Fair Debt Collection Practices Act (Regulation F); Time-Barred Debt

Publisher lists this guidance as withdrawn/rescinded: Fair Debt Collection Practices Act (Regulation F); Time-Barred Debt, 88 FR 26475 (May 01, 2023); withdrawn on May 12, 2025 .

This section of the FEDERAL REGISTER
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents.
Rules and Regulations
Federal Register
26475
Vol. 88, No. 83
Monday, May 1, 2023
1
85 FR 77987 (Dec. 3, 2020).
2
See generally 78 FR 79730, 79732–33 (Dec. 31,
2013).
3
Id. at 79733.
4
See generally Michael Hill, ‘‘Zombie Debt’’:
Homeowners face foreclosure on old mortgages,
Associated Press (Nov. 16, 2022), https://
apnews.com/article/business-mortgages-
44b1ffad08a80b96a8630e091d1e96f2.
5
See 86 FR 5766, 5776–77 (Jan. 19, 2021); 12 CFR
1006.26(a)(2).
6
See 86 FR at 5775–76; 12 CFR 1006.26(a)(1).
7
See 86 FR at 5777.
CONSUMER FINANCIAL PROTECTION
BUREAU
12 CFR Part 1006
Fair Debt Collection Practices Act
(Regulation F); Time-Barred Debt
AGENCY: Consumer Financial Protection
Bureau.
ACTION: Advisory opinion.
SUMMARY: The Consumer Financial
Protection Bureau (CFPB) is issuing this
advisory opinion to affirm that the Fair
Debt Collection Practices Act (FDCPA)
and its implementing Regulation F
prohibit a debt collector, as that term is
defined in the statute and regulation,
from suing or threatening to sue to
collect a time-barred debt. Accordingly,
an FDCPA debt collector who brings or
threatens to bring a State court
foreclosure action to collect a time-
barred mortgage debt may violate the
FDCPA and Regulation F.
DATES: This advisory opinion is
effective on May 1, 2023.
FOR FURTHER INFORMATION CONTACT: Seth
Caffrey, Courtney Jean, or Kristin
McPartland, Senior Counsels, Office of
Regulations at (202) 435–7700 or
https://reginquiries.
consumerfinance.gov/. If you require
this document in an alternative
electronic format, please contact CFPB_
Accessibility@cfpb.gov.
SUPPLEMENTARY INFORMATION: The CFPB
is issuing this advisory opinion through
the procedures for its Advisory
Opinions Policy.
1
Refer to those
procedures for more information.
I. Advisory Opinion
A. Background
Leading up to the 2008 financial
crisis, many lenders originated
mortgages to consumers without
considering their ability to repay the
loans.
2
These practices, which harmed
millions of people, included in some
cases originating products such as
‘‘piggyback’’ mortgages in which high-
interest second mortgages were issued
simultaneously with the origination of
the first mortgage. One common
piggyback mortgage product, known as
an 80/20 loan, involved a first lien loan
for 80 percent of the value of the home
and a second lien loan for the remaining
20 percent of the valuation. Some
consumers in these loans found
themselves unable to make full
payments on their first and second
mortgages, and when housing prices
began to decline in 2005, refinancing
became more difficult.
3

