SCOTUS Oral Argument Illuminates the Main Question in Foreclosures: What are the roles of the parties?

Two days ago in the case of Obudskey v McCarthy and Holthus LLP the  Supreme Court of the United States (SCOTUS) heard oral argument on issues relating to the application of the Federal Debt Collection Procedures Act (FDCPA).

The argument for including the law firm pursuing foreclosure was presented by DANIEL L. GEYSER, Esq. in a case that started in Texas.

In the course of reading the oral argument and comments by the court it is clear that everyone is struggling with defining the roles of each of the players in foreclosure.  The fact that such a struggle exists is a testament to the credibility of arguments raised by homeowners that claimants are misrepresenting their roles and capacity to pursue foreclosure or at least on dubious ground for claiming any rights in relation to the subject debt. While the SCOTUS ruling could go any number of ways, the fact that they took the case for review combined with the content of the oral argument, shows that the roles of all the parties who line up to pursue foreclosure are obscured.

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see scotus oral argument on fdcpa 17-1307_apl1

Hat tip to Charles Cox

Claims under the FDCPA are very interesting because in order to determine of the party that is acting is a debt collector you must first determine if they are a creditor and then determine whether their activities fall within the FDCPA. By alleging they are a debt collector you are implicitly stating that they are not a creditor — i.e. an owner of the debt seeking to collect it.

This opens discovery on the issue of who owns the debt and wether the party demanding payment is representing the owner of the debt . We know they are not representing the owner of the debt (there probably is no “owner of the debt”) and they are not owners of the debt — unless a presumption is made that possession of the original note raises the presumption of transfer of the debt.

That in turn raises the question of whether the note was delivered by someone who owned the debt.

And THAT is at the heart of the game for the banks. They lead foreclosure defense counsel, homeowners and the courts into believing that the existence of the chain of paper is sufficient to raise a virtually irrebuttable presumption that what is written in the chain of paper is true. It is not true. So the entire tsunami of foreclosures was based upon the premise of the banks that it is true because they say it is true.

This is accepted by courts because they automatically accept representations of bank counsel as credible —- and automatically reject assertions of foreclosure defense counsel —- as either not credible or just technical ways to either delay the inevitable (which is a prejudgment) or get out of a legitimate debt (making the frequently erroneous assumption that the debt is legitimate) without regard to whether it is owed to the claimant who is named in the foreclosure proceedings — or whether the claimant has a legal relationship (privity) with the owner of the debt.

No Surprise: Ocwen & US Bank Hit by $3.8 Million Verdict in Chicago Federal Trial For Violations in Fake Foreclosure

“The jury, after deliberating for approximately 7 hours, determined that Ocwen breached its contract, violated RESPA for failing to adequately respond to Saccameno’s Qualified Written Request, violated the FDCPA and committed both unfair and deceptive acts in violation of the Illinois Consumer Fraud Act.  Monette Saccameno was awarded $500,000.00 in compensatory damages, $70,000.00 in non-economic damages, $12,000.00 in economic damages and $3,000,000.00 in punitive damages. Nicholas Heath Wooten, Esq.Ross Michael Zambon, Esq., and Mohammed Omar Badwan, Esq. led the litigation team on behalf of Saccameno.”

And I ask again: WHY DO OCWEN DOCUMENTS AND “BOARDING PROCESS” GET ANY LEGAL PRESUMPTION ON SCANT TESTIMONY AND EVIDENCE THAT WOULD NOT BE ACCEPTED AS FOUNDATION IN ANY COURT OTHER THAN ONE IN FORECLOSURE PROCEEDINGS? With this verdict and dozens of other verdicts, settlements, lawsuits and whistleblower  news stories has establishing a crystal clear pattern of conduct of fake foreclosures based upon false documentation, false posting of payments and a clear mission to seek foreclosure whether the homeowner is current in payments or not.

The many cases akin to this one against OCwen and US Bank should be served up to judges hearing foreclosure cases with a single message: the foreclosures you are allowing are wrongful. Your decisions are giving rise to many lawsuits for damages.

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Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 954-451-1230 or 202-838-6345. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

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Hat Tip Greg da’ Goose

Case Number: 1:16-cv-05278
Court: Illinois Northern
Nature of Suit: 423(Bankruptcy Withdrawl)
Ocwen Financial Corporation
U.S. Bancorp


This case shows that juries are still angry about the 2008 meltdown and that the entire burden was shifted to homeowners and taxpayers — who “bailed out” financial institutions that had no losses.

And it also shows that lawyers can get rich by charging contingency fees in wrongful foreclosure actions that most lawyers avoid or rush to settlement. It provides ample encouragement for homeowners to sue and for lawyers to take the cases.

So for those of you who are  contemplating filing a wrongful foreclosure action against Ocwen, or U.S. Bank or any of the other players that are acting in concert with Ocwen, here is a case that no doubt will be settled under “seal of confidentiality” (like thousands of others). I think it is high time for borrowers to pool their complaints in either a class action or mass joinder action.

