SPS Violated FDCPA and FCRA by Resurrecting Debt Plaintiffs were Fully Released From

Case 4:15-cv-00252-JAJ-HCA Document 155 Filed 05/15/17 Page 1 of 3
IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF
IOWA CENTRAL DIVISION
MICHAEL BALLANGER and Civil Action No. 4:15-cv-00252-JAJHCA

KRISTINE S. BALLANGER,
Judge: John A. Jarvey
Magistrate Judge: Helen C. Adams
Plaintiffs,
vs.
PLAINTIFFS’ MOTION FOR
OCWEN LOAN SERVICING, LLC,
PARTIAL SUMMARY JUDGMENT
SELECT PORTFOLIO SERVICING,
INC., EQUIFAX INFORMATION
SERVICES,LLC, and TRANSUNION,
LLC,
Defendants.
The above named Plaintiffs, Michael and Kristine Ballanger, (hereinafter
“Plaintiffs”) will move the Court pursuant to Rule 56(a) of the Federal Rules of Civil
Procedure for an Order granting Partial Summary Judgment in Plaintiffs’ favor on the
grounds there is no genuine issue of material fact. Specifically, Plaintiffs seek partial
summary judgment against Defendant Select Portfolio Servicing, Inc. (hereinafter “SPS”)
and this Court can rule as a matter of law (1) that no liability for the underlying Note
existed in 2014, (2) that SPS violated several sections of the Fair Debt Collection Practices
Act, by falsely representing the character, amount, and legal status of its debt; threatening
to take action that it could not legally take; communicating credit information which it
knew to be false, including the failure to communicate that a disputed debt is disputed,
using unfair or unconscionable means to attempt to collect a debt; and attempting to

collect an amount not authorized by the agreement creating the debt or permitted by law,
(3) that SPS violated the Fair Credit Reporting Act by failing to reasonably investigate
Plaintiffs’ disputes of the SPS debt, continued to report the debt as belonging to them,
having a balance owing and that was severely past due, refused to indicate the debt was
disputed as required by federal law and (4) that SPS willfully failed to comply with the
Fair Credit Reporting Act or its actions were reckless or committed with reckless disregard
of the law thus, entitling Plaintiffs to pursue an award of punitive damages. Plaintiffs’
motion is for liability only, leaving the amount of damages to be ultimately determined
by the jury.
This Motion shall be based upon all files, records, and proceedings herein,
including the Brief in Support and accompanying Appendix, and all records in the
Court’s file.
Dated: May 15, 2017 Respectfully submitted,
/s/ Samuel Z. Marks
Samuel Z. Marks IS9998821

Marks Law Firm, P.C.
4225 University Avenue
Des Moines, IA 50311
(515) 276-7211
(515) 276-6280
sam@markslawdm.com
Thomas J. Lyons, Jr., Esq.

MN Attorney I.D. #: 0249646
367 Commerce Ct.
Vadnais Heights, MN 55127

Telephone: (651)770-9707
Facsimile: (651)704-0907
tommy@consumerjusticecenter.com
(Admitted Pro Hac Vice)
ATTORNEYS FOR PLAINTIFFS

Case 4:15-cv-00252-JAJ-HCA Document 155-1 Filed 05/15/17 Page 1 of 37


Plaintiffs,
vs.
PLAINTIFFS’ BRIEF IN SUPPORT OF
OCWEN LOAN SERVICING, LLC,
THEIR MOTION FOR PARTIAL
SELECT PORTFOLIO SERVICING,
SUMMARY JUDGMENT AND
STATEMENT OF UNDISPUTED
MATERIAL FACTS
LLC,
Defendants.
INTRODUCTION
Plaintiffs Michael and Kristine Ballanger, (hereinafter “Plaintiffs”) commenced this
action against all the above-named Defendants after Defendant Select Portfolio Servicing,
Inc. (hereinafter “SPS”) wrongfully resurrected a debt that Plaintiffs had been fully released
from after they entered into an agreed-upon and fully finalized Deed In Lieu of foreclosure
with the previous mortgage servicer in October 2013. This wrongful resurrection by SPS
occurred almost a full year later in August 2014 when Plaintiffs’ mortgage loan was
transferred to SPS for servicing. Despite being fully aware of this finalized Deed In Lieu of
Foreclosure, having possession of it and the recorded Satisfaction of the underlying
Mortgage and told by legal counsel that Plaintiffs’ liability for the debt was fully
extinguished pursuant to Iowa law, SPS commenced collection activities against Plaintiffs
demanding full payment in an amount in excess of $292,000 and reporting to the credit
reporting agencies Experian, Equifax, and TransUnion (hereinafter “CRAs”) that Plaintiffs
owed this amount and were in arrears in excess of $67,000. Unfortunately, the unjustifiable
collection attempts and wrongful credit reporting continued despite Plaintiffs and their
attorneys disputing the alleged debt in excess of 25 times. Incredulously, SPS even verified
the amount due and arrearages were supposedly accurate when Plaintiffs formally
disputed it with the CRAs entirely ignoring and refusing to even consider the presented
executed Deed In Lieu of Foreclosure and recorded Satisfaction Of Mortgage. In this
respect, SPS failed to reasonably investigate Plaintiffs’ disputes and completely ignored the
documents which confirmed no liability under the debt existed. As a direct result of SPS’
violations of its reporting and investigatory duties, Plaintiffs were denied credit numerous
times (including multiple attempts for the purchase of a new home), assessed higher
finance charges for subsequent motor vehicle purchases and suffered severe emotional
distress.
Defendant SPS is the only remaining Defendant in this action as Plaintiffs were able
to reach a settlement with the other Defendants. Plaintiffs’ asserted causes of action against
SPS include claims for several violations of the Fair Debt Collection Practices Act
(hereinafter “FDCPA”), violations of the Fair Credit Reporting Act (hereinafter “FCRA”)
(particularly 15 U.S.C. §1681s-2(b)) and credit defamation1.

1
SPS has filed its own motion for summary judgment asserting it is entitled to judgment
as a matter of law as Plaintiffs erroneously identified the incorrect loan in their Amended
Complaint. However, as the Court can readily recognize this argument is nothing more
Plaintiffs are now before this Court seeking Partial Summary Judgment for several
of their claims. Based on the evidence submitted, this Court can rule as a matter of law
(1) that no liability for the underlying Note existed in 2014, (2) that SPS violated several
sections of the FDCPA including falsely representing the character, amount, and legal
status of its debt; threatening to take action that it could not legally take; communicating
credit information which it knew to be false, including the failure to communicate that a
disputed debt is disputed, using unfair or unconscionable means to attempt to collect a
debt; and attempting to collect an amount not authorized by the agreement creating the
debt or permitted by law, (3) that SPS violated the FCRA by failing to reasonably
investigate their disputes of this debt, continued to report the debt as belonging to them
and refused to indicate the debt was disputed as required by federal law and (4) that SPS
willfully failed to comply with the FCRA or its actions were reckless or committed with
reckless disregard of the law. Plaintiffs’ motion is for liability only, leaving the amount of
damages to be ultimately determined by the jury.
Also incredulously, SPS engaged in similar conduct even after being sanctioned
by the Federal Trade Commission (hereinafter “FTC”) in 2004. (App. 434-467).
Notwithstanding being previously sanctioned SPS continued to engage in the offensive

