HR 2544 IH

To amend the Fair Debt Collection Practices Act to reduce the cost of credit, and for other purposes.

July 16, 1999

Mr. METCALF introduced the following bill; which was referred to the Committee on Banking and Financial Services

To amend the Fair Debt Collection Practices Act to reduce the cost of credit, and for other purposes.

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

SECTION 1. SHORT TITLE.

This Act may be cited as the `Credit Cost Reduction Act of 1999'.

SEC. 2. EXEMPTION FOR COMMUNICATIONS INVOLVING LEGAL PROCEEDINGS.

Section 803(2) of the Fair Debt Collection Practices Act (15 U.S.C. 1692a(2)) is amended by adding at the end the following new sentence: `Such term does not include actions taken pursuant to the Federal Rules of Civil Procedure; in the case of a proceeding in a State court, the rules of civil procedure available under the laws of such State; or a nonjudicial foreclosure.'.

SEC. 3. COLLECTION ACTIVITY FOLLOWING INITIAL NOTICE.

Section 809 of the Fair Debt Collection Practices Act (15 U.S.C. 1692(g)) is amended by adding at the end the following new subsection:

`(d) CONTINUATION DURING PERIOD- Collection activities and communications may continue during the 30-day period described in subsection (a) unless the consumer requests the cessation of such activities.'.

SEC. 4. LIABILITY FOR NONCOMPLIANCE.

(a) CLARIFICATION OF LIMITATION ON CLASS ACTION AWARDS- Section 813(a)(2)(B) of the Fair Debt Collection Practices Act (15 U.S.C. 1692k(a)(2)(B)) is amended--

(1) by inserting `or any series of class actions arising out of the same violations by the same debt collector' after `case of a class action'; and

(2) by inserting `of such class action or series of class actions' after `all other class members'.

(b) ATTORNEYS FEES TO ENFORCE CIVIL LIABILITY- Paragraph (3) of section 813(a) of the Fair Debt Collection Practices Act (15 U.S.C. 1692k(a)) is amended to read as follows:

`(3) subject to subsection (f), in the case of a successful action to enforce a liability under paragraph (1) or (2), the costs of the action, including reasonable attorney's fees, as determined by the court, in an amount not to exceed the amount awarded in such action under the applicable paragraph.'.

(c) RULES APPLICABLE TO CERTAIN ACTIONS- Section 813 of the Fair Debt Collection Practices Act (15 U.S.C. 1692k) is amended by adding at the end the following new subsection:

`(f) RULES APPLICABLE TO ACTIONS UNDER THIS TITLE- Notwithstanding any other provision of law, in any action arising under this title, for purposes of Rule 68 of the Federal Rules of Civil Procedure, the following provisions shall apply:

`(1) PLAINTIFF'S ATTORNEY'S FEES- Costs shall include reasonable fees for the plaintiff's attorney.

`(2) DISALLOWANCE OF CERTAIN FEES ACCRUING AFTER REFUSAL OF SETTLEMENT OFFER- In accordance with Rule 68 of the Federal Rules of Civil Procedure, if--

`(A) an offer is made by the debt collector to a consumer bringing an action (including any class action or series of class actions referred to in subsection (a)(2)(B)) under this title, and the offer is not accepted; and

`(B) the amount of the final judgment awarded to the consumer (or, in the case of a class action or series of class actions, the total amount awarded to all class members in such class action or series of class actions) is less than or equal to the amount of the offer referred to in subparagraph (A),

the consumer (or the class with regard to a class action or series of class actions) may not be awarded or otherwise recover costs for attorney's fees incurred after the date such offer is rejected.'.

(d) FACTORS FOR CONSIDERATION- Section 813(b) of the Fair Debt Collection Practices Act (15 U.S.C. 1692k(b)) is amended--

(1) in the portion of such subsection which precedes paragraph (1), by striking `liability in any action' and inserting `any award'; and

(2) by striking paragraph (1) and inserting the following new paragraph:

`(1) in any action under subsection (a)(2)(A), the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, the extent to which the such noncompliance was intentional, and the amount of actual damages awarded; or'.

