Class Action Lawsuit Against Setler-Mortgage Servicer

A homeowner has recently filed a class action lawsuit against Seterus Inc., a premier mortgage servicing company, citing several alleged abuses of the Fair Debt Collection Practices Act. The lawsuit, filed in the Eastern District of Pennsylvania, names Seterus as a class defendant and lists a number of individual lenders that engage in debt collection practices on behalf of Seterus. The complaint further names National City, National Collegiate Insurance Commission, Mortgage Electronic Registration Systems, Inc. and Loan Guaranty Corporation as individual defendants. The complaint further claims that these individual defendants violated the federal Fair Debt Collection Practices Act (FDCPA), the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA). Some of these alleged violations include: failure to disclose material and immovable assets, failure to make required disclosures, failure to pay or return money, failure to maintain effective debt collection agency records, use of a non-standard form for billing and collecting credit card debts, failure to provide consumers with a copy of their monthly bill after the due date, failure to provide consumers with an itemized statement at the time of a transaction and failure to respond to a complaint within a reasonable time. All of these allegations have been contained in previous complaints.

Class Action Lawsuit Against Seterus

The Pennsylvania attorney general, Thomas K. van De Ruit stated in a press release that, “The state of Pennsylvania has been working hard to protect the rights of its citizens, and will not hesitate to vigorously prosecute those who violate the law…The Class Action lawsuit filed today against Seterus, Inc. is another step in the fight to hold mortgage companies accountable for their unethical collection practices.” He went on to say that, “Lenders owe the public a living explanation of their real estate policies, and those responsible for collecting payments must face the consequences of their actions…Lenders have a legal obligation to provide housing to consumers, and they cannot act in ways that threaten the financial security of families and individuals.” Seterus responded with a class action lawsuit of their own against Bank of America, which claimed that their “willful misconduct” had forced them into “a negative and capricious” foreclosure action. Seterus further claimed that, “lying and false information was used by the Bank of America to evict the borrowers from their homes…” Seterus asked that all damages are awarded to him and other named class members. The complaint named both Bank of America and their underwriters; however, it was never filed in court.

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In 2004, the U.S. Congress passed and enacted into law, the Fair Debt Collection Practices Act. Section 611 of this act provides for “fair debt collection practices” and “ensure reasonable compensation,” among other things.

Among other things, the act establishes guidelines for the amount of money that a mortgage company may be allowed to charge a person for late or missed payments.

In 2004, Bank of America was one of twenty-nine financial institutions that signed on to settle the provisions of the Fair Debt Collection Practices Act. However, at the time of signing the agreement, Bank of America, according to the complaint and its exhibits, did not disclose to its borrowers that it routinely engages in these practices.

And, even today, despite the fact that the complaint has been certified, Bank of America continues to engage in these practices with impunity. As previously noted, the complaint was brought by a class action lawsuit against Bank of America. A second class action lawsuit, brought by the Office of the Comptroller of the Currency, has been pending before the courts, with Bank of America as its defendant, since 2004.

On the basis of its conduct and policies, as set forth in its loan documentation, Bank of America became the subject of a lawsuit in the federal district court for its policies governing the collection of mortgage payments.

According to the complaint, the defendants failed to develop and implement policies providing notice of default to its borrowers prior to taking them into foreclosure. The policies also failed to provide notice of other possible recourse after borrowers have been taken into default; it is clear that Bank of America failed to make those policy judgments an integral part of its debt collection activities. Consequently, when borrowers fail to pay the mortgage payments, the bank has no recourse but to pursue the borrower for payment of those funds.

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The Complaint further contends that Bank of America’s policies relating to recovery of debts also violate the rights of privacy and freedom of expression that are protected by the first amendment of the United States Constitution.

This class action lawsuit against Bank of America is also consistent with the statutory damages laws of various states, including the “joint and several liability” laws of Texas and the “punitive damages” laws of New York. In addition, the complaint notes that the violations may amount to violations of both the federal and state statues of limitations for the tort of foreclosure. Accordingly, the complaint seeks a declaration that Bank of America is guilty of violations of both statues, and a judgment in favor of its Class of victims.

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