Archive for June 3rd, 2012

Using the FDCPA in Foreclosure Defense

Nearly every client with whom I’ve spoken has lamented the never-ending, harassing phone calls received from debt collectors.  “How do I make them stop calling?”  Many such clients know that the Fair Debt Collections Practices Act exists, but don’t know enough about it to avail themselves of its provisions.  In light of some questions I’ve received recently, it’s probably past time that I explain how I put the FDCPA to good use in my foreclosure defense practice.

Under Section 805(a)(2) of the Act, a bank is prohibited from communicating with a homeowner when the bank knows the homeowner is represented by counsel.  There are other parts of the Act and other ways a bank can be said to have violated it, but this provision is simple and straightforward – black and white – with very little room for interpretation.  If I’m counsel for a homeowner in a foreclosure case, the bank can’t contact that homeowner about the debt.  That’s it; no exceptions.

Hence, without disclosing any specific conversations with my clients, I’ll say this.  What I like my clients to do is log the calls.  Keep track.  Document them.  Get a notepad and write down the date and time of each call, the name of the person who called, the company on whose behalf he/she is calling, and the substance of the conversation.  If you have itemized phone bills reflecting the calls, keep them.  Then give these documents/logs to me so I can use them to defend your foreclosure case.

Contrary to what you might have thought, you don’t have to file a lawsuit to put these violations of the FDCPA to good use.  You don’t even have to file a counterclaim (and incur the filing fees associated with a counterclaim).  All you have to do is assert a setoff defense for the bank’s violations of the FDCPA in your existing foreclosure case.

How does it work?  Just think about it.  The bank is suing you for foreclosure, but you contend the amount you owe, if anything, must be reduced by the amount to which you are entitled by virtue of the bank’s violations under the Act.  At worst, that creates disputed issues of fact as to the amount you owe, precluding summary judgment.  At best, this reduces the amount you owe (in theory, down to zero).

There are certainly other ways the FDCPA can be used to help consumers.   For me, though, if you’re looking to maximize the bang for your buck, i.e. to avail yourself of a legitimate defense with little input of time an expense, this is how.  It’s incredibly simple for my clients to document/log the calls they receive from the bank and for me to use these calls as a substantive defense to foreclosure.  Nothing fancy, nothing confusing.  Just keep track of the calls you receive so I can assert the FDCPA as a setoff defense.

Oh, and another neat thing here … I firmly believe a homeowner who defends a foreclosure case and brings a setoff defense or counterclaim for a violation of the FDCPA is entitled to a jury trial on that issue regardless of the waiver of the right to a jury trial in the mortgage.  After all, the FDCPA claim exists independent of the mortgage (and the jury trial waiver contained therein), and the Eleventh Circuit (one step down from the U.S. Supreme Court) has held that consumers are entitled to a jury trial in a FDCPA claim.  See Sibley v. Fulton Dekalb  Collection Service, 677 F.2d 830 (11th Cir. 1982).   So if/when you get to a trial in your foreclosure case, a jury will get to decide the amount of the setoff for the bank’s violations of the FDCPA.

Yes, there’s more to the FDCPA than this.  There are nuances and complications and many other violations than simply calling a homeowner who is represented by counsel.  But this defense is simple and I’m confident it works.

Mark Stopa

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