The Fair Debt Collection Practices Act (FDCPA) is a federal law that is designed to protect consumers of credit from abusive actions of collection agencies that are attempting to pursue a debt. It provides numerous protections for homeowners and puts restrictions and limitations on what actions collection agencies may take. When a lender or law firm violates the Fair Debt Collection Practices Act, foreclosure victims may bring up these abuses in their foreclosure lawsuit defense. Although the Act may not be applicable in every situation, many mortgages have been transferred to third parties, investors, other banks, and servicing companies, under the appropriate circumstances, and the law would come into play. Disclosure notice guidelines, dispute processes, and even stopping collection calls on a debt are covered by the Act. The Act also permits credit consumers to initiate lawsuits directly against a debt collector in order to obtain monetary damages for abuses of the FDCPA, and it can be remarkably easy for collectors to violate the Act. When a debt goes delinquent, the current owner of the loan, however, will not be considered a collection agency when it is pursuing collection on its own debt. It must use its own official business name and must not be primarily in the business of pursuing 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 company begins debt collection attempts in the case of foreclosure. It is important for homeowners to remember, however, that if the lender before the default holds onto 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 lender or servicing company changes after default, though, the new company which purchases the debt counts as a collection agency and falls under the Fair Debt Collection Practices Act. Any attorneys office that the lender hires to pursue the debt or file the foreclosure lawsuit in the county court system must also follow the FDCPA and may face liability for violations. Homeowners have a number of rights under this law. If they inform the debt collector (or lender or law firm) in writing of their desire not to be contacted regarding the debt, any further attempts to call are a violation of the Act. As well, lawyer fees that are charged to a loan that are not specifically authorized in the loan documents is a violation of the Act. The FDCPA also outlines abuses 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 speaking with an attorney familiar with the law in detail. There are also many websites that go into further detail about this particular federal law. Each violation of the Act may cause liability on the part of the debt collector for any actual damage suffered by 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 care enough about it to follow it exactly. When fighting back against a foreclosure action, homeowners may want to research violations of the FDCPA (and they may be surprisingly easy to uncover) to offset the judgment the bank is seeking. Violations may be listed as counterclaims in answering a complaint. The law firm representing the mortgage company also counts as a collection agency and may be brought into the lawsuit for its own violations of the Act.
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