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Wednesday, July 13, 2011

Ind. Decisions - 7th Circuit decides case involving Indiana's Home Loan Practices Act (IHLPA)

In Collins, et al v. America's Servicing Company (ASC) (ND Ind., Miller), an 11-page opinion, Judge Evans writes:

Phillip Collins, one of the many Americans who purchased a house in the early 2000s, filed suit against America’s Servicing Company (ASC), claiming it violated the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. §§ 2605, et seq., as well as Indiana’s Home Loan Practices Act (IHLPA), IND. CODE § 24-9-1-1 et seq., when, after he fell behind in his payments, it assessed monthly late fees and reported the late payments on his mortgage, thus preventing him from refinancing his house and ultimately leading to foreclosure proceedings. The district judge, finding that Collins failed to prove the necessary elements to survive summary judgment, granted ASC’s motion. Collins now appeals. * * *

Collins next argues that ASC’s conduct violated the IHLPA. To prevail on this claim, he must show that ASC (1) knowingly or intentionally, (2) made a material misrepresentation, or (3) concealed material information regarding the terms or conditions of the transactions. IND. CODE § 24-9-2-7(a). The judge found that Collins failed to prove any of these elements.

Collins contends that ASC violated the IHLPA because it did not consider the forbearance agreements when assessing late fees and that he had every expectation, as long as he made the payments according to the forbearance agreements, that he would not be assessed late fees. Unfortunately for Collins, the forbearance agreements specifically provided that all terms of the original mortgage remained in full force and effect, including the provision that payments would be applied in the order they became due. Moreover, there was no grace period in either of the forbearance agreements. Therefore, as Collins continued to fail to make timely payments, ASC had the right to assess late fees and make negative credit reports under the terms of all three contracts. Accordingly, Collins cannot prove that ASC knowingly or intentionally made a material misrepresentation or concealed information, because the plain language of the forbearance agreements made clear that all the provisions of the original mortgage applied. See Baker v. America’s Mortgage Servicing, Inc., 58 F.3d 321, 328 (7th Cir. 1995) (assessment of late fees under a mortgage agreement does not violate a state’s consumer fraud statute if they are assessed in accordance with the express terms of the contract).

For these reasons, the judge properly granted ASC’s summary judgment motion with regard to both Collins’ No. 10-2962 11 breach of contract and IHLPA claims. The judgment of the district court is AFFIRMED.

Posted by Marcia Oddi on July 13, 2011 02:37 PM
Posted to Ind. (7th Cir.) Decisions