“HORROR stories abound across Foreclosure Nation. But once in a while, a new one comes along to remind us just how dysfunctional our mortgage market is.” Gretchen Morgensen, NY Times
“The bottom line is that as long as we ignore the fact that we are focusing on the documents that have been faked rather than the money which is real, we will continue to have multiple “stakeholders” interfering with short-sales, modifications and settlements. These intermediaries who stole identities and misrepresented the consideration from OTHER transactions as their own are covering up a criminal PONZI scheme. It is only the sheer size of the scheme that is daunting to law enforcement and regulators — not the facts.” Neil F Garfield http://www.livinglies.me
EDITOR’S COMMENT: Short-sale goes through, now the bank is saying it didn’t. Foreclosure goes through, now the courts are saying “not so fast!” You are going to see a lot more stories like this — and a lot more litigation. And a lot of lawyers getting very rich. As the unraveling continues, lawyers are going to find it easier and easier to sue for damages which include emotional distress in States like California. Like a broken bone in a personal injury or malpractice case, you can’t hide the fact that the origination of the loans was broken — and no amount of paper will cover that up.”
It all comes from the mountain of paperwork — documents — that were fabricated to cover up fatally defective mortgages.
Multiple stake holders appeared out of nowhere. And they were universally believed. Now they are coming under scrutiny and doubt instead of prosecution and imprisonment.
All the courts and lawyers need to do is to get the proof of the trail of money. Any stakeholder claiming rights under the obligation, note, or mortgage must have proof they paid something at some point.
You will find they can’t do that in most cases because the loans were never securitized. In reality the “securitization” was simply replaced with a PONZI scheme. It’s really very easy — compare the money transactions with the documents at the borrower’s closing and the documents at the investor’s closing. Compare the money transactions with the claims of assignments and transfer. It is all B.S.
Ultimately the courts are going to rule with reality not with fluff, wool over the eyes, or diversion. Once lawyers start asking to see the actual bank accounts and actual money transfers, it will all become clear that reality doesn’t match the documents of the borrower nor the documents of the lender.
At that point the reality will be revealed. The loans were never documented, much less secured by mortgages that could be foreclosed. The investors already know this and affirmatively allege it in their pleadings. The day of reckoning is near. ” Repossession” will have a whole new meaning as homeowners recapture homes thought lost years ago. Money will be flowing to the victims of Foreclosures that were not just wrongful, but criminal and lots and lots of money gets made by lawyers who were smart enough to see this coming. This is bigger than personal injury and will become twice as easy.

A Florida Condo Sale and a Market’s Dysfunction – Fair Game
A Condo Was Sold, Until It Wasn’tBy

HORROR stories abound across Foreclosure Nation. But once in a while, a new one comes along to remind us just how dysfunctional our mortgage market is.

Chaos and conflict rein over many mortgage workouts. Until that changes, housing will struggle.

The case at hand — and it’s a whopper — involves a short sale on a condominium in Deltona, Fla. Short sales are transactions in which a bank and a borrower agree to sell a property for less than the amount owed on the mortgage.

While loan modification programs have received the greatest push from the government, short sales are crucial to cutting the inventory of foreclosed properties. And yet they are far less common than deals like loan modifications and forbearance plans that let people retain their homes.

In the first quarter of 2012, for example, Fannie Mae and Freddie Mac, the mortgage finance behemoths, completed just 30,601 short sales versus some 112,000 home-retention actions. Since the government took over the companies in 2008, the totals are 315,000 versus 1.9 million.

Last month, Fannie Mae announced new guidelines intended to prod the mortgage servicers into doing more short sales. “Our goal is to incentivize servicers to get to the solution that is appropriate for the borrower,” said Andrew Wilson, a spokesman for Fannie Mae.

Short sales are easier said than done, however. Some borrowers who have tried to work with banks report responses ranging from reluctance to outright recalcitrance.

But nothing beats the experience of Alexandra J. Garcia, who bought the Deltona condominium in 2007 as an investment. An employee at the Department of Motor Vehicles in Queens, she said she put 20 percent down on the $250,000 condo and got a mortgage from Countrywide, which then sold the loan to Fannie Mae.

