In Pfeifer v. Countrywide Home Loans et al., — Cal.Rptr.3d —-, 2012 WL 6216039 (2012), the Court of Appeal for the First District found a trustee’s action in a non-judicial foreclosure to be exempt from the FDCPA, rejected arguments apparently advocated by the CFPB in other cases.
Allen Pfeifer (Allen) and Florence A. Pfeifer (Florence), a son and his mother (collectively, the Pfeifers), have a mortgage insured by the Federal Housing Administration (FHA). They filed a third amended complaint against Countrywide Home Loans, Inc. (Countrywide) and ReconTrust Company (Recon), after a nonjudicial foreclosure proceeding was commenced against their property. The trial court sustained a demurrer by Countrywide and Recon (collectively, the lenders) without leave to amend against the Pfeifers’ third amended complaint and then entered judgment in favor of the lenders. ¶ The Pfeifers appeal and challenge the trial court’s rulings that they did not have a cognizable legal claim against Recon under the federal Fair Debt Collection Practices Act ( FDCPA or the Act). They also challenge, among other things, the trial court’s denial of their requests for declaratory relief and for wrongful foreclosure based on the lenders’ failure to conduct a face-to-face interview as mandated by the servicing regulations of the Department of Housing and Urban Development (HUD).
The Court of Appeal rejected the California Attorney General’s and CFPB’s argument that the trustee needs to follow, and should be subject to, the FDCPA. The Court of Appeal explained:
The Pfeifers argue that Recon was a debt collector because it “was hired by the unknown owner of the note and deed of trust for the specific purpose of collecting an alleged default.” It alleged that Recon “recorded a premature notice of default” prior to giving the Pfeifers the notice required by the FDCPA. They maintain that the opinion of the administrative agency responsible for enforcing the Act supports their argument that Recon was a debt collector under the FDCPA and courts should defer to the interpretation of a statute by the administrative agency responsible for enforcing that statute. (See, e.g., Ford Motor Credit Co. v. Milhollin (1980) 444 U.S. 555, 566 [the “general proposition” is “that considerable respect is due ‘ “the interpretation given [a] statute by the officers or agency charged with its administration” ‘ “].) In support of their argument, the Pfeifers cite the amicus brief by the Consumer Financial Protection Bureau (the Bureau) in Birster v. American Home Mortgage Servicing, Inc. (11th Cir.2012) 481 Fed. Appx. 579, which is an appeal from Birster v. American Home Mortg. Servicing, Inc. (S.D.Fla.2011) 796 F.Supp.2d 1376 (Birster ). In its amicus brief, the Bureau took an official position that trustees must comply with the entire FDCPA, and not merely title 15 of the United States Code section 1692f(6), in connection with a nonjudicial trustee sale. Title 15 of the United States Code section 1692f(6) defines “debt collector” for this provision as any entity whose “principal purpose” is “the enforcement of security interests.” Six categories of people/entities are specifically excluded from the definition of “debt collector,” but enforcers of security interests do not appear on that list. The Bureau stated that it disagreed with the conclusion of some courts that enforcers of security interests qualify as debt collectors for purposes of title 15 of the United States Code section 1692f(6) and therefore cannot be debt collectors under the FDCPA. The Bureau stated that an entity satisfying both definitions of “debt collector” remains a “debt collector” subject to the entire FDCPA even if it is enforcing a security interest in a particular case. ¶ The amicus brief by the Bureau in Birster did not address whether the pursuit of a foreclosure, by itself, constitutes debt collection under the Act. In Birster, the challenged conduct related to the enforcement of a security interest and included attempts to collect overdue payments that included visiting the home and making harassing and threatening phone calls to induce payment of the debts. (See Birster, supra, 796 F.Supp.2d at p. 1377.) Thus, the Bureau’s amicus brief does not affect the authority that has concluded that acts required to institute foreclosure proceedings, alone, are not debt collection activities under the FDCPA. In Santoro v. CTC Foreclosure Services (9th Cir.2001) 12 Fed.Appx. 476, the Ninth Circuit considered claims by mortgagors against the loan service company and foreclosure service company for alleged violations under the Act. The court explained that a foreclosure sale notice issued in compliance with Civil Code section 2924 et seq. does not seek to collect a debt and such notices are not the type of conduct that is forbidden under the Act. ¶ . . .The Pfeifers have alleged that Recon sent a notice of the pending foreclosure sale, but this allegation is insufficient to show that Recon engaged in debt collection activities bringing it under the ambit of the FDCPA. We agree with those courts that have held that giving notice of a foreclosure sale to a consumer as required by the Civil Code does not constitute debt collection activity under the FDCPA. ¶ We need not consider the Pfeifers’ contention that the FDCPA creates a private cause of action for injunctive relief. Since we conclude that the Pfeifers have not made a claim under the FDCPA, we need not consider what remedies are available under this Act.