stop people from avoiding responsibility for their debts when they can actually afford to pay.

At least that's the interpretation of Republicans and the creditors.

Many Democrats and "consumer" groups oppose the bill for a number of reasons. (There are some prominent Democrats who support the bill, however.) The arguments against it include:

"it'll prevent access to bankruptcy protection for consumers who really need it." I disagree. My read is that the bill won't significantly lower the number of bankruptcy claims in the U.S. It'll just require more of the people who file, and for their own good.

"it'll make single parents trying to collect back child support compete with credit card companies for their share of the money." Again, I may have too much faith in our bankruptcy system, but show me a court that will award money to a creditor over a a child support debt. There's no way. In our society, child support is the #1 debt (aside from tax evasion, it's the only kind of debt that can get you sent to prison.) I think child support will be the first debt addressed every time.

"it'll create a new government bureaucracy." If this charge were legitimate, it would definitely bother me. But what they're talking about is the means testing and education to which each bankruptcy filer would have to submit. It's been established that third-party accredited credit counselors would provide these services. The only government activity would be oversight of these independent counselors.

"it doesn't do enough to address corporate bankruptcy issues." Maybe not. I think of this as a consumer bankruptcy bill. Maybe there should be separate legislation to address corporate bankruptcy issues.

"it rewards those evil creditors, who deserve to lose because they send out too many credit offers." Okay. I'm paraphrasing. But this is the sentiment of the argument. Sure, creditors send out far too many credit offers, and they make it too easy to acquire too much credit. But to oppose the bankruptcy bill on those grounds shows that you're not pro-consumer (*cough* consumerfederationofamerica *cough* consumersunion *cough*) but rather anti-corporate (or anti-creditor, in this case). The bill is good for consumers on balance. And yes, it's good for creditors. What's wrong with a win-win? "Consumer" groups don't see it that way. It has to be 100% victory for them, 100% defeat for corporations/creditors. That's the only kind of plan they won't oppose.

Anyway, there's way more to talk about on the bankruptcy legislation issue. The bottom line, I like it because it requires consumers filing BK to seek out education on how to better manage their personal finances. Our current system does nothing to address the financial illiteracy problems that lead people down the road to bankruptcy in the first place.

What's this all leading up to? Eh, let's throw a little politics in here. The BK bill was passed by congress in 2000, only to be pocket vetoed by Clinton the next year. Bush has promised to sign the bill if it appears in front of him for approval. So where does Kerry stand on the issue?

I'm working on that. It's hard to pin Kerry down on anything (the mark of a skilled politician, to my mind). But the AFL-CIO website says Kerry "stood with consumers against big banks on the bankruptcy bill"... so for now, I'm assuming if elected, he'd veto the BK bill if it crossed his desk. (But don't hold me to that; Kerry voted for BK legislation in 1998, and against a very similar bill in 2003. Consistency is for hobgoblins, or something.)

Look at Your Credit Report!

This article from the AP opens with this statement:

One in four credit reports has errors serious enough to disqualify consumers from buying a home, opening a bank account or getting a job, a consumer group says.

Okay, normally the phrase "a consumer group says" would lead me to totally discount everything that came before. "Consumer groups" are not high on my love list. I love consumers, mind you, but "consumer groups" are usually anticapitalist political machines; they don't care about "consumers," they care about politics.

However, I happen to believe that credit reports are rife with errors; I see them all the time. Since that statement jibes with my personal and professional experience, I decided to look into it further.

The "consumer group" in question is U.S. PIRG, that is "Public Interest Research Group." Okay. That changes things a bit. I think U.S. PIRG is as authoritarian left-wing as one can get, but they're not really a "consumer" group, they're a "public interest" group. That means they're allowed to be political. They're not pretending to be protecting consumers, they're protecting the public interest. Two very different things. The AP got it wrong when they said "a consumer group says."

Let me detour for a second: I don't care what anyone's politics are. I don't say "left-wing" becuase I'm right-wing. "Liberal vs. Conservative" is not where the battleground is for me. The only meaningful political line is "Authoritarian vs. Libertarian." My only point about consumer groups is that they lie. The lie about being consumer-oriented when in fact they're politically oriented. Feminist and Environmental groups often do the same thing. If you want to be a political group, be one. Don't couch yourself as "environmental" or "women's rights" or "consumer advocacy". That's all.

