What’s wrong with telling a mortgage borrower that if they don’t pay their arrears, their loan will be accelerated? The complaint for this class action alleges that the debt collector, Seterus, Inc., was merely pressuring the borrowers, that it never intended to accelerate the loan and would accept any monthly amount on the arrears instead. The statement is therefore deceptive and misleading, and designed merely to pressure the borrowers.
The class for this action is all Pennsylvania residential mortgagors to whom Seterus sent a letter substantially similar to the Pennsylvania Final Letters in this case, warning that the loan would be immediately accelerated or that foreclosure proceedings would begin if the mortgagor made less than full payment of the “amount due” or “default amount,” where the letter was dated between December 18, 2015 and December 18, 2018.
Plaintiff Kay Wenger bought her home with a mortgage serviced by Seterus. The complaint says, “During the course of Seterus’ servicing of Plainitff’s loans, Seterus occasionally alleged that her loans became more than 45 days delinquent…”
Seterus then sent Wenger a collection letter that the complaint calls the “Pennsylvania Final Letter,” which is intended, the complaint says, “to coerce and intimidate consumers into paying the entire default amount of the loan.”
The complaint quotes the Pennsylvania Final Letters as saying, “If full payment of the default amount is not received by us … on or before [the Expiration Date], we will accelerate the maturity date of your loan and upon such acceleration the ENTIRE balance of the loan, including principal, accrued interest, and all other sums due thereunder, shall, at once and without further notice, become immediately due and payable.”
The complaint says this threat is designed to “create a false sense of urgency”; however, it claims, “Seterus’ actual policy … is to never accelerate a loan that is less than 45 days delinquent.”
In proof of this, the complaint quotes a question and answer from a Seterus deposition in a similar case:
“Q. My understanding of your testimony just now is that if Seterus receives a payment in response to [a similar final letter], then the debt is no longer 45 days due and so that’s sufficient to hold off the acceleration process?
“A. That’s correct.” The company later elaborates, saying that “if they’re in the bucket where a partial payment can be made, our objective is to collect that payment to help them stay in their house. Because them making payments, staying in their house helps us in our business as well.”
The complaint claims that the threat of acceleration unless the consumer makes full payment of the arrears is therefore false, intimidating, and misleading, in violation of the the Fair Debt Collection Practices Act (FDCPA), the Pennsylvania Fair Credit Extension Uniformity Act, and the Pennsylvania Unfair Trade Practices and Consumer Protection Law.