A recent Supreme Court (SCOTUS) decision is being called a victory for the mortgage industry, as homeowners in states with non-judicial foreclosures now have less power to fight foreclosures.
States differ with their foreclosure requirements, and Colorado is a non-judicial foreclosure state, meaning that foreclosures are not decided by the courts. In the Obduskey v. McCarthy & Holthus case, SCOTUS ruled against Colorado homeowner Dennis Obduskey, who invoked protection under the federal Fair Debt Collection Practices Act (FDPCA) once he received a foreclosure notice from law firm McCarthy & Holthus. The FDPCA protects consumers by requiring debt collectors to cease collection until the debt is verified and a copy of proof is mailed to the debtor. SCOTUS ruled that McCarthy & Holthus is not a debt collector by definition, and is therefore not held to the requirements of the FDPCA, HousingWire reports.
"This decision essentially gives law firms and lenders more protection in non-judicial foreclosure states,” said David Scheffel, partner at law firm Dorsey & Whitney. “This essentially eliminates a heavily used practice by plaintiffs' attorneys," Scheffel added. "Ultimately, this should have the effect of reducing the cost that lenders/servicers bare in terms of getting to a final foreclosure in these states as the FDCPA lawsuits delay this process significantly. At the end of the day, this decision will eliminate thousands of these lawsuits in non-judicial foreclosure states like Massachusetts, California, Colorado, and Minnesota.”