On August 12, 2015, the Second Circuit revived a putative class action alleging FCI Lender Services Inc. sent notices to mortgage borrowers appearing to initiate debt collections that did not comply with the Fair Debt Collections Practices Act.
FCI took over servicing of plaintiff’s and other mortgages from GMAC Mortgage LLC in 2012. Soon after, in attempts to comply with Real Estate Settlement Procedures Act (RESPA) requirements, the company sent notices to plaintiff and other mortgage holders including the new address where payments should be sent as well as telling borrowers that they had to dispute any statements of debts they owe within 30 days. Plaintiff alleged the notices violated the FDCPA because the letter did not include information regarding the current creditor on the mortgage and misstating debtors’ rights under the law. A federal district court judge in Buffalo agreed with dismissed the action in January, holding that the notices were informational, not an attempt to collect debt.
The Second Circuit overturned that decision, holding that the notices were subject to FDCPA. The panel rejected FCI’s argument that its notice was informational and intended only to provide transfer‐of‐servicing information so as to comply with RESPA. Specifically, the panel found that because the letter referenced a particular debt, directed plaintiff where to mail payments, and an attachment to the letter contained the words “THIS IS AN ATTEMPT TO COLLECT UPON A DEBT” a reasonable consumer would consider the letter an attempt to collect a debt.
The case is Hart et al. v. FCI Lender Services Inc., case number 14-0191, in the U.S. Court of Appeals for the Second Circuit.