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Did You Run that Past Legal? Larry Laskey, Windham Professionals Arthur Rotatori, McGlinchey Stafford John Culhane, Ballard Spahr Dino Tsibouris, Tsibouris & Associates Shelly Repp, NCHER

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Verification from the PCAs Perspective Larry Laskey, V.P. General Counsel Windham Professionals, Inc. 2 2013 Knowledge Symposium November 5-7, 2013 St. Pete, Florida

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Historical Perspective Specific, limited, outsourced function Verification provided on timely, written request Confirm amount creditor claims due Reliance on information creditor provides Validity ultimately determined by a court 3 2013 Knowledge Symposium November 5-7, 2013 St. Pete, Florida

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Looking Ahead? More information to the borrower up front Verification required on any request, at any time More information needed to verify Encourage borrowers to ask for more information 4 2013 Knowledge Symposium November 5-7, 2013 St. Pete, Florida

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Looking Ahead? Increasing creditor involvement Assure collector knowledge Monitoring collector activity Making more documentation available sooner A more active collector role Assessing validity of creditor claims Self-initiated verification activities Repository for documentation Recasting of roles/responsibilities? 5 2013 Knowledge Symposium November 5-7, 2013 St. Pete, Florida

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Notice of Borrower Rights Collector must abide by fair debt rules You can ask for proof of right to collect the debt itemization of the debt and payment history You are entitled to copies of all documents reflecting this debt Historical information (e.g., date of default, original creditor/account number, borrower information) 6 2013 Knowledge Symposium November 5-7, 2013 St. Pete, Florida

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State Verification Requirements New York City: upon any request, original debt documents and itemization from original creditor, describing basis of payment obligation Chicago: upon timely written request, statement of account/itemize components of original charge off balance and each post-charge off amount; identify/describe basis for the obligation 7 2013 Knowledge Symposium November 5-7, 2013 St. Pete, Florida

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State Verification Requirements New York (proposed): within 30 days of any request, signed debt agreement, last itemization from creditor to borrower (with all account numbers used), chain of title (statement with dates of assignment) California (purchased debt): within 15 days after any written request, access to all debt documents 8 2013 Knowledge Symposium November 5-7, 2013 St. Pete, Florida

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State Requirements: Substantiate Before Collection? Assure that Creditor has the right to collect All amounts sought are correct You have access to all information the borrower has a right to request You can provide it within 15 days 9 2013 Knowledge Symposium November 5-7, 2013 St. Pete, Florida

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Notice of Creditor Limitations You cannot be sued to repay this debt Your credit report can no longer reflect this debt Collector must know in order to notify Date of last payment/delinquency Law applicable to the debt and some interesting disclosures: You can be sued, but certain income is exempt Non-payment may damage your credit 10 2013 Knowledge Symposium November 5-7, 2013 St. Pete, Florida

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Federal Requirements: Inform and Investigate Borrowers dont get adequate information Borrower needs to assess the claim Validation notice needs more detail More substantial verification Written and oral disputes, whenever raised Proper amount and borrower Assess relevance, reliability, accuracy and completeness (including credibility) of all information from all sources. 11 2013 Knowledge Symposium November 5-7, 2013 St. Pete, Florida

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Federal Requirements: Substantiate Substantiate the debt before collection Reasonable basis to claim borrower owes the debt CFPB sample letters? Statute of limitations? 12 2013 Knowledge Symposium November 5-7, 2013 St. Pete, Florida

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Federal Requirements: Substantiate/Investigate Rely on creditor absent reasonable indication that information is incomplete, inaccurate, unreliable or does not substantiate Consider reliability and source of information Not an investigation 13 2013 Knowledge Symposium November 5-7, 2013 St. Pete, Florida

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Federal Requirements: Substantiate/Investigate Verify (investigate) even absent a borrower dispute? Similar other disputes at disproportionately high rates Unavailability of documents Creditors business methods Repository of debt documentation 14 2013 Knowledge Symposium November 5-7, 2013 St. Pete, Florida

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Expanding the Focus FTC Act Section 5 Dodd-Frank UDAAP Attempting to collect the wrong amount Third party disclosure Threats of litigation Creditor oversight 15 2013 Knowledge Symposium November 5-7, 2013 St. Pete, Florida

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Creditor Obligations for Debt Collection and Debt Selling Arthur J. Rotatori, Esq. McGlinchey Stafford 25550 Chagrin Blvd., Suite 406 Cleveland, Ohio 44122 16 2013 Knowledge Symposium November 5-7, 2013 St. Pete, Florida

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Creditor Obligations for Debt Collection have Expanded Direct Debt Collection Placement with Debt Collection Agency Sale of Debt to Debt Buyer Vendor Management Documentation 17 2013 Knowledge Symposium November 5-7, 2013 St. Pete, Florida

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Vendor Management April 2011 - OCC/ OTS/ Federal Reserve Interagency Review of Foreclosure Policies and Practices: The reviews found critical weaknesses in servicers foreclosure governance processes, foreclosure document preparation processes, and oversight and monitoring of third-party vendors, including foreclosure attorneys. 18 2013 Knowledge Symposium November 5-7, 2013 St. Pete, Florida

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April 13, 2012 - CFPB Bulletin 2012-03, Service Providers: "A service provider that is unfamiliar with the legal requirements applicable to the products or services being offered, or that does not make efforts to implement those requirements carefully and effectively, or that exhibits weak internal controls, can harm consumers and create potential liabilities for both the service provider and the entity with which it has a business relationship. Depending on the circumstances, legal responsibility may lie with the supervised bank or nonbank as well as with the supervised service provider." Vendor Management 19 2013 Knowledge Symposium November 5-7, 2013 St. Pete, Florida

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April 13, 2012 - CFPB Bulletin 2012-03, Service Providers: Thorough due diligence Review policies, procedures, internal controls, and training materials Contractual expectations of compliance On-going monitoring Prompt corrective action, including termination of relationship Vendor Management 20 2013 Knowledge Symposium November 5-7, 2013 St. Pete, Florida

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