Court Reaffirmed Existing Law: Denis Brosnan

Court Reaffirmed Existing Law

Perspectives by Denis Brosnan
October 7, 2009

Denis Brosnan

As we stated in last month’s article, over the course of this year we have seen the enactment of numerous new laws and regulations, many of which have served to make servicing defaulted loans very difficult, costly and time consuming.

These changes in the legal environment are a natural byproduct of the changes in the economy and the political landscape.

However, the implication of widespread unscrupulous behavior by the servicing industry that has accompanied these legal changes has been distressing for servicers and their vendors, given that these industry participants are fulfilling ministerial duties attendant to the enforcement of the loan documents.

Fortunately, one court has stepped up and refused to deviate from established law. News recently broke that the United States Court of Appeals for the Eleventh Circuit decided the case of Warren v. Countrywide Home Loans, 2009 US App Lexis 18191.

With this particular case, the pro se Plaintiff argued that the servicer had violated the Fair Debt Collection Practices Act by performing debt collection activities without following FDCPA guidelines.

The court, however, followed multiple precedents and concluded that enforcement of a security interest in residential real estate through the foreclosure process is not debt collection activity for purposes of the act. The specific ruling in this case follows similar standards set by other appellate courts, which further substantiates the existing practices of servicers nationwide.

We applaud the Warren holding as it is consistent with the intent of the act – to protect consumers from harassment or other abusive third-party debt collection practices. Furthermore, hopefully this case shows that courts remain willing to honor the boundaries of accepted law relating to the enforcement of valid security interests upon default.

Denis Brosnan is the CEO of Prommis Solutions, an Atlanta-based provider of mortgage foreclosure and bankruptcy processing services for mortgage servicers. Mr. Brosnan began his professional career as a practicing attorney, representing mortgage servicers in lender liability, foreclosure and bankruptcy eviction actions in North and South Carolina.