In its amicus brief, the CFPB argues that ReconTrust
is a debt collector because it sends notices to
consumers stating the amount the consumer would
have to pay to avoid non-judicial foreclosure in
California and, therefore, is attempting to collect
debts owed or due to another. The CFPB argues
that ReconTrust is a debt collector as dened by the
FDCPA. The CFPB further argues that nothing
in the FDCPA suggests that enforcers of security
interests are categorically excluded from the
denition of a “debt collector.”
In support of its argument that ReconTrust is a
“debt collector,” the CFPB relied on the Supreme
Court’s holding in
Heintz v. Jenkins,
(1995), which stands for the proposition that
lawyers who regularly try to collect consumer debts
through litigation are included in the denition of
a “debt collector.” The CFPB then relied on the
Sixth Circuit’s decision in
Glazer v. Chase Home
Finance, LLC,
704 F.3d 453 (6th Cir. 2013), and
the Third Circuit’s decision in
Kaymark v. Bank of
America, N.A.,
783 F.3d 168 (3d Cir. 2015), which
held that foreclosure activities constitute debt
collection under the FDCPA, even though such
efforts relate to the enforcement of a security
interest. The CFPB asserted that the key factor
in distinguishing foreclosure activities from non-
judicial actions to repossess property subject to a
security interest is “the need to ‘communicate with
the debtor regarding the debt during the foreclosure
proceedings, regardless of whether the proceedings
are judicial or non-judicial in nature.’”
See
2015 WL
4735787, at *8.
Applying the above reasoning to ReconTrust’s
Notice of Default and Notice of Trustee’s Sale,
the CFPB argued that the communications were
directed at the consumer and threatened foreclosure
if the default was not cured. Because the notices
threatened foreclosure, the CFPB claimed that they
constituted debt collection.
The Dodd-Frank Wall Street Reform and Consumer
Protection Act was enacted as a measure to promote
nancial stability and protection for consumers
through increased regulation of nearly every aspect
of the consumer nance industry. In the years
since its enactment, the Dodd-Frank Act has led to
signicant industry reforms and the promulgation
of numerous new laws and regulations. In an
effort to stay apprised of these signicant industry
changes, Burr & Forman’s Dodd-Frank Newsletter
will serve as a periodic update of recent case law,
news, and developments related to the Dodd-Frank
Act.
---- RECENT CASES ----
CFPB Involvement in Litigation
Ho v. ReconTrust Co., No. 10-56884, 2015 WL
4735787 (9th Cir. Aug. 7, 2015).
The CFPB recently led an amicus brief in the case
Ho v. ReconTrust, Co.
, which is on appeal before the
U.S. Court of Appeals for the Ninth Circuit. The
issues on appeal are whether ReconTrust Co., the
trustee, is a debt collector as dened by the Fair
Debt Collection Practices Act (“FDCPA”) and
whether foreclosure proceedings constitute debt
collection activities under the FDCPA.
Ho led suit against ReconTrust alleging that letters
sent in connection with foreclosure proceedings,
specically, the Notice of Default and the Notice
of Trustee’s Sale, contained false and misleading
information regarding the amount of the debts owed
in violation of the FDCPA. ReconTrust moved to
dismiss the complaint on the grounds that it was
not a debt collector, and the district court granted
its motion. Ho led three amended complaints, all
of which were dismissed. Ho appealed.
November 2015
