What's the difference between a breach letter and a FDCPA validation letter?

If you've fallen behind in your mortgage payments and are facing foreclosure, you might receive a breach letter or a Fair Debt Collection Practices Act (FDCPA) validation notice—or, in some cases a combination letter with both types of notice.

Keep reading to learn the difference between these types of notices.

Mortgage Contracts Often Require a Breach Letter

Mortgages and deeds of trust often contain a clause that requires the lender to send a notice—commonly called a breach letter—informing the borrower that the loan is in default before it can "accelerate" the loan and proceed with foreclosure. (The acceleration clause in the mortgage permits the lender to demand that the entire balance of the loan be repaid if the borrower defaults on the loan.)

Typically, the notice must specify:

• the default
• the action required to cure the default
• a date—usually not less than 30 days from the date the notice is given to the borrower—by which the default must be cured, and
• that failure to cure the default on or before the date specified in the notice may result in acceleration of the debt and sale of the property.

To avoid foreclosure, the borrower must bring the loan current by paying the full past due amount shown in the letter before the 30 days expires. If the 30-day time period expires and the borrower hasn’t paid the specified amount to bring the loan current, foreclosure proceedings—which could be nonjudicial or judicial depending on the state and the circumstances—will begin. (To learn more about the difference between judicial and nonjudicial foreclosure, see our Will Your Foreclosure Take Place In or Out of Court?)

Fair Debt Collection Practices Act (FDCPA) Validation Letter

The Fair Debt Collection Practices Act (FDCPA) is a federal law that protects consumers from abusive collection practices by debt collectors and collection agencies. (Learn more about what bill collectors can and cannot do under the FDCPA.)

Courts are split on whether the FDCPA applies to foreclosures. Some courts have held that an attorney—or any other person or entity who pursues foreclosure on behalf of the lender—who demands payment or otherwise attempts to collect the debt is considered a debt collector and therefore is subject to the FDCPA. Other courts have found that foreclosure activity is not covered by the FDCPA. (Learn more in Fair Debt Collection Claims in Foreclosure.)

If the property being foreclosed is in a jurisdiction where the FDCPA is applicable to foreclosures, the party attempting to collect the debt must send a written notice to the debtor within five days of its first communication, which contains:

• the amount of the debt (including all interest, late charges, attorney fees, and other charges)
• the name of the creditor to whom the debt is owed
• a statement that unless the debtor, within 30 days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector
• a statement that if the debtor notifies the debt collector in writing within the 30-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the debtor and a copy of such verification or judgment will be mailed to the debtor by the debt collector, and
• a statement that, upon the debtor’s written request within the 30-day period, the debt collector will provide the debtor with the name and address of the original creditor, if different from the current creditor.

Sometimes the FDCPA validation notice will be combined with the breach letter. Other times it might be a separate letter or, in some cases, it might be included with the complaint for foreclosure. (Learn about complaints for foreclosure in our article How Judicial Foreclosures Work.)

Talk to an Attorney

If you're facing a foreclosure and think the foreclosing party violated the loan contract by not sending a breach letter (or sending an incorrect letter) or is violating the FDCPA, consider talking to an attorney to find out options in your particular circumstances.