Sandra Fiecke-Stifter inherited a home in Hutchinson, Minnesota, subject to a mortgage with MidCountry Bank. After she made partial payments in late 2021, the bank initiated a nonjudicial foreclosure in early 2022. During this process, the bank credited her payments but later refunded them, assessing late fees in the interim. Fiecke-Stifter also alleged that the bank's attorney, Taft Stettinius & Hollister LLP, failed to provide a payoff amount when requested, despite her claim that she had the funds to reinstate the loan. The district court dismissed both her TILA claim against the bank and her FDCPA claim against the attorney, ruling that the bank's actions did not violate federal consumer protection statutes. Fiecke-Stifter appealed, arguing that the refund of payments constituted a TILA violation and that the attorney's failure to provide a reinstatement amount meant the bank lacked a 'present right to possession' required by the FDCPA.
The court analyzed the TILA claim first, focusing on 15 U.S.C. § 1639f(a), which requires servicers to credit payments as of the date of receipt. The court rejected Fiecke-Stifter's argument that the statute prohibits a servicer from refunding a payment after it has been credited. Citing the plain language of the statute and the Seventh Circuit's decision in Fridman v. NYCP Mortgage Co., the court explained that the 'date of receipt' requirement is designed to prevent the unwarranted delay in crediting accounts, not to mandate that once credited, a payment cannot be returned. The court found that Fiecke-Stifter failed to allege that the bank delayed crediting the payments, and thus the TILA claim was properly dismissed. Regarding the FDCPA claim, the court examined 15 U.S.C. § 1692f(6)(A), which prohibits a security-interest enforcer from taking nonjudicial action to dispossess property without a 'present right to possession.' The court noted that the FDCPA does not define this term and relies on state law to determine the right to possession. Under Minnesota law, specifically Minn. Stat. § 580.30, a mortgagor has an absolute right to reinstate the mortgage at any time before the sale by paying the delinquent amount plus costs. The statute requires the holder to provide the reinstatement amount within three days of a request. The district court had dismissed the claim, predicting that even if the statute was violated, it would not equate to an absence of a present right to possession. However, the Eighth Circuit held that the district court did not adequately address whether the alleged violation of the reinstatement statute suspends the right to possession for FDCPA purposes. The court emphasized that the issue of whether a specific state statutory violation affects the 'present right to possession' under the FDCPA is a question of state law that must be resolved by the district court in the first instance.
The decision affirms that mortgage servicers do not violate TILA merely by refunding payments that were initially credited, provided the crediting was timely. However, it significantly impacts FDCPA litigation in the Eighth Circuit by requiring district courts to explicitly determine whether violations of state foreclosure reinstatement statutes suspend a lender's 'present right to possession.' The case is remanded to the district court to apply Minnesota law to the specific facts of the reinstatement request and the timing of the foreclosure sale. This leaves open the question of whether a failure to provide a reinstatement amount under Minnesota law automatically voids the right to proceed with foreclosure for federal FDCPA purposes.