Case 1:18-cv LEK-ATB Document 1 Filed 09/07/18 Page 1 of 48 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF NEW YORK

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1 Case 1:18-cv LEK-ATB Document 1 Filed 09/07/18 Page 1 of 48 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF NEW YORK ROBERT J. HEINITZ and SANDRA L. HEINITZ, on Behalf of Themselves and Others Similarly Situated, v. Plaintiffs, CLASS ACTION COMPLAINT [JURY TRIAL DEMANDED] Case No.: 1:18-CV-1076 (LEK/ATB) SETERUS, INC., Defendant. Robert J. Heinitz and Sandra L. Heinitz ( Plaintiffs ), on behalf of themselves and all others similarly situated, file this class action complaint against Seterus, Inc. ( Seterus or "Defendant") and state: NATURE OF THE ACTION Plaintiffs bring this consumer class action on their behalf and on behalf of others similarly situated to obtain redress from Seterus systematic use of misleading, deceptive, unfair, and unlawful debt collection practices to collect upon residential consumer mortgage loans in violation of the Fair Debt Collection Practices Act, 15 U.S.C. 1962, et seq. ( FDCPA ). Specifically, Seterus sends homeowners form letters (the New York Final Letter ) stating that the borrowers are in default of their mortgages and that their failure to make a full and complete payment of all arrearages will result in acceleration of their loan and commencement of foreclosure proceedings. In truth, however, Seterus policy and practice is not to accelerate loans, or to initiate foreclosure proceedings, in instances where there is an arrearage, so long as the borrower makes a partial payment sufficient to bring the loan less than 45 days delinquent.

2 Case 1:18-cv LEK-ATB Document 1 Filed 09/07/18 Page 2 of 48 Accordingly, each of the New York Final Letters sent by Seterus falsely and misleadingly suggest that Seterus will accelerate the loan or commence foreclosure proceedings absent full payment, in contradiction to Seterus actual policy not to accelerate a loan or commence foreclosure proceedings so long as any payment sufficient to bring the loan less than 45 days delinquent is made prior to the expiration date set forth in the New York Final Letter. The New York Final Letter sent by Seterus to Plaintiffs and others similarly situated is a false and misleading threat of acceleration and foreclosure designed to intimidate borrowers into making payments to Seterus that are beyond their means and beyond what is necessary to avoid acceleration and save their homes from foreclosure. This class action is filed pursuant to Rule 23 of the Federal Rules of Civil Procedure on behalf of all persons who are members of the Class (defined below) to whom Seterus has sent or will send a New York Final Letter during the applicable Class Period (defined below). JURISIDICTION AND VENUE This Court has original subject matter jurisdiction under 28 U.S.C in that this action arises under, inter alia, the Fair Debt Collection Practices Act, 15 U.S.C et seq. This Court has jurisdiction of the FDCPA, KCPA claims under the Class Action Fairness Act ( CAFA ), 28 U.S.C. 1332(d), 1453, and , in that (i) the putative class contains more than 100 members; (ii) the class claims total more than $5 million; and, (iii) there is minimal diversity because Seterus is a citizen of a different state than Plaintiff or at least one member of the Class, some of whom have moved outside of New York in the past three years, such that there is minimal diversity. This Court has supplemental jurisdiction under 28 U.S.C in that the state law allegations contained herein are so related to the claims asserted under 15 U.S.C et seq. 2

3 Case 1:18-cv LEK-ATB Document 1 Filed 09/07/18 Page 3 of 48 over which the Court has original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution. Venue is proper in this District under 28 U.S.C. 1391(b)(2) in that a substantial part of the events or omissions giving rise to the claims asserted herein occurred in Ulster County, New York. PARTIES Plaintiffs are citizens and residents of Ulster County, New York. Plaintiffs are consumers as that term is defined by 15 U.S.C. 1692a(3). Seterus is a corporation organized and existing under and by virtue of the laws of the State of Delaware with a principal place of business in Research Triangle Park, North Carolina. Seterus frequently acts as a debt collector as that term is defined by 15 U.S.C. 1692a(6), including with regard to Plaintiffs mortgage loan, because Seterus obtained the servicing rights while in a state of default. Seterus is regularly engaged in the business of collecting debt in the State of New York. Its employees, affiliates, directors, agents, and attorneys act under the direction and supervision of Seterus and, therefore, Seterus is directly and/or vicariously liable for the actions of its employees, affiliates, directors, agents, and attorneys under, inter alia, the theory of respondeat superior. 3

