In an important victory for mortgage servicers, the Eleventh Circuit rejected a RESPA claim based on a motion to reschedule a foreclosure sale in Landau v. Roundpoint Mortgage Servicing Corp.

Rachel Landau defaulted on her home loan and her mortgage company foreclosed. A final foreclosure judgment was entered in February 2016 and a sale ordered for June 2016.  Roundpoint Mortgage Servicing Corp. offered Landau an opportunity to participate in loss mitigation, which she accepted. Roundpoint then moved to reschedule the foreclosure sale. Regulation X, 12 C.F.R. § 1024.41(g) of the Real Estate Settlement Procedures Act prohibits seeking an “order of sale” when the borrower has entered into a loss mitigation plan. Landau argued that a motion to reschedule a foreclosure sale amounts to an “order of sale” and filed suit against Roundpoint for violating Regulation X. She argued that Roundpoint should have canceled the foreclosure sale rather than rescheduling it. Roundpoint countered that rescheduling a foreclosure sale already ordered was not the same as a servicer moving for an “order of sale.” The trial court agreed and dismissed Landau’s claims.

The Court interpreted the phrase “order of sale” to mean a dispositive motion ordering the transfer of property.

On appeal, the Eleventh Circuit affirmed. The Court explained that Regulation X prohibits a servicer from moving for a foreclosure judgment or an “order of sale” during a loan modification program. The Court interpreted the phrase “order of sale” to mean a dispositive motion ordering the transfer of property. A motion to reschedule a previously ordered foreclosure sale, on the other hand, is a procedural, housekeeping matter that is not prohibited by Regulation X. Otherwise, servicers would have little incentive to offer a loss mitigation plan to a borrower for fear that they would have to restart foreclosure proceedings.

Landau opinion should facilitate the consumer protection goals of RESPA by protecting lenders who allow borrowers to enter into loss mitigation plans to borrowers after they have already obtained an “order of sale.”