Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.D. Ill.: Mortgagee advances claims for default without cause, (Mar 9, 2015)

By Dan Selcke, J.D.

A woman who had allegedly been unfairly defaulted on her mortgage payments could advance all of the claims she brought under the Illinois Consumer Fraud Act (ICFA) and the Fair Debt Collection Practices Act (FDCPA), the federal district court in Chicago held. She could not, however, proceed with her claims alleging violations of the Telephone Consumer Protection Act (TCPA) (Banks v. Green Tree Servicing, LLC, March 5, 2015, Coleman, S.).

Mortgage dispute. Regina Banks executed a 15-year mortgage loan in the amount of $93,840.00 secured by her home. Bank of America, N.A. (BANA) was the servicer on the loan until April 1, 2013, when Green Tree Servicing, LLC became the servicer. Just prior to the change, Banks claimed that her balance on the loan was $32,440.81. However, Green Tree’s first communication with her stated that the balance was $33,091.21.

After receiving this communication, Banks alleged that she called both BANA and Green Tree to verbally contest the balance, and that she sent both companies the first of several Qualified Written Requests (QWRs) for information regarding her balance. She also sent several letters disputing the balance under the Fair Debt Collection Practices Act. Nevertheless, Green Tree assessed late fees against Banks and called her cell and work phones several times each week to collect upon her “defaulted” debt, in addition to sending her notices of default in the mail. Banks never consented to the calls, repeatedly requested that they stop, and alleged that the calls were made using an automated calling system.

Banks filed suit against both Green Tree and BANA. They in turn filed a motion to dismiss her claims.

FDCPA claim. As to Banks’ claim that Green Tree had committed various violations of the FDCPA, the court rejected Green Tree’s argument that it was not a “debt collector” within the meaning of the statute and could therefore not be held liable. To be a debt collector under the FDCPA, Green Tree would have had to acquire a debt already in default or that it believed was in default. After Green Tree’s initial letter to Banks, which allegedly overstated the amount of her balance, every subsequent communication from the company—a “Grace Period Notice,” a notice of default, and a notice of default and acceleration—treated the loan as in default. It would appear that Green Tree believed the loan to be in default from the time it was acquired, which meant that it was a debt collector and that Banks’ FDCPA claim could proceed.

ICFA claim. The court considered Banks’ claim that BANA and Green Tree had violated the ICFA by sending her notices that included unauthorized or unearned costs and fees which misrepresented the amounts she actually owed. These allegations were sufficient to state a claim under the ICFA despite the defendants’ argument that, because the dispute amounted to a breach of contract claim, it was not actionable under statutory consumer fraud.

When a defendant’s actions implicate consumer protection concerns, a case becomes more than a mere breach of contract claim, Dubey v. Pub Storage, Inc., 395 Ill. App. 3d 342 (2009). In addition to the allegations above, Banks alleged that the defendants engaged in deceptive and unfair practices by failing to investigate or adequately answer her various QWRs and dispute letters. Their behavior, she claimed, was designed to force borrowers to pay unincurred fees and was therefore more than just a breach of contract.

TCPA claim. Finally, the court dismissed Banks’ claim that Green Tree had violated the TCPA by calling her cell phone without her consent, using an automated dialing system. The dismissal, which was without prejudice, was warranted because Banks had not alleged any facts in support of her conclusion that Green Tree had used automated equipment.

The case number is: 14-cv-2825

Attorneys: Mara Ann Baltabols (Sulaiman Law Group, Ltd.) for Regina L. Banks. James Matthew Goodin (Locke Lord LLP) for Green Tree Servicing, LLC. Benjamin Michael Wojcik (Winston & Strawn LLP) for Bank of America, NA.

Companies: Green Tree Servicing, LLC; Bank of America, N.A.

Cases: StateUnfairTradePractices IllinoisNews