Centex- Rule 5000 reage

[bird2006]

Centex,

 

I didn't want to take the OPs thread of track, so I started a new topic. I've had Rule 5000 questions for a long time. I want to have a somewhat better understanding of this. This is where we were:

 

WAMU places their paper very early but does not sell it until after chargeoff. At only 60 past due, you really ought to be pursuing a Rule 5000 reage of the account. If it gets much further behind, then you need to look at other options. I have recently (within the past six months or so) settled WAMU accounts for 35 cents on the dollar on accounts that had not gotten to the charged-off stage yet.

 

Centex,

Do you (consumer) have to request the Rule 5000 or does Wamu do it automatically? Is it that cut and dry?

 

The consumer would have to first get someone that understands what the law allows for in such a case and then initiate the request. In the case of the person I handled settlement for, we initially made the request for the Rule5000 adjustment but then they offered 45 cents which came down to 35 cents a few minutes further into the conversation. Total time on the phone with Arlington-based WAMU staff was about 20 minutes.

 

The consumer would need someone who understood the law because the reage would reset the SOL and the consumer would need to understand what that meant legally?

[bird2006]

"Re-Aging, Extensions, Deferrals, Renewals, and Rewrites 3

*snip*

Adequate management information systems usually identify and document any loan that is re-aged, extended, deferred, renewed, or rewritten, including the number of times such action has been taken. Documentation normally shows that the institution's personnel communicated with the borrower, the borrower agreed to pay the loan in full, and the borrower has the ability to repay the loan. To be effective, management information systems should also monitor and track the volume and performance of loans that have been re-aged, extended, deferred, renewed, or rewritten and/or placed in a workout program. "

 

Centex,

From the way this reads, it looks as if the OC could send letters that a consumer doesn't completely understand, and get a re-age once the consumer sends in a payment. Can this happen?

[centex]

Very few customer service reps have a clue what is or is not available under the law. Rule5000 is one of those areas. Even mid-level execs may not have a firm grasp on FDIC regulations, which is where the Rule 5000 reference is derived.

 

In pertinent part:

Re-Aging, Extensions, Deferrals, Renewals, and Rewrites 3

 

Re-aging of open-end accounts, and extensions, deferrals, renewals, and rewrites of closed-end loans can be used to help borrowers overcome temporary financial difficulties,

{{6-30-00 p.5083}}such as loss of job, medical emergency, or change in family circumstances like loss of a family member. A permissive policy on re-agings, extensions, deferrals, renewals, or rewrites can cloud the true performance and delinquency status of the portfolio. However, prudent use is acceptable when it is based on a renewed willingness and ability to repay the loan, and when it is structured and controlled in accordance with sound internal policies.

Management should ensure that comprehensive and effective risk management and internal controls are established and maintained so that re-ages, extensions, deferrals, renewals, and rewrites can be adequately controlled and monitored by management and verified by examiners. The decision to re-age, extend, defer, renew, or rewrite a loan, like any other modification of contractual terms, should be supported in the institution's management information systems. Adequate management information systems usually identify and document any loan that is re-aged, extended, deferred, renewed, or rewritten, including the number of times such action has been taken. Documentation normally shows that the institution's personnel communicated with the borrower, the borrower agreed to pay the loan in full, and the borrower has the ability to repay the loan. To be effective, management information systems should also monitor and track the volume and performance of loans that have been re-aged, extended, deferred, renewed, or rewritten and/or placed in a workout program.

 

Open-End Accounts

 

Institutions that re-age open-end accounts should establish a reasonable written policy and adhere to it. To be considered for re-aging, an account should exhibit the following:

• The borrower has demonstrated a renewed willingness and ability to repay the loan.

• The account has existed for at least nine months.

• The borrower has made at least three consecutive minimum monthly payments or the equivalent cumulative amount. Funds may not be advanced by the institution for this purpose.

Open-end accounts should not be re-aged more than once within any 12-month period and no more than twice within any five-year period. Institutions may adopt a more conservative re-aging standard; for example, some institutions allow only one re-aging in the lifetime of an open-end account. Additionally, an over-limit account may be re-aged at its outstanding balance (including the over-limit balance, interest, and fees), provided that no new credit is extended to the borrower until the balance falls below the predelinquency credit limit.

