On March 20, 2019, the US Supreme Court resolved a dispute among US Circuit Courts of Appeal concerning the application of the Federal Fair Debt Collection Practices Act (“FDCPA”) to communications and actions pertaining to non-judicial foreclosures.

In a unanimous decision, the Court ruled that a business engaged in no more than non-judicial foreclosure proceedings is NOT subject to all of the requirements and prohibitions applicable to “debt collectors” under the FDCPA.

Specifically, the Court held that the defendant, McCarthy & Holthus, (an agent for a foreclosing bank) was only subject to the FDCPA’s prohibitions under 15 USC 1692f(6) which regulates activity relating to enforcement of security interests.

Section 1692f(6) sets forth a prohibition against taking or threatening to take any non-judicial action to effect dispossession or disablement of property if:

(A) There is no present right to possession of the property claimed as collateral through an enforceable security interest;

(B) There is no present intention to take possession of the property; or

(C) The property is exempt by law from such dispossession or disablement.

The Court further ruled that the other FDCPA prohibitions would not apply to the defendant unless it also engaged in other qualifying “debt collector” activity. The Plaintiff had been attempting to expand the application of all of the FDCPA prohibitions to non-judicial foreclosure activity.

The case is Obduskey v. McCarthy & Holthus and a copy of the US Supreme Court decision can be accessed here.

Please contact us if you would like to discuss how this new legal decision may affect your business.