The United States Court of Appeals for the Eleventh Circuit (the “Eleventh Circuit”) has become the first circuit court to extend sections 1692e and 1692f of the Fair Debt Collection Practices Act (“FDCPA”) to proofs of claim filed in a bankruptcy case, ruling that a debt collector is prohibited from filing a proof of claim on debt that is barred by the applicable state statute of limitation. In Crawford v. LVNV Funding, LLC, et al. (In re Crawford),1 the Eleventh Circuit rejected lower court decisions dismissing an adversary proceeding brought by a bankruptcy debtor alleging FDCPA violations against a debt collector who filed a proof of claim for stale debt. The Eleventh Circuit applied a “least-sophisticated consumer” standard to hold that the filing of a time-barred claim was deceptive, misleading, unconscionable and unfair under FDCPA §§ 1692e and 1692f. To reach this conclusion, the Eleventh Circuit analogized filing a proof of claim to filing a lawsuit. The Eleventh Circuit’s decision in Crawford could have significant implications for both debt collectors and actual creditors because it leaves open the possibility that the FDCPA and related state corollary statutes may be applicable to bankruptcy proofs of claim.. [read more]
By Amy Jonker – insideARM
Last week, in Haddad v. Alexander, Zelmanski, Danner & Fioritto, PLLC, — F. 3d — Cir. 2014), 2014 WL 3440174 (6th Cir. Mich. 2014), 2014 U.S. App. LEXIS 13498, the Sixth Circuit expanded the requirement for how a debt collector must respond to a debtor’s request for verification of a debt under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (“FDCPA”), creating the most consumer-friendly verification standard ever.
Under § 1692g(b), if a consumer notifies the debt collector in writing within thirty days of receiving the § 1692g(a) notice that he disputes the debt or any portion of it, the debt collector must stop collecting the debt, or the disputed portion of the debt, and obtain verification of it and mail that verification to the consumer. The Haddad Court confronted the meaning of “verification” under § 1692g(b), because that term is not defined in the FDCPA.
Haddad received an initial letter from the defendant law firm notifying him that he owed a delinquent condominium assessment bill. The debtor disputed the amount of the debt in writing within 30 days of receiving the initial letter. In response, the law firm provided verification in the form of an accounting ledger showing the amounts comprising the total and a letter generally explaining the charges. The debtor replied with a letter explaining that there was no support for the beginning $50 balance or the subsequent fines and that the debt was still disputed as to those amounts. The law firm responded by sending a second letter and ledger providing more details about the charges. The debtor replied by letter again, demanding substantiation of the beginning $50 balance. The law firm sent a third letter itemizing the debt without explaining the beginning $50 balance and enclosing a copy of the lien that it later placed on the debtor’s condo. [read more]
CFPB Files Suits for Operations that Used Deception and False Promises to Collect More than $25 Million in Illegal Fees from Distressed Homeowners
WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB), the Federal Trade Commission (FTC), and 15 states announced a sweep against foreclosure relief scammers that used deceptive marketing tactics to rip off distressed homeowners across the country. The Bureau is filing three lawsuits against companies and individuals that collected more than $25 million in illegal advance fees for services that falsely promised to prevent foreclosures or renegotiate troubled mortgages. The CFPB is seeking compensation for victims, civil fines, and injunctions against the scammers. Separately, the FTC is filing 6 lawsuits, and the states are taking 32 actions.
“We are taking on schemes that prey on consumers who are struggling to pay their mortgages or facing foreclosure,” said CFPB Director Richard Cordray. “These companies pocketed illegal fees—taking millions of hard-earned dollars from distressed consumers, and then left those consumers worse off than they began. These practices are not only illegal, they are reprehensible.”
