The Federal Communications Commission (FCC) has denied a request from the Mortgage Bankers Association (MBA) to exempt mortgage servicers from the “express consent” provision of the Telephone Consumer Protection Act (TCPA), which requires servicers to get consent from borrowers before robo-calling their mobile phones.
The MBA submitted the request in June in response to a proposal approved by Congress earlier this year allowing servicers to robo-call borrowers’ cell phones without the required consent, provided they are collecting on government-backed loans.
The government’s rationale for this exception – which was granted by way of an amendment to the TCPA – is that it is important for mortgage servicers to be able to contact borrowers who are delinquent on their mortgages as early as possible so that they can get loss mitigation efforts into place and prevent borrowers from heading into foreclosure.
One of the classic problems with borrowers in default is that they often avoid having contact with their mortgage servicers. This is often ultimately to the borrower’s detriment, as the servicer is in the best position to assist the borrower and keep him or her from sinking deeper into financial trouble.
In its request, the MBA argued that the logic that is used for exempting collectors from the “express consent” provision for government-backed loans should apply to all mortgages, not just the ones that are government-backed.
“Outbound residential mortgage servicing calls are critical to ensure borrowers understand available options to avoid foreclosure and its financially damaging repercussions,” the MBA’s petition states. “Given their importance and benefit to borrowers, these communications are mandated by multiple federal and state laws, regulations, and requirements. However, residential mortgage servicers face uncapped statutory penalties for each call attempt made pursuant to these requirements.”
In the petition, the MBA points out that other federal regulators, including the Consumer Financial Protection Bureau, the Federal Housing Finance Agency, the Federal Housing Administration and the Treasury Department have mandated protocols for reaching out to borrowers through outbound communications when a homeowner is delinquent. In addition, most states have enacted similar requirements.
“This exemption will confirm that complying with borrower outreach requirements will not subject mortgage servicers to liability under the TCPA and will ensure that calls to borrowers are treated fairly under the TCPA regardless of who may own or insure the mortgage at any given time,” the petition states. “The TCPA was not intended to obstruct effective communications between mortgage servicers and their borrowers.”
The FCC, however, denied the request this past week on the grounds that the MBA failed to adequately show why servicers “should be able to make or send non-time-sensitive robo-calls, including robo-texts, to consumers without first obtaining consumer consent.”
The Federal Housing Finance Agency has also asked the FCC to carve out an exemption for the mortgage industry.
A recent enforcement advisory indicates that the FCC will soon be cracking down on “unwanted robo-texts.”
The TCPA prohibits prerecorded calls, as well as auto-dialers, that connect live callers to borrowers.
Mortgage servicers have been struggling with TCPA compliance, which is particularly tricky because some parts of the law are vague and open to interpretation. Regardless, violations can add up quickly, as fines are calculated on a per-incident basis. In July, Wells Fargo Bank paid $16.3 million to settle a class action lawsuit alleging it illegally used an auto-dialer to call mortgage borrowers’ mobile phones without their consent.
In that suit, Markos v. Well Fargo Bank NA, which was originally filed on April 14, 2015, the U.S. District Court for the Northern District of Georgia ruled that Wells Fargo must pay each affected borrower $25 to $75. That’s after deductions are made for cost of notice, claims administration, and court-awarded attorneys’ fees and costs.