Consumer borrowed money from Lender. Consumer defaulted, and Lender began to foreclose, including all the usual steps: arranging for property inspection, hiring counsel, etc. After about a year,Consumer sought to reinstate the loan, and asked Lender how much it would cost. Lender responded in writing, with an itemized list of expenses to be paid, plus an estimate of additional costs (clearly marked as estimates) that Lender may incur over the next month if it continued to exercise remedies. (After all, this would not be the first time in recorded history that a borrower swore it would make good on the loan – and then didn’t.)

Consumer paid the entire amount required to reinstate the loan, including Lender’s estimated out-of-pocket expenses. A few months later, Lender refunded the estimated expenses which it didn’t incur after all. What’s the big deal? Why is this unusual? Why are you reading this, and why did we write about it? Well, in the 11th Circuit, including any estimated future charges or expenses in a reinstatement letter (or a loan payoff, as your authors can’t see any reason why this remarkable ruling wouldn’t also apply to payoff letters) violates the federal Fair Debt Collection Practices Act if your loan documents don’t clearly allow for that inclusion (and most don’t – we checked). This is the ruling in Prescott v. Seterus, Inc., 2015 U.S. App. LEXIS 20934 (11th Cir. Dec. 3, 2015).

See Bryan Cave’s Bankruptcy & Restructuring Blog for more information about this opinion, and the steps that you can and should do to address.