FDCPA and FCCPA: Temperatures rising

FDCPA and FCCPA (or similar state legislation) claims are getting traction across the country. Bank of America violated the federal Fair Debt Collection Practices Act (“FDCPA”) and the related Florida Consumer Collection Practices Act (“FCCPA”). (Doc. 26). The Goodin case is a fair representation of the experience of hundreds of thousands of homeowners who have tried to reconcile the numbers given to them by Bank of America and others.

In a carefully worded opinion from Federal District Court Judge Corrigan in Jacksonville, the Court laid out the right to damages under the FDCPA and FCCPA. The Court found that BOA acted with gross negligence because they continued their behavior long after being put on notice of a mistake on their part and awarded the 2 homeowners:

  • Statutory damages of $2,000
  • Actual damages for emotional distress of $100,000 ($50,000 per person)
  • Punitive damages of $100,000
  • Attorneys fees and costs


See http://www.leagle.com/decision/In%20FDCO%2020150623E16/GOODIN%20v.%20BANK%20OF%20AMERICA,%20N.A.

The story is the same as I have heard from thousands of other homeowners. The “servicer” or “bank” misapplies payments, negligently posts payments to the wrong place and refuses to make any correction despite multiple attempts by the homeowners to get their account straightened out. Then the bank refuses to take any more payments because the homeowners are “late, ” “delinquent”, or in “default”, following which they send a default notice, intent to accelerate and then file suit in foreclosure.

The subtext here is that there is no “default” if the “borrower” tenders payment timely with good funds. The fact that the servicer/bank does not accept them or post them to the right ledger does not create a default on the part of the borrower, who has obviously done nothing wrong. There is no default and there is no delinquency. The wrongful act was clearly committed by the servicer/bank. Hence there is no default by the borrower in any sense by any standard. It might be said that if there is a default, it is a default by Bank of America or whoever the servicer/bank is in another case.

Using the logic and law of yesteryear, we frequently make the mistake of assuming that if there is no posting of a payment, no cashing of a check or no acceptance of the tender of payment, that the borrower is in default but it is refutable or excusable — putting the burden on the borrower to show that he/she/they tendered payment. In fact, it is none of those things. When you parse out the “default” none of the elements are present as to the borrower.

This case stands out as a good discussion of damages for emotional distress — including cases, like this one, where there is no evidence from medical experts nor medical bills resulting from the anguish of trying to sleep for years knowing that the bank or servicer is out to get your house. The feeling of being powerless is a huge factor. If an institution like BOA fails to act fairly and refuses to correct its own “errors,” it is not hard to see how the distress is real.

I of course believe that BOA had no procedures in place to deal with calls, visits, letters and emails from the homeowner because they want the foreclosure in all events — or at least as many as possible. The reason is simple: the foreclosure judgment is the first legally valid instrument in a long chain of misdeeds. It creates the presumption that all the events, documents, letters and claims were valid before the judgment was entered and makes all those misdeeds enforceable.

The Judge also details the requirements for punitive damages — i.e., aggravating circumstances involving gross negligence and intentional acts. The Judge doesn’t quite say that the acts of BOA were intentional. But he describes BOA’s actions as so grossly negligent that it must approach an intentional, malicious act for the sole benefit of the actor.



It has always been a basic rule of negotiable instruments law that once a promissory note is given for an underlying obligation (like the mortgage contract), the underlying obligation is merged into the note and is suspended while the note is still outstanding. Discharge on the note would (due to the rule that the two are merged) result in discharge discharge of the underlying obligation. Thus paying the note would also pay the obligation. Because of the merger rule, the underlying obligation is not available as a separate course of action until the note is dishonored.


The problem here is that most lawyers and most judges are not very familiar with the UCC even though it constitutes state law in whatever state they are in. They see the UCC as a problem when in fact it is a solution. it answers the hairy details without requiring any interpretation. It just needs to be applied. But just then the banks make their “free house” argument and the judge “interprets a statute that is only vaguely understood.

The banks know that judges are not accustomed to using the UCC and they come in with a presumed default simply because they show the judge that on their own books no payment was posted. And of course they have no record of tender and refusal by the bank. The court then usually erroneously shifts the burden of proof, as to whether tender of the payment was made, onto the homeowner who of course does not  have millions of dollars of computer equipment, IT platforms and access to the computer generated “accounts” on multiple platforms.

This merger rule, with its suspension of the underlying obligation until this honor of the note cut is codified in §3-310 of the UCC:

(b) unless otherwise agreed and except as provided in subsection (a), if a note or an uncertified check is taken for an obligation, the obligation is suspended to the same extent the obligation would be discharged if an amount of money equal to the amount of the instruments were taken, and the following rules apply:

(2) in the case of a note, suspension of the obligation continues until dishonor of the note or until it is paid. Payment of the note results in the discharge of the obligation to the extent of the payment.

thus until the note is dishonored there can be no default on the underlying obligation (the mortgage contract). All foreclosure statutes, whether permitting self-help or requiring the involvement of court, forbid foreclosure unless the underlying debt is in”Default.” That means that the maker of the promissory note must have failed to make the payments required by the note itself, and thus the node has been dishonored. Under UCC §3-502(a)(3) a hello promissory note is dishonored when the maker does not pay it when the footnote first becomes payable.


