Notice of Thirty-day Right to Dispute Debt Validity. The Fair Debt Collection Practices Act (“Fair Debt Act”) and the Texas Debt Collection Practices Act were enacted to protect consumers from abusive and deceptive debt collection practices. The Fair Debt Act requires a debt collector who is collecting a consumer debt to send written notice to the debtor, with the collector’s initial communication or within five days thereafter. A “consumer debt” is the debt of a natural person incurred primarily for personal, family or household purposes. The notice must contain the name of the creditor, the amount of the debt, a statement that the consumer has thirty (30) days in which to dispute the validity of the debt, a statement describing the debt collector’s obligation to obtain and send a copy to the consumer of the verification of the debt, and a statement that the consumer may request, in writing, the name and address of the original creditor. A conservative approach would thus require that the debt collector take no further action regarding the debt until the thirty-first (31st) day after this initial notice is sent. The term “debt collector” does not include a creditor acting on its own behalf, but attorneys and other debt collectors are subject to the Act. Therefore, the Bank should be aware that, when hiring counsel to pursue a consumer debt, this additional thirty-day period in which the consumer may dispute the validity of the debt may be required.
Notice of Availability of Homeownership Counseling. Section 169 of the Housing and Community Development Act of 1987 requires that the Bank give notice of the availability of homeownership counseling to the debtors on all home loans except those assisted by the Farmers Home Administration or guarantied by the Veterans Administration. To be eligible for this notification, the homeowner must occupy a one-family house (or one-family unit in a condominium) as a principal residence and must be delinquent in his or her loan payments due to an involuntary loss of income. Rather than seek to prove the cause of each delinquency, the Bank should probably send notice to all delinquent homeowners.
Notice of availability of homeownership counseling should be given at the time that notice of default is given to the debtor, or other first communication is made with the debtor, but in any event, within 45 days from homeowner’s failure to pay any amount due on a home loan. In the event that a homeowner cures the delinquency but then is subsequently delinquent, the Bank should again send notice of the availability of homeownership counseling.
The notice must contain information on any homeownership counseling provided by the Bank and notify the homeowner of any homeownership counseling provided by HUD-approved nonprofit organizations. The notice must also contain either the name, address and telephone number of the HUD-approved counseling agencies near the homeowner or a cost-free telephone number at the Bank’s office where the homeowner can obtain this information HUD publishes a list of HUD-approved counseling agencies.
Notice and Twenty-day Right to Cure. The Texas Property Code requires notice of default and twenty (20) days opportunity to cure in the case of a lien on a debtor’s residence. Waivers of notice of default are not effective. If notice of default must be given, it is simple to include notice of intent to accelerate, too. The most conservative Banks make a general practice of giving twenty (20) days opportunity to cure to all the debtors. See Form of Residential Default Letter located at the end of this Chapter.