Collins v. America's Servicing Co.

Summarized by Allen Guon , Cozen O'Connor
14 years 7 months ago

Citation:

Case No. 10-2962 (7th Cir. July 13, 2011)

Tag(s):

7th Circuit

Ruling:

The Seventh Circuit that held that the defendant mortgage loan servicer neither breached its forbearance agreements with the borrower nor violated the Indiana Home Loan Practices Act by continuing to charge late fees and reporting late payments to the credit bureaus because the servicer’s actions were consistent with the plain language of the mortgage and forbearance agreements.

Procedural context:

The Court of Appeals for the Seventh Circuit affirmed the order of the U.S. District Court for the Northern District of Indiana granting summary judgment in favor of the Defendant on Plaintiff's claims for breach of contract and violation of the Indiana Home Loan Practices Act, Ind. Code section 24-9-1-1, et seq.

Facts:

After falling two months behind on his mortgage, Collins entered into forbearance agreements with America’s Servicing Company (ASC). Collins subsequently filed suit against ASC alleging that ASC breached the terms of the mortgage and forbearance agreements and violated the Indiana Home Loan Practices Act (IHLPA) by continuing to assess late fees and reporting late payments to the credit bureaus even though Collins paid on time and in full as required the forbearance agreements. The Seventh Circuit found that the forbearance agreements clearly provided that all terms of the original mortgage remained in effect, including the provisions regarding the assessment of late fees, credit bureau reporting and the application of payments in the order they came due. Therefore, even if Collins had continued to pay on time in accordance with the forbearance agreements, his payments were always late because he was more than a month behind entering into the forbearance agreements and Collins never paid enough to bring the loan current. Since the loan was never current, ASC could continue to charge late fees and report the late payments to the credit bureaus without breaching the terms of the forbearance agreements. Collins also failed to prove that ASC knowingly or intentionally made a material misrepresentation or concealed information in violation of the Indiana Home Loan Practices Act because the plain language of the forbearance agreements made clear that all provisions of the original mortgage applied.

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