Foreclosures Have Been Ruled By FDCPA As Debt Collection

Image courtesy of AKZOphoto / www.flickr.com

It is common knowledge that the housing market took a large turn for the worse over the past few years.  More and more foreclosures have put homeowners out of their home and placed banks scrambling to sell houses they thought were already sold. 

Recently, the Sixth Circuit U.S. Court of Appeals passed a judgment that made foreclosures on mortgages an act of ‘debt collection.’ This was done under the Fair Debt Collection Practices Act and it reversed a decision made by the lower courts. 

This decision basically states that third parties that are working through the foreclosure process need to abide by the FDCPA laws and regulations.  The decision was made in response to Glazer V. Chase Home Finance, LLC.  Glazer inherited a home only to discover there was still an active mortgage that Chase held.  Six payments were missed and  a law firm was contacted to start the foreclosure proceedings. 

The mortgage wasn’t owned by Chase, nor did it originate there.  Fannie Mae was the mortgage owner and Chase was assigned to service the originator.  This made the entire process more complicated for Glazer to find details of the proceedings out and made it difficult to settle the problem. 

Glazer sought a lawsuit for FDCPA damages but an Ohio judge sided with Chase and their lawyers instead and dismissed the case entirely.  The panel stated Chase wasn’t a debt collector; however the lawyers working to collect on the lien were considered debt collectors and expected to follow the guidelines of FDCPA.

This means that there are a set of regulations and guidelines mortgage collectors will be expected to follow.  Likewise debtors will also be expected to follow the laws and regulations.  With this kind of formalities imposed on the system there is expected to be smoother transitions and hopefully less homeowners put out of their home.