CFPB Interim Final Rule: Pandemic Debt Collection Practices Effective May 3 | McGlinchey Stafford

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On April 19, 2021, the CFPB announced that it had issued an Interim Final Rule (IFR) in support of the Centers for Disease Control and Prevention (CDC) Moratorium on Residential Evictions (CDC Order), which will come into effect. effective May 3, 2021. The CFPB rule (summarized here) requires debt collectors to provide tenants with written notice of their rights under the CDC Order and prohibits debt collectors from misrepresenting tenants’ eligibility to protection against expulsion under the moratorium.

The CFPB released the rule because it believes consumers were unaware of their rights under the CDC’s moratorium, and because debt collectors pursuing evictions may have misrepresented tenants’ rights. The CFPB has found that failure by debt collectors to disclose the protections available under the CDC order may violate the FDCPA with immediate health and safety consequences. The bureau also issued the rule to provide guidance on how debt collections can comply with the CDC order.

The IFR provides that during the period of effect of the CDC order, in any jurisdiction where it applies, the debt collector must disclose to the consumer, in a clear and visible manner in writing, that the consumer may be eligible temporary protection against deportation under the CDC Commander. Additionally, the debt collector cannot falsely represent or suggest to a consumer that the consumer is not eligible for temporary eviction protection under the CDC order.

Although the CDC order does not apply to any state, local, territorial, or tribal area with a moratorium on residential evictions that offers a level of public health protection equal to or greater than that of the CDC order, The IFR does not require debt collectors in these areas to comply with the IFR, but they can do so without breaking the rule or the FDCPA.

The Bureau provided two examples of options, but not mandatory, for disclosure (as well as a website and phone number):


OPTION 1
Due to the global COVID-19 pandemic, you may be eligible for temporary deportation protection under federal law.

Discover the steps to follow now:


OPTION 2
Due to the global COVID-19 pandemic, you may be eligible for temporary deportation protection under the laws of your state, territory, locality, or tribal area, or under federal law.

Discover the steps to follow now:


The IFR defines the terms “consumer”, “debt” (including unpaid residential rents) and “debt collector” (including eviction officers and third party attorneys) as defined in the FDCPA. The “CDC Ordinance” refers to the CDC’s moratorium on evictions, which can be extended. The term “eviction notice” refers to the earliest of any written notice that the laws of a state, locality, territory or tribal area require it to be provided to a consumer before it is released. ‘an eviction action against the consumer can be brought. If no pre-filing notice is required, this is the eviction action. Disclosure can be provided more than once.

The Bureau invites comments on the IFR, which applies throughout the duration of the CDC order. This order will expire on June 30, 2021, but could be extended. Mortgage agents should carefully consider this rule, especially when foreclosed lenders become homeowners subject to IFR. For example, in some jurisdictions, where there may be rent control or other regulation of properties subject to legitimate and unexpired leases, tenants have protections and cannot be evicted or forced to vacate prior to specified events. , including non-payment of rent.


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