Putative Class Action Against Loan Servicer on FDCPA-related Claims Not Dismissed by NC Federal Court

Recently, the U.S. District Court for the Middle District of North Carolina largely denied a Loan Servicer’s motion to dismiss a putative class action alleging that the Loan Servicer violated the FDCPA, the North Carolina Debt Collection Act, the North Carolina Collection Agencies Act, and made negligent misrepresentations under North Carolina common law by sending delinquency letters that included false and deceptive statements.  Plaintiffs seek to certify a class of North Carolina borrowers who received this letter.

The Loan Servicer’s delinquency letter at issue, among other language, stated that “[f]ailure to cure the default on or before the date specified may result in acceleration of the sums secured by the Security Instrument, sale of the property and/or foreclosure by judicial proceeding and sale of the property.”  The plaintiffs alleged, in part, that this delinquency letter included false threats, false ultimatums, and false deadlines in violation of law because the Loan Servicer had no present intention of following through with those actions. 

The federal court found that many of the plaintiffs’ claims were plausibly alleged, and did not dismiss most of the complaint.  It did dismiss the FDCPA claims of one of the plaintiffs, as that person’s loan never went into default, and it dismissed the entire negligent misrepresentation claim because the plaintiffs failed to adequately allege a pecuniary injury from the alleged violations.