And here are some of the causes of action that could be filed that a federal jury found were reasons enough to award $500,000 in compensatory damages and $3 Million in punitive damages:

  1. Breach of contract
  2. RESPA violation (failure to respond to QWR)
  3. FDCPA violations
  4. Violation of state law — Illinois Consumer Fraud Act: Unfair and deceptive acts.

There are many other causes of action that could be filed. Each case needs to be evaluated as to which causes of action are most appropriate for the subject “loan”, most of which have resulted in substantial verdicts.

And don’t forget the role of US Bank whose name is used as trustee of a trust that  either doesn’t exist, doesn’t own the debt or both. US Bank is paid a fee to pose as trustee not to BE trustee.

See also

Ocwen (OCN) Receives Daily News Sentiment Rating of 0.15

Saccameno v. Ocwen Loan Servicing, LLC et al, No. 1:2015cv01164 – Document 265 (N.D. Ill. 2018)

Saccameno v. Ocwen Loan Servicing, LLC et al, No. 1:2015cv01164 – Document 231 (N.D. Ill. 2018)
MEMORANDUM Opinion and Order Signed by the Honorable Joan B. Gottschall on 3/9/2018

Saccameno v. Ocwen Loan Servicing, LLC et al, No. 1:2015cv01164 – Document 152 (N.D. Ill. 2017)
MEMORANDUM Opinion and Order Signed by the Honorable Joan B. Gottschall on 11/8/2017

Saccameno v. Ocwen Loan Servicing, LLC et al, No. 1:2015cv01164 – Document 75 (N.D. Ill. 2015)
MEMORANDUM Opinion and Order Signed by the Honorable Joan B. Gottschall on 11/19/2015

US Government Publishing Office
15-1164 – Saccameno v. Ocwen Loan Servicing, LLC et al

David Dayen: Gorsuch’s First Opinion: Let Debt Collectors Run Amok

Editor’s Note: Thanks to poster C. Anderson who says,
“This is a technically correct but bad decision, as Dayen shows. The statutory language desperately needs to be updated. Until then, consumers should be taught how to exercise proof of claim demands. A consumer has no contract with a debt buyer; an assigned debt for consideration is not a negotiable instrument (like a promissory note) for which a consumer is liable and on which a debt buyer can make a UCC claim (it’s just a piece of paper); the debt buyer should be made to prove injury through the consideration for any assignment (pennies on the dollar); and if the debt has been charged off by the original creditor who has received a tax benefit and insurance payoff, the debt is dead. Debt buyers should be threatened with fraud suit for attempted unjust enrichment and theft by deception.”

And poster Anonymous who reminds readers that, ”

Selling of a debt is an actionable claim. It is a settled position in law that buyer of an actionable claim cannot recover from the debtor more than what the buyer has paid, for acquisition of the debt as it otherwise lead to unjust enrichment.

Debt buyers are not entitled to recover anything more than what the debt buyer had paid to the original creditor. This is logic and meet to commonsense which is basis of law.”

Olivier Douliery/picture-alliance/dpa/AP Images

Associate Justice Neil Gorsuch

Justice Neil Gorsuch’s first Supreme Court opinion won’t earn much notice in his biographies. The unanimous decision reads more like a grammatical lesson, scrutinizing one line of text in a decades-old statute. But if you have ever been harassed in the middle of the night by a debt collector, or been threatened with tax liens or court summonses or even bodily harm, you should understand what Gorsuch and his fellow justices did on Monday: They gave some of the worst bottom-feeders in the economy a free pass to break the law.

The case, Henson v. Santander, looks pretty innocuous at first reading. But the Roberts Court’s deference to big business, and lack of experience about the real-world legislative implications of their legal debating club, turned this decision into a huge win for financial predators. It’s now up to Congress to fix what Gorsuch and friends broke. But with the current group in charge, don’t hold your breath.

Here’s what the case is about. Citi Financial Auto made a series of car loans, and then sold the defaulted debts to the Spanish bank Santander, which subsequently tried to collect. The plaintiffs allege that Santander violated the Fair Debt Collection Practices Act (FDCPA) of 1977 by harassing and intimidating the debtors. The FDCPA protects debtors from such practices, enabling them to file suit against the debt collector, with hefty fines for misconduct.

Santander argued that it bought the debts outright and wasn’t attempting to collect them on someone else’s behalf, as debt collectors regularly do. Therefore, it was exempt from the FDCPA. Two courts agreed with Santander, but the appeal went to the Supreme Court.

At this point we have to perform the drudgery of examining the FDCPA statutory text for how it defines “debt collector.” It’s a fairly targeted definition, with exemptions for government officials, process servers, nonprofit credit counselors, and originators of the debt. A “debt collector,” under the statute, means any business whose principal purpose is collecting debts, or a business that regularly collects “debts owed … another.”

This definition, written in 1977, predates the rise of the debt buyer. Since then, however, debt buying has become a multibillion-dollar industry whose participants purchase defaulted debt for pennies and harangue the debtors for the money.

The question raised by Gorsuch’s opinion is whether a debt buyer should be exempt from the main rule preventing abhorrent misconduct in this industry, just because it bought the debt outright instead of trying to collect as a third party.

