RMAI Update June 2022

RMAI continues to closely monitor activities on Capitol Hill. While we are following a few bills that would impact the industry, we believe these bills have no chance of passage in this session of Congress. In addition to the midterm elections, Congress remains focused on the war in Ukraine, inflation, gas prices, gun control, and most recently the January 6^th hearings. On the regulatory front, the CFPB continues their aggressive enforcement actions and public statements (in various forms) furthering their priorities for a financial services industry which operates without biases and is equitable for all.

Following in the footsteps of RMAI’s Atlanta regional event held in 2021, which focused on state advocacy, RMAI is deep into the planning for our 2022 regional event in Washington DC which will focus on federal advocacy. Speakers from Capitol Hill, regulators, election specialists, and others are being invited to share their insider knowledge and attendees will receive the RMAI Grassroots Advocacy Toolkit. We will couple this informative educational program with unique networking events including private tours of the US Capitol, an evening monument tour, and a Washington Nationals baseball game. Dates are Monday and Tuesday, September 26^th and 27^th. Registration will open soon. Register early as all events have limited space!

RMAI monitors, tracks, and responds to legislative and regulatory activity in all 50 states as the need arises.  Backed by RMAI’s State Legislative Committee and a team of state lobbyists, RMAI educates legislators and regulators about the industry and the negative impacts or unintended consequences a bill would have on businesses and consumers. The State Legislative cycle is winding down with most states having adjourned for the year. However, a handful of states are still in session, including California. RMAI is currently tracking 82 bills in states that are still in session (down from 352). Here are some recent developments at the state level that might be of interest:

California SB 975 – This bill would prohibit a debt collector from collecting or attempting to collect a consumer debt if the consumer provides documentation to the debt collector that the debt, or any portion of the debt, is the result of economic abuse. The bill defines economic abuse to be when a person causes another person “to have impaired financial stability by maintaining control over the individual’s financial resources . . .” Sufficient documentation to determine the occurrence of economic abuse would include a copy of a protective order; a police report indicating the individual was a victim of domestic violence or elder abuse; a  Federal Trade Commission identity theft report; or documentation from a licensed medical professional, domestic violence counselor, a sexual assault counselor, licensed health care provider, attorney, social worker, or counselor stating that the debt was incurred as a result of economic abuse. [This bill has passed the State Senate on party lines. RMAI opposes this bill, as drafted, given the unqualified background of some of the individuals who can determine the existence of economic abuse. RMAI supports similar bills introduced in Florida and Illinois that have appropriate protections.]

California SB 1200 – This bill would reduce the post-judgment interest rate from 10% to the federal prime rate not to exceed 5% if the judgment is on a claim related to personal debt or personal credit. The bill would also prohibit the renewal of a 10-year judgment for another 10 years, except in instances where a lien was created. [This bill has passed the State Senate on party lines. RMAI is working with our California lobbyist and an industry coalition to fight this bill.]

California SB 1477 – This bill would increase the disposable earnings that are exempt from wage garnishment by increasing the minimum wage multiplier to approximately 80x (California uses a convoluted formula). This would effectively exempt incomes under $70,000 from wage garnishment. This bill would also set the maximum amount of disposable earnings of a judgment debtor that is subject to levy at 10% of the amount by which the individual’s disposable earnings for a given week exceed 80x the state minimum hourly wage. [RMAI is working with our California lobbyist and an industry coalition to fight this bill. Higher wage multipliers are becoming a priority issue for consumer advocates.]

