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Mortgage Collections

Since mortgages are the most secured of any loan type (a lender can foreclose on a house if the loan defaults), collection agencies generally don’t get much mortgage collection work. But there is one large exception: deficiency balances. If a lender approves the sale of a house for less than what is owed by the borrower, the difference is a deficiency balance. In the ongoing morass of the housing market, short sales are commonplace. Lenders will typically forgive deficiency balances. If they do not, that amount enters the ARM process and can find its way to debt collectors.


Appeals Court Places Debt Collection Liabilities Under FDCPA on Creditor

The U.S. Second Circuit Court of Appeals in New York Wednesday took aim at defining what actions taken by a creditor expose it to liability under the Fair Debt Collection Practice Act by reviving an FDCPA class action against a mortgage company and three servicing and debt collection firms. The case could impact liability under first-party or flat-rate collection relationships.


CFPB Provides Guidance on Mortgage Servicing Rules Under FDCPA

The CFPB Tuesday released a bulletin and interim final rule to provide greater clarity to the market concerning mortgage servicing rules that take effect in January 2014. The clarifications address communications with family members after a borrower dies, contact with delinquent borrowers, and treatment of consumers who have filed for bankruptcy or invoked certain protections under the FDCPA.