Is your private information secure?

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For the last few days the news media has been all abuzz about an alleged cyber-attack on either one or all of the “Big three” credit bureaus that involved the publicizing of private financial information belonging to several celebrities including the First Lady, Michele Obama. According the AP news wire, a Russian based website called “exposed” is responsible for releasing the information. And the list of celebrities who’s information is now public is growing. No one is sure if the information is correct, but I don’t think it would be smart for any curious onlookers to somehow try to confirm the information as the White House has “released the hounds” to investigate who the owners of the website are and how they were able to hack their way into the three largest credit reporting agencies in the US.

Have you ever heard the saying, “if a tree falls in the forest and no one hears it, did it really make any noise? I use that analogy to say that there is an estimated 42 million credit reports held by Experian, Equifax, and TransUnion and in recent years, all three companies have experienced a massive increase in identity theft cases, some due to data security breaches at the agencies themselves, and other types because some guy decides to go through his neighbors garbage looking for bank statements. Apparently, it doesn’t really make the news until it happens to a celebrity. Believe me, my paltry $589.00 in my Bank of America checking account is just as important to me as Oprah Winfrey’s $589 million.

“We should not be surprised that if you’ve got hackers who want to dig in and devote a lot of resources, that they can access people’s private information,” Obama told ABC News in an interview aired Wednesday. “It is a big problem.”
Obama added: “It would not shock me if some information among people who presumably have pretty good safeguards against it, still gets out. Even though President Obama is not the one person whom I would assume has the last word on this country’s cyber security situation, it’s a pretty good bet that he is privy to some high-level information that informed his statements.

That alone is just scary.

The United States Department of Justice stated that in 2010, 7% of all United States households had at least one member of the family at or over the age of 12 who has been a victim of some sort of identity theft. Identify theft comes in various forms: medical information fraud, stealing the identity of persons deceased, credit card fraud, and check fraud. It is estimated that there 34,520 cases of various forms of identity theft per day, up from 22, 000+ in 2011.

Back in October of 2012, South Carolina Governor, Nikki Haley announced a massive security breach in the State’s Department of Revenue that resulted in the theft of 3.6 million social security numbers and 387,000 credit/debit card numbers (only 16,000 of which, it is believed, were unencrypted). These kinds of cyber-attacks are becoming more numerous as hackers are becoming more sophisticated.

I found a some good information on this subject at a site called Quizzle.com. They suggest some ways to protect yourself from cyber-attacks and identify-theft:

 

Don’t save credit card information on-line. I know that Google has an auto-fill plug -in that auto fill forms and job applications, etc. That same plug-in can save your credit card information as well. Don’t do it. Many hackers can figure out passwords by simply typing in multiple common passwords with different numeric combinations. If they get into an account that has stored your credit card number, they can easily charge items to your card without you knowing. The best way to avoid this is to use sophisticated password and not save your credit card number on any online store account

Keep your credit card pin number to yourself. Keep your credit/ debit card and the pin in completely separate places. And I don’t mean separately on your person, I mean if you have your credit card with you, your pin number should be at home. You should never write your PIN number on your credit card, according to experts at Identitytheft.com. Doing so makes it easy for thieves to access your account, if they get hold of your actual credit card. It’s also smart to shred all mail that you don’t want. This includes credit card offers and other mail that asks for financial information or social security number.

Be weary of Wi-Fi

Wi-fi has introduced a new opportunity for hackers to steal your identity, according to Hacked Info, a website devoted to cyber security. Most wi-fi networks are not covered by security software, thus making them a goldmine for hackers hoping to steal your identity. And computers typically have standard default settings that are common knowledge to most hackers, making it easy to get into your personal information.

To avoid having your computer overtaken through wi-fi networks, change the password on your wireless router. Passwords are often standard on routers, so replacing that password with your own is a great way to protect your computer from cyber attacks.

Think about what you’re posting on social networks

Cyber thieves stole above $25 million from businesses in the first quarter of 2009, and that number is consistently rising, according to Krebsonsecurity.com. And cyber theft has yet another target – social networking sites. People share information about themselves so freely that it is easy for criminals to pose as someone else and find your personal information.

The cyber theft process is easy for those with experience in programming, but many are buying software to steal information as well. Firewalls were once thought to protect your computer, but even they are not enough anymore.