than a red herring. Plaintiffs’ actual claims are squarely founded upon SPS’ conduct and
pled this way accordingly. (ECF No. 92 at ¶¶ 94-95, 97-98, 119 -122 and 124-26). In this
respect, Plaintiffs did not assert SPS wrongfully commenced collection activities or
reported the 1999 loan to the CRAs. Their claims address the actual violations and
conduct undertaken by SPS with regard to the correct loan. Conduct that is not disputed.
Plaintiffs will respond to SPS’ argument in greater detail with its opposition to SPS’
motion, but the point remains: Plaintiffs have pled valid causes of action which this Court
can rule upon at this time. SPS’ counsel confirmed this during Plaintiff Michael
Ballanger’s deposition. (ECF No. 136-3 at pg. 6, depo pg. 10, lines 11-18).]
conduct which led to further being ordered and enjoined in 2007 from continuing to do
so. Based on this and Plaintiffs’ submitted evidence demonstrating SPS engaged in the
exact same prohibited and sanctioned conduct in the case at bar, this Court can find as a
matter of law that SPS’ violations of the FCRA were reckless.
The FCRA provides for the imposition of punitive damages when there has been a
willful violation of the Act’s provisions. 15 U.S.C. § 1681n. Since the U.S. Supreme
Court’s decision in Safeco Insurance Co. of America v. Burr, 551 U.S. 47 (2007),
willfulness has included not only knowing and intentional violations, but also those
considered “reckless” or “in reckless disregard”. The current record before the Court
supports either basis, intentional or reckless disregard.
This motion seeks to ensure that Plaintiffs may present their claims for damages,
including punitive damages, to the jury at the trial in this matter. The evidence establishes
that Plaintiffs have a sufficient factual basis for the imposition of punitive damages.
Because there are no genuine issues of material fact regarding SPS’ violations of the
FDCPA and FRCA and its knowing violation and/or reckless disregard of Plaintiffs’
rights, an Order granting Plaintiffs’ motion for partial summary judgment is warranted.
Plaintiffs should be permitted to present their claims for damages, including punitive
damages related to the FCRA violations, to the jury. In support thereof, Plaintiffs submit
the following.
STATEMENT OF UNDISPUTED MATERIAL FACTS
In 2006 Plaintiffs refinanced their home located in Des Moines, Iowa and executed
an Adjustable Rate Note dated August 25, 2006 (App. 264-270). This Note was secured
by a mortgage of the same date which was filed for record in the office of the Polk County
Recorder on September 1, 2006. (App. 264-270).
In 2013, Plaintiffs’ mortgage loan was being serviced by Defendant Ocwen Loan
Servicing, LLC (hereinafter “Ocwen”). At that time, Plaintiff Michael Ballanger, lost his
job which caused Plaintiffs to fall behind on their payments. The loan was accelerated
and full and immediate payment was demanded with the current unpaid principal balance
being $214,817.45. (App. 309). Ocwen retained the law firm of South & Associates, P.C.
(hereinafter “South”) to handle the negotiation of a non-judiciary foreclosure with
Plaintiffs. (App. 309).
This was accomplished by Plaintiffs and Ocwen entering into a formal Deed-In-
Lieu of Foreclosure Agreement whereby the parties agreed Plaintiffs would execute a
Quit Claim Deed In Lieu of Foreclosure in favor of U.S. Bank National Association, as
Trustee for ABCF 2006-HE1 Trust. (App. 257-261). This Agreement specifically
provided:
…and in consideration of such conveyance, the Borrower(s) will receive a

full and complete release of liability on the Note secured by the Mortgage.
(App. 257-261).
The actual Quitclaim Deed In Lieu of Foreclosure also provided:
This deed is an absolute conveyance…., the consideration for which is the

release of the grantor from all of personal liability under the mortgage note.
(App. 257-261).
Plaintiffs were further requested to execute an Estoppel Affidavit which provided
in pertinent part:
The Grantors made, executed and delivered a deed to U.S. Bank National
Association, as Trustee for ABFC 2006-HE1 Trust (”Grantee”) dated of
even date with the Affidavit, conveying the Property to the Grantee. The
Grantors acknowledge, agree and certify that the deed was an absolute
conveyance of the Grantors’ rights, title and interest in and to the real
estate….. and in consideration of the premises hereof and in consideration of
such conveyance, the Grantors have received full and complete release of
personal liability on the Note secured by the Mortgage.
(App. 262-263).
As part of the negotiated Deed In Lieu of Foreclosure, Plaintiffs were obligated to
do three things: (1) execute and return the QuitClaim in Lieu of Foreclosure documents,
(2) vacate their home by the end of October 2013, and (3) turn over their keys to Ocwen.
In return, it was agreed Plaintiffs would receive $5,000.00 for moving expenses, be fully
released from the underlying note and Ocwen would file a Satisfaction of Mortgage once
it confirmed Plaintiffs had conveyed clear title to it. (App. 257-261). It is undisputed
Plaintiffs executed all three documents as requested by Ocwen. This was completed on
October 11, 2013. (App. 257-261) South received them and forwarded them to Ocwen on
October 15, 2013 along with a Satisfaction of Mortgage requesting that Ocwen execute
it2.
Plaintiffs also vacated their home by the end of October 2013 and turned their
keys over to Ocwen. Ocwen changed the locks and began to market the home
immediately. As far as Plaintiffs were concerned (and as is supported by Ocwen’s

2
South and the mortgage servicers routinely refer to the Satisfaction Of Mortgage as a
“release.” However, since the release from liability from the Note is very relevant to this
lawsuit, Plaintiffs will continue to refer to the Satisfaction Of Mortgage as the
Satisfaction Of Mortgage, but wanted to make the Court aware of common verbiage used
in the industry. (App. 271).
documents), they had fully complied with everything required of them, were now
formally released from the Note and free to move on with their lives. This they did, never
being alerted that anything was amiss with the Deed In Lieu of Foreclosure recording
process. (App. 1-37).
On December 3, 2013 Ocwen executed a Satisfaction of Mortgage which was then
recorded in the Office of the Polk County Recorder on December 18, 2013. (App. 271).
However for reasons that have never presented themselves, the executed Quit Claim
Deed In Lieu of Foreclosure was never filed with the Polk County Recorder’s Office.
In August 2014 Ocwen sold a pool of mortgage loans to SPS for servicing which
included Plaintiffs’ loan. (App. 56-110). SPS’ initial onboarding of these pooled loans
was done electronically. (App. 56-110). SPS admitted that its policies required that 100%
of ARM (adjustable rate) loans be reviewed by a person to ensure accuracy. (App. 56-
110). This review was to include a review of all hard copy documents provided by the
previous servicer. (App. 56-110). The Data Analysts were to analyze data for missing,
illogical or invalid data. (App. 56-110; and App. 134-154). If any “data discrepancies”
were detected, the Data Analyst was to work with the prior servicer to resolve it and
escalate or flag any concerning inconsistencies. (App. 56-110; and App. 134-154).SPS
has not produced one piece of evidence confirming any manual review was conducted of
Plaintiffs’ transferred ARM loan or that any illogical or inconsistent data was escalated or
flagged during the boarding process. (App. 56-110; and App. 134-154). Rather, it was
boarded as a valid, delinquent outstanding loan and Plaintiffs’ nightmare ensued. (App.
56-110; App. 131-154; and App. 280-283 – Filed Under Seal). Relevant subsequent
interactions between the parties include the following:
Contact History (App. 236-256)
Date Event
August 25, 2014 SPS forwards what it considers its “Hello Letter” to Plaintiffs at
their former (and long vacated) address advising it has taken over
the servicing rights of Plaintiffs’ loan and that all further
payments should be made to it. (App. 285-287).
September 9, 2014 Plaintiff Michael Ballanger contacts SPS after receiving notice of
the transfer of servicing rights and informed SPS of the Deed In
Lieu of Foreclosure that was finalized a year prior and that they
were released from the underlying note. SPS advises him it will
review the matter. (App. 56-110).
SPS System note is also entered “Prior Servicer Information

indicates the customer was in a Pending DIL3.”
September 10, 2014 Plaintiff Michael Ballanger contacts SPS to inquire as to the
status of its review of the Deed In Lieu of Foreclosure again
advising the matter was closed a year ago. (App. 56-110).
On this same day, SPS forwards correspondence to Plaintiffs at

their former (and long vacated) address advising it has identified
that Plaintiffs are in default and want to work to resolve the
delinquency and avoid foreclosure. One of the listed options was
“Deeds in Lieu of Foreclosure: With a Deed In Lieu, the title is
voluntarily transferred to the owner or servicer of account in order
to avoid a foreclosure sale and satisfy all or a portion of the
mortgage account. (App. 288-289).
advising the matter was closed a year ago. He was advised of the

