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Adams v. Seterus, Inc.

United States District Court, E.D. Michigan, Southern Division

September 27, 2019

TRACY ADAMS, on behalf of herself and others similarly situated, Plaintiff,
v.
SETERUS, INC., Defendant.

          ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS [DKT. NO. 7]

          DENISE PAGE HOOD UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         On September 4, 2018, Plaintiff filed a two-count Complaint alleging violations of the Fair Debt Collection Practices Act (“FDCPA”) and the Michigan Regulation of Collection Practices Act (“MRCPA”). On November 1, 2018, Defendant filed a Motion to Dismiss the Complaint. Dkt. No. 7. The Motion has been fully briefed, and a hearing was held on December 19, 2018. For the reasons that follow, the Motion to Dismiss is granted in part and denied in part.

         II. STATEMENT OF FACTS

         Plaintiff owns a residential home located at 8890 Burlingame Avenue, SW, Byron Center, Michigan. Dkt. No. 1 at ¶ 20. The home is secured by a mortgage owned, backed, or controlled by Federal National Mortgage Association (“Fannie Mae”) that is serviced by Defendant. Id. at ¶ 21. Defendant acquired the servicing rights to Plaintiff’s Fannie Mae-owned loan from CitiMortgage when the loan was in a state of default. Id. at ¶ 27-29. As a mortgage servicer, Defendant contracts with Fannie Mae to collect payments, fees, and other amounts owed by the home owner and to provide other services to investors relating to the home owner’s loan. Id. at ¶ 24. Pursuant to its agreement with Fannie Mae, Seterus provides notices to Plaintiff and consumers like Plaintiff using a form letter that is identified in the Complaint as the “Michigan Final Letter.” Id. at ¶¶ 47-48.

         The Michigan Final Letter includes the following language:

A. THIS COMMUNICATION IS FROM A DEBT COLLECTOR AS WE SOMETIMES ACT AS A DEBT COLLECTOR.
B. If full payment of the default amount is not received by us . . . on or before [the Expiration Date], we will accelerate the maturity date of your loan and upon such acceleration the ENTIRE indebtedness of the loan, including principal, accrued interest, and all other sums due thereunder, shall, at once and without further notice, become immediately due and owing.
C. If you send only a partial payment, the loan will still be in default and we may keep the payment. Additionally, we will keep the payment and may accelerate the maturity date.
D. IF THE DEFAULT IS NOT CURED ON OR BEFORE THE EXPIRATION DATE, THE LOAN OWNER AND WE INTEND TO ENFORCE THE LOAN OWNER’S RIGHTS AND REMEDIES AND MAY PROCEED WITHOUT FURTHER NOTICE TO COMMENCE
FORECLOSURE PROCEEDINGS.
E. You have the right to reinstate your loan after acceleration and the right to bring a court action or assert in the foreclosure proceedings the nonexistence of a default or any other defense to acceleration and sale. If you reinstate your loan after acceleration, the loan no longer will be immediately due in full.

Dkt. No. 1 at Ex. A (and Ex. B, C, D, E, F, and G). See also Dkt. No. 1 at ¶¶ 49, 50, 51, 78.

         In 2016, a “legal mediation officer” (i.e., a Rule 30(b)(6) witness) designated by Defendant testified in another case (Hager v. Seterus, Inc., 1:15-cv-222 (W.D. N.C. )) as follows:

Q. My understanding of your testimony just now is that if Seterus receives a payment in response to an NC Final, then the debt is no longer 45 days due and so that’s sufficient to hold off the acceleration process?
A. That’s correct.
Q. Okay. And is that -- is that Seterus’ policy just with regard to North Carolina?
A. Seterus’ policy for the loans where we are accepting payments and we’re able to apply full contractual payment to the loan.
Q. Okay. So in response to a letter like Exhibit 11 [a Seterus North Carolina Final Letter], Seterus’ policy, if they're accepting payments, is if they receive an amount equal to a normal ...

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