4 Case 1:18-cv LEK-ATB Document 1 Filed 09/07/18 Page 4 of 48 FACTUAL ALLEGATIONS Plaintiffs own a residential home located at 1946 Lucas Avenue, Cottekill, NY Plaintiffs home is secured by a mortgage owned, backed, or controlled by Federal National Mortgage Association ( Fannie Mae ) that is serviced by Seterus. Upon information and belief, Seterus is a specialty mortgage servicer for high risk residential housing loans owned, backed, or controlled by Fannie Mae. As a mortgage servicer, Seterus contracts with Fannie Mae to collect payments, fees, and other amounts owed by the home owner and to provide other services to investors relating to the home owner s loan. Upon information and belief, Seterus earns money based upon a percentage of the funds that it collects from consumers mortgage payments as well as through the assessment of late fees and other penalties. Plaintiffs mortgage loan is governed by a promissory note (the Note ) that defines default as failure to pay the full amount of each monthly payment on the date it is due.... Plaintiffs loan was delinquent when transferred to Seterus for servicing on or about March 1, The Scope of Seterus Collection Activities Seterus is not a bank and does not lend money to purchasers for home loans. Seterus is not owned or controlled by a bank, corporation or association engaged in accounting, bookkeeping, or data processing services where a primary component of such services is the rendering of statements of accounts and bookkeeping servicers for creditors. Upon information and belief, Seterus services hundreds of thousands of loans 4

5 Case 1:18-cv LEK-ATB Document 1 Filed 09/07/18 Page 5 of 48 throughout the United States. Because Seterus does not originate home mortgage loans, it only becomes involved with homeowners by acquiring the servicing rights to their mortgage loans as part of a portfolio of loans from Fannie Mae, or if Fannie Mae or other entity assigns or transfers the servicing rights to Seterus of a portfolio of loans from another servicer. Seterus is a specialty mortgage servicer that primarily services high risk portfolios owned or backed or otherwise controlled by Fannie Mae or other entities. Seterus specialty is servicing residential mortgage loans that are in default or at an increased risk of default. Accordingly, a high percentage of the residential mortgage loans serviced by Seterus experience one or more payment delinquencies of 45 days or more. Upon information and belief, when loans for New York homeowners became more than 45 days delinquent over the Class Period, Seterus sends each mortgagor the New York Final Letter. Upon information and belief, to this day, Seterus continues to send a version of the New York Final Letter to New York homeowners whose loans become more than 45 days delinquent. Seterus Violations of the Fair Debt Collection Practices Act Vis-à-Vis Plaintiffs On or about March 1, 2015, Plaintiffs mortgage was service transferred to Seterus while in a state of delinquency. Since that time, Seterus has alleged the Plaintiffs to be more than 45 days delinquent on their mortgage and sent Plaintiffs numerous New York Final Letters. Attached as Exhibit A is a true and correct copy of a New York Final Letter sent 5

6 Case 1:18-cv LEK-ATB Document 1 Filed 09/07/18 Page 6 of 48 by Seterus to Plaintiff Sandra Heinitz. Upon information and belief, Plaintiffs have received and read numerous New York Final Letters during the Class Period. 1 Upon information and belief, Exhibit A is substantially the same form of letter sent to all borrowers in New York who are alleged to be more than 45 days delinquent on a loan that Seterus services. Seterus s correspondence to Plaintiffs, as set forth herein, and similar form letters to Class members expressly state THIS COMMUNICATION IS FROM A DEBT COLLECTOR AS WE SOMETIMES ACT AS A DEBT COLLECTOR (emphasis in original). The New York Final Letter specifically states: If full payment of the default amount is not received by us... on or before [the Expiration Date], we will accelerate the maturity date of your loan and upon such acceleration the ENTIRE balance of the loan, including principal, accrued interest, and all other sums due thereunder, shall, at once and without further notice, become immediately due and payable. Exhibit A. (emphasis added). Id. (emphasis in original). The New York Final Letter further states: If you send only a partial payment, the loan still will be in default... IF THE DEFAULT IS NOT CURED ON OR BEFORE THE EXPIRATION DATE, THE LOAN OWNER AND WE INTEND TO ENFORCE THE LOAN OWNER S RIGHTS AND REMEDIES AND MAY PROCEED WITHOUT FURTHER NOTICE TO COMMENCE FORECLOSURE PROCEEDINGS. Seterus has contractual obligations to provide notices to mortgagors like Plaintiffs 1 Exhibit A is an example of the New York Final Letters sent to Class members. New York Final Letters includes all form letters sent by Seterus during the Class Period that contain the passages alleged to violate the FDCPA in the ways alleged in this Class Action Complaint. 6