3
SPS frequently uses the acronym DIL to denote Deed In Lieu.
cure amount and told SPS was continuing its review of the matter.
Representative entered notes “EXTENDED PROBLEMS” with a
start day of the same day. (emphasis on original). (App.290-291).
A different SPS representative enters another note “Documents

found in Ocwen imaging and sent to SPS Imaging
- Warranty Deed
- DIL Agreement
- Satisfaction Of Mortgage
On this same day, SPS also forwards correspondence to Plaintiffs
at their former (and long vacated) address entitled “Validation of
Debt Notice” advising it was collecting the debt on behalf of U.S.
Bank “caused by your default” advising its records showed a
balance owed of $292,255.88. The letter further provided:
Federal law gives you thirty (30) days after you receive this letter
to dispute the validity of the debt, or any party of it. If you don’t
dispute it within that period, we will assume that it is valid.
SPS also attempted to contact Plaintiffs by phone.
advising the matter was closed a year ago. He was again advised
of the cure amount and asked for payment. He was further told to
provide loss mitigation documents. Plaintiffs responded the Deed
In Lieu of Foreclosure was already approved and they no longer
have anything to do with the home. (App. 56-110).
September 16, 2014 SPS attempted to contact Plaintiffs by phone.
September 17, 2014 Plaintiff Michael Ballanger contacts SPS (twice) to inquire as to
the status of its review of the Deed In Lieu of Foreclosure again
advising the matter was closed a year ago. He further advised he
has not lived in the home for a year and Ocwen changed the locks
and marketed the home for sale. He further provided contact
information for South. (App. 56-110).
On this same day SPS also forwards correspondence to Plaintiffs

at their former (and long vacated) address advising it: is unable to

complete our review of your request for a Deed In Lieu because
we have not received all of the documentation we previously
requested. If we do not receive the required documents by
10/02/2014 we will consider your request to be withdrawn. (App.
292-295).
September 18, 2014 SPS rep contacts Lori Wolf at South who confirms Plaintiffs
returned all documents required of them and that Ocwen had not
cooperated with their attempts to properly record the documents.
(App. 56-110).
September 25, 2014 Plaintiff Michael Ballanger contacts SPS (five times) to inquire as
to the status of its review of the Deed In Lieu of Foreclosure again
advising the matter was closed a year ago and “this loan was
satisfied.” He again advised Ocwen changed the locks and
marketed the home for sale. He was again advised of the cure
amount and asked for payment. (App. 56-110).
advising the matter was closed a year ago. SPS’ contact notes
indicate Plaintiff Michael Ballanger said he “just wants
information to reflect correctly and does not want to receive any
more correspondence.” (App. 56-110).
On this same day SPS forwards correspondence to Plaintiffs at

their current address advising it: is currently reviewing your
request for options to resolve the delinquency on this account.
We apologize that this has taken more time than originally
anticipated. We remain committed to assisting you during your
current financial hardship. We expect to provide a response to
you within the next fifteen (15) business days. (App. 296).
On this same day SPS forwards another correspondence to

Plaintiffs at their current address advising it: received your recent
telephone inquiry. We will review your request and, if you have
alleged an error in servicing, we will provide you with a response
and resolution regarding this matter within 30 days of your

inquiry. (App. 297).
SPS finally opens up a formal dispute indicating “CSAR is stating

the DIL was done prior to coming to us.4” As indicated above,
Plaintiff Michael Ballanger had called in disputing the debt 12
times over the course that month before this dispute was formally
opened. (App. 56-110).
of the cure amount and asked for payment. SPS advised Deed In
Lieu of Foreclosure review was pending and “to allow time for it.”
(App. 56-110).
advising the matter was closed a year ago. Told still waiting on
Ocwen to see if they will send a new document pending research.
(App. 56-110).
October 2, 2014 Plaintiff Michael Ballanger contacts SPS to inquire as to the

of the cure amount and asked for payment. Told still reviewing
the Deed In Lieu of Foreclosure with Ocwen. (App. 56-110).

their current address advising it: is unable to complete our review
of your request for a Deed In Lieu because we have not received
all of the documentation we previously requested. If we don’t
receive the required documents by 10/17/2014 we will consider
your request to be withdrawn. (App. 298-301).

4
SPS confirmed the acronym CSAR is used to denote a telephonic dispute made by the
customer.

advising the matter was closed a year ago. Told it was
specifically being researched and “still showing in the works.”
(App. 56-110).
October 7, 2014 SPS rep calls both Plaintiffs’ cellular telephones.
Plaintiff Michael Ballanger returned SPS’s call and was told the
status of its review of the Deed In Lieu of Foreclosure was there
was still a dispute with the prior servicer and SPS was still
seeking further review. He was advised of the total past due
amount, cure amount and asked for payment. (App. 56-110).

their current address advising it: received your recent phone call
during which you raised issues regarding the servicing of this
account. We would like to discuss the results of our research with
you; however, we have been unable to contact you by telephone.
(App. 302).

advising the matter was closed a year ago. He was advised of the
total past due amount, cure amount and asked for payment. (App.
56-110).

their current address advising it “has reviewed your request for
workout assistance on the above referenced account. We are
unable to approve your request for assistance involving a Deed In
Lieu of Foreclosure. We determined that we are unable to assist
you in this proposed arrangement because we have not received a
response from you.” It further advised “We are now returning
your loan to normal collection activity, which could include
referral to foreclosure and a foreclosure sale.” (App. 303-305).
October 8, 2014 After failing to convince SPS there was no longer any money
owed on the loan, Plaintiffs retained Brett Osborn (hereinafter
“Attorney Osborn”) as legal counsel to help resolve title and

collection issues between the Plaintiffs, Ocwen, and SPS. (App.
306-308).
On this date Attorney Osborn sent correspondence to SPS

advising he represented the Plaintiffs and disputed the validity of
the debt. Further, Attorney Osborn advised SPS its September 11,
2014 letter violated the FDCPA as Plaintiffs entered into a non-
judicial foreclosure agreement and delivered it on October 11,
2013. He further advised:
This Deed was accepted by U.S. Bank … as confirmed by its

servicer Ocwen.
*****
Upon receipt of the Deed In Lieu of Foreclosure under Iowa law,
the debt was cancelled. Any attempt to collect the debt existing
prior to the Deed In Lieu of Foreclosure is a violation of the Iowa
Consumer Credit Code and the Fair Debt Collection Practices
Act. You are liable for damages pursuant to the Fair Debt
Collection Practices Act and Iowa Consumer Credit Code.
Attorney Osborn further advised his clients dispute the validity of

the debt and that SPS cease and desist communicating with
Plaintiffs. (App. 306-308).
advising the matter was closed a year ago. Again advised Ocwen
changed the locks and marketed the home for sale. (App. 56-110).
October 14, 2014 SPS receives Attorney Osborn’s October 8, 2014 correspondence.
(App. 56-110).
October 15, 2014 SPS enters note “written cease and desist processed” and that no
further calls were to be made. (App. 56-110).
October 16, 2014 Lori Wolf, legal assistant from South forwarded correspondence
to Plaintiffs confirming they executed a Deed In Lieu of
Foreclosure in 2013 and “due to an error on the lender’s part, this
Deed In Lieu was not able to have been recorded.” She further
confirmed she had been in contact with SPS who requested that
Plaintiffs execute the enclosed quit claim deed.(App. 309).
SPS’ notes confirmed it was again provided with a copy of the

Deed In Lieu of Foreclosure Agreement. (App. 236-256).
October 21, 2014 SPS notes reflect its resolution of Plaintiffs second CSAR Dispute
noting the previous Deed was not recorded, it acquired the loan
and “no other adjustments needed as of now.” (App. 56-110).
SPS also made two telephone calls to Plaintiffs. Plaintiff Michael

Ballanger returned the call and again advised of Deed In Lieu of
Foreclosure and that the matter was closed a year ago. (App. 56-
110).
SPS also forwarded correspondence to Attorney Osborn advising

it: received your client’s recent phone during which he raised
issues regard the servicing of this account. We would like to
discuss the results of our research with you; however, we have
been unable to contact you by telephone. (App. 310).
SPS formally opened another dispute. (App. 327-344; and App.

56-110).
November 13, 2014 SPS note is entered stating “review loan with legal, was advised
not to address the violation but to inform we are honoring the
prior servicer review. (App. 56-110).
SPS then forwarded correspondence to Attorney Osborn advising

it would cease verbal communication regarding the collection of
Plaintiffs’ debt. It also stated it had been in communication with
Ocwen and “we will honor the Deed In Lieu Agreement done
with your prior servicer.” SPS further asserted “the debt is valid
until the QCD is executed and return. [sic]” (App. 314-315).
November 24, 2014 Attorney Osborn forwarded correspondence to SPS advising he

was very troubled by SPS’ November 13, 2014 correspondence as
it was false and misleading. (App. 312-313).
Attorney Osborn also stated “Furthermore, you have in your

possession my demand of $5,000 for the execution of the Quit
Claim Deed drafted on October 16, 2014 and my correspondence
indicating the errors that were contained in [it] as well as the lack
of information it contains pertaining to the specific mortgage that
it is given in lieu of. Please provide a corrected Quit Claim deed
with a proper Grantor clause not being duplicated as well as
proper reference to the mortgage and debt that the deed is being
given in lieu of.” Attorney Osborn confirmed the $5,000 demand
was for violations of the FDCPA. (App. 312-313).
December 3, 2014 SPS opened its fifth formal dispute. (App. 56-110; and App. 327-
344).
December 9, 2014 SPS forwarded correspondence to Attorney Osborn declining his

