Consumer JusticeDebt Collection AbuseForeclosure Appeals

Federal Judge: Systematic Flaws in State Courts Allow Banks to Steal Money!

By January 16, 20162 Comments

That sounds like an inflammatory statement coming from me, a consumer rights attorney. But no, that statement comes from a federal court judge who recognizes and is honest about what is occurring in state court.  If we were all honest about what was actually occurring in state courts, we would all recognize that the courts have largely become debt collection mills, not just forgiving grossly improper bank conduct in the effort to improperly collect this debt, but using taxpayer money in service of these activities.  Well just read what the federal court judge had to say:

Systematic flaws in the state judicial process have resulted in an increased level of arrogance and greed among debt collectors as evidenced in this case.

It was not enough for the debt collection law firm and loan servicer to seek recovery of the debt owed, instead they inflated the sum by thousands of dollars and assumed with confidence they would get away without anyone noticing.  Had Mr. Psaros not been diligent to seek the assistance of an attorney, the collectors would have successfully stolen this money.

And notice that the court recognizes the positive role played by the consumer justice attorney in the case. The opinion goes on to note, the purpose of the FDCPA is to:

“eliminate abusive debt collection practices by debt collectors”

The problem is servicers get away with grossly abusive and improper debt collection tactics when they pursue foreclosure actions in state court proceedings.  In recognition that state courts have become increasingly hostile to the interests of consumers (and of justice), this case was transferred to federal court.

Steven-Psaros-vs-Green-Tree-Servicing-LLC-Civil-Action-No15-4277

Westwood, NJ, January 5, 2016:   No longer can legal counsel evade liability under the Fair Debt Collection Practices Act (FDCPA) by claiming false information provided to a court or debtor was supplied by their client.  This is the conclusion of a groundbreaking judicial opinion according to Westwood, NJ financial consumer rights law firm Denbeaux & Denbeaux.

U.S. District Court Judge Jose Linares denied a debt collection law firm’s motion to dismiss in Steven Psaros vs Green Tree Servicing, LLC.  According to Judge Linares’ 16-page opinion, Psaros successfully alleged that New Jersey law firm Stern Lavinthal & Frankenberg violated FDCPA laws by charging and attempting to collect improper fees of $10,974.37 for property insurance outlays to Psaros’ home mortgage debt.  The fees were improper because Psaros had paid all taxes/insurance, and his mortgage loan contained an escrow waiver.  In response Psaros sued both Green Tree Servicing, LLC and Stern Lavinthal & Frankenburg.   Stern Lavinthal & Frankenburg argued that they were not liable for the false representations of the debt owed by Psaros because the false information was generated by their client Green Tree Servicing, LLC.  Justice Linares rejected their defense, ruling that “Stem Lavinthal cannot evade its responsibilities as a debt collector by blaming its client for providing it with factually inaccurate information used in the process of collecting a debt.” Green Tree Servicing, LLC did not move for dismissal of the claims.

Read more about it here

2 Comments

  • It is sad that this situation is experienced by many of us on a daily basis wherein we requires help from law firms or lawyers but what if the court is the one that fails.

  • Mark Bowen says:

    You are now, and have been across the board, correct in your assessments of Florida’s state court in regards to mortgage foreclosure actions (or any debt collection proceedings). The only thing I would change in the Federal Court Judge’s statement is this: change “Systematic” to “Systemic.” It is not a few judges that have corrupted the system; it is the system itself which is corrupt.

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