District of Columbia B 357 – The bill would change a number of provisions related to D.C.’s debt collection laws, including: (1) expanding the prohibitions on deceptive behavior; (2) prohibiting debt collectors from making more than four phone calls to a consumer in seven days; (3) limiting debt collectors to one email, text, or direct messaging communication in a seven day period until the consumer opts into e-communications; once opting in they can make five communications; (4) requiring debt collectors to have complete documentation related to the consumer debt being collected; (5) requiring debt collectors to provide extensive data and documents to the consumer within 15 days of a written request; (6) requiring lengthy consumer notices informing consumers of their rights; (7) requiring debt collectors who enter into a payment schedule or settlement to provide a written copy of the schedule or agreement; (8) adding specific requirements for a debt collector when initiating a cause of action against a consumer for consumer debt; (9) requiring account level-affidavits similar to New York; and (10) increasing damages that can be awarded to a consumer for violations. [After 10 months of negotiations and amendments, the D.C. City Council adopted the final bill on June 7^th and will become effective on January 1, 2023. The D.C. City Council heard public testimony from RMAI and other industry participants on November 29, 2021, on the adoption of a permanent law based on the text contained in temporary bill # 348. RMAI and an industry coalition were successful in amending the emergency and temporary bills by: (a) adding exemptions to the call cap limitation, (b) eliminating pre-charge-off itemization of credit card debt; (c) eliminating the requirement for 24 months of statements; (d) eliminating unsolicited mailing requirements foisted upon debt collectors involving sensitive consumer data; (e) eliminating a requirement that the “original account number” be in the bill of sale; (f) eliminating mandatory punitive damages; and (g) eliminating a “per violation” penalty.]

Massachusetts SB 2858 – This bill among other things: (1) increases the garnishment exemption from 50x state minimum wage to 65x state minimum wage; (2) once the consumer exceeds the exemption threshold, the bill limits garnishment to 10% of the income above the threshold; (3) reduces the statute of limitations in an action for the collection of a consumer debt from six to four years; (4) prohibits the revival of a debt that is beyond the statute of limitations through the making of a payment; and (5) reduces the time allowed to take action to enforce a judgment from 20 to 10 years but allows renewing the judgment for an additional 10 years. If passed, the bill would take effect on September 1, 2023. [RMAI has retained a lobbyist to oppose the bill in its current form. RMAI participated in a stakeholder roundtable requested by the committee chair in January 2020 and April 2022. Working with a receivables industry coalition, RMAI has exchanged several redlines with proponents of the bill. While we have made significant progress, such as the removal of debt expungement from the bill, more work is needed on the wage garnishment provisions.]

FCRA Ruling in Favor of Lender Reversed by Ninth Circuit Based on “Patently Inaccurate” Reporting
Gross v. CitiMortgage, Inc., No. 20-17160, 2022 U.S. App. LEXIS 13096 (9th Cir. May 16, 2022)

A lender reported a consumer’s junior mortgage loan as “past due,” with accruing interest and late fees. The consumer submitted a written dispute to a credit reporting agency, which in turn sent notice to the lender.

The consumer’s dispute noted that he had lost his home in a foreclosure sale and no longer owed the junior mortgage loan. Furthermore, the consumer included a citation to the Arizona Revised Statutes, pointing to the provision that he believed “abolished” the debt, the Arizona Anti-Deficiency Statute. After a second written dispute, the lender eventually reported the debt as “charged off” rather than “abolished.”

The consumer then sued the lender under Fair Credit Reporting Act (“FCRA”).  The consumer alleged that the lender violated FCRA by failing to reasonably investigate his dispute and by providing inaccurate information to the three national credit reporting agencies.

On cross-motions for summary judgment, the trial court ruled for the lender, determining that its reports to the credit reporting agencies were accurate as a matter of law and that the lender had reasonably investigated the consumer’s disputes. The consumer appealed.

The U.S. Court of Appeals for the Ninth Circuit determined that a furnisher’s duties resemble those of a credit reporting agency, which can also be found liable for failing to “follow reasonable procedures to assure maximum possible accuracy” of information on a credit report. 15 U.S.C. § 1681e(b); see also 15 U.S.C. §§ 1681n, 1681o.  In such lawsuits, before a court considers the reasonableness of the agency’s procedures, the consumer must make a “prima facie showing” of inaccuracy in the agency’s reporting.

The Ninth Circuit concluded that the issue rested on the Arizona Anti-Deficiency Statute, which provides that after a trustee sale, if a mortgage deficiency remains, “no action may be maintained to recover any difference between the amount obtained by sale and the amount of the indebtedness . . .” Ariz. Rev. Stat. § 33- 814(G). The Court found that this statute “abolished” the consumer’s liability for the debt.

Thus, with the consumer’s liability “abolished,” the Ninth Circuit held that he was no longer obligated to repay the debt.  Since the consumer no longer owed a balance, the Court also concluded that his payments were not late, and the loan should not have been accruing interest or late fees.

