Servicer’s Loss Mitigation Letters Found Not to Be Attempts to Collect a Debt

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Author(s) Richard K. Vann, Jr.

Financial Services Perspectives Blog

Servicer's Loss Mitigation Letters Found Not to Be Attempts to Collect a DebtA recent decision from Pasco County, Florida clarifies for lenders and servicers what constitutes an attempt to collect a debt when they are communicating with a debtor about loss mitigation. In Hurtubise v. P.N.C. Bank, N.A., the borrower, James Hurtubise, filed suit against his creditor, PNC Bank, alleging that the bank improperly contacted him to collect a debt after notice was sent to advise the bank that the borrower was represented by counsel. The borrower sought statutory damages and attorney’s fees under the Florida Consumer Collection Practices Act (FCCPA). In the lower court, the bank was granted summary judgment, and the borrower appealed to the 6th Judicial Circuit Court in and for Pasco County, Florida.

In 2010, PNC filed a Complaint seeking to foreclose on a mortgage executed by the borrower. The borrower retained an attorney, but the borrower’s attorney chose not to file a notice of appearance in the foreclosure action. The borrower’s counsel then sent two letters to PNC’s foreclosure counsel to inform them that the borrower had retained counsel for representation in the foreclosure action. PNC maintained, however, that it did not receive these letters or otherwise acquire actual knowledge that the borrower had obtained counsel in the foreclosure action.

Subsequent to the borrower’s letters to PNC’s foreclosure counsel, PNC sent two loss mitigation letters directly to the borrower. The first letter was sent in August 2011 and was an advertisement for a locally sponsored workshop to assist homeowners facing foreclosure. This letter was generally addressed to “PNC Mortgage Customer” rather than the borrower personally, and the letter did not include any language regarding a request for payment. The second letter was sent in September 2011, and it provided contact information for a representative at PNC for questions relating to loss mitigation. This letter also did not request any payment from the borrower. PNC contended that this letter was required to be sent by directive of the Department of Treasury in compliance with the Home Affordable Modification Program.

Using these two PNC letters as a basis for his claim, the borrower filed suit against PNC claiming violations of Section 559.72(18) of the FCCPA, alleging that PNC attempted to collect a debt directly from the borrower after PNC had actual knowledge of borrower’s representation by counsel. In arguing that the two PNC letters were for collecting a debt, Hurtubise also relied on language in both communications which states: “This is an attempt to collect a debt. Any information obtained will be used for that purpose.” PNC moved for summary judgment and argued that these two letters did not constitute an attempt to collect a debt, and further that PNC did not have the required actual knowledge of borrower’s representation by counsel. After a hearing on the motion, the trial court granted summary judgment in favor of PNC, and awarded PNC attorney’s fees and costs.

Section 559.72(18), Fla. Stat. provides:

In collecting consumer debts, no person shall:

Communicate with a debtor if the person knows that the debtor is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney’s name and address, unless the debtor’s attorney fails to respond within 30 days to a communication from the person, unless the debtor’s attorney consents to a direct communication with the debtor, or unless the debtor initiates the communication.

The 6th Judicial Circuit Court found that the PNC advertisement letter was informational only and not an attempt to collect a debt, and that the PNC letter assigning the borrower a single point of contact was not a violation when the letter is required by federal law. Moreover, it found the trial court committed no error in finding that the language in the letters required to be included by the FDCPA does not constitute a basis for a violation of Section 559.72(18).

Accordingly, the court found that the purpose of PNC’s letters was not to induce payment by the borrower, and therefore did not constitute attempts to collect a debt in violation of Section 559.72(18). Thus, the court affirmed the trial court’s order granting summary judgment in favor of PNC, further affirmed the award of attorney’s fees, and granted PNC’s motion for appellate attorney’s fees.