The mortgagor and his sister inherited his mother’s property, which was subject to a mortgage, interest after her death in 2020. The refinanced mortgage took effect in the month before her death. A year later, the mortgagor requested and received confirmation of his interest in the property. In early 2022, the mortgagor requested the servicer validate the debt. The mortgagee’s reply stated that the loan qualified for forbearance and that there were five overdue monthly payments. In late 2022, after another request to validate the debt, the mortgagee claimed it had attached the note, security deed, verification of mortgage, and payment history required by the Fair Debt Collection Practices Act. In 2023, the collector sent a correspondence addressed to the mortgagor’s mother, who had died almost three years before the correspondence had been sent. The collector then proceeded with a nonjudicial foreclosure sale on the mortgage. The mortgagor then filed a complaint against the servicer and the collector claiming violations of U.S.C. §§ 1692(d), 1692(e), and 1692(f). The mortgagor’s complaint contained four counts: (1) the notice of foreclosure contained “misleading representations likely to lead to confusion” violating §§ 1692(d) and 1692(e), (2) the initial correspondence failed to identify the collector as a debt collector violating § 1692(e), (3) the notice of foreclosure “offered to discuss ‘foreclosure alternatives.’” which also risked confusion violating § 1692(e), and (4) the notice of sale misconstrued the rights of the servicer and collector as related to their interest in the property, violating § 1692(f)(6). The magistrate recommended dismissal on all counts. The magistrate also determined that granting leave to amend would be “futile” because “[the mortgagor] had already tried and failed to sue the same defendants under the Act for similar allegations.” The district court adopted the recommendation in full, which led to an appeal.
In Taylor v. Freedom Mortg. Corp., No. 24-12771, 2025 WL 2814524, 2025 U.S. App. LEXIS 25733 (11th Cir. Oct. 3, 2025) (opinion not yet released for publication), the Eleventh Circuit affirmed the district court’s dismissal on all counts. Given the similarity of the first three counts, the circuit court affirmed the district court’s determination that under the definition of a “debt collector” in §1692(a)(6), the first three counts did not trigger the statute or any of its violations. To qualify as a debt collector under the statute, a person must “. . . {be] in any business the principal purpose of which is the collection of any debts.” See 15 U.S.C. §1696(a)(6). However, an exception exists for attempting to collect on a debt not in default at the time it was acquired by the servicer, and others who service outstanding debts for the collectors. Because there were only five outstanding monthly payments at the time the servicer acquired the debt, the servicer qualified for the exception. Similarly, the court held that because a nonjudicial foreclosure was not a default, the collector also qualified for the exception. In count four, the collector met one of the triggering conditions of §1692(f)—having a present right to possession of the property—when the servicer showed it had authority to enforce the mortgage’s interest. Therefore, the final claim did not misrepresent the rights of the servicer and collector. Accordingly, the Eleventh Circuit affirmed the lower court’s dismissal of all counts.
By Andrew Fielden [email protected]
Edited by Charlie Cole [email protected]
Edited By Olivia Lewis [email protected]
Edited By Taylor O’Brien [email protected]