Metzger v. Seterus, Inc.

Background

Jeffrey Metzger and his wife signed a promissory note and mortgage in 2005. Fannie Mae owned the loan, and Seterus began servicing it on Fannie Mae’s behalf in October 2014. Metzger was current on his monthly mortgage payments when Seterus began servicing the loan, but he owed $54.86 in late fees.

Metzger later fell behind on the mortgage. In January and February 2018, Seterus sent statements and other notices listing different amounts needed to bring the loan current. A February 8, 2018, foreclosure advice notice stated that, as of January 25, 2018, Metzger owed $16,381.52 plus interest and other costs, and directed him to contact Seterus for the current reinstatement amount. A sheriff’s sale occurred on March 19, 2018, and Fannie Mae purchased the home.

Metzger sued Seterus under the Fair Debt Collection Practices Act (FDCPA), alleging that Seterus falsely represented the amount of his debt. He sued Fannie Mae under Minnesota’s foreclosure-by-advertisement statute, alleging that the foreclosure advice notice misstated the amount needed to reinstate the loan. The defendants moved for summary judgment, which asks whether the evidence presents a genuine dispute requiring a trial.

FDCPA claim against Seterus

The court granted summary judgment to Seterus on Metzger’s FDCPA claim for two reasons.

First, the FDCPA generally applies to a person who regularly collects debts owed to someone else, but excludes a servicer collecting a debt that was not in default when the servicer obtained it. The court examined the promissory note and concluded that default occurred when a borrower failed to pay the full monthly payment when due. The note treated late charges as separate from monthly payments. Because Metzger was current on his monthly payments when Seterus began servicing the loan, the court held that he was not in default and Seterus was not a debt collector under the FDCPA at that time.

Second, the court held that the claim failed even if Seterus qualified as a debt collector. The court reviewed the amounts in the January and February statements and concluded that each accurately stated the amount owed as of the applicable date. The amount increased because Seterus added a $15 property-inspection fee, because the foreclosure advice notice listed the loan amount without separately including certain other costs, and because a later statement added another monthly payment. The court therefore held that the record did not support a finding that Seterus falsely represented the amount of the debt.

Foreclosure advice notice claim against Fannie Mae

The court also granted summary judgment to Fannie Mae. Minnesota law required substantial compliance with a statutory template for a foreclosure advice notice. The court found that the notice followed the template and accurately stated that Metzger owed $16,381.52 as of January 25, 2018, plus interest and other costs. The court explained that the statute allowed the notice to use that language instead of listing every amount of interest and other costs.

The court distinguished a prior related proceeding in which a notice stated the amount owed as of a date eleven months before the notice was sent. Here, the notice was served on February 8 and stated the amount due as of January 25, while also directing Metzger to contact Seterus for the most current amount. The court concluded that this timing did not create the same problem and that the notice did not misrepresent the amount due.

Disposition

The court granted the defendants’ motion for summary judgment and ordered that the case be dismissed with prejudice.