December 27, 2013
The Eleventh Circuit and the majority of federal circuit courts have adopted the “least-sophisticated consumer” standard in analyzing claims brought under the Fair Debt Collection Practices Act (FDCPA). The least-sophisticated consumer standard is consistent with FDCPA’s goal of expanding the consumer protections originally provided by the Federal Trade Commission Act. The purpose of the least-sophisticated-consumer standard, here as in other areas of consumer law, is to ensure that the FDCPA protects the gullible as well as the shrewd. No requirement of proof of actual deception of the consumer is necessary.
Courts apply this objective standard in order to implement the FDCPA’s dual purpose: to protect consumers against deceptive debt collection practices and to protect debt collectors from unreasonable constructions of their communications to consumer. The least sophisticated consumer will be presumed to possess a rudimentary amount of information about the world and a willingness to read a collection notice with some care. However the test also has an objective component in that while protecting naive consumers, the standard also prevents liability for bizarre or idiosyncratic interpretations of collection communications by preserving a quotient of reasonableness.
December 25, 2013
An attempted validation notice pursuant to 15 U.S.C. §1692(g) attached to a Complaint in a lawsuit may be considered as deceptive and misleading to the “least sophisticated consumer” under the Fair Debt Collection Practices Act. In Battle v. Gladstone Law Group, P.A., law firm, acting as counsel for Bank of America, N.A., filed a complaint in Florida State Court to foreclose on Gina Battle’s mortgage and to enforce a promissory note. Attached to the State Court complaint and summons was a document entitled “Notice Required by the Fair Debt Collection Practices Act, 15 U.S.C. Section 1692g.” The Notice was presumably served to inform Gina Battle of her rights concerning validation of the debt and provide her with 30 days to request validation of the debt. The summons issued by the State Court along with the State Court complaint informed Battle that she had 20 days to file a response with the court. Battle sued the law firm, Gladstone Law Group, and attorney Ron Gladstone, under the Fair Debt Collection Practices Act alleging that they violated the FDCPA because the Notice attached to the state court Complaint was deceptive and misleading to the “least sophisticated consumer.” The federal lawsuit was converted into a Class Action alleging that that the class was so large that joinder of all members of the Class was impractical and that the class was in excess of 100. The District Judge ruled that an FDCPA notice incorporated into a mortgage foreclosure summons and complaint, such as the one used by the Gladstone Law Group, does not necessarily effectively convey notice of the rights to the “least sophisticated consumer.” The Court went on to say that the “least sophisticated consumer” could be deceived or confused when the summons sets out a 20-day deadline to respond to the lawsuit and the attached notice provides for a 30-day deadline to request validation of the debt.
Battle v. Gladstone Law Group, P.A., Case Number: 12-14458-Civ-Martinez-Lynch.
December 16, 2013
Deborah E. Focht appealed the trial court’s entry of a final summary judgment of foreclosure in favor of Wells Fargo Bank, N.A. The Florida Second District Court of Appeal reversed the final judgment of foreclosure because there was a genuine issue of material fact regarding Wells Fargo’s standing to enforce the note and mortgage.
In October 2002, Ms. Focht executed an adjustable rate note and mortgage with BNC Mortgage, Inc. The loan was later transferred into a trust for which Wells Fargo is the trustee. Wells Fargo subsequently filed a motion for summary judgment, which Focht opposed based on numerous affirmative defenses including Wells Fargo’s lack of standing. Wells Fargo asserted that it had standing by virtue of an assignment of the note and mortgage dated September 2008, which was several months after the complaint was filed. Wells Fargo alternatively asserted that it had standing as the holder of the original note endorsed in blank. The trial court granted Wells Fargo’s motion for summary judgment and entered a final judgment of foreclosure. Focht appealed.
