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News & Press: Industry News

Will the U.S. Supreme Court Upend California Foreclosure Law?

Tuesday, January 15, 2019  
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The U.S. Supreme Court is considering whether trustees conducting nonjudicial foreclosures are subject to the Fair Debt Collection Practices Act (FDCPA). Lower courts are split with the federal Ninth Circuit Court of Appeals, the federal court covering California, ruling that a trustee conducting a California nonjudicial foreclosure proceeding was not a debt collector under the FDCPA because the trustee was trying to reclaim the property and not collect money. Therefore, the issue before the Supreme Court is whether a nonjudicial foreclosure is an attempt to collect a debt under the federal law. Reviewing the issue of whether nonjudicial foreclosure action is debt collection raises the question of whether Congress intended to preempt state nonjudicial foreclosure laws to the extent that they conflict with the FDCPA.

California’s nonjudicial foreclosure law has a series of notice requirements that leave no room for compliance with both state law and the federal debt collection law. This means that a trustee is in a difficult position if the trustee has to comply with both state and federal law. A ruling by the Supreme Court should clarify the law but could also have the effect of requiring changes to California’s foreclosure law. The case before the Supreme Court is Obduskey v. McCarthy.

California Land Title Association

1215 K Street #1816 Sacramento, CA 95814-3905
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