Bureau Issues Interim Final Rule on Fair Debt Collection Practices Act (reprint April 19, 2021)
The Consumer Financial Protection Bureau (CFPB) today issued an interim final rule in support of the Centers for Disease Control and Prevention (CDC)’s eviction moratorium. The CFPB’s rule requires debt collectors to provide written notice to tenants of their rights under the eviction moratorium and prohibits debt collectors from misrepresenting tenants’ eligibility for protection from eviction under the moratorium. The CDC has established the eviction moratorium to protect the public health and reduce the spread of the virus. Debt collectors who evict tenants who may have rights under the moratorium without providing notice of the moratorium or who misrepresent tenants’ rights under the moratorium can be prosecuted by federal agencies and state attorneys general for violations of the Fair Debt Collection Practices Act (FDCPA) and are also subject to private lawsuits by tenants.
“With COVID-19 killing hundreds of Americans every day, kicking families out into the street during this pandemic may literally be a death sentence,” said CFPB Acting Director Dave Uejio. “No one should be evicted from their home without understanding their rights, and we will hold accountable those debt collectors who move forward with illegal evictions. We encourage debt collectors to work with tenants and landlords to find solutions that work for everyone.”
Nearly 9 million households are behind on their rental payments. Tens of thousands of renters are being evicted every week, often without being told of their rights under the CDC moratorium. As the CDC has found, tenants who are evicted may end up homeless or in crowded or shared living settings, increasing their vulnerability to COVID-19 and the risk of the disease spreading throughout communities. Such evictions can have long-term health, financial, and social consequences for families and children.
A temporary eviction moratorium ordered by the CDC has been extended through June 30, 2021. The CDC order generally prohibits landlords from evicting tenants for non-payment of rent, if the tenant submits a written declaration that they are unable to afford full rental payments and would likely become homeless or have to move into a shared living setting. This prohibition applies to an agent or attorney acting as a debt collector on behalf of a landlord or owner of the residential property.
Tens of thousands of tenants and families are evicted every week, many of whom would have had a right to stay in their homes if they had given their landlord a completed CDC eviction moratorium declaration. According to a recent Government Accountability Office report, tenants facing eviction may be unaware of the moratorium or may not understand the steps they must take to act on its protections. Declarations can be submitted in languages other than English, and alternative forms are available online.
New Tenant Protections
Under the FDCPA interim final rule, debt collectors, including attorneys, seeking to evict tenants for non-payment of rent must provide tenants who may have rights under the CDC order with clear and conspicuous written notice of those rights. The notice must be provided on the same date as the eviction notice, or, if no eviction notice is required by law, on the date that the eviction action is filed.
Debt collectors must provide the notice in writing. Phone calls or electronic notice such as text messages or emails are not sufficient. The CFPB is providing debt collectors with sample language to satisfy the rule’s disclosure requirements.
Failure to provide the required notice to tenants is a violation of the FDCPA. The FDCPA provides a private right of action against debt collectors, and violators can be held liable for actual damages, statutory damages, and attorney’s fees. Class actions may be brought under the FDCPA.
Some states and localities have adopted their own eviction moratoria. Debt collectors may also be required to provide notice of these moratoria. The CFPB’s rule does not preempt more protective state law.
There are additional resources available to help struggling renters impacted by COVID-19. Congress has created the Emergency Rental Assistance Program, administered by the U.S. Department of Treasury. This program provides assistance through state and local government to help tenants catch up on missed payments to avoid eviction. Applicants must apply through their local programs.
The National Low Income Housing Coalition has a directory of state and local rental assistance programs that renters can use to find their local programs. Landlords may also be eligible for funds under the Emergency Rental Assistance Program. The pandemic’s health and economic crises threaten families and communities across the nation. According to the CFPB’s analysis and other data:
Millions of families are at risk of being evicted: In December 2020 about 18 percent of renter households were behind on their rent, which means nearly 9 million households at risk of eviction. In a typical year, there are about 900,000 evictions nationwide. Over 27 percent of households with annual income under $25,000 were behind on their rent.
Stopping evictions saves lives:Research shows that COVID-19 infection rates and mortality rates were higher when eviction moratoria were removed. The CFPB’s rule will help ensure that more renters are able to take advantage of their protections and avoid eviction.
Evictions increase racial inequality: Black and Hispanic households are more than twice as likely to be tenants than white households, and they are also twice as likely to be behind on rental payments as of December 2020, according to a March CFPB report. Evictions impose substantial costs on individuals, families, and children, and having an eviction on your record can make it much harder to find a new rental property. Even an eviction filing can make it impossible for a family to locate new housing.
The CFPB has authority under the FDCPA to “prescribe rules with respect to the collection of debts by debt collectors.” Attorneys who engage in eviction proceedings on behalf of landlords or residential property owners to collect unpaid residential rent may be “debt collectors” as defined by the FDCPA. Given the urgency of the pandemic crisis, the Interim Final Rule will take effect on May 3, 2021. The CFPB believes this will give debt collectors time to come into full compliance. Debt collectors may begin complying with the rule before the compliance date.
Be very careful when looking for “free” advice. COVID has given fraudsters even more incentive to lie, cheat and steal your hard earned money. Through the many “COVID” programs, there are hundreds of thousands of dollars available to help tenants stay in their homes. But, I am told those tenants are unaware of their rights or how to access those funds. Smart landlords are walking tenants through the process so the landlords do not face the foreclosure of their property.
Only rely on government websites. Contact the agency directly, do not respond to emails, phone calls or letters from someone saying they are with the government – THEY ARE SCAMS. Sources including: www.FHA.gov, www.CFPB.gov, www.FTC.gov, to name a few. Once armed with good information, then use your common sense to decide what is best for you.
Diane is a well respected Arizona bankruptcy and foreclosure attorney. As a retired law professor, she believes in offering everyone, not just her clients, advice about bankruptcy and Arizona foreclosure laws. Diane is also a mentor to hundreds of Arizona attorneys.
*Important Note from Diane: Everything on this web site is offered for educational purposes only and not intended to provide legal advice, nor create an attorney client relationship between you, me, or the author of any article. Information in this web site should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state. Make sure to check out their reviews.*
When a debtor is in Chapter 13 bankruptcy, it is not unusual that their monthly payments are made through a plan rather than directly to the mortgage lender. At the end of the year, the mortgage lender is likely to send Form 1098 (mortgage interest paid through the year) to the trustee, not the homeowner.
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