On October 4, 2018, the New Jersey Appellate Division held that a mortgage loan servicer’s failure to include the name and address of the lender in a Notice of Intention to Foreclose (“NOI”), which is a violation under the Fair Foreclosure Act (“FFA”), could serve as the basis for suit under New Jersey’s Truth-In-Consumer Contract, Warranty, and Notice Act (“TCCWNA”). Wright v. Bank of America, N.A., 2018 WL 4779028. The Wright decision re-emphasizes the need for exercising due care and diligence in preparing and servicing NOIs or other writings to a borrower.
In New Jersey, it is violative of TCCWNA to provide a consumer with a contract, warranty, or other writing containing a provision that “violates any clearly established legal right of a consumer.” Aggrieved parties under TCCWNA can obtain civil penalties of not less than $100.00 or actual damages, or both. Earlier this year, the New Jersey Supreme Court narrowed the interpretation of an “aggrieved party” under the Act when it held that such a claimant must not only show a violation of an established legal right, but must also demonstrate that the violation resulted in a monetary loss or other harm to the consumer in order to be classified as aggrieved. Spade v. Select Comfort Corp., 232 N.J. 504, 521 (2018). In Spade, while the court determined that there were violations of New Jersey administrative code provisions contained within a consumer furniture sales and servicing contract in accordance with a TCCWNA analysis, because it found no corresponding monetary damages or other harm to the plaintiff, it concluded that the plaintiff was not an aggrieved party. As a result, statutory remedies were unavailable to the plaintiff.
In the Wright case, borrower Charles Wright alleged damages stemming from the service of multiple erroneous NOIs upon him by BAC Home Loans Servicing, LP (“BAC”). BAC was the loan servicing agent on behalf of the lender, Bank of America, N.A. (“BofA”). BAC failed to identify BOA’s name and address as the lender within the NOIs. This failure is a violation of the FFA in accordance with the New Jersey Supreme Court’s ruling in U.S. Bank Nat’l Ass’n v. Guillaume, 209 N.J. 449, 474-75 (2012). In Guillaume, the court held that a lender or its agent in any notice of intention to foreclose, must accurately set forth the required information under the FFA and that only providing the name and address of the lender’s servicing agent, but not the lender, does not satisfy the FFA. Guillaume provided for a possible cure for defective NOIs in the form of reissuance.
While the borrower in Wright neither contested the validity of any information contained in the NOIs nor asserted that the NOIs contained false or misleading information, he argued that BAC’s failure to supply BofA’s name and address in the NOIs was a clear violation of an established right under the FFA. In turn, this FFA violation constituted a violation of the TCCWNA. The lower court dismissed the complaint holding that an alleged FFA violation cannot serve as the basis of a claim under the TCCWNA.
On appeal, the New Jersey Appellate Division reversed the lower court. The Appellate Division reiterated the elements of a cause of action under TCCWNA, and set forth that no creditor shall in the course of his business provide any notice which violates any established legal right of a consumer as established by state or federal law. The court found that the servicing agent’s failure to include all required information under the FFA can support a TCCWNA claim because of the expansive language crafted by the legislature in drafting the Act to broadly define consumers and potential consumers. In addressing harm or damages to the plaintiff, the court stated that inasmuch as foreclosure proceedings were never initiated by the defendants; that the violative actions by the servicer were limited to the NOIs, the Court could not make a determination of whether or not Wright qualified as an aggrieved consumer. Rather than denying the appeal under a Spade analysis, the appellate court remanded the case to the lower court to allow the plaintiff an opportunity to amend his complaint to more clearly attempt to demonstrate damages.
While it remains to be seen whether the plaintiff in Wright will ultimately be able to establish monetary damages or other harm as a result of the loan servicer’s actions, the decision serves as a strong reminder to lenders and their servicing agents about the importance and necessity of ensuring that written communications to borrowers, and here specifically, NOIs under New Jersey’s FFA, are carefully drafted and reviewed for compliance with existing law. Despite the fact that the Guillaume decision provides for a potential cure of NOI errors, the Wright decision indicates that the act of simply issuing a faulty NOI can nevertheless lead to liability under TCCWNA in New Jersey.
ABOUT THE AUTHOR: Alan M. Minato, Esq. is the Managing Partner of BP Fisher Law Group, LLP in Cherry Hill, New Jersey. He has approximately twenty-five (25) years of experience representing lenders and servicers in residential and commercial foreclosure, bankruptcy, and creditor’s rights matters in New Jersey and Pennsylvania. If you have any questions or concerns about the Wright decision, the FFA, or the TCCWNA, please feel free to contact Mr. Minato.