BREAKING NEWS: SCOTUS Says “Security Instrument Enforcers” Generally Not FDCPA Debt Collectors

Author: By Michael R. Steinmark

Today, Wednesday March 20, 2019, the United States Supreme Court handed down its decision in Ombudskey v. McCarthy & Holthus LLP, an important case for the mortgage servicing industry and other collectors of debts secured by real or personal property. The Ombudskey Court held that the federal Fair Debt Collection Practices Act (“FDCPA”) generally does not apply to businesses engaged solely in enforcing security instruments through nonjudicial foreclosure, which the Court referenced as “security instrument enforcers.” Parsing the statutory definition of “debt collector” under the FDCPA, the Court found that security instrument enforcers are included only for purposes of 15 U.S.C. § 1692f(6). As such, all of the restrictions on debt collectors under the FDCPA are inapplicable to security instrument enforcers, other than Section 1692f(6), which imposes 8 categories of restrictions. To the extent they have not done so already, security instrument enforcers should become familiar with these restrictions in Section 1692f(6) and ensure their practices are compliant with them.

For more information about this decision or its application in debt collection or security instrument enforcement operations, please contact Michael R. Steinmark at msteinmark@settlepou.com or any of the other distinguished members of SettlePou’s Financial Services Litigation group.