The Eleventh Circuit Court Finds TILA-Required Mortgage Statements May Violate the FDCPA.troutman pepper

If the mortgage servicer collects receivables using statements sent periodically under the Lending Act (TILA), misunderstandings made in those statements under the Fair Debt Collection Practices Act (FDCPA) You may be held liable for any misleading or misleading representations. Applying this reasoning, the 11th Circuit recently overturned the dismissal of the FDCPA lawsuit — Lamirand v. Fay Servicing, LLC — The district court found that the declaration was not subject to the FDCPA because it had to be sent by TILA.

The plaintiff settled two lawsuits with the loan servicer, including a foreclosure action, by agreeing to pay $85,790.99 over one year. Four months later, the servicer sent a statement to the plaintiff notifying him that the loan had been accelerated due to delays in the agreed payments and that he had one month to pay $92,789.55. We informed them of the risk of higher fees and loss of the home due to foreclosure if they did so, and also provided information about the multiple available payment methods.

Plaintiffs continued to receive similar statements and an increase in outstanding amounts from the previous month. The plaintiff sued the servicer, alleging that he violated the FDCPA by the servicer sending inaccurate balance statements. A federal district court ruled that the statements were not related to debt collection for inclusion in the scope of the FDCPA because the statements were required to be sent under his TILA. The 11th Circuit disagreed.

The court begins its analysis by noting that the court must seek to give meaning to both the FDCPA and TILA, and that its role is to harmonize the overlapping statutes to the extent possible to give effect to each. Did.

Here, the court concluded that:[n]something of [TILA] It says that periodic statements are useless as a means of debt collection…. Nor are the two laws so irreconcilably opposed in their operation.of [TILA] The FDCPA requires servicers to send statements on a regular basis, and the FDCPA requires those statements to be fair and accurate if they contain language urging the debtor to pay. doing. In this way, the statutes reinforce each other and ensure that consumers receive regular and accurate information about their mortgages. ”

Thus, plaintiffs’ FDCPA argument supports a motion to dismiss so long as their complaint alleges that plaintiffs’ statements were plausibly intended, at least in part, to induce them to pay. There is The court found that the statement easily met that standard because it listed all the ways plaintiffs could make payments. It included a detachable payment coupon that could be sent with payment. Defendant said it is a debt collector and that the information provided will be used for that purpose.

Significantly, the court rejected the servicer’s three material allegations. First, the servicer argued that the purpose of the periodic statement was to inform. In response, the court held that while providing information may be one of the purposes of the statement, communication may have multiple purposes, and the fact-finder argued that the reasoned that it could easily be concluded that the book was intended.

Second, servicers believe that periodic statements resembling the standard form promulgated by the Consumer Financial Protection Bureau (CFPB) to guide compliance with TILA should be construed as attempts to collect debts under the FDCPA. argued not. However, the court replied: [CFPB’s] The Format does not grant the Servicer a license to insert inaccurate information. In addition, the statement in this case contained language regarding payment options other than model form.

Finally, Court Excludes Periodic Statements from Creating FDCPA Liability If Borrower Sends “Stop Contact” Letter I rejected the servicer’s claim. The court responded that information submitted under TILA “is useful only if it is accurate and fair, as required by the FDCPA.”

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