According to the Supreme Court, yes. Gorsuch weirdly throws out the first part of the definition—about a business with the principal purpose of collecting debts—writing that “the parties haven’t much litigated that alternative definition” and the Court didn’t agree to address it. So the only dispute here is over the “debts owed … another” clause.

There then follows a long passage about the meaning of those three words—if you are interested in questions of past participles, give it a read—concluding that “a debt purchaser like Santander may indeed collect debts for its own account without triggering the statutory definition in dispute.”

Maybe that’s a reasonable position. But you should understand the consequences. Debt buyers, who to this point had at least some legal exposure to the FDCPA, are now exempt from it, under one definition of “debt collector.” That makes potential litigants reliant on the other definition—a business whose principal purpose is collecting debts. And some experts in this field believe this presents an opportunity for the buyer industry.

“It’s almost a road map to me on how you can avoid the FDCPA,” says noted consumer bankruptcy attorney Max Gardner, who runs a boot camp for lawyers fighting predatory lenders. As an international bank, for example, Santander could easily argue that its principal purpose is not debt collection, but originating loans. Other debt buyers could follow the “Santander defense.”

“The biggest debt buyer in the country is called Sherman Acquisitions,” Gardner says. “They own all sorts of subsidiaries. They also own two national banks. You can put two and two together.” Sherman could merely claim that the national banks it owns are the debt collectors, and that’s not their primary purpose. And if the courts agree, the nation’s largest debt buyer would be freed from following the FDCPA, and allowed to call and yell at you at three in the morning.

Sherman could have done that switcheroo before, but they still had to fear running afoul of the “debts owed … another” clause, which other courts had ruled as applicable to debt buyers. With Gorsuch and the Supremes waving that away, debt buyers are free to play all kinds of games to evade regulation. Debt buyers could acquire a community lender and assign it the task of debt collection. Or larger banks could bring a debt buying operation under their roof, as Santander has.

Bankruptcy attorneys seem more exercised by this decision than consumer attorneys, but everyone sees the potential for mischief. “Certain debt buyers by their corporate structure are going to be able to avoid this law,” says April Kuehnhoff, an attorney with the National Consumer Law Center. “Now consumers are not going to know whether this person calling them is covered or isn’t covered [by the act]. I think it raises a lot of difficulty in private enforcement.”

Kuehnhoff adds that Congress needs to get involved right away to fix this newly created hole, rather than wait and see how the industry adapts. Indeed, that was Justice Gorsuch’s conclusion as well, that Congress could merely update the statute by applying it to debt buyers to reflect the changing times. Max Gardner believes that’s a pipe dream with the current Congress. “That’s going to happen as soon as Trump reveals his tax returns,” he says.

Gorsuch’s was the second Supreme Court ruling benefiting debt buyers handed down in the last two weeks.

Gorsuch’s was the second Supreme Court ruling benefiting debt buyers handed down in the last two weeks. The other, Midland v. Johnson, allows a debt buyer to file a proof of claim in a bankruptcy case beyond the statute of limitations without violating the FDCPA. This creates an incentive for debt buyers to toss expired claims into any bankruptcy case without sanction. “You’re buying debt for five (hundredths of one percent), you don’t have to hit too many doubles to come up with a pretty good batting average,” says Gardner.

Decisions like those in these two cases happen when you have nine cloistered, Ivy League-educated career jurists on the Court, instead of someone with actual experience in the legislative arena or defending vulnerable people. A 2014 report found that 77 million Americans—more than one in three—have an outstanding debt in collections. Enormous numbers of people are going to have their lives worsened because of this unanimous ruling based on a narrow word construction.

The justices certainly could have clarified the status of debt buyers under the FDCPA using the statute’s entire definition. The Court has no problem expanding rulings when it comes to letting states opt out of expanded Medicaid or enabling unrestricted money in our elections. Only when it comes to people hounded by debts do they adhere so narrowly to the question before them. But businesses almost always get the benefit of the doubt at the Supreme Court in ways that ordinary Americans don’t.

Millions of people will be awakened in the night by an angry telemarketer screaming at them to pay up. I wish the first person to get such a call would be Neil Gorsuch.

DS News: Inconsistency in the Courts concerning RESPA & FDCPA

Inconsistency in the Courts

Equal justice under the law. Carved across the front of the Supreme Court building in Washington, D.C., these words succinctly yet completely convey the duty of the U.S. Supreme Court. Its decisions, however, are then interpreted and applied by the lower federal courts. What happens when those federal courts apply a Supreme Court ruling quite differently depending on the claim? Inconsistency in the courts can certainly leave questions in its wake.

Defining Concrete

In Spokeo v. Robins, 136 S. Ct. 1540 (2016), the U.S. Supreme Court held that alleging a bare violation of a statute will no longer suffice to establish Article III standing. Even if the defendant violated a statute that provides a statutory penalty, a plaintiff will still need to show particularized and concrete harm in order to bring an action in federal court. 

