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Fair Debt Collection: 11.15.3.2 Strategic Considerations

Before filing an FDCPA claim, the consumer’s attorney must carefully evaluate whether the claim meets the case or controversy requirements of Article III—in particular, whether the consumer has suffered a concrete injury. The attorney should consider not only the intricacies of Spokeo and Ramirez, but also whether the complaint smacks of something serious or something trivial.

Fair Debt Collection: 11.15.6 Article III Standing for Claims Involving Unwanted, Inconvenient, or Repeated Calls or Other Contacts with Debtor

The FDCPA places four restrictions on contacts with consumers at inconvenient times or places.1967 Section 1692c(a)(1) prohibits debt collector calls at times and places that are inconvenient for the consumer. Section 1692c(a)(3) prohibits debt collector calls to consumers at their workplaces if such calls are prohibited. Section 1692c(c) allows the consumer to stop most future debt collector phone calls and letters altogether. And section 1692d(5) prohibits repeated calls with the intent to annoy or abuse any person.

Fair Debt Collection: 11.15.2.2.1 The holdings in Ramirez

The Supreme Court’s 2021 decision in TransUnion L.L.C. v. Ramirez1458 is its second major decision about the application of Article III to claims under federal consumer protection laws. The case arose when TransUnion, one of the “Big Three” nationwide consumer reporting agencies (CRAs or credit bureaus), issued a report identifying a car buyer, Sergio Ramirez, as a potential terrorist.

Fair Debt Collection: 11.15.2.2.3 When does harm have a close relationship to harm traditionally recognized as a basis for a lawsuit?

Ramirez provides more detail about one of the two alternative tests for Article III standing articulated in Spokeo: that the harms the plaintiff suffered have a close relationship to a harm traditionally recognized as providing a basis for a lawsuit in American courts.1464 Ramirez states that Article III “does not require an exact duplicate in American history and tradition.”1465

Fair Debt Collection: 11.15.2.2.5 Procedural vs. substantive requirements—does it make a difference?

The Spokeo decision dwelt on a characterization of the case’s FCRA violations as merely “procedural.” Although the Spokeo Court did not clearly indicate the role of the distinction between procedural and substantive violations, many decisions have given meaning to this distinction, often by giving greater weight or conclusive weight to Congress’s judgment in enacting a statute that creates substantive protections and grants a private remedy for violations.1495

Mortgage Servicing and Loan Modifications: 12.3.7.3 VA Forbearance Provisions

Pursuant to VA Circular 26-23-8, VA borrowers with pandemic-related hardships are entitled to forbearance as long as they make their requests by May 31, 2023.420 The agency’s guidance, consistent with interagency guidance from the FHA, VA, and USDA, clarifies that borrowers are entitled to determine the length of forbearance up to 360 days.421

Mortgage Servicing and Loan Modifications: 12.3.7.4 VA Post-Forbearance Options

On July 23, 2021, the VA issued a revision of the post-forbearance options available to borrowers facing COVID-19 hardships through VA Circular 26-21-13. The circular included the VA’s COVID-19 Home Retention Waterfall (“VA waterfall”), which provides the VA’s “preferred order” of options for servicers addressing borrowers with pandemic-related hardships.425 In addition to the circular, the VA provided two helpful charts that reflect their waterfall.426

Mortgage Servicing and Loan Modifications: 12.2.4.4 Home Retention Options

In Mortgagee Letter 2023-03, HUD amended the loss mitigation waterfall available for borrowers transitioning from a disaster-related forbearance through October 30, 2024. Under Mortgagee Letter 2023-03, HUD directs servicers to evaluate borrowers for COVID-19 loss mitigation options regardless of whether the borrower’s hardship resulted from the pandemic.208

Mortgage Servicing and Loan Modifications: 12.2.5.4 Home Retention Options

The Servicer Handbook states that there are two modification options for borrowers who have been impacted by a disaster: the VA Disaster Loan Modification and the Disaster Extend Modification. These modifications do not require the borrower to submit a complete loss mitigation application.227 The Servicer Handbook also advises servicers to refer to 38 C.F.R.