Institutions may re-age an account after it enters a workout program, including internal and third-party debt-counseling services, but only after receipt of at least three consecutive minimum monthly payments or the equivalent cumulative amount, as agreed upon under the workout or debt-management program. Re-aging for workout purposes is limited to once in a five-year period and is in addition to the once in twelve-months/twice in five-year limitation described above. To be effective, management information systems should track the principal reductions and charge-off history of loans in workout programs by type of program.

 

The bolded text was emphasis added by me for the purpose of this post. The full page may be found at http://www.fdic.gov/regulations/laws/rules...l#5000uniformpf

 

There is no requirement that a lender allow for the reaging. The argument to be made in favor of the adjustment is that it is win-win for everyone involved: the customer keeps the account (and gets an improved report) and the bank gets a promise that it should be seeing all of its money (to include fees). The obvious negative from the consumer's viewpoint is precisely that the bank is getting all of its money, which includes accrued fees.

 

Getting someone with the lender who understands this process will involve spending some time on the phone. I have found that the best place to start is a long-distance call to the corporate offices instead of calling in through the toll-free numbers where they only know how to read from a script.

[bird2006]

After further reading in Open End accounts:

 

" Institutions may re-age an account after it enters a workout program, including internal and third-party debt-counseling services, but only after receipt of at least three consecutive minimum monthly payments or the equivalent cumulative amount, as agreed upon under the workout or debt-management program."

 

Is this where your services are needed for the consumer?

[centex]

Centex,

From the way this reads, it looks as if the OC could send letters that a consumer doesn't completely understand, and get a re-age once the consumer sends in a payment. Can this happen?

 

The whole point of the process is to get the account back on track. And once on track, there should be no reason for default to occur a second time (given the claim advanced by many that they could have gotten back on track if only a lender would have worked with them), which should negate the concern about SOL.

[centex]

After further reading in Open End accounts:

 

" Institutions may re-age an account after it enters a workout program, including internal and third-party debt-counseling services, but only after receipt of at least three consecutive minimum monthly payments or the equivalent cumulative amount, as agreed upon under the workout or debt-management program."

 

Is this where your services are needed for the consumer?

 

let's back up a step...this is not the area of law in which I am routinely involved. I have handled a few matters for clients that were already in the office on areas related to our field and I have also handled credit matters for friends locally.

 

Obtaining results in this area is something that people can do for themselves, but it requires that they not be afraid of their telephone.

[bird2006]

Very few customer service reps have a clue what is or is not available under the law. Rule5000 is one of those areas. Even mid-level execs may not have a firm grasp on FDIC regulations, which is where the Rule 5000 reference is derived.

 

In pertinent part:

Re-Aging, Extensions, Deferrals, Renewals, and Rewrites 3

 

Re-aging of open-end accounts, and extensions, deferrals, renewals, and rewrites of closed-end loans can be used to help borrowers overcome temporary financial difficulties,

{{6-30-00 p.5083}}such as loss of job, medical emergency, or change in family circumstances like loss of a family member. A permissive policy on re-agings, extensions, deferrals, renewals, or rewrites can cloud the true performance and delinquency status of the portfolio. However, prudent use is acceptable when it is based on a renewed willingness and ability to repay the loan, and when it is structured and controlled in accordance with sound internal policies.

Management should ensure that comprehensive and effective risk management and internal controls are established and maintained so that re-ages, extensions, deferrals, renewals, and rewrites can be adequately controlled and monitored by management and verified by examiners. The decision to re-age, extend, defer, renew, or rewrite a loan, like any other modification of contractual terms, should be supported in the institution's management information systems. Adequate management information systems usually identify and document any loan that is re-aged, extended, deferred, renewed, or rewritten, including the number of times such action has been taken. Documentation normally shows that the institution's personnel communicated with the borrower, the borrower agreed to pay the loan in full, and the borrower has the ability to repay the loan. To be effective, management information systems should also monitor and track the volume and performance of loans that have been re-aged, extended, deferred, renewed, or rewritten and/or placed in a workout program.

