In Kevin Prescott v. Seterus, Inc., No. 15-10038, 11 Cir.; 2014 US App. LEXIS 20934, the court ruled that the defendant loan servicer, Seterus, violated § § 1692e(2) and 1692f(1) of Fair Debt Collection Practices Act (FDCPA), as well as the FCCPA (Florida Statute 559.55 et seq.) by including estimated attorney’s fees in a reinstatement quote to the borrower, Kevin Prescott. The court found that while the security agreement obligated Prescott to pay for attorney’s fees and other expenses actually incurred by the loan servicer as a result of his default nothing in the security agreement explicitly stated that Prescott must pay estimated fees and costs for future legal services.
The question before the court was whether the least sophisticated consumer would have nonetheless understood the security agreement to obligate Prescott to pay such fees; the court held the answer to be no. The court further held the Defendant was not entitled to benefit from a bona fide error defense, as estimated fees/costs were not included as a result of an error.
It is important to note that as a result of this decision, as well as two similar opinions in other jurisdictions, James L. Beard v. Ocwen Loan Servicing, LLC,Udren Law Offices, PC, and Cathy Moore, Civil No., (1:14-CV-1162, USDC, M.D. Pennsylvania) and Dale Kaymark v. Bank of America, N.A. and Udren Law Offices, P.C., (W.D. Pa. No. 2-13-CV-00419), great care should be taken to include only incurred fees and costs in reinstatement or payoff quotes. Any other practice could expose servicers and law firms to liability.
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