FDCPA was enacted with the main purpose of eliminating abusive practices in debt collections, promote fair debt collection practices, provide avenue for disputing errors & obtain validation of debt information for ensuring accuracy of information.

Guidelines have been specified in the act under which debt collectors have to conduct their business, and it also defines the penalties & remedies if the act is violated.

Who are covered by FDCPA?

Debt collectors use different names such as factoring company, collection agency and other similar name to claim immunity from the Act. But debt collectors have been broadly defined as persons who make use of instrumentality of interstate commerce in any business, where the principal purpose is collection of debts. It is also applicable to persons who collects or attempts to collect, debts owed or due or which are asserted to be due or owed.

One important thing worth mentioning is that definition of “debt” and “consumers” is limited to cover personal & non-commercial transactions only. So those debts owed by businesses are not regulated by FDCPA.

According to FDCPA, certain type of “deceptive & abusive” conduct while attempting to collect debts is strictly prohibited. Let us now go through the specifics mentioned in the Act to this regard.

Prohibited conduct

1. Contact consumer where they are work/are employed – If consumer has told in writing or verbally, then it would be violation of the act to contact consumer at his place of employment.

2. Contact over phone – Debt collector can only contact between 8:00 a.m. and 9:00 p.m. local time and not outside this time frame.

3. Reporting incorrect information – Reporting incorrect information or threatening to do so, on consumer’s credit report in the process of collection is prohibited under FDCPA.

4. Misrepresentation – Using deception to collect debt or misrepresent debt including misrepresentation that debt collector is a law enforcement officer or attorney is against FDCPA norms.

5. Threatening legal action – To threaten arrest or legal action which is not permitted or which collector does not actually contemplate doing is prohibited according to the act.

6. Use of abusive language – In the course of communication with relation to the debt, a debt collector cannot use profane or abusive language.

7. Contacting third parties – Discussing or revealing consumer’s nature of debt with third parties or threaten to do so. But debt collector can discuss with consumer’s attorney or spouse.

In our next article on FDCPA we will look into how FTC enforces the regulations mentioned in this act as per the powers it has as per the Federal Trade Commission Act. Other important section that will be worth reading will be on the required conduct by debt collectors as per FDCPA.

Readers can enhance there knowledge about FDCPA by going through this following page which elaborately describes all the sections of this Act –

[http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm ]

Mortgage fraud has been declared as one of the rapidly growing crimes (named as white collar crimes) in the country.

After analysis it has been found that every fraud has some kind of material misrepresentation, misstatement or omission relied upon by a lender or underwriter to purchase, insure or fund a mortgage.

But the true level of this type of fraud is largely unknown as majority portion of mortgage industry is void of any kind of mandatory mortgage fraud reporting. And added to that, such frauds in the secondary market are often under reported.

Mortgage fraud can be broadly divided into two categories; fraud for profit & fraud for property.Fraud for property involves borrower as the perpetrator. Borrower makes misrepresentations about his income, value of the property or personal debts. But the borrower is interested in repaying the loan & keeps the property in such kind of frauds. Such kind of fraud comes to about 20% of all mortgage frauds.On the other hand fraud for profit is done by industry professionals. In such frauds there are multiple mortgage transactions & involves several financial institutions. Misrepresentations such as overstating income, assets and collateral, reporting fictitious employment, not fully disclosing borrower’s debts and credit history, borrower assuming identity of another person or stating residential use of property while actually using it as rental and disguising down payment borrowed with fraudulent gift letter.

Let us now look at some of the most common fraud schemes:Air loans:As the name suggests, these loans are non-existent and there is no collateral. An example would be like when a broker invents properties & borrowers, establishes accounts for payments & for escrows maintains custodial accounts.Silent seconds:It relates to the down payment borrower is required to make. In this type of mortgage fraud, buyer borrows down payment amount from seller by way of a non-disclosed second mortgage. The actual lender believes that the down payment money has been invested by borrower from his own funds, which actually has been borrowed. To conceal its status, this type of second mortgage is not recorded also.Nominee loans:Borrower’s identity is concealed in this type of fraud scheme by use of a nominee who allows his name & credit history to be used by actual borrower to apply for a mortgage.Foreclosure schemes:Fraudster locates people who are facing risks of default on their mortgage or who already are in foreclosure. They mislead the homeowner to believe that he can help save their home in exchange for an up front fees and transfer of the deed for their house. Fraudster makes a profit by pocketing the fees paid by homeowner or refinancing the property.Equity skimming:

