Pfeifer v. Countrywide Home Loans, Inc.

Summary

The California Court of Appeal considers claims arising from a pending nonjudicial foreclosure of an FHA-insured mortgage. It holds that the FHA deed of trust incorporated HUD servicing requirements, including a face-to-face interview requirement, and that borrowers could seek injunctive and declaratory relief based on noncompliance without first tendering the debt. The court rejects the borrowers’ FDCPA damages claim against the foreclosure trustee because the alleged foreclosure-related conduct did not constitute actionable debt collection under the Act.

Holdings

1. The alleged act of giving notice of a foreclosure sale as required by California's nonjudicial foreclosure statutes did not constitute debt-collection activity under the FDCPA, and the complaint therefore did not establish that ReconTrust was a debt collector subject to the asserted FDCPA claim.
2. The HUD servicing requirements referenced in the FHA deed of trust, including the face-to-face interview requirement, were conditions precedent to acceleration and foreclosure. A lender could not initiate a valid nonjudicial foreclosure before complying with those requirements, absent an applicable regulatory exception.
3. Although the borrowers had no private right of action for damages based solely on the lenders' failure to comply with HUD servicing regulations, they could invoke that noncompliance defensively to seek an injunction against a pending nonjudicial foreclosure and declaratory relief that the lenders lacked authority to proceed until satisfying the conditions precedent.
4. The borrowers were not required to allege that they had tendered or would tender the full amount due because no foreclosure sale had occurred and they alleged that the lenders lacked authority to foreclose before satisfying HUD conditions precedent.
5. The borrowers had no private right of action for damages based on the lenders' noncompliance with HUD servicing regulations.

Questions Presented

1. Whether ReconTrust's alleged recording of a notice of default and notice of trustee's sale constituted debt-collection activity by a debt collector under the FDCPA.
2. Whether HUD servicing regulations, including the face-to-face interview requirement in 24 C.F.R. § 203.604, were incorporated into the FHA deed of trust and operated as conditions precedent to acceleration and nonjudicial foreclosure.
3. Whether borrowers could defensively invoke noncompliance with the HUD servicing regulations to obtain injunctive or declaratory relief despite the absence of a private action for damages under the National Housing Act and its regulations.
4. Whether the borrowers were required to allege tender of the full secured debt when seeking to prevent a pending foreclosure sale before any sale had occurred.
5. Whether the borrowers had viable claims for damages or other relief based on the HUD servicing regulations, California foreclosure statutes, or HAMP.

Disposition

reversed_and_remanded