The first lawsuit names Clausen & Cobb Management Company and owners Alfred Clausen and Joshua Cobb, as well as Stephen Siringoringo and his Siringoringo Law Firm. The second lawsuit is against The Mortgage Law Group, LLP, the Consumer First Legal Group, LLC, and attorneys Thomas Macey, Jeffrey Aleman, Jason Searns, and Harold Stafford. The third lawsuit is against the Hoffman Law Group, its operators, Michael Harper, Benn Wilcox, and attorney Marc Hoffman, and its affiliated companies, Nationwide Management Solutions, Legal Intake Solutions, File Intake Solutions, and BM Marketing Group. [read more]
By Ellen Brown – The Web of Debt
For years, homeowners have been battling Wall Street in an attempt to recover some portion of their massive losses from the housing Ponzi scheme. But progress has been slow, as they have been outgunned and out-spent by the banking titans.
In June, however, the banks may have met their match, as some equally powerful titans strode onto the stage. Investors led by BlackRock, the world’s largest asset manager, and PIMCO, the world’s largest bond-fund manager, have sued some of the world’s largest banks for breach of fiduciary duty as trustees of their investment funds. The investors are seeking damages for losses surpassing $250 billion. That is the equivalent of one million homeowners with $250,000 in damages suing at one time.
The defendants are the so-called trust banks that oversee payments and enforce terms on more than $2 trillion in residential mortgage securities. They include units of Deutsche Bank AG, U.S. Bank, Wells Fargo, Citigroup, HSBC Holdings PLC, and Bank of New York Mellon Corp. Six nearly identical complaints charge the trust banks with breach of their duty to force lenders and sponsors of the mortgage-backed securities to repurchase defective loans.
Why the investors are only now suing is complicated, but it involves a recent court decision on the statute of limitations. Why the trust banks failed to sue the lenders evidently involves the cozy relationship between lenders and trustees. The trustees also securitized loans in pools where they were not trustees. If they had started filing suit demanding repurchases, they might wind up suedon other deals in retaliation. Better to ignore the repurchase provisions of the pooling and servicing agreements and let the investors take the losses—better, at least, until they sued. [read more]
By Ashlee Kieler – Consumerist
When the Consumer Financial Protection Bureau implemented rules to protect consumers from getting caught in mortgage “debt traps” earlier this year, the regulators may have missed one section of not-so-typical borrowers: consumers who inherit a family member’s home – mortgage and all.
In an attempt to make things easier on surviving family members when a homeowner dies, the CFPB issued an interpretive rule that would allow survivors to be added to outstanding mortgages without the fear of losing their home because of newly enacted rules.
The interpretive rule clarifies that when a borrower dies, the name of the borrower’s heir generally may be added to the mortgage without triggering the Ability-to-Repay rule.
Under the Ability-to-Pay rule, which went into effect in January, lenders are required to make a reasonable, good-faith determination that a borrower has the ability to repay their loans, something that makes sense. [read more]
By ACA International
Circuit court rules that consumers have standing to sue a collector for a statutory-right violation created by sending a misleading letter, even if they do not receive the letter, read it or suffer actual damages.
On June 25, 2014, the Ninth Circuit Court of Appeals ruled in David Tourgeman v. Collins Financial Services Inc., et al., No. 12-56783, 2014 WL 2870174, — F.3d — (9th Cir. June 25, 2014), that a consumer had standing to assert claims based on collection letters he did not receive because the alleged violation of his statutory right not to be the target of misleading debt communications constitutes an injury. The Ninth Circuit panel also held that the consumer had a statutory cause of action under the Fair Debt Collection Practices Act.
In Tourgeman, the consumer filed a class action for violations under the FDCPA alleging that debt collectors made false representations to him in connection with their efforts to collect the balance on a computer the consumer purchased. The consumer claimed that the debt collectors violated the FDCPA by misrepresenting the identity of his original creditor in a series of collection letters that never actually went to the consumer but were mailed to his parents’ house, as well as in a complaint filed against him in state court. The complaint was subsequently dismissed because the consumer had already paid the debt. [read more]