Mortgage Servicer Appeals $8M CFPB Judgment To Ninth Circuit

By Evan Weinberger

A mortgage servicer facing a nearly $8 million judgment from a Consumer Financial Protection Bureau enforcement action for misleading consumers has asked an appeals court to weigh whether the federal law used to bring the case properly defines the term “deceptive.”

Nationwide Biweekly Administration, a Xenia, Ohio-based mortgage servicer and its founder, Daniel S. Lipsky, filed a notice of appeal March 15 stating that it would ask the the U.S. Court of Appeals for the Ninth Circuit to review a March 12 ruling that upheld the $7.9 million judgment and a permanent injunction.

The company had asked Judge Richard Seeborg of the U.S. District Court for the Northern District of California to overturn his November decision on a number of grounds, including its inability to repay the nearly $8 million judgment. Nationwide Biweekly also wants the Ninth Circuit to review whether the legal theories the CFPB used to bring its case were too vague.

The CFPB said in a 2015 lawsuit that the company misled consumers about the savings possible through a biweekly mortgage payoff program that Nationwide calls its “Interest Minimizer.”

Judge Seeborg said in his March 12 order that there was no basis to lift last year’s verdict against the company under the grounds that the term “deceptive” is not sufficiently defined under the Consumer Financial Protection Act, the section of the 2010 Dodd-Frank Act that created the CFPB.

“As reflected in the opinion and order, defendants’ suggestion that the statutory meaning of deceptiveness required further or different explication is not tenable,” Judge Seeborg wrote.

Nationwide Biweekly is a subsidiary of Loan Payment Administration LLC. Nationwide Biweekly is represented by Mac Murray and Shuster LLP.

The case is Cons. Fin. Protection Bureau v. Nationwide Biweekly Adm’n , N.D. Cal., No. 3:15-cv-02106, appeal filed 3/15/18 .

To contact the reporter on this story: Evan Weinberger in New York at eweinberger@bloomberglaw.com

To contact the editor responsible for this story: Michael Ferullo at mferullo@bloomberglaw.com

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