In the
United States Court of Appeals
For the Seventh Circuit
No. 10-2962
P HILLIP A. C OLLINS, on behalf of
himself and all others similarly situated,
Plaintiff-Appellant,
v.
A MERICA’S S ERVICING C OMPANY,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Indiana, Hammond Division.
No. 2:08-cv-00122—Robert L. Miller, Jr., Judge.
A RGUED M AY 6, 2011—D ECIDED JULY 13, 2011
Before B AUER, K ANNE, and E VANS, Circuit Judges.
E VANS, Circuit Judge. Phillip Collins, one of the many
Americans who purchased a house in the early 2000s,
filed suit against America’s Servicing Company (ASC),
claiming it violated the Real Estate Settlement Procedures
Act (RESPA), 12 U.S.C. §§ 2605, et seq., as well as Indiana’s
Home Loan Practices Act (IHLPA), IND. C ODE § 24-9-1-1
2 No. 10-2962
et seq., when, after he fell behind in his payments, it
assessed monthly late fees and reported the late pay-
ments on his mortgage, thus preventing him from re-
financing his house and ultimately leading to fore-
closure proceedings. The district judge, finding that
Collins failed to prove the necessary elements to survive
summary judgment, granted ASC’s motion. Collins now
appeals.
The facts of this case are an all-too-familiar story of our
nation’s current economic predicament. In August 2004,
Collins secured financing from WMC Mortgage Company
to purchase a home in Lowell, Indiana. After closing on
the loan, WMC assigned the servicing obligations to
ASC. Under the terms of the loan, mortgage payments
were due on the first of each month, with a 15-day grace
period after which ASC assessed a late fee. And if Collins
skipped a month, his next payment was applied to the
principal and interest for the missed month.
In the fall of 2006, Collins ran into financial troubles
and missed his September and October payments. In
November, he contacted ASC to discuss restructuring his
loan repayment. After speaking with an ASC customer
service representative named “Christina,” Collins entered
into a forbearance agreement. Under the terms of the
agreement, he would not have to make his November
payment; rather, it would be pro-rated and added to
his regular monthly payments over the next eight
months—from December 2006 through July 2007.
Collins had until the 15th of each month to make his
payments, but there was no grace period before ASC
No. 10-2962 3
would assess a late fee. The agreement also stated
that credit reporting would continue until the loan was
current.
When Collins got off the phone, he had a slightly dif-
ferent understanding of the terms; he thought that all
he had to do was make his regular monthly payment
(plus the pro-rated amount of the November payment)
by the due date for each month of the forbearance agree-
ment, and that by entering into the forbearance agree-
ment he was protecting his credit so he could refinance
his home the following August. In other words,
Collins believed that the agreement was protecting him
from piling up late fees and negative credit reporting.
Collins made payments in the amount required
under the forbearance agreement around the 15th of
each month from December through March.1 In
April, Collins received a second forbearance agree-
ment from ASC. Under this agreement, ASC agreed not
to accelerate the total loan amount if Collins made pay-
ments by the 27th of the month from April through
July. Again, there was no grace period before late fees
would be assessed. This second agreement also stated,
“credit reporting will continue to occur until the loan
is current.” Collins made payments around the 27th
1
Collins claims he made all payments during the first forbear-
ance agreement on time, but according to the documents ASC
produced (which are recreated in a chart), Collins failed to
pay his March payment before the 15th of the month.
4 No. 10-2962
from April through July.2 ASC charged Collins late fees
every month between November and July.
In August 2007, Collins sought to refinance his home
after he received a notice that his interest rate was going
to go up. But he learned that ASC had reported his
late payments to credit bureaus during the ongoing
forbearance agreement periods. He then sent a letter to
ASC referencing his rights under RESPA, asserting that
certain late fees on his account were erroneous, and
requesting that ASC remove the late fees and retract
any negative credit reporting.
ASC sent a letter to Collins, acknowledging receipt of
his request, providing some of the information he re-
quested, explaining why other information was not
included, and informing Collins that it would not
remove the late fees. 3 Consequently, Collins was unable
to refinance his mortgage, he is unable to pay the
increased monthly mortgage payments, and he now
faces a foreclosure action.