 

Open-End Accounts

 

Institutions that re-age open-end accounts should establish a reasonable written policy and adhere to it. To be considered for re-aging, an account should exhibit the following:

• The borrower has demonstrated a renewed willingness and ability to repay the loan.

• The account has existed for at least nine months.

• The borrower has made at least three consecutive minimum monthly payments or the equivalent cumulative amount. Funds may not be advanced by the institution for this purpose.

Open-end accounts should not be re-aged more than once within any 12-month period and no more than twice within any five-year period. Institutions may adopt a more conservative re-aging standard; for example, some institutions allow only one re-aging in the lifetime of an open-end account. Additionally, an over-limit account may be re-aged at its outstanding balance (including the over-limit balance, interest, and fees), provided that no new credit is extended to the borrower until the balance falls below the predelinquency credit limit.

Institutions may re-age an account after it enters a workout program, including internal and third-party debt-counseling services, but only after receipt of at least three consecutive minimum monthly payments or the equivalent cumulative amount, as agreed upon under the workout or debt-management program. Re-aging for workout purposes is limited to once in a five-year period and is in addition to the once in twelve-months/twice in five-year limitation described above. To be effective, management information systems should track the principal reductions and charge-off history of loans in workout programs by type of program.

 

The bolded text was emphasis added by me for the purpose of this post. The full page may be found at http://www.fdic.gov/regulations/laws/rules...l#5000uniformpf

 

There is no requirement that a lender allow for the reaging. The argument to be made in favor of the adjustment is that it is win-win for everyone involved: the customer keeps the account (and gets an improved report) and the bank gets a promise that it should be seeing all of its money (to include fees). The obvious negative from the consumer's viewpoint is precisely that the bank is getting all of its money, which includes accrued fees.

 

Getting someone with the lender who understands this process will involve spending some time on the phone. I have found that the best place to start is a long-distance call to the corporate offices instead of calling in through the toll-free numbers where they only know how to read from a script.

 

Thanks so much, Centex! I have been trying to get a better understanding of this for a while. I see how it could be a win for the consumer. Pay- improve the report (without having to dispute the heck out of it) and keep the age.

[bird2006]

After further reading in Open End accounts:

 

" Institutions may re-age an account after it enters a workout program, including internal and third-party debt-counseling services, but only after receipt of at least three consecutive minimum monthly payments or the equivalent cumulative amount, as agreed upon under the workout or debt-management program."

 

Is this where your services are needed for the consumer?

 

let's back up a step...this is not the area of law in which I am routinely involved. I have handled a few matters for clients that were already in the office on areas related to our field and I have also handled credit matters for friends locally.

 

Obtaining results in this area is something that people can do for themselves, but it requires that they not be afraid of their telephone.

 

I see. thanks for taking the time to explain this to me.

[jack1212]

Very few customer service reps have a clue what is or is not available under the law. Rule5000 is one of those areas. Even mid-level execs may not have a firm grasp on FDIC regulations, which is where the Rule 5000 reference is derived.

 

In pertinent part:

Re-Aging, Extensions, Deferrals, Renewals, and Rewrites 3

 

Re-aging of open-end accounts, and extensions, deferrals, renewals, and rewrites of closed-end loans can be used to help borrowers overcome temporary financial difficulties,

{{6-30-00 p.5083}}such as loss of job, medical emergency, or change in family circumstances like loss of a family member. A permissive policy on re-agings, extensions, deferrals, renewals, or rewrites can cloud the true performance and delinquency status of the portfolio. However, prudent use is acceptable when it is based on a renewed willingness and ability to repay the loan, and when it is structured and controlled in accordance with sound internal policies.

Management should ensure that comprehensive and effective risk management and internal controls are established and maintained so that re-ages, extensions, deferrals, renewals, and rewrites can be adequately controlled and monitored by management and verified by examiners. The decision to re-age, extend, defer, renew, or rewrite a loan, like any other modification of contractual terms, should be supported in the institution's management information systems. Adequate management information systems usually identify and document any loan that is re-aged, extended, deferred, renewed, or rewritten, including the number of times such action has been taken. Documentation normally shows that the institution's personnel communicated with the borrower, the borrower agreed to pay the loan in full, and the borrower has the ability to repay the loan. To be effective, management information systems should also monitor and track the volume and performance of loans that have been re-aged, extended, deferred, renewed, or rewritten and/or placed in a workout program.

