Fair Debt Collection Laws May Apply to Mortgage Statements

Answering a question of first impression for the court, the Eleventh Circuit held in Daniels v. Select Portfolio Servicing, Inc., 2022 U.S. App. LEXIS 14013 (11th Cir. May 24, 2022), that a mortgage statement submitted to a borrower may, under certain circumstances, constitute a communication in connection with a debt that is subject to the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq., and Florida’s Consumer Collection Practices Act. The court vacated an order dismissing the borrower’s complaint, concluding that compliance with the Truth-in-Lending Act and its implementing regulation did not insulate the mortgagee from liability under the two collection statutes.

Judge Bert Jordan’s opinion for the court reviewed in detail the plaintiff’s rocky history with her mortgage lenders. After falling behind in her payments, she entered into a loan modification agreement with her original lender, which then assigned the note to another lender which, in turn, allegedly refused to abide by the agreement. The second lender filed a foreclosure action in Florida state court but, according to the complaint, the state court enforced the loan modification agreement and sanctioned the lender. Along the way, Select Portfolio became the loan servicer. Select Portfolio began sending the plaintiff monthly mortgage statements that included language asserting past due amounts, late charges and the like, plus FDCPA-warnings on at least one such statement that it represented an attempt to collect a debt. According to the plaintiff, the statements were inaccurate concerning the amounts due in several respects, prompting the plaintiff to commence the action leading to this appeal.

The court concluded that claims may be stated under FDCPA and the Florida CCPA where a monthly mortgage statement includes debt-collection language that is not required by TILA or its regulations and the context suggests that they are attempts to collect or induce payment on a debt. The court disagreed with two unpublished district court opinions to the contrary. The court also distinguished an interpretive bulletin from the Consumer Financial Protection Bureau and its own unpublished decision in Green v. Specialized Loan Servicing LLC, 766 F. App’x 777 (11th Cir. 2019), the latter on the ground that the mortgage statement in Green did not include the FDCPA-debt collection language.

Judge Barbara Lagoa dissented at length, noting, among other things, that the decision creates a circuit split, a point disputed by the majority opinion.