“Starting in early 2020 and continuing to today, Chase has filed thousands of lawsuits against credit card customers who have fallen behind on their payments.”

Patrick Rucker, The Capitol Forum

So what’s the big deal, you ask? If people fall behind on their credit card payments, they deserve to be sued! It was just a coincidence, you say, that Chase Bank started to ramp up its lawsuits against credit card holders in early 2020, just as the worst pandemic in over 100 years was bearing down on the world, and continued to sue thousands of people behind on their payments through the last two, financially precarious years.

Here’s why this is a big deal: According to a recent article by The Capital Forum and ProPublica, Chase Bank has been filing these lawsuits all across the country en masse, beginning in 2020, which coincided with the expiration of a provision in a consent agreement it had signed in 2015, that in effect, prohibited them from filing court actions against customers in default on their credit cards. The agreement (see below), found that Chase had filed “flimsy” lawsuits, sometimes trying to get more money from customers than it was legally owed, and required the bank to completely overhaul its procedures to file these actions legally.

Additionally, Chase was not including all of a customer’s credit card records in the lawsuit, but instead included only a few of the customer’s documents and robo-signed affidavits attesting that it had full knowledge of all of the bank’s pertinent information and that it was accurate.

At this point, it’s probably helpful to throw in a few definitions:

Robo-signing is generally defined as a “… rapid fire signing of foreclosure [or credit default] affidavits without adequately verifying the truth of what the affidavits state.” Robo-signing is illegal under most state statutes because it amounts to a fraudulent signature on a document.

An Affidavit is a notarized document submitted to a court “…in which a person attests to personal knowledge as to what is contained [in the document]. This means that the person signing a foreclosure affidavit should have verified all information he or she is stating to be true.”

What happens when a company, like a bank, files as many lawsuits as it can involving one issue, like credit card defaults or mortgage foreclosures, in a short amount of time? It mass produces generic affidavits and a small group of low-level employees sign these court documents with little to no knowledge of what they say or what they mean, or even exactly what they are signing. Or worse, the generic affidavits are fitted with dates and mostly correct names and put in queue for an electronic signature.

Why is this important to all of us, not just the percentage of Americans who fall behind on their credit card bills or mortgage payments? One reason is because these banks “are too big to fail” and our government feels it must bail them out like it did in 2009 and surely will again. And even if the banks pay back the Treasury, we the taxpayers still pay upfront and directly suffer 100% of the harm, especially those most in need of financial help. Remember, according to Business Insider, nearly 10 million American families lost their homes to foreclosure between 2006 and 2014.

Here are a few more sources of information that help explain why the resurgence of robots-signing is a big deal and why it matters to you.

— This primer on robo-signing explains everything you ever wanted to know (and some thing you surely didn’t) about this practice—how it started and why, and the possible impact it has on your mortgage.

“A robo-signer's signature means nothing since they don't know why or what they're signing. As a result, in many states, if a transfer document has been robo-signed the transfer is considered invalid. This leaves doubt about which party has the right to foreclose.'‘

https://upsolve.org/learn/robo-signing/

— A blast from the foreclosure past from CNBC: This 2013 article summarizes those banks fined for Robo-signing mortgage documents, including those filed in foreclosure cases, and noted what they paid to consumers in restitution for their illegal activity.

“The banks, including Bank of America, Citibank, JPMorgan Chase and Wells Fargo, will make $3.5 billion in direct payments to borrowers and $5.2 billion in other assistance, such as loan modifications and forgiveness of deficiency judgments.”

https://www.cnbc.com/id/100359672

— And finally for this evening… here’s a copy of the consent agreement signed by the CFPB and Chase bank in 2015.

“Respondents filed lawsuits and obtained judgments against consumers using deceptive affidavits and other documents that were prepared without following required procedures, because for example, they were at times signing without personal knowledge of the signer, a practice commonly referred to as "robo-signing.”

https://files.consumerfinance.gov/f/201507_cfpb_consent-order-chase-bank-usa-na-and-chase-bankcard-services-inc.pdf

I’m sure you can see the pattern: Banks, especially the largest ones like Chase, Wells Fargo and others, engage in widespread violation of laws designed to protect consumers like us; they get caught and fined billions of dollars (which amounts to a “slap on the wrist” for them), maybe wait awhile, and go right back and continue with the same illegal practices. Why? Because it is way less expensive for them to violate the law and pay civil fines than uniformly comply with restrictions on the way these entities do business.. Yet they still spend millions lobbying Congress to prevent consumer protection laws from being passed, knowing full well they will ignore them anyway.

I’d love to hear what you think of Banks resurrecting Robo-signing yet again, and any other issues you’d like to discuss. Please let me know in the Comments below!

Leave a comment

If you think these issues are important, please share —it’s easy!

Share

And as always, if you are not already subscribed, please take a minute and sign-up right now.