Credit Cost Reduction Act of 1999

Summary: Permits continuation of collection and communications activities during the period of initial notice of debt unless the consumer requests cessation of such activities.
Expands the scope of debt collector's civil liability for noncompliance to include any series of class actions arising out of the same violations by the same debt collector.
Adds to the mandatory factors for court consideration of debt collector's liability for noncompliance the amount of actual damages awarded.
Shields a debt collector from liability for a violation resulting from good faith compliance with either Federal or State rules of civil procedure or a nonjudicial foreclosure proceeding.
Prescribes guidelines under which a servicer of a federally related mortgage loan secured by a first lien is exempt from requirements pertaining to: (1) certain false or misleading representations to the consumer in connection with debt collection; or (2) debt validation activities. Requires such servicer to provide to the consumer, at least 30 days before an acceleration of the debt, a validation statement or a notice of the consumer's right to receive a validation statement.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Credit Cost Reduction Act of 1999''.

SEC. 2. EXEMPTION FOR COMMUNICATIONS INVOLVING LEGAL PROCEEDINGS.

    Section 803(2) of the Fair Debt Collection Practices Act (15 U.S.C. 
1692a(2)) is amended by adding at the end the following new sentence: 
``Such term does not include actions taken pursuant to the Federal 
Rules of Civil Procedure; in the case of a proceeding in a State court, 
the rules of civil procedure available under the laws of such State; or 
a nonjudicial foreclosure.''.

SEC. 3. COLLECTION ACTIVITY FOLLOWING INITIAL NOTICE.

    Section 809 of the Fair Debt Collection Practices Act (15 U.S.C. 
1692(g)) is amended by adding at the end the following new subsection:
    ``(d) Continuation During Period.--Collection activities and 
communications may continue during the 30-day period described in 
subsection (a) unless the consumer requests the cessation of such 
activities.''.

SEC. 4. LIABILITY FOR NONCOMPLIANCE.

    (a) Clarification of Limitation on Class Action Awards.--Section 
813(a)(2)(B) of the Fair Debt Collection Practices Act (15 U.S.C. 
1692k(a)(2)(B)) is amended--
            (1) by inserting ``or any series of class actions arising 
        out of the same violations by the same debt collector'' after 
        ``case of a class action''; and
            (2) by inserting ``of such class action or series of class 
        actions'' after ``all other class members''.
    (b) Attorneys Fees To Enforce Civil Liability.--Paragraph (3) of 
section 813(a) of the Fair Debt Collection Practices Act (15 U.S.C. 
1692k(a)) is amended to read as follows:
            ``(3) subject to subsection (f), in the case of a 
        successful action to enforce a liability under paragraph (1) or 
        (2), the costs of the action, including reasonable attorney's 
        fees, as determined by the court, in an amount not to exceed 
        the amount awarded in such action under the applicable 
        paragraph.''.
    (c) Factors for Consideration.--Section 813(b) of the Fair Debt 
Collection Practices Act (15 U.S.C. 1692k(b)) is amended--
            (1) in the portion of such subsection which precedes 
        paragraph (1), by striking ``liability in any action'' and 
        inserting ``any award''; and
            (2) by striking paragraph (1) and inserting the following 
        new paragraph:
            ``(1) in any action under subsection (a)(2)(A), the 
        frequency and persistence of noncompliance by the debt 
        collector, the nature of such noncompliance, the extent to 
        which the such noncompliance was intentional, and the amount of 
        actual damages awarded; or''.
    (d) Bona Fide Errors.--Section 813(c) of the Fair Debt Collection 
Practices Act (15 U.S.C. 1692k(c)) is amended--
            (1) by striking ``(c) A debt collector may not'' and 
        inserting ``(c) Bona Fide Errors.--
            ``(1) In general.--A debt collector may not''; and
            (2) by adding at the end the following new paragraph:
            ``(2) Reliance on rules of civil procedure.--A debt 
        collector may not be held liable in any action brought under 
        this title if the debt collector shows by a preponderance of 
        the evidence that the violation resulted from good faith 
        compliance with the Federal Rules of Civil Procedure; in the 
        case of a proceeding in a State court, the rules of civil 
        procedure available under the laws of such State; or a 
        nonjudicial foreclosure proceeding.''.

