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.”
Related Stories
Financing
Homebuyers Unable to Find Traditional Mortgages Are Trying Out Alternative Financing
Some homebuyers who are unable to secure traditional mortgages are taking a risk and turning to alternative financing options that lack consumer protections
Financing
Refinance Demand Jumps After Slight Drop in Mortgage Rates
Mortgage rates made a sharp U-turn after logging consecutive weekly gains, pushing borrowers back into the housing fray
Affordability
Monthly Payments for Homebuyers Are Up 25% to Record High
Inflated mortgage rates, home prices, and rents are making home purchases pricier than ever for those brave enough to try their luck