Eleventh Circuit reaffirms application of FDCPA to mortgage foreclosure actions

Since 2009, debt collectors in the Eleventh Circuit (Florida, Georgia and Alabama) who were contacting consumers in connection with mortgage foreclosure actions relied on the decision of Warren v. Countrywide Home Loans, Inc. , 342 F. App’x 458 (11th Cir. 2009) for protection from suit because that decision held that enforcement of a security interest through the foreclosure process is not debt collection for purposes of the FDCPA.  However, creditors can no longer seek refuge in Warren v. Countrywide Home Loans, supra, since publication of the opinion in Reese v. Ellis, Painter, Ratterree & Adams, LLP , 678 F.3d 1211 (11th Cir. 2012).  Reese held that an entity that regularly attempts to collect debts can be a “debt collector” under the FDCPA even when that entity is also enforcing a security interest. 


The Reese holding was recently reaffirmed in Birster v. Am. Home Mortg. Servicing, 2012 U.S. App. LEXIS 14660 (11th Cir. Fla. July 18, 2012).  In this recent case, the Birsters owned a home in Jupiter, Florida which they refinanced through Option One.  The Birsters ceased making mortgage payments on or around June 1, 2008.  The promissory note and mortgage provided that any missed payment by the Birsters places the loan into a default status.  On July 30, 2008, AHMSI began servicing the loan and initiating collection activities.  On February 2, 2009, U.S. Bank, N.A., as the trustee for the lienholder, initiated foreclosure proceedings against the Birsters. In their FDCPA lawsuit, the Birsters alleged that AHMSI began its relentless assault on them in 2008.  According to the Birsters, AHMSI called them multiple times on a daily basis to collect the past due amounts.  The Birsters further alleged that most of these calls occurred after AHMSI knew that Angela suffered from an inoperable glioma (brain tumor) that cannot be diagnosed as cancerous or non-cancerous.  As early as April 16, 2009, the Birsters informed AHMSI that they were represented by an attorney, and provided AHMSI with the attorney’s name and phone number.  The Birsters advised AHMSI to contact their attorney and to cease contacting them directly.  AHMSI nevertheless continued its direct communications with the Birsters.  The Complaint further alleged that during these calls, AHMSI used offensive and abusive language towards Mrs. Birster and made false representations that the Birsters’ home was scheduled for a foreclosure sale.  Mrs. Birster also alleged that after a particularly abusive call on May 5, 2009, she collapsed in her front yard and was rushed to a nearby hospital.  Once the calls ceased, the Birsters claim AHMSI then began intimidating and harassing them at their home.  AHMSI sent agents to “inspect” the property, despite knowing the Birsters resided there.  Although AHMSI was initially inspecting the property on a monthly basis, AHMSI soon began visiting the Birsters’ home every day or every other day.  AHMSI’s home inspections even occurred on Thanksgiving and Christmas days. The Birsters alleged AHMSI’s actions caused Angela to suffer a deep depression and anxiety, resulting in her attempted suicide. 


The district court granted summary judgment to AHMSI after concluding the Birsters’ allegations related solely to efforts by AHMSI to enforce a security interest, rather than to collect a debt. Thus, the district judge concluded that the actions of AHMSI were not covered by the FDCPA.  Based on the holding in Reese, supra, the Eleventh Circuit reversed the order granting summary judgment.

For more information about the Fair Debt Collection Practices Act, or, its state law counterpart, the Florida Consumer Collection Practices Act, visit us at:

• Stop Collection Harassment;
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Confusing Debt Validation Notice violates FDCPA

The Fair Debt Collection Practices Act (“FDCPA”) requires, among other things, that debt collectors, within five days after first communicating with an individual debtor about a debt, to provide the debtor with a validation notice provides the consumer a written notice containing -- along with other information – the name of the creditor to whom the debt is owed and the amount of the debt. This notice is sometimes referred to as a debt validation notice. Simply stating the amount due is not enough, however. The notice must state the amount of the debt clearly enough that the recipient is likely to understand it. It is not enough for a debt collection agency simply to include the proper debt validation notice in a mailing to a consumer. Congress intended that such notice be clearly conveyed. Therefore, a notice that letter fails to state amount of debt where a consumer reading it could reasonably interpret the amount of debt in two ways, is a violation of the FDCPA. In Melillo v. Shendell & Assocs., 2012 U.S. Dist. LEXIS 9248 (S.D. Fla. Jan. 26, 2012), the plaintiff recieved a collection letter from a law firm representing his condominium association. Plaintiff alleged in his Complaint that the collection letter failed to state a clear amount of the debt owed because it referred to different amounts. The Court applied the objective "least sophisticated consumer" standard to the collection letter. In denying defendant’s motion to dismiss, the Court stated that in reading the complaint in the light most favorable to plaintiff, to the extent that the parties dispute factual issues regarding whether the collection letter was actually confusing will ultimately be for the jury to decide at trial.

