Not a Debt Collector
March 22, 2019
Clair Law is not a "Debt Collector" when representing financial institutions in foreclosure actions.
The United States Supreme Court on March 20, 2019 ruled unanimously in the case of Obduskey v. McCarthy & Holthus LLP that a business engaged only in nonjudicial foreclosure proceedings is not a "debt collector" under the Fair Debt Collection Practices Act.
The case arose when a Colorado homeowner in 2009 defaulted on his Wells Fargo mortgage and the bank hired a law firm to carry out a nonjudicial foreclosure on his property. During the foreclosure process, the homeowner alleged the bank violated the FDCPA's debt validations procedures. While the law firm is subject to the FDCPA's provisions specifically related to enforcing a security interest, the United States Supreme Court in its decision relied on the FDCPA text and legislative history to concluded that it is not a "debt collector" and therefore not subject to the remaining FDCPA provisions.
Clair Law, and foreclosure firms that represent bank clients in foreclosure proceedings are not considered debt collectors under this recent case law. Despite the ruling, Clair Law will continue to comply with the FDCPA regulations whenever it represents financial institutions.