Cyber security is all about being careful. If you engage in on-line shopping, slow down and ask yourself few questions before you enter that credit card number, “am I doing the most secure thing with my credit card information, or, am I sure this website is secure?” Be thoughtful about what you say and do while on the Internet and even on your home computer. A little common sense will go a long way to keeping your personal information safe from hackers and would-be identity thieves. And remember if you want to keep financial records like credit card numbers, and pin numbers or passwords more secure, place them on a thumb drive so the information is not just sitting online or on your computer waiting for some sophisticated hacker to get at it.

Related articles

My thanks to Shannon Dickinson at Quizzle for her article, “Combating Identity Theft: How to protect yourself from cyber crime” http://www.quizzle.com/blog/2010/10/combating-identity-theft-how-to-protect-yourself-from-cyber-crime/

• Chase Bank fends off cyber attack (heraldtimesonline.com)
• How To Prevent Identity Theft and Protect Your Credit Score (creditrepair.com)
• Senior US Official Says China Must Stop Cyber-Attacks (theepochtimes.com)
• Michelle Obama Victim of Hacking, Obama Does Not Confirm Amidst Meetings on Cyber Security (+Video) (theepochtimes.com)
• What To Do About Identity Theft (nationaldebtrelief.com)
• Pursuit of hackers who took credit reports expands (news.yahoo.com)
• Hackers Attack Bank Minutes After NSA Chief Warns Senate About Hackers Attacking Banks (theatlanticwire.com)
• Identity Theft in America by The Numbers (creditloan.com)

What to do if you get sued by a collection agency

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Today I received a text from my old college roommate who said he received a Summons and Complaint from a Junk debt buyer. He’s a Paralegal and will know what to do, but it got me thinking about how scary it is to be on the receiving end of one those things. So I jumped on over to one of my favorite credit repair go-to websites, Creditinfocenter and found a very good article on what you should do if you ever get sued by an original creditor, collection agency, or ANYONE for that matter. Here is a copy of what I found on the Creditinforcenter blog:

Sued by a Creditor? Learn How to Fight a Debt Lawsuit

 

With many collection agencies and JDBs turning to the legal system to collect, more and more people are talking to me about lawsuits over debts. This article will cover the best way to handle the situation if you find yourself with a summons. This article covers lawsuits dealing with DEBT ONLY. You might also watch to watch our video on being sued.

Please Note: I AM NOT A LAWYER. If you are facing court, it’s ALWAYS a good idea to hire an attorney or get some legal assistance. Depending on your area and circumstances, in some cases, you can get free help. If you cannot afford it, though, take heart. Lot of people have handled their cases pro per (in other words, without a lawyer.)

What To Do If You Are Served a Lawsuit

If you have been served with a lawsuit, the time to send a debt validation letter is OVER. People always think that sending a debt validation letter to the law firm/collection agency/junk debt buyer will somehow stop the court case or serve as a proper answer to the summons. IT DOES NOT. At this point, your priority should be writing your answer to the court addressing each point in the complaint. If you don’t do this, you automatically lose the case. Your time to answer the complaint is limited, usually 20-30 days from the day you are served. Don’t waste this precious time on debt validation.

What is a Summons and Complaint?

In the packet of papers you received from the process server, you will find:

• A paper telling you when your court date is,
• Some kind of certification that you were served (meaning it goes over how you were notified of the lawsuit: in person, by mail, etc.),
• Instructions for answering the complaint or a form to fill out,
• Any evidence the Plaintiff (i.e. collection agency) is submitting. There could be documents such as affidavits from the collection agency. There might also be documents from the original creditor, although this is extremely rare,
• A list of allegations, which constitutes the complaint. The paper may or may not be titled “Complaint”. Next we will go over the steps to identify the complaint in the paperwork. There will ALWAYS be a complaint in your paperwork. Please look for it.

Complaint

If you are still having trouble finding the complaint, this next information may help. Most complaints will look like the following.
Complaint Number #XXXXXXX Collection Attorney Plaintiff vs. YOU Defendant
Allegation 1: Allegation 2: Allegation 3: Typically, this next allegation will say something like “Defendant obtained a credit card from Credit card Company X” Allegation 4: Typically, this next allegation will say something like “Defendant used the credit card to obtain goods and services using the card” Allegation 5: Typically, this next allegation will say something like “Defendant racked up charges totally $XX and then refused to pay”

Answer

The most important thing you can do is to answer the complaint by the due date. This is the most important thing you can do when you receive a summons.
Once you’ve identified the paperwork which constitutes the complaint, you must answer it. You merely reply by stating whether or not you agree with the statements in the complaint and why. Don’t hide your head in the sand, you have NOTHING to lose by answering the complaint, even if you don’t do it exactly right. You must do it quickly, you only have 20-30 days (depending on your court) to answer the complaint. If you do NOTHING, you automatically lose and the collection agency has a judgment against you.