Accordingly, the Ninth Circuit held that the lender’s reports were “patently incorrect,” and the consumer satisfied his burden to make a prima facie showing of inaccurate reporting.

Additionally, the Ninth Circuit held that there was a genuine factual dispute about the reasonableness of the lender’s investigation.

Under the FCRA, a furnisher must correct or delete inaccurate information after conducting an “investigation with respect to the disputed information.” 15 U.S.C. § 1681s-2(b). That investigation must be at least “reasonable” and “non-cursory,” and a consumer may sue a furnisher and recover damages if the furnisher willfully or negligently violated the FCRA. 15 U.S.C. §§ 1681n, 1681o.

Because the reasonableness of a furnisher’s policies depends on the “nature, size, complexity, and scope of each furnisher’s activities,” the Ninth Circuit concluded it was best left to a jury to determine the reasonableness of the lender’s investigation.

Accordingly, the Ninth Circuit reversed the trial court’s grant of summary judgment in favor of the lender and remanded back to the trial court for further proceedings.

Eleventh Circuit Partly Relies on Mini-Miranda in Determining Mortgage Statements May Be Subject to FDCPA
Daniels v. Select Portfolio Servicing, Inc., No. 19-10204, 2022 U.S. App. LEXIS 14013 (11th Cir. May 24, 2022)

A consumer fell behind on her mortgage payments and entered into a modification agreement with her lender.  The mortgage was later sold, transferred, or assigned to another creditor that refused to honor the terms of the modification and initiated a foreclosure action in state court.

In addition to sanctioning the creditor for bringing an improper foreclosure action, the court ordered that the consumer resume payments and that the sum of interest and escrow payments that had not been made over time would be added “to the end of” the loan modification agreement.

After conclusion of the foreclosure action, the creditor’s mortgage servicer resumed sending mortgage statements required by the Truth in Lending Act (“TILA”) to the consumer.  The consumer alleged that one statement in particular “significantly misstated the deferred principal balance, the outstanding principal balance, and the amount of the interest-only payment that was due.”  The statement included the FDCPA § 1692e(11) “mini-Miranda,” stating: “This is an attempt to collect a debt. All information obtained will be used for that purpose.”  It “did not indicate that it was being sent for informational purposes.”

Receiving no response from the servicer, the consumer filed suit alleging violations of the federal Fair Debt Collection Practices Act (“FDCPA”), §§ 1692d, 1692e and 1692f, and the Florida Consumer Collection Practices Act (“FCCPA”), Fla Stat. §§ 559.72(7) and 559.72(9).

The trial court dismissed the consumer’s claims, ruling that “the monthly mortgage statements complied with the TILA and its regulations, and so were not communications in connection with the collection of a debt under the FDCPA and the FCCPA.”  The consumer appealed.

The U.S. Court of Appeals for the Eleventh Circuit noted that in Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211, 1216 (11th Cir. 2012), it “recognized that a communication can ‘have dual purposes,’ such as providing a consumer with information and demanding payment on a debt.”  Here, the mortgage statement: 1) stated it was an attempt to collect at debt,”; 2) the statement had entries for amounts due and due dates; and 3) it included a monthly payment coupon.”

The Court concluded that the consumer “plausibly alleged that the mortgage statements . . . were communications ‘in connection with the collection of a debt’ under the FDCPA and in connection with ‘collecting [a] . . . debt[ ]’ under the FCCPA.”

Viewed holistically, a communication that expressly states that it is ‘an attempt to collect a debt,’ that asks for payment of a certain amount by a certain date, and that provides for a late fee if the payment is not made on time is plausibly ‘related to debt collection.’

Importantly, the court included this clarification in a footnote: “We do not hold that the statements are, as a matter of law, communications in connection with the collection of a debt. Our ruling is that [the consumer] has plausibly alleged that they are.”

The Court reversed the trial court’s dismissal and remanded the case for further proceedings.

