U.S. Supreme Court Holds Foreclosure Firms Conducting Nonjudicial Foreclosures Are Not Debt Collectors Under the FDCPA
In Obduskey v. McCarthy, the Supreme Court of the United States issued an opinion holding businesses conducting nonjudicial foreclosures are not “debt collectors” under the Fair Debt Collection Practices Act (“FDCPA”). The Supreme Court limited its decision to nonjudicial foreclosures. The Justices ruled 9-0 in the case, with Justice Breyer writing the opinion and Justice Sotomayor concurring.
SUMMARY OF FACTS
In 2007, petitioner Dennis Obduskey (“Obduskey”) purchased a home in Colorado with a $329,940 loan secured by the property. Obduskey defaulted on the loan and in 2014, Wells Fargo Bank, N.A. (“Wells Fargo”), hired a law firm, McCarthy & Holthus, LLP (“McCarthy”), to proceed with a nonjudicial foreclosure. McCarthy mailed Obduskey a letter stating it had been “instructed to commence foreclosure” against the property, disclosed the amount outstanding on the loan, and identified the creditor. The letter was sent to Obduskey to provide notice in compliance with both Colorado state law and the FDCPA. Obduskey responded with a letter invoking Section 1692g(b) of the FDCPA, stating that since Obduskey, as a consumer, disputes the amount of a debt, the “debt collector,” this case, McCarthy, must cease collection until it verifies the debt and mails a copy to the debtor.
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“U.S. Supreme Court Holds Foreclosure Firms Conducting Nonjudicial Foreclosures Are Not Debt Collectors Under the FDCPA,” by Wayne Streibich, Diana M. Eng, Cheryl S. Chang, Jonathan M. Robbin, and Namrata Loomba was published in the June 2019 edition of The Banking Law Journal (Vol. 136, No. 6), an A.S. Pratt Publication. Reprinted with permission.
This article was first published as a Blank Rome Consumer Finance Litigation client advisory in March 2019.