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11th Cir. Holds TILA Periodic Statements Can Trigger FDCPA, FCCPA Liability

mortgage statementThe U.S. Court of Appeals for the Eleventh Circuit recently reversed a trial court’s dismissal of a consumer’s complaint against a mortgage servicer brought under the federal Fair Debt Collection Practices Act and the Florida Consumer Collection Practices Act.

In so ruling, the Eleventh Circuit held that monthly mortgage statements may constitute “communications” under the FDCPA and the FCCPA if they “contain debt-collection language that is not required by the [Truth in Lending Act] TILA or its regulations” and the context suggests that the statements are an attempt to collect or induce payment on a debt.

A copy of the opinion in Constance Daniels v. Select Portfolio Servicing, Inc. is available at:  Link to Opinion.

A consumer sued his mortgage servicer, claiming that several mortgage statements sent by the servicer, as required by TILA, misstated a number of items, including the principal balance due. The consumer alleged that by sending these incorrect statements, the servicer violated the FDCPA and FCCPA. 

The trial court dismissed the consumer’s complaint with prejudice, agreeing with the mortgage servicer that the statements in question were not communications in connection with the collection of a debt and therefore not covered by the FDCPA and the FCCPA. The consumer timely appealed.

The question on appeal was whether monthly mortgage statements required by TILA and its implementing regulations can constitute communications in connection with the collection of a debt under the FDCPA and the FCCPA.

The FDCPA requires that the challenged communications be “in connection with the collection of a[ ] debt.” See 15 U.S.C. §§ 1692d, 1692e(10), 1692f(1). The substantive FCCPA provisions similarly require that the correspondences be made in connection with “collecting [a] . . . debt[.]” Fla. Stat. §§ 559.72(7), 559.72(9). Both statutes therefore require a nexus between the communication and the collection of a debt.

The Eleventh Circuit has held that the FDCPA’s “in connection with the collection of a[ ] debt” language asks whether the “challenged conduct is related to debt collection,” i.e., is “an attempt to ‘collect’ [a] debt.” Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211, 1217 (11th Cir. 2012).

Additionally, TILA requires mortgage lenders and/or servicers to send their mortgagees a statement once per billing cycle, updating them on a number of items. These items are the amount of the principal obligation under the mortgage; the current interest rate in effect; the date on which the interest rate may reset or adjust; the amount of any prepayment penalty that may be charged; late payment fees; a telephone number and electronic mail address that can be used to obtain information regarding the mortgage; the names and contact information of credit counseling agencies or programs reasonably available; and such other information as may be required by regulation. See 15 U.S.C. § 1638(f)(1). 

The Eleventh Circuit here concluded that the statements, even though required by TILA, were “related to debt collection.”  

First, the statements expressly said that they were “an attempt to collect a debt” and that “[a]ll information obtained will be used for that purpose.” Second, the statements had entries for “loan due date,” “payment due date,” “amount due,” “total amount due,” “interest-bearing principal,” “deferred principal,” “outstanding principal,” and “interest rate.” Third, the statements included a “delinquency notice” box, which listed overdue payments and the amount needed to bring the account current.  Finally, the statements attached a monthly payment coupon at the bottom of the first page with the mortgage servicer’s address. The coupon included late fee information and instructed the consumer to “[p]lease detach bottom portion and return with your payment” and “[m]ake checks payable to [the mortgage servicer]” 

The Eleventh Circuit holistically viewed a communication that expressly states that it is “an attempt to collect a debt,” that asks for payment of a certain amount by a certain date, and that provides for a late fee if the payment is not made on time as plausibly “related to debt collection.” Reese, 678 F.3d at 1217.

The context of the statements also mattered to the Eleventh Circuit. By the time the mortgage servicer sent the mortgage statements, the consumer had prevailed in a foreclosure action brought by the creditor for the consumer’s mortgage loan. During that litigation, the mortgage servicer was servicing the loan. Therefore, the sums listed as allegedly due and owing in the statements, along with the delinquency notice, could have been viewed as an attempt to collect (or induce payment on) a disputed and allegedly defaulted debt. See Grden v. Leikin Ingber & Winters PC, 643 F.3d 169, 173 (6th Cir. 2011); Gburek v. Litton Loan Servicing LP, 614 F.3d 380, 386 (7th Cir. 2010).