But the Supreme Court left the task of figuring out what “concrete” harm may be entirely to lower federal courts. The court suggested that concrete harm does not necessarily mean tangible harm and that even the risk of harm may suffice in certain circumstances. The court further suggested that a plaintiff could be able to show a risk of harm sufficiently concrete to support standing based on a statutory violation alone where the harm alleged was based on a long-recognized common-law right (i.e., slander, libel, or the right to obtain publicly available information). 

That, however, is about where the Supreme Court stopped. With respect to the Fair Credit Reporting Act, the statute at issue in the suit, the only specific example the court provided of a published inaccuracy that would not suffice to show a risk of harm concrete enough to support standing would be an incorrect ZIP code. And even that sentence was qualified with a footnote stating the example does not apply to “other types of false information.”


For loan servicers, the ruling, while somewhat helpful, left most questions unanswered, including what type of harm to borrowers the courts would consider concrete. The lack of guidance has led to some rather disparate results. 

One such example can be found in how the federal courts have applied Spokeo differently to two statutes very familiar to mortgage loan servicers: the Real Estate Settlement Procedures Act (RESPA) and the Fair Debt Collection Practices Act (FDCPA). Both of these statutes provide a statutory right to certain information. 

RESPA requires loan servicers to, among other things, inform borrowers if their loans transfer to new servicers and also respond to borrowers’ written requests for information about their loans. The FDCPA requires debt collectors to, among other things, inform debtors if a communication is coming from a debt collector and if it is being sent in connection with the collection of a debt.

Since both statutes confer on consumers a right to receive certain information and both permit consumers to sue if they do not receive that information, one would think the courts would apply Spokeo similarly when analyzing both statutes to either find standing or no standing to sue. But that simply hasn’t been the case. 

Proving Harm

In Dolan v. Select Portfolio Servicing, No. 03-CV-3285, 2016 U.S. Dist. LEXIS 101201 (E.D.N.Y. Aug. 2, 2016), the court held that the plaintiff lacked Article III standing to pursue claims against his loan servicer for the servicer’s alleged failure to notify him when the loan service transferred—a violation of RESPA’s sections 2605(b) and (c). The plaintiff argued, among other things, that he had standing because under his interpretation of Spokeo, “the mere violation of a statute that requires disclosure of any type of public or consumer information is sufficient to confer standing on a plaintiff who was denied access to that information.” Id. at *21 fn 7. 

The court, however, disagreed, holding that the examples of intangible, lack-of-information-type harm the Supreme Court identified in Spokeo as sufficient to confer standing “involved interests of much greater and broader significance to the public than those . . . under Section 2605 of RESPA.” Id. at *22–23. In other words, the court seemingly ruled that the public interest advanced by RESPA was simply not important enough to confer standing absent a showing of actual harm.

Standing to Sue

Most courts have come to the opposite conclusion, however, with respect to FDCPA claims. In an unpublished opinion, Church v. Accretive Health, Inc., 654 Fed. Appx. 990 (11th Cir. 2016), the 11th U.S. Circuit Court of Appeals held that the plaintiff’s “statutorily created right to information pursuant to the FDCPA” gave her standing to sue simply because she did not receive the required information. 

“Through the FDCPA,” the court explained, “Congress has created a new right—the right to receive the required disclosures in communications governed by the FDCPA—and a new injury—not receiving such disclosures.” Id. at *994. Simply not receiving the required FDCPA disclosures, according to the court, is therefore sufficiently concrete intangible harm to confer standing. 

Numerous other courts have agreed. See, e.g., Daubert v. Nra Grp., LLC, No. 3:15-CV-00718, 2016 U.S. Dist. LEXIS 105909 (M.D. Pa. Aug. 11, 2016), which found standing when the defendant mailed a collection letter displaying the barcode and account number associated with plaintiff’s debt in violation of the FDCPA. In Lane v. Bayview Loan Servicing, LLC, No. 15-C-10446, 2016 U.S. Dist. LEXIS 89258, at *3–5, 10–14 (N.D. Ill. July 11, 2016), the plaintiff established a concrete injury resulting from the defendant’s delivery of an allegedly misleading debt collection notice in violation of the FDCPA. Also see Quinn v. Specialized Loan Servicing, LLC, No. 16-C-2021, 2016 U.S. Dist. LEXIS 107299, at *8–13 (N.D. Ill. Aug. 11, 2016), which found the plaintiff’s 1692e claim alleged a sufficiently concrete injury for Article III standing. 

In Blaha v. First Nat’l Collections Bureau, Inc., No. 16-cv-2791, 2016 U.S. Dist. LEXIS 157575 (D.N.J. Nov. 10, 2016), the court agreed and then added, apparently by way of explanation, “Congress enacted the FDCPA as a result of ‘abundant evidence of the use of abusive, deceptive, and unfair debt collection practices’ and the inadequacy of existing laws and procedures designed to protect consumers . . .” and that “[t]he stated purpose of the law was to eliminate abusive debt collection practices and to promote further action to protect consumers against debt collection abuses . . .” and “[t]he right Congress sought to protect in enacting this legislation was therefore not merely procedural but substantive and of great importance.” Id. at *22–23 (Emphasis added).

