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The FDCPA and is Application to Homeowners

On Behalf of | Sep 10, 2014 | Consumer Protection

Some industries are more prone to debt collection abuse than
others.  Student loans,
medical billing and the mortgage lending industry
are areas
that seem to be more aggressive at recovering debt than
others.  Debt collectors collecting on these types of debts
have been sued under the Fair Debt Collection Practices Act
(“FDCPA”) forviolations of the statute.  If you are a home
owner and have fallen behind on payments, you are more than likely
aware of the lengths a collector will go to collect a mortgage loan
debt even at the risk of violating the law.

Under the FDCPA, a collector is prohibited from collecting on a
delinquent mortgage loan by using abusive and harassing
tactics to collect a debt, using false statements, collecting on
time-barred debts, reporting false information to the credit
reporting agencies, collecting on a home foreclosure (in some
states) and communicating with third parties for information other
than the location of the debtor.  Furthermore, several states
have enacted laws to protect homeowner debtors from unacceptable
collection tactics after foreclosure.  These state laws
protect the homeowner from a collector seeking to collect the
deficiency, or the balance remaining on the mortgage after

Courts are split on whether the FDCPA applies to
foreclosures.  From a plain reading of
the statute,
it is not clear whether or not the FDCPA is
applicable to foreclosure actions.  Several courts have held
that an attorney or other entity that pursues a foreclosure action
against a homeowner on behalf of a mortgage bank and who demands
payment or attempts to collect the debt is considered a debt
collector under the statute and must comply with the law.
However, other courts say the statute does not apply and
foreclosure activity is not covered by the

If you reside in a jurisdiction where the FDCPA applies to
foreclosure actions, the collector must comply with all of
requirements imposed by the statute.  First, an attorney must
send you notice of the debt in writing within 5 days of the initial
communication.  The notice must include the amount of the
debt; the name of the mortgage bank to whom the debt is owed; and a
notice of your right to dispute the debt within 30 days of receipt
of the letter.  If you dispute the debt, the collector must
provide validation of the debt and cease all collection activity
until you receive a response.

If you are a homeowner and are being contacted by a collector,
your rights may have been violated under the FDCPA.  If
you would like to speak with one of our licensed attorneys, contact SmithMarco P.C. for a completely
case review.