Mr. Cooper Mortgage Collection Letters Violate FDCPA, Says Judge
A recent federal court decision in a lawsuit against Seterus (now known as Mr. Cooper) reveals interesting details about the mortgage foreclosure, servicing, and other collection procedures used in the course of the mortgage business.
The class-action lawsuit was filed alleging that Seterus/Mr. Cooper violated the federal Fair Debt Collection Practices Act (FDCPA) and a state law prohibiting unfair business practices. The claims related to a series of debt-collection letters that were sent to some homeowners.
A federal court judge allowed some of the homeowners’ claims to proceed while dismissing some others. The most interesting part of the decision, however, is the insights that the judge’s 94-page decision holds about Seterus’s mortgage servicing business.
According to the decision, Seterus services hundreds of thousands of homeowners’ mortgages. Seterus does not originate mortgages (it isn’t a lender), and only services the loans. All the loans it services are owned by Fannie Mae, the Federal National Mortgage Association. Fannie Mae is a federally chartered company that backs billions of dollars of American mortgages. Most of these loans are assembled into portfolios of loans, which Fannie Mae sends out for servicing and collection by Seterus/Mr. Cooper en masse.
These are all interesting tidbits – loans backed by Fannie Mae all have to be serviced according to uniform guidelines contained in the Fannie Mae Single-Family Servicing Guide, which is publicly available. This is a handbook with sections on collections, loan modifications, forbearances, and foreclosure, among other things.
Many homeowners have mortgages that are serviced by Seterus/Mr. Cooper. Mortgage servicing is a notoriously difficult business for consumers to deal with. Communications are often inconsistent, misleading, and opaque. Simple issues require byzantine processes to resolve, if they are resolved at all.
There are countless homeowners who have been foreclosed on unnecessarily or illegally, or who have been victim to other unfair or deceptive mortgage servicing practices. Homeowners often feel at the mercy of servicers like Seterus/Mr. Cooper.
In the court’s decision in this case, the claims under the FDCPA were allowed to proceed, and the class action was certified. Overall, the homeowners received a favorable decision and will be allowed their day in court.
Culik Law is a consumer-protection law firm located in Massachusetts and North Carolina concentrating its practice in the litigation and negotiation of issues involving mortgages, foreclosures, loan modifications, forbearances, and other mortgage disputes. If you have an issue with your mortgage, contact us to see if we can help.