The latest reports show that devaluation of the dollar combined with other economic factors has launched what will be the worst round of inflation we have seen in our lifetimes. And it will most probably feed itself into a frenzy despite all efforts to soften the blow. The 1.1% increase in production costs is only the tip of the iceberg.

  • All businesses are feeling the pinch of rising “costs” (more dollars) against consumer reluctance to pay higher “prices.” 
  • Price baskets that reflect reality (actual impact on the life of an ordinary American family) show something in the range of 15%-25% average. 
  • Job growth has been non-existent for years despite data to the contrary: the reports count ANY job to replace a job that paid 4-10 times as much as “job creation.”
  • Purchasing power has been declining since before this latest round of hyper-inflation.
  • Debt is at an all-time high for the country and for individuals.
  • Taxes and other “private taxation” deductions from U.S. individual income  have steadily increased when compared to other nations
  • The Fed is stuck between an economy diving into recession and an economy that is virtually ruined by its own currency. If it raises rates to try to curb inflation, it won’t succeed because most of the money supply is created from Wall Street. Raising rates also has the added factor of decreasing confidence in the U.S. economy, which will only deepen the recession. If it lowers rates to counter the recession it won’t succeed for the same reason. Lowering rates has the added factor of creating a new bubble to cover-up the old one. 

When will we finally get the message and bubble and bust is not a very good way to do business?

  • Fundamentally, the first line of attack should be on staunching the bleeding and stopping the foreclosures and evictions. Just taking control of that and putting it under management, will have an enormous impact on our currency, our World position, and our financial markets. 
  • restoring confidence in the financial markets is the first priority. The ONLY way this can be done is by stopping foreclosures and evictions, restoring value to balance sheets, and providing a path to full recovery, even if it is not totally assured. 
  • The perception that the U.S. financial markets cannot be trusted can ONLY be overcome by establishing international oversight, at least for transparency and reporting purposes. In order to retain national sovereignty, obviously, regulation in the United States can only be by U.S. agencies.
  • But in the global economy, other countries and economic unions have the same rights we do when it comes to regulating money supply and whether to permit certain actions in their part of the pond. We have now painted ourselves into the corner of submitting our own regulatory authority to the decisions of other nations. It’s fact that we are just going to have to live with.

Our passion for dominance should be replaced with a passion for fairness and stability.

Mortgage Meltdown: Freezing Home Equity Lines —Remedies




It seems that the lenders who were involved in the second tier of home mortgage finance (home equity loans) reserved to themselves some protections that nobody else received. They are sending letters out to everyone telling them the balance of their home equity line has been frozen and that no more money is available from the “equity” in their house. Of course this is because the equity never was there, only the illusion.

  • These lenders collected fees, points, costs and interest for  the full amount.
  • They now are using their “legal” right to freeze the equity line, without any refund of the fees, points, costs or interest paid by the borrower.
  • This amounts to an undisclosed increase in the cost of the loan under the Truth in Lending Act (TILA)  entitling the borrower to challenge the freeze, demand a refund of the fees, points, costs, and/or interest, and perhaps demand rescission of the home equity loan.
  • The borrower might be able to force the lender to complete its commitment on the home equity loan because of violations of TILA.
  • Borrowers who were planning to use this available source of cash are now damaged because in reliance on the appraisal and underwriting of the lender, they bought or refinanced a house under terms that were all based upon a false presumption: the fair market value of the house, which was inflated under a tacit agreement (conspiracy to defraud) the American public in general and you, the borrower in particular. 
  • This adds to the the potential causes of action against the primary lender as well: all the lenders and closing participants, including the auditor of the lenders, knew full well that you were relying on the appraisal, relying on the underwriting of the first and second mortgage lenders (i.e., the fact that they were taking a risk) only to realize, sometimes in as little as a few days, that market conditions did not support the value placed on the home.
  • Nor did actual market conditions support the false premises of closing and signing on your mortgages and notes.
  • Of many undisclosed facts, there was no risk to either lender because they knew when you closed that they were selling or had sold the the risk to an investment banking aggregator who was in turn selling derivative securities (collateralized mortgage obligations) to unsuspecting investors, thus deceiving and defrauding both the borrowers at one end and the buyers of the securities on the other hand, with all the middle men collecting fees and costs without risk.
  • Had you known that everyone at the closing had a direct financial incentive for you to sign the documents and that none of them were taking any risk or had performed any independent analysis of fair market value, and that appraisers were given either tacit or overt encouragement to appraise slightly higher than the deal, regardless of the fundamentals of fair market value is doubtful that you or anyone else would have signed such a deal. 
  • The entire scheme, taken collectively, was a fraud upon the entire economy which resulted in a systemic increase in apparent money supply forcing the legitimate sources of money supply to “make good” on these ornate methods of money creation. 
  • All that means the value of the dollar was decreased at the same time that the housing prices were falsely and deceptively increased thus putting you the borrower, your city, your county and your state behind an 8-ball that none of you knew existed until it was too late. 
  • Like all Ponzi schemes, the system collapsed causing widespread losses which have negatively impacted you economically.
  • You in turn relied upon the availability of the home equity line that was promised, and shortly after securing it, you are told, in classic bait and switch, deceptive practice that the value used in your closing which you thought was accurate is too low to support the continued funding of your home equity loan. 
Go Get ‘im , Boy/Girl!