As many of you know, most so-called “lenders” are not lenders at all. They sold their interest in the note and are acting as services to collect the money for the REMIC that holds the note.
When you challenge the debt under the Fair Debt Collections Practices Act(FDCPA), often times, these lenders come back saying “we are not governed under the Fair Debt Collections Act and it does not apply to us.”
I call bullshit on this.
1) I have personally received a letter from Bank of America admitting that they are governed under the FDCPA. You will note that at the same time their attorneys filed a Motion to Dismiss to have my case dismissed citing that the FDCPA does not apply to them.
2) Various courts around the country have conclusively ruled on this issue. For instance see in RE: Karl John REINKE v. Northwest Trustee Services, Inc., a Washington Corp.; Aurora Loan Services LLC, a Delaware Corp.; BAC Home Loans Servicing Inc., fka Country Wide Home Loans Servicing LP, a Texas Corp.; Home Capital Funding, a California Corp.; First American Title Insurance Co., a Washington Corp.; Lawyers Title Insurance Co., a Nebraska Corp.; Winstar Mortgage Partners, Inc., a Minnesota Corp.; Mortgage Electronic Registration Systems, Inc., a Delaware Corp., Defendants.
Bankruptcy No. 09–19609.Adversary No. 09–01541.Oct. 26, 2011
Here, the court ruled that the FDCPA does apply in the court opinion.
3) A Servicer is not the original creditor. It collects the debt on behalf of a third party. This makes them a Third Party Debt Collector.
Under the definition of the FDCPA 15 USC 1692a § 803, It defines a Debt Collector as follows:
The term “debt collector” means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. Not- withstanding the exclusion provided by clause (F) of the last sentence of this paragraph, the term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts. For the purpose of section 808(6), such term also includes any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests. The term does not include—
(A) any officer or employee of a creditor while, in the name of the creditor, collecting debts for such creditor;
(B) any person while acting as a debt collector for another person, both of whom are related by com- mon ownership or affiliated by corporate control, if the person acting as a debt collector does so only
or persons to whom it is so related or affiliated and if the principal business of such person is not the collection of debts;
(C) any officer or employee of the United States or any State to the extent that collecting or attempting to collect any debt is in the performance of his official duties;
(D) any person while serving or attempting to serve legal process on any other person in connection with the judicial enforcement of any debt;
(E) any nonprofit organization which, at the request of consumers, performs bona fide consumer credit counseling and assists consumers in the liquida- tion of their debts by receiving payments from such consumers and distributing such amounts to credi- tors; and
(F) any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity
(i) is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement;
(ii) concerns a debt which was originated by such person;
(iii) concerns a debt which was not in default at the time it was obtained by such person; or
(iv) concerns a debt obtained by such person as a secured party in a commercial credit transac- tion involving the creditor.
However, one very key issue you need to be aware of is this. The FDCPA only applies to consumer debts. This means if you own an investment property, then this is not covered. Sorry. You can not have it both ways.
Why is this Important?
1) If a servicer is covered under the Fair Debt Collections Practices Act, then you can dispute the debt under 15 USC 1692g § 809. This means once a consumer disputes the debt, all collection activity must cease…including a foreclosure action.
2) Each violation of the act carries a penalty of up to $1000.
3) This gives you a valid cause of action to file your lawsuit against your “lender”. Often times, when a pro se litigant files an Action, the bank responds with a “Motion to Dismiss for Failure to State a Claim”, which basically says “you don’t have any reason to sue us. This is frivolous.”
If you can show the court that “here’s the law, here’s how and when they broke the law, and here’s how I am damaged” then you have a valid cause of action.
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