For more information about the Fair Debt Collection Practices Act, or, its state law counterpart, the Florida Consumer Collection Practices Act, visit us at:

• Stop Collection Harassment;
or
• Consumer Rights Orlando

Who is a "debt collector" under Florida Law

Under Florida law, and more specifically the Florida Consumer Collection Practices Act (“FCCPA”), a “debt collector” is defined as: “any person who uses any instrumentality of commerce within this state,  . . . in any business the principal purpose of which is the collection of debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.  The term ’debt collector’ includes any creditor who, in the process of collecting her or his own debts, uses any name other than her or his own which would indicate that a third person is collecting or attempting to collect such debts.”

So, the FCCPA applies to any person or persons, collecting his/her own debts.  Under that broad definition, the FCCPA would apply to alaw firm attempting to collect its own fees, as well as the employees engaged in such collection activity on the law firm's behalf.

Robin Morgan retained the law firm of Arnold & Wilkins.   Morgan did not pay the law firm and they sued her is Small Claims Court.  She counterclaimed against the law firm, as well as the attorney and his assistant, individually, for violations of the FCCPA.  The law firm and the individuals moved to dismiss the counterclaim because they were not “debt collectors” under the FCCPA.   Morgan responded to the motion to dismiss by arguing that the FCCPA applies not only to a collection agency, but to any party seeking to collect a consumer debt.  The trial court granted the motion to dismiss finding that the FCCPA only apples to debt collectors not creditors collecting their own accounts as Morgan has alleged counter-defendants were doing.

On appeal, the law firm and the individual counterdefendants conceded that the trial court was in error when it ruled that FCCPA pertains only to debt collectors, however, they argued that that the trial court reached the right result for the wrong reason because Morgan’s debt was not a debt within the purview of the FCCPA since the debt did not flow from an extension of credit.  The appellate court reversed holding that that the obligation to the law firm was a debt covered by the FCCPA.

Morgan v. Wilkins, 74 So. 3d 179 (Fla. 1^st DCA 2011). 

For more information about the Fair Debt Collection Practices Act, or, its state law counterpart, the Florida Consumer Collection Practices Act, visit us at:

• Stop Collection Harassment;
or
• Consumer Rights Orlando

Florida Consumer Collection Practices Act ("FCCPA")

In 1993, the Florida Legislature enacted the Florida Consumer Collection Practices Act ("FCCPA") which law targets unfair debt collection tactics, including those inflicted upon residential mortgage customers. The statute proscribes a broad range of deceptive, harassing, and abusive practices.  It also provides a right to bring litigation against wrongdoers and to recover actual damages, costs, and attorney fees.

The following are some of the most common possible violations of the FCCPA:

•    Harassment - frequent phone calls to alleged debtors, their family and friends, repeated calls with no messages, hang-ups, lies, misleading comments, speaking in a belittling manner, embarrassing, argumentative and rude conduct are examples of harassing conduct.

•    Collecting money not owed - if an alleged debtor doesn’t owe the money it is a violation of the law for a collector to try and force the alleged debtor to pay the money.

•    Threats - creating a “false sense of urgency” or suggesting arrest, criminal prosecution, jail.

•    Calls at work - calls to the workplace, especially after a collector is told not to call, such as speaking to or leaving messages with a receptionist, calling the cell phone while alleged debtor is at work or calling alleged debtors direct line, is a violation.

•    Contacting 3rd parties - collectors may not contact any party about a debt without the express permission of the alleged debtor, including the spouse or any other family member, neighbors, friends, or co-workers.

•    Contact after attorney representation - once a collector is told a individual is represented by all conversations, messages, letters or any other communication must immediately stop.

For more information about the Fair Debt Collection Practices Act, or, its state law counterpart, the Florida Consumer Collection Practices Act, visit us at:

• Stop Collection Harassment;
or
• Consumer Rights Orlando

Mistakes in Debt Validation Notice result in FDCPA lawsuit

The FDCPA, among other things, mandates that, as part of noticing a debt, a “debt collector” must send the consumer a written notice containing -- along with other information – “the name of the creditor to whom the debt is owed.” This requirement is sometimes referred to as the "Debt Validation Notice." In addition, the Act prohibits a “debt collector” from using “any false, deceptive, or misleading representation or means in connection with the collection of any debt.” For purposes of the FDCPA, a false representation in connection with the collection of a debt is sufficient to violate the FDCPA facially, even where no misleading or deception is claimed. In Bourff v. Rubin Lublin, LLC., 674 F.3d 1238 (11th Cir. 2012), the plaintiff claimed that the creditor’s law firm violated the prohibition on false, deceptive, or misleading representations by falsely stating in its collection statutory notice that BAC was the creditor when it was really the assignee of the original creditor - America’s Wholesale Lender (AWL). The facts of the case are that when the debtor failed to make a payment on the loan causing a default, AWL assigned the loan and security agreement to BAC. The law firm hired by BAC sent the debtor a letter stating that it was notice pursuant to the FDCPA and that it was an attempt to collect a debt; the notice identified BAC as the creditor. In his suit, the debtor claimed that the notice violated the FDCPA because it falsely represented that the company, BAC, was the creditor on the loan. The district court concluded that the error was a harmless mistake and dismissed the Complaint. In reversing the trial court and vacating the order of dismissal, the Court found that the statement in the notice that BAC was the creditor was a false representation and that it was made by a debt collector under the FDCPA. The Court considered that the identity of the “creditor” in the statutory notices is “a serious matter.”