You MUST answer the complaint. It will cost you next to nothing to answer, and it’s pretty easy to do. If you do nothing, you AUTOMATICALLY LOSE. By answering, you have a good chance of winning.

Answering the Complaint Correctly

You can write your answer on a plain piece of paper, or type them up on your computer. No fancy or legal format is necessary. As long as your answer is clear, it will be fine. In some court systems, they provide written forms for you to fill out. You can use them and attach a more detailed answer. A sample answer is posted at the bottom of this page.
IMPORTANT: You must ADMIT or DENY each allegation. Failure to deny an allegation means that you are admitting to it. In the above complaint example

Your answer to Allegation number 1 can be: In your answer, you would ADMIT allegation 1, that the plaintiff is who they say they are.
Your answer to Allegation number 2 can be: You would also ADMIT allegation 2: that you (the defendant) are who Plaintiff says you are.
Your answer to Allegation number 3 can be: We are assuming in allegation 3, that you opened a credit card account with them, has been backed up by zero evidence. For instance, some lawsuits are filed by Junk Debt Buyers acting as collection agencies who don’t even list the account number of the original credit card. They don’t have any statements from the credit card companies, nothing. They’ve provided no proof so you, as a result, have no idea what they are talking about. The same holds true for allegations 4 and 5.
ADMIT in part. I did have an account with Bank X. DENY in part, I have been presented no evidence that the account I had with Bank X is the same account as the debt alleged in this complaint.
-or-
DENY. Responding Party objects to this request on the ground that it is vague, ambiguous and unintelligible in that Responding Party has to speculate as to the meaning of “the credit card” and “the account.”
Your answer to Allegation number 4 can be: DENY. This request calls for admission of matter defendant has denied and thus it is improper.
-or-
DENY. Responding Party objects to this request on the ground that it is vague, ambiguous and unintelligible in that Responding Party has to speculate as to the meaning of “the credit card” and “the account.”
Your answer to Allegation number 5 can be: DENY. This request calls for admission of matter defendant has denied and thus it is improper.

Affirmative Defenses

Affirmative defenses are legal reasons why the complaint should be thrown out. Some of the best affirmative defenses are:

• Failed to state the basis of the lawsuit: They did not cite an actual state law which was violated.
• Debt is Time-barred: The statute of limitations has passed.
• Statute of Frauds: No contract exists as proof.
• Failure of Consideration: No exchange of money or goods occurred between the plaintiff and the defendant.
• Lack of Privity: No relationship exists between the collection agency and you. You never signed a contract or agreement with the collection agency, remember?

You can list these affirmative defenses at the bottom of your answer, after the specific responses to the allegations.

File Your Answer

You will need to send a copy of your answer to the courts and the lawyer listed in the complaint. Make sure you send them within the time allowed and send them registered mail! As another option for selected states, here is a service where you can submit your court filing online.
A sample answer is posted at the bottom of this page.

Requests for Discovery

In some courts, you need to file any counter-suit along with your answer. In addition, if you intend to ask for discovery (request disclosure of information and documents from the Plaintiff), you may need to send it along with your answer. Every court’s rules are different, you need to look this up. Which brings us to the next item.

Look up Courts Rules of Procedure

Most courts have online instructions and information. Take the time to read it. You will at least need to know the timetable of your case.

Evidence Included in the Summons and Complaint

Most often you will be presented with exhibits (documentation which serves as evidence) in the case file, such as credit card agreements and affidavits of debt. Usually you can object to this evidence and get it thrown out of the case based on hearsay. If you are successful getting this evidence thrown out (struck from the records), the Plaintiff will have no evidence against you. If they have no evidence, they cannot win.

Tips for Filing Your Answer

Many courts will let you handle everything via the U.S. Mail. There is no need to take time off of work to personally file your answer. Send everything certified mail, return receipt requested; one copy to the court, one copy to the lawyer representing the Plaintiff.
Another good idea is to include a self-addressed stamped envelope and one extra copy with your answer to the court. In some cases, if you made a mistake in your answer, they will let you know immediately. If nothing else, they will send you a an endorsed-filed copy of the filing so you know it was entered. One of our readers received a hand written note from the clerk asking my reader to call so the clerk could help correct the filing.