When the market collapsed and she couldn’t rent the property, Ms. Garcia fell behind on the loan. Bank of America, the servicer, filed for foreclosure in 2009. She tried unsuccessfully for a loan modification.

Ms. Garcia then tried to persuade Bank of America to let her make a short sale. In February this year, she submitted the necessary materials to the bank. On Feb. 8, she got a letter approving a short sale for $72,000.

The letter said the bank “and/or its investors and/or insurers,” in this case Fannie Mae, had agreed to accept the payoff. Among their conditions were limits on closing costs and real estate commissions and a requirement to close by March 23.

The letter had even better news for Ms. Garcia. The owner of the mortgage and Bank of America agreed to “waive their right to pursue collection of any deficiency following the completion of your short sale and your debt is considered settled.”

Though she had lost her down payment and ruined her credit, Ms. Garcia said she was thrilled to get out of the property. She agreed to pay the bank $1,000 in the deal. She was home free.

The deal closed on March 5; the money was wired to Bank of America.

Then the weirdness began.

On March 7, it rejected some of the terms noted in the closing documents and returned the money. The next day, it sent a letter approving the same terms. Worried that the deal might be scotched, Ms. Garcia revised the documents to the bank’s earlier specifications and paid an additional $575.

On March 16, Bank of America asked Ms. Garcia for the $575 that had already been sent. But, the bank employee wrote: “I did receive and approve your closing docs today.”

Three days later, Ms. Garcia’s lawyer again wired the sale amount to the bank. It rejected the wire and on March 20 sent Ms. Garcia a letter declining the short sale. The deal was off, even though the property had changed hands, the buyer had moved in and the new ownership had been recorded.

The letter said the sale had been denied after it was submitted to the investor, Fannie Mae. Fannie had said no “due to (insufficient offer, not willing to sign a deficiency agreement, or contributing to the loss),” the letter added, never clarifying whether one or all three of those factors were behind the denial.

The bank then told Ms. Garcia that it might reconsider the sale if she would accept responsibility for some or all of the loss or get the buyer to pay more. In other words, actions that the bank said were unnecessary two weeks earlier.

Jose Oliveira, a lawyer in Orlando who represents Ms. Garcia, sued Bank of America, claiming breach of contract. He asked the court to declare her mortgage satisfied and to order the bank to accept the payment it had agreed to.

Asked about the Garcia matter, Mr. Wilson of Fannie Mae said it had neither approved nor denied the transaction but had delegated the authority to allow or deny the deal to Bank of America, as is its custom.

After receiving inquiries, Bank of America agreed on Friday to settle the matter. The bank satisfied the mortgage on the terms of the short sale and said it would pay Mr. Oliveira’s legal costs.

Jumana Bauwens, a spokeswoman for Bank of America, said it had reviewed the transaction and found inconsistencies in the documents leading it to decline the transaction. “Additional information should have been requested and the file ultimately approved,” she said. “We are sorry for the delay.”

This short sale ended happily, but far more do not. Some foreclosure experts contend that such sales are stymied because of conflicts inherent among mortgage servicers who decide them on behalf of institutions like Fannie Mae.

April Charney, a foreclosure defense lawyer formerly with Jacksonville Area Legal Aid and now in private practice in Sarasota, Fla., said mortgage servicers lose fees when a short sale occurs. Handling defaulted loans is more lucrative than handling performing ones.

“Why in the world would a bank ever finish one of these deals?” Ms. Charney asked. “When they renege, they get to keep servicing a defaulted loan.”

