The Fair Debt Collection Practices Act (FDCPA) is a federal law that has been created to protect consumers of credit from predatory actions of debt collectors that are attempting to pursue a debt. It provides numerous protections for borrowers and puts restrictions and limitations on what actions collection agencies may engage in.
When a lender or its attorneys violates the Fair Debt Collection Practices Act, homeowners may mention these violations in their foreclosure lawsuit defense. Although the Act may not be applicable in every set of circumstances, a large number of mortgages have been sold to third parties, investors, other mortgage companies, and servicing companies, under the appropriate circumstances, and the law would come into play.
Disclosure notice requirements, dispute processes, and even stopping collection phone calls on a debt are covered by the Act. The Act also allows credit consumers to initiate lawsuits directly against a collection agency in order to obtain monetary damages for violations of the FDCPA, and it can be remarkably easy for collectors to violate the Act.
When a debt goes into default, the current holder of the loan, however, will not count as a collection agency when it is collecting on its own debt. It must use its own corporate name and must not be primarily in the business of collecting debts. In the case of the mortgage lending business over the past decade, very many loans are sold once they go into default.
The FDCPA applies when a mortgage loan is sold or transferred and another lender begins debt collection attempts in the case of delinquency. It is important for borrowers to remember, though, that if the lender before the default keeps the loan, the FDCPA does not apply. But if the bank transfers the loan to another company, the law will apply to the new owner.
Once the bank or servicing company changes after default, though, the new company which purchases the debt is considered a collection agency and falls under the Fair Debt Collection Practices Act. Any law office that the lender hires to pursue the debt or bring the foreclosure lawsuit in court must also follow the FDCPA and may face liability for any failures.
Homeowners have a number of rights under this law. If they inform the collection agency (or lender or law firm) in writing of their desire not to be called regarding the debt, any further communication is a violation of the Act. As well, attorney fees that are charged to an account that are not specifically authorized in the loan documents is a violation of the Act.
The FDCPA also outlines violations due to harassment, abuse of borrowers, misleading representations, and debt validation, among other provisions. Other rights protected under the Act can be researched by reading the law or consulting with an attorney familiar with the law in detail. There are also many online resources that go into further detail about this particular federal law.
Each violation of the Act may create liability on the part of the collection agency for any actual damage done to the borrowers, $1,000 per offense, and costs of any action to defend the foreclosure lawsuit, initiate a foreclosure lawsuit, and attorneys fees. In effect, there are countless ways to violate the law, and many collection agencies do not know enough about it to follow every provision.
When fighting back against a foreclosure action, homeowners may wish to use violations of the FDCPA (and they may be amazingly easy to uncover) to offset the judgment the bank is suing for. Violations may be included as counterclaims in answering a complaint. The law firm representing the lender also counts as a collection agency and may be brought into the lawsuit for its own violations of the Act.
Author Resource:-
Nick publishes articles for the ForeclosureFish blog. These articles provide advice to homeowners dealing with the loss of a home, describing various methods they can use to stop foreclosure. The site examines numerous options, including mortgage modification, foreclosure loans, deed in lieu, filing bankruptcy, and more. Visit the site to find out more about how the foreclosure process works: http://www.foreclosurefish.com/
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