 

Fifth Circuit Holds Forward Flow Agreement for “Additional Accounts” is Enforceable
Capio Funding, L.L.C. v. Rural/Metro Operating Co., No. 20-11218, 2022 U.S. App. LEXIS 13454 (5th Cir. May 18, 2022)

A debt buyer (“Buyer”) entered into an agreement to purchase specifically identified delinquent accounts from a health services provider (“Seller”) for a specific price.  The Buyer paid an additional amount to include an amendment pursuant to which the Seller would offer “additional Accounts” on a quarterly basis, and the Buyer would pay for the “additional Accounts” based on a formula.  The Seller agreed that the forward flow accounts would be of the same quality and character as the original accounts, as determined by the Buyer.

Although the Buyer paid the agreed price for the first forward flow portfolio, the portfolio was never delivered because, according to the Buyer, the Seller was undergoing a merger with another company.

After the merger, the Seller did offer some accounts to the Buyer for pricing, but the deal did not close.  A second offering was made consisting of some of the Seller’s accounts and some of the accounts of the company with which the Seller had merged, the latter not being addressed by the forward flow agreement.  That deal also failed to close because of a “dollar-and-cents issue.”

The Buyer sued the Seller for breach of contract and tortious interference, in essence arguing that the forward flow agreement required the Seller to offer all, not some, qualifying accounts on a quarterly basis.   In its motion for summary judgment, the Seller argued the forward flow agreement was unenforceable because it did “not specify the quantity of accounts to be sold.”  The trial court agreed, concluding that the use of the word “additional” was too indefinite.  The Buyer appealed.

Reversing the trial court, the U.S. Court of Appeals for the Fifth Circuit stated that the question was “whether the term ‘additional Accounts’ rendered the Forward Flow Amendment unenforceable,” and explained:

The term ‘additional’ qualifies ‘Accounts,’ which is defined in the base contract (albeit with more words) as ‘the accounts receivable listed in . . . Schedule I.’ The basic definition of ‘Accounts’ therefore contemplates only itemized ‘accounts receivable’ already in existence. It comes as no surprise, then, that the scope of the Forward Flow Amendment (by which [the Seller] agreed to offer and sell future accounts receivable) contemplates more accounts than . . . expected under Schedule I. But how many? . . . however many (i.e., all) that meet the agreed-upon quality requirements.

Accordingly, the Fifth Circuit determined the forward flow agreement was binding and reversed the ruling of the trial court.

Support the Executive Summit Silent Auction Fundraiser for the Legislative Fund
The Executive Summit 2022 Silent Auction opens live in July! Watch for the announcement and then browse the online auction catalog for the available items. “Buy it Now” if you find something you can’t live without! “Buy it Now” ends when the Executive Summit begins on August 2nd. Then remaining silent auction items will be available to Executive Summit attendees for on-site bidding using bid sheets.

Donate an Item
To donate a silent auction item and add your company logo to the auction catalog and donor list, please fill out this donation form. (Not sure what to donate? Browse our Amazon wishlist for ideas.)

Register to Bid
If you haven’t registered as a bidder yet for any of our previous silent auctions, register now so you are ready when the silent auction opens.

Where Do Your Donations Go?
RMAI utilizes the Legislative Fund donations from our members to fund state and federal advocacy efforts. Check out our updated infographic which shows where the donations go and the current state & federal activities RMAI is actively fighting.

Contribute to the Legislative Fund by donating here. We will add your company name to our list of Legislative Fund contributors on the RMAI website and in RMAI publications. Click here to see a list of current contributors on the right-side bar.

About the Legislative Fund
RMAI actively monitors and responds to state and federal measures affecting how our members do business. Your contributions to the Legislative Fund extend the reach of RMAI’s advocacy across the country where and when needed. Read more about the Legislative Fund here.

POP-UP WEBINAR – Friday, June 17th! – “What’s New with New York Form Affidavits”
RMAI is hosting a webinar this week, Friday, June 17th on the recently released form affidavits from the New York Office of Court Administration. This webinar is free for members!

Webinar Information | RMAI Member Alert – June 2, 2022 | REGISTER

Chief Compliance Officer Webinar Series (CCO Series)
Register for RMAI’s six-part webinar series which begins May 26th and ends on November 1st and focuses on recent updates and changes in the compliance world since the implementation of Regulation F. Topics include Credit Reporting, Letters, Communication Restrictions, Vendor Oversight, Text Message/SMS, and Payments. While this series is designed for chief compliance officers, the content is beneficial for anyone working in or wanting to learn more about these topic areas.

