Credit Cost Reduction Act of 2000

Summary: Permits collection activities and communications during the 30-day notice period following initial debt notification to the consumer.
Revises civil liability guidelines for a debt collector's noncompliance with the Act with respect to: (1) consumer's attorney's fees; (2) disallowance of certain attorney's fees accruing after a consumer's refusal of a debt collector's settlement offer if a final judgment amounts to the same as or less than such offer; (3) additional factors for consideration by the court in determining the amount of any award; and (4) a debt collector's good faith compliance with State or Federal rules of civil procedure as a shield against liability.
Cites conditions under which a servicer of federally related mortgage loans secured by first liens is exempt from certain requirements relating to: (1) debt notification and validation; and (2) failure to disclose that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose. Requires such a servicer, if a debt collector is exempt from ordinary debt validation requirements, to provide a consumer, without charge, with a validation statement or a notice of the consumer's right to receive one at least 30 days before any debt acceleration.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Credit Cost Reduction Act of 2000''.

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--
            (1) by striking ```communication' means'' and inserting the 
        following: ```communication'--
                    ``(A) means'';
            (2) by striking the period at the end and inserting ``; 
        and''; and
            (3) by adding at the end the following:
                    ``(B) does not include any action taken pursuant 
                to--
                            ``(i) the Federal Rules of Civil Procedure;
                            ``(ii) in the case of a proceeding in a 
                        State court, the rules of civil procedure 
                        available under the laws of such State; or
                            ``(iii) a nonjudicial foreclosure.''.

SEC. 3. COLLECTION ACTIVITY FOLLOWING INITIAL NOTICE.

    Section 809 of the Fair Debt Collection Practices Act (15 U.S.C. 
1692g) is amended by adding at the end the following:
    ``(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.--Section 813(a)(3) 
of the Fair Debt Collection Practices Act (15 U.S.C. 1692k(a)(3)) 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) Rules Applicable to Certain Actions.--Section 813 of the Fair 
Debt Collection Practices Act (15 U.S.C. 1692k) is amended by adding at 
the end the following:
    ``(f) Rules Applicable to Actions Under This Title.--
Notwithstanding any other provision of law, in any action arising under 
this title, for purposes of rule 68 of the Federal Rules of Civil 
Procedure, the following provisions shall apply:
            ``(1) Plaintiff's attorney's fees.--Costs shall include 
        reasonable fees for the plaintiff's attorney.
            ``(2) Disallowance of certain fees accruing after refusal 
        of settlement offer.--In accordance with rule 68 of the Federal 
        Rules of Civil Procedure, if--
                    ``(A) an offer is made by the debt collector to a 
                consumer bringing an action (including any class action 
                or series of class actions referred to in subsection 
                (a)(2)(B)) under this title, and the offer is not 
                accepted; and
                    ``(B) the amount of the final judgment awarded to 
                the consumer (or, in the case of a class action or 
                series of class actions, the total amount awarded to 
                all class members in such class action or series of 
                class actions) is less than or equal to the amount of 
                the offer referred to in subparagraph (A),
        the consumer (or the class with regard to a class action or 
        series of class actions) may not be awarded or otherwise 
        recover costs for attorney's fees incurred after the date such 
        offer is rejected.''.
    (d) Factors for Consideration.--Section 813(b) of the Fair Debt 
Collection Practices Act (15 U.S.C. 1692k(b)) is amended--
            (1) in the matter preceding paragraph (1), by striking 
        ``liability in any action'' and inserting ``any award''; and
            (2) by striking paragraph (1) and inserting the following:
            ``(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''.
    (e) 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 the following:
    ``(c) Bona Fide Errors.--
            ``(1) In general.--A debt collector may not''; and
            (2) by adding at the end the following:
            ``(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--
                    ``(A) the Federal Rules of Civil Procedure;
                    ``(B) in the case of a proceeding in a State court, 
                the rules of civil procedure available under the laws 
                of such State; or
                    ``(C) 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:
``Sec. 818. Mortgage servicer exemption
    ``(a) Exemption.--Any servicer of federally related mortgage loans 
secured by first liens shall be exempt from the requirements of 
sections 807(11) and 809 in connection with the collection of any debt 
that is a federally related mortgage loan secured by a first lien, if 
the servicer is--
            ``(1) a debt collector; and
            ``(2) a servicer for whom the collection of delinquent 
        debts is secondary to the primary function of the servicer of 
        servicing federally related mortgage loans.
    ``(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 that 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 first class mail with 
                        prepaid postage.
            ``(3) Reasonable estimates of third 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.--In this section:
            ``(1) Federally related mortgage loan.--The term `federally 
        related mortgage loan' has the meaning given the 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 that--
                    ``(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 those 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 an 
        item relating to section 819; and
            (2) by inserting after the item relating to section 817 the 
        following:

``818. Mortgage servicer exemption.''.