COLLINS v. AMERICA'S SERVICING CO. (July 13, 2011)

In 2004, Phillip Collins bought a house in Lowell, Indiana. His lender assigned the mortgage servicing obligations to America's Servicing Company shortly after closing. Under the terms of the mortgage, Collins’s payment was due on the first of the month with a 15-day grace period, a late fee was assessed after the grace period, and any payment was always applied first to the oldest obligation. Collins missed his payments in September and October of 2006. He sought assistance from ASC. Collins and ASC entered into a forbearance agreement. Under the agreement: a) Collins did not have to make his November payment, b) the amount of his November payment was prorated over the following eight months’ payments, c) his due date was extended to the 15th of each month, d) the grace period was eliminated, and e) ASC would continue credit reporting. Collins apparently did not understand the agreement. He thought that he could avoid late fees and protect his credit under the agreement if he simply made his regular, though now slightly increased, monthly payments. Collins and ASC entered into a second agreement in April. ASC agreed not to accelerate the loan if Collins made his regular monthly payments for the following four months. Like the earlier agreement, there was no grace period and credit reporting continued. In fact, ASC charged late fees every month and reported him delinquent every month after September. Collins discovered this when he tried to refinance in August 2007. Collins sent a letter to ASC pursuant to the Real Estate Settlement Procedures Act (RESPA) and requested that ASC remove the late fees and retract any negative credit reports. ASE responded to the letter but refused his requests. He now faces foreclosure. Collins filed suit alleging violations of RESPA, the Indiana Home Loan Practices Act, and breach of contract. Judge Miller (N.D. Ind.) granted summary judgment to ASC on all counts. He concluded that ASC responded to Collins' RESPA request according to the statute. He concluded that Collins failed to prevent evidence of either a breach of contract or a material misrepresentation in violation of the Indiana statute. Collins appeals the latter two rulings.

In their opinion, Judges Bauer, Kanne, and Evans affirmed. The Court first addressed the breach of contract claim. The Court concluded that ASC fully complied with the terms of the mortgage, the first forbearance agreement, and the second forbearance agreement. After Collins missed his September and October payments, he was always in arrears. Even if he made every monthly payment, the monthly payments went to past due obligations. The fact that Collins understood otherwise, and may have even been told otherwise, does not help him. The language of the contracts is unambiguous and Collins cannot rely on oral modifications for a breach of contract under Indiana law. Likewise, Collins cannot succeed on his Indiana Home Loan Practices Act claim. The written agreements are very clear. Collins cannot prove that ASC made a knowing or intentional material misrepresentation.