On March 30, 2003 the Seventh Circuit Court of Appeals held that when determining whether an assignee of a debt may take advantage of the so-called “[mortgage] servicer exemption” under the federal Fair Debt Collection Practices Act (“FDCPA”), a court should focus on the status of the obligation as asserted by the assignee. Schlosser v. Fairbanks Capital Corp., 323 F.3d 534, 538 (7th Cir. 2003). The court felt that it made little sense in terms of the conduct sought to be regulated by the FDCPA to exempt an assignee from the application of the FDCPA based on actual status that is contrary to the assertions of the debt collector to the debtor. Id.

    In Schlosser, the defendant acquired, in part, allegedly delinquent mortgages that included a mortgage owed by the plaintiff. Id. at 535. The defendant sent the plaintiff a letter identifying itself as a debt collector, alleged that the debt was delinquent at the time it was obtained, refused to accept the plaintiff’s regularly scheduled payment and instituted foreclosure proceedings when the plaintiff’s debt was in fact not delinquent at the time it was obtained. Id. The letter sent by the defendant failed to include the validation of debt notice required by the FDCPA. Id. at 536. The court ruled that the plaintiff had a viable claim under the FDCPA using the definitions of “debt” and “creditor,” as well as the antecedent language to the so-called “[mortgage] servicer exemption,” to rationalize its decision. Id. at 538.

    Michael Tomkies and Tiffany Scurti-Swain