request for compensation asserting “Our research shows that we
have serviced your clients’ account in accordance with the terms
of your clients’ Adjustable Rate Note and Mortgage.”(App. 316-
317).
January 26, 2015 SPS forwarded correspondence to Attorney Osborn advising its
position was the same as provided with its December 9, 2014
correspondence. (App. 56-110).
On this same day SPS forwarded correspondence entitled Notice

of Default and Right to Cure to Plaintiffs at their former (and long
vacated) address advising the amount required to cure the default
‘as a result of your failure to make payments as required by the
Note” was $57,792.23. SPS threatened foreclosure if the required
payment was not received. (App. 319-322).
June 11, 2015 SPS forwarded correspondence to Plaintiffs at their former (and
long vacated) address with an opening sentence “Your mortgage
loan payment is past due and your property may be referred
to foreclosure.” (emphasis on original) and that “The total
amount needed to reinstate or bring the account current is
$67,068.28.” This correspondence further provided “SPS intends
to cause a foreclosure action to be commenced on the mortgaged
property.” Last SPS advised that if Plaintiffs continue to occupy
the property they must maintain it and that if they wished to
vacate it, they must first contact them to discuss the surrender.
(App. 323-326).
Credit Reporting and Credit Application History
The following relevant acts occurred with regard to SPS reporting this wrongfully
resurrected debt to the CRAs, which unfortunately directly affected Plaintiffs’ ability to
obtain credit.
In late October or early November 2014, Plaintiffs applied online for a new home
mortgage loan with Bank of England. Plaintiff Michael Ballanger testified they were up
front with this Bank advising it of the previous Deed In Lieu of Foreclosure. Even with
this history, Plaintiffs were preapproved for a loan for the purchase of a new home. Even
though this pre-approval letter is undated, Plaintiff Michael Ballanger testified it was
received in early November 2014. The pre-approval was contingent upon Plaintiffs
maintaining good credit. The pre-approval of this purchase is also confirmed by
correspondence dated December 9, 2014 from the closing company confirming the
closing was to occur on December 29, 2014. (App. 1-37; and App. 38).
Unfortunately, this closing never occurred as SPS commenced its wrongful and
inaccurate reporting of the loan from which Plaintiffs had previously been fully released
from in late 2014. This wrongful reporting was discovered by the Bank’s underwriters
and Plaintiffs were denied credit. (App. 1-37).
Also unfortunately, these credit denials continued into 2015 as Plaintiffs were
denied car loans by two separate dealerships in February 2015. (App. 39; and App. 40).
Plaintiffs were only able to obtain financing by agreeing to pay a substantially higher
interest rate as they were deemed to be high risk. (App. 1-37). As a result of these credit
denials, Plaintiffs obtained copies of their credit reports and by correspondence dated
June 2, 2015 each formally disputed the 2006 mortgage loan debt with Experian, Equifax,
and TransUnion (the “CRAs”). (App. 155-235). They explained in their letter that they had
been fully released from liability for the Note after entering into a Deed In Lieu of
Foreclosure with Ocwen in 2013. Id. Plaintiffs enclosed copies of the QuitClaim Deed In
Lieu of Foreclosure, Deed-In Lieu of Foreclosure Agreement and Estoppel Affidavit all
dated October 11, 2013, the Satisfaction of Mortgage dated December 3, 2013 and
recorded December 18, 2013 to support their positions. Id. TransUnion and Equifax
forwarded Automated Credit Dispute Verification (hereinafter “ACDV”) requests to SPS
attaching Plaintiffs’ separate June 2, 2015 dispute letters, the supporting attachments and
indicated Plaintiffs were disputing the debts and requested SPS to verify the debt existed
and the amounts owed. Id. TransUnion even included a comment in the FRCA Relevant
Information section “Unable to authenticate documentation dated 10/11/2013, stated this
agreement is deed-in-lieu of foreclosure.” Id.
SPS representative Tiffany Roman (hereinafter “Roman”) processed all four (4)
ACDVs for this dispute. (App. 111-133). These documents confirm and she has testified
that she received the attached images (Plaintiffs’ dispute letters and supporting attachments
(App. 155-235)) and saved them to SPS’ system.
Unbelievably though, Roman also testified not only did she not review Plaintiffs’
dispute letters or supporting attachments; she wasn’t required to as SPS’ policies or
procedures didn’t require this of her; nor was she trained to do so. (App. 111-133; and App.
345-407 – Filed under Seal). She provided similar testimony for the FRCA Relevant
Information section, stating that she did not review that field of information; that SPS’
policies or procedures didn’t require her to review; and was she was not trained to do so. Id.
Both Roman and the Director of Contested Defaulted Management Department,
Diane Weinberger, testified they were not required to make any changes to the
Compliance Condition Code section of the ACDV, that SPS’ policies or procedures didn’t
require this of the employees, nor was they trained about what this code field meant or even
required action from SPS. (App. 111-133; App. 134-154; and App. 345-407 – Filed Under
Seal).
Roman testified that she reviewed SPS’ system, noted the account existed and
completed the ACDV to reflect the new increased amounts owed. (App. 111-133). This
was the extent of her investigation. Id. In her words, the fact SPS’ computer system
reflected Plaintiffs’ account existed, was sufficient proof for her. Id. Therefore, Roman
responded to the ACDV confirming the account belonged to Plaintiffs while certifying on
all four (4) ACDVs that she had reviewed and considered all the associated images and
verified the accuracy of the data in compliance with all legal requests. Id. Roman clearly
misrepresented to the credit reporting agencies that she had reviewed and analyzed all
relevant information in her possession. Id.
Plaintiffs were advised by Equifax and TransUnion that SPS verified the debt
causing Plaintiffs to commence this action in August 2015. (App. 1-37). Subsequent
thereto, in December 2015 Plaintiffs were again denied credit by Lincoln Bank for the
purchase of another home. (App. 408-429 – Filed Under Seal).
It wasn’t until May 18, 2016 that SPS finally conceded its reporting of this debt was
incorrect and requested the trade line for this loan be deleted. (App. 284). It did so even
though nothing had changed regarding the status of the previously executed Quit Claim
Deed. (App. 56-110). In this respect, a new one had not been provided by Plaintiffs at the
time SPS deleted the trade line confirming its execution was never a condition precedent to
SPS deleting the account. (App. 56-110).
Plaintiffs have undoubtedly suffered actual damages as a direct result of SPS’
conduct. (App. 1-37; and App. 41-55). This includes numerous credit denials, out-of-pocket
charges and severe emotional distress. Id. Both Plaintiffs have testified about the physical
and emotional harm they have suffered as a direct result of SPS attempting to collect on a
debt they don’t owe, wrongfully reporting it to the CRAs, verifying it was a valid debt
after formally being disputed and the multiple credit denials. Id. This conduct has caused
Plaintiffs to increase or begin taking medication, extreme embarrassment, feelings of
hopelessness and despair, disconnect from family life, anxiety, mental anguish and loss
of sleep. Id. Plaintiffs’ son Jared Ballanger and Kristine’s mother Judy Davis have
provided declaration testimony corroborating Plaintiffs’ mental anguish and emotional
distress. (App. 430-433).
SUMMARY JUDGMENT STANDARD
Pursuant to Rule 56(c) of the Federal Rules of Civil Procedure, summary
judgment shall be rendered “if the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show that there is no genuine issue
as to any material fact, and that the moving party is entitled to a judgment as a matter of
law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202
(1986). When a motion for summary judgment is properly made and supported, the
adverse party may not rest upon the allegations or denials in its pleading, but must instead
set forth “specific facts showing that there is a genuine issue for trial.” Fed.R.Civ.P.
56(e); Johnson v. Hamilton, 452 F.3d 967, 972 (8th Cir.2006); Thompson v. Hubbard,
257 F.3d 896, 898–99 (8th Cir.2001).
ARGUMENT
I. SPS IS LIABLE UNDER THE FDCPA FOR NUMEROUS VIOLATIONS.
A. Plaintiffs Were Not Liable For Their August 2006 Loan After Being Fully
Released From Liability For It In October 2013.
As the recited facts undisputedly confirm, Plaintiffs had been fully released from
liability for their August 2006 note in October 2013. This was confirmed with the execution
of 3 different documents, all drafted by Ocwen’s attorney. It is further undisputed that SPS
had the Deed In Lieu of Foreclosure and fully recorded Satisfaction Of Mortgage in its
possession as of September 11, 2014. Last, Plaintiffs’ counsel, Attorney Osborn also
advised SPS with his October 8, 2014 correspondence:
Upon receipt of the Deed In Lieu of Foreclosure under Iowa law, the debt
was cancelled. Any attempt to collect the debt existing prior to the Deed In
Lieu of Foreclosure is a violation of the Iowa Consumer Credit Code and the
Fair Debt Collection Practices Act.
Attorney Osborn was absolutely correct. As held by the Iowa Supreme Court in
Nash Finch Co. v. Corey Dev., Ltd., 669 N.W.2d 546 (Iowa 2003):
Parties may agree, either explicitly or implicitly, to substitute a new

