collateral

Issues

In this case, the Supreme Court will decide whether an entity that attempts to collect from defaulted loans is a “debt collector” as defined in 15 U.S.C. § 1692a(6). This definition includes two prongs, and Petitioners Henson, et al. argue that in the second prong, “owed or due another” should be read as debts owed to the originator but due to the debt purchaser. See Brief for Petitioners, Ricky Henson, et al. at 19–20. Since the debt that Respondent Santander tried to collect was due to Santander, who is the purchaser of the debt, Petitioners argue that Santander was a debt collector under 15 U.S.C. § 1692a(6) and can therefore be held liable under the Fair Debt Collection Practice Act (FDCPA). See id. at 23. Moreover, they maintain that the Fourth Circuit’s contrary interpretation may encourage the debt industry to engage in practices like loan diversification to avoid regulation and liability under the FDCPA. See id. at 20–21. On the other hand, Santander contends that a number of textual cues in the statute, such as the grammar and repeated use of present tense, demonstrate that “owed or due another” regards the time of collection, which releases Santander of liability because during the period of collection Santander was not collecting on behalf of another entity. See Brief for Respondent, Santander Consumer USA, Inc. at 11. Moreover, Santander argues that most of the abusive practices that could be exempted from the FDCPA may be regulated by another statute. See id. at 14. At stake are the extent of legal accountability for debt purchasers and the incentives for purchasing debt. See Brief of Amici Curiae Jerome N. Frank Legal Services Organization et al. (“LSO”), in Support of Petitioner at 7; Brief of Amicus Curiae ACA International, in Support of Respondent at 17–18.

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Issues

Benjamin Robers pled guilty to conspiracy to commit wire fraud for his role as a straw man in a mortgage fraud scheme.  Under the Mandatory Victims Restitution Act of 1996, Robers was ordered to pay restitution to the lenders he defrauded. The amount owed was determined based on the amount the lenders lost minus the amount they received when the homes were resold. Robers argues that the statute offsets damages based on the remaining value due after the lenders received part of the property they lost, which he argues is when the lenders took title to the foreclosed homes. The government counters that the property lost, for which restitution is owed, is the cash the lenders lost because of Robers’s fraudulent actions. Thus, restitution should be determined based on the amount of cash the lender recovers after selling the home. The Supreme Court’s resolution of this case will settle whether the property is returned and restitution set when the lender takes over the title at foreclosure or when the lender receives cash at resale. This case will address the consequences for criminals convicted of fraud who are required to pay restitution and the amount they are responsible for paying.

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