Although some portions of the statements could have been for informational purposes, as prescribed by TILA, the Eleventh Circuit also held that a communication can have dual purposes. See Reese, 678 F.3d at 1217.

Furthermore, in this case, the mortgage statements contained “this is an attempt to collect a debt” language that is not required by the TILA or its regulations. The Eleventh Circuit noted that while the FDCPA mandates that consumers be told in the “initial written communication” that a “debt collector is attempting to collect a debt and that any information obtained will be used for that purpose,” 15 U.S.C. § 1692e(11), neither the FDCPA nor TILA requires the use of such language in subsequent communications or periodic statements. “A monthly statement that is in conformity with TILA may nevertheless include additional language that constitutes debt collection.” Green v. Specialized Loan Servicing LLC, 766 F. App’x 777, 785 (11th Cir. 2019).

Therefore, the Eleventh Circuit held that monthly mortgage statements required by TILA and its regulations can plausibly constitute communications in “connection with the collection of a[ ] debt” under the FDCPA and in connection with “collecting [a] . . . debt” under the FCCPA if (a) they contain the FDCPA’s “this is an attempt to collect a debt” language, (b) they request or demand payment of a certain amount by a certain date, (c) they provide for a late fee if the payment is not made on time, and (d) the history between the parties suggests that the statement is an attempt to collect on a disputed debt. See Lear v. Select Portfolio Servicing, Inc., 309 F.Supp.3d 1237, 1240 (S.D. Fla. 2018).

Additionally, the Eleventh Circuit considered the guidance bulletin issued in 2013 by the Consumer Financial Protection Bureau, on which the trial court relied. See Consumer Financial Protection Bureau, Implementation Guidance for Certain Mortgage Servicing Rules, CFPB Bulletin 2013-2, 2013 WL 9001249 (Oct. 15, 2013). In that bulletin, the CFPB provided an “advisory opinion” concerning the “cease communications” option provided by the FDCPA. See 15 U.S.C. § 1692c(c). The CFPB concluded that servicers who are debt collectors are generally not liable under § 1692c(c) to consumers who make a “cease communications” request if they comply with the regulations issued under federal laws like TILA, including 12 C.F.R. § 1026.41 (the periodic statement regulation). 

However, the Eleventh Circuit recognized that an agency’s interpretive bulletin provides non-controlling guidance, and its persuasiveness depends on the thoroughness, consistency, and validity of its reasoning. See Rodriguez v. Farm Stores Grocery, Inc., 518 F.3d 1259, 1268 n.5 (11th Cir. 2008). Given that the CFPB bulletin deals only with consumers who choose the “cease communications” option under the FDCPA, the Court reasoned that the bulletin’s guidance did not extend to the present situation. See 15 U.S.C. § 1692k(e). Indeed, the Court determined that there is nothing in the bulletin indicating that the CFPB sought to provide an advisory opinion excluding all TILA- required periodic mortgage statements from FDCPA coverage no matter the circumstances. 

Accordingly, the Eleventh Circuit held that a required monthly mortgage statement that generally complies with TILA and its regulations can plausibly be a communication “in connection with the collection of a[ ] debt” under the FDCPA or in connection with “collecting [a] . . . debt” under the FCCPA if it contains additional debt-collection language. Thus, the Court reversed the trial court’s dismissal of the consumer’s complaint and remanded for further proceedings.

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Daniel Miller is an associate in the Chicago office of Maurice Wutscher LLP, practicing in the firm’s Consumer Credit Litigation and Commercial Litigation groups. Daniel has substantial experience as a litigation attorney representing clients in both individual and class action cases involving the FDCPA, TCPA, FCRA, TILA, RESPA, Illinois Consumer Fraud Act, and various other federal and state statutes. He also has experience in representing corporate clients in commercial transactions and executive compensation agreements. Daniel earned his Juris Doctor from the University of Illinois College of Law, and his Bachelor of Arts in History from Durham University in the United Kingdom. He is admitted to practice law in Illinois and the U.S. District Courts for the Northern District of Illinois and the Southern District of Illinois.

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