Consumer Finance Litigation

In Joy v. MERSCORP, Inc., No. 5:10-CV-218-FL, 2013 WL 1246856 (E.D.N.C. Mar. 27, 2013), the Eastern District of North Carolina held that a borrower stated a claim for a violation of the FDCPA against a loan servicer in connection with documents filed in foreclosure proceedings. The plaintiff sued several defendants alleging a violation of § 1692e of the FDCPA claiming that the defendants filed false, deceptive, and misleading documents in connection with foreclosure proceedings. Nationwide Trustee Services, Inc. ("Nationwide") moved for a judgment on the pleadings, and Litton Loan Servicing ("Litton") moved to dismiss the plaintiff's complaint. Rejecting the magistrate judge's recommendation, the court found that the plaintiff sufficiently alleged that Nationwide violated the FDCPA. Specifically, the court found that several documents filed in the foreclosure proceedings stated that the plaintiff received notice of a foreclosure hearing when the plaintiff did not receive notice. Additionally, the court found that several documents stated that a continuance of the foreclosure hearing was granted when it had not actually been granted. The court found that these documents were false and misleading, and denied Nationwide's motion with respect to the FDCPA claim. The court also determined that the plaintiff sufficiently alleged an FDCPA claim against Litton and Nationwide with respect to an appointment of substitute trustee and assignment of deed of trust. The plaintiff alleged that the appointment of substitute trustee was fraudulent because the vice president that executed the appointment was never the vice president. The plaintiff also alleged that the assignment of the deed of trust was fraudulent because the assignor company was defunct at the time of the assignment and the vice president who signed it was not actually the vice president. Taking the plaintiff's allegations as true, the court found that the plaintiff stated a claim under the FDCPA. However, the court made it clear that the plaintiff's claim failed to the extent he challenged the validity of the MERS assignment. Similarly, the court rejected the plaintiff's argument that the documents were invalid because Nationwide "rubber stamped" the names of the trustees on documents that required signatures and personal knowledge. For more information on consumer finance litigation topics, please contact one of the Burr & Forman team members for assistance. We are happy to answer any questions or concerns you may have.