New Foreclosure Crisis: Credit Cards
A company named Credigy Receivables made waves in California recently. A report surfaced from California Watch exposing that the company was foreclosing on people’s homes over credit card debt. Normally, such an action cannot be done unless the home was directly used as collateral for the debt. However, California laws have a loophole in them which allows debt collectors to foreclose on a person’s home even if the house was not collateral for the debt in the first place.
Credigy is owned by National Bank Financial, a private investment bank from Toronto Canada. Businessweek lists it as a “distressed debt management company.” In other words, Credigy is a debt collector.
Credigy has garnered a reputation over the years for engaging in illegal practices, and a willingness to push and break the law to get what they want. The record of lawsuits against them is not record-worthy, but it is remarkable. Now they have found another loophole by which they hope to rob people blind.
Debt collection is a profession like any other, but when a company such as this engages in behavior so out of the socially acceptable limits, it diminishes the entire industry, and such out-of-control behavior results in tighter regulations. It is clear that the banks cannot manage themselves already, but it seems that other financial firms need to be brought into line as well. Dodd-Frank was intended to bring such behavior in-line, but the court decision last week has hamstrung its regulatory strength, with the judge requiring regulators to “require more study” before even basic regulations could be put into place.
Until then, more people in the U.S. will suffer at the hands of these fiends and other companies just like them.
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