The United States District Court for the District of Kansas recently found that a lender did not violate a state usury law or the FDCPA, RESPA or TILA in its handling of plaintiffs’ mortgage, but may have violated the contract by not immediately applying plaintiffs’ partial payments. See Schneider v. U.S. Bank, N.A., 2020 WL 4673159 (D. Kan. Aug. 12, 2020). In 2010, plaintiffs obtained a mortgage loan from defendant. At the time of the loan, the interest rate exceeded the maximum interest rate in Kansas. In 2020, plaintiffs brought this action, alleging a number of issues with the loan, including that the interest rate was usurious under Kansas state law. Plaintiffs also claimed that they were required to pay fees to make payments online or on the phone that were split between defendant and another entity, and also that, if they made extra principal payments, the lender would hold the payment and apply it to the next month’s payment rather than applying it immediately, allowing interest to continue to accrue. In their complaint, Plaintiffs made a number of state law claims, in addition to federal claims under the FDCPA, RESPA, and TILA. Defendant moved to dismiss the complaint.
The Court granted the motion in part and denied it in part. First, the Court dismissed the usury claim. It held that defendant is a national bank, and under the National Bank Act, “a national bank is allowed to export the maximum interest rate it could have charged in its home state to the state where the loan is originated.” Thus, even if the interest rate exceeded Kansas’s limit, it was not usurious. Second, the Court dismissed the FDCPA claim, finding that defendant has always serviced the mortgage and “Congress did not intend for the FDCPA to cover mortgage service companies.” Third, the Court dismissed the RESPA claim, finding that the split fees between defendant and a third party only were taken for monthly payments, and the RESPA prohibition on fee splitting applies only to fees at origination. Likewise, the Court found that there was not a TILA violation when defendant held partial payments to be applied for subsequent months. Nonetheless, the Court found that plaintiffs had made a sufficient claim of breach of contract based on the claim that the mortgage required payments to be posted immediately upon receipt.