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TILA, RESPA and FCRA . . . Oh my!

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Cole v. Federal National Mortgage Association, et al., 2017 WL 623465 (D. Md. February 13, 2017)

The Plaintiff, Ms. Cole, brought a case against Fannie Mae and Severus, alleging a number of claims under the Truth in Lending Act(TILA), the Real Estate Settlement Procedures Act(RESPA), the Maryland Consumer Debt Collection Act(MCDCA), the Maryland Consumer Protection Act(MCPA), and the Fair Credit Reporting Act(FCRA).

Unlike most pro se Plaintiffs, who generally strikeout when throwing a bunch of these claims against the wall, Ms. Cole hits a home run on every one, and it is impressive to see.

In 2007, the Plaintiff and her late husband obtained a mortgage loan on the property from a non-party, Bank of America. Mr. Cole passed away in 2013, and Ms. Cole became the sole mortgagor of the property. Severus declared the loan in default in February of 2014 and mailed Ms. Cole a Notice of intent to foreclose in November of 2014, stating that Fannie Mae was the current secured party for the loan and that the total amount to cure the default was just over $15,000.00.

The Plaintiff sent multiple letters at the beginning of December of 2014, requesting proof that Severus was in possession of the original note, a payoff statement, and reinstatement quotes. and requesting proof. Additionally, Ms. Cole sent several letters, disputing the payoff amounts, but Severus never designated her account as “disputed” with the CRA’s. Severus also continued to report her account as delinquent throughout this entire time period.

TILA Claims

According to Congress, the Truth in Lending Act services to “assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to them and avoid the uninformed use of credit, and to protect the consumer against inaccurate and unfair credit billing and credit card practices.” 15 U.S.C. Section 1601.

Under Sections 1641(g), “Not later than 30 days after the date on which a mortgage loan is sold or otherwise transferred or assigned to a third party, the creditor that is the new owner or assignee of the debt shall notify the borrower in writing of such transfer.” While assignment or re-assignment of the Deed of Trust along does not trigger the disclosure requirements, ‘if the security interest and the note were transferred, then the 1641(g) claim will survive, and that is what was alleged here.

Additionally, the Plaintiff also alleged that the Defendant did not disclose the ownership of the loan until December of 2016 (claiming that the Plaintiff concealed this information from her); therefore, the one-year statute of limitations from the date of the transfer does not run from the date of transfer and dismissal based on statute of limitations grounds would be improper.

Under 1639(t)(2), “payoff balances shall be provided within 5 business days after receiving a request by a consumer or a person authorized by the consumer to receive such information. Additionally, 12 C.F.R. Section 226.36 (Regulation Z) further requires lenders to provide within a reasonable time after receiving a request from the consumer an accurate statement of the total outstanding balance that would be required to satisfy the consumer’s obligation in full as of a specified date. The Defendants argued that her mortgages were a “high-cost” mortgage and that she was impermissibly charged a fee, but the Court brushes off this defense by pointing out that there is nothing in 1639 stating that it only applies to high-cost mortgages or the like; the Court refused to dismiss this claim.

Section 1638(f) requires the servicer to transmit, for each billing cycle, a statement setting forth several items. Rather than dispute the substance of the allegations, the Defendants here argued that there was no “detrimental reliance” and “actual damages.” The Court notes that the Plaintiff did sufficiently allege that the failure to have this information prevented her from identifying billing errors by the Defendant in a timely fashion and that she did not have information to provide another lender that she would have been able to use to cure the default. The Court holds that the Plaintiff’s TILA claims survive.

RESPA Claims

Moving onto the RESPA claims, the Defendants’ arguments focused on whether the Plaintiff’s correspondence is considered a “qualified written request,” triggering its duties under RESPA, noting that the permissible score of Qualified Written Requests under RESPA is limited to information related to the servicing of the loans. The Courts have drawn the distinction between communications related to the servicing of the loan, which is covered under RESPA, and those challenging the validity of the loan, which is not. The Plaintiff counters that she not only requested information regarding the original note, but the Plaintiff disputed or challenged the interest, fees, attorney fees, foreclosure costs, and delinquency status, which DID relate to the servicing of the loan. The Court agreed that these letters qualified and denied the motion to dismiss. The Court also noted that the Plaintiff also adequately pled damages related to those violations by the Defendant.

Under 12 U.S.C. Section 2605(e), there is a 60-day grace period, beginning on the date of the servicer’s receipt from any borrower of a QWR. This relates to a dispute regarding the borrower’s payments, during which a servicer may not provide information regarding any overdue payment owed by such a borrower and relating to such period or QWR, to any consumer reporting agency.  The Defendant does not dispute this, only whether or not the Plaintiff’s correspondence counted as a QWR, which the Court already ruled on, and therefore, the Court overruled the Defendant’s motion as to this count.

MCDCA Claims

The Maryland Consumer Debt Collection Act provides that “in collecting or attempting to collect an alleged debt, a collector may not engage in various activities, including “claiming, attempting, or threatening to enforce a right with the knowledge that the right does not exist.” Md. Code. Com. Law Section 14-202(8).

The Defendant claims that it was not in dispute that the Plaintiff was in default. The Court noted, however, that the Plaintiff’s claim is not predicated on whether the Defendant’s had the right to foreclose, but rather, on whether Defendants attempted to collect an amount of debt they knew they had no right to collect (i.e. Charging inflated title fees, filing costs, attorney’s fees, etc.). The Court, therefore, permitted the MCDCA claim to move forward.

MCPA Claims

Pursuant to Section 13-316(c)(2) of the Maryland Consumer Protection Act, a mortgage loan servicer shall respond in writing to each written complaint or inquiry within 15 days if requested. The Court determined that based on a review of the nine written inquiries alleged in the Complaint, at least seven requested information. Of those seven, all but one were responded to. Therefore, as to the one letter that wasn’t responded to, the Motion to Dismiss is denied.

FCRA Claim

Finally, the Plaintiff alleges that the Defendant violated 15 U.S.C. 1681s-2 by “failing to delete or modify the accounts after it concluded a reasonable investigation of Plaintiff’s dispute” and “failing to note the Plaintiff’s continuing dispute.” The Defendant claims that the Plaintiff failed to allege the CRA notify the defendant, furnisher, of the dispute. Also, the Defendant failed to conduct an investigation into her dispute or her investigation was unreasonable. However, the Court noted that other courts found these types of allegations have survived a motion to dismiss because it can be reasonably inferred that the CRA performed its statutory obligation and forwarded the dispute. And because the claims under 1681s-2(b) are independent and severance, the fact that the Plaintiff alleged the Defendants failed to report her account as disputed allowed the claim to move forward.

Pro se Plaintiff, 8-8; Home. Run.

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