Foreclosure Mortgage Servicer to Defend Alleged Violation of FDCPA

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A mortgage servicer’s motion to dismiss a consumer protection complaint in Florida was denied.  This case is representative of the behavior many debtors experience after their bankruptcy case is over, especially if they had owned a house that was in foreclosure.  Fortunately, the judge in this case is holding the servicer accountable for its actions.

In this case, out of the federal District Court of Florida, Middle District, the plaintiff filed a consumer protection complaint against a mortgage servicer.  Back in 2008, the plaintiff had filed a chapter 7 bankruptcy and had obtained her discharge, which also discharged a mortgage on real property that she had owned.  About four and half years after her bankruptcy case was over and closed, the mortgage servicer changed from Countrywide to Nationstar.  Thereafter, Nationstar mailed the plaintiff a Mortgage Loan Statement, reflecting the outstanding balance of the mortgage, a payment due date, a late fee statement, and a payment coupon.

The plaintiff, believing that this debt was discharged in bankruptcy, brought a complaint in the bankruptcy court, alleging a violation of the discharge injunction.  That case was settled, and as part of the settlement, Nationstar agreed not to send any more Mortgage Loan Statements.

Notwithstanding, the statements continued to be sent.  The plaintiff’s attorney sent a letter to Nationstar requesting that it cease and desist from sending the statements, as per the settlement from the first case, but the statements continued to arrive.  Finally, the plaintiff filed this complaint in federal court alleging claims under the Fair Debt Collection Practices Act (FDCPA) and comparable Florida statute (FCCPA).

Nationstar filed a motion to dismiss the complaint.  The crux of Nationstar’s argument for dismissal is that the statements sent to the plaintiff contained a disclaimer that the statements were sent only for informational purposes, and not for collection of debt.

The court’s analysis looked to the statement being delivered and decided that, notwithstanding the one sentence disclaimer, the statements constituted an attempt to collect a debt (which was discharged in bankruptcy).  The court reasoning rested on the idea that “a communication falls under the FDCPA when its animating purpose is to induce payment by the debtor.”  The court then looked to the language of the document, as well as the elements it contained, such as the demand for payment, the due date, a statement of a late charge assessment, and the attached payment coupon.  All these taken together, the court found that, in the eyes of the “least sophisticated consumer,” the document would most certainly be construed as a demand for payment of debt.  Galle v. Nationstar Mortgage, LLC, 16-CV-407-SPC (M. D. Fl., July 2016).

Be aware that creditors and debt collectors can’t use false or misleading tactics to collect debts, both inside and outside of bankruptcy.  The bankruptcy injunction provides protections to those debtors that have filed bankruptcy, while consumer protection laws, such as the FDCPA, protect debtors outside of bankruptcy.

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