For Pennsylvania consumers, mortgage foreclosure is considered debt collection under the Fair Debt Collection Practices Act (FDCPA). The view adopted by a majority of federal district courts is that mortgage foreclosure is not debt collection. However, the Third Circuit Court of Appeals, the federal appellate court covering Pennsylvania, concludes otherwise. This is good news for Pennsylvania consumers facing unfair collection practices during foreclosure.
If the servicer of your loan obtains servicing rights after the loan is in default, the servicer is a debt collector under the FDCPA. Lawyers who meet the general definition of a “debt collector”as defined by the FDCPA must comply with the law when engaged in mortgage foreclosure. A lawyer can satisfy that definition if his/her principal business purpose is mortgage foreclosure or if he/she “regularly”performs this function.
Pennsylvania is a judicial foreclosure state. This means a lawsuit must be filed in order to foreclose on your home. If you are served with a mortgage foreclosure complaint, do not ignore it. You have a limited period of time to file a response before a default judgment can be taken against you.
The bank and the lawyers who file the foreclosure complaint may violate the FDCPA if the complaint contains allegations that are false. In addition, the lawyers may have communicated with you before the complaint was filed either by mail or telephone. These communications must comply with the FDCPA. You should keep all the letters you receive and save all voice mail messages. Take good notes during any phone calls. The notes will come in handy if your rights under the FDCPA are violated.