False income statement and credit reports are used by an investor to obtain mortgage in the name of a straw buyer. After loan closing, straw buyer transfer property ownership over to investor. The investor stops making monthly payments on the mortgage and rents the property until foreclosure starts after several months.

Property flips:

In this scheme, property is purchased and is falsely appraised for a higher value purchased then sold within a few days. As the appraisal information is fraudulent such property flipping is considered illegal.

This is just a beginning of analysis of mortgage fraud schemes. This series will continue until we have covered all the necessary information borrowers and homeowners should have to prevent falling prey to any of these mortgage fraud schemes. In our next segment we will look into other type of predatory loan practices and provide useful tips on how borrowers can safeguard themselves against such predatory fraud schemes.

Information presented in this article is mainly based on the useful details provided on this following FBI website’s section on mortgage frauds:

http://www.fbi.gov/page2/dec05/operationquickflip121405.htm

Almost everyday we get to hear about companies offering to help consumers clean up their credit reports for a fee. They promise that by accepting their service, they would be able to repair their credit and easily qualify for loans & jobs.

But the truth is that they don’t do anything after taking hundreds and even thousand of dollars from the customer and simply vanish with the money. So how a person can save himself from falling prey to any such credit repair scam offer?

We have summarized some of the most common signs where it is likely that the offer is nothing but a scam:

1. A credit repair company does not tell you about your legal rights & what the customer can do by himself for free without taking their help.

2. Customer is asked to pay for the services upfront before they provide the service.

3. Any company which recommends customer not to directly contact any credit reporting company.

4. Customer is advised to create a new credit identity and then a new credit report by applying for EIN (Employer Identification Number).

5. Credit repair company which advises customer to dispute all information listed on his credit report even if the customer is aware that it is accurate.

As per laws, obtaining EIN from IRS under false pretense is a federal crime. Additionally, according to CROA (Credit Repair Organizations Act) companies cannot ask for payment which they haven’t yet provided.

What we would suggest is that don’t fall prey do any such scams and try to repair your credit on your own and save some money also. You can improve your credit only by putting in conscious effort, time, and a self managed personal debt repayment plan.

The credit agency will have a hard look on the financial credit-worthiness of the person when he applies for a loan or credit card. His financial healthiness will decide the terms and conditions of the loan or credit card. So it is very important to maintain a good credit history to utilize loan opportunities. But all of us not able to maintain it properly; some have poor credit history and some have good history. Those who have poor credit, they need to repair it with proper guidance.

What is credit repair?

Credit repair is a process in which consumers try to re-establish their credit-worthiness by procuring a credit report from the reputed credit rating agencies and then taking proper steps. It involves issues like errors, omissions, misreporting or wrong entries correction. Various laws are there to protect the consumers if there are any errors or wrong entries in their credit report.

What is the necessity of repairing credit?

The credit record of a consumer has a significant influence in his future purchasing capability and his eligibility of availing future credit facilities. If you accrue good score, it can insure low interest rate loans with long term. But if you have poor score, the credit companies will charge high rate of interest.

Legitimate way of Credit Repair

Repairing credit is very important for every individual to take full advantage of future credit. And it can only be achieved through proper financial discipline and your mental toughness to work hard. You may get some advertisement saying repair your credit in few days and with guaranty. But you must remember that the advertisement may be tempting but it also can push you to further difficulties in future.

It is not legally possible for anyone to remove accurate and negative information from credit report. But it is for sure that there are laws which allow one to request for a reinvestigation of some inaccurate or incomplete information. You need not to pay anything for it. If you are serious enough and have the mentality to work hard then you can do the basic credit repairing work of your own with little or no cost. And if it is not possible for you to grip the situation of your own then you can take advices from professional financial consultants.