The Eleventh Circuit held that debtors’ complaint stated a false representation claim under the federal Fair Debt Collection Practices Act, where the debt validation/1692g notice identified the loan servicer who started servicing the loan after it was in default as the creditor.”

The Lender transferred the serving rights to the mortgage and note. The Loan Servicer hired a law firm to foreclose. The law firm sent a notice to the Debtor stating that the notice was being sent pursuant to the federal Fair Debt Collection Practices Act (“FDCPA”) to collect on the debt. The notice also identified the loan servicer as the creditor on the loan.

The Debtor filed suit against the Law Firm in federal district court, claiming that the notice sent to him by the Law Firm violated Section 1692e of the FDCPA by falsely representing that the loan servicer was the creditor on the loan. The Debtor claimed that the loan servicer, having been assigned a debt already in default solely for purposes of collecting on the debt, was not a creditor under the FDCPA. The Court found that even if the loan servicer were not a creditor under the FDCPA, it was harmless error to use the term with respect to the servicer, because the loan servicer had the authority to foreclose and otherwise act as the creditor on the loan. See 15 U.S.C. § §1692a(40; 15 U.S.C. §§ 1692e, 1692g(a)(2), 1692k(a).

However, the Court found that the Debtor’s complaint contained allegations as to the date of default, that the debt was assigned to the loan servicer after the default, thus the law firm violated the FDCPA by falsely identifying the loan servicer as the creditor in its debt collection notice.

Carol A. Lawson, Esq., 28870 U.S. Hwy19 #300, Hodusa Towers, Clearwater, FL 33761             Phone: (727) 410-2705;   email: [email protected]