Steve Harms

Wednesday, March 6, 2013

FDCPA update: Mortgage foreclosure work is debt collection

The United States Court of Appeals for the Sixth Circuit ruled in Glazer v Chase Home Finance (decided January 2013) that mortgage foreclosure work is debt collection under the Fair Debt Collection Practices Act.  Lawyers who meet the definition of being "debt collectors" must therefore comply with the FDCPA when engaged in mortgage foreclosure as per the facts in the Glazer case. 

This may come as a shock to some as this type of work is frequently not considered to be debt collection.  The logic the Sixth Circuit used was that the foreclosure is basically a means to an end, and the end is to collect the amount owed on the note that accompanied the mortgage.  Assuming the loan from the note secured by the property foreclosed upon was used for personal, family or household use, the logic follows that the proceeds of the foreclosure action are being used to pay a consumer debt which is the heart and sole of the FDCPA...this case, of course from the context, involved a consumer debt or, as the court called it: a home loan to a consumer.


Warner Carter said...

If you are dealing with a collector, or have a debt that may soon go to collection, it's important to know what debt collection agencies can and cannot do. Not only can you use your knowledge of these laws to protect yourself from harassment, but if a collector violates one of these laws, you may be able to: use the violation to negotiate a better settlement, file a complaint with the Federal Trade Commission (FTC), or sue the collector. Tulsa mortgage

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