Know Your Loan Modifications: A Caution Under the Florida Consumer Collection Practices Act

A recent decision by the Florida Second District Court of Appeal spotlights the importance of a lender keeping its loan system up-to-date as to loan modifications and forbearance agreements so that erroneous default notices are not automatically generated and sent to consumers. In Gann v. BAC Home Loans Services, LP, the Plaintiff alleged a cause of action against BAC under the Florida Consumer Collection Practices Act (FCCPA), claiming that BAC violated the FCCPA because it sent her letters telling her that her loan was in default and that she needed to pay a reinstatement amount to avoid foreclosure. The Plaintiff further alleged that she and BAC had entered into a loan modification and that she was current with all her payments under the loan modification. If what the Plaintiff alleged was true, then BAC could be found in violation of the FCCPA for attempting to enforce a debt when BAC knew or should have known that the debt was not legitimate because there was no default under the loan modification. For a complete copy of the Court’s decision, click here.

As a reminder to lenders and loan servicers in Florida, the FCCPA is broader in scope than the Federal Fair Debt Collection Practices Act. Unlike the Federal version, which only applies to debt collectors who aren’t the owner or servicer of the debt, the FCCPA applies to creditors who are collecting their own debts. Damages for violations of the FCCPA include actual damages, statutory damages not to exceed $1,000 per violation, punitive damages in particularly eggregious cases, and attorneys fees if the person claiming the violation prevails. Generally it is the exposure to a large attorneys fees award that creates the most litigation risk for a lender.

 

Sarah Lindquist Pape

Website | Email | Linkedin

Phone: 407-563-4335

Fax: 407-425-2747

My practice includes the representation of financial institutions, banks, insurance companies, business owners and other corporate clients. I have a growing and focused practice dedicated to helping financial institutions navigate the complex and expanding area of government regulation and compliance with federal and state laws. This includes working with financial institutions to prepare best practices policies, procedures, and forms, as well as advising financial institutions as to avoiding litigation. When necessary, I will also represent those same institutions in court. I enjoy keeping current with the news and issues that affect banks and financial institutions in their business, and sharing that information along with my thoughts on the issue from a legal perspective based upon my experience.

My firm, Zimmerman, Kiser, & Sutcliffe, P.A.* is a full-service law firm located in Orlando, Florida. Established in 1984 and consistently recognized as one of the largest firms in Central Florida, our firm maintains a respected reputation within the southeast U.S. business and legal community. Our more than 30 attorneys provide comprehensive legal representation in an extensive range of practice areas including corporate, tax, real estate, litigation, banking and financial institutions, structured finance, bankruptcy & creditors’ rights, estate planning & probate, and workers’ compensation.

http://www.zkslawfirm.com

About Sarah Lindquist Pape

Website | Email | Linkedin
Phone: 407-563-4335
Fax: 407-425-2747

My practice includes the representation of financial institutions, banks, insurance companies, business owners and other corporate clients. I have a growing and focused practice dedicated to helping financial institutions navigate the complex and expanding area of government regulation and compliance with federal and state laws. This includes working with financial institutions to prepare best practices policies, procedures, and forms, as well as advising financial institutions as to avoiding litigation. When necessary, I will also represent those same institutions in court. I enjoy keeping current with the news and issues that affect banks and financial institutions in their business, and sharing that information along with my thoughts on the issue from a legal perspective based upon my experience.

My firm, Zimmerman, Kiser, & Sutcliffe, P.A.* is a full-service law firm located in Orlando, Florida. Established in 1984 and consistently recognized as one of the largest firms in Central Florida, our firm maintains a respected reputation within the southeast U.S. business and legal community. Our more than 30 attorneys provide comprehensive legal representation in an extensive range of practice areas including corporate, tax, real estate, litigation, banking and financial institutions, structured finance, bankruptcy & creditors’ rights, estate planning & probate, and workers’ compensation.

http://www.zkslawfirm.com
This entry was posted in Collection Practices, Creditor's Rights. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Current day month ye@r *