In Humphrey v. PennyMac Holdings, LLC, No. 15-cv-2622 (D.N.J. Mar. 2, 2016), the United States District Court for the District of New Jersey permitted a claim by a borrower to proceed under the Fair Debt Collections Practices Act (“FDCPA”) against the original lender’s assignee. Plaintiff Virgil Humphrey (“Plaintiff”) brought an action against PennyMac Holdings, LLC (“PennyMac”) based on a note secured by a mortgage from Plaintiff, as borrower, to Washington Mutual Bank, as lender. Plaintiff alleges that Washington Mutual “assigned, placed with, or otherwise transferred” the loan to PennyMac for “collection.” Plaintiff alleges that PennyMac filed a “debt collection action” and attached a copy of a state court foreclosure complaint. On that basis, Plaintiff brought claims against PennyMac for violation of the FDCPA, Fair Credit Reporting Act (“FCRA”) and New Jersey Consumer Fraud Act (“NJCFA”).
Plaintiff alleged that PennyMac violated the FDCPA because PennyMac is, in reality, a debt collector and “the state court action is a collection action masquerading as a foreclosure action.” The District Court found such allegation barely sufficient to withstand dismissal, but permitted the claim to remain, particularly in light of Plaintiff’s pro se status. The District Court did caution, however, that PennyMac had raised serious concerns about the viability of the claims, and the Court itself had concerns about jurisdiction under Rooker-Feldmen or abstention under Colorado River, based on the pending state foreclosure action. The District Court noted that such concerns could likely be addressed with limited discovery.
Plaintiff claimed that PennyMac, as a credit furnisher, breached a duty to provide accurate information, refrain from providing information after it was informed of a consumer dispute and to correct information under the FCRA. PennyMac contended that there is no private right of action for violation of 15 U.S.C. §1681s-2(a)(1), (2) & (3), which merely lists “responsibilities.” The District Court found that the Third Circuit had already held that no private action exists. The District Court did, however, find that a private right of action does arise under 15 U.S.C. §1681s-(2)(b), which provides that a furnisher of credit information has a duty to report a dispute to all credit reporting agencies. The District Court dismissed the FCRA claim without prejudice and instructed that any amendment state the particular manner in which the information furnished to the credit reporting agencies was inaccurate. The District Court then dismissed without prejudice Plaintiff’s claim under the NJCFA because the “unlawful practice” alleged in support of the claim was the violation of the FCRA.