Public vs. Private

So what’s the difference between RESPA and the FDCPA such that a violation of one statute confers standing with no further showing of harm while a violation of the other does not? Is it that the FDCPA is simply more important than RESPA? More useful? Do borrowers’ interactions with debt collectors require more protection than their interactions with their loan servicers? Perhaps more important, how can courts possibly decide objectively which statute is really important and which is not? 

Although absolute certainty in the law may not be attainable, surely we can do better than to base our standing jurisprudence on some amorphous scale of the statute’s relative social importance. Moreover, there is no language in Spokeo suggesting the Supreme Court ever intended for the question of standing to be analyzed in this way. Instead, the Supreme Court’s opinion suggests a completely different—and more bright-line—test that would eliminate entirely the need to weigh a statute’s relative importance when a plaintiff claims injury based on not receiving required disclosures. 

As numerous courts have correctly noted, Spokeo holds that some types of intangible harm, including not receiving information that an individual is entitled to receive, suffices to maintain an action in federal court. But the two cases the Supreme Court cited for this point—Federal Election Comm’n v. Akins, 524 U. S. 11 (1998) and Public Citizen v. Department of Justice, 491 U. S. 440 (1989)—involved a public right to information, not a private one. 

That seems a much simpler test but one that is still consistent with Spokeo: If the statute concerns public information, then it may fall within Spokeo’s definition of intangible harm sufficient to confer standing. But if the information is required to be privately disclosed, then a plaintiff should have to show some harm beyond just not having received it. 

Of course, the Supreme Court in Spokeo did not explicitly offer any such bright-line test—or any bright lines, for that matter—leaving loan servicers and litigants largely guessing what the federal courts may do next and eagerly awaiting the next time the issue finds its way to the Supreme Court. For now, referencing the existing RESPA and FDCPA cases is the best guidance until there is consistency in the courts.

About Author: Lukas Sosnicki

Profile photo of Lukas Sosnicki
Lukas Sosnicki is a litigator in the Financial Services Group in Dykema’s Los Angeles, California, office. He has extensive experience defending banks and mortgage servicers in individual and class action lawsuits across the country. He is also an appellate lawyer, having successfully represented numerous bank and servicer clients on appeal.

About Author: Madeleine Lee

Madeleine Lee is a litigator in the Financial Services Group in Dykema’s Los Angeles, California, office. Her practice focuses on the representation of financial institutions, servicers, and trustees in lender liability, loan servicing, lienholder, and title litigation. Her consumer finance practice includes advising clients on navigating the ever-evolving landscape of complex federal and state consumer lending laws.

TILA RESCISSION: Who Pays the Money?

The menu of items that are due to the borrower as a condition precedent to making a claim for repayment is expansive and frankly in many cases is equivalent or nearly equivalent to the total amount of the principal claimed as loan repayment. 

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While everyone is resisting the idea of enforcing rescission, some are asking the right questions. Here is the answer.


The rescission is effective on the date of mailing. The lender must comply within 20 days from date of notification. Compliance means (1) return of cancelled note (2) release of the encumbrance on record in tech county records and (3) return of all money paid by the borrower, directly or indirectly with certain minor exceptions.


The answer to the question of how much is due is that there needs to be an accounting because the statute 15 USC §1635 requires the return of all money paid by the “borrower”, directly or indirectly.


The fact that the fee or compensation or “profit” was not disclosed to the borrower does not remove it from the list of the charges paid by or on behalf of the borrower nor the liability to pay it to the borrower once rescission is effective (i.e., upon notice — mailing).


This leads to some interesting issues that will need to be dragged out of the “lender”, including all the other “lenders” going back to the original transaction. Most of the money received as compensation by third parties was not disclosed to the borrower, hence the need for an accounting. Many of the charges were slipped in to the loan without the borrower’s knowledge or consent. This brings in possible violations of the FDCPA, the FTCA and the “little FTC” acts passed by individual states.


The menu of items that are due to the borrower as a condition precedent to making a claim for repayment is expansive and frankly in many cases is equivalent or nearly equivalent to the total amount of the principal claimed as loan repayment. 


And that in turn brings up the most interesting question of all: who is liable to return those fees, compensation and finance charges? You can be sure that once the accounting is ordered by a court there will be scrambling amongst the players in the “Securitization” market. The whole point of masking their scheme was to avoid liability for this sort of thing. Hence the obfuscation of the actual creditor or lender. And this is one of many break points where the securitization players will start sniping at each other rather than the borrower.


Nobody wants to hand all that money that was “earned” through the hard work of chicanery. And nobody wants to assert that they are the actual creditor since that would be an admission against interest that they had been misrepresenting the true creditor all along. And it would be waiving the 5th Amendment right against self incrimination for criminal charges.


In any event, here are the REG Z rules on what constitutes a finance charge, which by the way, means that they should ALL have been been disclosed without exception.

§226.4   Finance charge.

(a) Definition. The finance charge is the cost of consumer credit as a dollar amount. It includes any charge payable directly or indirectly by the consumer and imposed directly or indirectly by the creditor as an incident to or a condition of the extension of credit. It does not include any charge of a type payable in a comparable cash transaction.

