DISTRICT COURT IN GEORGIA DISMISSES MORTGAGOR’S DEBT COLLECTION CLAIMS

Last month the Macon Division of Georgia’s Middle District dismissed multiple claims filed by mortgagor, Lequita Whitfield, against servicer, Selene Finance LP (“Selene”) for alleged “unlawful and unfair debt collection practices.” Whitfield v. Selene Fin. LP, No. 5:24-CV-00153-TES, 2024 WL 4933329, at *1-2 (M.D. Ga. Dec. 2, 2024)[i]. Whitfield claimed that a “GA Final Letter” sent by Selene to Whitfield after she defaulted on her mortgage violated The Fair Debt Collections Practices Act (“FDCPA”)[ii] and Georgia’s Fair Business Practices Act (“GFBPA”)[iii].

Whitfield argued that Selene used false and deceptive means to collect a debt because the Final Letter suggested a sale was imminent, but both the mortgage and state law required Selene to take various steps before a sale could be held.[iv] As to damages, Whitfield alleged she suffered emotional distress[v] specifically complaining that the Final Letter caused her to feel “anxious and terrified” and put her at risk of suffering a heart attack.[vi] According to Whitfield, she feared Selene was going to foreclose and sell her house “at any moment” if she did not bring the loan current by the deadline in the letter.[vii]

The Middle District rejected all of Whitfield’s claims and dismissed her complaint. Firstly, the Court noted that the Final Letter repeatedly indicated that Selene would “comply with all applicable laws in accelerating and foreclosing.”[viii] The Court placed great emphasis on these compliance phrases in the Final Letter.[ix] The Court explained that “from the perspective of the least sophisticated consumer,” the letter adequately informed Whitfield that Selene “would not have foreclosed without providing what was required under the mortgage contract and state law.”[x] Therefore, Whitfield’s alleged emotional distress stemming from her fear of the eminent sale of her property was unwarranted.

Secondly, the Court found that Whitfield’s GFBPA claims also failed because the legislature restricted application of GFBPA “to the unregulated consumer marketplace.”[xi] Since loan lending and servicing were already “heavily regulated areas,” GFBPA did not apply. The Court also noted that Whitfield failed to show detrimental reliance, a required element of GFBPA claims, and failed to show how the alleged claims detrimentally impacted the “general consuming public,” another required element of the act.[xii]

Lastly, the Court explained that even if it ignored its lack of Article III jurisdiction and the lack of substantive merit in Whitfield’s claims, it was still required to dismiss because of a procedural defect in Whitfield’s case.[xiii] Namely, Whitfield failed to comply with the “notice-and-cure” provision in the Security Deed. That provision required Whitfield notify Selene in writing of any alleged breach of the Security Deed and provide a reasonable period to cure the breach before filing a lawsuit. The Court rejected Whitfield’s rebuttal that the notice-can-cure provision only applied to the lender, not the servicer. The Court dismissed Whitfield’s claims in their entirety.

[i] Future references to this case are to this citation until indicated otherwise.

[ii] This FDCPA is codified at  15 U.S.C. § 1692.

[iii] GFBPA is codified at O.C.G.A. § 10-1-390.

[iv] Whitfield, at *6.

[v] Although outside the scope of this article, in addition to ruling in Selene’s favor on the merits, the Middle District also concluded that it did not have Article III standing because Whitfield’s “emotional distress alone” was not sufficiently concrete an injury to confer standing on the Court. Whitfield, at *5.

[vi] Whitfield, at *1.

[vii] Whitfield, at *2.

[viii] Whitfield, at *6.

[ix] Whitfield, at *6-7.

[x] Whitfield, at *6-7.

[xi] Whitfield, at *7.

[xii] Whitfield, at *7-8.

[xiii] Whitfield, at *8-9. Future references to this case are to this citation.