The United States Court of Appeals for the Tenth Circuit recently joined the Ninth Circuit and affirmed a district court’s holding that the Fair Debt Collection Practices Act (“FDCPA”) does not apply to a non-judicial foreclosure. See Obduskey v. Wells Fargo, 2018 WL 477257 (10th Cir. Jan. 19, 2018). In the case, plaintiff defaulted on his loan, and defendant law firm sent a letter to plaintiff stating that it “MAY BE CONSIDERED A DEBT COLLECTOR ATTEMPTING TO COLLECT A DEBT” and that it was “instructed to commence foreclosure against” plaintiff’s property. Plaintiff responded to the letter to dispute the debt, but defendant nonetheless initiated a foreclosure. Plaintiff filed this lawsuit alleging that the defendant violated the FDCPA. Defendant moved to dismiss, arguing, among other things, that non-judicial foreclosures are not subject to the FDCPA. The district court agreed and dismissed the action.
On appeal, the Tenth Circuit affirmed. In doing so, it held that there is a “critical difference” between a judicial foreclosure and a non-judicial foreclosure in that the non-judicial foreclosure seeks only to enforce a security interest, and the creditor in a non-judicial foreclosure must bring a separate action if it wants to collect a deficiency. The Court further found that other circuits that had reached contrary conclusions had misinterpreted the FDCPA, and that the provisions they reference apply only to “action[s],” which does not encompass non-judicial proceedings. Finally, the Court noted that its decision does not apply to judicial foreclosures, and that “[w]hether or not more aggressive collection efforts leveraging the threat of foreclosure into the payment of money constitute ‘debt collection’ is left for another day.” This decision is consistent with a 2016 decision from the Ninth Circuit, but other circuits to address this question have held to the contrary. See Vien-Phuong Thi Ho v. ReconTrust Co., 858 F.3d 568 (9th Cir. 2016); Glazer v. Chase Home Fin. LLC, 704 F.3d 453, 461 (6th Cir. 2013); Wilson v. Draper & Goldberg, P.L.L.C., 443 F.3d 373, 378-379 (4th Cir. 2006); Kaltenbach v. Richards, 464 F.3d 524 (5th Cir. 2006).