(1) Charges by third parties. The finance charge includes fees and amounts charged by someone other than the creditor, unless otherwise excluded under this section, if the creditor:

(i) Requires the use of a third party as a condition of or an incident to the extension of credit, even if the consumer can choose the third party; or

(ii) Retains a portion of the third-party charge, to the extent of the portion retained.

(2) Special rule; closing agent charges. Fees charged by a third party that conducts the loan closing (such as a settlement agent, attorney, or escrow or title company) are finance charges only if the creditor—

(i) Requires the particular services for which the consumer is charged;

(ii) Requires the imposition of the charge; or

(iii) Retains a portion of the third-party charge, to the extent of the portion retained.

(3) Special rule; mortgage broker fees. Fees charged by a mortgage broker (including fees paid by the consumer directly to the broker or to the creditor for delivery to the broker) are finance charges even if the creditor does not require the consumer to use a mortgage broker and even if the creditor does not retain any portion of the charge.

(b) Examples of finance charges. The finance charge includes the following types of charges, except for charges specifically excluded by paragraphs (c) through (e) of this section:

(1) Interest, time price differential, and any amount payable under an add-on or discount system of additional charges.

(2) Service, transaction, activity, and carrying charges, including any charge imposed on a checking or other transaction account to the extent that the charge exceeds the charge for a similar account without a credit feature.

(3) Points, loan fees, assumption fees, finder’s fees, and similar charges.

(4) Appraisal, investigation, and credit report fees.

(5) Premiums or other charges for any guarantee or insurance protecting the creditor against the consumer’s default or other credit loss.

(6) Charges imposed on a creditor by another person for purchasing or accepting a consumer’s obligation, if the consumer is required to pay the charges in cash, as an addition to the obligation, or as a deduction from the proceeds of the obligation.

(7) Premiums or other charges for credit life, accident, health, or loss-of-income insurance, written in connection with a credit transaction.

(8) Premiums or other charges for insurance against loss of or damage to property, or against liability arising out of the ownership or use of property, written in connection with a credit transaction.

(9) Discounts for the purpose of inducing payment by a means other than the use of credit.

(10) Charges or premiums paid for debt cancellation or debt suspension coverage written in connection with a credit transaction, whether or not the coverage is insurance under applicable law.

FDUTPA:”Per Se” Violations of Deceptive or Unfair trade Practices Under Federal or State Law

a per se violation of TILA or any other Federal or State law makes the act also per se violations of the FTC act, (and the applicable little FTC acts passed in various states). Florida is used here as an example. 