Registration Options

Entire CCO Webinar Series: $299 for members – REGISTER (Recordings provided for webinars that have already occurred.)

Individual Webinars: $64 per webinar for members

Credit Reporting – May 26th REGISTER
June Coleman – Messer Strickler Burnette
Catherine Calko – Spring Oaks Capital
Addison Crawford – Midland Credit Management

Letters – June 23rd REGISTER
John Bedard – Bedard Law Group
Amy Brown – Gurstel Law Firm
Brian Glass – Halsted Financial Services

Communication Restrictions – July 26th REGISTER
Crystal Duplay – Kodak Law
Stefanie Jackman – Troutman Pepper

Vendor Oversight – September 15th REGISTER
Sara Woggerman – ARM Compliance Business Solutions
TBD

Text Message/SMS – October 13th REGISTER
Tim Caraveo – Synergetic Communication
Mike Frost – Malone Frost Martin

Payments – November 1st REGISTER
Rozanne Andersen – Finvi
Michael Kane – Unifund

Recorded Monthly Webinars – Free for Members
If you missed the May 18^th webinar, you can still watch the recording. Register for Best Practices and Considerations for an Effective Estate Recovery Strategy.

Contact Shannon Parod at [email protected] or 916.482.2590 with any questions.

Congratulations to our new and renewed Certified Receivables Compliance Professionals (CRCP), and new and renewed Certified Receivable Businesses (CRB)!

CRCP – New
Jason Davis – Frontline Asset Strategies
Hugh Fudge –Robinson Hoover & Fudge
Boris Graypel – Paradigm Assets
Darlene Hirsch – National Debt Holdings
Scott Kulaga – Halsted Financial Service

CRCP – Renewals
David Barrett – Portfolio Investment Solutions
Tim Caraveo – Synergetic Communication
Gretchen Frascella – US Mortgage Resolution
Jon Gluckner – The Cadle Company
Patrick Green – Synergetic Communication
Al Hochheiser – Maurice Wutscher
Monica Johnson – Absolute Resolutions Corp.
Tom Ludwig – NLEX
Scott Ogden – Red Target, LLC dba SCJ Commercial Financial Services
Adam Parks – Plaza Services
Angie Radmall-Christenson – Federal Pacific Credit Co.
Michael Schulman – NDS
Mark Stelk – General Collection Co.

CRB – New
Oliphant United
Premium Asset Recovery Corporation (PARC)

CRB – Renewals
Indiana Receivables

Attention, Originating Creditor Members!!
RMAI’s Certification Council has an opening for a representative from an Originating Creditor member financial institution. If you or someone you know might be interested in serving on the Certification Council or would like to know more about the role of this position, please reach out to Director of Certification & Education, Shannon Parod [email protected].

View all certified businesses and vendors
View all certified individuals.
View educational requirements for certified individuals.

For questions about certification, contact Shannon Parod direct at 916-482-2590 or email [email protected].

RMAI’s leadership cultivates relationships within the receivables management industry to expand business opportunities for members.

RMAI 2022 Executive Summit | August 2-4, 2022

RMAI 2022 Washington D.C. Regional Event | September 26-27, 2022

Please note, the RMAI office will be closed July 4, 2022 for the Independence Day Holiday.

Thank you to our June 2021 – June 6,  2022 Legislative Fund Contributors!

Diamond $25,000

Cavalry Investments, LLC

Crown Asset Management, LLC

Financial Recovery Services, Inc.

Midland Credit Management

Portfolio Recovery Associates, LLC

Resurgent Holdings, LLC

Titanium $15,000

Velocity Portfolio Group, Inc.

Platinum $10,000

Blitt and Gaines, P.C.

Cascade Capital, LLC

InvestiNet, LLC

National Credit Adjusters, LLC

Unifund CCR LLC

Gold $7,500

EverChain

Miller and Steeno, P.C.

Pressler, Felt and Warshaw, LLP

Rausch Sturm, LLP

Silver $5,000

CKS Financial

Digital Recognition Network

FMA Alliance, Ltd

Klima, Peters, & Daly, P.A.

Pharus Funding, LLC

Superlative RM

T&I Enterprises, LLC

Tromberg, Morris & Poulin, PLLC

Bronze $2,500

Absolute Resolutions Corp.

