II

106TH CONGRESS

2D SESSION S. 2837

To amend the Fair Debt Collection Practices Act to reduce the cost of

credit, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JUNE 30, 2000

Mr. CRAIG introduced the following bill; which was read twice and referred

to the Committee on Banking, Housing, and Urban Affairs

A BILL

To amend the Fair Debt Collection Practices Act to reduce

the cost of credit, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Credit Cost Reduction

5 Act of 2000’’.

6 SEC. 2. EXEMPTION FOR COMMUNICATIONS INVOLVING

7 LEGAL PROCEEDINGS.

8 Section 803(2) of the Fair Debt Collection Practices

9 Act (15 U.S.C. 1692a(2)) is amended—
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1 (1) by striking ‘‘ ‘communication’ means’’ and

2 inserting the following: ‘‘ ‘communication’—

3 ‘‘(A) means’’;

4 (2) by striking the period at the end and insert5 ing ‘‘; and’’; and

6 (3) by adding at the end the following:

7 ‘‘(B) does not include any action taken

8 pursuant to—

9 ‘‘(i) the Federal Rules of Civil Proce10 dure;

11 ‘‘(ii) in the case of a proceeding in a

12 State court, the rules of civil procedure

13 available under the laws of such State; or

14 ‘‘(iii) a nonjudicial foreclosure.’’.

15 SEC. 3. COLLECTION ACTIVITY FOLLOWING INITIAL NO16 TICE.

17 Section 809 of the Fair Debt Collection Practices Act

18 (15 U.S.C. 1692g) is amended by adding at the end the

19 following:

20 ‘‘(d) CONTINUATION DURING PERIOD.—Collection

21 activities and communications may continue during the

22 30-day period described in subsection (a), unless the con23 sumer requests the cessation of such activities.’’.
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1 SEC. 4. LIABILITY FOR NONCOMPLIANCE.

2 (a) CLARIFICATION OF LIMITATION ON CLASS AC3 TION AWARDS.—Section 813(a)(2)(B) of the Fair Debt

4 Collection Practices Act (15 U.S.C. 1692k(a)(2)(B)) is

5 amended—

6 (1) by inserting ‘‘or any series of class actions

7 arising out of the same violations by the same debt

8 collector’’ after ‘‘case of a class action’’; and

9 (2) by inserting ‘‘of such class action or series

10 of class actions’’ after ‘‘all other class members’’.

11 (b) ATTORNEYS FEES TO ENFORCE CIVIL LIABIL12 ITY.—Section 813(a)(3) of the Fair Debt Collection Prac13 tices Act (15 U.S.C. 1692k(a)(3)) is amended to read as

14 follows:

15 ‘‘(3) subject to subsection (f), in the case of a

16 successful action to enforce a liability under para17 graph (1) or (2), the costs of the action, including

18 reasonable attorney’s fees, as determined by the

19 court, in an amount not to exceed the amount

20 awarded in such action under the applicable para21 graph.’’.

22 (c) RULES APPLICABLE TO CERTAIN ACTIONS.—Sec23 tion 813 of the Fair Debt Collection Practices Act (15

24 U.S.C. 1692k) is amended by adding at the end the fol25 lowing:
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1 ‘‘(f) RULES APPLICABLE TO ACTIONS UNDER THIS

2 TITLE.—Notwithstanding any other provision of law, in

3 any action arising under this title, for purposes of rule

4 68 of the Federal Rules of Civil Procedure, the following

5 provisions shall apply:

6 ‘‘(1) PLAINTIFF’S ATTORNEY’S FEES.—Costs

7 shall include reasonable fees for the plaintiff’s attor8 ney.

9 ‘‘(2) DISALLOWANCE OF CERTAIN FEES ACCRU10 ING AFTER REFUSAL OF SETTLEMENT OFFER.—In

11 accordance with rule 68 of the Federal Rules of Civil

12 Procedure, if—

13 ‘‘(A) an offer is made by the debt collector

14 to a consumer bringing an action (including any

15 class action or series of class actions referred to

16 in subsection (a)(2)(B)) under this title, and

17 the offer is not accepted; and

18 ‘‘(B) the amount of the final judgment

19 awarded to the consumer (or, in the case of a

20 class action or series of class actions, the total

21 amount awarded to all class members in such

22 class action or series of class actions) is less

23 than or equal to the amount of the offer re24 ferred to in subparagraph (A),
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1 the consumer (or the class with regard to a class ac2 tion or series of class actions) may not be awarded

3 or otherwise recover costs for attorney’s fees in4 curred after the date such offer is rejected.’’.

5 (d) FACTORS FOR CONSIDERATION.—Section 813(b)

6 of the Fair Debt Collection Practices Act (15 U.S.C.

7 1692k(b)) is amended—

8 (1) in the matter preceding paragraph (1), by

9 striking ‘‘liability in any action’’ and inserting ‘‘any

10 award’’; and

11 (2) by striking paragraph (1) and inserting the

12 following:

13 ‘‘(1) in any action under subsection (a)(2)(A),

14 the frequency and persistence of noncompliance by

15 the debt collector, the nature of such noncompliance,

16 the extent to which the such noncompliance was in17 tentional, and the amount of actual damages award18 ed; or’’.

