Today the 11th Circuit ruled that Foreclosure attorneys who are attempting to collect the underlying mortgage debt are subject to the FDCPA. This ruling is in line with many other circuits and differentiates the actions that foreclosure attorneys take in moving forward with a foreclosure action. Previously, in another case, the Eleventh Circuit held that the act of foreclosing a security interest is not debt collection, and thus does not fall under the FDCPA. Attorneys for the banks have constantly used that argument in fighting off FDCPA charges. But today's ruling puts a spotlight on the true activity of many attorneys and services who begin the foreclosure process: they are attempting to collect the underlying mortgage debt - plain and simple.
From the ruling:
"The rule the Ellis law firm asks us to adopt would exempt from the
provisions of § 1692e any communication that attempts to enforce a security
interest regardless of whether it also attempts to collect the underlying
debt. That rule would create a loophole in the FDCPA. A big one. In every
case involving a secured debt, the proposed rule would allow the party
demanding payment on the underlying debt to dodge the dictates of § 1692e by
giving notice of foreclosure on the secured interest. The practical result
would be that the Act would apply only to efforts to collect unsecured
debts. So long as a debt was secured, a lender (or its law firm) could
harass or mislead a debtor without violating the FDCPA. That can’t be right.
It isn’t. A communication related to debt collection does not become
unrelated to debt collection simply because it also relates to the
enforcement of a security interest."
Reese v. Ellis, Painter, Raterree & Adams,