Couch Lambert

Investment Retrievers, Inc.

RAzOR Capital, LLC

Resurgence Capital, LLC

SAM, Inc. – Solutions for Account Management

Security Credit Services, LLC

Brass $1,000

Andreu, Palma, Lavin & Solis, PLLC

Bayview Solutions, LLC

Complete Credit Solutions, Inc.

FLOCK Specialty Finance

Gordon, Aylworth & Tami, P.C.

Halsted Financial Services, LLC

Hunt & Henriques

Kino Financial Co., LLC

Levy & Associates, LLC

Maxwell & Graves Solutions, LLC

Quantum3 Group, LLC

Simmonds & Narita, LLC

Synergetic Communication, Inc.

The Cadle Company

Tobin & Marohn

VeriFacts, Inc.

Other

Accelerated Data Systems

Acctorp International, Inc.

Action Collection Agencies, Inc.

Advancial Federal Credit Union

Aldridge Pite Haan, LLP

Alliance Data

Alliant Capital Management LLC

Arko Consulting LLC

ARM Compliance Business Solutions

Atlas Acquisitions

Attunely Inc.

Autovest, LLC

Ballard Spahr, LLP

Beam Software

Business and Professional Collection Service, Inc.

Butler & Associates, P.A.

C&E Acquisition Group, LLC/ Diverse Funding Associates

Capio

Capital Collection Management, LLC

Capital Link Management, LLC

Client Services Incorporated

CMS Services

Commercial Credit Group Inc.

Complete Credit Solutions, Inc.

Comtronic Systems, LLC

Conficio Capital, Inc.

Converging Capital, LLC

Convoke, Inc.

Cornerstone Support, Inc.

Credit Control, LLC

Credit Management Corporation

Credit Corp Solutions, Inc.

CSS Impact!

Debt Recovery Solutions, LLC

Delev & Associates, LLC

Dyck-O’Neal, Inc.

Dynamic Recovery Solutions

Equabli

Experian

Finvi

First Financial Portfolio Services, LLC (FFAM360)

First American Acceptance Co., LLC

First Solutions Debt Management, LLC

FMS, Inc.

G. Reynolds Sims & Associates, P.C.

Gaskell & Giovannini, LLC

Genesis Recovery Services

Guglielmo & Associates, PLLC

Harvest Strategy Group, Inc.

Indiana Receivables, Inc.

Interim Capital Group, Inc.

International Debt Buying Consultants, LLC

Invenio Financial, a Phillips & Cohen Associates Company

Jefferson Capital Systems, LLC

Jormandy

Keith D. Weiner & Associates Co., LPA

Kelly Knepper -Stephens

Kirschenbaum & Phillips, P.C.

Law Offices of Steven Cohen, LLC

Lockhart, Morris & Montgomery, Inc.

Malone Frost Martin PLLC

MauriceWutscher LLP

Metronome Financial LLC

Monarch Recovery Management, Inc.

National Debt Holdings, LLC

National Loan Exchange NLEX

National Recovery Associates, Inc.

National Recovery Solutions, LLC

Nationwide Recovery Systems

NCB Management Services, Inc.

Nelson & Kennard

NRA Group, LLC

PCI Group Inc.

Phin Solutions, LLC

Portnoy Schneck, L.L.C.

Poser Investments, Inc.

Premier Forty Financial, LLC

Premium Asset Recovery Corp (PARC)

Pro Forma Inc

Provana, LLC

ProVest LLC

Quall Cardot, LLP

RAS LaVrar LLC

Rausch, Sturm, LP

Repay

Resource Management Services, Inc.

RevSpring

Robinson, Hoover & Fudge, PLLC

Scott & Associates, PC

Sentry Credit, Inc.

Slovin & Associates

SMS Financial, LLC

State Collection Services, Inc.

Stone, Higgs & Drexler

Suttell & Hammer

Synchrony Financial

Tag Process Service, Inc.

Tate & Kirlin

Techno Brain BPO ITES Limited

TransUnion

Troy Capital, LLC

USASF Servicing

Vargo & Janson, P.C.

Velo Law Office

Venable LLP

VoApps

Zenarate, Inc