How does the FDCPA apply to my mortgage company?

Hello. My name is John Watts. I am an Alabama Consumer Protection Attorney and this is part of our continuing series on answering questions. The question we will answer today is how does the Fair Debt Collection Practices Act or the FDCPA, apply to my mortgage company?

Here is what the FDCPA regulates or governs. It says if you have a debt collector and you are dealing with a personal debt and not a business debt, then the FDCPA will normally apply.

What is the definition of a debt collector under the FDCPA?

Here is the basic definition. If the company that we’re wondering if they are a debt collector, if that company the first time that it touched the loan to “collect on the loan” or “to service the loan”, whatever you want to call it, the first time they touched it, was the loan in default as defined by the loan?

With a mortgage, we look at either the mortgage or the note. Normally the note and the mortgage will say if you do not make your payment by the due date, you are default.

Now the mortgage companies don’t like this. They say “Oh, no no. You are not really in default. Even though our document says you are in default, we don’t think you are in default” because they don’t want the FDCPA to apply to them.

Why does your mortgage company not want the FDCPA to apply?

The FDCPA says that they can not lie to you, they can not treat you unfairly and they despise that law. They do not want to be governed by that law. They will fight against this but just understand that’s the basic definition is when your mortgage company got your loan, was it in default or was it on time?

Example of Bank of America and Nationstar.

Let’s look at a couple of examples. Let’s say Bank of America receives your loan after it was in default. Your due date is on the 1st and now it’s the 18th and you still haven’t paid. That’s in default. Then on the 18th, Bank of America takes over the loan. Well, then Bank of America will normally be a debt collector and will be subject to the FDCPA.

What about if Nationstar gets your loan and they say you are in default so they send you a letter that says ‘Welcome to Nationstar and by the way you are two months behind’ and it turns out you are actually not two months behind?

Does the FDCPA apply to Nationstar? Is Nationstar a debt collector?

The answer is normally yes.

Even though you are technically not in default, if they treat you like you are in default, if they believe you are in default, they act like you are in default, then you get the protection of somebody who is in default which in this situation means the FDCPA would apply.

What good does it do for you to have your mortgage company to be a debt collector under the FDCPA?

We’ve talked about that they can’t lie to you and crazy as it sounds under Alabama law at least a lot of courts, and certainly the mortgage companies believe they can lie to you without hesitation as long as they do it verbally, sometimes even in writing, but they believe there is nothing you can do under Alabama law.

Now the FDCPA is different which is why mortgage companies fight hard against being subject to it as it forbids lying.

Maybe Alabama allows them to lie to you but we don’t care about Alabama law when we are dealing with a Federal law like the FDCPA. 

It has an ability for you to get statutory damages up to $1000. That’s even if you can’t prove you were injured. When they violate the law with your mortgage, almost always you would have lots of damages. You can get actual or what are called compensatory damages to compensate you.

Maybe you had $100,000 in equity in your house and your mortgage company wrongfully foreclosed. Well then your damages might be $100,000 plus mental anguish.

It also allows the court to force the mortgage company to pay your attorney if you are successful.

It is a very powerful law.

They absolutely hate it. They can’t stand it and that’s why it is so good for you as a homeowner, as a consumer if the FDCPA applies.

“What if I have questions about my mortgage company?”

What do you do if you have questions about is my mortgage company subject to the FDCPA? Is it a debt collector or maybe I know it is a debt collector but have they violated the FDCPA? We have lots of videos on what violates the FDCPA and we are going to try to keep this as short as we can so if you have questions, get in touch with us.

You can contact us through our website or you can call us at 205-879-2447.

You can also leave a comment below. Although if it is personal information, definitely get in touch with us through our website or through our phone number.

John Watts


  1. Kwan Roel says:

    Please help me save my home

    • John Watts says:


      If you live in Alabama, give us a call at 205-879-2447.

      If you are not in Alabama, you’ll need to get with an attorney in your state.

      Best wishes!

      John Watts

  2. April says:

    WellsFargo sent a reinstatement letter July 13, I have until July 31 to pay the amount to reinstate the loan. July 18 I receive a letter from an attorney where they filed at the court house for foreclosure and will publish in the paper and request acceleration of loan and total due. Only July 22 I paid the reinstatement amount and Wells Fargo says I am no longer in foreclosure.
    However, my home is listed on a HUD website as per foreclosure that is sending emails to people I know who are interested in houses. Second, even though I have contacted wellsfargo’s attorney, it may still be in the local paper tomorrow as being foreclosed. Can wellsfargo legally still put this in the paper without trying to atleast stop it? We live in a small town with a small business and this could be detrimental to our reputation, and we are Now current.

    • John Watts says:


      I understand how frustrating this is to you. Glad you got the loan reinstated.

      I would suggest first get with an attorney in your state (I’m assuming you are not in Alabama) for specific advice.

      If you were here — I would suggest thinking about this.

      First — ask Wells Fargo and its lawyers in writing to stop the newspaper ad. If they can’t or won’t, then they can publish a retraction since it is not accurate information any longer.

      Second — check your credit reports to make sure not showing up as a foreclosure.

      Hope that helps some — it is frustrating when they claim they can’t stop (or won’t even try) the newspaper ad but sometimes if you do step one that motivates them. And if they have false credit reporting, that can open some options up for you.

      Best wishes

      John Watts

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