When a borrower defaults on a second
mortgage, the mortgage holder may be
able to initiate a foreclosure even if the
borrower is current on the first
mortgage. However, the second
mortgage holder only receives proceeds
from the foreclosure sale if there are any
funds left after paying off the first
mortgage. As a result, many second
mortgage holders of piggyback loans,
recognizing that a foreclosure would not
generate enough money to cover even
the first mortgage, charged their
defaulted loans off as uncollectible and
ceased communicating with the
borrowers. Some sold the loans to debt
buyers, often for pennies on the dollar.
Such sales often occurred unbeknownst
to borrowers, who continued to receive
no communications regarding the loans.
Many borrowers, having not received
any notices or periodic statements for
years, concluded that their second
mortgages had been modified along with
the first mortgage, discharged in
bankruptcy, or forgiven.
In recent years, as home prices have
increased and borrowers have paid
down their first mortgages, after years of
silence, some borrowers are hearing
from companies that claim to own or
have the right to collect on their long-
dormant second mortgages.
4
These
companies often demand the
outstanding balance on the second
mortgage, plus fees and interest, and
threaten to foreclose if the borrower
does not or cannot pay. The CFPB is
concerned about homeowners who
survived the 2008 financial crisis but
who are now facing foreclosure threats
and other collection activity because of
long-dormant second mortgages. These
borrowers are often told that they face
a choice between entering into onerous
payment plans or losing their homes
and the equity they have diligently built
since the financial crisis.
Because of the amount of time that
has lapsed on these long-dormant loans,
some have likely become time barred
under State law. Time-barred debts are
debts for which the applicable statute of
limitations has expired.
5
Statutes of
limitation are, typically, State laws that
provide time limits for bringing suit on
legal claims.
6
In most States the
expiration of the applicable statute of
limitations, if raised by the consumer as
an affirmative defense, precludes the
debt collector from recovering on the
debt using judicial processes.
7
In many
jurisdictions, State court (i.e., judicial)
foreclosure actions are subject to a
statute of limitations.
The CFPB understands that some debt
collectors collecting on long-dormant
second mortgages may have filed or
have threatened to file judicial
foreclosure actions even though the
underlying debt is time barred. The
CFPB is issuing this advisory opinion to
affirm that: (1) the FDCPA and its
implementing Regulation F prohibit a
debt collector, as that term is defined in
the statute and regulation, from suing or
threatening to sue to collect a time-
barred debt; and (2) this prohibition
applies even if the debt collector neither
knows nor should know that the debt is
time barred. Accordingly, an FDCPA
debt collector who brings or threatens to
bring a State court foreclosure action to
collect a time-barred mortgage debt may
violate the FDCPA and Regulation F.
B. Coverage
This advisory opinion applies to debt
collectors as defined in section 803(6) of
the FDCPA and implemented in
Regulation F, 12 CFR 1006.2(i).
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26476 Federal Register/ Vol. 88, No. 83 / Monday, May 1, 2023 / Rules and Regulations
8
15 U.S.C. 1692–1692p.
9
12 CFR part 1006.
10
15 U.S.C. 1692a(6); 12 CFR 1006.2(i). The
statute and regulation also provide that, for
purposes of section 808(6) and 12 CFR 1006.22(e),
the term debt collector also includes any person
who uses any instrumentality of interstate
commerce or the mails in any business the
principal purpose of which is the enforcement of
security interests. Id.
11
15 U.S.C. 1692a(5); 12 CFR 1006.2(h).
12
See, e.g., Cohen v. Rosicki, Rosicki & Assocs.,
PC, 897 F.3d 75, 83 (2d Cir. 2018).
13
Id. at 83–84.
14
12 CFR 1006.26(b).
15
86 FR 5776, 5778 (Jan. 19, 2021).
16
See id. at 5777, 5781.
17
Id. at 5777.
18
See 15 U.S.C. 1692a(5); 12 CFR 1006.2(h).