SEC. 5. MORTGAGE SERVICERS' REGULATORY BURDEN RELIEF.

    (a) In General.--The Fair Debt Collection Practices Act (15 U.S.C. 
1692 et seq.) is amended--
            (1) by redesignating section 818 as section 819; and
            (2) by inserting after section 817 the following new 
        section:
``Sec. 818. Mortgage servicer exemption
    ``(a) Exemption.--Any servicer of federally related mortgage loans 
secured by first liens--
            ``(1) who is a debt collector; and
            ``(2) for whom the collection of delinquent debts is 
        secondary to the servicer's primary function of servicing 
        federally related mortgage loans,
shall be exempt from the requirements of sections 807(11) and 809 in 
connection with the collection of any debt which is a federally related 
mortgage loan secured by a first lien.
    ``(b) Validation Statement.--If a debt collector is exempt, 
pursuant to subsection (a), from the requirements of section 809 with 
respect to any federally related mortgage loan to a consumer which is 
secured by a first lien, the servicer shall provide to the consumer, at 
least 30 days before any acceleration of the debt and without charge to 
such consumer--
                    ``(A) a notice of the consumer's right to receive a 
                validation statement; or
                    ``(B) a validation statement.
            ``(2) Qualified validation requests.--
                    ``(A) Response to request.--If a servicer described 
                in paragraph (1) provides a consumer with a notice 
                under subparagraph (A) of such paragraph, the servicer 
                shall provide such consumer with a validation statement 
                not more than 10 days after receiving a qualified 
                validation request from such consumer.
                    ``(B) No delay required.--No provision of this 
                title shall be construed as requiring a servicer 
                described in paragraph (1) to delay acceleration, 
                foreclosure, or any other action with respect to a 
                federally related mortgage loan for which the servicer 
                provided a notice to the consumer under paragraph 
                (1)(A) due to the receipt by such servicer of a 
                qualified validation request from such consumer.
                    ``(C) Receipt and handling of requests.--A servicer 
                described in paragraph (1) may establish a separate and 
                exclusive office for the receipt and handling of any 
                qualified validation request from any consumer under 
                this subsection if the servicer provides notice of that 
                fact and the address of the office to the consumer--
                            ``(i) in the notice provided to such 
                        consumer pursuant to paragraph (1)(A); or
                            ``(ii) separately by 1st class mail with 
                        prepaid postage.
            ``(3) Reasonable estimates of 3d party charges.--A servicer 
        described in paragraph (1) shall not be liable under this title 
        for any inaccurate amount contained in a validation statement 
        provided to a consumer with respect to a federally related 
        mortgage loan secured by a first lien to the extent the 
        inaccurate amount--
                    ``(A) relates to costs for services to be provided 
                by third parties; and
                    ``(B) constitutes a reasonable estimate of such 
                costs.
    ``(c) Definitions.--For purposes of this section, the following 
definitions shall apply:
            ``(1) Federally related mortgage loan.--The term `federally 
        related mortgage loan' has the meaning given to such term in 
        section 3(1) of the Real Estate Settlement Procedures Act of 
        1974.
            ``(2) Qualified validation request.--The term `qualified 
        validation request' means a written request for a validation 
        statement from a consumer to a servicer which--
                    ``(A) includes the name and account number of the 
                consumer or such other information as may be necessary 
                to allow the servicer to identify such name and account 
                number; and
                    ``(B) is not written on or otherwise included with 
                a payment coupon or other payment medium provided by 
                the servicer.
            ``(3) Servicer; servicing.--The terms `servicer' and 
        `servicing' have the meanings given to such terms in section 
        6(i) of the Real Estate Settlement Procedures Act of 1974.
            ``(4) Validation statement.--The term `validation 
        statement' means a statement of--
                    ``(A) the total amount a consumer must pay, as of a 
                particular date, to bring the consumer's loan current; 
                and
                    ``(B) the total amount a consumer must pay, as of a 
                particular date, to satisfy the loan in full.''.
    (b) Clerical Amendment.--The table of sections for the Fair Debt 
Collection Practices Act (15 U.S.C. 1692 et seq.) is amended--
            (1) by redesignating the item relating to section 818 as 
        section 819; and
            (2) by inserting after the item relating to section 817 the 
        following new item:

``818. Mortgage servicer exemption.''.