The latest round of servicer litigation activity includes a servicer, evidently weary of a Maryland couple’s frequent lawsuits, that asked for a court ruling forbidding them from suing again. A Florida court clarified for mortgage firms what constitutes an attempt to collect a debt when communicating with a debtor about loss mitigation comprise, and a federal appeals court ruled on the timing of online payments.
In Bank of America v. Kissi, a federal trial court in Maryland granted summary judgment to a couple described as “a pair of repeat litigants whose relentless, frivolous, and vexatious behavior has led to the imposition of pre-filing injunctions barring them from filing new cases in this and several other courts.”
BofA had asked the court to rule in its favor on the lender’s request “for an injunction barring defendants from bringing any new cases against plaintiffs or their affiliates in any Maryland state court and seeking to grant this court jurisdiction over any cases filed in violation of such an injunction.” The U.S. District Court for the District of Maryland pointed out that relief sought by by the lender would exceed its jurisdiction.
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federal appellate court on April 7 ruled in Kaymark v. Bank of America that a homeowner who had defaulted on his mortgage had sufficiently pled that a dispute over fees not yet incurred but listed as “due and owing,” was actionable under the Fair Debt Collection Practices Act.
Dale Kaymark alleged that the fees violated several state and federal fair debt collection laws and breached the mortgage contract. As a result, the Third Circuit reversed the trial court’s order dismissing the FDCPA claims but affirmed dismissal of the other claims.
On May 1, in Saldana v. Bank of America, a California federal trial court granted the lender’s motion asking the court to dismiss the plaintiffs’ request for specific performance of an alleged short sale contract between them and the bank after one of the three plaintiffs — Raymundo Saldana, Joe Ruiz and Luz Ruiz — suffered “business losses which made it impossible for him to maintain payments on the loans he received.”
Saldana then sought relief through a short sale. At that time, Saldana believed that the fair market value of the property was $252,000; Joe and Luz Ruiz, also plaintiffs in this action, agreed to take over the obligation for the remaining loan, subject to a $252,000 price. When BofA determined that the $252,000 price was insufficient, the Ruiz’s agreed to pay $258,000. BofA confirmed the agreement and arranged for payment.
According to court papers, BofA then backed out of the sale agreement because it had neglected to consider the satisfaction of Saldana’s second loan in their negotiations.
In Citicorp v. Makkas, a New York state court, observing that the excuse of law office failure offered was reasonable, ruled on April 15, among other things, that the supreme court should have granted the lender’s motion vacating its default in appearing at scheduled court conferences.
Robert D. Biddle appealed from the order granting a motion to reassess damages filed by EMC Mortgage LLC in EMC Mortgage v. Biddle. The Superior Court of Pennsylvania vacated the order on April 15 and remanded with instructions.
In summarizing the facts and procedural history of the case, the trial court said that after more than a year of conciliation efforts, EMC entered a default judgment of $60,264.10. EMC then filed a motion to reassess damages, stating that additional costs of and interest had accrued since the judgment. Biddle filed an answer arguing that the mortgage foreclosure judgment was final when entered, and thus, damages were fixed at that point in time. The trial court granted the motion to reassess damages.
The question before a federal appellate court in Fridman v. NYCB Mortgage concerned online payments made by Elena Fridman to her servicer, NYCB Mortgage Company LLC. By furnishing the required information and clicking on the required spot, she authorized NYCB to collect funds from her BofA
account. Although she filled out the form within the grace period allowed by her note, NYCB did not credit her payment for two business days. This delay caused Fridman to incur a late fee. Believing that her payment should not have been treated as late, Fridman brought suit in the district court on behalf of herself and a putative class.
Fridman alleged that NYCB’s practice of not crediting online payments on the day that the consumer authorizes them violates the Truth in Lending Act. She asserted that TILA requires servicers to credit electronic payments on the day of the authorization. NYCB persuaded the district court that the relevant time under the statute for crediting such a payment is when the servicer receives the funds from the borrower’s external bank account. The district court granted NYCB’s motion for summary judgment.
Fridman appealed, and the U.S. Court of Appeals for the Seventh Circuit reversed the district court’s order and remanded for further proceedings.
In Kuns v. Ocwen Servicing, Kuns alleged that because his former home was bought with a purchase money mortgage and sold through a nonjudicial foreclosure, he had no personal liability for the deficiency that resulted from the foreclosure sale. However, Ocwen was reporting the deficiency amount to the credit reporting agencies. After Kuns filed for bankruptcy, Ocwen reported that the deficiency was discharged via the bankruptcy.
Kuns alleged that Ocwen’s reporting of the deficiency, without being accompanied by additional information to indicate Kuns’ lack of personal liability, violated Ocwen’s obligation under California’s Consumer Credit Reporting Agencies Act. The district court concluded that Ocwen had no duty under the CCRAA to indicate that the deficiency could not be collected from Kuns, and dismissed the complaint.
On appeal, the Ninth Circuit held that an item on a credit report can be incomplete or inaccurate because it is misleading in such a way and to such an extent that it can be expected to adversely affect credit decisions. The appellate court interpreted the phrase “incomplete or inaccurate” in CCRAA § 1785.25(a) as requiring that furnishers of credit information such as Ocwen not only refrain from making any reports that are obviously wrong or missing crucial data, but also that the reports not contain information that is materially misleading.
As a result, Kuns’ allegation that Ocwen’s reporting was “incomplete or inaccurate” regarding his personal liability for the foreclosure deficiency stated a claim under CCRAA § 1785.25. However, the district court correctly concluded that, after Kuns filed for bankruptcy and Ocwen reported the deficiency as discharged in the bankruptcy, this reporting could not have been “incomplete or inaccurate” within the meaning of CCRAA § 1785.25. There was no allegation that Ocwen did anything other than accurately report the action taken by the bankruptcy court. As a result, the appellate court affirmed in part and reversed in part, remanding the case for further legal proceedings.
A Florida court clarified what constitutes an attempt to collect a debt when communicating with a debtor about loss mitigation in Hurtubsie v. PNC Bank. According to an analysis provided by Bradley Arant Boult Cummings LLP, the borrower’s attorney choose not to file a notice of appearance in the foreclosure action; although, the attorney sent two letters to PNC stating that he was representing the borrower.
PNC said it didn’t receive the letters and did not have actual knowledge that the borrower was represented. PNC sent two loss mitigation letters to the borrower. The borrower filed suit, alleging that PNC attempted to collect a debt after it had actual knowledge that the borrower had an attorney. The trial court granted summary judgment to the lender and awarded attorney’s fees and costs.
On appeal, the court found that the letters were informational only and not an attempt to collect a debt and that PNC did not have the required actual knowledge of borrower’s representation by counsel. The appellate court also affirmed the award of attorney’s fees and made an award of appellate attorney’s fees.
In Ellsworth v. U.S. Bank N.A., a California federal judge on April 24 granted preliminary approval to a class action settlement between U.S. Bank NA, American Security Insurance Co. and plaintiffs who claim the bank charged homeowners lender-placed flood insurance rates that were inflated by kickbacks and policy backdating. The 2,859 class members will be refunded 12.5 percent of the amount they were charged for the flood insurance that U.S. Bank placed on properties where the policies had lapsed.
U.S. Bank and ASIC will pay the class counsel’s attorneys’ fees up to $625,000 and the class representatives will receive an additional payment of $2,500. In addition, for three years, U.S. Bank, ASIC and their affiliates will not accept payment related to lender-placed flood insurance on property owned by class members, not including payment on damage claims, and ASIC will not give U.S. Bank below-cost or free outsourced services in connection with lender-placed flood insurance on property owned by class members.