Testimonial That This Advice Works!

I want to say THANK YOU!!!!! I was recently (11/06/08) sued by a Debt Collection agency and taken to my local District Judge for an old credit card account of just under $2500. This account was originally opened in the early 90s and I last made a payment to a collections dept. in 2002. Well, a junk debt buyer bought it and have been harassing me since 2004. I received a summons in the mail to appear in court, which I promptly replied that I would defend since referencing your creditinfocenter website.
I not only built a case using the SOL argument and re-aging, but embarrassed the counselor that showed up against me by asking for signatures, original documents, account histories, etc. He showed up with GENERIC documents w/ no signatures and I won the case!!!!
Thank you SOOOOO much. The best part was when the counselor stopped me after the judge left and said how impressed he was with my preparedness and that no one usually knows about those items!! Thanks so much.
Thanks again!
M. (Pittsburgh, PA)

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You can also read this detailed description of what it’s like to go to court against the big boys and WIN. The story is enlightening, educational and ENTERTAINING.

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Sample AnswerPLEASE DO NOT JUST CUT AND PASTE THIS – Every complaint is different. One size DOES NOT fit all. If you merely cut and paste, you WILL LOSE.

Complaint number #XXXXXXX Collection Attorney Plaintiff vs. YOU Defendant
Defendant’s Answer to Complaint
Allegation 1: Admit Allegation 2: Admit Allegation 3: Denied: Responding Party objects to this request on the ground that it is vague, ambiguous and unintelligible in that Responding Party has to speculate as to the meaning of “the credit card” and “the account.” Allegation 4: Denied: This request calls for admission of matter defendant has denied and thus it is improper. Allegation 5: Denied: This request calls for admission of matter defendant has denied and thus it is improper. FUTHERMORE, Defendant DENIES every other allegation not previously admitted, denied or controverted.
AS AND FOR AFFIRMATIVE DEFENSES
1. Plaintiff fails to state a cause of action against the defendant. 2. Plaintiff, as the defendant is informed and believes, lacks the legal standing to bring and maintain this action. 3. The action is barred by the Statute of Frauds. 4. The action is barred by the Statute of Limitations. 5. The court would unjustly enrich the plaintiff by granting the relief sought herein. 6. The plaintiff has not proven the debt is valid or the amount of the debt is accurate. The plaintiff must prove that the principal, interest, collection costs, and attorneys fees are all correct, agreed to in your contract, and lawfully charged. Defendant also insists that the plaintiff come up with the contract, account statements and purchase receipts to prove the amount of the debt.
WHEREFORE, the defendant asks the Court for judgment: a. dismissing the complaint herein with prejudice.

Not really sure who the real plaintiff is? Read this!

Zombie Debt: Help stop the haunting!

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I have lived most of my adult life in Seattle, Washington. I have experienced life as a stable, working member of the community, and I have also fallen on times so hard that I had to live in my car and depend upon food banks to feed myself. If you visit food banks and emergency homeless shelters enough, eventually you will meet some very interesting people. I once met a brilliant young man who was an Oregon State University law-school drop out. He told me (as we sat on the sidewalk eating turkey sandwiches we had just scored from a homeless shelter) that he dropped out of law school in his 3rd year because he couldn’t stay focused, and could not get help to treat his ADHD (attention deficit hyperactivity disorder) condition. I remember thinking what a waste of a good mind.  If only he could have gotten the medical attention he needed, he could have finished law school. I don't know what he would have been doing had he finished law school, but I 'd bet he would not have been sitting on a corner eating a food-bank sandwich with me!

I’ve met a wide variety of people who exists as virtual ghosts, living in the underbelly of Seattle; they live under bridges, in alleys, in abandoned or foreclosed homes. ”Ordinary” people see the homeless but rarely acknowledge them - as if they exist on some other time-plane that makes their presence not quite physical. If you do take a minute and speak to a homeless person, or someone at a food-bank you will immediately notice that they are quite real, and as the Pemco Insurance commercial says, “a lot like you- a little different.”

Another thing I have noticed is Seattle has a large number of homeless persons who aren’t natives of Washington State. I am amazed by the number of people who have casually told me they came to Seattle because they heard the social, and low-income services administered by non-profit organizations were the best in the country. I don’t know this to be true from experience, as I have never needed to access social welfare programs in any state other than Washington, but I am convinced that Seattle has some pretty awesome low-income social service organizations here. I have featured two such agencies in this blog-post.

