Rainey v. Amerihome: FDCPA and RESPA Lessons for Mortgage Servicers

Rainey v. AmeriHome Mortgage Co., LLC - Mortgage Servicers and Affiliated Stakeholders Be Warned and Take Heed

A. Introduction

On June 10, 2026, The Honorable Raymond Jackson of the U.S. District Court for the Eastern District of Virginia, Norfolk Division, issued a ruling in Rainey v. AmeriHome Mortgage Co., LLC, No. 2:25-cv-315, on a mortgage company’s motion to dismiss claims that the company violated the Fair Debt Collection Practices Act (FDCPA) and the Real Estate Settlement Procedures Act (RESPA). Judge Jackson’s decision illustrates the significant downstream liability that can arise when a creditor fails to meet its obligations and follow regulations when communicating with a consumer. Mortgage servicers should be duly warned and heed the lessons of the Rainey case.

B. Facts and Background Information

This case involves a series of transactions and communications between the plaintiff, Donnie Rainey II (Rainey), and his mortgage servicer and subservicer, AmeriHome Mortgage Co., LLC (AmeriHome) and Cenlar FSB (“Cenlar”, and collectively with AmeriHome, the “Defendants”).

In 2012, Rainey purchased a home in Portsmouth, Virginia with a purchase money mortgage. In 2016, Rainey refinanced the mortgage into a mortgage insured by the Federal Housing Authority (FHA). In 2022, AmeriHome acquired the servicing rights for the mortgage, and Cenlar became the subservicer.

In August 2022, Rainey brought suit against the Defendants and his previous mortgage servicer, CMG Mortgage Inc. (CMG), alleging errors in the loss mitigation process following a COVID-19 forbearance. This suit resulted in a settlement agreement under which the Defendants and CMG agreed to implement an FHA Standalone Partial Claim, which created a $52,652.13 lien on the home, held by the U.S. Department of Housing. Defendants and CMG agreed to apply a $24,964.10 credit to the principal balance of the mortgage because FHA regulations require a partial claim to make a mortgage current, and the accrued arrearage on the mortgage exceeded the maximum partial claim amount. At this point, Rainey then contended he was current on the mortgage, given the Partial Claim and the credit applied to his mortgage principal.

Prior the execution of the settlement agreement, Defendants conducted an escrow analysis on July 11, 2023, which found that Rainey owed an escrow shortage of $3,241.65. Defendants gave Rainey the option to either (1) spread out the escrow payments, making his monthly payment $1,838.96; or (2) pay the shortage in full, making his monthly payment $1,568.18.

On January 18, 2024, Defendants provided Rainey with an Approval Letter for the Partial Claim, which listed his payment at $1,586.82, very close to the payment under option (2). Defendants’ Approval Letter stated that the Payment Amount was “an estimate and subject to change after an escrow analysis.” However, Defendants issued mortgage statements showing that Rainey actually owed $1,838.96. After months of communications exchanged between Rainey and Defendants, wherein Defendants attempted to collect allegedly delinquent balances from Rainey, made misrepresentations about how his payments were being applied, and Rainey sought information as to why his account was delinquent, the suit resulted.

C. Suit Claims of Plaintiff/Borrower

Rainey brought three (3) counts against the Defendants based upon their alleged misrepresentations and other acts in furtherance of their debt collection efforts. Count I alleged a violation of the FDCPA, 15 U.S.C. § 1692, et seq. against Defendant, Cenlar. Counts II and III alleged violations of RESPA, 12 U.S.C. § 2605(e) and (k) against all Defendants. Defendants filed a motion to dismiss pursuant to Rule 12(b)(6) as to all three (3) counts.

Plaintiff alleged he suffered significant damages to his credit file, was denied credit, and suffered emotional distress, as a result. Rainey sought actual and statutory damages, attorneys’ fees, litigation costs, and pre- and post-judgment interest for violations alleged by Defendant, Cenlar of the FDCPA, and all Defendants of RESPA.

D. The District Court’s Decision

(1) Cenlar’s Misrepresentations Violated § 1692(e)(2) and (10) of the FDCPA.

The Court found that Cenlar’s monthly mortgage statements and its misrepresentation regarding the application of Rainey’s March 2024 mortgage payment stated a claim for a violation of § 1692(e)(2) and (10) of the FDCPA. The Court applied the Fourth Circuit’s standard requiring a court to utilize the “vantage of the least sophisticated consumer” to determine if a debt collector’s representations violate the FDCPA. Section 1692(e)(2)(A) prohibits the false representation of “the character, amount, or legal status of any debt.” Section 1692(e)(10) prohibits the “use of any false representation of deceptive means to collect or attempt to collect any debt ....”

In the Court’s view, Rainey sufficiently alleged the monthly mortgage statements violated the FDCPA because the monthly mortgage statements were for $1,838.96, the amount Rainey would have owed had he not satisfied the escrow shortage. The Approval Letter stated that the new monthly payment amount would be $1,586.86, which was very similar to the estimated amount of $1,586.18, the amount Rainey was told he would owe if he satisfied the escrow shortage. While the Approval Letter stated the amount was subject to change based upon an escrow analysis, Cenlar increased the payment amount without conducting a new escrow analysis. The Court found that Rainey plausibly alleged that “the least sophisticated consumer would be led to believe that his payment would be similar to the estimate provided in the Approval Letter because it estimated his monthly mortgage payment after the satisfaction of his escrow shortage.”

