Recently, the U.S. District Court for the Western District of Tennessee granted in part and denied in part a defendant mortgage servicer’s motion for summary judgment concerning allegations that the defendant improperly foreclosed on plaintiff’s property. The plaintiff alleged that the defendant wrongfully accused her of failing to remedy her default and therefore violated RESPA and the FDCPA, among other things. Ultimately, the court denied defendant’s summary judgment request as to plaintiff’s RESPA claim because the defendant failed to exercise due diligence. But the court granted defendant’s request for summary judgment regarding plaintiff’s FDCPA claim because plaintiff presented no evidence that the defendant acted deceptively.

The plaintiff’s original loan—serviced by a previous servicer—was modified in 2016. But payments again were not made, so the previous servicer notified the plaintiff in December 2018 that it had accelerated the loan’s maturity date and referred the loan to foreclosure. The plaintiff, however, again applied for another modification in early 2019. After telling plaintiff her application was complete, the previous servicer then told the plaintiff, who claimed she inherited the property, that it needed additional documents to prove plaintiff’s successor-in-interest status. Ultimately, the previous servicer did not confirm the modification because the plaintiff did not confirm her successor-in-interest status.

The plaintiff again applied for a loan modification in March 2019, after the previous servicer transferred servicing rights to the defendant, and this modification was denied. She allegedly spoke with one of defendant’s representatives about the denial and indicated that she wished to reapply for a modification. However, the representative advised that she would have to reinstate the mortgage first before any loan modification. The defendant then sent a default letter to plaintiff’s property, which advised that the loan was still in default and needed payment.

The plaintiff submitted at least one additional request for mortgage assistance after the March 2019 modification application. The defendant acknowledged receipt of the request and detailed the documents it needed to process the request. The defendant then followed up in June 2019, stating again that it could not confirm that she was the successor-in-interest on the loan without documentation. A month later the defendant advised the plaintiff again that documents were still missing that were necessary to process her loan assistance request. The loan remained in default thereafter and the defendant foreclosed in August 2019.

In adopting the magistrate judge’s recommendation that the defendants’ motion for summary judgment be denied as to the RESPA claim, the district court noted that the defendant possibly should have sought documents, specifically the successor-in-interest documentation from the previous servicer, after the plaintiff submitted an incomplete loan modification application. The court stated that “there is a question of material fact whether [defendant] exercised reasonable diligence in failing to request the successor-in-interest documentation from [the previous servicer].” The court added that “there is a requirement of reasonable diligence, and there is no evidence showing that [defendant] met this standard. Failing to address the regulatory standard creates a question that cannot be resolved on the available information. Thus, there is at least one question of material fact here.”

Regarding plaintiff’s FDCPA claim, the court noted that “there is no evidence of deception in the foreclosure of loan payment process” and that “[p]laintiff has failed to provide any evidence that [defendant] acted dishonestly in requesting additional documentation to complete the loan modification.” The court therefore granted defendant’s summary judgment motion as to the FDCPA claim.