agreement discharging original obligations. See generally James L.
Buchwalter, Annotation, Conveyance or Surrender of Property as an Accord

and Satisfaction of Contract Obligation, 59 A.L.R.5th 665 (1998). The
intention of the parties controls whether the underlying obligation is
forgiven upon the execution of the parties' new agreement. Id. at 675. Words
in the new agreement may indicate the parties' intention that the obligation
existing under the original contract is forgiven. The “intent of the parties is
ordinarily a question of fact, but may be decided as a question of law if the
evidence on intent is not in conflict.” Id. at 680 (citing Rosenberg v. Lincoln
Fed. Sav. & Loan Ass'n, 219 Neb. 689, 365 N.W.2d 809, 811 (1985)).
Nash, 669 N.W.2d at 549.
Iowa Code § 654.18 outlines the procedure for “alternative nonjudicial
voluntary foreclosure.” Under this statute, the mortgagor conveys to the mortgagee all
interest in the mortgaged property and the mortgagee accepts the conveyance and waives
any right to a deficiency. See id.
Based on the executed Deed In Lieu of Foreclosure documents and controlling
Iowa law, Plaintiffs would respectfully request this Court determine as a matter of law
that they were no longer liable for the August 2006 note after October 2013.
After determining no liability exists under the underlying Note, the Court can then
rule upon the legal effect of SPS’ wrongful collection attempts and illegal credit reporting
activities.
B. SPS is a Debt Collector.
As the Court is aware, the FDCPA governs the activities of debt collectors. SPS is
undoubtedly a debt collector under the law. First, it identified itself as such beginning first
with its September 10, 2014 correspondence and continuing with most correspondence
thereafter.
The Court in Donnelly-Tovar v. Select Portfolio Servicing, Inc., 945 F. Supp. 2d
1037 (D. Neb. 2013) agreed a mortgage servicing company is deemed to be debt collector
even when it is pursuing a non-existent debt. As it held:
“The definition of debt collector pursuant to § 1692a(6)(F)(iii) includes any

nonoriginating debt holder that either acquired a debt in default or has treated
the debt as if it were in default at the time of acquisition.” Bridge v. Ocwen
Federal Bank, FSB, 681 F.3d 355, 362 (6th Cir.2012) (finding error in the
district court's dismissal of a complaint against mortgage lender, assignee, and
servicer for FDCPA violations). “[A] debt holder or servicer is a debt collector
when it engages in collection activities on a debt that is not, as it turns out,
actually owed.” Id. (noting “[t]his stands to reason since the pursuit of
collection activities presupposes that the collector alleges or asserts that the
subject of those activities is obligated.”).
Donnelly-Tovar, 945 F. Supp. 2d at 1044.
C. SPS’ Conduct Violated Several Sections of the FDCPA
The FDCPA was enacted in 1977 for the purpose of eliminating abusive debt
collection practices by debt collectors, among other things. Jerman v. Carlisle, McNellie,
Rini, Kramer & Ulrich LPA, 559 U.S. 573, 575–77, 130 S.Ct. 1605, 1608, 176 L.Ed.2d
519 (2010); Dunham v. Portfolio Recovery Associates, LLC, 663 F.3d 997, 1000 (8th
Cir.2011). It regulates where and when a debt collector may communicate with a
consumer. See 15 U.S.C. § 1692c.
Under the FDCPA, debt collectors cannot:
- use false, deceptive, misleading, unfair or unconscionable means to collect or

attempt a debt 15 U.S.C. § 1692e(10) and 1692(f);
- falsely represent the character, amount, or legal status of any debt 15 U.S.C. §
1692e(2)(A);
- threaten to take any action that cannot legally be taken 15 U.S.C. § 1692e(5);
- communicate or threaten to communicate to any person credit information which

is known or which should be known to be false, including the failure to
communicate that a disputed debt is disputed; 15 U.S.C. § 1692e(8); and
- attempt to collect any amount not expressly authorized by the agreement creating
the debt or permitted by law. 15 U.S.C. §1692f(1).
Other Courts have readily granted summary judgment to consumers who have been
victimized by abusive debt collectors. See Edeh v. Midland Credit Mgmt., Inc., 748
F.Supp.2d 1030, 1035-36 (D. Minn. 2010) and Bartl v. Enhanced Recovery Company,
LLC, 2017 WL 1740152 (D. Minn. 2017).
Plaintiffs would respectfully request this Court do the same as all of the above
prohibited actions were undisputedly committed by SPS given that no valid debt existed
after October 2013.
II. SPS IS LIABLE UNDER THE FCRA FOR CONTINUOUSLY REPORTING

PLAINTIFFS WERE LIABLE ON A NOTE IT KNEW NO LONGER
EXISTED.

As indicated above, Attorney Osborn advised SPS with his October 8, 2014
correspondence that upon Ocwen’s receipt of the fully executed Deed In Lieu of
Foreclosure the debt was cancelled pursuant to Iowa law. He further advised that any
attempt to collect upon or report the non-existing debt against Plaintiffs’ credit was a
violation of both Iowa and federal law. Again, Attorney Osborn was absolutely correct. As
further set out in Iowa Code § 654.18, subd. 4 “A mortgagee who agrees to a foreclosure
pursuant to this section [utilizing alternative nonjudicial voluntary foreclosure] shall not
report to a credit bureau that the mortgagor is delinquent on the mortgage. However, the
mortgagee may report that this foreclosure procedure was used.”
SPS also was advised by its Legal Department to not “address the violations” and to
honor the previously negotiated Deed In Lieu of Foreclosure. This was conveyed to
Attorney Osborn with correspondence dated November 13, 2014. Yet, the evidence is clear
it did not do as even in this same correspondence, SPS advised “the debt is valid until the
Quit Claim Deed is executed and return [sic].” This is not honoring the Deed In Lieu of
Foreclosure.
SPS’ reporting of the debt to the CRAs beginning in late 2014 was also not honoring
the Deed In Lieu of Foreclosure. It continued to attempt to collect on the debt and report it
as an outstanding credit obligation up until the tradeline was formally deleted in May 2016.
This was not honoring the Deed In Lieu of Foreclosure. SPS’ conduct can only be
classified as flagrant abuse of the very laws it was required to adhere to.
SPS knew Plaintiffs’ liability for the August 2006 loan had been completely
extinguished in October 2013. SPS’ representatives testified that because title had not been
formally transferred, that it could not consider plaintiffs’ account to be an REO (“Real
Estate Owned) account. Given the account was not properly REO status, SPS was of the
opinion that it needed to continue to service (by continued to collect) on the extinguished
loan.
Plaintiffs are sure the Court can appreciate the absurdity of this rationale. Title
transfer had absolutely no bearing on Plaintiffs’ liability for an extinguished note. They had
undoubtedly been fully released from liability on the Note and the Mortgage had been
satisfied. The proper course of action would have been to first request that Plaintiffs
execute another Quit claim deed which complied with Iowa law or commence a quiet title
action if Plaintiffs refused, not resurrect a non-existing loan and violate all kinds of laws
attempting to collect on the same, all the while wreaking complete chaos on Plaintiffs’ lives.
Yet, this is exactly what SPS did. All because it couldn’t pigeonhole the account into any of
its existing categories.
A. FCRA Requirements.
“The . . . FCRA . . . was crafted to protect consumers from the transmission of
inaccurate information about them, and to establish credit reporting practices that utilize
accurate, relevant, and current information in a confidential and responsible manner.”
Guimond v. Trans Union Credit Info. Co., 45 F.3d 1329, 1333 (9th Cir. 1995). Congress
intended to promote efficiency in the nation’s banking system and to protect consumer
privacy. TRW Inc. v. Andrews, 534 U.S. 19, 24, 122 S. Ct. 441(2001) (citing 15 U.S.C. §
1681(a)). Congress addressed the latter concern by including provisions intended “to prevent
consumers from being unjustly damaged because of inaccurate or arbitrary information in a
credit report. S. Rep. No. 91-517, at 1 (1969). Congress also hoped to address a number of
related problems, including the “the inability at times of the consumer to know he or she is
being damaged by an adverse credit report”, the lack of “access to the information in his or
her file”, the “difficulty in correcting inaccurate information”, and “getting the consumer’s
version of a legitimate dispute recorded in . . . [his or her] credit file.” Id. at 3 (1969). “These
consumer oriented objectives support a liberal construction of the FCRA” and any
interpretation of this remedial statute must reflect those objectives. Guimond, 45 F.3d at
1333.
In general terms, the FCRA imposes duties on two types of entities: credit reporting
agencies and “furnishers of information.” See Cosmas v. Am. Express Centurion Bank, 2010
WL 2516468 at *7 (D.N.J. June 14, 2010). A data furnisher is an entity that reports
information relevant to a consumer’s credit rating - - i.e., payment history, amount of debt,
and credit limit - - to credit reporting agencies.” Burrell v. DFS Servs., LLC, 753 F. Supp.2d
438, 446 (D.N.J. 2010). There is no dispute SPS is a “furnisher” of information.
A data furnisher has a duty provide accurate information and is prohibited from
reporting information with actual knowledge of errors. 15 U.S.C. § 1681s-2(a)(1)(A).
FCRA explicitly provides a [data furnisher] shall not furnish any information relating to a
consumer to any consumer reporting agency if the person knows or has reasonable cause to
believe that the information is inaccurate after having been notified by the consumer that
specific information is inaccurate; and the information is, in fact, inaccurate. 15 U.S.C. §
1681s-2(a)(1)(B). SPS is a data furnisher required to comply with all applicable sections of
the FCRA.
Plaintiffs have asserted a cause of action against SPS asserting it violated 15 U.S.C.
§1681s-2(b). A duty to act is triggered when a furnisher of information “receiv[es] notice …
of a dispute with regard to the completeness or accuracy of any information provided by [the
furnisher] to a consumer reporting agency….” 15 U.S.C. § 1681s-2(b)(1). After receiving
notice of the dispute from a CRA, the furnisher must:
(A) conduct an investigation with respect to the disputed information;

