The U.S. Court of Appeals for the Seventh Circuit held that a mortgage field servicing company’s actions were too attenuated from its mortgage servicer client’s own debt collection efforts to be considered a debt collector under the federal Fair Debt Collection Practices Act (FDCPA). Accordingly, the Seventh Circuit affirmed the ruling of the trial court granting the company’s motion for summary judgment. A copy of the opinion in Schlaf v. Safeguard Property, LLC is available at: Link to Opinion. The plaintiff homeowners owned property that was subject to an FHA-insured mortgage loan serviced by a mortgage loan servicer. The plaintiffs defaulted…
On Aug. 22, the California legislature passed Assembly Bill 1526, relating to the collection of debt that is beyond the statute of limitations for bringing legal action. Since 2014, debt buyers collecting from California residents have been required by Cal Civ Code § 1788.52(d)(2) to provide one of two notices, as applicable, when a debt is “time-barred.” The new legislation creates the same requirement for debt collectors, making it a violation for a debt collector to send a collection letter to a consumer on a time-barred debt without providing the debtor with one of the following written notices, depending on…
The U.S. Court of Appeals for the Eighth Circuit held that a plaintiff lacked standing to pursue an alleged violation of the Telephone Consumer Protection Act (TCPA) against a defendant that supposedly did not provide a proper opt-out notice in its advertisement faxes because the plaintiff invited and did not rebuke the faxes, and the faxes did not cause the concrete harm required to establish Article III jurisdiction. Separately, the Eighth Circuit reversed the dismissal with prejudice in this removed case, holding that the proper remedy when no case or controversy exists was to return the matter to the state…
The U.S. Court of Appeals for the Seventh Circuit recently held that, unless the parties to a class action settlement agreement expressly agree otherwise, class settlement agreements should not be read to bar objectors from requesting fees for their efforts in adding value to a settlement. Because the Court determined that the objector did add value to the settlement, it reversed the ruling of the trial court denying the objector’s motion for fees and an incentive award. A copy of the opinion in Markow v. Southwest Airlines Co. is available at: Link to Opinion. Class action counsel settled a class action…
The U.S. Court of Appeals for the Seventh Circuit recently concluded that collection letters sent to consumers offering to settle their debt but warning them that the settlement “may have tax consequences” did not violate the federal Fair Debt Collection Practices Act (FDCPA). The plaintiffs had argued that the letters were false and misleading because they were insolvent and, as such, would not have incurred any tax liability for any discharged debt. The Seventh Circuit rejected the argument, concluding that the term “may” only meant there could be tax consequences, and it was possible insolvent debtors would become solvent before settling…
On Aug. 14, Gov. Bruce Rauner signed into law the Illinois Career Preservation and Student Loan Repayment Act. The act moved through the legislature as Senate Bill 2439 and passed unanimously in the Senate and by a vote of 104-3 in the House. The act provides that Illinois government agencies and boards can no longer deny, refuse to renew, suspend, revoke or take any other disciplinary action related to a person’s professional or occupational license because of a delinquency or default on a student loan guaranteed by the Illinois Student Assistance Commission or any other Illinois state agency. The legislation…
On an issue of first impression, the U.S. Court of Appeals for the Ninth Circuit recently held the federal catchall statute of limitations of four years under 28 U.S.C. § 1658(a) applies to private suits alleging violations of section 303(c) of the federal Servicemembers Credit Relief Act (SCRA). Accordingly, the Ninth Circuit affirmed the dismissal of the plaintiff’s complaint as time-barred. A copy of the opinion in McGreevey v. PHH Mortgage Corporation is available at: Link to Opinion. In 2006, the plaintiff, a U.S. Marine, refinanced a mortgage loan on his home in the state of Washington with a loan from…
With a tip of the cap to Popeye the Sailor Man, the Third Circuit has decided that a purchaser of defaulted debt is a “debt collector” under the federal Fair Debt Collection Practices Act. A copy of the opinion in Tepper v. Amos Fin., LLC is available here: Link to Opinion. The borrowers, a husband and wife, had a home equity line of credit with a bank secured by a mortgage on their home. They made timely payments until receiving notice that the bank was closing. The bank was taken over by the FDIC and the loan was eventually sold to a…
In a recent decision, the Ohio Court of Appeals considered the question whether, for the purpose of determining the applicable statute of limitations, an unsigned credit card agreement constituted a written or oral contract. In Ohio, the statute of limitations is eight years for a written contract and six years for an oral contract. Ohio Rev. Code Ann. §§ 2305.06, 2305.07. A copy of the opinion in Unifund CCR Partners v. Piaser is available at: Link to Opinion. The Court noted that existing Ohio law was unclear on the written versus oral contract issue, and that previous decisions had determined…
In a case of first impression, the Arizona Supreme Court recently addressed the question of when the statute of limitations commences on credit card debt that is subject to an optional acceleration clause. A copy of the opinion in Mertola, LLC v. Santos is available at: Link to Opinion. The consumer obtained a credit card subject to an agreement that provided if he missed any payment the issuer could declare the balance “immediately due and payable.” The consumer missed a payment in February 2008, but subsequently made a $50 payment, which was less than the minimum payment due, in August 2008. No notice…
The U.S. Court of Appeals for the Fifth Circuit recently held that a mortgagee’s foreclosure action did not violate an automatic stay imposed during one of the plaintiff’s chapter 13 bankruptcy schedules, where the debtor failed to amend his bankruptcy schedules to disclose his recent acquisition of the subject property from his son. In so ruling, the Fifth Circuit affirmed the trial court’s judgment in favor of the mortgagee because father and son plaintiffs were judicially estopped from claiming a stay violation. A copy of the opinion in Fornesa v. Fifth Third Mortgage Company is available at: Link to Opinion. A…
The U.S. Court of Appeals for the Sixth Circuit recently held that a debtor’s claim seeking to use a bankruptcy trustee’s § 544(a) strong-arm power to avoid a mortgage on the ground that it was never perfected did not require appellate review of the state court foreclosure judgment, and therefore was not barred by the Rooker-Feldman doctrine. A copy of the opinion in In re Isaacs is available at: Link to Opinion. In 2003, the debtor and her husband took out a home-equity loan secured by a mortgage on their home in Kentucky. The original mortgagee did not immediately record…