19
15 U.S.C. 1692e(2)(a); 12 CFR 1006.18(b)(2).
20
15 U.S.C. 1692e(5); 12 CFR 1006.18(c)(1); 15
U.S.C. 1692f(6); 12 CFR 1006.22(e).
21
12 CFR 1006.30(b).
22
15 U.S.C. 1692e(11); 12 CFR 1006.18(e).
23
15 U.S.C. 1692g(a); 12 CFR 1006.34.
24
15 U.S.C. 1692g(b); 12 CFR 1006.38(d); 85 FR
76734, 76845–48 (Nov. 30, 2020).
25
15 U.S.C. 1692f(6).
26
See 15 U.S.C. 1692a(6); 12 CFR 1006.2(i)(1).
27
See Obduskey v. McCarthy & Holthus LLP, 139
S.Ct. 1029 (2019) (holding that a business engaged
in no more than nonjudicial foreclosure
proceedings is not a debt collector under FDCPA
section 803(6), except for the limited purpose of
FDCPA section 808(6)).
28
12 U.S.C. 2601 et seq.
29
15 U.S.C. 1601 et seq.
30
See, e.g., 12 CFR 1024.33(b) (requiring a
transferee and transferor servicer to provide a
timely notice of transfer of servicing to the affected
borrower), 12 CFR 1024.39 (requiring servicers to
make early intervention contacts with delinquent
borrowers), 12 CFR 1024.41 (requiring servicers to
follow certain loss mitigation procedural
requirements, including certain foreclosure-related
protections). Note that small servicers, as defined in
12 CFR 1026.41(e)(4), are exempt from certain of
these requirements. See 12 CFR 1024.30(b).
31
See 12 CFR 1026.41(a); see also, e.g., 12 CFR
1026.41(e)(4) (exempting small servicers from this
requirement) and 12 CFR 1026.41(e)(6) (exempting
servicers from periodic statement requirements for
certain charged-off loans but only if, among other
conditions, the servicer sends a specific notice to
the consumer and does not charge additional fees
or interest on the account).
32
Dodd-Frank Wall Street Reform and Consumer
Protection Act, Public Law 111–203, 124 Stat. 1376
(2010).
33
12 U.S.C. 5512(b)(1).
34
5 U.S.C. 553(b).
35
5 U.S.C. 603(a), 604(a).
C. Legal Analysis
The FDCPA
8
and its implementing
Regulation F
9
govern the conduct of
‘‘debt collectors’’ when they collect
‘‘debt.’’ The statute and regulation
generally define a debt collector as ‘‘any
person who uses any instrumentality of
interstate commerce or the mails in any
business the principal purpose of which
is the collection of any debts, or who
regularly collects or attempts to collect,
directly or indirectly, debts owed or due
or asserted to be owed or due
another.’’
10
Many individuals and
entities that seek to collect defaulted
mortgage loans, and many of the
attorneys that bring foreclosure actions
on their behalf, are FDCPA debt
collectors.
The FDCPA and Regulation F define
‘‘debt’’ as ‘‘any obligation or alleged
obligation of a consumer to pay money
arising out of a transaction in which the
money, property, insurance, or services
which are the subject of the transaction
are primarily for personal, family, or
household purposes, whether or not
such obligation has been reduced to
judgment.’’
11
A consumer’s payment
obligation arising from a mortgage
transaction primarily for personal,
family, or household purposes, such as
the purchase of the consumer’s
residence, falls within the plain
language of this definition.
12
It follows
that State court foreclosure proceedings
often constitute the collection of ‘‘debt’’
under the FDCPA,
13
and debt collectors
who engage in such debt collection
activity are subject to the requirements
and prohibitions of the FDCPA and
Regulation F.
Regulation F prohibits a debt collector
from suing or threatening to sue to
collect a time-barred debt.
14
As the
CFPB explained in finalizing this
prohibition, ‘‘a debt collector who sues
or threatens to sue a consumer to collect
a time-barred debt explicitly or
implicitly misrepresents to the
consumer that the debt is legally
enforceable, and that misrepresentation
is material to consumers because it may
affect their conduct with regard to the
collection of that debt, including
whether to pay it.’’
15
Regulation F’s
prohibition on suits and threats of suit
on time-barred debt is subject to a strict
liability standard.
16
That is, a debt
collector who sues or threatens to sue to
collect a time-barred debt violates the
prohibition ‘‘even if the debt collector
neither knew nor should have known
that a debt was time barred.’’
17