To be sure, short sales can be tricky. But Dixon Pearce, a lawyer in Mount Pleasant, S.C., whose firm does many short sales, said they don’t have to be so difficult. He has a recommendation. “The government ought to get in there,” he said, “and do a uniform process and make this easier for everybody.”

http://www.nytimes.com/2012/09/16/business/a-florida-condo-sale-and-a-markets-dysfunction-fair-game.html?_r=1

20 Responses

  1. There is a $75 to $100 trillion dollar credit liability FLOATING AROUND IN CYBERSPACE…according to a BLOOMBERG NEWS guest. That is PROOF that the FED CREDIT SYSTEM IS A CREDIT SCAM…A SET UP TO FAIL CREDIT SYSTEM THAT WAS INSTITUTED BY THE TRAITOR POLITCIANS FOR THE AMERICAN PEOPLE TO FAIL…IT IS NOT A MONETARY SYSTEM BACKED GOLD OR SILVER….WHICH IS SOMETHING TANGIBLE THAT HAS VALUE…..AS THE U.S. CONSTITUTION REQUIRES. WE NEED TO RESTORE THE U.S. CONSTITUTION …ISSUE OUR OWN CURRENCY….ABOLISH THE FED MICROCHIP CREDIT SCAMMERS..!

  2. Oops..I meant to say it is UNCONSTITUTIONAL & ILLEGAL TO TAKE PROPERTY IN EXCHANGE FOR BILLS OF CREDIT…SAYS ARTICLE 1 SECTION 10 OF THE SUPREME LAW OF THE UNITED STATES OF AMERICA…THE UNITED STATES CONSTITUTION.

  3. My comment below is beside the fact that taking property in exchange for debt… IS UNCONSTITUTIONAL AND ILLEGAL SAYS ARTICLE 1; SECTION 10 OF THE U.S. CONSTITUTION…THE FACT THEY ARE TAKING PROPERTY IN EXCHANGE FOR THE INSOLVENT DEBT OF FAILED INSTITUTIONS IS ABSOLUTELY CRIMINAL.

  4. WHOA…..THEY ARE STRONG ARMING THE AMERICAN PEOPLE..INSTEAD OF THE BANKSTER/WALL STREET CROOKS…!.A SURETY BONDED RECEIVER TO THE RESCUE…! THE FEDERAL GOVERNMENT IS COMING TO COLLECT ON BONDS THAT NEVER EXISTED BECAUSE THERE IS NO COLLATERAL BACKING UP THOSE BONDS….!!! WHY DOESN’T THE FEDERAL GOVERNMENT DISSECT THE LOAN FILES OF THESE BANKSTERS…???? THEY DON’T WANT TO BECAUSE THEY KNOW WHAT THEY WILL FIND ……. THEIR DEBTS ARE INSOLVENT…THERE IS NOT ENOUGH PROPERTY HERE TO RECOVER THEIR “DEBTS”..

  5. From an adversary I uncovered recently:

    What’s wrong here?

    Pleading – The debtor entered into a Loan Modification Agreement with Deutsche Bank’s servicer, America’s Servicing Company, in January 2010

    1. Deutsche Bank does not have a servicing agent. Deutsche Bank National Trust Company is a bond underwriter and bond holder. And America’s Servicing Company, is a defunct entity. If anything the Servicing rights that entitle Deutsche Bank’s servicer, America’s Servicing Company to any relationship what so ever is for remedying a Defaulted Bond or pursuant to a depositors cash account under the protections of a US receiver

    The only obligation currently serviced by America’s Servicing Company is for the amount these court room adversary’s are fighting over – which ASC is trying to pay back one “Home” at a time.

    Deutsche Bank National Trust Company and any American banking entity as alleged are a complete mis-joinder of claims, in spite of any pending resolution and settlement talks.

    Id_accounting@yahoo.com
    Get the testimony right!

  6. An attorney told me several months ago the banks are only accepting cash in short sales. They will not wait for a buyer to get financed and they want to close the deal in no less than 60 days, preferably 30. That proves to me these greedy crooks want to take the money and run before their house of cards collapses. I hope the rule of law gets upheld and they all get stripped of all of their ill gotten gains like Bernie Madoff and they all go to prison for life….3 felonies=life in prison….