(B) review all relevant information provided by the consumer reporting agency pursuant
to section 1681i (a)(2) of this title;
(C) report the results of the investigation to the consumer reporting agency;
(D) if the investigation finds that the information is incomplete or inaccurate, report
those results to all other consumer reporting agencies to which the person furnished the
information and that compile and maintain files on consumers on a nationwide basis;
and
(E) if an item of information disputed by a consumer is found to be inaccurate or

incomplete or cannot be verified after any reinvestigation under paragraph (1), for
purposes of reporting to a consumer reporting agency only, as appropriate, based on the
results of the reinvestigation promptly:
(i) modify that item of information;
(ii) delete that item of information; or
(iii) permanently block the reporting of that item of information.
15 U.S.C. § 1681s-2(b)(1) (emphasis added).
As has been interpreted by the Courts:
the plain meaning of “investigation” clearly requires some degree of careful

inquiry by creditors. Further, § 1681s-2(b)(1)(A) uses the term “investigation” in
the context of articulating a creditor's duties in the consumer dispute process
outlined by the FCRA. It would make little sense to conclude that, in creating a
system intended to give consumers a means to dispute-and, ultimately, correct-
inaccurate information on their credit reports, Congress used the term
“investigation” to include superficial, unreasonable inquiries by creditors.
Johnson v. MBNA Bank of America, NA, 357 F.3d 426, 430-31. (4th Cir. 2004).
To meet this standard, data furnishers may need to consult underlying documents
such as account applications, for example, rather than simply reviewing data in
computerized customer information systems. Id. Further, SPS failed to update Plaintiffs’
accounts as disputed after investigation. See Saunders v. Branch Banking & Trust Co., 526
F.3d 142, 148 (4th Cir. 2008); Boggio v. USAA Fed. Sav. Bank, 696 F.3d 611, 617 (6th Cir.
2012); Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1163 (9th Cir. 2009); and
Hinkle v Midland Credit Funding et al 2016 WL 3672112 (11th Cir. July 11, 2016):
The question of whether a furnisher’s investigation is reasonable is normally a

question reserved for the jury, and summary judgment is only appropriate where the
reasonableness of a defendant’s procedures is “beyond question.” See Olwell v.
Medical Information Bureau, 2003 WL 79035 *3 (D.Minn. 2003), citing Crabill v.
Trans Union, 259 F.3d 662, 664 (7th Cir. 2001).
With Hinkle, the Eleventh Circuit now joins the Fourth, Ninth, Sixth and Seventh
Circuits in their comprehensive analysis of what a “reasonable investigation” entails. See
also Westra v. Credit Control of Pinellas, 409 F.3d 825, 827 (7th Cir. 2005) (“summary
judgment is proper if the reasonableness of the defendant's procedures is beyond question”),
Taylor v. First Advantage Background Servs. Corp., --- F.Supp.3d ---- 2016 WL 4762268
(N.D. Cal. Sept. 13, 2016.) (summary judgment granted in Plaintiff’s favor when Defendant
failed to properly re-investigate inaccuracies) and Meyer v. F.I.A. Card Services, N.A., 780
F.Supp.2d 879 (D.Minn. 2011).
B. SPS Failed To Conduct A Reasonable Investigation.
Plaintiffs claim SPS failed to reasonably investigate their disputes when Roman
completely disregarded their dispute letters and enclosed attachments and only bothered to
review their account online noting it was listed as open and delinquent. This was enough
for her to verify the debt. SPS’s own representative Mark Syphus testified on several
occasions that he agreed this investigation was not reasonable, that Plaintiffs’ disputes
should have been handled differently and that, at a bare minimum, Roman should have read
Plaintiffs’ dispute letters and reviewed the enclosed attachments. (App. 56-110). Had she
done so, she would have realized SPS’ account was not valid and was not being accurately
reported. She could have escalated the matter for supervisory review. Id.
At the same time, the blame for this grossly inadequate investigation cannot lie
entirely with Roman. She testified SPS’ policies did not require that she read the
attachments. Roman furthered testified she, was not trained to read the attachments to the
ACDVs or provided guidance on what to do in the face of such glaring inconsistencies.
(App. 111-133).
The requirement of a “reasonable investigation” is clearly set out a 15 U.S.C. §
1681s-2(b) of the Fair Credit Reporting Act and has been overwhelmingly upheld by the
Courts to mean more than just reviewing its computer system. See Boggio v. USAA Fed.
Sav. Bank, 696 F.3d 611 (6th Cir. 2012) (reversing summary judgment for the furnisher
whose “policy prohibited its employees from performing anything more than a cursory
confirmation” of its own records; “a reasonable investigation under the circumstances
would require that USAA review the relevant, underlying documentation”). See
also Daugherty v. Equifax Info. Servs., LLC, 2015 WL 6456572 (S.D.W. Va. Oct. 26, 2015)
(Denying the furnisher summary judgment and sustaining the consumer’s claim that it
engaged in “a mere ‘data conformity” review” because the furnished failed to conduct the
required “searching” reasonable investigation and limited itself to “brief reviews of internal
records” when it” had available for review additional information about potential
inaccuracies with the Plaintiff's account, had direct communications with the Plaintiff about
the inaccuracies, [and] had knowledge that the Plaintiff's credit report inaccurately showed
that the Ocwen account was past due” and in foreclosure); Seungtae Kim v. BMW Fin.
Servs. NA, LLC, 142 F. Supp. 3d 935 (C.D. Cal. 2015) (“Defendant should have considered
information it received directly from Plaintiff” through the earlier § 1681s-2(a)(8) dispute in
conducting its § 1681s-2(b) investigation); Davenport v. Sallie Mae, Inc., 124 F. Supp. 3d
(D. Md. 2015) (finding “a genuine dispute of material fact as to whether or not [the
furnisher] conducted a reasonable investigation” since its review of its record of
communications with the consumer “apparently did not include what the correspondence ...
actually said”); McDonald v. OneWest Bank, 2013 WL 858197 (W.D. Wash. Mar. 7, 2013)
(denying the furnisher summary judgment where it knew from the consumer’s on-going
correspondence the details of the dispute but “did nothing more than compare the points of
data provided by the CRA with its own records”); Darrin v. Bank of Am., 2013 WL 877087
(E.D. Cal. Mar. 7, 2013) (denying dismissal because the allegations established that bank
had consented in writing to a specific loan modifications, yet the furnisher verified to CRAs
that the payments made in conformity therewith were made late); Rogers v. JPMorgan
Chase Bank, 2012 WL 2190900 (W.D. Wash. June 13, 2012) (denying summary judgment
because, as a result of the consumer’s earlier oral reports of the identity theft to bank branch
managers, the bank failed to act on the information that it had); Allicon v. Verizon Wireless,
2012 WL 380147 (D.N.H. Jan. 18, 2012) (mag.) (furnisher failed to review its own records
that confirmed the consumer’s dispute and revealed the defendant’s erroneous
reporting), adopted by 2012 WL 405502 (D.N.H. Feb. 8, 2012); Watson v. Citi Corp., 2008
WL 4186317, at *4 (S.D. Ohio Sept. 5, 2008) (evidence that furnisher should have known
from prior disputes and consumer’s earlier telephone complaints that its debt collector had
reached a compromise settlement of the account raised questions of material fact whether
furnisher’s investigation resulting in verification of debt was reasonable), later op., Watson
v. Citi Corp., 2009 WL 161222 (S.D. Ohio Jan. 22, 2009) (finding at bench trial that credit
card company did not conduct a reasonable investigation when it failed to contact its
collection agency to verify or refute consumer’s claim that agency had compromised and
settled debt and instead “merely relied on its own incomplete records”); Ferrarelli v.
Federated Fin. Corp. of Am., 2009 WL 116972 (S.D. Ohio Jan. 16, 2008) (denying
furnisher summary judgment when one of the factors that jury could consider in
determining whether investigation was reasonable was the furnisher’s failure to review the
consumer’s supporting documents); Thomas v. U.S. Bank, 2007 WL 764312 (D. Or. Mar. 8,
2007); Notley v. Sterling Bank, 2007 WL 188682 (N.D. Tex. Jan. 24, 2007); Saunders v.
Equifax Info. Serv., L.L.C., 2006 WL 2850647 (E.D. Va. Oct. 3, 2006) (denying furnisher
summary judgment when its “perfunctory response” to the dispute did not include
reviewing its own records that sustained the consumer’s contention), aff’d sub nom.
Saunders v. Branch Bank& Trust Co., 526 F.3d 142 (4th Cir. 2008); Alabran v. Capital One
Bank, 2005 WL 3338663, at *7 (E.D. Va. Dec. 8, 2005); Semper v. JBC Legal Group, 2005
WL 2172377 (W.D. Wash. Sept. 6, 2005); Bruce v. First U.S.A. Bank, 103 F. Supp. 2d 1135
(E.D. Mo. 2000).
C. SPS Did Not Provide Notice That The Existence Of Its Debt Was Disputed
By Plaintiffs.
As addressed above, the FDCPA requires that debt collectors provide notice that
consumers are disputing a debt5. This same requirement can be found in the FCRA which
provides:
(3) Duty to provide notice of dispute.
If the completeness or accuracy of any information furnished by any person to

