Fair Debt Collection Practices Applies to Mortgagee’s Attorneys in Foreclosure Proceedings

Attorneys Who Regularly Engage in Collecting Consumer Debts, Including Those Representing Mortgagees in Foreclosure Proceedings, Are Subject to the Fair Debt Collection Practices Act.

The United States Supreme Court in the Matter of Heintz v. Jenkins, 514 U.S. 291, 294-95, 115 S. Ct. 1489, 131 L. Ed. 2d 395 (1995) Rejected the Assertion that a Law Firm Representing the Original Creditor Is Not a Debt Collector Under the Provisions of the Fair Debt Collection Practices Act.

Some law firms have argued that if they represent the original creditors they are not considered as debt collectors under the provisions of Fair Debt Collection Practices Act. This assertion which is in direct conflict with the provisions of the Act and the authority of the United States Supreme Court in the matter of Heintz supra.

In Heintz, the Court squarely addressed the issue of whether a law firm representing an original creditor was subject to the provisions of the Act. The plaintiff in this case, Darlene Jenkins, borrowed money from the Gainer Bank in order to buy a car. She defaulted on her loan. The bank’s law firm then sued Jenkins in state court to recover the balance due. As part of an effort to settle the suit, a lawyer with that law firm, George Heintz, wrote to Jenkins’ lawyer. His letter, in listing the amount she owed under the loan agreement, included $ 4,173 owed for insurance, bought by the bank because she had not kept the car insured as she had promised to do. Jenkins then brought this Fair Debt Collection Practices Act suit against Heintz and his firm Heintz at 292

The Court found that the Act “applies to attorneys who ‘regularly’ engage in consumer-debt-collection activity, even when that activity consists of litigation,” for two reasons: First, the Act defines the “debt collector[s]” to whom it applies as including those who “regularly collec[t] or attempt[t] to collect, directly or indirectly, [consumer] debts owed or due or asserted to be owed or due another.” § 1692a(6). In ordinary English, a lawyer who regularly tries to obtain payment of consumer debts through legal proceedings is a lawyer who regularly “attempts” to “collect” those consumer debts.

In the recent matter of Barrows v. Chase Manhattan Mortg. Corp., 465 F. Supp. 2d 347, 356 2006, the Court found that the law firm of Hubschman & Roman, PC, and John J. Roman, Jr., Esquire representing the mortgagee in foreclosure proceeding are “debt collectors” under the provisions of the FDCPA” Following Congress’s removal of language in the FDCPA that expressly excluded attorneys from FDCPA liability, the United States Supreme Court clarified the lower courts’ disagreement over whether attorneys could[**14] be classified as “debt collectors” and be subject to liability under the Act.

In Heintz v. Jenkins, 514 U.S. 291, 294-95, 115 S. Ct. 1489, 131 L. Ed. 2d 395 (1995), the Court found that FDCPA “applies to attorneys who ‘regularly’ engage in consumer-debt-collection activity, even when that activity consists of litigation,” for two reasons: First, the Act defines the “debt collector[s]” to whom it applies as including those who “regularly collec[t] or attempt[t] to collect, directly or indirectly, [consumer] debts owed or due or asserted to be owed or due another.” § 1692a(6). In ordinary English, a lawyer who regularly tries to obtain payment of consumer debts through legal proceedings is a lawyer who regularly “attempts” to “collect” those consumer debts.

Under the Act, a debt collector may not communicate with a consumer if inter alia ” [I} the debt collector knows the consumer is represented by an attorney with respect to such debt and has knowledge of or can readily ascertain, such attorney’s name and address unless the attorney fails to respond within a reasonable period of time to a communication from the debt collector or unless the attorney consents to direct communication with the consumer” 15 USC Sec 1692c(2) ” The term communication means the conveying of information regarding a debt directly or indirectly to any person through any medium”. 15 USC Sec 1692a