On April 21, 2021, the Eleventh Circuit Court of Appeals issued a decision in the case of Hunstein vs. Preferred Collection and Management Services. The Court found that the debt collector’s use of a third-party mail vendor violated the Fair Debt Collection Practices Act. This ruling resulted in an increase in lawsuits against debt collectors (third-party agencies) and raised serious compliance concerns for creditors under the Florida Consumer Collections Practices Act.

On Wednesday, November 17, 2021, the Eleventh Circuit Court of Appeals issued an order vacating the previous decision. Additionally, the Court issued an order to rehear the case before the full Court panel. The original case was heard before a panel of three judges.

The case was reheard before the full panel of judges for the Eleventh Circuit Court of Appeals. The court issued their latest opinion on September 9, 2022. The court has reversed the original decision. The court found that the Plaintiff did not have standing to bring the lawsuit because the Plaintiff had not suffered a “real” injury. The court focused on the fact that the Plaintiff had not suffered any harm. It is important to note that the court did not get to the issue of whether the use of third-party mail vendor violated the FDCPA.

The effect of the Court’s action is that the prior opinion of the court is no longer valid and does not have authority over lower courts. The Plaintiff could seek to appeal this decision to the U.S. Supreme Court, or the Plaintiff could refile the suit in state court in Florida. Florida law provides a different standard for standing that may allow the case and allegations to move forward. We will continue to monitor this matter and will provide updates as this case moves forward.

On Friday, July 29, 2022, the CFPB and Justice Department issued a Joint Letter reminding auto lenders of their responsibilities to recognize important legal protections for military families under the Servicemembers Civil Relief Act (SCRA). This letter comes months after the CFPB issued a compliance bulletin on repossessions. The CFPB also addressed repossession compliance issues in its Spring 2022 Supervisory Highlights.

The Joint Letter was a reminder to lenders of key provisions within the SCRA, including:

• Wrongful vehicle repossessions: The SCRA prohibits a lender from repossessing a motor vehicle during the borrower’s military service without a court order. The letter reminders lenders that a violation of this law can lead to criminal penalties.
• Failure to terminate vehicle leases without penalty: The SCRA allows servicemembers to terminate motor vehicle leases early and without penalty in certain situations.
• Violations of auto loan interest rate benefits: The SCRA limits interest rates on loans incurred prior to military service to no more than 6% per year. This cap on interest includes a cap on most fees. If servicemembers make a proper request, a creditor must forgive any interest greater than 6%. Any interest already paid must be refunded to the borrower.

A copy of the Joint Letter can be found here.

In light of the CFPB’s focus on repossessions, if you have not recently reviewed your Policies and Procedures related to repossession, especially involving those protected by the SCRA, we recommend you review those policies and procedures now. If you have questions or need a legal review, please do not hesitate to contact a lawyer at Sorenson Van Leuven.

On April 21, 2021, the Eleventh Circuit Court of Appeals issued a decision in the case of Hunstein vs. Preferred Collection and Management Services. The Court found that the debt collector’s use of a third-party mail vendor violated the Fair Debt Collection Practices Act. This ruling resulted in an increase in lawsuits against debt collectors (third-party agencies) and raised similar compliance concerns for creditors under the Florida Consumer Collections Practices Act. A copy of our original summary of this Court opinion can be found here.

On Wednesday, November 17, 2021, the Eleventh Circuit Court of Appeals issued an order vacating the previous decision. Additionally, the Court issued an order to rehear the case before the full Court panel. The original case was heard before a panel of three judges. Now the case will go before the full panel of judges. The rehearing date has not been set.

The effect of the Court’s action is that the prior opinion of the court is no longer valid and does not have authority over lower courts. We will continue to monitor this matter and will provide updates as this case moves forward.

On August 26, 2021, the United States Supreme Court in a 6-3 ruling, blocked the latest Centers for Disease Control (CDC) Eviction Moratorium, finding that the CDC exceeded its authority. A majority of the Court held that only Congress can allow for such a ban on evictions.

As you may recall, this latest moratorium was imposed on August 3, 2021, by the CDC and was scheduled to expire on October 3, 2021. It prevented residential evictions for the non-payment of rent in counties that had substantial or high transmission levels. After applying the formula provided by the CDC in determining whether a county was experiencing substantial or high transmission levels, it was determined that the moratorium applied to over 90% of the United States.

Now, based on this ruling from the Supreme Court, unless a state has its own eviction moratorium, residential evictions for the non-payment of rent can resume. Currently, Florida and Georgia do not have state-wide moratoriums on residential or commercial tenant evictions.

If you have any questions or concerns about this ruling, its application to mortgage foreclosures, or any other matters related to creditor’s rights, please do not hesitate to reach out to one of the attorneys at Sorenson Van Leuven, PLLC.