any consumer reporting agency is disputed to such person by a consumer, the
person may not furnish the information to any consumer reporting agency
without notice that such information is disputed by the consumer.
15 U.S.C. § 1681s-2(a)(3).
The FCRA has several provisions that create liability for violations of the Act. See,
e.g., 15 U.S.C § 1681n (creating civil liability for willful noncompliance with any portion of
the Act); 15 U.S. C. § 1681o (creating civil liability for negligent noncompliance with any
portion of the Act). 15 U.S.C.§ 1681s-2(b) is the only section that can be enforced by a
private citizen seeking to recover damages caused by a furnisher of information. See
Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1154 (9th Cir. 2009) and Saunders v.
Branch Banking & Trust Co. of Va., 526 F.3d 142, 149 (4th Cir. 2008).
Based on the foregoing, Plaintiffs would respectfully request that the Court rule as a
matter of law that SPS failed to comply with its duties to conduct a reasonable investigation
and indicate that Plaintiffs disputed the account.
III. SPS’ VIOLATIONS OF THE FCRA WERE RECKLESS AS A MATTER

OF LAW.
A. This Court Can Find as a Matter of Law that SPS’ Violations were
Reckless.
A data furnisher can be held liable for punitive damages if it is determined that it

5
See 15 U.S.C. §1692e(8).
willfully failed to comply with any portion of the FCRA. 15 U.S.C § 1681n. The U.S.
Supreme Court with its ruling in Safeco Insurance Co. of America v. Burr, 551 U.S. 47 (2007)
established that “willfulness” required by the FCRA as a threshold standard for imposition of
punitive damages for violation of the Act included not only knowing violations, but also those
which are reckless or committed with reckless disregard of the law. Safeco, 551 U.S. at 57.
The Court concluded, however, in Safeco that the Defendants had not acted willfully because
their conduct was based upon a reading of the FCRA that was not objectively unreasonable in
light of legal rules that were clearly established at the time. 551 U.S. at 69-70. This cannot and
has not been raised by Defendant SPS.
Plaintiffs recognize that, generally, willfulness under the FCRA is a question of fact for
the jury. See Guimond v. Trans Union Credit Information, 45 F.3d 1329 (9th Cir. 1995) (“The
reasonableness of [a defendant’s] procedures…will be jury questions in the overwhelming
majority of cases.”). However, if the Court concludes that there is no genuine issue of material
fact that SPS’ conduct created “a risk [of an FCRA violation] substantially greater than that
which is necessary to make [its] conduct negligent, see Safeco, 127 S.Ct. at 2215, then it may
determine willfulness as a matter of law. This is one of those rare and exceptional cases.
B. SPS’ Reckless Violations.
As alluded to above, this is not the first time SPS has engaged in such abusive
conduct. SPS was formally known as Fairbanks Capital Corporation (hereinafter
“Fairbanks”). The FTC commenced an enforcement action against Fairbanks in 2003 after
finding that it engaged in numerous flagrant violations of both the FDCPA and FRCA.
Fairbanks agreed to a $40 million settlement in 2004 and promptly changed its name to SPS
hoping to move away from the public’s association of illegal conduct with the name
“Fairbanks.” The Court can appreciate that, a leopard cannot change its spots. Even after
being sanctioned in 2004 SPS still continued to engage in the same conduct.
This prompted the FTC to seek a Modification of the previous Settlement in 2007.
As ordered by the Court:
IT IS FURTHER ORDERED that Defendants, * * * are hereby permanently restrained

and enjoined, in connection with the servicing of any loan that was in default at the time
it was obtained by Defendants, from:
A. Using any false, deceptive, or misleading representation or means in connection with

the collection of any debt, in violation of Section 807 of the FDCPA, 15 U.S.C. § 1692e,
including, but not limited to: (1) falsely representing the character, amount, or legal
status of a debt, or any services rendered or compensation which may be lawfully
received by a debt collector for collection of a debt, in violation of Sections
807(2)(A)and (B) of the FDCPA,15 U.S.C. §§ I692e(2)(A) and (B); (2) communicating
or threatening to communicate to any person credit information which is known or
which should be known to be false, including the failure to communicate that a disputed
debt is disputed, in violation of Section 807(8) of the FDCPA, 15 U.S.C. § 1692e(8);
and (3) using false representations or deceptive means to collect or attempt to collect a
debt or to obtain information concerning a consumer, in violation of Section 807(10)of
the FDCPA, 15 U.S.C. § 1692e(10);
B. Using any unfair means to collect or attempt to collect a debt, including but not
limited to collecting amounts (including any interest, fee, charge, or expense incidental
to the principal obligation)not authorized by the agreement creating the debt or
permitted by law, in violation of Section 808(1)of the; FDCPA, 15 U.S.C. § 1692f(1);
C. Failing to notify consumers of their right to dispute and obtain verification of their
debts and to obtain the name of the original creditor, either in the initial communication
with consumers by Defendants, or within five days thereafter, in violation of Section
809(a) of the FDCPA, 15 U.S.C. § 1692g(a); and
D. Failing to comply in any other respect with the FDCPA, as amended, or as it may be
amended in the future.
X.
IT IS FURTHER ORDERED that Defendants, * * * * are hereby permanently

restrained and enjoined, in connection with the servicing of any loan, from:
A. Furnishing information relating to any consumer to a consumer reporting agency if

Defendants know or have reasonable cause to believe that the information is inaccurate,
as provided in Section 623(a)(1)(A) of the FCRA, 15 U.S.C. § 1681s 2(a)(1)(A);
B. Failing to promptly notify a consumer reporting agency, as required by Section