So anyway, since PIRG claims to be a "Public Interest Group" and not a "consumer group," I can trust them a bit further. I still completely disagree with their position on many things (especially Genetically Modified food-I'll blog on that sometime), but I'm willing to say that I do not doubt their position that one in four credit reports contains serious errors.

So? Have your credit report looked at! Hire a professional if you don't know what to look for yourself. Just make sure they're COA-accredited.

(sigh) Greed

With the passing of President Reagan last week, the subject of his legacy has been hashed and re-hashed over the last ten days or so.

One of my pinko friends said to me, "Let's not forget the era he created; the era of greed that was the 80's."

As though
1) the "greed" of the 80's was Reagan's fault
2) there was more greed in the 80's than any other time.

I submit that both are false assumptions. For instance, overlimit fees.

Look at this story from Cardweb.com. Overlimit fees were virtually unheard of in the "Greedy 80's". Now, they're the norm. And they, my friends, represent more unbridled greed than was possible in the 1980's.

Do they need to charge these fees? Of course not. They make enough money on their extortion racket, and they don't have to authorize transactions that would take their customers over their credit limit. In the old days, they wouldn't. But there's money to made, so to heck with the consumer, right?

It would have been unthinkable when Reagan was president.

This isn't really about politics. It's about corporate greed among the credit card issuers. But the more my pinko friends point to the 80's as some kind of era of greed, the more they overlook the unbelievable evil credit card companies are wallowing in today.

And I'm not even talking about Enron and Adelphia... we KNOW those guys are despicable. We all hate them. But nobody's calling for the heads of credit card company execs, when they're pulling the same miserable greedy crap as the Ken Lays and Dennis Kozlowskis of the world.

I've just seen too many consumers buried in a mountain of debt from which they can't escape. All of these fees keep piling up on them, and the ridiculous interest rates, and the credit card companies simply don't care. Perhaps they never did, but they used to at least pretend. They used to cooperate with credit counseling agencies, and make fair share contributions to make credit counseling work. But those days are fast coming to an end.

My question is, when is it enough? At what point have they made enough money off of the backs of workaday consumers? When a typical credit card payment is 60% interest and 40% principal, and it'll take 20 years to pay off, why add overlimit fees on top of all that? When is enough enough?

Prettypolictical's investigation of Harvey Warren

I'm not the only blogger interested in Harvey Warren and the NCC. Prettypolitical.com discussed Harvey's connection with arts4peace, a non-profit "multifaith arts group."

While arts4peace looks like a good-guy charity, prettypolitical's Adventures in GoogleSpace makes connections to the NCC, money laundering, and "offshore tax planning".

It's incredibly fascinating, and I urge all COB readers to take a look at prettypolitical's investigation of Warren and the NCC. See also John Wetzel's comments which suggest arts4peace and Financial Rescue Services are affiliated with the Church of Scientology.

Notice also that Harvey Warren was nominated for 16 Clio awards for advertising. Think that's all the NCC ever was for him: an advertising gig.

FindMyRealEstate.com was on to the NCC all along

A reader commented that the FTC's receiver in the NCC case (see yesterday's post) had done a "Mossad-level forensic accounting" of the National Consumer Council's "web of moneytraps."

Very cool.

I also found this site from San Diego-based findmyrealestate.com. They really take Harvey Warren and the NCC to task.

...we see a ton of pictures all of Harvey Warren shaking everybody's hand at functions but we don't see any real work on helping people.

Before the FTC shut them down, the NCC's web site was a masterpiece of self-promotion. Harvey would attend every event he could in Washington D.C. and have his picture taken with any political bigwig he could get his hands on. Harvey's idol was another master of self-promotion, Ralph Nader. Warren was often quoted as saying "I want to be the Ralph Nader of credit." Where I'm from, nobody would want to be the Ralph Nader of anything.

And the NCC attempted to bully this site off of the internet, just as they attempted to bully their way past a negative Better Business Bureau rating.

Since this posting from January we were contacted by the NCC under the guise they were looking for property rather than being honest and contacting a company like most companies do. They threatened legal action if we didn't take this post down...

And then we see the NCC engaging in what Dianne Wilkman calls the "Non-Profit whine": "they said they didn't have a website up... 'for the people'" because "it was expensive and being a non profit they didn't have the budget."

Harvey once said that the NCC's for-profit benefactors gave "HUGE" amounts of money to the NCC. I predict that the FTC will find a lot of money in the NCC's "web of moneytraps." That is, if it hasn't all been buried in an offshore "International Charitable Foundation." (Tune in tomorrow for more on this.)

And more about Harvey tomorrow.