(e) BONA FIDE ERRORS- Section 813(c) of the Fair Debt Collection Practices Act (15 U.S.C. 1692k(c)) is amended--

(1) by striking `(c) A debt collector may not' and inserting `(c) BONA FIDE ERRORS-

`(1) IN GENERAL- A debt collector may not'; and

(2) by adding at the end the following new paragraph:

`(2) RELIANCE ON RULES OF CIVIL PROCEDURE- A debt collector may not be held liable in any action brought under this title if the debt collector shows by a preponderance of the evidence that the violation resulted from good faith compliance with the Federal Rules of Civil Procedure; in the case of a proceeding in a State court, the rules of civil procedure available under the laws of such State; or a nonjudicial foreclosure proceeding.'.

SEC. 5. MORTGAGE SERVICERS' REGULATORY BURDEN RELIEF.

(a) IN GENERAL- The Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.) is amended--

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

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

`Sec. 818. Mortgage servicer exemption

`(a) EXEMPTION- Any servicer of federally related mortgage loans secured by first liens--

`(1) who is a debt collector; and

`(2) for whom the collection of delinquent debts is secondary to the servicer's primary function of servicing federally related mortgage loans,

shall be exempt from the requirements of sections 807(11) and 809 in connection with the collection of any debt which is a federally related mortgage loan secured by a first lien.

`(b) VALIDATION STATEMENT- If a debt collector is exempt, pursuant to subsection (a), from the requirements of section 809 with respect to any federally related mortgage loan to a consumer which is secured by a first lien, the servicer shall provide to the consumer, at least 30 days before any acceleration of the debt and without charge to such consumer--

`(A) a notice of the consumer's right to receive a validation statement; or

`(B) a validation statement.

`(2) QUALIFIED VALIDATION REQUESTS-

`(A) RESPONSE TO REQUEST- If a servicer described in paragraph (1) provides a consumer with a notice under subparagraph (A) of such paragraph, the servicer shall provide such consumer with a validation statement not more than 10 days after receiving a qualified validation request from such consumer.

`(B) NO DELAY REQUIRED- No provision of this title shall be construed as requiring a servicer described in paragraph (1) to delay acceleration, foreclosure, or any other action with respect to a federally related mortgage loan for which the servicer provided a notice to the consumer under paragraph (1)(A) due to the receipt by such servicer of a qualified validation request from such consumer.

`(C) RECEIPT AND HANDLING OF REQUESTS- A servicer described in paragraph (1) may establish a separate and exclusive office for the receipt and handling of any qualified validation request from any consumer under this subsection if the servicer provides notice of that fact and the address of the office to the consumer--

`(i) in the notice provided to such consumer pursuant to paragraph (1)(A); or

`(ii) separately by 1st class mail with prepaid postage.

`(3) REASONABLE ESTIMATES OF 3D PARTY CHARGES- A servicer described in paragraph (1) shall not be liable under this title for any inaccurate amount contained in a validation statement provided to a consumer with respect to a federally related mortgage loan secured by a first lien to the extent the inaccurate amount--

`(A) relates to costs for services to be provided by third parties; and

`(B) constitutes a reasonable estimate of such costs.

`(c) DEFINITIONS- For purposes of this section, the following definitions shall apply:

`(1) FEDERALLY RELATED MORTGAGE LOAN- The term `federally related mortgage loan' has the meaning given to such term in section 3(1) of the Real Estate Settlement Procedures Act of 1974.

`(2) QUALIFIED VALIDATION REQUEST- The term `qualified validation request' means a written request for a validation statement from a consumer to a servicer which--

`(A) includes the name and account number of the consumer or such other information as may be necessary to allow the servicer to identify such name and account number; and

`(B) is not written on or otherwise included with a payment coupon or other payment medium provided by the servicer.

`(3) SERVICER; SERVICING- The terms `servicer' and `servicing' have the meanings given to such terms in section 6(i) of the Real Estate Settlement Procedures Act of 1974.

`(4) VALIDATION STATEMENT- The term `validation statement' means a statement of--

`(A) the total amount a consumer must pay, as of a particular date, to bring the consumer's loan current; and

`(B) the total amount a consumer must pay, as of a particular date, to satisfy the loan in full.'.

(b) CLERICAL AMENDMENT- The table of sections for the Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.) is amended--

(1) by redesignating the item relating to section 818 as section 819; and

(2) by inserting after the item relating to section 817 the following new item:

`818. Mortgage servicer exemption.'.

END