Renee McCray v. Federal Home Loan Mortgage
2016 U.S. App. LEXIS 18266
| 4th Cir. | 2016Background
- In 2005 McCray refinanced her Baltimore home with a $66,500 loan; American Home financed the note, which was later sold and serviced by Wells Fargo; Freddie Mac later appeared as an investor/owner.
- After disputing billing/escrow issues in 2011, McCray stopped payments in 2012; Wells Fargo retained the White Firm to initiate foreclosure.
- The White Firm sent notices to McCray stating it was "attempting to collect a debt" and then initiated foreclosure; several firm attorneys were substituted as trustees and filed foreclosure proceedings in state court.
- McCray sued under the FDCPA, TILA §1641(g), and RESPA, alleging failures to validate debt, to respond to information requests, and to give statutorily required notices of loan transfer/assignment.
- The district court dismissed McCray’s FDCPA and TILA claims and granted summary judgment to Wells Fargo on RESPA. McCray appealed.
- The Fourth Circuit affirmed dismissal of TILA claims, reversed dismissal of FDCPA claims against the White Firm and Substitute Trustees, and remanded those FDCPA claims for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether White Firm/Substitute Trustees are “debt collectors” under FDCPA §1692a(6) | White Firm and trustees acted to collect debt via foreclosure; notices expressly stated an attempt to collect | Foreclosure enforcement is distinct from debt collection; no express demand for payment; activity incidental to fiduciary role | Reversed dismissal — complaint adequately alleges they are debt collectors; foreclosure activity can be debt collection (remanded) |
| Whether Freddie Mac violated TILA §1641(g) by failing to notify borrower of loan purchase | Freddie Mac failed to give required post-transfer notice | Freddie Mac’s acquisition occurred before TILA’s 2009 amendment and/or plaintiff knew by 2011 letters; claim time-barred | Affirmed dismissal — plaintiff failed to allege a post-2009 transfer and claim was barred by one-year limitations |
| Whether Wells Fargo had to give §1641(g) notice upon assignment/beneficial interest | Wells Fargo’s recorded interest and deed language could imply an ownership transfer triggering notice | Wells Fargo only obtained a beneficial servicing interest, not legal title; no §1641(g) obligation | Affirmed dismissal — beneficial servicing interest does not trigger §1641(g) notice requirement |
| Whether factual deficiencies warranted dismissal rather than discovery (pleading sufficiency) | McCray’s pro se allegations were sufficient to survive pleading stage and warrant discovery | Defendants argued pleadings lacked necessary facts to state claims | Mixed: Court allowed FDCPA claims to proceed on pleading; TILA claims dismissed; concurring judge would have allowed TILA claim against Wells Fargo to proceed to discovery |
Key Cases Cited
- Powell v. Palisades Acquisition XVI, LLC, 782 F.3d 119 (4th Cir. 2015) (debt-collection activities need not include an express payment demand to trigger FDCPA)
- Sayyed v. Wolpoff & Abramson, 485 F.3d 226 (4th Cir. 2007) (motions and litigation steps in collection actions fall within FDCPA)
- Wilson v. Draper & Goldberg, P.L.L.C., 443 F.3d 373 (4th Cir. 2006) (foreclosure communications and initiation of foreclosure can constitute debt collection under FDCPA)