At Loan Lawyers, we have used the Fair Debt Collection Practices Act (FDCPA) to great effect to protect members of the public from harassment by debt collectors, mortgage companies and mortgage services, As the FDCPA states, its purpose is to “eliminate abusive debt collection practices by debt collectors, to ensure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.” Our office has filed many hundreds of FDCPA claims and has been successful in eliminating very large debts and recovering large sums of money for our clients based on the misconduct of debt collectors. The FDCPA cannot be used in every case as it only applies to debt collectors, people who are collecting debts on behalf of others, and what the FDCPA describes as “debt collection” activity. On its face, “debt collection” activity should be a simple matter. In Florida, debt collection activity is fairly simple and is interpreted to mean exactly what you think it means but it can be more complicated in the context of foreclosures in other states.
Judicial Foreclosure in Florida
Florida is one out of twenty-three “judicial foreclosure” states. In judicial foreclosure states, a mortgage creditor needs to sue borrowers first and win court cases in order to throw them out of their homes.
You might have read that sentence and said to yourself “Wait, I can be thrown out of my house without going to court first? The bank can just sell it?” In a majority of states, the answer is yes but thankfully that is not the case in Florida. The process varies state by state, but in non-judicial foreclosure states, the creditor gives certain notices to the homeowner, sells the house, and evict the homeowner (with the aid of a local sheriff if they don’t voluntarily leave). In theory, there are mechanisms to challenge it but they are unwieldy and it is common for members of the public to be steamrolled.
In Florida, we see mortgage creditors screw up various procedures every single day and fight with them about it in Courts. Mortgage creditors are no less prone to making the same mistakes in non-judicial foreclosure states, they simply get away with it easier because they don’t have to prove anything to a court.
Our office has seen many cases where mortgage creditors do not properly apply payments, lose checks, or otherwise screw up paperwork and try to throw people out of their homes who are not actually delinquent on their mortgages. We have filed numerous wrongful eviction lawsuits against companies for doing such things and it is genuinely terrifying to consider how often it happens in non-judicial foreclosure states without any courts holding mortgage creditors to account. I cannot tell you how many cases we’ve seen where mortgage creditors claim they sent legally required notices to mortgage borrowers and never did it at all. In non-judicial foreclosure states, there are people being evicted who had no idea their house was being sold or was already sold. Again, thankfully Florida is a judicial foreclosure state.
So, what does this have to do with the FDCPA?
Judicial Foreclosure and the FDCPA
In non-judicial foreclosure states, where abuse against members of the public is widespread and people are thrown out of their homes without notice or a chance to fight back, mortgage creditors are working to strip away one of the very few protections homeowners have in such places, the FDCPA.
If a mortgage creditor:
- Screws up the process of trying to take someone’s home and
- There is evidence of it and
- The homeowner is able to find a lawyer who will actually help them then, theoretically, they could sue the mortgage creditor under the FDCPA, save their home and get money for the headache.
I wish anyone in a non-judicial foreclosure state who is having their home stolen luck in finding a lawyer who will actually help them fight an FDCPA case. It can be difficult to find an attorney even in judicial foreclosure states like Florida. While our firm has had a great deal of success fighting hundreds of FDCPA cases, they can take a considerable amount of effort to win so many lawyers are simply not interested in them. Now mortgage creditors are hard at work trying to strip away this final protection in non-judicial foreclosure states, the FDCPA.
The Mortgage Creditor Argument
The argument that mortgage creditors have won in some non-judicial foreclosure states goes a little something like this: “We are not trying to collect a debt when we take someone’s home, sell it at auction and then demand they pay us the money they still owe us, we are only trying to enforce our security interest in the property. We promise that it is not actually debt collection, despite the fact we are literally demanding payment on a debt, we are just enforcing a security interest, so the FDCPA does not apply since it only applies to debt collection.”
That truly is the argument and it has been tried in Florida, thankfully Florida courts have firmly rejected it.
Still, the argument has worked in many non-judicial foreclosure states, creating a “circuit split” among non-judicial foreclosure states. A circuit split occurs when different high-level courts in different parts of the country disagree with each other. Some non-judicial foreclosure states think that the FDCPA applies to non-judicial foreclosure while other non-judicial foreclosure states think that the FDCPA does not apply. The Supreme Court agreed to hear a case to settle the dispute and this is not good news for homeowners anywhere in the United States considering the current composition of the Court. It is unclear how the Supreme Court will rule on the issue and since Florida is a judicial foreclosure state, the case does not directly affect us. However, given its current makeup, any Supreme Court case on the FDCPA is at risk that the Supreme Court will define some portion of the language in the FDCPA which will hurt consumers.
Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems. We have saved over 1,800 homes from foreclosure, eliminated $100,000,000 in mortgage principal and consumer debt, and have collected millions of dollars on behalf of our clients due to bank, loan servicer, debt collector violations, negligence, and fraud.
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.