The Tenth Circuit has weighed in on whether a non-judicial foreclosure is debt collection activity. In doing so, the Tenth Circuit has joined a split in the circuits on the issue. With the Tenth Circuit’s decision the circuits remain split with the Ninth Circuit and now the Tenth Circuit holding that non-judicial foreclosures are not debt collection activity and the Fourth, Fifth and Sixth Circuits holding that they are.
In Obduskey v. Wells Fargo, 2018 U.S. App. LEXIS 1275 (10th Cir., Jan. 19, 2018), Wells Fargo retained foreclosure counsel who sent the consumer an initial communication which stated that it “MAY BE CONSIDERED A DEBT COLLECTOR ATTEMPTING TO COLLECT A DEBT” and advised Mr. Obduskey that it had been retained to initiate foreclosure proceedings. The letter referenced the amount owed and identified the current creditor as Wells Fargo. In response, the consumer requested validation of the debt. Instead of responding, the law firm initiated a non-judicial foreclosure. Mr. Obduskey then filed suit alleging the law firm violated 15 U.S.C. §1692g.
The law firm moved to dismiss the action asserting that it was not a debt collector covered by the FDCPA because a foreclosure proceeding is not a debt collection activity. The district court agreed and dismissed the complaint. On appeal, the Tenth Circuit addressed the issue of whether the FDCPA applies to non-judicial foreclosure proceedings.