Governor signs Wieckowski bill protecting mortgage holders from abusive debt collection tactics

October 7, 2019

SACRAMENTO – California Governor Gavin Newsom signed Senator Bob Wieckowski’s (D-Fremont) Senate Bill 187 to protect consumers with mortgages from abusive debt collection tactics.  The bill ends years of confusion and stops the debate as to whether mortgage holders fall under the same consumer protection umbrella as other debtors.

“The Governor’s signature on this bill will stop individuals with mortgage debt from being subjected to endless threats and harassment from mortgage servicers and others,” said Wieckowski, a member of the Senate Judiciary Committee.  “It clarifies that the state’s Fair Debt Collections Practices Act protects individuals with mortgage debt and prevents mortgage servicers from harassing them to collect that debt.  But it also removes the exception that attorneys or counselors at law are not subject to the act.  This expands protection for California mortgage holders.”

In 1977, Congress created the Fair Debt Collection Practices Act, to regulate how creditors and debt collection agencies enforce and collect payment of debts.  It granted consumers protections and rights, such as an avenue for disputing debt, the ability to obtain accurate debt information, and rules on how and when a collection agency can contact a consumer. That same year, California approved the Rosenthal Fair Debt Collections Practices Act, which expanded upon the protections in the federal statute.

But the law was silent as to whether it applies to collection agencies trying to collect mortgage debt and over the years conflicting court rulings have added to the uncertainty.  Last year, in a ruling issued by the Fourth District Court of Appeal, the court reversed a trial court ruling and found that mortgage collectors are covered under the Rosenthal Act.  The plaintiff argued that he was the victim of hundreds of harassing and threatening phone calls demanding payment of his mortgage, despite his history of timely payments. The calls came at inconvenient times during the day, including at work, and included threats to foreclose on his home and report negative credit information.

Ted Mermin, director of the California Low-Income Consumer Coalition (CLICC), said the bill will provide important protection for people with mortgage debt.

“It is vitally important that all debt collectors be held to basic standards of decency,” Mermin said.  “Why should being an attorney, or collecting mortgage debt, give a collector a license to abuse consumers?  It shouldn’t.  And thanks to this bill, it doesn’t.”

SB 187 is supported by a large coalition of legal aid organizations, the Alexander Community Law Center at Santa Clara University, Consumer Attorneys of California and other groups throughout the state.

Senator Wieckowski represents the 10th District, which includes parts of Alameda and Santa Clara counties.