  7. I don’t agree with Soliman that any such documents exist or ever existed because they did not disclose all aspects that were pertinent to that financial transaction. MAINLY, the fact they never lent you any money and in fact they were the borrowers of U.S.TAXPAYER MONEY VIA THE U.S. TREASURY DEPT…WHAT OCCURRED AFTER THE ORIGINATION FRAUD IS WHY THESE MORTGAGES ARE INSOLVENT and their “LIENS” are not legally enforceable..

  8. These titles should be audited for MORTGAGE FRAUD…by an unbiased, independent party or better yet…educate yourself and do it yourself…. before ANY NEGOTIATION IS MADE OR ANY DEAL IS STRUCK with any party who claims you owe them money or your house. Otherwise, this is extortion ….anyone can say you owe them your money or your property but where’s the proof? These entities are PROVEN criminals and the TRUTH IS..THEY CREATED TONS OF DEBT WITH OUR ELECTRONIC SIGNATURES THAT CAN NEVER BE REPAID…. Do not trust, verify.

  9. Short Sales are a scam. The property owners…WE THE PEOPLE ARE VICTIMS OF THIS FRAUD BY LACK OF KNOWLEDGE….THE PEOPLE DON’T REALIZE ALL OF THESE MORTGAGE DEBTS ARE INSOLVENT BECAUSE OF $700 TRILLION IN MORTGAGE FRAUD COMMITTED BY WALL STREET …! My hope is every short sale gets revoked and the people who were robbed by this scam get their property back and monetary restitution and all real estate agents, title company agents and any one else involved in the SHORT SALE SCAM are imprisoned for fraud…To say these real estate agents and the like are innocent by lack of knowledge is NOT A VALID EXCUSE…IT IS THEIR JOB TO KNOW THE TITLE HISTORY OF THESE PROPERTIES….!. These are ALL insolvent debts, the entities involved with them are CRIMINALS and SHORT SALES ARE A GIANT RIP OFF…!

  10. Foreclosures are not the problem. Foreclosures are only one of the many ways corporations have found to divert our money for their own gain. Good point …its true

  11. enraged ….Hmmmm I hear you

  12. I almost quipped on that “massage” thing but… my conscience forbade me to go there…

  13. @masterservicer

    “To attack me and my massage…”

    Who attacked your massage? Are they really that bad? There are lots of books on how to give a good massage, you know.

  14. Morgensen said “The bottom line is that as long as we ignore the fact that we are focusing on the documents that have been faked we will continue to have multiple “stakeholders” interfering with short-sales, modifications and settlements.

    Soliman- I have long said the documents are not fake! Moot maybe or inconsequential …not fake! They are substantive to the deal “THEY” made and not what you think you’re looking at. If the note can be tendered as it is alleged, it is allowed to carry a blank endorsement. For it is the owner of the note that has granted to the person in possession the obligation. This is affirmed under UCC article 9.
    If the successor holds the note the endorsement in blank is moot.
    If the original holder possesses the note, then a blank endorsement is a households substantive claim where as the note was alleged sold into a security.
    A Robo Signature is an endorsement by fictitious name that is posting to one’s own account. It is not a fraud and allowed upon the presumption the endorsement posted by fictitious name is for tax payer reporting purposes.
    If the note was used to create a mortgage backed security, the note was tendered as of the closing date. You bought the securitization audit or whatever. You know there was a closing date correct?
    If the note is in possession of the original holder and was never endorsed, then the securitization held as of the closing date did not include the note? Therefore the note was never tendered?
    100 percent of the notes I have seen are brought into court with an endorsement in blank. I know firsthand of how and why the notes were destroyed and not lost as some here exclaim.
    Are you getting it? No?

    Who is the sole shareholder in each of these deals?

    Got it ? Now we see emerge the accounting violations under SEC violations AB rules that confirm this fact. Auditor attestations also concede this as a fact. The blank endorsement brought into court is prima fascia conclusive of this fact.

    Counsel, if you don’t know what you’re arguing then you’re liable for a malpractice suit. The note in a foreclosure defense is material for one and only one reason. I state as fact, the deal structure they are using is not a fraud and allowed certain accounting liberties that translate in one of the most oppressive acts I have ever seen committed against an American by it banks.