Collins filed suit against ASC alleging violations of
RESPA and IHLPA, breach of contract, and pyramiding
of late fees. The district judge first held that ASC could
not be liable under RESPA because it provided Collins
with a proper and timely response to his inquiry, as the
2
Again, Collins claims he made all payments on time during
the second forbearance agreement, but according to ASC’s
records, he made late payments in April, June, and July.
3
ASC’s response was in compliance with RESPA.
No. 10-2962 5
statute requires. The judge then—in an of exercise of
supplemental jurisdiction over the state law claims for
reasons of judicial economy and fairness—found that
Collins failed to challenge ASC’s evidence and failed to
present evidence that ASC breached any provision of the
mortgage or forbearance agreements. Accordingly, the
judge held that ASC was entitled to summary judgment
on the breach of contract claim. Finally, the judge ruled
that Collins failed to point to any evidence estab-
lishing that ASC knowingly or intentionally made
material misrepresentations or concealed material infor-
mation regarding the terms of any of the agreements, and
therefore ASC was entitled to summary judgment on the
IHLPA claim. On his appeal, Collins argues that the
judge erred in granting ASC’s summary judgment
motion because ASC breached the mortgage contract
and it violated the IHLPA. He does not challenge the
RESPA ruling on appeal.
We review the district court’s grant of summary judg-
ment de novo. Nemsky v. ConocoPhillips Co., 574 F.3d 859,
864 (7th Cir. 2009). Summary judgment is appropriate
where the admissible evidence shows that “there is no
genuine issue as to any material fact and the movant is
entitled to judgment as a matter of law.” FED. R. C IV. P.
56(a). “A genuine issue of material fact arises only if
sufficient evidence favoring the nonmoving party exists
to permit a jury to return a verdict for that party.”
Faas v. Sears, Roebuck & Co., 532 F.3d 633, 640-41 (7th
Cir. 2008) (internal quotation marks omitted). We view
the record in the light most favorable to Collins,
drawing all reasonable inferences in his favor. McCann
6 No. 10-2962
v. Iroquois Memorial Hospital, 622 F.3d 745, 752 (7th Cir.
2010).
We begin with Collins’ claim that ASC breached the
terms and conditions of the mortgage and forbearance
contracts. There are three contracts at issue in this case:
the original mortgage, the first forbearance agreement,
and the second forbearance agreement. Under the mort-
gage agreement, payments were due the first of every
month, but Collins had a 15-day grace period before
ASC assessed a late charge of 5%. Payments to ASC
were first applied to any past-due balance; if there were
remaining funds, they were applied to the current
month’s payment. Failure to cover the current month’s
payment triggered a late fee. Under the first forbearance
agreement, the November 2006 payment was spread
out over the next eight installments, and the payment
date was moved to the 15th of the month. But the agree-
ment clearly stated that there was no grace period, that
all of the provisions of the original mortgage remained
in full force and effect, and that the contractual due
date of the loan would continue to be reported to
credit bureaus on a monthly basis. Under the second
forbearance agreement, ASC agreed to move the pay-
ment date to the 27th, again with no grace period, and
made clear that “credit reporting will continue to
occur until the loan is current.”
Collins argues that ASC breached the contracts by
assessing late fees and reporting late payments even
though he paid on time and in full as the forbearance
agreements required. ASC, however, contends that it
No. 10-2962 7
did not breach the terms of the contracts because at the
time Collins called ASC and entered into the first for-
bearance agreement, he had already missed two pay-
ments—September and October 2006—and although
the agreement pro-rated the November payment and
moved the due date to the 15th of the month, it did not
change the fact that those two previous payments
were still outstanding.
This fact is devastating to Collins’ claim. The original
mortgage agreement made clear that if Collins missed a
payment, his next payment would be applied to the
“Periodic Payment in the order in which it became
due.” And the forbearance agreements clearly stated
that this provision remained in effect. Therefore, despite
having entered into the forbearance agreement, when
Collins made a payment on November 2, 2006, it was
applied to his missed September payment. And when
he made his December payment—on December 15 in
accordance with the first forbearance agreement—it was
applied to his missed October payment. Therefore, even
if Collins had continued to pay on time in accordance
with the forbearance agreements, his payments were
always “late” because he was more than a month behind
entering into the agreement, and he never paid enough
extra to dig himself out from under the missed payments
and bring the loan current. As the chart below shows, at
no point before August 2007 did Collins catch up on his
late payments. Accordingly, ASC was within its con-
tractual rights to assess late fees through September 2007.