On August 3, 2021, the Biden Administration and the Centers for Disease Control (CDC) announced that it is imposing a new moratorium on residential evictions for non-payment of rent. This new moratorium is scheduled to last two months and expire on October 3, 2021. Unlike the prior eviction moratorium that was nationwide and expired on July 31, 2021, this new moratorium is limited to counties that are experiencing substantial or high levels of COVID-19. Based upon various news reports, this new moratorium will apply to almost 90% of the U.S. population.

In determining whether a county is experiencing substantial or high transmission levels, the CDC intends to look at the number of new cases reported per 100,000 residents over a seven-day period and the positivity rate of that county. If the number of new cases in a county in the prior seven days, divided by the population of the county, then multiplied by 100,000 is between 50.99 and
99.9 and the percentage of positive tests in the prior seven days, divided by the total number of tests in the prior seven days is between 8% and 9.99%, then that county is experiencing substantial transmission levels and residential properties in that county are subject to this new CDC eviction moratorium. If the number of new cases in a county in the prior seven days, divided by the population of the county, then multiplied by 100,000 is 100 or greater and the percentage of positive tests in the prior seven days, divided by the total number of tests in the prior seven days is greater than 10%, then that county is experiencing high transmission levels and residential properties in that county are subject to this new CDC eviction moratorium.

For a tenant to be protected under this new moratorium, they must not only live in a county that is experiencing substantial or high COVID-19 infection levels, but they must also file a declaration under penalty of perjury setting forth the following:

1. The tenant has used best efforts to obtain government assistance for housing,
2. The tenant earned no more than $99,000.00 or $198,000.00 if filing jointly for the tax year 2020 or received a stimulus check,
3. The tenant is unable to pay rent,
4. The tenant is using best efforts to make partial rent payments, and
5. The eviction will make the individual homeless or forced into a close-
   quarters living situation.

Presently, every county in the State of Florida is experiencing either substantial or high transmission levels, so the CDC eviction moratorium will apply in every county in Florida. In the State of Georgia, every county except Lincoln, Quitman, Webster, and Glascock is experiencing substantial or high transmission levels. The counties in which this applies is subject to change, so if you are dealing with an eviction in a particular county, you should check for up-to-date data.

If you have any questions or concerns about the new moratorium, its application to mortgage foreclosures or any other matters related to creditor’s rights, please do not hesitate to reach out to one of the attorneys at Sorenson Van Leuven, PLLC.

Yesterday, the Consumer Financial Protection Bureau (CFPB) announced that the two final rules under the Fair Debt Collection Practices Act will take effect on November 30, 2021. Previously, the CFPB issued a proposal to move the effective date to January 29, 2022, to give third-party debt collectors more time to implement the new rule due to the pandemic. The CFPB has now determined that an extension is unnecessary. While the rule is aimed at third-party debt collection, the rule does have some impact on creditors who work with third-party debt collectors.

Should you have questions about the two final rules or how it impacts your organization, please do not hesitate to contact a lawyer at Sorenson Van Leuven.

On Monday, June 28, 2021, the Centers for Disease Control and Prevention (CDC) issued final amendments to the Federal mortgage servicing rules. Pursuant to the Consumer Financial Protection Bureau (CFPB), these amendments are designed to facilitate a smooth transition in the housing market and mortgage servicing industry as federal foreclosure protection is scheduled to expire on July 31, 2021.

The amendments take effect on August 31, 2021, and cover loans on principal residences. The changes generally exclude small servicers, so many credit unions will be exempt. These amendments have sunset provisions or expirations, with some expiring on January 1, 2022, and others expiring on October 1, 2022.

The rule will require services to increase their efforts to reach borrowers and work with those borrowers to avoid foreclosure. The rule will allow foreclosures to start if: (1) the borrower has abandoned the property; (2) the borrower was more than 120 days behind on their mortgage before March 1, 2020 (and they are still behind by at least 120 days); (3) the borrower is more than 120 days behind on their mortgage and has not responded to specific required outreach from the mortgage servicer for 90 days; or (4) the borrower has been evaluated for all options other than foreclosure and there are no available options to avoid foreclosure.

For those attending the SVL SourcExpo (July 21st through July 23rd), we will cover these amendments in more detail. Information on the SVL SourcExpo can be found here: https://svllaw.com/sourcexpo-2021/

Additionally, on Tuesday, June 29, 2021, the United States Supreme Court voted 5 to 4 to keep in place the CDC eviction moratorium. That means that legal attempts to stop the eviction moratorium have failed, as the CDC has indicated that it will not extend the moratorium past July 31, 2021.
Should you have questions about the amendments to the mortgage servicing rules or the CDC eviction moratorium, please reach out to a lawyer at SVL.

