At a City Hall briefing, aldermen pressured the sewer authority to be more proactive in helping people deal with debt so they don’t end up in foreclosure court — and suggested the authority’s debt-collectors may have violated a federal law.
Aldermen called the Water Pollution Control Authority (WPCA) to City Hall Tuesday night amid concern over its aggressive pursuit of foreclosure actions to deal with unpaid bills. The agency has now filed such suits against more than 135 city homeowners since the former city agency became independent in the middle of 2005. Click here to read a story of some of the people swept up in piles of new debt due to WPCA’s tactics.
Gabriel Varca, director of finance and administration for the WPCA, framed the foreclosure practice as the only way to reach customers who just refuse to pay their sewer bills. He ran through a defense of the agency’s collection policy.
Bills not paid within 30 days incur an interest rate of 1.5 percent per month. Reminders are sent after 30 and 60 days. When the debt hits $90 or more, or is more than 90 days old, the account is referred to a collection agency. A total 3,243 files totaling $1.5 million are currently at that stage, Varca said.
When the debt hits $1,000, the WPCA refers the account to a collection attorney. To get that deep in debt, Varca argued, a client would have gone about three and a half years without paying a bill. He based that calculation on a $270 average annual residential sewer bill.
A total 417 files are currently in the hands of those collection attorneys, who are supposed to offer to set up payment plans before filing for foreclosure. Varca called the move successful by one measure: About a third of the debt owed was paid off at that stage. A total 58 payment plans have been put in place. But 90 to 100 of these customers were taken to foreclosure court.
Aldermen questioned that last move — why foreclosure court, where fees can pile up and double or triple a person’s debt? Critics such as foreclosure judge Anthony DeMayo (quoted in this story) have questioned the practice, saying the added fees leave both parties in worse shape and threaten people’s homes over a small time fee.
Why Not Small Claims?
Why can’t the WPCA just take customers to small claims court? asked Alderman Jorge Perez.
Renee Phillips, the WPCA’s customer service supervisor, said the agency had tried that method to no avail. “We did Small Claims for over 20 years with very, very limited results,” she said. Small Claims court can issue a judgment lien, which can call for the garnishment of wages.
But Phillips (pictured at left) said those liens didn’t bring in much cash: “A lot of the time, we don’t know where they work.” Or the WPCA would stand in line behind hospitals or other agencies who were also garnishing wages. The result might be five or ten bucks tossed to the WPCA per month. Those payments hardly put a dent in a debt facing an 18 percent annual interest, she said.
Another alternative to foreclosure would be to put a lien on the property. Varca said either way, the WPCA ends up with a lien that would be subordinate to a city lien, so the city will get first dibs on any equity if the house gets foreclosed.
Phillips said the agency had instead tried to make it easier for customers to pay, offering 12 locations around town to pay sewer bills. It even started offering payment by credit card — compared to an 18 percent interest rate on the sewer bill, she said, “if they put it on a credit card, it’s a lower rate.”
Fair Debt Collection?
Alderman sought more viable ways out of the water-bill swamp than racking up credit card debt.
Alderwoman Ina Silverman (pictured at left), who along with Alderman Carl Goldfield originally called for a public hearing on the matter, said her concern is with the behavior of collection agencies.
Agencies are bound by the Fair Debt Collection Practices Act, which is supposed to protect consumers from abusive practices in the collection of consumer debts. Under the law, customers are supposed to stay informed through various notifications. Silverman said she knew of one particular case where the act had been violated.
Larry Sgrignari, a collection attorney for the WPCA (pictured at the top of this story at right, with WPCA chief Dominick DiGangi at center), replied that the Act does not apply to the WPCA, only to third-party collection agencies.
Is there any supervision? Silverman pressed.
Yes, the WPCA team said, collection attorneys are supposed to report to the WPCA. Varca pledged to investigate any complaints.
East Rock Alderman Roland Lemar asked if the WPCA couldn’t be a bit more proactive. Collection agencies are notorious for not protecting consumer’s rights, he said. They take a hefty 15 percent commission off bills, and are supposed to uphold their duties.
Lemar encouraged the WPCA not to “short shrift” the Fair Debt Collection Practices Act. “It’s incumbent on you” to make sure the collection agencies you hire uphold the law, he told DiGangi, the WPCA chief, encouraging him to “hold their feet to the fire.”
Lemar suggested the WPCA take a more proactive tact before the bills pile up. He mentioned the new state hotline [(877) 472‑8313] for people hit by the foreclosure crisis. The WPCA should partner with local agencies like the Neighborhood Housing Services and help people seek credit counseling, he suggested.
“It’s incumbent on everyone to take this a little more seriously,” said Lemar. He mentioned that a lot of people don’t know that the sewer authority has the right to foreclose on their homes. Could that fact be announced more prominently in bills, along with a referral for credit counseling?
Not right now, replied DiGangi. He said the WPCA couldn’t work such language into its bills because they’re issued by an antiquated computer system at the Regional Water Authority. The agency won’t be able to customize its own bills for another year, he said.
“There’s no time like a crisis to review standard operating procedure,” remarked Lemar after the one-hour hearing came to a close.
Goldfield closed the meeting by saying he understood the need to collect on debt, but he had outstanding questions about the foreclosure tactic. “We are a caring city, and I don’t want to see people hit with these kind of fees.” Mentioning two other episodes in the DeStefano Era involving debt collection, he said he wanted to make sure citizens weren’t getting hit with “brutal” fees.
Tuesday’s briefing did not include comment from the public. Goldfield and Silverman have called for a public hearing that would include commentary from others outside the WPCA.
Read previous Independent coverage of New Haven’s foreclosure crisis:
‚Ä¢ WPCA’s Targets Struggle To Dig Out
• Sue The Subprimers?
• WPCA Hearing Delayed
‚Ä¢ Megna’s “Blood Boils” at WPCA Tactics
• Goldfield Wants WPCA Answers
• 2 Days, 8 Foreclosure Suits
• WPCA Goes On Foreclosure Binge
• A Guru Weighs In
• WPCA Targets Church
• Subprime Mess Targeted
‚Ä¢ Renters Caught In Foreclosure King’s Fall
‚Ä¢ She’s One Of 1,150 In The Foreclosure Mill
‚Ä¢ Foreclosures Threaten Perrotti’s Empire
‚Ä¢“I’m Not Going To Lay Down And Let Them Take My House”
The following links are to various materials and brochures designed to help homeowners avoid foreclosure.
How to prepare a complaint to the Department of Banking; Department of Banking Online Assistance Form; Connecticut Department of Banking, Avoiding Foreclosure; FDIC Consumer News; Statewide Legal Services of Connecticut, Inc; Connecticut Bar Association Lawyer Referral Service.
For lawyer referral services in New Haven, call 562‑5750 or visit this website. For the Department of Social Services (DSS) Eviction Foreclosure Prevention Program (EFPP), call 211 to see which community-based organization in the state serves your town.
Click here for information on foreclosure prevention efforts from Empower New Haven.
As someone else mentioned in an article a few weeks ago, he's a bit too liberal for some people's tastes, but I honestly think that Roland Lemar could become the best damn alderman we've had in this City in my 40 years in New Haven. He "gets it" no matter what the issue is, pushes meaningful public policy, holds the City accountable for its actions (or lack thereof) and generally emerges as the reasoned voice on most issues. Now if he would just do something about my goddamn taxes.