District Court Supports Bona Fide Error Defense in FDCPA Case

A district court judge in Alabama has granted a motion for summary judgment in favor of a mortgage servicer who claimed the bona fide error defense of the Fair Debt Collection Practices Act.

The defendant, Bayview Loan Servicing, had inadvertently sent two statements to a borrower whose loan had been discharged in bankruptcy and who had lost the property in foreclosure.

Attempting to use the bona fide error defense is not usually a winnable strategy in FDCPA cases. In order to prevail, defendants must prove that the violation was unintentional; and that the defendant maintains procedures to avoid such violations. The case, Arnold v. Bayview Loan Servicing, was in front of the U.S. District Court for the Southern District of Alabama.

Bayview has readily shown that any violation of the FDCPA with regard to the mailing of the December 2013 billing statements was unintentional because (i) Arnold’s loan had been coded with a foreclosure man code when Bayview assumed servicing responsibilities, effectively suppressing all billing statements; (ii) Bayview sent no billing statements to Arnold between February 2013 and November 2013; (iii) the Bayview employee who performed a pre-foreclosure review of Arnold’s loan was bound to follow a Bayview checklist that did not call for changing the man code or issuing billing statements; (iv) nothing in the checklist or employee comments suggested that this individual intended to change the man code or reactivate Arnold’s loan; (v) the man code was changed anyway, even though Bayview had no reason to do so in its pre-foreclosure review; (vi) Bayview ceased communications to Arnold when it discovered the error; and (vii) Bayview provides extensive, ongoing training to employees in the area of FDCPA compliance. Viewing these facts through the inferential, subjective lens ascribed to the intent prong, the Court concludes that no reasonable finder of fact could disagree that Bayview’s alleged error was unintentional. Defendant has conclusively shown that Bayview never meant to send FDCPA noncompliant bills to Arnold while his loan was in foreclosure.

A copy of the summary judgment can be viewed here.

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