Appeals Court Rules Naming Servicer Instead of Creditor on Foreclosure Docs Does Not Rise to FDCPA Violation

The Court of Appeals for the Second Circuit has upheld a lower court’s ruling dismissing a class-action case in which the plaintiff alleged that a mortgage servicer and its law firm violated the Fair Debt Collection Practices Act by incorrectly naming the creditor on notifications filed with the court related to foreclosure proceedings.

While the Court of Appeals disagreed with the lower court that “enforcement of a security interest through foreclosure proceedings is not debt collection for purposes of the FDCPA,” the Appeals Court affirmed the lower court’s dismissal of the case in favor of the defendant.

A copy of the ruling in Cohen v. Rosicki, Rosicki & Associates., P.C., can be accessed by clicking here.

In filing foreclosure notifications, the defendant listed the mortgage servicer (Green Tree) and not the actual owner of the mortgage (Fannie Mae) as the holder of the note, a discrepancy that led the plaintiff to file the class-action lawsuit. Nonetheless, the Appeals Court ruled that while there may have been a “technical violation” of the law in listing the wrong entity on the documents, it did not rise to meet the materiality standards required for a injury to be sustained.

On the facts reflected in the complaint and attached documents, the false identification of Green Tree as the creditor would not have caused even a highly unsophisticated consumer to suffer a disadvantage in charting a course of action in response to the collection effort. Indeed, stating accurately that Fannie Mae was the creditor to whom the debt is owed likely would have caused confusion inasmuch as Cohen might then have been led to believe—wrongly, of course—that he should make his monthly mortgage payments to Fannie Mae.