Obduskey v. McCarthy & Holthus LLP
139 S.Ct. 1029 (2019) — Supreme Court of the United States (2019)
Facts of the Case
Dennis Obduskey defaulted on his mortgage. The law firm McCarthy & Holthus, acting as the foreclosure attorney for the lender's servicer, initiated a non-judicial foreclosure in Colorado. The firm sent Obduskey a letter stating the debt amount and that the firm was a 'debt collector.' Obduskey sent a written dispute under FDCPA § 1692g(b) requesting validation of the debt. The law firm did not cease collection — it proceeded with the non-judicial foreclosure. Obduskey sued, alleging the firm violated the FDCPA by continuing collection without verifying the debt. The district court and Tenth Circuit dismissed, holding that the law firm's conduct in enforcing a security interest (non-judicial foreclosure) was not 'debt collection' under the primary provisions of the FDCPA.
Legal Issue
Does the FDCPA apply to law firms conducting non-judicial foreclosure proceedings? Specifically, is a business primarily engaged in the enforcement of security interests (rather than the collection of debts as money) subject to ALL provisions of the FDCPA, or only to § 1692f(6)?
Court Holding
The Supreme Court held (unanimous, 9-0) that non-judicial foreclosure proceedings are NOT 'debt collection' for purposes of the FDCPA's main provisions. A business engaged in non-judicial foreclosure is subject ONLY to § 1692f(6) — which prohibits taking or threatening to take non-judicial action to dispossess the debtor when there is no present right to possession. The Court reasoned that non-judicial foreclosure is fundamentally about enforcing a security interest (seizing and selling the property), not about collecting money — it is a different legal process from debt collection. The FDCPA's primary provisions (validation notices, cease-communication, time/place restrictions) apply to money debt collection, not to non-judicial foreclosure.
Why This Case Matters
Obduskey is a landmark decision narrowing the FDCPA's application in the foreclosure context. Before Obduskey, borrowers argued that foreclosure attorneys and trustees were 'debt collectors' subject to all FDCPA requirements (validation, time/place restrictions, cease-communication, etc.). After Obduskey, non-judicial foreclosure is NOT 'debt collection' under the FDCPA for most purposes — foreclosing attorneys can proceed with non-judicial foreclosure without complying with FDCPA validation requirements. However, the Court left open the possibility that a business that engages in BOTH non-judicial foreclosure AND traditional debt collection may still be subject to the full FDCPA.
Impact on Homeowners
If you're facing non-judicial foreclosure, FDCPA claims against the foreclosure attorney are limited after Obduskey. You can still assert FDCPA violations under § 1692f(6) — if the attorney threatens foreclosure without the legal right to do so (lack of standing, defective notice, invalid assignment). But you generally cannot assert FDCPA claims for failure to validate the debt, communication violations, or harassment. Focus your defenses on state foreclosure law, RESPA (servicer violations), and standing challenges rather than relying on FDCPA claims against the foreclosing attorney.
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Frequently Asked Questions
Does Obduskey mean FDCPA claims are dead in foreclosure?▼
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