When is your mortgage servicer a debt collector?

I am constantly irritated by the fact that Saxon Mortgage does not wait until the 16th day of the month to call homeowners. My monthly statement specifically says the payment is due on the first and considered late by the sixteenth.

Saxon begins a regular daily series of phone call starting on the second day of the month.

Fair Debt Collection

By law, a debt collector is a person who regularly collects debts owed to others. Your mortgage servicer is considered a debt collector only if your loan was in default when the servicer acquired it. If that’s true, you have additional rights that you can read about in the FTC’s brochure “Fair Debt Collection.”

Allow me to specifically state that I never make late payments. I pay many mortgages every month. This is not an editorial by someone living on the edge, and I have a great credit score.

What irritates me is that Saxon Mortgage would consider calling me, primarily after the U.S. Postal Service priority mail delivery confirmation shows that Saxon already received my payment.

Saxon says it was an accident. I beg to differ. I think it is a direct deliberate violation of the Fair Debt Collection Protection Act. When I answered the phone I had to listen as Saxon told me that Saxon is a debt collector. I am addressing the defense used by debt collectors, when collectors say “It was an accident.”

THE FAIR DEBT COLLECTION PRACTICES ACT
As amended by Pub. L. 109-351, §§ 801-02, 120 Stat. 1966 (2006)

808. Unfair practices
A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt. Without limit-ing the general application of the foregoing, the following conduct is a violation of this section:

(5) Causing charges to be made to any person for com-munications by concealment of the true propose of the communication. Such charges include, but are not limited to, collect telephone calls and telegram fees.

VIOLATION: Saxon Mortgage Services attempted to collection a monthly home mortgage payment via Western Union Speedpay, after said payment had already been received and processed by Saxon Mortgage Services.

(10) The use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.

VIOLATION: Saxon Mortgage Services attempted to collection a monthly home mortgage payment after said payment had already been received and processed by Saxon Mortgage Services.

813. Civil liability
(a) Except as otherwise provided by this section, any debt collector who fails to comply with any provision of this title with respect to any person is liable in the case of any action by an individual, such additional damages as the court may allow, but not exceeding $1,000.

A debt collector may not be held liable in any action brought under this title if the debt collector shows by a preponderance of evidence that the violation was not inten-tional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.

Saxon Mortgage’s action is intentional. In fact Saxon told me they would continue to call every month, starting on the second day of the month, unless I sent a cease and desist letter. I have not done so, because it would exclude all communication. That could be dangerous.

If one considers the telephone call – placed after my payment was received – as unintentional, then Saxon must demonstrate the existence of procedures reasonably adapted to avoid any such error. Clearly Saxon has no procedure to delete names from the calling list after payments have been received.

Clearly Saxon has no procedure to double-check the status of customers.

My loan was not in default, nor past due, when Saxon acquired the loan from NovaStar, yet Saxon continues to identify themselves as debt collectors.

Legal Precedent — THE FTC COMPLAINT

September 9, 2008: The Bear Stearns Companies, LLC and its subsidiary, EMC Mortgage Corporation, have agreed to pay $28 million to settle Federal Trade Commission charges that they engaged in unlawful practices in servicing consumers’ home mortgage loans. The companies allegedly misrepresented the amounts borrowers owed, charged unauthorized fees, such as late fees, property inspection fees, and loan modification fees, and engaged in unlawful and abusive collection practices.

The complaint charges Bear Stearns and EMC with violating the FTC Act, the Fair Debt Collection Practices Act (FDCPA), the Fair Credit Reporting Act (FCRA), and the Truth in Lending Act’s (TILA) Regulation Z.

The proposed settlement requires Bear Stearns and EMC to pay $28 million to redress consumers who have been injured by the illegal practices alleged in the complaint. In addition, the settlement bars the defendants from future law violations and imposes new restrictions and requirements on their business practices.

Is Saxon Mortgage a debt collector

For purposes of determining the applicability of the FDCPA one must ascertain whether the person communicating with the debtor is a “debt collector.” The FDCPA defines debt collector as a person engaged in a business with the principal purpose of collecting debts or who “regularly collects or attempts to collect, directly or indirectly, debts owed to another.” Whether you fall within the definition is crucial. If you are considered a debt collector, you are subject to all of the requirements and restrictions of the FDCPA.

The application by the courts of who is a debt collector under this definition has been growing over time. For instance, in a case decided on April 18,1995, the United States Supreme Court held that lawyers who regularly collect consumer debts, even when their collection efforts are through litigation only, are debt collectors under FDCPA. Heintz v. Jerkins 95 Daily Journal D.A.R. 7134 (1995). Note that those organizations that collect on their own debts are not debt collectors (other than those persons whose business’ principal purpose is debt collection). Therefore, courts have held that lenders who foreclose on their mortgage loans are not debt collectors. Olroyd v. Associates Consumer Discount Co., 863 F.2d 23 7 (D.C., E D. Penn 1994).

Creditors who take an assignment of the debt while it is in default are generally considered to be subject to FDCPA as debt collectors. Therefore, mortgage services who receive a loan prior to default are not covered as debt collectors (Penny v. Stewart Elk Co., 756 F.2d 1197 (5th Cir., 1985); rehearing granted on other grounds, 7611 F.2d 237), but mortgage services who obtained the loan while it was in default are subject to the FDCPA as debt collectors [Games v. Cavazas, 737 F.Supp. 1368 (D.C., D. Del. 1990)]. Thus, the same servicer can be a debt collector for purposes of some loans and not others.