Below is a link to a video I found at the ‘Solid Ground’ website - a great non-profit organization in Seattle Washington, on how zombie debt is increasingly being used by collection agencies to unlawfully collect time-barred debts from consumers, and how it disproportionately affects the lives of low- income persons.  The video is part a campaign to get our state legislators to pass HB 1069. Poverty Action says HB 1069 is being considered by the legislature right now. This legislation would prevent debt buyers from:

• Suing debtors for time-barred debt (outside the statute of limitations);
• Suing debtors without sufficient proof that the debt buyer actually owns the debt;
• Not having proof of assignments of the debt to indicate a chain of title for the debt.

Zombie Debt: Help stop the haunting! The video was produced by Marcy Bowers of the Statewide Poverty Action network http://povertyaction.org/. Both organizations are committed to helping the poor through social service programs and housing assistance. Solid Ground has been around for a long time here in Seattle. Formerly known as the Fremont Public Association, the non-profit is widely acknowledged for their work helping low-income individuals and families. They also help the homeless overcome economic crises and develop skills and resources they need to get back on their feet. They offer over 30 programs and services to help needy families and individuals.

The Poverty Action Network is more focused upon building grass-roots campaigns that address issues such as consumer protections, basic needs, racial equity, and Immigration and Refugee justice. Poverty Action was founded in 1996 as a response to the federal government’s passage of the Personal Responsibility and Work Opportunity Reconciliation Act or “welfare reform.”

Poverty Action says they are Washington state’s largest anti-poverty organization.

Related articles

• 7 steps to avoiding zombie debt (thewiseme.com)
• Zombie Foreclosures: Reanimated Mortgage Debts (sgtreport.com)
• Old debt, uncollectable and not taxable (dontmesswithtaxes.typepad.com)
• The Walking Debt……Zombie Mortgage Appocalpse (kswiggins.wordpress.com)
• The Worst Part of Being Homeless: ‘No One Sees Me’ (alternet.org)

Can the new mortgage rules of the CFPB really protect the consumer from predatory lending?

On January 12th of this year, the Consumer Financial Protection Bureau issued it’s new mortgage servicing rules via a long-awaited press release. “For many borrowers, dealing with mortgage servicers has meant unwelcome surprises and constantly getting the runaround. In too many cases, it has led to unnecessary foreclosures. Our rules ensure fair treatment for all borrowers and establish strong protections for those struggling to save their homes.” said CFPB Director, Richard Cordray.

The new servicing rules highlight three basic areas of mortgage servicing: foreclosure avoidance, servicing transparency, and uncomplicated business procedures. The consumer Finance Protection Bureau has obviously done their homework. They probably conducted polls to find out what the major complaints were among those who were experiencing mortgage foreclosures. In the early to mid 2000’s, most American homeowners who found themselves trapped in bad mortgages were not wholly to blame as some would argue. Sure, there is something to be said for paying attention to what their loan paperwork actually said, but what if the loan originator had an ulterior motive that had absolutely nothing to do with what was even on the paperwork? Did not that loan originator have a fiduciary responsibility to their client? The answer to that obviously rhetorical question is, yes. In doing research to write this blog, I purposely read articles from differing perspectives – from the more conservative Wall Street perspective as well as from writers who had a more liberal perspective.

The differences between liberal and conservative perspectives on this issue were stark. The wall street pundits blame globalization, Trade deficits, market upheaval, shadow banking systems, world-wide fixed income investment increases, and artificial currency manipulation in the East. Liberal economists like Paul Krugman tended to focus on US Monetary Policy, Foreign Policy, and individuals like former Chairman of the Federal Reserve, Allen Greenspan, his predecessor, Ben Bernanke and their anti-regulation policies. Allen Greenspan publicly admitted during a Congressional hearing that he “had made a mistake in presuming that financial firms could regulate themselves.” In a Wall Street Journal article, columnist David Henderson, wrote, “It’s become conventional wisdom that Alan Greenspan’s Federal Reserve was responsible for the housing crisis. Virtually every commentator who blames Mr. Greenspan points to the low-interest rates during his last few years at the Fed” Henderson was referring to the decision Allen Greenspan made to lower interest rates from 3.5% to 1% in the wake of the 911 attacks and end of the Internet tech-bubble in hopes of avoiding an economic slowdown. I vaguely remember then President Bush telling America the best response to the 911 attacks was to, “go shopping.”

