Mortgage Holder Is Not Debt Collector Under FDCPA

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The United States Bankruptcy Court for the District of Massachusetts has held that the holder of a mortgage is not a “debt collector” within the meaning of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §1692 et seq. In Re: Gill, Stephen D., et al., Chapter 7 Case No. 09-15976-JNF; Adv. P. No. 13-1111.

The Plaintiffs’ complaint alleged that Navy Federal Credit Union, the holder of Plaintiffs’ mortgage, violated the FDCPA in sending monthly or quarterly statements to the Plaintiffs. They alleged that those statements constituted communications regarding a debt and constituted false representations of the debt under the applicable federal statutes. The Court held that the mortgage holder was not a debt collector as defined in the FDCPA.

The Court noted that the FDCPA defines a debt collector as one “whose principal purpose…is the collection of any debts, or who regularly collects or attempt to collect…debts owed or due or asserted to be owed or due to another.” The Court further relied on the First Circuit’s decision in Chiang v. Verizon New England, Inc., 595 F.3d 26 (1st Cir. 2010), which held that creditors collecting on their own accounts are generally excluded from the reach of the statute. While there is a limited exception for a creditor who attempts to intimidate debtors by indicating a third-party is involved in collecting the debt, that exception did not apply here. All communications relied upon by the Plaintiffs clearly identified the Defendant as the entity communicating with the Plaintiffs.

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