There has been a lot of controversy in the past regarding the issue of whether or not mortgage servicing, or a foreclosure action is an attempt to collect a debt, are the attorneys claiming to represent the foreclosing party debt collectors and are they subject to 15 USC Chapter 41, also known as the Fair Debt Collection Practices Act or “FDCPA”.
In short, yes they are. The United States Court of Appeals ruled as such in the case of Glazer v. Chase Home Finance LLC, 704 F.3d 453 (6th Cir. 2013) in where the court opined, “For these reasons, we hold that mortgage foreclosure is debt collection under the Act. Lawyers who meet the general definition of a “debt collector” must comply with the FDCPA when engaged in mortgage foreclosure. And a lawyer can satisfy that definition if his principal business purpose is mortgage foreclosure or if he “regularly” performs this function.”
A “debt collector” is defined by 15 USC 1692(a)(6) as (paraphrased), a person whose “principal business” is debt collection, or a person “who regularly collects or attempts to collect” “consumer” debts. In addition, the court in Glazer supra further opined that the definition of a debt collector should include the collection or enforcement of a security interest without regard to the state’s judicial or non-judicial foreclosure status (Id. 464) all of which are key elements to foreclosure. The court further opined, “In fact, every mortgage foreclosure, judicial or otherwise, is undertaken for the very purpose of obtaining payment on the underlying debt” (Id. 461). There is more to the statutory definition as prescribed in subsection (a)(6) and there are exceptions such as an original creditor, but for sake of brevity in this article I will forego the rest. Note: I will always recommend someone reads the whole of the law for themselves in order to come to a fully informed understanding. This is called “your due diligence”.
15 USC 1692(c),(d),(e) place strict prohibitions upon a debt collector, some of which are that a debt collector may not contact a consumer by telephone accept between the hours of 8 o’clock AM and 9 o’clock PM local time; they may not contact a consumer at their place of work if they know the consumer’s employer prohibits such communications; the debt collector may not use any form of false or misleading representations, threats, coercion, oppression, intimidation, harassment, abuse, or foul language of any kind; nor may a debt collector communicate directly with a consumer if the consumer is represented by legal counsel.
15 USC 1692(e) also requires a debt collector to provide full disclosure to a consumer by identifying himself as a debt collector and, “that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose”. Failure to disclose is a violation of this chapter.
If you have received a communication from a third party debt collector, usually a law firm, you may have noticed this disclosure in the communication. They will usually claim that they are not subject to the FDCPA because they are a law firm representing a client. This claim would be repugnant to the court’s opinion in Glazer.
Keep in mind that according to Glazer a mortgage servicer would also fit the definition of a debt collector as they are 1, not entitled to “receive” payment, but only to “collect” payment, 2, that the mortgage servicer is not the original creditor, and 3, the mortgage servicer is collecting on a “security interest” therefore the servicer is a third party debt collector. A request, or demand to validate an alleged debt as provided in 1692(g) subsection (b) allow an alleged debtor to stop making payments unless or until said alleged debt is validated in a timely manner. “If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) of this section that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.” If the debt collector has a legal obligation to “cease collection of the debt, or any disputed portion thereof” then the alleged debtor is under no legal obligation to pay until or unless the request or demand to validate is satisfied.
It would stand to good reason and logic that the age-old question, “does the FDCPA apply to mortgage foreclosures” has been answered thanks to the Honorable Justices Griffin, Kethledge, and Thapar of the 6th Circuit Court of Appeals in Glazer v. Chase Home Finance LLC.