Get a consult! 202-838-6345 to schedule CONSULT, leave message or make payments.
Anyone who has done even the most cursory research knows that a pattern of behavior in which the name of the creditor or lender is withheld is a “per se” predatory loan. While Judges don’t care whether the borrower knows the actual lender, clearly Congress, the U.S. Supreme Court and the executive branch DO care ( and so their state counterparts); the courts are required to follow the law not create it by inaction or action contrary to the express wording of statutes. As we have discussed this will be shortly revealed as the rescission cases go back to SCOTUS which has already ruled unanimously that there is nothing wrong with the rescission statute, it clearly states the procedures and nothing unconstitutional about its process or effect.
Pretender lenders are rushing as many cases to forced sale through foreclosure because their days are numbered in which they can continue to do so. One reason is that their violations of Federal and State statutes prohibiting unfair trade practices are violations per se and another is that their violations are still prosecutable even if they are not on some list somewhere in some statute or group of cases interpreting deceptive trade and lending practices. 
For along time, it has been known, accepted and understood that withholding the name of the actual lender as a matter of practice makes each such loan and each such practice “predatory per se” under Reg Z of the Federal truth in Lending Act. The purpose of this article is to suggest that a per se violation of TILA or any other Federal or State law makes the act also per se violations of the FTC act, (and the applicable little FTC acts passed in various states). Florida is used here as an example. 
While the recognition that the alleged loan transaction was by definition unto itself predatory, there has been no attempt or agreement to arrive at any consequences that should befall the “ pretender lender” violator because TILA has enforcement provisions and self executing punishment like TILA rescission but it does not specifically provide an easy route to assessing substantial damages by way of disgorgement, which probably cannot be barred by the defense of the statute of limitations. 
If a loan is predatory per se under Reg Z as a table funded loan then it is hard to imagine how that act of “lending” would not also be a per se violation of the FTCA and, in Florida, the FDUTPA 501.204 et seq. A table funded loan by definition withholds the identity of the true lender. Table funded loans were not only part of the pattern and practice of creating illusions they called “loans” but became industry standard.
 It is neither an exaggeration nor over-reaching to say that table funded loans that were predatory per se became industry practice from around 2001 through the present. In other words it became industry standard to violate the Federal Truth in Lending Act, the FTC Act, and the state versions of the FTC act (in Florida §501.204 et seq). As we have seen with construction defect lawsuits starting back in the 1970’s, the fact that it became custom and practice to violate the the local building codes does not in any way raise a valid defense to violating those codes. 
This would fall under the Florida FDUTPA category of “Per Se by Description. “ It doesn’t matter whether the judge “feels” that some bank or “lender” or “servicer” might be hurt. That question has been decided by the Federal legislative branch, the Federal Executive Branch and the Federal Judicial branch as enunciated by the highest court in the land. Under the powers vested in the Federal government laws were passed in which the Federal government pre-empted or restricted state action in circumstances where ordinary consumers were fooled by deceptive practices. And the test is whether the least sophisticated and most gullible consumer was tricked and hurt by the trick. The same line of thought applies to state laws like the little FTC act in Florida.
Once the violation becomes a per se violation, the question is not whether there is injury but rather how much should be awarded to the consumer as a punishment to the violator and as a means to settle the score with the consumer. This calls for disgorgement which is not considered to be “damages” since it is described as merely preventing the violator from keeping ill-gotten gains. Attorneys fees and court costs are almost always provided by the Federal and state FTC statutes. The violations under the FDCPA may be barred by the expiration of a statute of limitations but the per se violations of the of the FDCPA and its equivalent state statutes probably is a trigger for declaring the FDCPA violation a per se violation which in turn triggers the rest of the applicable statutes for disgorgement of ill-gotten gains. 
Per Se by Description
The reference in §501.203(3)(a) and (c) to FDUTPA violations based on FTC or FDUTPA rules, or “[a]ny law, statute, rule, regulation, or ordinance” can further be interpreted as a formal acknowledgment of violations of a second type of per se violation which occurs when a rule, statute, or ordinance is violated, and the rule, statute, or other ordinance expressly describes unfair, deceptive, or unconscionable conduct, without necessarily referring expressly to FDUTPA.
Rules Adopted by the FTC
Pursuant to the FTC act, the FTC has adopted rules which describe unfair or deceptive acts in several contexts, and which appear in 16 C.F.R. ch. 1, subch. D, entitled “Trade Regulation Rules.” Some of the more well known of these include the FTC rules governing door-to-door sales,16 franchises,17 holders in due course,18 negative option sales plans,19 funeral industry practices,20 and mail or telephone order sales.21 According to the definition of “violation of this part,” in §501.203(3)(a) a violation of FDUTPA can occur when federal administrative rules promulgated by the Federal Trade Commission pursuant to the FTC act are violated. Along these lines, the 11th Circuit has confirmed that §501.203(3)(a) of FDUTPA creates a private cause of action for violation of an FTC rule even though none exists under federal law.22
[Whether  or not the facts alleged by the consumer are sufficient for rescission, damages remain available under the FTC act and little FTC acts in various states. The damages extend up to and including all money paid by the debtor. And according to recent case law following a long prior tradition, the statute of limitations does not apply to petitioners for disgorgement of ill-gotten gains.  16 CFR 433 — Preservation of consumer claims and defenses, unfair or deceptive acts or practices]


Much of the material for this article has been inspired by the following article:
Florida Bar Journal May, 2002, Volume LXXVI, No. 5 Page 62 by Mark S. Fistos. “Per Se Violations of Florida Deceptive and Unfair Practices Act §501.204(1)”
Relevant passages quoted:
FDUTPA broadly declares in §501.204(1) that “[u]nfair methods of competition, unconscionable acts or practices, and unfair or deceptive acts or practices in the conduct of any trade or commerce” are unlawful. By design, FDUTPA does not contain a definition or “laundry list” of just which acts can be “deceptive,” “unfair,” or “unconscionable.” No specific rule or regulation is required to find conduct unfair or deceptive under the statute.1
There is, however, an entire body of state and federal rules, ordinances, and statutes which serves to identify specific acts that constitute automatic violations of FDUTPA’s broad proscription in §501.204(1). These rules, ordinances, and statutes, if violated, constitute “per se” violations of FDUTPA, and could automatically expose parties to actual damages, injunctions, and civil penalties up to $15,000 per violation. An assessment of potential per se FDUTPA violations, therefore, should play a part in any commercial law practice, and is imperative for any lawyer bringing or defending against a claim for deceptive or unfair trade practices.
Approaches to FDUTPA Liability
There are two basic approaches to analyzing FDUTPA liability: one is to determine whether an act or practice in trade or commerce violates broadly worded standards relating to unfairness, deception, unconscionable acts or practices, or unfair methods of competition; a second is to assess whether conduct in trade or commerce constitutes a per se violation.2
FDUTPA tracks the broad language of the Federal Trade Commission Act (FTC act)3and declares “[u]nfair methods of competition, unconscionable acts or practices, and unfair or deceptive acts or practices in the conduct of any trade or commerce” to be unlawful. Subsection 501.204(2) of FDUTPA in turn provides that “due consideration and great weight” be given interpretations by federal courts and the Federal Trade Commission of what constitutes unfairness and deception.
Based on FTC interpretations and federal case law dating from the 1960s, Florida courts have adopted and applied in various contexts a broadly worded standard of unfairness under which a practice is unfair, “if it offends public policy and is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.”4

