Monday, October 10, 2011

Law School Consumer Protection Clinic Moves To Strike Robosigner-Tainted Affidavits In Bill Collection Suits Filed By National 'Zombie Debt' Buyer

In Baltimore, Maryland, The Baltimore Sun reports:

  • The University of Maryland School of Law's consumer-protection clinic is trying to get key documents stricken from potentially hundreds of debt-collection cases over an issue more commonly thought of as a foreclosure problem — robo-signing.

  • Midland Funding, which buys old consumer debts and sues to collect, filed affidavits signed by representatives who swore they had personal knowledge of the debts even though they did not, a federal court in Ohio found as part of an August class-action settlement.

  • Midland employees daily signed 200 to 400 of such "false and misleading" affidavits for years, according to an order by U.S. District Judge David A. Katz. Though it insisted the facts in the affidavits were accurate, Midland agreed as part of the settlement to change its practices.

  • But the University of Maryland consumer-protection clinic says the company and affiliate Midland Credit Management have more than 400 active cases in Maryland that rely on affidavits filed during the period covered by the class-action settlement — January 2005 through mid-March of this year.

  • Some of the cases have not been ruled on by a judge, while others are still active because Midland was awarded a judgment that hasn't been fully paid off. Midland's parent, the publicly traded Encore Capital Group, said it would stand by its affidavits in Maryland.


  • Industry critics say the companies typically purchase scant information about the debts and are sometimes several purchasers removed from the credit-card company or other creditor that originally sold it.

  • "A fifth-generation purchaser of debt cannot possibly have personal knowledge of what happened when the account was created and what happened with each prior generation of debt buyer," said Peter A. Holland, an attorney who runs the University of Maryland clinic.

  • Last week the clinic began filing motions in several Midland cases to get the affidavits stricken from the record in those lawsuits. The clinic also asked the District Court to take note of "fraudulent, robo-signed" affidavits in all of Midland's 2005 through mid-March cases in Maryland.


  • Lindsay Warnes, a staff attorney for Maryland Legal Aid, which represents low-income Marylanders, said she has been seeing debt-buyer affidavits that seem to dance around the lack-of-knowledge problem.

  • "Some of them say, 'I have been told … that this piece of information is accurate,' and then they swear," she said. "They're trying to get more creative in the way they write them. But there's still no personal knowledge whatsoever."

For the story, see Consumer advocates want affidavits pulled in Md. debt-collection cases (Ohio class-action settlement has implications for Maryland consumers, attorneys say).

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