A debt buyer is a businessperson that buys debt from creditors at a reduced price. Debt buyers generally pay a very low percentage. They buy debts such as credit cards, auto loans, medical bills, mortgages, retail accounts, and utility bills. Every debt buyer has the same financial goal: to maximize their return on investment. So it is perhaps not surprising that states are enacting laws to control the debt buying industry and safeguard consumers as it grows.
The statutes of debt buyers have numerous impacts on servicing non-performing mortgage debt. For every stakeholder in the trade of borrowing and lending, it is crucial to be aware of the state laws regulating purchasing of debt in the state. Similarly, as a private business looking to invest in the purchase of debt, you would not want to expose yourself to a lawsuit worth tens of thousands of dollars because you unintentionally broke new state law.
For instance, the California Fair Debt Buyers Practices Act appears to have a stronger impact on older consumer debt with weak documentation, and most real estate loans will hopefully have most, if not all, of the paperwork required to comply with the regulation. On the other hand, the Texas Debt Buyer Statute covers debt purchase as the purchase of charged-off debt portfolios rather than that of current debt.
Other states with enacted laws on the purchase of debts with similar laws to California include Oregon, Texas, and Washington. Therefore, it is important to allow skilled and knowledgeable professionals to advise private and individual lenders on issues and regulations surrounding the purchase of debts as an investment.
Click this link to learn more about the purchase of debts as private investors and the several states’ laws and regulations attached to it.
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