Supreme Court: FDCPA (sometimes) does not apply to nonjudicial foreclosures
In Obduskey v. McCarthy & Holthus, LLP, the United States Supreme Court unanimously held the Fair Debt Collection Practices Act does not apply to a law firm conducting a nonjudicial foreclosure.
While the law firm prevailed in Obduskey, the Court’s opinion suggested several circumstances in which the law firm might have been subject to the FDCPA. Practically speaking, many firms instituting nonjudicial foreclosures will likely remain subject to the FDCPA.
According to Obduskey, a law firm conducting nonjudicial foreclosures might still be subject to the FDCPA if:
- The law firm has a regular debt collection practice above and beyond nonjudicial foreclosures, or if the firm otherwise engages in debt collection;
- The law firm sends an unnecessary letter (or engages in other communications) that is not required by state law;
- The foreclosure is a judicial foreclosure;
- The law firm engages in unfair practices related to the nonjudicial foreclosure.