Mortgage

The Supreme Courtroom ruling eliminates the usage of auto dialers for FHA, VA collections

The US Supreme Court decision in a case of the Telephone Consumer Protection Act will have a direct impact on federally guaranteed mortgage service providers who have used Robocalls to reach borrowers.

The ruling ended an exemption that allowed automatic selection of cell phones for debt collection, such as mortgages.

"While the Supreme Court ruling did not add any new requirements for mortgage lenders, it confirms that compliance with the TCPA remains in effect," said Mike Eshelman, head of consumer finance at fintech company Jornaya.

"Mortgage providers need to make sure they have a solution to protect themselves, otherwise they will face potential litigation and settlements that have recently averaged $ 6.6 million," added Eshelman.

Damages for TCPA violations start at $ 500 per call or text. This amount can be tripled for intentional violations of the law.

Servicers can still call consumers manually provided they meet all the criteria for spam phone calls that are prohibited by the TCPA and Can Spam law, said Marx Sterbcow, a lawyer in the mortgage industry.

The exemption at the heart of the Supreme Court decision was created in an amendment to the 2015 TCPA that was supported by both parties. However, this change only affected mortgages from the Federal Housing Administration, Veterans Affairs, and the U.S. Department of Agriculture.

The decision means that the servicers will again need a non-revoked consent to contact consumers regarding the collection of these loans and other forms of federal debt such as student loans.

This case differs from previous actions by the Federal Communications Commission, which refused to grant a similar exception to loans from Fannie Mae and Freddie Mac.

In 2018, 17 groups, including the American Bankers Association, the Mortgage Bankers Association, and the National Credit Union Association, applied to the FCC to change their interpretation of the TCPA again, making it more difficult for consumers to win robocalling lawsuits. This followed a decision by the Court of Appeal in March 2018 that invalidated the previous FCC interpretation.

The Supreme Court case, Barr v. American Association of Political Consultants, was dealt with from a different perspective. The lobby group claimed that Congress handled different aspects of the language unequally.

In the majority opinion, Judge Brent Kavanaugh agreed on this point and said: "Since the law prefers the speech to collect public debt over political and other speeches, the law restricts the speech."

But seven of the judges said that the TCPA was not unconstitutional (as the AAPC wanted and the other two conservative judges supported). The majority argued that the 2015 amendment could be separated from the other provisions of the law.

"As a result, the plaintiffs may still not make political calls to mobile phones, but their speech is now treated the same as the debt collection speech," Justice Kavanaugh wrote.

The decision was a huge win for consumers, said Margot Saunders, a lawyer with the National Consumer Law Center.

"We were very concerned that the entire TCPA could be at risk. This decision protects consumers from unwanted, disagreeable robocalls related to government-sponsored debt," she said.

What the court ruling does not end is discussions about what constitutes consent in the sense of the mortgage contract and whether it can be revoked unilaterally, said Saunders.

The case also did not resolve the ongoing controversy regarding the definition of an automated telephone dialing system in terms of TCPA compliance.

The ABA and other groups are petitioning the FCC to allow robocalls for information about indulgence and other corona virus initiatives without consumer approval.

So far, the FCC has not responded, said Saunders, whose organization supports the measure.

Without the exemption, staffing will become a problem for servicers who want to stay in touch with consumers who may be criminal or have been lenient, Sterbcow said.

"Will you have enough staff to make individual calls? And that will create some back-end costs for mortgage service providers and debt collection agencies," said Sterbcow.

If anything, the verdict is actually an opportunity for mortgage service providers to improve the way they interact with their customers, said Jane Mason, CEO of service technology provider Clarifire.

"Some of our customers are using technology to maintain self-service accessibility for customers," said Mason. "What they do is they offer a choice of how they want to communicate with them."

The consumer can set other parameters for the contact, e.g. B. the hours at which he can be called or contacted in some other way.

"So the servicers will be fine as long as they adopt new ways of thinking about how to interact with their customers from their call center collections," Mason said.

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