Justices Limit Reach of Debt Collection Law In Foreclosures (3)

Federal protections against abusive collection methods don’t apply to foreclosures that take place outside of the court system, the U.S. Supreme Court said.

The high court on March 20 found in a unanimous ruling that the Fair Debt Collection Practices Act does not extend to parties involved in so-called “nonjudicial foreclosures” because Congress carved companies seeking to collect on a security interest – including through a sale of a home in the foreclosure process – from some of the protections in the 1977 law.

“We think Congress may well have chosen to treat security-interest enforcement differently from ordinary debt collection ...