Mortgage Servicing and Loan Modifications: 12.2.6.1 Sources of Information

An important source of information about the United States Department of Agriculture (USDA) direct loan program240 and disaster assistance is Appendix 10 of the HB-1-3550 Direct Single Family Housing Loans and Grants Field Office Handbook (HB-1-3550 Handbook), which is entitled “Single Family Housing Fiel

Mortgage Servicing and Loan Modifications: 12.3.6.4.2 COVID-19 Advance Loan Modification

The COVID-19 Advance Loan Modification (ALM) provides eligible borrowers with a 25% reduction of their monthly principal and interest payment through preset loan modification terms.390 Borrowers do not apply for the ALM. Instead, during a specified period, servicers review their FHA-insured loan portfolio for loans that would achieve the ALM target payment through the modification.391 The servicer will send the ALM modification offer to borrowers who meet the eligibility guidelines.

Mortgage Servicing and Loan Modifications: 12.3.2 COVID-19 Assistance

There has been local, state, and federal assistance for borrowers with COVID-19 hardships. The federal provisions generally apply only to “federally-backed” mortgages, which includes loans backed by Fannie Mae and Freddie Mac and loans insured by federal agencies. There are very limited published guidelines to assist borrowers without federally backed loans. Knowing the relevant investor of the loan is critical to knowing what assistance a borrower is entitled to receive.

The general categories of assistance are as follows:

Mortgage Servicing and Loan Modifications: 12.3.3.1 Introduction, Timing, and Coverage

As described above, forbearance is temporary pause on the borrower’s obligation to make payments. The CARES Act provides details on when forbearance applies and leaves some other specific details to investors, as described in later sections.

In response to the rising pandemic, Congress passed the CARES Act to, among many other things, assist borrowers facing COVID-19 hardship. According to the section covering mortgages, section 4022, its provisions apply “during the covered period.”278

Mortgage Servicing and Loan Modifications: 12.3.4.1 Overview

The government sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, have implemented similar policies for borrowers facing COVID-19 hardships, pursuant to the Federal Housing Finance Agency’s (FHFA) Servicing Alignment Initiative, but with some variation.308 The GSEs do not vary in terms of the basic options available, but they have some different rules regarding access to relief. Effective November 1, 2023, Fannie Mae began retiring its COVID-19 policies described below.

Mortgage Servicing and Loan Modifications: 12.3.4.3.1 Generally

Even after the end of the COVID-19 national emergency, borrowers facing COVID-19 hardships have access to forbearance. The availability of forbearance from Fannie Mae is not time limited because COVID-19 hardships may fit within Fannie Mae’s standard forbearance language.314 It is important to note that Fannie Mae’s forbearance provisions are not mandatory.

Mortgage Servicing and Loan Modifications: 12.3.4.3.3 Eligibility for Fannie Mae’s COVID-19 Deferral

Fannie Mae’s initial option for addressing forborne payments is its COVID-19 deferral program.320 To access this option, borrowers must have their COVID-19 hardship identified before November 1, 2023, and the final evaluation for the deferral must be completed before November 1, 2024.321 Borrowers with hardships identified on or after November 1, 2023, may have access to the standard deferral described in Chapter 7.

Mortgage Servicing and Loan Modifications: 12.3.4.3.4 How borrowers obtain a Fannie Mae COVID-19 Deferral

Fannie Mae does not require borrowers with COVID-19 hardships identified prior to November 1, 2023, to submit documentation of hardship or a borrower response package (BRP) or other financial documentation to access this option. Fannie Mae guidelines state that “quality right party contact” (QRPC) is required in order to determine basic information about the borrower’s finances, including whether the borrower can afford the pre-forbearance monthly payment.

Mortgage Servicing and Loan Modifications: 12.3.5.2.1 Generally

Even after the end of the COVID-19 national emergency, borrowers with Freddie Mac loans are entitled to forbearance for COVID-19 hardships. The availability of forbearance from Freddie Mac is not time limited because COVID-19 hardships fit within Freddie Mac’s standard forbearance language. It is important to note that Freddie Mac’s forbearance provisions are not mandatory.