Certain Mortgage Communications Must Comply with Both the Truth in Lending Act and the Fair Debt Collection Practices Act

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

Judge Britt Grant chronicled the plaintiffs’ history with their mortgage lender, Fay Servicing.  After defaulting on their mortgage payments, the Lamirands settled foreclosure litigation with Fay Servicing for a certain sum to be paid in one year.  But after reaching the settlement, Fay Servicing began sending the Lamirands monthly mortgage statements notifying them that their loan had “been accelerated” and increasing the amount due each month in excess of the agreed settlement amount.  The court quoted language from the mortgage statements instructing that the Lamirands “must pay this amount to bring [their] loan current” and warning that the failure to pay the balance could “result in additional fees or expenses, and in certain instances,” the “loss of [their] home to a foreclosure sale.”  The court emphasized that the mortgage statements included much detail regarding the many methods of payment, 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 concluded that both the TILA and the FDCPA applied to Fay Servicing’s monthly mortgage statements.  Viewing the mortgage statements “holistically,” the court concluded that they both conveyed information about a debt and also, at least in part, aimed to induce the Lamirands to pay.  The communications, therefore, had the necessary nexus to debt collection under the FDCPA. 

The court harmonized the two statutes because the TILA requires a mortgage servicer 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 reasoned that the two statutes do not conflict, but instead provide assurance that the information consumers receive about their mortgage loans is both regular and accurate.

Posted by Ben Reed.

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