The appellate court reversed the final judgment based on the existence of a genuine issue of material fact regarding Wells Fargo’s standing to enforce the note and mortgage at the time it filed the complaint. In its opinion reversing the final judgment of foreclosure, the court stated that under Florida law, a plaintiff who is not the original lender may establish standing to foreclose a mortgage loan by submitting a note with a blank or special endorsement, an assignment of the note, or an affidavit otherwise proving the plaintiff’s status as the holder of the note. McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012). But standing must be established as of the time of filing the foreclosure complaint. Country Place Cmty. Ass’n v. J.P. Morgan Mortg. Acq. Corp., 51 So. 3d 1176, 1179 (Fla. 2d DCA 2010); McLean, 79 So. 3d at 173. Thus, the court ruled that Wells Fargo’s submission of a postfiling assignment of the note and mortgage did not establish that it had standing when it filed the lawsuit. See Gonzalez v. Deutsche Bank Nat’l Trust Co., 95 So. 3d 251, 253 (Fla. 2d DCA 2012); McLean, 79 So. 3d at 173.
November 25, 2013
Leon County, Florida, Circuit Judge, John C. Cooper, dismissed a lawsuit filed by National Collegiate Student Loan Trust for breach of contract in connection with an allegedly defaulted student loan. Judge Cooper ruled that the complaint was defective in that it failed to attach a copy of the contract sued upon.
In response to the order dismissing the complaint, National Collegiate Student Loan Trust filed an Amended Complaint, with several attachments, including what it contended was a copy of the assignment from the original lender. However, the assignment offered by National Collegiate Student Loan Trust was to an entity named National Collegiate Funding, LLC and not the Plaintiff in the action.
National Collegiate Student Loan Trust v. Harvey, 2013-CA-2278.
November 7, 2013
Student Loan lawsuits are on the rise. Two major student loan debt buyers, National Collegiate Student Loan Trust and SLM Private Credit Student Loan Trust, are suing consumers across the country for past-due private student loans. Neither National Collegiate Student Loan Trust nor SLM Private Credit Student Loan Trust are lenders but are debt buyers of private student loans guaranteed by TERI rather than by the federal government. These entities purchase student loans from the original lenders and attempt to collect them from the borrowers. The private student loans were used by students to assist in financing the cost of their education in attending undergraduate, law school, business school, medical school, dental school, and other graduate programs.
Both National Collegiate Student Loan Trust and SLM Private Credit Student Loan Trust are Student Loan Asset-Backed Security (or, as they’re known in the industry, SLABS). SLABS were invented by then-semi-public Sallie Mae in the early ’90s, and their trading grew as part of the larger asset-backed security wave that peaked in 2007. Simplly stated, these student loans are bundled and sold as investments to the general public as a safe investment.
In order for a suing creditor to obtain a judgment against the consumer/borrower on a defaulted student loan, the creditor must prove ownership of the loan. Given that the student loan consumer did not borrow the money from the SLAB, it must show how it acquired the loan. Proof of assignment of the student loan is a requirement.
National Collegiate Student Loan Trust and SLM Private Credit Student Loan Trust count on consumers doing nothing so they can obtain a default judgment against the borrower. From a statistical standpoint, more than 90% of all collection lawsuits – including those for private student loans – end up with a default judgment.
Most student loan borrowers who receive lawsuit papers simply do nothing to defend themselves. It is important for consumers to defend themselves against lawsuits brought by National Collegiate Student Loan Trust and SLM Private Credit Student Loan Trust to demand that they prove their case.
November 7, 2013
A lawsuit filed under the Fair Debt Collection Practices Act and the Florida Consumer Collection Practices Act alleges that Midland Funding, LLC and Pollack & Rosen, P.A. garnished the wages of the wrong person. A wage garnishment is an order from a court sent an employer requiring that money be withheld and forwarded to the creditor. However, in order for the wage garnishment to be lawful, there must be a valid judgment against the person whose wages are being garnished. In this case, the wrongful garnishment created havoc in the consumer’s checking account and many of his scheduled payments were dishonored as a result of the garnishment.
Both federal and state law make it unlawful for a debt collector to make a claim or legal right that does not exist.
Plaintiff is seeking statutory and compensatory damages against Midland Funding, LLC and Pollack & Rosen, P.A. and has demanded a trial by jury.
[The allegations in the Fair Debt Collection Practices Act lawsuit described in this article are the plaintiff’s version of the facts and must be proven with competent evidence. Moreover, these allegations may be denied or disproven by the defendants.]