Creditor Faces Fair Debt Claims Under Texas Law

     SAN ANTONIO (CN) – Nationstar Mortgage is not liable under federal law for a class action that claims it mailed “hundreds or thousands” of deceptive letters to Texas homeowners, but it must still face claims under a broader state law, a federal judge ruled.

     San Antonio resident Naomi Boles said her home equity loan provider, Nationstar Mortgage, accused her of falling behind on payments.
     Boles claimed the lender then retained a collections agency, Moss Codilis LLP, which sent her a letter that stated: “If you voluntarily surrender possession of the collateral specified herein, you could still owe additional monies after the money received from the sale of the collateral is deducted from the total amount you owe.”
     In a seven-page complaint against Nationstar and Moss Codilis, Boles accused both companies of violating the Fair Debt Collection Practices Act (FDCPA) and the Texas Debt Collection Act (TDCA).
     “The letter misrepresents Texas law because Texas residents who have obtained Texas home equity loans secured by their homesteads have no personal liability for any deficiency owing on a home equity loan,”
     Boles sought certification to sue on behalf of those home equity borrowers that received the same collection letter.
     Nationstar moved to dismiss the complaint, arguing that it is not a debt collector under either statute. U.S. District Judge Xavier Rodriguez agreed that Nationstar is not liable for Moss Codilis’ letter under the FDCPA, but pointed out that the Texas law gives more leeway.
     “The [Texas] statute separately defines third-party debt collectors as any debt collector that falls within the FDCPA definition,” Rodriguez wrote. “Thus, the TDCA’s definition of a debt collector is broader than that under the FDCPA, and includes creditors seeking to collect debts originated by them.”
     Both defendants have until August 30 to respond to the motion for class certification.

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