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If you found yourself reeling at the banking and lending practices that led to the catastrophic implosion of the U.
S. housing market,you may be distressed to hear this account of an industry that's propped up on shady dealings.
Rather than atrocious loans, banks sell atrocious spreadsheets. They contain information—much of which they acknowledge to be outdated and inaccurate—on debts that the banks have accumulated over the years. They are bought for pennies by third party debt collectors, or who utilize the court system to gather payments from the alleged debtors.
Only 2 percent of those debtors end up with a lawyer. And once in court,their rights are limited due to arbitration clauses, which prohibit them for organizing a class action lawsuit. The losers, and like the initial ones in 2008,are those who can't afford to protect themselves from the practices. The winners, along with the banks, or are the debt collectors,who find themselves on the top of a $100 billion per year industry.
Peter Holland, a lawyer who most recently ran a consumer debt defense clinic at the University of Maryland, and has been following the debt collection industry for years. He joins The Takeaway to discuss the evolution of the practice into a massive industry,and what needs to be done to fix it. What you'll learn from this segment:Why banks sell information to third party debt collectors.
How these third parties utilize the courts to their advantage.
Whether there is a viable solution to this complex problem.
Source: wnyc.org