The United States District Court for the Western District of Michigan issued an important published opinion early this month in the case of Macholtz v. Carrington Mortgage Services, LLC, finding, after a “journey through a thick summary judgment record” that detailed a “15-year struggle between plaintiff and a series of lenders,” that the mortgage servicer defendant’s refusal to acknowledge a loan modification agreed to by its predecessor made it liable to the consumer plaintiff under various state and federal consumer protection laws. The lawsuit, filed in early 2019 by Westbrook Law PLLC in Grand Rapids, Michigan, seeks damages for the plaintiff and to unwind a foreclosure sale.

The lawsuit challenged the conduct of the mortgage servicer, Carrington Mortgage Services, LLC, and the bank it worked for, Wilmington Savings Fund Society FSB. Carrington qualified as a “debt collector” under the Fair Debt Collection Practices Act (“FDCPA”) because it began servicing the mortgage after the predecessor servicer, CitiMortgage, had declared a default. CitiMortgage had also previously entered into a modification agreement with the plaintiff, but failed to ever “on-board” the modification or acknowledge its existence. Eventually, after demanding to be paid huge sums of money that were not justified under the modified terms of the loan, Carrington and Wilmington foreclosed on the plaintiff’s Berrien County home, which he had owned for 22 years.

The lawsuit alleged violations of the Real Estate Settlement Procedures Act (“RESPA”); Truth in Lending Act (“TILA”); FDCPA, Michigan Mortgage Brokers, Lenders and Servicers Licensing Act (“MBLSLA”); Michigan Regulation of Collection Practices Act (“MRCPA”), and common-law wrongful foreclosure and breach of contract. The court found violations of TILA, FDCPA, MBLSLA, and MRCPA on the part of Carrington and Wilmington and set the case for trial regarding damages and other remedies.

Consumer advocates in Michigan have often lamented the erosion of protections for homeowners under state and federal law over the last 20 years. It is true that consumers in Michigan have fewer protections than they did during the 1980s and 1990s. However, while holding mortgage servicers and banks accountable remains challenging, the Macholtz opinion shows that the remaining federal and state protections can be potent tools for redressing consumer abuses.

TJW