Wednesday, May 6, 2015

Transfer Letter from Mortgage Servicer Held to be In Connection with Collection of a Debt

Mortgage servicers need to take note of a decision issued by an Illinois District Court a few weeks ago.  In ruling on the servicer’s motion to dismiss, the Northern District of Illinois held that a mortgage servicer’s transfer letter was a communication in connection with collection of a debt.  Snyder v. Ocwen Loan Servicing, LLC, No. 14 C 8461 (N.D. Ill. Apr. 27, 2015).  In that case, Snyder received two letters from Ocwen on the same date.  The first letter was a Notice of Servicing Transfer.  The second was a demand letter for payment, containing the 30 day debt validation notice. While Ocwen did not contest the demand letter was sent in connection with the collection of a debt, it did contest that the Notice of Servicing Transfer was sent in connection with collection of a debt and was therefore covered by the FDCPA.   While the court agreed that “in isolation, the transfer letter does not appear to be connected to debt collection,” it did not review the letter in isolation.  Instead, the court noted that the context of the communications was a factor to be considered as well.  Because Snyder alleged the transfer letter was sent on the same day as the demand letter, the court determined that there were sufficient facts alleged to support the inference that the transfer letter was sent in connection with the collection of the debt.  Mortgage servicers and others sending out required notices should take note, therefore, that notices sent within a close time frame with demand letters may support a similar inference and should make efforts to insure their notices also comply with the FDCPA, if appropriate.

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