So let’s bring this thing back to Main Street America because that’s where you and I live – and because it was we who paid the price for Wall-Streets’ mistakes and Washington’s’ wrong-headed monetary policies. Now that the damage has been done, and lives have been ruined, we now look to our political ‘knight in shining armor’, the Consumer Financial Protection Bureau; the bureau that was birthed amidst a fire-storm of right-wing resistance, and was the brain-child of the champion of consumer rights herself – Elizabeth Warren. After all, it was she who originally sounded the clarion call in Congress to make those, “too big to fail” financial institutions pay back their TARP handouts, and pushed for more regulation of the financial services industry as a whole.

There is no longer any doubt in anyone’s mind that predatory lending was not just a phenomenon, it was going on before the credit crunch, and will continue if it is not stopped. It is malicious, destructive, and it is pervasive. It was born out of pure greed. The question is how to stop it. The CFPB has taken a very effective first step, but I believe the the problem goes much deeper than regulating the loan servicing department of a bank or financial institution. I believe the root of the problem is the securitization of Credit itself. In their book, The Securitization of Credit, James A. Rosenthal and Juan M. Ocampo, define credit securitization like this: “Credit securitization is the carefully structured process whereby loans and other receivables are packaged, underwritten, and sold in the form of securities (instruments called asset-backed securities).”
The causes of the 2007 mortgage default crisis has been described as a “systemic event,” meaning that the entire US financial system was in crisis to the point of insolvency. Too big to fail is no joke. If Citi-group, Bank of America, AIG, and the other too big to fail financial institutions had not received TARP funds, the United States would have collapsed financially, and yes, we would have had another Great Depression on our hands. While I truly believe the CFPB has committed some of the best legal and economic minds we have in this country to solving this problem, I cannot believe anything less than a total overhaul of our financial system is the only remedy that will prevent this from happening again. It may not happen in the mortgage/housing industry, but possibly another sector. In an excellent paper written by Gale Gorton and Andrew Metrick of Yale University, they describe the securitization of credit like this:

“An important part of the subprime mortgage innovation was how the mortgages were financed. In 2005 and 2006, about 80 percent of the subprime mortgages were financed via securitization, that is, the mortgages were sold in residential mortgage-backed securities (RMBS), which involves pooling thousands of mortgages together, selling the pool to a special purpose vehicle (SPV) which finances their purchase by issuing investment-grade securities (i.e., bonds with ratings in the categories of AAA, AA, A, BBB) with different seniority (called “tranches”) in the capital markets. Securitization does not involve public issuance of equity in the SPV. SPVs are bankruptcy remote in the sense that the originator of the underlying loans cannot claw back those assets if the originator goes bankrupt. Also, the SPV is designed so that it cannot go bankrupt.”

It stands to reason that any player in the financial services industry will undoubtedly experience what liberal economist, Paul Krugman calls ‘Moral Hazard.’ Moral is a concept saying that people will take risks if they have an incentive to do so. The idea is that people might ignore the moral implications of their choices. Instead, they will do what benefits them the most. Most people understand the trade off between risk and reward. If you take risks, there may be consequences. However, you might be rewarded.
What if those trade offs weren’t there? If you knew you could take risks without consequences, would you take more risk? What if someone else had to suffer the consequences of your actions? Moreover, Wikipedia notes: That is essentially what happened in mortgage default crisis with respect to the originators of sub prime loans, many may have suspected that the borrowers would not be able to maintain their payments in the long run and that, for this reason, the loans were not going to be worth much. Still, because there were many buyers of these loans (or of pools of these loans) willing to take on that risk, the originators did not concern themselves with the potential long-term consequences of making these loans. After selling the loans, the originators bore none of the risk so there was little to no incentive for the originators to investigate the long-term value of the loans. A party makes a decision about how much risk to take, while another party bears the costs if things go badly, and the party isolated from risk behaves differently from how it would if it were fully exposed to the risk.
Until the CFPB, the FTC, and Dodd-Frank can construct a systemic remedy for moral hazard in the financial services industry, you can bet the love of money will undoubtedly cause another financial catastrophe similar to the mortgage default crisis 2007.

Related articles

• CFPB to Help Mortgage Industry With Implementation of Rules (broadcastarchives.net)
• U.S. Mortgage Overhaul Turns Eyes on Borrowers (bloomberg.com)
• Warren, Brown, Reed demand majority vote on Cordray nomination (dailykos.com)
• New Mortgage Rules Readied by CFPB as Banks Seek Time to … – Bloomberg (bloomberg.com