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Debt Collection Relief For Mortgage Foreclosures

Michael Agruss

Written and Reviewed by Michael Agruss

  • Managing Partner and Personal Injury Lawyer at Mike Agruss Law.
  • Over 20 years of experience in Personal Injury.
  • Over 8000+ consumer rights cases settled.
  • Graduated from the University of Illinois Chicago School of Law: Juris Doctor, 2004.

Debt Collection Relief For Mortgage Foreclosures

On January 14, the U.S. Court of Appeals for the Sixth Circuit reversed a lower court decision and wrote an opinion defining mortgage foreclosure actions as “debt collection” under the Fair Debt Collection Practices Act. The appellate panel said third parties that initiate foreclosure actions must comply with the provisions of the FDCPA.The case, Glazer v. Chase Home Finance, LLC, et. al., was brought by plaintiff Glazer, after he inherited a home with an outstanding and active mortgage serviced by Chase. After six missed payments, Chase engaged the law firm Reimer, Arnovitz, Chernek & Jeffrey Co., LPA (RACJ) to start foreclosure proceedings. But, Chase did not actually own the mortgage (this is not uncommon—it’s actually a widespread problem now), nor had it originated the mortgage. Fannie Mae owned the loan, and Chase had been assigned as the servicer from the originator. But, when Reimer, Arnovitz, Chernek & Jeffrey Co. started foreclosure, the firm represented Chase as the loan owner.Glazer asked for proof that Chase owned his mortgage, and the law firm did not comply; Glazer sued, seeking FDCPA damages. An Ohio district judge ruled in favor of Chase and RACJ, but Glazer appealed the decision. T he Sixth Circuit panel said Monday that Chase was not a “debt collector” under the FDCPA, but the law firm it retained was; the court wrote:”…we hold that mortgage foreclosure is debt collection under the, Act. Lawyers who meet the general definition of a “debt collector” must comply with, the FDCPA when engaged in mortgage foreclosure. And a lawyer can satisfy that definition if his principal business purpose is mortgage foreclosure or if he “regularly” performs this function. In this case, the district court held that RACJ was not engaged in debt collection when it sought to foreclose on the property. That decision was erroneous, and the judgment must be reversed.”Glazer’s case will now go back to the lower court in Ohio for further consideration (which seemed to dismiss his suit on a technicality). The Sixth Circuit Court’s decision is welcome news for people dealing with aggressive banks and collection agencies; some judges are holding these corporations to account.If a collection agency has harassed you, you may be entitled to money damages up to $1,000.00, based on the FDCPA, which has been around for almost 35 years. The FDCPA is a federal law that applies to every state. In other words, everyone is protected by the FDCPA. The FDCPA is essentially a laundry list of what debt collectors can and cannot do while collecting a debt, as well as things debt collectors must do while collecting a debt. Plus, the FDCPA has a fee-shift provision. This means, the collection agency pays your attorney’s fees and costs. Founding attorney, Michael Agruss, has settled over 1,500 debt collection harassment cases. We want to help you, too. 

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