The 11th Circuit Court of Appeals, which hears cases from Florida, Georgia,
and Alabama, recently issued a decision regarding the FDCPA requirements
for lenders who want to offer homeowners a “Cash for Keys”
In a case called
Kinlock v. Wells Fargo Bank, plaintiff Dudley Kinlock lost his home to foreclosure. Following the
foreclosure sale, the mortgagor Wells Fargo Bank sent Kinlock a letter
offering cash in exchange for moving out of the home earlier.
Cash for Keys offers like this are very common after a mortgage foreclosure
sale. The offers provide the former homeowners with the immediate funds
needed to move out and find a new residence in exchange for cleaning the
property and moving out earlier than the law requires.
In the case, Kinlock sued Wells Fargo for violating the Fair Debt Collection
Practices Act (FDCPA) and the Florida Consumer Collection Practice Act
(FCCPA). He claimed that the Cash for Keys offer letter violated state
and federal consumer protection laws, and that he shouldn’t have
been contacted for debt collection reasons after his foreclosure case.
The district court disagreed, and found that Kinlock had failed to show
that the Cash for Keys letter was actually an attempt to collect a debt
under either statute. On appeal, the appellate court affirmed the district
court’s decision, but also noted that a debt collector could be
liable for violating the FDCPA even when not expressly demanding payment.
The court said that a demand for payment could be implicit; for example,
the debt collector could send a statement containing the amount owed,
a description of the debt, and information about how the debt could be
paid without explicitly demanding payment. This type of letter could still
violate the FDCPA and the FCCPA without expressly attempting to collect a debt.
However, the court said that since Wells Fargo was actually offering Kinlock
money without an expectation of anything in return other than turning
over the house early, the letter could not be construed as an attempt
to collect a debt.
Debt collectors are required to follow a complex series of rules designed
to protect consumers. When a debt collector violates these rules, the
consumer has the right to sue that company for damages. Even though not
every case is successful, appellate decisions like these give both debt
collectors and consumers guidance on what type of activities are prohibited.
If you are being harassed by debt collectors, the South Florida debt defense
attorneys at Loan Lawyers can help. To schedule a free consultation and
learn more about how we can help you, contact us today by calling (888)