OCC Publishes Guidelines for Consumer Debt Sales

2895964373_1f7f33a6b8_oPhoto Credit: woodleywonderworks via Compfight cc

A further piece of news from the bank regulation/debt collection beat I sometimes cover:

On Monday, August 4, the federal Office of the Comptroller of the Currency (OCC) issued a risk management bulletin to its supervised banks (i.e. national banks) giving them guidance on how they should handle sales of seriously delinquent, “charged off” debt to third-party debt buyers.

The OCC’s guidelines mandate a minimum quantity of account documentation the bank must supply the debt buyer upon purchase, and they also forbid the sale of certain categories of accounts, such as accounts belonging to deceased persons and accounts which are included in a pending or concluded bankruptcy (yes, unbelievably there is a market for these debts). They also require banks to do some due diligence on a debt buyer before selling debt to it.

This guidance formalizes advice the OCC issued back in July 2013. It also broadens the scope of concerns addressed last year in a consent order between Chase Bank and the OCC regarding its sales of consumer debt. I am glad to see it, but it goes to show how long it can take regulators to catch up to the facts on the ground. The large abuses these guidelines are meant to combat reached their height in 2009 or 2010 in my opinion.

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