Deficiency actions arising under a mortgage note secured by Florida real estate used for personal, family or household purposes are subject to many of the same consumer protection regulations as other consumer debt. Last April, in an unrecorded case, Baggett v. Law Offices of Consuegra , P.L. No.3:14-cv-1014-J-32PDB 2015 WL 1707479 (M.D. Fla. April 15, 2015), the Middle District of Florida ruled that a deficiency action after foreclosure constituted an effort to collect on a debt under the Fair Debt Collections Practices Act (“FDCPA”) and the Florida Consumer Collection Practices Act (“FCCPA”). In Baggett , the Court held that because the deficiency action is based on a consensual obligation to pay under the note and not the foreclosure, it is a process to collect “consumer debt” and is therefore subject to the rules under FDCPA and FCCPA.
What does this mean for lenders or their assignees intending to collect on a deficiency? It might be a good time to review collections practices for residential property. Although Baggett is unrecorded, it is persuasive and consistent with several other unrecorded cases outside of Florida that suggested deficiency actions in those states would also be subject to FDCPA. Accordingly, it appears likely that, if challenged, other Florida courts would follow in line with this ruling. All collection efforts for deficiency actions under a note secured by residential property (or other property used for personal, family or household purposes) should be conducted with the same scrutiny as consumer debt collections. Collections practices should include, among other things, compliance with FDCPA and FCCPA in all borrower communications. Further, be aware that this ruling works in connection with Florida’s 1 year statute of limitations on deficiency judgments for certain residential property.