Sixth Circuit Holds that Mortgage Foreclosure and Foreclosure Lawyers are Subject to the FDCPA
This posting was written by Victoria Holstein-Childress.
Recently, the U.S. Court of Appeals for the Sixth Circuit held that mortgage foreclosure actions are “debt collection” under the Fair Debt Collection Practices Act (FDCPA). Glazer v. Chase Home Finance LLC, No. 10-3416, 2013 WL 141699 (6th Cir. Jan. 14, 2013). In this decision, the Sixth Circuit also held that lawyers who meet the general definition of debt collector under the FDCPA must comply with its provisions when engaged in mortgage foreclosure activities, and a lawyer whose principal business purpose is mortgage foreclosure or who “regularly” performs this function meets this definition.
The Sixth Circuit’s ruling is significant because, among other things, the prospect of FDCPA liability may discourage law firms from engaging in mortgage foreclosure activity, requiring banks and other mortgage servicers to move some of these collection activities in-house. Should banks opt to move some of these functions in-house, they should be aware that they may become subject to FDCPA liability. To read the full alert, click here.
Victoria Holstein-Childress is a partner in the Financial Industry Group at Reed Smith LLP, resident in the firm’s Washington, D.C. office. Victoria specializes in financial services litigation and enforcement matters and is Chair of the ABA’s Consumer Financial Services Subcommittee of the Consumer Litigation Committee.