Kansas Federal Court Dismisses RESPA and FDCPA Claims Against Loan Servicer

The United States District Court for the District of Kansas recently granted a loan servicer’s motion for summary judgment dismissing claims under the Real Estate Settlement Procedures Act (“RESPA”) and the Fair Debt Collection Practices Act (the “FDCPA”).  See Boedicker v. Rushmore Loan Mgmt. Servs., LLC, 2018 WL 828039 (D. Kan. 2018).  In the case, the defendant loan servicer serviced a mortgage loan for the plaintiff borrowers.  In January 2016, when the borrowers were in default, the servicer sent the borrowers a reinstatement payment plan letter that incorrectly inserted an amount in place of a date, stating “[t]he amount required to reinstate your loan in full as of 7392.91 is $6,686.55.”  After the borrowers defaulted again, they sought another modification that the servicer denied on September 1, 2016.  The borrowers then sent two “Notices of Error” to the servicer on September 14, 2016.  In the first, they claimed defendant erred by not providing an appraisal and a waterfall analysis.  In the second, they inquired as to “whether the ‘trial loan modification’ was a forbearance agreement or modification and what would happen to” a particular payment the servicer had requested.  The servicer responded to these inquiries on November 1, 2016, but the borrowers found some of the servicer’s responses to be inadequate.  The borrowers then brought this action and made claims under RESPA and the FDCPA, and the servicer filed a motion for summary judgment.

The Court granted the servicer’s motion and dismissed the action.  The Court first found that the servicer did not violate RESPA.  None of the alleged issues raised in the Notices of Error are enumerated in 12 CFR 1024.35(b), which “defines the types of errors that are subject to RESPA resolution procedure.”  Thus, even if the servicer had failed to properly respond, it would not have been a violation.  Further, the Court found that the servicer had adequately responded.  The Court also found that defendant did not violate the FDCPA.  The borrowers had made two claims under the FDCPA:  first, that the reinstatement amount in the January 2016 reinstatement letter differed from the amount the servicer reported as due to a credit reporting agency that same month, and second, that the incorrect insertion of an amount in place of a date in the January 2016 letter was a false or misleading representation.  With regard to the first claim, the Court held that the borrowers failed to produce the credit report they claim was at issue and, therefore, there was no proof supporting the borrowers’ allegation.  Moreover, even if the amounts differed, this would only mean that the reinstatement amount was different from the amount due, which is not a violation of the FDCPA.  With regard to the second claim, the Court found that “[t]he insertion of the first number into what was clearly supposed to be a date would have been understood by any reasonable person to be a typographical error, and not a representation of the amount of the debt.”  Thus, the Court dismissed the action.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com, Michael Crowley at mcrowley@riker.com, or Dylan Goetsch at dgoetsch@riker.com.