New York Appellate Division, Second Dept.
Foreclosing Mortgagee Not Considered “Debt Collection Agency” Under Administrative Code of the City of New York: Borrower sought to dismiss a mortgage foreclosure, arguing that the lender failed to obtain a debt collection agency license under the Administrative Code of the City of New York § 20-490. The Supreme Court, Queens County rejected the argument and the Second Department sustained. Finding that the City Council did not intend to include a foreclosing lender in the definition of “debt collection agency”, the Court made the following points: A mortgage foreclosure acts upon the real property, not the person; a foreclosing lender enforces its own debt rather than the debts of another; the principal purpose of a foreclosing lender is not to collect delinquent debts; judicial foreclosure includes consumer protection requirements and the process “does not constitute the sort of tactics” that brought about the establishment of the license requirement; by analogy - SCOTUS case law concludes that parties who enforce security interests are not debt collectors under the Fair Debt Collection Practices Act.