    These violations however are not what you’re claiming in court. The violations of rules and procedures occurred under the most extreme types of business dealings that are subject to claims of restraint on alienation, the law of surety ship, unlawful delays for the formation of the oppositions defenses using unethical estoppels and wide spread mis-joinder.

    The expert here is not the fraud . . . . Unless you’re engaging him to tell you what YOU want to hear. The expert is a fraud if he cannot explain these details to you!
    Counsel, has the Bar advised you to stay out of these claims under USC Title 18?

    Is M.Soliman a threat to your stubbornness and need to take on these cases where you back out at the eleventh hour pleading the consumer has been in the home long enough.
    This all began in 1992 when the AB was outspoken about the things to come guys. So were the title attorneys who would not take on the project under the greatest assurance of the government backing against claims of a surety or right to exoneration

    Things launched in 1996 and the states still believe they have jurisdiction over a uniform MASTER TRUST DEED or what?
    I stayed in till 2001. I got out before the thing went out of control. Barclays is only the beginning of the out of control snowball.
    They completed the first round of the 40 year bond financing in 1996 through GMAC BofA and Wells Fargo, each separately. In 2002 we see this thing take off and there is where the argument prevails for manipulative and controlling devisees that violated the accounting rules. From 2002 through 2007, the platform used amongst FDIC member National Associations and allowed banks to engage in predatory lending practices that avoided discovery. Perhaps it’s what was called for to free up capital to support our efforts overseas.

    Either way, the cost of funds selling six percent Privy Label paper and buying .60 BP’s T-Bill alternatives was a 10:1 ratio in our favor. So read it and weep Homeowners and foreign investors.
    But as of mid 2007 however, the discovery is there in open and public records. The cost of buying funds at six percent and selling T-Bill alternatives at 60. BPS …that was your downfall. I mean we are talking in the trillions here boys.

    To attack me and my massage is to discount that which you will look back on and say – damn it …I should have listened,

    registerclaims@live.com

  15. Im not sure if they are monitoring again – Ill try

  16. Has anyone wondered why, if the feds have been printing so much money day in, day out, as so many people here seem to claim:

    1) We still haven’t seen any hyperinflation?
    2) There aren’t any bills in circulation, dated after 2009? I read that today and had to verify it for myself. I happen to have cleaned up my bank account a few months ago and have everything I had in it stashed away, in regular $20, $50 and $100. All in all, it represents upward of 250 bills. I checked every single one and, sure enough, their date of issuance ranges from 1989 to 2008 (with some interesting ones dated 2003 A).

    http://blogs.wsj.com/economics/2010/12/22/is-the-fed-printing-money/

    December 22, 2010, 4:15 PM

    Is the Fed Printing Money?

    In an exchange with readers on Time magazine’s website this past weekend, a reader asked Mr. Bernanke why the Fed is creating dollars “out of thin air.” Mr. Bernanke said it wasn’t. “These policies are not leading to increases in the amount of currency in circulation,” he said.

    He made a similar argument to CBS News’s Scott Pelley earlier this month in defense of the Fed’s plan to purchase $600 billion of U.S. Treasury bonds with money that the Fed creates. “People talk about the printing press. That’s not what this is about. This policy does not increase the amount of currency in circulation. It does not increase in any significant way the amount of money in broader terms, say, as measured by bank deposits,” he said.

    Yet back in March 2009 Mr. Bernanke told Mr. Pelley that the Fed was printing money to fund an earlier bond buying program. “It’s not tax money. The banks have accounts with the Fed, much the same way that you have an account in a commercial bank. So, to lend to a bank, we simply use the computer to mark up the size of the account that they have with the Fed. It’s much more akin to printing money than it is to borrowing,” he said.

  17. Foreclosures are not the problem. Foreclosures are only one of the many ways corporations have found to divert our money for their own gain. Note: one of the side effects of consuming GMO food is… sterility! And all the true scientists who disclosed it are under gag orders or have lost their right to practice any kind of scientific research.

