A Servicer’s Written Offer To Discuss Foreclosure Alternatives With A Delinquent Borrower Is A Communication Made In Connection With The Collection Of A Debt Under The FDCPA

In Gburek v. Litton Loan Servicing LP, 08-3776, (7th Cir. July 27, 2010) the servicer sent a delinquent borrower a letter offering to discuss ways she could avoid losing her home a foreclosure and asking for current financial information. A few days later, she received a letter from a firm that facilitates communication between the servicer and distressed borrowers. The borrower sued the servicer under the FDCPA contending, in a class action complaint, that the letters were a deceptive means to obtain personal information and charging it with communicating with a third party about her mortgage without her consent. The district court granted the servicer’s motion to dismiss, concluding that the conduct did not fall within the scope of the FDCPA because the letters the borrower received did not contain a demand for payment. The issue on appeal was whether the communications to the borrower were made in connection with the collection of her debt. The Seventh Circuit found that they did. Recognizing there was no bright-line rule for determining whether a communication from a debt collector was made in connection with the collection of a debt the court looked to three opinions from its own circuit that it deemed instructive. The court distilled from its holdings in _Bailey v. Security National Servicing Corp._, 154 F.3d 384 (7th Cir.1998), _Horkey v. J.V.D.B. & Associates_, 333 F.3d 769 (7th Cir.2003), and )Ruth v. Triumph Partnerships_, 577 F.3d 790 (7th Cir.2009) that the absence of a demand for payment is just one of several factors that come into play in the commonsense inquiry of whether a communication is made in connection with the collection of a debt. The nature of the parties’ relationship is also relevant, and the court found it significant in Bailey (which held that the communication was not the collection of a debt) that there was a preexisting forbearance agreement in place. As was implicit in all three cases, the purpose and context of the communications-viewed objectively-are important factors as well. In the case before it the court determined that the context and content of the servicer’s letter was sufficient to bring the claim within the scope of the FDCPA because the borrower was in default, the letter offered to discuss foreclosure alternatives, and they asked for financial information in order to initiate that process. The court viewed the letter as the opening communication in an attempt to collect [borrower’s] defaulted home loan-by settlement or otherwise. Though it did not explicitly ask for payment, the letter was an offer to discuss repayment options, which qualify as a communication in connection with an attempt to collect a debt. Accordingly, it was a mistake to dismiss the complaint on the sole ground that none of the communications explicitly demanded payment.

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