In Grubb v. Green Tree Servicing, LLC, 2017 WL 3191521, at *8–9 (D.N.J., 2017), Judge Wolfson held that a loan servicer’s acquisition of servicing rights for an account in default triggered the FDCPA.
Post-assignment servicers and owners of debts that were in default at the time of assignment, however, are treated differently under the law. “[A]n assignee may be deemed a ‘debt collector’ if the obligation is already in default when it is assigned.” Id. In that regard, courts must determine whether the new servicer or owner of the debt falls within the FDCPA’s definition of a debt collector. In that connection, a court must inquire, as a factual matter, whether (a) “the principal purpose” of the servicer’s or owner’s business “is the collection of any debts … owed or due another,” or (b) whether the servicer or owner “regularly collects or attempts to collect … debts owed … or due another.” 15 U.S.C. § 1692a(6). Stated differently, when an assignee acquires a debt in default, that assignee would be treated as a debt collector under the FDCPA if the principal purpose of that assignee’s business is to collect debts owed another, or if that assignee regularly collects debts owed another, in the course of business. Id.  Here, Green Tree has failed to establish that it is exempt from the FDCPA. First, although Green Tree operates as a loan servicer, it does not automatically fall within the FDCPA’s definition of a creditor. Significantly, Green Tree acquired the right to service Plaintiff’s Mortgage after Plaintiff had defaulted on the loan. Def.’s Statement of Facts, ¶ 5. Indeed, Green Tree, by its own admission, concedes that “Plaintiff was delinquent under the Loan at the time that Green Tree acquired the servicing rights from Bank of America” on May 1, 2013. Id. Therefore, because the Mortgage was not current at the time of transfer, Green Tree cannot claim creditor status simply because it provided Plaintiff with various loan mitigation options, approximately eight months after the loan was transferred from Bank of America. Rather, because the loan was in default, Green Tree would only qualify as a creditor, if it does not provide debt collection services as its principal purpose of business, or regularly collect on defaulted loans.  *9 Tellingly, Green Tree fails to proffer any evidence, such as a sworn affidavit or any corporate document demonstrating the extent to which Green Tree services loans that are in default. Indeed, Green Tree’s own submission, in the form of a declaration provided by Stewart Derrick, a “Corporate Litigation Representative” at Green Tree, creates a genuine issue of material fact, preventing the resolution of this dispute on this motion. Declaration of Stewart Derrick (dated July 7, 2016) (“Derrick Dec.”), ¶ 1. Specifically, Mr. Derrick, in describing Green Tree’s business operations, states as follows: “Green Tree is in the business of servicing both performing and non-performing loans. Among other things, Green Tree collects mortgage, principal and escrow payments from the borrower and remits portions of these funds to various entities.Id. ¶ 4 (emphasis added). Mr. Derrick goes on to explain that “Green Tree [would] pay the outstanding taxes and insurance premiums from the escrowed payments.” Id. Mr. Derrick’s statements are equivocal regarding the principal purpose of Green Tree’s business. Indeed, from his description, a jury could find that Green Tree regularly provides debt collection services, or that Green Tree services3 loans in default.Oppong v. First Union Mortg. Corp., 215 Fed. Appx. 114, 119 (3d Cir. 2007) (finding that the defendant, who only serviced 89 out of 141,597 mortgages in default during a three month period, was sufficient for the purposes of finding that the defendant regularly collected on defaulted loans). Significantly, while this case stands on its own facts, this finding is consistent with numerous district court decisions, wherein Green Tree has been determined to be a debt collector. See, e.g., Ordonez v. Green Tree Servicing LLC, No. 14-1284, 2016 U.S. Dist. LEXIS 88763 (D. Nev. July 7, 2016); Napolitano v. Green Tree Servicing, LLC, No. 15-0160, 2016 U.S. Dist. LEXIS 14122 (D. Me. Feb. 4, 2016); Adu v. Green Tree Servicing, LLC, No. 15-0012, 2015 U.S. Dist. LEXIS 182947 (N.D. Ga. Oct. 28, 2015); Geary v. Green Tree Servicing, LLC, No. 14-0522, 2015 U.S. Dist. LEXIS 35059 (S.D. Ohio Mar. 20, 2015). The Court, therefore, finds that there is a genuine issue of material fact as to whether Green Tree is a creditor under the FDCPA. Summary Judgment on this basis is not appropriate.
The District Court also said that the individual inquiries regarding whether the loan was for consumer or commercial purposes did not defeat class certification.
Likewise, Defendant’s argument that it is difficult to ascertain the purpose of each potential class member’s loan is also unavailing. For one, numerous district courts have found that a class, in the context of a FDCPA action, is ascertainable, even where a question exists as to whether the loan is consumer based. Wilkerson v. Bowman, 200 F.R.D. 605, 609 (N.D. Ill. 2001) (“[T]he need to show that the transactions involved in a particular case are consumer transactions is inherent in every FDCPA class action. If that need alone precluded certification, there would be no class actions under the FDCPA.”) (internal citations omitted); Gold v. Midland Credit Mgmt., 306 F.R.D. 623, 630 (N.D. Cal. 2014) (“However, as many other courts have determined in considering class certification under the FDCPA, the mere fact that the debt collection agency does not segregate business and consumer debt accounts is not enough to thwart class certification.”); see also, Butto v. Collecto Inc., 290 F.R.D. 372, 382 (E.D.N.Y. 2013); Macarz v. Transworld Sys., Inc., 193 F.R.D. 46, 57 (D. Conn. 2000). Moreover, it appears that Defendant has already conducted this inquiry. Defendant, by its own admission, concedes that the 9,177 loans that it has identified belong to potential class members who are “New Jersey consumers.” Jones Cert., ¶ 14, Ex. A (emphasis added). Under the applicable provisions of the FDCPA, “the term ‘consumer’ means any natural person obligated or allegedly obligated to pay any debt,” and “[t]he term ‘debt’ means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes….” 15 U.S.C. 1692(a)(3), (5) (emphasis added). Thus, based on this set of definitions, the potential class members, as identified by Defendant, include individuals whose loans are for a purpose that the FDCPA was intended to govern.