This case affirms the prevailing rule that even compliance with state-court law or practice can be violative of the Fair Debt Collection Practices Act ("FDCPA").
A collection law firm, on behalf of a bank, sued to foreclose before WAMU received assignment of the mortgage and transfer of the promissory note. The lower District Court held this common practice not to be a deceptive business practice, and consequently, not violative of the FDCPA.
The Court of Appeals disagreed and reversed, holding that the borrower's allegations adequately alleged a material misrepresentation that would confuse or mislead an "unsophisticated consumer."
The issue decided: Is claiming false ownership of a mortgage "false, deceptive, or misleading" under the FDCPA. It sure can be, says the appellate court.
The borrower alleged that the false statement was "material" because he was delayed in intervening because of the mix-up of parties and account numbers. The court was satisfied with this showing of "materiality" and reinstated the complaint.
Wallace v Washington Mut. Bank, F.A., 10-3694, 2012 WL 2379664 (6th Cir June 26, 2012).