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Mortgage Servicing and Loan Modifications: 9.5.3.2 Moratorium

Rural Development direct loan borrowers who face loss of income or increased expenses that impair their ability to make regularly scheduled payments may be eligible for a moratorium on payments. To qualify for a moratorium, borrowers must show that they face a hardship due to circumstances beyond their control. A natural disaster should easily meet this standard.

Mortgage Servicing and Loan Modifications: 9.5.3.3 Payment Assistance

Payment assistance is another option that can provide substantial payment relief to Rural Development direct loan borrowers facing a natural disaster. Payment assistance provides a subsidy that reduces monthly payments to a level that is affordable based on the borrowers’ income. Borrowers enter into payment assistance contracts annually. However, when unforeseen events occur, borrowers can seek adjustments to their subsidy at any time during the contract year. Reduced income as a consequence of a natural disaster would certainly be a basis to request a downward adjustment in payments.

Fair Debt Collection: 14.3.3.3 FDCPA and Other Claims for Falsifying Caller ID Information

Section 1692d(6) of the Fair Debt Collection Practices Act (FDCPA) prohibits “the placement of telephone calls without meaningful disclosure of the caller’s identity.” Meaningful disclosure has been defined as including the caller’s name, the collection company’s name, and the nature of the caller’s business.241 A federal court found a FDCPA § 1692d(6) violation where the debt collector transmitted the name “Jennifer Smith” to the recipient’s caller ID device to lure the recipient to answer the phone, where no Jennifer Smith worked for the de

Fair Debt Collection: 14.3.3.4 Consumers’ Ability to Keep Their Phone Numbers Private

Caller ID technology is particularly troublesome for consumers who wish to preserve the privacy of their telephone numbers and locations. Consumers may wish to keep their phone numbers private from creditors and collection agencies to avoid repeated or harassing phone calls. Such consumers may unwittingly give debt collectors their telephone numbers by simply calling the collector from a phone without a caller ID block.

Fair Debt Collection: 14.3.4 Protection from Electronic Messaging Harassment

The Controlling the Assault of Non-Solicited Pornography and Marketing Act (CAN-SPAM Act)264 prohibits materially false or materially misleading headers in certain email messages.”265 It requires the sender of an unsolicited commercial email message to provide consumers a way to opt out of future messages.266 CAN-SPAM also authorizes the FCC to adopt rules to protect consumers from unwanted “mobile service commercial messages,”

Fair Debt Collection: 14.5.1 Advantages and Disadvantages of RICO Claims

Unlawful debt collection may violate the federal Racketeering Influenced and Corrupt Organizations Act (RICO).301 RICO does not prohibit unlawful debt collection itself, but rather targets those who use such debt collection or other specified criminal acts to relate to an “enterprise”302 in a forbidden manner.

Fair Debt Collection: 14.5.2.1 Generally

RICO prohibits persons from using either of two different kinds of qualifying conduct to relate to an enterprise in a prohibited manner. These two kinds of preliminary conduct are “collection of an unlawful debt” and a “pattern of racketeering activity.”305 The next two subsections discuss these preliminary requirements for any RICO claim.

Fair Debt Collection: 14.5.2.2 Collection of an Unlawful Debt

RICO defines “unlawful debt” to include debts from unlawful gambling and debts that arise from a loan that is both unenforceable under a usury law and bears a rate at twice the enforceable rate.306 A defendant need only collect one unlawful debt to meet this initial element of RICO.307 Although a plaintiff must show that a usurious debt was incurred “in connection with . . .

Fair Debt Collection: 14.5.2.3 Pattern of Racketeering Activity

The second, alternative type of qualifying activity is a “pattern of racketeering activity.” “Racketeering activity,” the core requirement of this type of qualifying conduct, comprises any of nine state criminal offenses or any of a longer list of specified federal offenses.312 Of these, mail fraud and wire fraud are the two most commonly invoked predicate offenses.313

Fair Debt Collection: 14.5.3 RICO’s Substantive Prohibitions

Once a plaintiff has shown that a defendant has either collected an unlawful debt or committed a pattern of racketeering activity, the plaintiff must show that the defendant used that conduct to relate to an “enterprise”325 in a manner that violates one of RICO’s three substantive provisions.326 The provision most commonly employed by civil RICO suits prohibits a person who is employed by or associated with an enterprise from using either the collection of an unlawful debt or a pattern of racket

Fair Debt Collection: 14.6.1 Overview

Reporting a debt to a credit bureau—known as a “consumer reporting agency” or CRA under the Fair Credit Reporting Act345—is a “powerful tool designed, in part, to wrench compliance with payment terms.”346 The collection industry has acknowledged this sentiment,347 and the CFPB noted that “furnishing information to the [nationwide CRAs] can provide an incentive for borrowers or debtors to meet their repayment obligations.”

Fair Debt Collection: 14.6.2.1 Generally

Providing accurate information is the hallmark of the FCRA.370 The accuracy standard in the FCRA is stringent, requiring more than just technical accuracy and measured instead by the FCRA’s own sui generis benchmark of “maximum possible accuracy.”371

Fair Debt Collection: 14.6.2.3.1 Notice of the dispute

To initiate the FCRA’s formal reinvestigation process, the consumer must send a notice of dispute to the consumer reporting agency informing the agency that an item of information is inaccurate or incomplete.386 Taking this step can be an effective method to force a debt collector or creditor to correct its errors. It is also the essential first step for a claim against the furnisher under the FCRA.387

Fair Debt Collection: 14.6.2.3.2 Furnisher’s duty to conduct a reasonable investigation

After a consumer reporting agency notifies a furnisher that an item of information the furnisher provided is disputed, the furnisher must conduct its own investigation into the accuracy and completeness of that information and must promptly report back to the CRA.395 The FCRA does not specify the standard for the investigation, but the federal courts uniformly have held that the furnisher must conduct a “reasonable investigation.”396 The investigation’s adequacy is a question of fact for jury de

Fair Debt Collection: 14.6.2.3.3 Reinvestigation time limits

The CRA’s reinvestigation must be completed within thirty days of receipt of the consumer’s formal dispute, with one fifteen-day extension allowed if, during the original thirty days, the consumer forwards additional relevant information. Furnishers thus have to act quickly enough to permit the CRA to meet its deadline, normally having to reinvestigate and respond to the CRA within fifteen to twenty days of their receipt of the notice of the dispute.407

Fair Debt Collection: 14.6.4 Special Duties Where Debt Arises from Fraud or Identity Theft

The FCRA gives consumers the right to require consumer reporting agencies to block information that resulted from fraud, including identity theft.421 Once properly notified by the consumer of the fraud, the CRA must also promptly notify the furnishers of the information, including debt collectors.422 That debt collector or other person then may not sell or transfer the debt, except as a repurchase to a prior assignor, and may not place it for further collection.

Fair Debt Collection: 14.6.5 Creditors and Collectors As Consumer Reporting Agencies

A collection agency or creditor will meet the definition of consumer reporting agency if it regularly furnishes information, beyond its own transactions or experiences with consumers, to third parties for use in connection with consumers’ transactions.431 But merely reporting its own experience with the consumer will not make it a consumer reporting agency.432