19 (e) BONA FIDE ERRORS.—Section 813(c) of the Fair

20 Debt Collection Practices Act (15 U.S.C. 1692k(c)) is

21 amended—

22 (1) by striking ‘‘(c) A debt collector may not’’

23 and inserting the following:

24 ‘‘(c) BONA FIDE ERRORS.—
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1 ‘‘(1) IN GENERAL.—A debt collector may not’’;

2 and

3 (2) by adding at the end the following:

4 ‘‘(2) RELIANCE ON RULES OF CIVIL PROCE5 DURE.—A debt collector may not be held liable in

6 any action brought under this title, if the debt col7 lector shows by a preponderance of the evidence that

8 the violation resulted from good faith compliance

9 with—

10 ‘‘(A) the Federal Rules of Civil Procedure;

11 ‘‘(B) in the case of a proceeding in a State

12 court, the rules of civil procedure available

13 under the laws of such State; or

14 ‘‘(C) a nonjudicial foreclosure pro15 ceeding.’’.

16 SEC. 5. MORTGAGE SERVICERS’ REGULATORY BURDEN RE17 LIEF.

18 (a) IN GENERAL.—The Fair Debt Collection Prac19 tices Act (15 U.S.C. 1692 et seq.) is amended—

20 (1) by redesignating section 818 as section 819;

21 and

22 (2) by inserting after section 817 the following:

23 ‘‘§ 818. Mortgage servicer exemption

24 ‘‘(a) EXEMPTION.—Any servicer of federally related

25 mortgage loans secured by first liens shall be exempt from
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1 the requirements of sections 807(11) and 809 in connec2 tion with the collection of any debt that is a federally re3 lated mortgage loan secured by a first lien, if the servicer

4 is—

5 ‘‘(1) a debt collector; and

6 ‘‘(2) a servicer for whom the collection of delin7 quent debts is secondary to the primary function of

8 the servicer of servicing federally related mortgage

9 loans.

10 ‘‘(b) VALIDATION STATEMENT.—If a debt collector is

11 exempt, pursuant to subsection (a), from the requirements

12 of section 809 with respect to any federally related mort13 gage loan to a consumer that is secured by a first lien,

14 the servicer shall provide to the consumer, at least 30 days

15 before any acceleration of the debt and without charge to

16 such consumer—

17 ‘‘(A) a notice of the consumer’s right to re18 ceive a validation statement; or

19 ‘‘(B) a validation statement.

20 ‘‘(2) QUALIFIED VALIDATION REQUESTS.—

21 ‘‘(A) RESPONSE TO REQUEST.—If a

22 servicer described in paragraph (1) provides a

23 consumer with a notice under subparagraph (A)

24 of such paragraph, the servicer shall provide

25 such consumer with a validation statement not
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1 more than 10 days after receiving a qualified

2 validation request from such consumer.

3 ‘‘(B) NO DELAY REQUIRED.—No provision

4 of this title shall be construed as requiring a

5 servicer described in paragraph (1) to delay ac6 celeration, foreclosure, or any other action with

7 respect to a federally related mortgage loan for

8 which the servicer provided a notice to the con9 sumer under paragraph (1)(A) due to the re10 ceipt by such servicer of a qualified validation

11 request from such consumer.

12 ‘‘(C) RECEIPT AND HANDLING OF RE13 QUESTS.—A servicer described in paragraph (1)

14 may establish a separate and exclusive office for

15 the receipt and handling of any qualified valida16 tion request from any consumer under this sub17 section if the servicer provides notice of that

18 fact and the address of the office to the

19 consumer—

20 ‘‘(i) in the notice provided to such

21 consumer pursuant to paragraph (1)(A); or

22 ‘‘(ii) separately by first class mail

23 with prepaid postage.

24 ‘‘(3) REASONABLE ESTIMATES OF THIRD PARTY

25 CHARGES.—A servicer described in paragraph (1)
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1 shall not be liable under this title for any inaccurate

2 amount contained in a validation statement provided

3 to a consumer with respect to a federally related

4 mortgage loan secured by a first lien to the extent

5 the inaccurate amount—

6 ‘‘(A) relates to costs for services to be pro7 vided by third parties; and

8 ‘‘(B) constitutes a reasonable estimate of

9 such costs.

10 ‘‘(c) DEFINITIONS.—In this section:

11 ‘‘(1) FEDERALLY RELATED MORTGAGE LOAN.—

12 The term ‘federally related mortgage loan’ has the

13 meaning given the term in section 3(1) of the Real

14 Estate Settlement Procedures Act of 1974.

15 ‘‘(2) QUALIFIED VALIDATION REQUEST.—The

16 term ‘qualified validation request’ means a written

17 request for a validation statement from a consumer

18 to a servicer that—

19 ‘‘(A) includes the name and account num20 ber of the consumer or such other information

21 as may be necessary to allow the servicer to

22 identify such name and account number; and

23 ‘‘(B) is not written on or otherwise in24 cluded with a payment coupon or other pay25 ment medium provided by the servicer.
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1 ‘‘(3) SERVICER; SERVICING.—The terms

2 ‘servicer’ and ‘servicing’ have the meanings given

3 those terms in section 6(i) of the Real Estate Settle4 ment Procedures Act of 1974.

5 ‘‘(4) VALIDATION STATEMENT.—The term ‘vali6 dation statement’ means a statement of—

7 ‘‘(A) the total amount a consumer must

8 pay, as of a particular date, to bring the con9 sumer’s loan current; and

10 ‘‘(B) the total amount a consumer must

11 pay, as of a particular date, to satisfy the loan

12 in full.’’.

13 (b) CLERICAL AMENDMENT.—The table of sections

14 for the Fair Debt Collection Practices Act (15 U.S.C.

15 1692 et seq.) is amended—

16 (1) by redesignating the item relating to section

17 818 as an item relating to section 819; and

18 (2) by inserting after the item relating to sec19 tion 817 the following:

‘‘818. Mortgage servicer exemption.’’.

Æ