Accordingly, a debt collector who brings
or threatens to bring a State court
foreclosure action with respect to a
time-barred mortgage debt may violate
the FDCPA and Regulation F. This is
true even if the debt collector neither
knew nor should have known that the
debt was time barred.
The CFPB also notes that a broad
range of non-foreclosure debt collection-
related activity, such as communicating
with consumers about defaulted
mortgages, can be covered by the
FDCPA. FDCPA debt collectors
undertaking such activity are subject to
the other requirements and prohibitions
of the statute and Regulation F when
collecting debt
18
whether or not that
debt is time-barred. These include, for
example, the prohibition on debt
collectors: falsely representing the
character, amount, or legal status of any
debt;
19
threatening to take any action
that cannot legally be taken or that is
not intended to be taken;
20
and selling,
transferring for consideration, or placing
for collection a debt that the debt
collector knows or should know has
been paid or settled or discharged in
bankruptcy.
21
They also include, for
example, the requirement that debt
collectors: identify themselves as a debt
collector in all communications with
the consumer (except formal pleadings
in connection with a legal action);
22

provide the consumer with validation
information in certain circumstances;
23

and respond to consumer disputes
adequately before continuing to
collect.
24
Finally, even if an FDCPA
debt collector engages only in actions
necessary to undertake a nonjudicial
foreclosure action, the debt collector is
still subject to FDCPA section 808(6)
25

and Regulation F, 12 CFR 1006.22(e),
26

which generally prohibit taking or
threatening to take any nonjudicial
action to effect dispossession or
disablement of property if the debt
collector has no present right or
intention to do so.
27

Although not the focus of this
advisory opinion, the CFPB also notes
that entities selling or collecting on
these second mortgages who are
mortgage servicers may also be subject
to certain requirements under the Real
Estate Settlement Procedures Act,
28
the
Truth in Lending Act,
29
and the CFPB’s
mortgage servicing regulations.
30
For
example, unless an exemption applies,
the CFPB’s mortgage servicing
regulations require servicers to provide
periodic statements to consumers.
31

II. Regulatory Matters
This advisory opinion is issued under
the CFPB’s authority to interpret the
FDCPA, including under section
1022(b)(1) of the Consumer Financial
Protection Act of 2010,
32
which
authorizes guidance as may be
necessary or appropriate to enable the
CFPB to administer and carry out the
purposes and objectives of Federal
consumer financial laws.
33

An advisory opinion is a type of
interpretive rule. As an interpretive
rule, this advisory opinion is exempt
from the notice-and-comment
rulemaking requirements of the
Administrative Procedure Act.
34

Because no notice of proposed
rulemaking is required, the Regulatory
Flexibility Act does not require an
initial or final regulatory flexibility
analysis.
35
The CFPB has also
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26477 Federal Register/ Vol. 88, No. 83 / Monday, May 1, 2023 / Rules and Regulations
36
44 U.S.C. 3501–3521.
37
5 U.S.C. 801 et seq.
determined that this advisory opinion
does not impose any new or revise any
existing recordkeeping, reporting, or
disclosure requirements on covered
entities or members of the public that
would be collections of information
requiring approval by the Office of
Management and Budget under the
Paperwork Reduction Act.
36

