March 28, 2014
The court in deciding HSBC Bank USA v. Teagarden, 2013-Ohio-5816 (Ohio Ct. App., Trumbull County, 2013) reversed the ruling for summary judgment in favor of HSBC Bank.
Defendants-appellants, [Teagardens], appealed two judgment entries from the lower court, dismissing the Teagardens’ counterclaims and granting summary judgment in favor of plaintiff-appellee, HSBC Bank USA, National Trust Company.
The first issue before this court was whether the original lender may be a debt collector for the purposes of the Fair Debt Collection Practices Act (FDCPA) when the debt is assigned to a third party. The remaining issues were: whether the one-year statute of limitations for FDCPA actions precluded claims based on false affidavits filed in a prior foreclosure action; whether there is justifiable reliance on false affidavits to support a fraudulent misrepresentation claim when the veracity of the affidavits were contested; whether the failure to comply with federal mortgage servicing guidelines may sustain a cause of action for breach of contract; whether the term “branch office” as used in federal regulations refers only to offices with qualified mortgage servicing personnel; and whether actual damages are a necessary element to state a valid claim for a violation of the Real Estate Settlement Procedures Act (RESPA).
This court found that the original lender of a mortgage debt was not a debt collector under 15 U.S.C.S. § 1692a(6) or liable under the FDCPA, even though it had transferred the debt to a transferee and subsequently attempted to collect the debt on behalf of the transferee.
The court noted that the original lender consistently dealt with the debtors in entities using its name and the debtors did not allege that they believed these entities were third parties, independent of the original lenders. The court found that the debtors’ claim that the original lender misrepresented that it was the holder of the loan when it was the mortgage servicer did not raise a reasonable inference that it used a false name to create the impression that another party was attempting to collect the debt. The also found that the debtors’ claim against the transferee was based on actions that were time-barred under 15 U.S.C.S. § 1692k(d); the claims based on the underlying fees and costs were also time-barred.
Accordingly, this court affirmed the lower court’s dismissal of the Teagardens’ counterclaims. This court also reversed the lower court’s entry of summary judgment in favor of HSBC Bank on the note.