For more information about the Fair Debt Collection Practices Act, or, its state law counterpart, the Florida Consumer Collection Practices Act, visit us at:

• Stop Collection Harassment;
or
• Consumer Rights Orlando

Does the FDCPA apply to mortgage foreclosures?

A recent Eleventh Circuit decision responded to this question in the affirmative. In Reese v. Ellis, Painter, Ratterree & Adams LLP, 678 F.3d 1211 (11th Cir 2012) the Reeses defaulted on a loan and mortgage. A law firm representing the lender sent the Reeses a letter and documents demanding payment of the debt and threatening to foreclose on the property if they did not pay it. The Reeses then filed a lawsuit against the law firm alleging that the communication violated the Federal Debt Collection Practices Act. The district court dismissed the complaint finding that the law firm was not a “debt collector” under the FDCPA and that the letter and documents it sent were not covered by the FDCPA. The basis for the trial Court’s dismissal was, in part, based on the decision in Warren v. Countrywide Home Loans, 342 Fed. Appx. 458 (11th Cir. Ga. 2009) which held that the FDCPA, except for limited circumstances, does not apply to mortgage foreclosures and such collection activity does not constitute debt collection activities governed by the FDCPA. In holding that the FDCPA applied to the collection efforts of the lender’s law firm, the Court rejected defendant’s arguments that the purpose of the letter was to inform the Reeses that the lender intended to enforce its security deed. That argument, the Court observed, wrongly assumed that the letter could not have had a dual purpose – to give notice of foreclose and to demand payment on the note. The Court went on to state that the rule the law firm was asking the Court to adopt would exempt from the provisions of the FDCPA any communication that attempted to enforce a security interest regardless of whether it also attempted to collect the underlying debt. That rule, the Court said, would create a loophole in the FDCPA and the practical result of such a rule would be that the FDCPA would apply only to efforts to collect unsecured debts. Under such a rule, the court noted, a lender (or its law firm) could harass or mislead a debtor without violating the FDCPA as long as a debt was secured. That, the Court said: “can’t be right.” In summarizing its ruling on this point, the Court said: “A communication related to debt collection does not become unrelated to debt collection simply because it also relates to the enforcement of a security interest.”

Creditors still trying to collect debts after bankruptcy

James and Shannon Humphrey filed bankruptcy on October 4, 2010 listing Bank of America as a creditor.  After the bankruptcy was filed, Bank of America, illegally contacted the Humphreys on 38 separate occasions.  Bank of America ignored protests from the Humphreys and their lawyer, telling them they didn't care about the bankruptcy and that phone calls would continue until the Humphreys contacted the bankruptcy department so Bank of America could update its computer system. The Court only penalized Bank of America $10,000 plus attorney's fees for these violations. 
Portfolio Recovery, a debt collector, purchased $1.52 billion of bankruptcy debt in 2011 for 9 cents on the dollar.   In the first quarter of 2012 alone, Portfolio Recovery reported earnings of $79,994,000 in fees collecting on bankruptcy debt.  In 2011, Capital One had to refund $2.35 million for illegally collecting on 15,500 claims already discharged in bankruptcy.  Capital One received $3.55 billion in bailout money from the federal government in 2008. EMC Mortgage -- a company purchased by JP Morgan Chase from Bear Stearns -- has illegally billed debtors in bankruptcy so often that bankruptcy judges have assessed punitive damages against it in four different court cases. Gagliardi v. EMC Mortgage, 290 B.R. 808 (Bankr.D.Colo. 2003); Curtis v. EMC Mortgage, 322 B.R. 470 (Bankr.D.Mass.2005); Castro v. EMC Mortgage, 08-01135 (Bankr.D.N.C. 2008); Harlan v. EMC Mortgage, 402 B.R. 703 (Bankr.W.D.Va.2009).   JP Morgan Chase obtained a bailout of $25 billion.   Despite reliance on the public dole to cure their own financial problems, banks have become more voracious in collecting consumer debt.

Excerpted from article written by Richard Gaudreau of the Huffington Post.

For more information about the Fair Debt Collection Practices Act, or, its state law counterpart, the Florida Consumer Collection Practices Act, visit us at:

• Stop Collection Harassment;
or
• Consumer Rights Orlando