FCC Denies Petition by Mortgage Bankers Association to Exempt Certain Mortgage Servicing Calls from Prior Express Consent Requirement

On November 15, the FCC’s Consumer and Governmental Affairs Bureau denied a petition by Mortgage Bankers Association (MBA)[1] that sought an exemption from the FCC’s prior express consent requirement for non-telemarketing residential mortgage servicing calls to wireless numbers. In its Order, the Bureau concluded that MBA had failed to show (1) that the calls om question would be free of charge to consumers; and (2) that the parties seeking relief should be able to send non-time-sensitive calls to consumers without their consent.[2]

The Bureau’s Order explained that the TCPA “reflects Congress’ recognition of the potential costs and privacy risks imposed on wireless consumers from the use of autodialer equipment, which can generate large numbers of unwanted calls,” and accordingly, the FCC has generally attempted to balance and accommodate the legitimate business interests of callers in addition to recognized consumer privacy interests.[3]

For instance, while consent is required for autodialed and prerecorded calls to wireless numbers, the FCC may waive that consent requirement for calls that are not charged to the consumer when it is in the public interest to do so.[4] The Bureau noted that the circumstances justifying such exemptions are limited, and has thus exercised the exemption authority sparingly.[5]

The MBA petition had urged the grant of such an exemption to “mortgage servicing” calls, including calls made to determine the reasons for a consumer’s delinquency and to provide potential options to assist.  The MBA petition encompassed calls to discuss whether a borrower abandoned a property and whether additional documentation is needed to complete a loss mitigation application, as well as to gauge homeowners’ perceptions of their financial circumstances and ability to repay the debt.[6]

MBA argued that these calls offer benefits to consumers and to the public that far outweigh TCPA’s privacy interests.  It asserted that without an exemption, the TCPA may conflict with state and federal laws requiring certain notifications be provided to borrowers.  According to MBA, many state and federal laws specifically require telephone notifications.[7]

MBA also argued that the requested exemption was needed to ensure parity for all lenders in light of the Commission’s recent exemption of calls to collect on debts owed to the federal government.  Finally, MBA suggested that the exception could be subject to conditions to mitigate any potential privacy concerns.  It submitted, in particular, that mortgage servicers could be required to: (1) state the name and contact information of the mortgage servicer; (2) refrain from including telemarketing content, cross marketing, solicitation, or other advertisements; (3) ensure that calls and text messages remain concise; (4) provide an easy opt-out mechanism; and (5) honor opt-out requests promptly.[8]

There were a number of public comments filed on the petition, including support from several mortgage servicers and affiliated groups, as well as opposition from several other consumer groups.  Supporters emphasized the need for an exemption to comply with state law, while opponents expressed concern that servicing calls are often perceived as harassing by consumers, and these commenters alleged that opt-out requests sometimes go unheeded.[9]

In its analysis, the Bureau first noted that MBA provided no information about how its members would refrain from charging the called party for the wireless call, and also failed to show that exempted calls would not count against any plan limits on the consumer’s voice minutes or texts.  The Bureau concluded that these shortcomings required denial of the petition.[10]

The Bureau also noted, however, that even if MBA were able to make those required showings, the public interest does not justify the grant of an exemption.  For support, the Bureau cited the FCC’s 2015 TCPA order that granted an exemption to the American Bankers Association (“ABA”) to make calls to wireless numbers where there was indication of fraud or identity theft relied on the exigent circumstances such events represent, in which time is of the essence.[11]  By contrast, the FCC in that order denied the portions of the ABA’s request that pertained to non-time-sensitive calls like payment notifications and social security disability eligibility.  Even though such calls contained helpful consumer information, the FCC found that ABA members lacked any immediate need to convey that information to consumers, and therefore, the infringement on consumers’ privacy rights was not justified in those circumstances.[12]

Turning to the MBA’s petition, the Bureau noted that the federal and state laws mandating contacts with borrowers do not apply until a borrower is at least 20 to 36 days into delinquency.  Although the FCC has not precisely defined how time-sensitive messages must be to justify an exemption, the Bureau concluded that in this case sufficiently urgent circumstances do not exist to justify one here.[13]

The Bureau also observed that mortgage servicers remain free to autodial consumers without an exemption by relying on a prior express consent a consumer provides when including their wireless phone number on a mortgage application, or by obtaining a new consent from consumers.[14] The Bureau next observed that no federal or state law required calls to borrowers to be initiated by autodialers, and expressed its agreement with commenters that MBA members have alternate means to contact such borrowers.[15]

Finally, the Bureau dismissed MBA’s argument that lender parity requires the grant of a similar exemption to that provided with respect to debts owed to the federal government.  The Order notes that that exemption was statutorily mandated,[16] and concluded that if Congress had wanted to include private lenders in the exemption, it had ample opportunity and means to do so.  In light of Congress’ decision to expressly limit the relief to calls to collect on debt owed to the federal government, the Bureau determined that it would not be proper for it to extend that exemption beyond those boundaries.[17]

[1] In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Mortgage Bankers Association Petition for Exemption, CG Docket No. 02-278, Order (Nov. 15, 2015), http://transition.fcc.gov/Daily_Releases/Daily_Business/2016/db1115/DA-16-1277A1.pdf (“Order”).
[2] Mortgage Bankers Association Petition for Exemption, CG Docket No. 02-278 (filed June 16, 2016), https://ecfsapi.fcc.gov/file/60002303090.pdf.
[3] Order at ¶ 2.
[4] 47 U.S.C. § 227(b)(2)(C).
[5] Order at ¶ 4.
[6] Id. at ¶ 5.
[7] Id. at ¶ 6.
[8] Id. at ¶ 7.
[9] Id. at ¶¶ 8-10.
[10] Id. at ¶ 13.
[11] In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Declaratory Ruling and Order, CG Docket No. 02-278 30 FCC Rcd 7961 (2015), https://apps.fcc.gov/edocs_public/attachmatch/FCC-15-72A1.pdf.
[12] Order at ¶. 14.
[13] Id.
[14] Id. at ¶ 15.
[15] Id.
[16] 47 U.S.C. § 227(b)(1)(A)(iii).
[17] Order at ¶ 16.

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