FTC File No. P084801 Opinion, March 19, 2008 Re: Whether the Fair Debt Collection Practices Act (“FDCPA”)…

FTC File No. P084801 Opinion, March 19, 2008

Re: Whether the Fair Debt Collection Practices Act (“FDCPA”) prohibits a debt collector from notifying a consumer of settlement options that may be available to avoid foreclosure.

Dear Ms. Sinsley and Mr. Newburger:

This is in response to the request from the USFN, formerly known as the U.S. Foreclosure Network, for a Commission advisory opinion (“Request”) regarding whether the Fair Debt Collection Practices Act (“FDCPA”)1 prohibits a debt collector in the foreclosure context from discussing settlement options in the collector’s initial or subsequent communications with the consumer. The Request asserts that the receipt of information about settlement options could enable the consumer to save his or her home from foreclosure. As explained more fully below, the Commission concludes that debt collectors do not commit a per se violation of the FDCPA when they provide such information to consumers. Moreover, the Commission believes that it is in the public interest for consumers who may be subject to foreclosure to receive truthful, non-misleading information about settlement options, especially in light of the recent prevalence of mortgage borrowers who are delinquent or in foreclosure.2

1 15 U.S.C. §§ 1692- 1692p.

2 According to press reports, in 2007, there were an estimated 2.2 million foreclosure filings in the United States, a 75% increase from 2006. The number of foreclosure filings increased late in 2007- in December there were 215,749 foreclosure filings, a 97% increase from the number of filings in December 2006. December was the fifth consecutive month in which foreclosure filings topped 200,000. Associated Press, Home Foreclosure Rate Soars in 2007, N.Y.TIMES, 407 U.S. FORECLOSURE NETWORK

Opinion of the Commission

USFN submitted the Request pursuant to Sections 1.1-1.4 of the Commission’s Rules of Practice, 16 C.P.R. §§ 1.1-1.4. The Request focuses on two sections of the FDCPA, Sections 807 and 809, 15 U.S.C. §§ 1692e, 1692g,3 and presents three specific questions for consideration:

(1) Does a debt collector violate the FDCPA when he, in conjunction with the sending of a “validation notice” pursuant to Section 809(a) of the FDCPA, notifies a consumer of settlement options that may be available to avoid foreclosure?

(2) Does a debt collector violate the FDCPA when he, subsequent to sending the validation notice pursuant to Section 809(a) of the FDCPA, notifies a consumer of settlement options that might be available to avoid foreclosure?

(3) Does a debt collector commit a false, misleading or deceptive act or practice in violation of Section 807 of the FDCPA when he presents to a consumer settlement options that are available to the consumer to avoid foreclosure?

Jan. 29, 2008, available at www.nytimes.com/aponline/us/AP-Foreclosure -Rates.html. Mortgage delinquency is also escalating. The number of borrowers falling behind on first-lien mortgage payments for residences during 2007 was the highest it has been since 1986-2.64 million borrowers fell behind on payments. Michael M. Phillips, Serena Ng & John D. McKinnon, Battle Lines Form Over Mortgage Plan, WALL ST. J., Dec. 7, 2007, at Al.

3 The Commission has considered only these sections in rendering this opinion and it should not be construed to pertain to any other section of the FDCPA, to any other law, or to any issue of legal ethics.