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Compliance with the Truth in Lending Act and Fair Debt Collection Practices Act

One law that we frequently use to recover money for members of the public is the Fair Debt Collection Practices Act, also known as the FDCPA. The FDCPA applies to debt collectors and forbids them from engaging in certain activities. One section of the FDCPA prohibits mortgage servicers who are foreclosing on a consumer from directly communicating with that consumer if the servicer knows the consumer to be represented by counsel, as part of an attempt to collect a debt. What does that mean? It means the bank should not be sending bills to the person they are suing, those bill should be sent to that persons lawyer. This law is violated very frequently and we have successfully prosecuted many lawsuits against debt collectors who have violated it.

One defense which mortgage servicers raise against FDCPA cases with great regularity, though rarely successfully, is the Truth in Lending Act, also known as TILA. TILA governs certain conduct by mortgage servicers, among other things, the sending of monthly mortgage statements. One portion of TILA requires that mortgage servicers send out monthly statements to consumers. Mortgage servicers have tried to use this portion of TILA to try to defend against FDCPA cases, claiming that they are required to send the monthly statements directly to the borrowers and therefore can send bills directly to our clients. This argument has rarely if ever worked against our office and local judges seem to realize the requirement to send statements under TILA does not require that they are sent to the consumer directly, only that they are sent. Sending them to a consumer’s attorney of course satisfies that requirement. Still, it is good to see that this interpretation of the FDCPA and TILA is spreading to other jurisdictions. Judge Peck recently adopted this interpretation in the case of Carey v. Everbank in Hernando County, Case No. 14-CC-142 where he ruled that:

“The Court finds that Fla. Stat. 559.72(18) is not preempted by 12 CFR 1026.41 and that simultaneous compliance with both 12 CFR 1026.41 and Fla. Stat. 559.72(18) can be achieved by sending the monthly mortgage statements required by 12 CFR 1026.41 to legal counsel for a consumer. The Court rejects Defendant's arguments to the contrary.”

This document has been provided for informational purposes only and is not intended and should not be construed to constitute legal advice. Please consult your attorney in connection with any legal issues related to the matters discussed in this article as the applicability of state, local and federal laws may vary.