GREENSBORO, N.C.— A North Carolina federal court has allowed a putative class case to proceed on a theory that a residential mortgage servicer’s notice that it “may” accelerate is deceptive under the FDCPA and state law, according to a new report.
JD Supra reported that on Sept. 16, 2025, a judge for the U.S. District Court of the Middle District of North Carolina issued a memorandum opinion and order in the class action proceeding Christel England et al. v. Selene Finance LP, denying the defendant servicer’s motion to dismiss a putative class action complaint.
The plaintiffs alleged that the servicer’s default notice is deceptive under the federal Fair Debt Collection Practices Act (FDCPA), the North Carolina Debt Collection Act and the North Carolina Collection Agencies Act, according to JD Supra.
What Language Reveals
In its analysis, JD Supra noted, “The language of the notice at issue is familiar to the residential mortgage servicing industry. Titled Notice of Default and Intent to Accelerate, the notice states that:
• The servicer of your mortgage loan [] in accordance with the Security Instrument and applicable state laws provides you with formal notice of the following: The mortgage loan associated with the Security Instrument is in default for failure to pay the amounts that came due on [date] and all subsequent payments. To cure this default, you must pay all amounts due under the terms of your Note and Security Instrument, which includes any delinquent payments and regularly scheduled payments. … The total amount you must pay to cure the default stated above must be received by [date]. Failure to cure the default on or before the date specified may result in acceleration of the sums secured by the Security Instrument, sale of the property and/or foreclosure by judicial proceeding and sale of the property.”
Action Can’t Be Taken
JD Supra said plaintiffs argue that the notice threatens legal action that cannot be taken, which constitutes an unfair and deceptive collections practice.
“The language at issue is the statement that, ‘[f]ailure to cure the default on or before the date specified may result in acceleration of the sums secured by the Security Instrument, sale of the property,’” the JD Supra report explained. “Plaintiffs allege that the threat to accelerate the loan if the arrears are not paid in full by the date contained in the letter violates section 1692e of the FDCPA because residential servicers do not commence foreclosure when a loan obligation is less than 120 days delinquent.”
Additional Rationale
As JD Supra further explained, Section 1692e of the FDCPA prohibits a debt collector from threatening “to take any action that cannot legally be taken or is not intended to be taken” and using “any false representation or deceptive means to collect or attempt to collect any debt.”
The court found sufficient the plaintiffs’ allegation that the servicer does not accelerate the loans of borrowers who fail to pay their total default amount before the date set out in the letters—usually 30 days from the notice—“in the usual course of business” because residential servicers do not commence foreclosure until the loan obligation is more than 120 days delinquent, the report stated.
“Therefore, to avoid acceleration and foreclosure, a borrower needs only to bring the loan to less than 120 days past due,” it added.
The Ruling
Assuming the vantage of the “least sophisticated consumer,” the district court concluded that the plaintiffs had plausibly stated a claim for relief under Section 1692e(5) of the FDCPA because this statement was a threat to take action the servicer “has no intention of taking,” JD Supra said, adding the court rejected the servicer’s argument that its statement that the borrower’s failure to pay may result in acceleration and foreclosure was permissible.
