11th Cir. Periodic TILA statements can trigger FDCPA, FCCPA liability

The United States Court of Appeals for the Eleventh Circuit recently reversed a trial court’s dismissal of a consumer complaint against a mortgage manager filed under the federal Fair Debt Collection Practices Act and the Florida Consumer Collection Practices Act.

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

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

A consumer sued his mortgage manager, alleging that several mortgage statements sent by the manager, as required by TILA, contained a number of inaccurate items, including the principal balance owed. The consumer alleged that by submitting these incorrect statements, the repairer violated the FDCPA and the FCCPA.

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

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

The FDCPA requires that the challenged communications be “in connection with the collection of a[ ] debt.” See 15 USC §§ 1692d, 1692e(10), 1692f(1). [a] . . . debt[.]”Fla. Stat. §§ 559.72(7), 559.72(9). Both statutes therefore require a connection between the communication and the collection of a debt.

The Eleventh Circuit ruled that the FDCPA “in connection with the collection of a[ ] debt” asks whether the “contested conduct is related to debt collection”, that is, is “an attempt to ‘collect’ [a] debt.” Reese vs. Ellis, Painter, Ratterree & Adams, LLP678 F.3d 1211, 1217 (11th Cir. 2012).

Additionally, TILA requires mortgage lenders and/or managers to send their mortgagees a statement once per billing cycle, updating them on a number of items. These elements are the amount of the principal obligation under the mortgage; the prevailing interest rate; the date on which the interest rate can be reset or adjusted; the amount of any prepayment penalty that may be charged; late payment fees; a telephone number and an e-mail address for obtaining information about the mortgage; the names and contact details of reasonably available credit counseling agencies or programs; and any other information required by regulation. See 15 USC § 1638(f)(1).

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

First, the statements expressly said that it was “an attempt to collect a debt” and that “[a]All information obtained will be used for this purpose. Second, the statements had entries for “loan due date”, “payment due date”, “amount due”, “total amount due”, “interest-bearing principal”, “deferred principal”, “main outstanding” and “interest assess.” Third, the statements included a “overdue notice” box, which listed overdue payments and the amount needed to bring the account up to date. Finally, the statements included a monthly payment coupon with the bottom of the first page with the mortgage agent’s address. The coupon included information on late fees and asked the consumer to “[p]lease detach the lower part and return with your payment” and “[m]make checks payable to [the mortgage servicer]”

The Eleventh Circuit viewed holistically a communication that expressly states that it is an “attempt to collect a debt,” which requests payment of a certain amount by a certain date, and which provides for a fee. of delay if payment is not made on time as plausibly “related to debt collection”. Reese678 F.3d at 1217.

The context of the statements also mattered to the Eleventh Circuit. At the time the mortgage agent sent the mortgage statements, the consumer had won a foreclosure action brought by the creditor for the consumer’s mortgage loan. During this litigation, the mortgage agent was servicing the loan. Therefore, the amounts allegedly due and payable in the statements, together with the overdue notice, could have been viewed as an attempt to collect (or induce payment) of a disputed and allegedly defaulted debt. See Grden vs. Leikin Ingber & Winters PC643 F.3d 169, 173 (6th Cir. 2011); Gburek v Litton Loan Servicing LP614 F.3d 380, 386 (7th Cir. 2010).

Although portions of the statements may have been for informational purposes, as required by TILA, the Eleventh Circuit also held that a communication may serve a dual purpose. See Reese678 F.3d at 1217.

Also, in this case, the mortgage statements contained language “this is an attempt to collect a debt” which is not required by TILA or its regulations. The Eleventh Circuit noted that although the FDCPA requires consumers to be informed in the “initial written communication” that a “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 require the use of such language in subsequent communications or periodic statements. “A TILA-compliant monthly statement may nevertheless include additional language that constitutes debt collection.” Green c. LLC Specialty Loan Service766 F. App’x 777, 785 (11th Cir. 2019).

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

In addition, the Eleventh Circuit reviewed 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 (15 Oct. 2013). In this bulletin, the CFPB provided an “advisory opinion” regarding the “cease communications” option offered by the FDCPA. See 15 USC § 1692c(c). The CFPB has concluded that debt collectors who are debt collectors are generally not liable under s. regulations issued under federal laws such as TILA, including 12 CFR § 1026.41 (the periodic reporting regulation).

However, the Eleventh Circuit recognized that an agency’s interpretive bulletin provides non-controlling advice and that its persuasiveness depends on the rigor, consistency, and validity of its reasoning. See Rodriguez v Farm Stores Grocery, Inc., 518 F.3d 1259, 1268 n.5 (11th Cir. 2008). Because the CFPB bulletin only addresses consumers who elect the “cease communications” option under the FDCPA, the Court held that the bulletin’s guidance does not apply to the current situation. See 15 USC § 1692k(e). Indeed, the Court determined that nothing in the bulletin indicated that the CFPB sought to provide an advisory opinion excluding all periodic mortgage statements required by TILA from FDCPA coverage, regardless of the circumstances.

Accordingly, the Eleventh Circuit held that a required monthly mortgage statement that generally complies with TILA and its regulations may plausibly be a communication “in connection with the collection of a[ ] debt” under the FDCPA or in connection with the “collection [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 retrial.

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