8 No. 10-2962
Due Date Date Month Late fee
Month (grace period) Payment Payment imposed?
Received Applied to
Jan. ‘06 1-1 (15 days) 1-20-06 Jan. ‘06 yes
Feb. ‘06 2-1 (15 days) 2-7-06 Feb. ‘06 no
M ar. ‘06 3-1 (15 days) 3-6-06 M ar. ‘06 no
A pr. ‘06 4-1 (15 days) 4-6-06 A pr. ‘06 no
M ay ‘06 5-1 (15 days) 5-10-06 M ay ‘06 no
June ‘06 6-1 (15 days)
July ‘06 7-1 (15 days) 7-21-06 June ‘06 yes
A ug. ‘06 8-1 (15 days) 8-4-06 July ‘06 yes
8-16-06 A ug. ‘06 yes
Sept. ‘06 9-1 (15 days)
Oct. ‘06 10-1 (15 days)
N ov. ‘06* pro-rated 11-2-06 Sept. ‘06 yes
D ec. ‘06* 12-15 12-15-06 Oct. ‘06 yes
Jan. ‘07* 1-15 1-12-07 N ov. ‘06 yes
Feb. ‘07* 2-15 2-15-07 Dec. ‘06 yes
M ar. ‘07* 3-15 3-16-07 Jan. ‘07 yes
A pr. ‘07* 4-27 4-30-07 Feb. ‘07 yes
M ay ‘07* 5-27 5-25-07 M ar. ‘07 yes
June ‘07* 6-27 6-28-07 A pr. ‘07 yes
No. 10-2962 9
July ‘07* 7-27 7-30-07 M ay ‘07 yes
A ug. ‘07 8-1(15) 8-30-07 June ‘07 yes
Sept. ‘07 9-1(15) 9-17-07 July ‘07 yes
* Forbearance agreements in effect.
Collins argues that when he set up the first forbearance
agreement in November 2006, he was told that if he
made payments in accordance with the new contract, no
late fees would be assessed and no negative credit
reports would be made. And Collins is probably cor-
rect—when he got off the phone with ASC, that was
likely (and reasonably) his understanding. But, as ASC
notes, under the Indiana Lenders Liability Act, Collins
cannot make a breach of contract claim based on
alleged oral modifications to loan agreements. IND. C ODE
§ 26-2-9-4(b). And as we have already found, the
language of the contracts is clear—ASC had the right
at all times, under the original contract and both forbear-
ance agreements, to charge Collins late fees and report
his late payments. Moreover, looking at the chart,
Collins made late payments even after the forbearance
agreements were in effect, failing to pay by the
hard time deadline in March, April, June, and July. There-
fore, the judge correctly ruled that Collins’ breach of
contract claim cannot survive ASC’s summary judgment
motion.
Collins next argues that ASC’s conduct violated the
IHLPA. To prevail on this claim, he must show that
ASC (1) knowingly or intentionally, (2) made a material
10 No. 10-2962
misrepresentation, or (3) concealed material information
regarding the terms or conditions of the transactions.
IND. C ODE § 24-9-2-7(a). The judge found that Collins
failed to prove any of these elements.
Collins contends that ASC violated the IHLPA because
it did not consider the forbearance agreements when
assessing late fees and that he had every expectation,
as long as he made the payments according to the for-
bearance agreements, that he would not be assessed
late fees. Unfortunately for Collins, the forbearance agree-
ments specifically provided that all terms of the original
mortgage remained in full force and effect, including
the provision that payments would be applied in the
order they became due. Moreover, there was no grace
period in either of the forbearance agreements. Therefore,
as Collins continued to fail to make timely payments,
ASC had the right to assess late fees and make negative
credit reports under the terms of all three contracts.
Accordingly, Collins cannot prove that ASC knowingly
or intentionally made a material misrepresentation or
concealed information, because the plain language of the
forbearance agreements made clear that all the provisions
of the original mortgage applied. See Baker v. America’s
Mortgage Servicing, Inc., 58 F.3d 321, 328 (7th Cir. 1995)
(assessment of late fees under a mortgage agreement does
not violate a state’s consumer fraud statute if they are
assessed in accordance with the express terms of the
contract).
For these reasons, the judge properly granted ASC’s
summary judgment motion with regard to both Collins’
No. 10-2962 11
breach of contract and IHLPA claims. The judgment of
the district court is A FFIRMED.
7-13-11