 

Open-End Accounts

 

Institutions that re-age open-end accounts should establish a reasonable written policy and adhere to it. To be considered for re-aging, an account should exhibit the following:

• The borrower has demonstrated a renewed willingness and ability to repay the loan.

• The account has existed for at least nine months.

• The borrower has made at least three consecutive minimum monthly payments or the equivalent cumulative amount. Funds may not be advanced by the institution for this purpose.

Open-end accounts should not be re-aged more than once within any 12-month period and no more than twice within any five-year period. Institutions may adopt a more conservative re-aging standard; for example, some institutions allow only one re-aging in the lifetime of an open-end account. Additionally, an over-limit account may be re-aged at its outstanding balance (including the over-limit balance, interest, and fees), provided that no new credit is extended to the borrower until the balance falls below the predelinquency credit limit.

Institutions may re-age an account after it enters a workout program, including internal and third-party debt-counseling services, but only after receipt of at least three consecutive minimum monthly payments or the equivalent cumulative amount, as agreed upon under the workout or debt-management program. Re-aging for workout purposes is limited to once in a five-year period and is in addition to the once in twelve-months/twice in five-year limitation described above. To be effective, management information systems should track the principal reductions and charge-off history of loans in workout programs by type of program.

 

The bolded text was emphasis added by me for the purpose of this post. The full page may be found at http://www.fdic.gov/regulations/laws/rules...l#5000uniformpf

 

There is no requirement that a lender allow for the reaging. The argument to be made in favor of the adjustment is that it is win-win for everyone involved: the customer keeps the account (and gets an improved report) and the bank gets a promise that it should be seeing all of its money (to include fees). The obvious negative from the consumer's viewpoint is precisely that the bank is getting all of its money, which includes accrued fees.

 

Getting someone with the lender who understands this process will involve spending some time on the phone. I have found that the best place to start is a long-distance call to the corporate offices instead of calling in through the toll-free numbers where they only know how to read from a script.

 

 

So do this mean that ALL 3 elements be present for it to be reaged?

 

jack1212

[ICANHASMUNY?]

( brushing the dust off a old thread)

 

Never do this with a JDB or a CA, just the OC, and make absolutely sure you are talking with the OC

 

No

 

All three conditions do not have to be present.

 

however, a good explaination of your circumstances leading you to your original default is needed.

 

(& if you had a sparkling credit history before the default, it helps.)

 

due to the economy, lenders may be more willing to work things out .

 

I renogotiated a defaulted 16K CC to 15 % for 5 years back in 2007

 

but I had held the account for 15 years previously, just couldn't make a payment due to temp unemployment

 

and then I couldn't bring the account current due to the default interest rate and late fees...( 32% )

 

so I had a new job, and they renogotiated the account with me.

 

when they do this over the phone,

 

there is a formal procedure they follow,.

 

 

 

they tell you they are going to record the call,

 

they get someone from the legal dept online as a witness,

 

they formally record the fact that this a recorded call, with the names of the witnesses and agent,

 

you have to agree to the recording

 

they ask you specific questions regarding your employment,

 

willingness to repay , Acknowledgement of the debt,

 

Reaging of the debt,

 

and the terms of the deal.

 

they then follow it up with all of the above in a letter.

 

Just make sure that you can really afford to make the payment you are promising, negotiate nicely, but firmly.

[Guest Joseph C]

... Real quick... Although it is beneficial to know how, under certain circumatances, it is possible to "pay off" an account for a % of what is owed, I thought "Re-aging" was a bad thing.

 

However, a CA of mine, General Revenue Corp, DID so that SAME procedure with the call and different Department and Recording it when I was in my Rehabilitation Program for a SL.. and it WORKED And i am now OUT of Default on that one...