623(a)(2) of the FCRA, 15 U.S.C. § 1681s-2(a)(2), when Defendants have determined
that information previously furnished about any consumer to the consumer reporting
agency is not complete or accurate, and failing to provide to the agency any corrections
to that information, or any additional information, that is necessary to make the
information provided to the agency complete and accurate, and to not thereafter furnish
to the agency any of the information that remains not complete or accurate;
C. Failing to report accounts as "disputed" to consumer reporting agencies, as required

by Section 623(a)(3) of the FCRA, 15 U.S.C. § 1681s-2(a)(3), when consumers dispute
accounts either in writing, orally, or by electronic means; and
D. Failing to comply in any other respect with the FCRA, as amended, or as may be
amended in the future.
(App.434-467).
As this Court is well aware, punitive damages are meant to serve “as a form of
punishment and to deter others from conduct which is sufficiently egregious to call for the
remedy.” Coster v. Crookham, 468 N.W.2d 802, 810 (Iowa 1991). Obviously, “others”
would include the very parties whose conduct has already been previously sanctioned.
The above evidence demonstrates SPS is clearly not abiding by the FTC’s Order. If
there is ever a case that warrants an award of punitive damages, this is it.
SPS’ conduct was more than just error or negligence. SPS’ onboarding requirements
for transferred ARM loans required 100% manual review by a qualified Data Analyst. Yet,
this was not completed. SPS had physical possession of the Deed In Lieu of Foreclosure
and Satisfaction Mortgage which clearly indicated Plaintiffs had been fully released from
liability for the August 2006 Note. Yet, it wrongfully resurrected the loan, pursued
collection of it, illegally reported it and when called upon by the credit reporting agencies to
investigate Plaintiffs’ disputes, recklessly disregarded its duty to conduct a reasonable
investigation. It agreed to “honor” the previous Deed In Lieu of Foreclosure, but obviously
didn’t.
This was intentional and knowing misconduct, plain and simple. This
willful/reckless conduct on the part of SPS and its personnel needs to be punished.
Plaintiffs would respectfully respect that the Court rule accordingly and determine as a
matter of law that Plaintiffs are entitled to pursue an award of punitive damages.
CONCLUSION
For all of the above reasons, Plaintiffs would respectfully request this Court grant
their motion for Partial Summary Judgment finding as a matter of law that (1) that no
liability for the underlying Note existed in 2014, (2) that SPS violated several sections of the
FDCPA, by falsely representing the character, amount, and legal status of its debt;
threatening to take action that it could not legally take; communicating credit information
which it knew to be false, including the failure to communicate that a disputed debt is
disputed, using unfair or unconscionable means to attempt to collect a debt; and attempting
to collect an amount not authorized by the agreement creating the debt or permitted by law,
(3) that SPS violated the FCRA by failing to reasonably investigate their disputes of this
debt, continued to report the debt as belonging to them and refused to indicate the debt was
disputed as required by federal law and (4) that SPS willfully failed to comply with the Fair
Credit Reporting Act or its actions were reckless or committed with reckless disregard of
the law thus, entitling Plaintiffs to pursue an award of punitive damages at trial.
Dated: May 15, 2017 Respectfully submitted,
/s/ Samuel Z. Marks

Samuel Z. Marks IS9998821
Marks Law Firm, P.C.
4225 University Avenue
Des Moines, IA 50311
(515) 276-7211
(515) 276-6280
sam@markslawdm.com
Thomas J. Lyons, Jr., Esq.

MN Attorney I.D. #: 0249646
367 Commerce Ct.
Vadnais Heights, MN 55127
Telephone: (651)770-9707
Facsimile: (651)704-0907
Email:
tommy@consumerjusticecenter.co
m
(Admitted Pro Hac Vice)
ATTORNEY FOR PLAINTIFFS



Plaintiffs,
vs.
PROPOSED ORDER ON PLAINTIFFS’
OCWEN LOAN SERVICING, LLC, MOTION FOR PARTIAL SUMMARY
SELECT PORTFOLIO SERVICING, JUDGMENT
LLC,
Defendants.
This matter came before the Court on the Motion for Partial Summary Judgment for
Plaintiffs. The Court, having the Motion and being otherwise sufficiently advised, finds that
the Motion is well taken. Accordingly, it is hereby ORDERED and ADJUDGED that
Plaintiffs’ Motion for Partial Summary Judgment is GRANTED and concludes that
Defendant SPS violated 15 U.S.C. §1692, et seq. (FDCPA claim) and 15 U.S.C. §1681s-
2(b) (FCRA claim). Further, the Court orders that Defendant SPS violated 15 U.S.C.
§1681s-2(b) and is liable to Plaintiffs pursuant to 15 U.S.C. §1681n.
SO ORDERED this ___ day of May, 2017.
Judge John A. Jarvey

SPS Violated FDCPA and FCRA by Resurrecting Debt Plaintiffs were Fully Released From

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Case 4:15-cv-00252-JAJ-HCA Document 155 Filed 05/15/17 Page 1 of 3

IN THE UNITED STATES DISTRICT COURT

MICHAEL BALLANGER and Civil Action No. 4:15-cv-00252-JAJHCA

The above named Plaintiffs, Michael and Kristine Ballanger, (hereinafter

using unfair or unconscionable means to attempt to collect a debt; and attempting to

Dated: May 15, 2017 Respectfully submitted,

/s/ Samuel Z. Marks

Samuel Z. Marks IS9998821

Thomas J. Lyons, Jr., Esq.

Vadnais Heights, MN 55127

ATTORNEYS FOR PLAINTIFFS

IN THE UNITED STATES DISTRICT COURT

MICHAEL BALLANGER and Civil Action No. 4:15-cv-00252-JAJHCA

Plaintiffs Michael and Kristine Ballanger, (hereinafter “Plaintiffs”) commenced this

Foreclosure, having possession of it and the recorded Satisfaction of the underlying

executed Deed In Lieu of Foreclosure and recorded Satisfaction Of Mortgage. In this

(particularly 15 U.S.C. §1681s-2(b)) and credit defamation1.

disputed debt is disputed, using unfair or unconscionable means to attempt to collect a

damages to be ultimately determined by the jury.

by the Federal Trade Commission (hereinafter “FTC”) in 2004. (App. 434-467).

Notwithstanding being previously sanctioned SPS continued to engage in the offensive

matter of law that SPS’ violations of the FCRA were reckless.

supports either basis, intentional or reckless disregard.

STATEMENT OF UNDISPUTED MATERIAL FACTS

Recorder on September 1, 2006. (App. 264-270).

(hereinafter “South”) to handle the negotiation of a non-judiciary foreclosure with

Plaintiffs. (App. 309).

…and in consideration of such conveyance, the Borrower(s) will receive a

The actual Quitclaim Deed In Lieu of Foreclosure also provided:

This deed is an absolute conveyance…., the consideration for which is the

Plaintiffs were further requested to execute an Estoppel Affidavit which provided

As part of the negotiated Deed In Lieu of Foreclosure, Plaintiffs were obligated to

immediately. As far as Plaintiffs were concerned (and as is supported by Ocwen’s

process. (App. 1-37).

On December 3, 2013 Ocwen executed a Satisfaction of Mortgage which was then

interactions between the parties include the following:

Contact History (App. 236-256)

SPS System note is also entered “Prior Servicer Information

On this same day, SPS forwards correspondence to Plaintiffs at

A different SPS representative enters another note “Documents

SPS also attempted to contact Plaintiffs by phone.

September 16, 2014 SPS attempted to contact Plaintiffs by phone.

On this same day SPS also forwards correspondence to Plaintiffs

at their former (and long vacated) address advising it: is unable to

On this same day SPS forwards correspondence to Plaintiffs at

On this same day SPS forwards another correspondence to

and resolution regarding this matter within 30 days of your

SPS finally opens up a formal dispute indicating “CSAR is stating

October 2, 2014 Plaintiff Michael Ballanger contacts SPS to inquire as to the

On this same day SPS forwards correspondence to Plaintiffs at

October 6, 2014 Plaintiff Michael Ballanger contacts SPS to inquire as to the

October 7, 2014 SPS rep calls both Plaintiffs’ cellular telephones.

On this same day SPS forwards correspondence to Plaintiffs at

October 8, 2014 Plaintiff Michael Ballanger contacts SPS to inquire as to the

On this same day SPS forwards correspondence to Plaintiffs at

“Attorney Osborn”) as legal counsel to help resolve title and

On this date Attorney Osborn sent correspondence to SPS

This Deed was accepted by U.S. Bank … as confirmed by its

Attorney Osborn further advised his clients dispute the validity of

SPS’ notes confirmed it was again provided with a copy of the

SPS also made two telephone calls to Plaintiffs. Plaintiff Michael

SPS also forwarded correspondence to Attorney Osborn advising