A Florida trial court recently held that a mortgagee’s direct communication to a borrower regarding funds applied to the loan (which included information as to overdue payments, amount of arrears, and the status of loss mitigation) did not constitute a debt collection communication, and therefore did not violate the Florida Consumer Collection Practices Act’s prohibition on communicating directly with a consumer with knowledge that the consumer is represented by an attorney. A copy of the opinion is attached.
In November, 2012, the borrower retained counsel to represent him in a mortgage foreclosure. Shortly thereafter, the borrowers’ attorney faxed a notice of representation to the mortgagee, and filed its notice of appearance to the mortgagee’s foreclosure counsel.
The mortgagee’s internal log and system notes indicated a cease and desist on all calls and mail to the borrower, and that two letters sent to counsel to confirm representation went without response. A subsequent letter was then sent to the borrower to confirm removal of the cease and desist on all calls and mail. Although the mortgagee admitted that the wrong form letter was sent to the borrower (due to no response from his counsel), it did not receive any objection from the borrower.
On June 27, 2013, the mortgagee sent correspondence directly to the borrower via mail. The borrower brought suit against the mortgagee, alleging that the notice violated the section of the FCCPA which prohibits communication to collect a debt directly with the consumer when the creditor knows the consumer is represented by counsel.
As you may recall that the Florida Consumer Collection Practices Act (hereinafter FCCPA) defines communication as “the conveying of information regarding a debt directly or indirectly to any person through any medium.” See §559.55(5).
Under the FCCPA, in collecting consumer debts, no person shall “[c]ommunicate with a debtor if the person knows that the debtor is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney's name and address, unless the debtor's attorney fails to respond within 30 days to a communication from the person, unless the debtor's attorney consents to a direct communication with the debtor, or unless the debtor initiates the communication.” See §559.72(18).
To determine whether the letter violated the FCCPA, the Court looked only to the substance of the correspondence at issue, entitled “Funds applied to your loan account.” The notice advised the borrower of thirteen overdue payments and the total amount overdue on the loan, while stating that that the loan is neither in a loss mitigation plan nor being considered and remains in foreclosure status. It concluded by urging the borrower to contact the lender to confirm the amount to reinstate the loan, and for assistance with payments or any other questions.
The Florida trial court held that the correspondence at issue was “informational and not an attempt to collect a debt,” and was not a prohibited communication in violation of §559.72(18).
Accordingly, the Court entered final judgment in favor of the lender.
Ralph T. Wutscher
McGinnis Wutscher Beiramee LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
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Admitted to practice law in Illinois
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