The Federal Housing Finance Administration (FHFA), an independent federal agency that oversees Fannie Mae and Freddie Mac, has announced that it is extending its moratorium on residential mortgage foreclosures through July 31, 2021. This moratorium was scheduled to expire on June 30, 2021. This applies to all residential mortgage loans that are owned by Fannie Mae and Freddie Mac, and prevents any servicer from seeking to file a foreclosure or complete a foreclosure on any residential property that is occupied.

In addition, the Biden Administration has extended its moratorium on foreclosures for federally backed mortgages (loans insured by HUD, VA and USDA) through July 31, 2021. The moratorium on federally backed loans, which has been in place since March 2020 and extended on several occasions, was also scheduled to expire on June 30, 2021.

Lastly, the Centers for Decease Control (CDC) announced that it has extended its nationwide moratorium on residential tenant evictions through July 31, 2021. Much like the foreclosure moratoriums on federally backed loans, the moratorium on evictions was scheduled to expire on June 30, 2021. In announcing this extension, the CDC has also stated that this will be the last extension of its moratorium.

If you have any questions or concerns about these moratoriums, or any other matters related to creditor’s rights, please do not hesitate to reach out to one of the attorneys at Sorenson Van Leuven, PLLC.

On April 21, 2021, the Eleventh Circuit Court of Appeals issued a decision in the case of Hunstein vs. Preferred Collection and Management Services. This opinion raises several issues and, in our opinion, could lead to litigation claims against debt collectors and creditors, including Credit Unions.

The original lawsuit was filed under the Fair Debt Collections Practices Act (FDCPA) and the Florida Consumer Collections Practices Act (FCCPA). The claim was brought by Mr. Hunstein, alleging that the debt collector violated the FDCPA and the FCCPA when it conveyed information about his delinquent debt to a third-party mail vendor used by Preferred Collection and Management Services to send out routine collection letters. The district court dismissed the lawsuit, finding that the consumer failed to state a cause of action under the FDCPA. On appeal, the Eleventh Circuit reversed that decision.

The Eleventh Circuit Court’s sole focus is on the FDCPA, which would not apply to Credit Unions collecting their own debt. Its decision does not address the claim under the FCCPA, which would apply to Credit Unions. The statutory language at issue under the FDCPA is Section 1692c(b) that provides “a debt collector may not communicate, in connection with the collection of any debt, with any other person other than the consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector[.]” The Eleventh Circuit found that a communication in connection with the collection of any debt with a third-party mail vendor could violate the Act if that communication is in connection with the collection of any debt. Mr. Hunstein’s allegation was that the communication from the debt collector to its mail vendor included the amount of the debt, the entity to which the debt was owed, and the fact that the debt was related to his son’s medical treatment. The Eleventh Circuit ruled that if the communication to the mail provider contained this information, then it was a communication in connection with a debt that violated 1692c(b).

This ruling will have a significant impact on debt collectors (third-party agencies). How they deal with this new risk could significantly change their process and cost structure. In fact, the Eleventh Circuit recognizes that its decision will severally impact third-party debt collectors but emphasized that the problem needs to be addressed by Congress.

It is hard to determine how this will impact Credit Unions or other creditors at this time. The court did not address the FCCPA claim, as that was not addressed at the lower court level, except for the fact that once the FDCPA claim was dismissed (the one involving a federal statute), that eliminated jurisdiction for the federal court to consider the FCCPA claim. Now that the FDCPA claim is back before the lower court, the court will have to consider the FCCPA claim as well.

The FCCPA does not have the same statutory language as the FDCPA. The complaint filed by the consumer, Mr. Hunstein, alleges violation of Section 559.72(5), which provides as follows:

Disclose to a person other than the debtor or her or his family information affecting the debtor’s reputation, whether or not for credit worthiness, with knowledge or reason to know that the other person does not have a legitimate business need for the information or that the information is false.

If a court were to rule that the use of a third-party mail vendor violates Section 559.72(5), the impact on Credit Unions and other creditors could be significant. In the meantime, as this opinion is disseminated among consumer lawyers, I would not be surprised to see similar claims brought against creditors. SVL will continue to monitor the litigation between Mr. Hunstein and Preferred Collection and Management Services as the lower court considers the FCCPA claim. In the meantime, if you wish to discuss this matter and your unique risks, please contact a lawyer at SVL.

Yesterday, April 7, 2021, the Consumer Financial Protection Bureau (CFPB) issued a proposal to delay the effective date of the Debt Collection Rules for sixty (60) days. The reason for the delay is to give those impacted by the Rules more time to prepare given the pandemic. The new proposed effective date is January 29, 2022. The proposal seeks only to modify the effective date and does not include any other changes. This proposal is open for public comment for thirty days, after which the CFPB will make a final determination on whether the effective date will be delayed. If you have questions about this proposal or the Debt Collection Rules, please do not hesitate to contact a lawyer at SVL.