HR1025APR8

TheWeekInCongress.com

Week Ending April 8, 2005

HR 1025 to amend the fair Debt Collection Practices Act to exempt mortgage servicers from certain requirements of the Act with respect to federally related mortgage loans secured by a first lien and for other purposes.

BRIEF

Mortgages are often sold and transferred such that the loan is serviced by someone other than the original broker. The new servicer (sic) has traditionally been required to contact the borrower and announce several things including that the contact is an attempt to collect a debt and any information obtained will be used for that purpose. (The Miranda notification). According to bill supporters, servicers who have taken over a mortgage and who contact the borrower on a late payment are sometimes ignored or avoided even because of the Miranda notice even though they may not be calling to collect the debt and may have a solution to keeping the mortgage in tact for the delinquent borrower.

The bill would exempt certain servicers of certain mortgages from the requirement of the Miranda notification as such: If the loan is federally related mortgage loan secured by first liens (including loans that may be in default) and the servicer is also a debt collector but collections are incidental to the primary function of servicing current federally related-mortgage loans then the servicer is exempt from making the Miranda notice.

Sponsor: Representative Edward R. Royce. (R-CA-40^th)

Vote: Passed House by voice vote (April 6, 2005)

Cost to the taxpayers: No discernible cost.