 

but i thought re-aging was something that CAs do -improperly- and wreak all sorts of havoc (illegally) do with DOLAs and SOLs.

[ICANHASMUNY?]

re- aging done illegally by the CA's is entirely different than Re- aging under the rule 5000

 

rule 5000 can only be done by the OC.

 

However, you can reset the SOL with a CA or the OC by acknowledgment or payments

All depending on your state laws;

 

some states require acknowledgements to be in Writing,

 

and in some states a payment to an account is acknowledgment enough and will reset the SOL.

 

Reaging by a CA or a JDB is usually done thru misreporting to the CRA's as an extortion tactic

 

to keep the debt reporting past the 7 year period for reporting a debt.

Edited September 12, 2009 by ICANHASMUNY?

[gdtobefree]

Joesph, this is completely different, in this case reaging of a BANK OWNED account is the GOOD reaging what this procedure does it reages the account back to GOOD STANDING, not reaging to where it stays on your credit longer as a negative, but reages it to remove the negativity.

 

This rule ONLY applies to the FDIC in which Banks are regulated, not the FCRA and the FDCPA.

 

It would be nice if we COULD use it against an OC other then a bank though

Edited September 12, 2009 by gdtobefree

[Bobbydebt]

Joesph, this is completely different, in this case reaging of a BANK OWNED account is the GOOD reaging what this procedure does it reages the account back to GOOD STANDING, not reaging to where it stays on your credit longer as a negative, but reages it to remove the negativity.

 

This rule ONLY applies to the FDIC in which Banks are regulated, not the FCRA and the FDCPA.

 

It would be nice if we COULD use it against an OC other then a bank though

 

So...... Can a Home Depot card be subject to Rule5000 since it is backed by HSBC?

[centex]

Joesph, this is completely different, in this case reaging of a BANK OWNED account is the GOOD reaging what this procedure does it reages the account back to GOOD STANDING, not reaging to where it stays on your credit longer as a negative, but reages it to remove the negativity.

 

This rule ONLY applies to the FDIC in which Banks are regulated, not the FCRA and the FDCPA.

 

It would be nice if we COULD use it against an OC other then a bank though

 

So...... Can a Home Depot card be subject to Rule5000 since it is backed by HSBC?

 

Did not know HSBC had HD paper (used to be a Citi card and before that a GEMB card IIRC), but yes, if the OC still owned the paper and it has not yet charged off, then a Rule 5000 could be done if you can get an employee of the bank to grasp the concept (these things tend to work best if you can get someone in the ivory tower...MBNA, for all of their faults, seemed to be the only major player that had staff capable of openly discussing the adjustments, although I doubt they knew it was a Rule 5000 adjustment).

[Bobbydebt]

Joesph, this is completely different, in this case reaging of a BANK OWNED account is the GOOD reaging what this procedure does it reages the account back to GOOD STANDING, not reaging to where it stays on your credit longer as a negative, but reages it to remove the negativity.

 

This rule ONLY applies to the FDIC in which Banks are regulated, not the FCRA and the FDCPA.

 

It would be nice if we COULD use it against an OC other then a bank though

 

So...... Can a Home Depot card be subject to Rule5000 since it is backed by HSBC?

 

Did not know HSBC had HD paper (used to be a Citi card and before that a GEMB card IIRC), but yes, if the OC still owned the paper and it has not yet charged off, then a Rule 5000 could be done if you can get an employee of the bank to grasp the concept (these things tend to work best if you can get someone in the ivory tower...MBNA, for all of their faults, seemed to be the only major player that had staff capable of openly discussing the adjustments, although I doubt they knew it was a Rule 5000 adjustment).

 

Eh.... I could be wrong on the HSBC thing. But, the same idea would apply. Thanks for clearing it up

[LadyRelm2]

No

 

All three conditions do not have to be present.

 

Pulling up this thread for a question.... In an earlier post, Jack had asked if all 3 conditions had to be present for a Rule 5000 re-age:

 

Open-End Accounts

 

Institutions that re-age open-end accounts should establish a reasonable written policy and adhere to it. To be considered for re-aging, an account should exhibit the following:

• The borrower has demonstrated a renewed willingness and ability to repay the loan.

