Does Sending an FDCPA Validation Request Stop Foreclosure? Yes, Says One Court

FDCPA Foreclosure InvalidMany debt collectors are engaged in foreclosure. And under the Fair Debt Collection Practices Act, debt collectors are required to stop collecting when a consumer sends a request for verification or validation of the debt. So, if a consumer’s home is being foreclosed on by a debt collector, he or she can send a validation request which should stop the foreclosure. At least, so says one federal appellate court.

The issue comes down to the language of the FDCPA, which says as follows:

(b) Disputed debts. If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector. Collection activities and communications that do not otherwise violate this subchapter may continue during the 30-day period referred to in subsection (a) unless the consumer has notified the debt collector in writing that the debt, or any portion of the debt, is disputed or that the consumer requests the name and address of the original creditor. Any collection activities and communication during the 30-day period may not overshadow or be inconsistent with the disclosure of the consumer’s right to dispute the debt or request the name and address of the original creditor.

This lays out the process for what happens when a debt collector starts collecting. The collector has to send a notice with some basic information about the debt. The consumer can respond by sending a dispute within 30 days of the initial notice. The debt collector must stop collecting until it provide validation or verification of the debt, which usually consists of documentation showing that the debt is owed, or other documentation requested by the consumer.

Though this issue usually arises during collections credit cards and medical debt, there is no reason it should not apply to foreclosures, too. After all, the debt collector is foreclosing in order to satisfy the debt that is allegedly owed. A homeowner being foreclosed on by a debt collection law firm should be able to send a validation request and, at least temporarily, stop the foreclosure in its tracks. This could allow time to apply for a loan modification or to seek other alternatives to foreclosure.

There is, however, a catch for Massachusetts homeowners. It is not clear in the First Circuit (the federal appellate court for Massachusetts) that foreclosure actually does qualify as debt collection under the FDCPA. The 9th and 10th Circuit Courts of Appeal hold that foreclosure is not debt collection, while the 4th, 5th, and 6th Circuits hold that it is debt collection. In the First Circuit, there is no appellate-level decision. The issue thus remains open to be contested in Massachusetts, at least until the Supreme Court weighs in.

Nevertheless, it gives an additional tool to Massachusetts homeowners being foreclosed upon so that they can assert their rights and hold off the foreclosing bank or servicer.

The decision is here: Scott v. Trott Law PC

Culik Law is a Boston, Massachusetts consumer protection law firm. Our attorneys handle issues related to violations of the Fair Debt Collection Practices Act, as well as Massachusetts foreclosure laws. If you are dealing with a debt collector, bank, or servicer, contact us to see if we can help.

Josef Culik

Josef Culik

Attorney Joe Culik has built his reputation on helping people and has dedicated his practice in Boston, Massachusetts to consumer protection, employee rights, and small business and franchise law.