Fair Debt Collection Practices Act

Fair Debt Collection Practices Act (FDCPA) is the primary federal law governing the conduct of debt collectors in the United States. Originally enacted in 1977, it sets strict rules on when, how, and how often a debt collector can contact a borrower, what must be disclosed in initial communications, and what practices are prohibited — including harassment, false representations, and unfair collection methods.

Whether the FDCPA applies to a mortgage note investor depends on how the investor acquired the debt. The law targets "debt collectors," which it defines as parties collecting debts owed to another or debts that were in default at the time of acquisition. Note investors who purchase non-performing loans are generally treated as debt collectors under the FDCPA, meaning every borrower communication — whether sent directly or through a servicer — must comply with the statute's requirements. This includes sending a written validation notice within five days of initial contact, honoring cease-and-desist requests, and avoiding contact at inconvenient times. Violations carry statutory damages of up to $1,000 per action plus actual damages and attorney fees, making compliance a non-negotiable operational requirement for note investors and their servicing partners.