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Obduskey v. McCarthy & Holthus LLP

Supreme Court of the United States

January 7, 2019, Argued; March 20, 2019, Decided

No. 17-1307.


Justice Breyer delivered the opinion of the Court.

The Fair Debt Collection Practices Act regulates “‘debt collector[s].’” 15 U. S. C. §1692a(6); see 91 Stat. 874, 15 U. S. C. §1692 et seq. A “‘debt collector,’” the Act says, is “any person . . . in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts.” §1692a(6). This definition, however, goes on to say that “[f]or the purpose of section 1692f(6)” (a separate provision of the Act), “[the] term [debt collector] also includes any person . . . in any business the principal purpose of which is the enforcement of security interests.” Ibid.

The question before us concerns this last sentence. Does it mean that one principally involved in “the enforcement of security interests” is not a debt collector (except “[f ]or the purpose of [***6]  section 1692f(6)”)? If so, numerous other provisions of the Act do not apply. Or does it simply reinforce the fact that those principally involved in the enforcement of security interests are subject to §1692f(6) in addition to the Act’s other provisions?

In our view, ] the last sentence does (with its §1692f(6) exception) place those whose “principal purpose . . . is the enforcement of security interests” outside the scope of the primary “debt collector” definition, §1692a(6), where the business is engaged in no more than the kind of security-interest enforcement at issue here—nonjudicial foreclosure proceedings.

When a person buys a home, he or she usually borrows money from a lending institution, such as a bank. The resulting debt is backed up by a “mortgage”—a security interest in the property designed to protect the creditor’s investment. Restatement (Third) of Property: Mortgages §1.1 (1996) (Restatement). (In some States, this security interest is known as a “deed of trust,” though for present purposes the difference is immaterial. See generally ibid.) The loan likely requires the homeowner to make monthly payments. And if the homeowner defaults, the mortgage entitles the creditor to pursue  [*1034]  foreclosure, which is “the process in which property securing a mortgage is [***7]  sold to pay off  [**395]  the loan balance due.” 2 B. Dunaway, Law of Distressed Real Estate §15:1 (2018) (Dunaway).

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139 S. Ct. 1029 *; 203 L. Ed. 2d 390 **; 2019 U.S. LEXIS 2090 ***; 27 Fla. L. Weekly Fed. S 724; 2019 WL 1264579


Notice: The LEXIS pagination of this document is subject to change pending release of the final published version.


Obduskey v. Wells Fargo, 879 F.3d 1216, 2018 U.S. App. LEXIS 1275 (10th Cir. Colo., Jan. 19, 2018)

Disposition: Affirmed.


debt collector, security interest, nonjudicial foreclosure, collection, enforcing, foreclosure, homeowner, primary definition, security-interest, of the Act, consumer, notice, sentence, principal purpose, repossession, the Act, mortgage, entity, limited-purpose, protections, pursuing, repo, nonjudicial foreclosure proceedings, debt collection practice, public trustee, state law, prohibitions, nonjudicial, indirectly, default

Banking Law, Consumer Protection, Fair Debt Collection, Unfair Practices, Governments, Legislation, Interpretation, Constitutional Law, Separation of Powers