The Court further found Rainey’s allegations supported his claim Cenlar violated the FDCPA by misrepresenting where his March 2024 mortgage payment would be applied. When Plaintiff called Defendants to find out why his account was delinquent, Defendants stated that Plaintiff’s mortgage payment for March 2024 had been applied to May 2020. However, the May 2020 payment had already been paid for by the Partial Claim and the Offset Payment applied to the mortgage principal. The Court again applied the “least sophisticated consumer” test and found that Rainey “plausibly allege[d] that Defendants issued a false or misleading statement because they misrepresented to [Rainey] that they were accepting his payment to cover his March 2024 mortgage payment but instead applied that money to a past due amount that was satisfied by the Partial Claim.” It was significant to the Court that Defendants misrepresented where the payment had been applied and they then also attempted to collect the March 2024 payment from Rainey.

The Court notes that if plaintiff successfully alleges a § 1692(e) claim, then the plaintiff cannot state a claim under § 1692(f) if the same conduct undergirds the § 1692(f) claim. Thus, Defendants’ motion to dismiss was granted as to all of Rainey’s § 1692(f) claims.

These violations, the monthly mortgage statements and the misapplication of the March, 2024 payment, led to liability for Cenlar under § 1692(e) for representing that Rainey was subject to foreclosure efforts, for representing that Defendants would remove derogatory credit reporting information, representing that Defendants could charge late fees to Rainey, and for sending dunning letters to Rainey. These two violations, resulting from misrepresentations and poor communication with Rainey, compounded into much greater potential liability for Cenlar.

(2) Defendants’ Communications Violated § 2605(e) of RESPA.

The Court found Rainey plausibly alleged that Defendants violated RESPA § 2605(e) by failing to sufficiently respond to his Qualified Written Requests (QWR). To state a claim under § 2605(e), a plaintiff must allege facts to support that:

(1) Defendant is a loan servicer;

(2) Plaintiff sent the Defendant a valid QWR;

(3) Defendant failed to adequately respond within the statutory period; and

(4) Plaintiff is entitled to damages.

A QWR is a written request for certain information relating to loan servicing from a borrower to a loan servicer. For element number three (3) in the prima facie test to establish a claim under RESPA, there are two (2) types of adequate responses to a QWR. First, the servicer may respond by making corrections in response to the buyer’s concerns and notifying the buyer. Second, a servicer may conduct a reasonable investigation and notify the buyer that no error has occurred. This notice should include a statement of the reasons for the determination that there was no error, a statement of the borrower’s right to request documents relied upon, information on how the borrower can request the documents, and contact information for further assistance from the loan servicer.

The Court found Rainey sufficiently alleged that Defendants’ responses to Rainey’s two (2) QWRs were insufficient and violated RESPA. In May 2024, Rainey sent Defendants a QWR alleging that Defendants did not apply his March and April payments properly and that he was not past due. Defendants responded by stating that they had applied those payments to the mortgage and that they held the Apri; 2024 payment in suspense. The Court found this response was deficient because Defendants did not indicate how the March 2024 payment was applied to the mortgage and failed to respond to Rainey’s concern that he was erroneously told he had past due payments.

In July 2024, Rainey sent another QWR alleging that Defendants had overcharged him, failed to apply his monthly payments, and had rejected his payments. In this letter, Rainey requested that Defendants correct these errors, remove late charges, remove negative credit reporting, and accept his payments. Defendants responded by saying no errors had occurred but then went on to say that there had been a delay in adjusting the payment amount to $1,586.82. Defendants also indicated the March 2024 payment was held in a suspense account, despite prior statements that the March 2024 payment had been applied to the May 2020 payment. Defendants also included a new escrow analysis lowering the payment amount to $1,542.94. The Court found this response violated RESPA because Defendants indicated there had been no errors but then went on to acknowledge various errors made related to the payments without making any of the corrections Rainey requested.

(3) Violation of the Real Estate Settlement Procedures Act 12 U.S.C. § 2605(k) against all Defendants.

The Court also found Rainey plausibly alleged Defendants violated RESPA§ 2605(k) by failing to respond or investigate sufficiently in response to Rainey’s QWRs. To state a claim under § 2605(k)(1)(E), a plaintiff must allege facts to support that a federally regulated mortgage servicer has “failed to comply with any other obligation found by the Bureau of Consumer Financial Protection, by regulation, to be appropriate to carry out the consumer protection purposes of this chapter.” As discussed above, Section 2605(e)(2) requires a servicer to provide a substantive response to a QWR. The Court found Rainey’s allegations that Defendants failed to conduct a reasonable investigation into the March 2024 payment’s misapplication, the delayed application of the Partial Claim, and failure to return his account to good standing plausibly stated a claim under § 2605(k)(1)(E).

E. Key Takeaways to Mortgage Lenders, Servicers, and Sub-Servicers and their Counsel

The key takeaways and best practice pointers for Virginia lawyers representing mortgage servicers are to ensure clients understand their obligations under the FDCPA and RESPA. For the FDCPA, servicers should be sure to communicate clearly with borrowers about payment obligations and how debt figures are calculated. Many of the issues and errors in the Rainey case stemmed from the Defendants’ differing estimates and their failures to communicate clearly and/or effectively with Rainey or even internally. For RESPA, servicers must understand their obligations in responding to QWRs. Servicers are required to either make corrections in response to the consumer’s request, or state that no error has been made and supply the required corresponding information to the consumer. This opinion shows how significant liability can arise from failing to adhere to these expressly stated statutory requirements. Mortgage servicers would be wise to listen and lean into, as well as to closely heed the lessons taught in the Rainey case.