Obduskey v. McCarthy & Holthus LLP, U.S. Supreme Court case No. 17-1307: Meaning of the Term ‘Debt Collector’ in Foreclosure Protections Case Debated in Supreme Court Oral Argument
On 1/7/19, the US Supreme Court heard oral argument in Obduskey v. McCarthy & Holthus LLP, U.S. Supreme Court case No. 17-1307. A decision is expected to be issued by the US Supreme Court by June 2019. According to CNBC.com, depending what the US Supreme Court rules, the case may resolve a legal question that could have broad ramifications on hundreds of thousands of Americans who are foreclosed on without a judicial process each year. A key issue in the matter is who or what can be considered a “debt collector.” The case centers on Dennis Obduskey, a Colorado man who defaulted on his $329,940 home loan in the aftermath of the 2007 financial crisis. The question in the case is whether Obduskey is entitled to legal protections for debtors provided by Congress in 1977, or whether the foreclosure is exempt because it is Obduskey’s home, and not money, that is at stake. Obduskey obtained his home loan from a company called the Magnus Financial Corporation in 2007, before it was ultimately transferred to Wells Fargo. Like many other Americans, he defaulted on the loan in 2009. The bank then attempted to foreclose on Obduskey for six years, to no avail. Finally, in 2015, Wells Fargo retained a law firm — McCarthy & Holthus — to handle the foreclosure proceedings. But, as of the latest briefs in the case, Obduskey’s home has yet to be sold. The question of whether a law firm seeking to foreclose on a property is a debt collector is one that could affect millions of Americans. In 2016, about 200,000 homes were lost to foreclosure in states that permit lenders to foreclose on a property without going to court. Business groups have argued that these so-called non-judicial foreclosures are more efficient and fair to borrowers. Progressives say borrowers are entitled to more protections.