A 3 judge panel found that consumers, Lisa Bridge and William Bridge, had valid claims against Ocwen Financial Corporation for violations of the federal Fair Debt Collection Practices Act (FDCPA). Bridge v. Ocwen Federal Bank, Et Al., 681 F.3d 355 (6th Cir. 2012).
The FDCPA was passed to protect consumers against both abusive and mistaken attempts to collect debts. This case started with accounting errors on the part of a bank. Despite these bank erorrs being corrected, the bank started trying to collect the debt and threatened foreclosure. It also went on to negatively report the debt to credit reporting agencies.
Mistake Made By Bank
Lisa Bridge had a mortgage debt with Aames Capital Corporation; her husband, William Bridge, was not a borrower on the loan. Lisa Bridge's bank, Firstar, erroneously did not accept her personal check for her April 2002 monthly mortgage payment. So, Ms. Bridge then had Firstar issue an official check to Aames Capital. Unfortunately, Firstar failed to honor this check as well. So, a 2nd official check was then issued. Aames notified Ms. Bridge of the dishonored checks and assessed a late fee. Firstar ultimately honored both her personal check and one of the official checks. Since two payments were made in April 2002, Lisa Bridge did not submit another payment in May 2002.
Aames Assigned The Mortgage To Ocwen
During the time Aames Capital was saying Ms. Bridge's mortgage was in default, Ames Capital assigned her mortgage to Ocwen Financial Corporation, Et Al. (Ocwen). Despite the fact that Lisa Bridge provided Ocwen proof of the double payment in April 2002, Ocwen began collection activity against both Lisa and her husband. Ocwen made endless collection calls, despite cease and desist requests, threatened foreclosure, assessed monthly late fees and reported derogatory information to the credit reporting agencies.
Consumers Sue Ocwen Under the FDCPA
Lisa Bridge and William Bridge filed a lawsuit against Ocwen in federal court, alleging that Ocwen violated the federal FDCPA, 15 U.S.C. §§1692c, 1692d, and 1692e. The consumers alleged Ocwen made repeated and continuous telephone calls, despite requests to cease and desist, that Ocwen made false representations the consumers had comitted a crime, sought to collect amounts not owed, threatened to take actions that were not allowed to take, among other things.
Ocwen filed a motion to dismiss the lawsuit. Ocwen claimed it was not a "debt collector", and therefore could not be sued pursuant to the federal FDCPA, 15 U.S.C. §§1692c, 1692d, and 1692e. Simply put, Ocwen claimed the debt was not in default when they acquired it (the debt had to be in defeault for Ocwen to have been considered a "debt collector." The district court granted Ocwen's motion to dismiss, but the consumers chose to have a 3 judge appellate panel revisit the matter.
The Court Of Appeals Disagreed With Lower Federal Court and Overturned the Dismissal
The Appellate Court reasoned:
1. The FDCPA is an extraordinarily broad statute enacted by Congress to protect people like the consumers here
2- The distinction between a creditor and a debt collector lies in 15 U.S.C. §1692a(6)(F)(iii). Simply put, if the debt in question was in default status at the time it was acquired, or if the servicing company treated it as if in default, regardless of the loan's actual status, then the loan servicer is a debt collector. Furthermore, the Court of Appeals defined a debt collector as any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts.
3- The Court of Appeals found Ocwen's argument "unsettling". The fact that Ocwen sought to defeat the lawsuit by alleging that the mortgage was not in default after years of attempting to to collect the debt, and claiming it was in default, was "disingenuous" and "unsettling."
4- Even though William Bridge did not owe the debt, Congress intended to protect people like Mr. Bridge when they enacted the FDCPA, and thus he was protected by the statute as well.
We are investigating potential claims against Ocwen and other creditors and collection agencies. If we can help, call the Law Offices of Ronald Wilcox at 408-296-0400.