• DYE CULIK PC | Consumer Protection Division

Debt-collection Law Applies to Foreclosures, Says Court of Appeals


The Fair Debt Collection Practices Act (FDCPA) is a federal law with the purpose of eliminating abusive debt collection practices by debt collectors. Foreclosure law firms are typically subject to the FDCPA.

In this case, the foreclosure firm sent a foreclosure complaint to a homeowner that demanded fees, even though the fees were not yet owed. The homeowner filed suit against the firm for violating the FDCPA’s prohibition on making misrepresentations about the amounts that are actually due.  The federal trial court ruled that the firm did not violate the FDCPA to demand the fees because they were expected to be incurred.

Overruling the trial court, the Court of Appeals held that the homeowner’s FDCPA claim should not have been dismissed. If a debt collector misstates the amounts due — whether in a collection letter or in court filings such as a complaint — then the FDCPA has been violated.

This decision comports with other courts around the country that have held that debt collectors who make false or misleading statements to consumers should be held liable for violating the FDCPA.

Link to decision: Kaymark v. Bank of America, NA

#fdcpa #foreclosure #mortgage