Mortgage Foreclosures Now Considered Collection Activity Under The FDCPA

In the case of Glazer v. Chase Home Finance, LLC et al , Past _due _imgthe Sixth Circuit of the U.S. Court of Appeals
rendered an opinion this week adding mortgage foreclosures to the
list of defined collection activities under the
Fair Debt Collection Practices Act (FDCPA)
.  This decision
by the Sixth Circuit allows consumers to now hold collection
tactics involved in mortgage foreclosures to the same standards
under the FDCPA as other debts. 

Specifically, in Glazer the appellate panel stated that law
firms initiating a foreclosure must comply with the provisions of
the FDCPA.  In Glazer, Plaintiff inherited a property and
subsequently fell behind on numerous mortgage payments.  Chase
Home Finance, LLC (“Chase”), the servicer of the loan but not the
original owner of the debt, hired a law firm to commence a
foreclosure action on its behalf.  Under the FDCPA, in
response to the collection efforts, the consumer requested verification of the debt and proof
and that Chase was the rightful owner of the mortgage.  When
Chase did not comply with the consumer’s request, he filed suit
under the FDCPA seeking damages.

On appeal to the Sixth Circuit, the Court held that while Chase
was not considered a debt collector under the law, the law firm
attempting to collect the debt was, and therefore must comply with
request for verification
before proceeding with the
foreclosure, which is considered a collection activity.  
In its decision the Court held,

 … 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. In this case, the district

 court held that [the law firm engaged in collecting on
Chase’s behalf] was not engaged

 in debt collection when it sought to foreclose on the
property. That decision was erroneous,

 and the judgment must be reversed.

In its opinion, the Sixth Circuit refused to follow the numerous
cases finding attorneys who handle mortgage foreclosure actions not
subject to the rules of the FDCPA and not considered collectors
under the definition of the statute.  The FDCPA defines “debt
collector” as a person who regularly collects or attempts to
collect consumer debts.  In the Sixth Circuit’s interpretation
of the definition of “debt collector”, it found that any action in
which the sole purpose is to collect payment of a debt must be
considered collection activity and therefore attorney’s initiating
foreclosure actions must follow the laws of the

The Sixth Circuit is not alone in its opinion holding attorneys
involved in mortgage foreclosure actions subject to the laws of the
FDCPA.  Other circuits including the 2nd, 3rd, 4th and 11th
also require compliance under the FDCPA. Should you feel your
involvement with a law firm attempting to collect payment on a
mortgage foreclosure has failed to meet the requirements under the
FDCPA contact SmithMarco, P.C. for a free consultation