Mortgage servicers meet the definition of “debt collector” under the California Rosenthal Fair Debt Collection Practices Act, and must comply with the law when collecting debts, a California Court of Appeal has ruled.
A copy of the ruling, in Davidson v. Seterus, Inc., can be accessed here.
At issue, is whether collecting on a mortgage is considered to be the same as collecting on a “consumer debt,” which is that the Rosenthal Act covers.
In attempting to adhere to a general principle which states: civil statutes for the protection of the public are, generally, broadly construed in favor of that protective purpose, the Appeal Court ruled that the “definitional language” in the law was “sufficiently broad” to include mortgage lenders and/or mortgage servicers, “we conclude that mortgage lenders and mortgage servicers can be “debt collectors” under the Rosenthal Act.”
The plaintiff in this case sued the defendant after receiving “hundreds of phone calls from employees of Seterus demanding mortgage payments that Davidson had already paid or that were not yet due.”
The Rosenthal Act contains no language specific to whether mortgage lenders or servicers are either covered under the law or exempt from it. With that uncertainty, the Appeal Court turned to the specific language of the law to determine whether mortgage lenders and servicers should be subject to the law.
The Appeal Court also ruled that the parent company of Seterus, IBM, should also be subject to the law as well.