Categories of Per Se Violations

The rules, regulations, ordinances, and statutes referenced in the above-quoted §501.203(3) refer to sources which may serve as a basis for a per se FDUTPA violation. These sources can be broken down into three categories:
1) Per se violations whereby a statute, ordinance, or rule expressly refers to FDUTPA and provides a violation thereof to be a violation of FDUTPA; [per se by reference]
2) Per se violations whereby a statute, ordinance, or rule expressly describes deceptive, unconscionable, or unfair conduct without referring expressly to FDUTPA and when violated constitutes a per se violation of FDUTPA; [per se by description] and
3) Per se violations whereby a court, in the absence of any such reference or description, construes a statute, ordinance, or rule to be a per se violation of FDUTPA.
Examples from Footnotes: Fla. Stat. §§210.185(5) (cigarette distribution), 320.03(1) (DHSMV agents), 320.27(2) (vehicle dealer licensing), 624.125(2) (service agreements), 681.111 (lemon law), 501.97(2) (location advertising), 400.464(4)(b) (home health agencies), 400.93(6)(b) (home medical equipment providers), 483.305(3) (multiphasic health testing centers), 496.416 (charitable contributions), 501.160(3) (price gouging), 501.0579 (weight loss centers), 501.34 (aftermarket crash parts), 509.511 (campground memberships), 559.934 (sellers of travel), 624.129(4) (location and recovery services), 817.62(3)(c) (credit card factoring);Code of Ordinances, City of Ft. Walton Beach, Florida §23-145(a) (title loans).

CHECKLIST — FDCPA Damages and Recovery: Revisiting the Montana S Ct Decision in Jacobson v Bayview

What is unique and instructive about this decision from the Montana Supreme Court is that it gives details of each and every fraudulent, wrongful and otherwise illegal acts that were committed by a self-proclaimed servicer and the “defective” trustee on the deed of trust.

You need to read the case to see how many different times the same court in the same case awarded damages, attorney fees and sanctions against Bayview who persisted in their behavior even after the judgment was entered.

Get a consult! 202-838-6345 to schedule CONSULT, leave message or make payments.


This case overall stands for the proposition that the violations of federal law by self proclaimed servicers, trusts, trustees, substituted trustees, etc. are NOT insignificant or irrelevant. The consequences of merely applying the law in a fair and balanced way could and should be devastating to the TBTF banks, once the veil is pierced from servicers like Bayview, Ocwen et al and the real players are revealed.

I offer the following for legal practitioners as a checklist of issues that are usually present, in one form or another, in virtually all foreclosure cases and the consequences to the bad actors when the law is actually applied. The interesting thing is that this checklist does not just represent my perspective. It comes directly from the Jacobson decision by the high court in Montana. That decision should be read, studied and analyzed several times. You need to read the case to see how many different times the same court in the same case awarded damages, attorney fees and sanctions against Bayview who persisted in their behavior even after the judgment was entered.

One additional note: If you think about it, you can easily see how this case represents the overall infrastructure employed by the super banks. It is obvious that all of Bayview’s actions were at the behest of Citi, who like any other organized crime figure, sought to avoid getting their hands dirty. The self proclamations inevitably employ the name of US Bank whose involvement is shown in this case to be zero. Nonetheless the attorneys for Bayview and Peterson sought to pile up paper documents to create the illusion that they were acting properly.

  1. FDCPA —abusive debt collection practices by debt collectors
  2. FDCPA who is a debt collector — anyone other than the creditor
  3. FDCPA Strict Liability 
  10. HAMP Modifications Scam — initial and incentive payments
  11. Estopped and fraud: 90 day delinquency disinformation — fraud and UPL
  12. Rejected Payment
  13. Default Letter: Not authorized because sender is neither servicer nor interested party.
  14. Default letter naming creditor
  15. Default letter declaring amount due — usually wrong
  16. Default letter with deadline date for reinstatement: CURE DATE
  17. Late charges improper
  18. Extra interest improper
  19. Fees even after they lose added to balance “due.”
  20. Notice of acceleration based upon default letter which contains inaccurate information. [Not authorized because sender is neither servicer nor interested party.]
  21. Damages: Negative credit rating — [How would bank feel if their investment rating dropped? Would their stock drop? would thousands of stockholders lose money as a result?]
  22. damages: emotional stress
  23. Damages: Lost opportunities to save home
  24. Damages: Lost ability to receive incentive payments for modification
  25. FDCPA etc: Use of nonexistent or inactive entities
  26. FDCPA Illegal notarizations
  27. Illegal notarizations on behalf of nonexistent or uninvolved entities.
  28. FDCPA naming self proclaimed servicer as beneficiary (creditor/mortgagee)
  29. Assignments following self proclamation of beneficiary (creditor/mortgagee)
  30. Falsely Informing homeowner they cannot reinstate
  31. Wrongful appointment of Trustee under deed of trust
  32. Wrongful and non existent Power of Attorney
  33. False promises to modify
  34. False representations to the Court
  35. Musical entities
  36. False and fraudulent utterance of a document
  37. False and fraudulent recording of a false document
  38. False representations concerning “US Bank, Trustee” — a whole category unto itself. (the BOA deal and others who “sold” trustee position of REMICs to US Bank.) 
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