• The account has existed for at least nine months.

• The borrower has made at least three consecutive minimum monthly payments or the equivalent cumulative amount. Funds may not be advanced by the institution for this purpose.

 

Open-end accounts should not be re-aged more than once within any 12-month period and no more than twice within any five-year period. Institutions may adopt a more conservative re-aging standard; for example, some institutions allow only one re-aging in the lifetime of an open-end account. Additionally, an over-limit account may be re-aged at its outstanding balance (including the over-limit balance, interest, and fees), provided that no new credit is extended to the borrower until the balance falls below the predelinquency credit limit.

 

Institutions may re-age an account after it enters a workout program, including internal and third-party debt-counseling services, but only after receipt of at least three consecutive minimum monthly payments or the equivalent cumulative amount, as agreed upon under the workout or debt-management program. Re-aging for workout purposes is limited to once in a five-year period and is in addition to the once in twelve-months/twice in five-year limitation described above. To be effective, management information systems should track the principal reductions and charge-off history of loans in workout programs by type of program.

 

So what makes you think all 3 conditions don't have to be present? Or rather, in particular, the rule states that the borrow must make 3 consecutive payments before the rule can be re-aged. In fact, it calls out this limitation *twice* in the rule. Would it be your interpretation that the "3 consecutive payment" rule must be present before an account could be re-aged?

 

I'm asking this question specifically because of my BOA dispute. When DH entered the RPP program in August 2008, they stated that all his past due balances would be removed. Yet, are reporting him as "past due" for 4 months following his entry into the RPP. Now they are saying that they didn't re-age the account until he made 4 consecutive payments on time.

 

If the "3 consecutive payments" condition is a hard rule of re-aging, then that would mean they lied when they signed him up for the RPP by saying his past due balances would be removed. Or is the "3 consecutive payments" rule an optional condition of a work-out program, but not necessarily mandatory?

Edited February 10, 2010 by LadyRelm2

[centex]

I am guessing that an entity could reage under provisions other than FDIC 5000. However, I would opine that for Rule 5000 to apply, all three conditions must be satisfied...

[LadyRelm2]

I am guessing that an entity could reage under provisions other than FDIC 5000. However, I would opine that for Rule 5000 to apply, all three conditions must be satisfied...

 

 

What other provision would allow for re-aging? Just curious...

 

[centex]

I am guessing that an entity could reage under provisions other than FDIC 5000. However, I would opine that for Rule 5000 to apply, all three conditions must be satisfied...

 

 

What other provision would allow for re-aging? Just curious...

 

 

The 'just cause' provisions of the ivory tower...you know "We did it just 'cause we wanted to work with you." It CAN happen...it just requires more effort to manage than many people are willing to exert...

[reesie0726]

This is an old thread but very helpful. I tried to get a BOA loan that was 120+ days delinquent re-aged the good way. I brought it current as soon as I got my first paycheck from my new job. I spoke with a customer service rep about this re-aging process although I did not know it was the FDIC 5000. He said congrats on the job but since I wasn't behind anymore that I could not qualify. I will try a BOA exec. I also decided to change my banking to a regional bank.

[ICANHASMUNY?]

Right on - you needed to negotiate it while you were past due

 

the best way is to get a rule 5000 reage;

 

if you can't bring it current with a lump sum,

 

and can't afford payments at the default rate of interest

 

you have to negotiate what level of payments you can make over the next 5 years

 

if you are making payments and keeping it current, they have no reason to re age the account for your benefit.

 

 

 

 

 

 

 

 

[reesie0726]

Oh well, you live and learn. It is gonna be a pain to get those lates off.

Edited November 1, 2010 by reesie0726

[reesie0726]

I read the FDIC link that center posted. If an account is charged off or greater than 180 days past due, it has to be chalked as a loss and charged off. At that point, is it too late to do the 5000 reage program. I would love to do it with this charge off I have.

[ICANHASMUNY?]

actually, in the current climate where OC's are trying to get the accounts paid, and not sell them off for pennies,

 

you may be able to negoitate something.