Pursuant to the Congressional Review
Act,
37
the CFPB will submit a report
containing this interpretive rule and
other required information to the United
States Senate, the United States House
of Representatives, and the Comptroller
General of the United States prior to the
rule’s published effective date. The
Office of Information and Regulatory
Affairs has designated this interpretive
rule as not a ‘‘major rule’’ as defined by
5 U.S.C. 804(2).
Rohit Chopra,
Director, Consumer Financial Protection
Bureau.
[FR Doc. 2023–09171 Filed 4–28–23; 8:45 am]
BILLING CODE 4810–AM–P
DEPARTMENT OF DEFENSE
Office of the Secretary
32 CFR Part 158
[Docket ID: DOD–2020–OS–0015]
RIN 0790–AK81
Operational Contract Support (OCS)
Outside the United States
AGENCY: Office of the Under Secretary of
Defense for Acquisition and
Sustainment, Department of Defense
(DoD).
ACTION: Final rule.
SUMMARY: The DoD is updating the
policies and procedures for operational
contract support (OCS) outside the
United States. These changes include
broadening the range of applicable
operational scenarios, eliminating
content internal to the Department
designating contractor personnel as part
of the DoD total force, incorporating
requirements for accountability and
reporting, and clarifying
responsibilities. With these updates, the
Department addresses open
recommendations from the Government
Accountability Office (GAO).
DATES: This rule is effective May 31,
2023.
FOR FURTHER INFORMATION CONTACT: Ms.
Donna M. Livingston, 703–692–3032,
donna.m.livingston.civ@mail.mil.
SUPPLEMENTARY INFORMATION: OCS is a
segment of the GAO High Risk Area of
DoD Contract Management, and while
the latest update in March 2021, GAO–
21–119SP, ‘‘High-Risk Series: Dedicated
Leadership Needed to Address Limited
Progress in Most High-Risk Areas’’
(available at: https://www.gao.gov/
products/gao-21-119sp) acknowledged
progress, GAO cited the need to revise
and reissue guidance to address five
open recommendations.
Legal Authority
Section 861 of the National Defense
Authorization Act for Fiscal Year 2008
(Pub. L. 110–181) requires the DoD,
Department of State, and the United
States Agency for International
Development to enter into an agreement
regarding contracting matters in Iraq
and Afghanistan and identify a common
database to serve as a repository of
information on contracts and contractor
personnel supporting these operations.
Section 854 of the Duncan Hunter
National Defense Authorization Act for
Fiscal Year 2009 (Pub. L. 110–417)
requires mechanisms for ensuring
contractors are required to report
specified offenses that are alleged to
have been committed by or against
contractor personnel to the appropriate
authorities.
Discussion of Comments
The Department of Defense published
a proposed rule titled ‘‘Operational
Contract Support (OCS) Outside the
United States’’ (32 CFR part 158) in the
Federal Register on January 7, 2021 (86
FR 1063–1080). Fourteen comments
were received from eight respondents
and a summary of the comments and the
Department’s responses as follows.
Comment: The Department received
five comments from respondents
recommending the addition of
requirements for defense contractor
personnel to report information on gross
violations of human rights (GVHRs). In
general, all five comments regarding
GVHR reporting recommended that the
rule include a ‘‘duty to report’’ GVHRs
for defense contractors. Several
respondents noted that the proposed
rule missed an opportunity to address
the requirements of Section 888 of the
National Defense Authorization Act for
Fiscal Year 2020 to ‘‘monitor and report
allegations of gross violations of
internationally recognized human
rights.’’
Response: The DoD acknowledges the
requirement, however the policy and
processes to support the requirements
for reporting allegations of gross
violations of human rights are still being
developed and are not final. When those
actions are completed, the DoD will
initiate actions to update this rule as
needed to comply with the established
policy.
Comment: The Department received a
comment objecting to requiring the
people of the United States to provide
proof of vaccination for the coronavirus
disease 2019 (COVID–19) prior to any
travel.
Response: The rule does not address
requirements related to any specific
vaccination requirement for contractor
personnel. The provisions in the rule
regarding immunizations and
deployment health activities ensure that
contractor personnel are medically
ready to deploy and protect the health
of the total force in deployed
environments.
Comment: The DoD received a
comment recognizing the significant
role defense contractors play in support
of military operations overseas and the
costs born in terms of injury and death
that have resulted. The commenter
recommended DoD make a more robust
effort to collect, analyze, and publicly
share data with regard to contractor
personnel fatalities and injuries.
Response: The Department
appreciates the commenter’s
understanding of the key role defense
contractors play in supporting the DoD.
While the DoD does collect data on
contractor personnel wounded and
killed while performing their duties,
this data is not made publicly available.
The Synchronized Predeployment and
Operational Tracker—Enterprise Suite
(SPOT–ES) is the common joint
database used to maintain
accountability and visibility of
contractors supporting applicable
operations. In accordance with the
SPOT Business Rules, referenced in this
rule, it is the responsibility of the
contractor’s employer to close out the
individual’s deployment record in
SPOT–ES following a death and to
update the records when an injury
occurs. The DoD is reviewing how to
improve contractors’ compliance with
these procedures and to respectfully
encourage more comprehensive
reporting to the DoD without impacting
legal and privacy issues.
Comment: The DoD received one
comment regarding the types of support
contractors are generally required to
provide their employees while
deployed. The commenter asserted that
in austere environments, it is common
for the U.S. Government to provide life
support to contractor personnel when
those personnel are located at U.S.
military facilities; however, contractor
personnel may need to transit through
other military facilities before reaching
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