Select Portfolio Servicing Class Action Targets Debt Collection

Debt collection company Select Portfolio Servicing is accused of sending debt collection letters that violate federal law, according to a class action lawsuit.

The complaint alleges that Select Portfolio Servicing uses “false, deceptive, misleading, unfair, and unconscionable practices in connection with their attempt to collect an alleged debt from Plaintiffs and others.”

The Select Portfolio Servicing class action lawsuit asserts that the company is a “special servicer” of residential mortgage loans, meaning it collects on defaulted or delinquent mortgages.

According to the complaint, Select Portfolio Servicing has a portfolio of over 33,000 “special servicing” loans totaling around $4.8 billion.

To collect on those debts, the Select Portfolio Servicing unfair debt collection practices lawsuit contends that the company must follow federal laws, especially the federal Fair Debt Collection Practices Act (FDCPA).

The complaint argues that the FDCPA is broadly interpreted to protect debtors, because “all consumers, even those who have mismanaged their financial affairs resulting in default on their debt, deserve the right to be treated in a reasonable and civil manner.”

The FDCPA lists several practices that are illegal, including using misleading or false statements to collect a debt, “from the standpoint of the ‘least sophisticated consumer’.”

Plaintiffs Angel Rivera and Angela Rivera claim that Select Portfolio Servicing violated the FDCPA while attempting to collect a debt from them that they did not owe. The Riveras state that they defaulted on a mortgage with Bank of America in January of 2009. The Riveras filed for bankruptcy that same year, and ultimately discharged their debt, including their mortgage, in October of 2009.

Despite the bankruptcy, the Riveras received a notice that the Bank of America mortgage was transferred to Select Portfolio Servicing for collection on July 9, 2015. Weeks later, they received a “notice of debt” from Select Portfolio Servicing on July 24, 2015, stating that late charges would accrue and “vary from day to day.”

The Select Portfolio Servicing unfair debt collection practices lawsuit alleges that those communications to the Riveras violated the FDCPA in at least two ways. First, it is illegal to attempt to collect “any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly permitted by law.” The complaint argues that the attempt to collect “late charges” that “very from day to day” is unlawful.

Second, the FDCPA requires a “notice of debt” to contain certain information for the debtor, and be mailed to the debtor within five days of first contacting the debtor about the debt. The class action lawsuit maintains Select Portfolio Servicing missed that five-day deadline in its communications with the Riveras, and likely with others.

The Riveras seek to represent two separate Classes. The first is all persons who received a notice of debt later than five days after first contact from Select Portfolio Servicing, within roughly the past year. The second is all persons who received a notice of debt from Select Portfolio Servicing which stated the amount of the debt would increase because of “late charges…that vary from day to day.” The class action requests statutory damages of up to $1,000 per violation.

This is not the only recent class action lawsuit against Select Portfolio Servicing. Less than a month ago, Select Portfolio Servicing settled a separate class action lawsuit about its force-placed insurance practices. That lawsuit alleged that Select Portfolio Servicing received illegal kickbacks from the insurance company it used when the debt collector had to obtain insurance on a debtor’s property. As reported by Topclassactions.com, the claim period for the Select Portfolio Servicing force-placed insurance coverage lawsuit is currently open.

The plaintiffs are represented by Philip D. Stern and Andrew T. Thomasson of Stern Thomasson LLP.

The Select Portfolio Servicing Unfair Debt Collection Practices Class Action Lawsuit is Angel Rivera, et al. v. Select Portfolio Servicing Inc., et al., Case No. 3:16-cv-03112, in the U.S. District Court for the District of New Jersey.