From NakedCapitalism
By Yves Smith
''One of the ways banks can earn credits toward the remainder of the
balance is by extinguishing first and second liens. But the banks look
to be taking debts that were uncollectable, from a legal perspective,
and claiming credit nevertheless. The most egregious version is the one
fingered by Morgenson, that of debts that were already erased in
bankruptcy. Morgenson has unearthed multiple instances where the banks
have sent out cheery letters saying they are wiping out consumers’
debts, when those debts in fact are long gone. And to add injury to
insult, these servicers are also reporting these phony extinguishments
of debt to the IRS as if they were actual debt forgiveness, so the
consumers will have an uphill battle proving that the banks have done
them a dirty by misreporting for fun and profit.''
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