Certain mortgage communications must comply with both the Truth in Lending Act and the Fair Debt Collection Practices Act

The Eleventh Circuit again ruled that certain mortgage servicing communications required under the Truth in Lending Act (TILA) and sent to a borrower may also be subject to the Fair Debt Collection Practices Act (FDCPA). Lamirand c. Fay Servicing, LLC, 38 F.4e 976 (11th Cir. 2022). The court overturned an order dismissing the lawsuit filed by borrowers who had received monthly mortgage statements containing payment terms that contradicted the terms of an earlier settlement.

Judge Britt Grant recounted the plaintiffs’ history with their mortgage lender, Fay Servicing. After defaulting on their mortgage payments, the Lamirands settled a foreclosure dispute with Fay Servicing for a certain amount to be paid in one year. But after reaching the settlement, Fay Servicing began sending monthly mortgage statements to the Lamirands notifying them that their loan had been “accelerated” and increasing the amount owed each month above the agreed settlement amount. The court cited wording in the mortgage statements that the Lamirands “must pay this amount to bring [their] current loan” and warning that non-payment of the balance could “result in additional fees or expenses, and in some cases”, the “loss of [their] home at a foreclosure sale. The court pointed out that the mortgage statements contained many details about the many payment methods, and even included a detachable payment coupon.

Referring to its recent decision in Daniels v Select Portfolio Servicing, Inc., 34 F.4th 1260, 1263 (11th Cir. 2022), the court found that TILA and the FDCPA applied to Fay Servicing’s monthly mortgage statements. Viewing the mortgage statements “holistically,” the court found that they both conveyed information about a debt and were also intended, at least in part, to induce the Lamirands to pay. The communications therefore had the necessary connection to debt collection under the FDCPA.

The court harmonized the two statutes because TILA requires a mortgage manager to send periodic statements, and the FDCPA requires those statements to be fair and accurate when they contain language that would induce a debtor to pay. The court held that the two laws were not incompatible, but rather provided assurance that the information consumers receive about their mortgages is both regular and accurate.

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