11th Circuit Holds Debt Collection Lawyer Better Understand Mortgage Industry in Order to Properly Identify “Creditor”; Rejected Argument that Mere Servicer Who Had Authority to Foreclose Was Properly Identified as the “Creditor”

In Bourff v. Rubin Lublin, LLC, 2012 WL 851626 (11^th Cir. 2012), the Court of Appeals for the Eleventh Circuit held that a collection lawyer collecting on defaulted mortgage debt better dig deep to understand all the permutations and securitizations of the mortgage industry in order to properly identify the “creditor” under the FDCPA. Merely identifying the party who had the power to foreclose on the residential was held to be insufficient and, therefore, deceptive.

The facts were as follows:

The basics of this case are not in dispute. In April 2009 Bourff failed to make a payment on the loan and caused default under the terms of the note. AWL later assigned the loan and the security deed to BAC Home Loan Servicing, LP f/k/a Countrywide Home Loans Servicing, LP (“BAC”) for the purpose of collecting on the note. BAC in turn hired defendant law firm, Rubin Lublin, LLC (“Rubin Lublin”), to assist in collection efforts. In late May 2009 Rubin Lublin sent a notice to Bourff stating that they had been retained to help collect on the loan. The notice clearly stated that it was being sent as “NOTICE PURSUANT TO FAIR DEBT COLLECTION PRACTICES ACT 15 U.S.C. § 1692 [,]” and that it was “AN ATTEMPT TO COLLECT A DEBT.” The notice also identified BAC as “the creditor on the above-referenced loan.” (Compl.Ex.A.) < ![endif]–> Shortly after receiving the notice, Bourff filed this civil action against Rubin Lublin pursuant to the FDCPA. Bourff claimed that the notice sent by Rubin Lublin violated § 1692e of the FDCPA by falsely representing that BAC was the “creditor” on the loan, despite entities in BAC’s position being specifically excluded from the definition of “creditor” by the language of the FDCPA. Rubin Lublin filed a motion to dismiss under Rule 12(b)(6), and the dis-trict court dismissed the action for failure to state a claim under the FDCPA. The district court concluded that BAC was a “creditor” according to the ordinary meaning of the term and that, even if BAC was no creditor, the error in listing it as such was a harmless mistake in the use of the term because BAC had the power to foreclose on the property or other-wise to act as the creditor on the loan. (Order 11.)

The Court found the lawyer’s letter deceptive:

Plaintiff’s complaint alleges that Bourff defaulted on the loan in April 2009 by failing to tender the required monthly payment. The complaint further alleges that BAC “received an assignment of the security deed and debt on June 19, 2009 …, while the Plaintiff’s loan was in default, for the purpose of facilitating collection of such debt for another, presently unknown, entity.” (Compl.¶ 13) Accepting Plaintiff’s allegations as true and construing them in the light most favorable to the Plaintiff, the statement on the May 2009 notice that BAC was Plaintiff’s “creditor” was a false representation and was made by a “debt collector” as defined in § 1692a of the FDCPA. ¶ The FDCPA provides that “any debt collector who fails to comply with any provision of this subchapter with respect to any person is liable to such person …” for potential damages and costs. 15 U.S.C. § 1692k(a). The complaint on its face, taken as true and viewed in the light most favorable to Plaintiff, states a claim upon which relief may be granted un-der the FDCPA. As such, we vacate the dismissal and remand this case to the district court for further proceedings.