    Amazingly enough, Monsanto has obtained from the court the right to forbid anyone from using their engineered crops in order to perform the research never, ever conducted prior to force feeding them to us.

    http://www.youtube.com/watch?v=QYvf46v_B3Q

    Obama named a former Monsanto researcher as head of the FDA. That ought to tell us everything we need to know.

  18. @Colleen,

    Yep. Just saw that too. Where are they gona put us all? FEMA? Oh well! They won’t be happy until it gets bloody…

    That ought to really clear up courts’ backlogs!

    In Prosecutors, Debt Collectors Find a Partner

    By JESSICA SILVER-GREENBERG
    Published: September 15, 2012
    The letters are sent by the thousands to people across the country who have written bad checks, threatening them with jail if they do not pay up.
    Collection notices.

    They bear the seal and signature of the local district attorney’s office. But there is a catch: the letters are from debt-collection companies, which the prosecutors allow to use their letterhead. In return, the companies try to collect not only the unpaid check, but also high fees from debtors for a class on budgeting and financial responsibility, some of which goes back to the district attorneys’ offices.

    The practice, which has spread to more than 300 district attorneys’ offices in recent years, shocked Angela Yartz when she was threatened with conviction over a $47.95 check to Walmart. A single mother in San Mateo, Calif., Ms. Yartz said she learned the check had bounced only when she opened a letter in February, signed by the Alameda County district attorney, informing her that unless she paid $280.05 — including $180 for a “financial accountability” class — she could be jailed for up to one year.

    “I was so worried driving my kid to and from school that if I failed to signal, they would cart me off to jail,” Ms. Yartz said.

    Debt collectors have come under fire for illegally menacing people behind on their bills with threats of jail. What makes this approach unusual is that the ultimatum comes with the imprimatur of law enforcement itself — though it is made before any prosecutor has determined a crime has been committed.

    Prosecutors say that the partnerships allow them to focus on more serious crimes, and that the letters are sent only to check writers who ignore merchants’ demands for payment. The district attorneys receive a payment from the firms or a small part of the fees collected.

    “The companies are returning thousands of dollars to merchants that is not coming at taxpayer expense,” said Ken Ryken, deputy district attorney with Alameda County.

    Consumer lawyers have challenged the debt collectors in courts across the United States, claiming that they lack the authority to threaten prosecution or to ask for fees for classes when no district attorney has reviewed the facts of the cases. The district attorneys are essentially renting out their stationery, the lawyers say, allowing the companies to give the impression that failure to respond could lead to charges, when it rarely does.

    “This is guilty until proven innocent,” said Paul Arons, a consumer lawyer in Friday Harbor, Wash., about two hours north of Seattle.

    The partnerships have proliferated from Los Angeles to Baltimore to Detroit, according to the National District Attorneys Association, as the stagnant economy leaves city and state officials grappling with budget shortfalls. Lawyers for the check writers estimate that more than 1 million of them are targeted a year. The two main debt collectors — California-based CorrectiveSolutions and BounceBack of Missouri — return millions of dollars each year to retailers including Safeway, Target and Walmart.

    While the number of bounced checks has fallen as more shoppers pay with credit or debit cards, Americans still write billions of dollars worth of bad checks each year. In 2009, $127 billion worth of checks were returned, according to the most recent data from the Federal Reserve. That’s down from $182 billion in 2006.

    Because the cases are not fully investigated, there is no way of knowing whether the bad checks were the result of innocent mistakes or intentional fraud. The so-called bad check diversion programs start from the position that a crime has been committed.

    Before the first partnerships were rolled out in the late 1980s, merchants who received a bad check typically tried to retrieve the money themselves or through a private collection company, with abysmal results. Those merchants who suspected fraud could send along the checks to their local district attorneys.

    The influx of bad-check reports overwhelmed district attorneys’ offices, according to Grover C. Trask, a former district attorney in Riverside, Calif., considered the father of such programs. “It was a way to deal with a fairly serious nonviolent crime going on in the business community, but not overburden the court system or the resources of the district attorneys,” Mr. Trask said.

