November 29, 2016
By: Wendy Lee
On October 19, 2016, the Ninth Circuit Court of Appeals published its opinion in Ho v. ReconTrust Company, N.A. The decision affirmed the dismissal of a Fair Debt Collection Practices Act (FDCPA) claim brought against ReconTrust, a nonjudicial foreclosure trustee. In doing so, the opinion clarified that a trustee of a California deed of trust is not a “debt collector.” The holding affirmed Hulse v. Ocwen Federal Bank, a 2002 case decided by the District Court of Oregon (195 F. Supp. 2d 1188). In other circuits (including the Third, Fourth, Fifth, and Sixth) a nonjudicial foreclosure trustee is a debt collector.
In coming to its conclusion, the majority in Ho analyzed the notices in the nonjudicial process and found that the act of issuing such notices doesn’t constitute debt collection as defined by the FDCPA. The opinion analogizes the nonjudicial trustee to the tow truck driver in that the repossession of the car isn’t the act of collecting on the unpaid parking ticket debt, even though the threat of such action can motivate a debtor to pay on a debt.
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