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New Day For RESPA: The UDAAPification Of Section 8

Law360

Valerie L. Hletko, Caroline M. Stapleton

The Real Estate Settlement Procedures Act has gone the "UDAAPified" way of debt collection — this time, through enforcement rather than guidance.

In July 2013, Consumer Financial Protection Bureau Bulletin 2013-07 announced that the principles underlying the Fair Debt Collection Practices Act broadly apply under Sections 1031 and 1036 of the Dodd-Frank Act, which prohibit unfair, deceptive, or abusive acts or practices (UDAAPs). The FDCPA prohibits a “debt collector” from engaging in any conduct, “the natural consequence of which is to harass, oppress or abuse any person in connection with the collection of debt,” to “use any false, deceptive or misleading representation or means in connection with the collection of any debt,” or to “use any unfair or unconscionable means to collect or attempt to collect any debt.”

The FDCPA generally applies to third-party debt collectors, including collection agencies, debt purchasers and attorneys who engage in debt collection. It does not apply to companies collecting on their own behalf. CFPB Bulletin 2013-07 acknowledges that the FDCPA “does not include some persons who collect consumer debt,” but warns that “all covered persons and service providers must refrain from committing UDAAPs” in the collection of debt.

On Feb. 10, 2015, the CFPB announced a consent order against NewDay Financial LLC, a mortgage lender offering mortgage loans guaranteed by the Veterans Benefits Administration. (In re NewDay Financial Inc., 2015-CFPB-0004 (Feb. 10, 2015)). The order is based on an allegedly deceptive advertising relationship with an unidentified third-party veterans’ organization.

Originally published in Law360; reprinted with permission. 

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