    The programs were quickly challenged by consumer lawyers, who took aim primarily at California-based American Corrective Counseling Services. Facing a barrage of class-action lawsuits, the company reorganized through a Chapter 11 bankruptcy in 2009.

    Still, its successor, CorrectiveSolutions, which says it has contracts with more than 140 prosecutors, has been dogged by similar legal challenges, including a class-action lawsuit pending in federal court in San Francisco that claims the company “has constructed an elaborate artifice” to terrify borrowers into paying. CorrectiveSolutions, which did not respond to requests for comment, has contested the claims, court filings show.

    For the collection companies, the partnerships offer a distinct financial benefit: the “financial accountability” classes. Typically, a small portion of the class fees, which can exceed $150, are passed on to the district attorneys’ offices. Check writers are led to believe that unless they take the courses, they could end up in jail.

    A letter signed by the Santa Clara County district attorney, for example, informed Kathy Pepper that the “bad check restitution program” would allow her to avoid “the possibility of further action against the accused by the District Attorney’s Office.”

    Petrified, Ms. Pepper agreed to pay $170 for a class and another $25 to reschedule the class last year after accidentally writing a $68 check in the midst of a divorce last year that upended her finances.

    What Ms. Pepper did not know was that her bad check was sent directly from the merchant to the debt-collection company, without any prosecutor determining whether she had actually committed a crime.

    Under the terms of five contracts between CorrectiveSolutions and district attorneys reviewed by The New York Times, merchants refer checks directly to the company, circumventing the prosecutors’ offices. While the merchants are required, for example, to attempt to contact the check writer, they can send any bad checks to the collection companies if the shopper hasn’t responded, typically within 10 days.

    “No one at the district attorney’s office reviews the cases” before the collection company sends out letters, said Priscilla Cruz, an assistant director in the Los Angeles district attorney’s office.

    As of July, CorrectiveSolutions had sent out 16,955 letters on behalf of the Los Angeles district attorney, and during that time 635 people attended the program’s classes, county data show. While few people will be prosecuted for not attending the class, there is a possibility of charges, Ms. Cruz said.

    While the percentage of targeted check writers taking the classes is low — 4 percent to 7 percent in recent years — the percentage of cases referred for potential prosecution is much lower, about 0.10 percent.

    Few bad-check writers are prosecuted, especially for relatively small sums, lawyers say, because it is hard to prove the person meant to defraud the merchant.

    Gale Krieg, a vice president at BounceBack, said he has turned down business from prosecutors who won’t agree to at least have all copies of the checks sent to their offices, where prosecutors can determine if a crime has been committed. Mr. Krieg, who said the company has contracts in 38 states, acknowledges the limitations: “Whether they exert oversight isn’t something that we can control.”

    Prosecutors point out that people who write bad checks should be held accountable for paying back what they owe.

    “I view it as quite a win-win,” said Baltimore County State’s Attorney Scott D. Shellenberger. “You aren’t criminalizing someone who shouldn’t have a criminal record, and you are getting the merchant his money back.” On its Web site, CorrectiveSolutions says that its classes result in low rates of recidivism.

    Some officials in district attorneys’ offices have quietly raised concerns that the programs are misleading. A November 2009 county audit of Deschutes County, Ore., titled “District Attorney’s Office-Cash handling over revenues,” wondered whether elements of the program could be “disingenuous.” The prosecutor’s office, which did not return requests for comment, contracts with CorrectiveSolutions to handle its bad checks. Ms. Yartz said she accidentally wrote a check for groceries on her credit union account, rather than her bank checkbook. She had recently moved and was in the process of closing that account.

    Even after Ms. Yartz paid $100.05 in February to cover the bounced check, the returned item fee and an administration fee, she got a letter signed by the Alameda district attorney informing her that her remaining balance was $180 for the class. After consulting with a lawyer, she decided to take her chances rather than pay for a class she could not afford, to avoid being punished for a crime she said she did not commit. Ms. Yartz also questioned the need for a class on budgeting and financial accountability: “If I meant to bounce this check like a criminal, why do I need a class on budgeting?”

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