7 Case 1:18-cv LEK-ATB Document 1 Filed 09/07/18 Page 7 of 48 of the occurrence of a deficiency qualifying as a default. Rather than simply providing notice, Seterus instead utilizes the New York Final Letters to make false, misleading, and overbroad threats to accelerate the note and to commence foreclosure proceedings. Seterus Actual Corporate Policy and Practice The New York Final Letters create a false sense of urgency by threatening to accelerate the entire indebtedness of a consumer s loan if full payment of the default amount is not received... on or before the Expiration Date, when Seterus actual policy, attested to in sworn testimony by a corporate officer, is to not accelerate loans that are less than 45 days delinquent. On July 19, 2016, Seterus s 30(b)(6) deposition testimony was taken in Hager v. Seterus, Inc., 1:15-cv-222 (W.D.N.C.) pursuant to the Notice of Deposition to Seterus, Inc.. A true and accurate copy of the 30(b)(6) Notice of Deposition from Hager v. Seterus, Inc. is attached hereto as Exhibit B. Seterus designated Achsah Jacob, a legal mediation officer, to testify as to the topics identified in the Notice of Deposition to Seterus, Inc. During Seterus 30(b)(6) deposition, Achsah Jacob testified as follows: Q. My understanding of your testimony just now is that if Seterus receives a payment in response to an NC Final, then the debt is no longer 45 days due and so that's sufficient to hold off the acceleration process? Q. Okay. And is that -- is that Seterus policy just with regard to North Carolina? A. Seterus policy for the loans where we are accepting payments and we re able to apply full contractual payment to the loan. Q. Okay. So in response to a letter like Exhibit 11 2, Seterus policy, if they're accepting 2 Exhibit 11 (a true and accurate copy of which is attached hereto as Exhibit D) was a North Carolina Final Letter substantially similar to Exhibit A. This deposition was taken in North 7

8 Case 1:18-cv LEK-ATB Document 1 Filed 09/07/18 Page 8 of 48 payments, is if they receive an amount equal to a normal monthly payment, they will not accelerate the debt? A. As long as, right, it brings the loan less than 45 days due. Q. Okay. Where does it say that in this letter that if you make one payment or enough such that one payment is recorded, we won t do this, or does it say that? A. Well, the expiration date provides really the -- the timeline where the customer needs to make some sort of payment so that the 45 days are not past due. Q. Not some sort of payment, $3,204.72, that s what it says, right? A. Yes. And we re allowing the customer, we re also -- yes. We would like the $3, But our objective is not to foreclose on our customers. Our objective is to be able to take -- even if it's a partial payment, if where -- if in the bucket where a partial payment can be made, our objective is to collect that payment to help them stay in their house. Because them making payments, staying in their house helps us in our business as well. Foreclosing on them is really not, you know, helpful to us nor to them. Q. Yeah. A. And so therefore, this letter is sent out per the guidelines that are outlined and we allow the customer -- we allow the customer to make that partial payment. And then when a full -- if a partial payment does not equal the contractual payment, then your -- then this letter still -- still stands. But because a contractual payment is able to be applied to the loan account, then we don t have to continue with the -- this letter. [Seterus Dep. at pp. 177:11-180:10]. A true and accurate copy of a portion of Seterus s 30(b)(6) Deposition from Hager is attached hereto as Exhibit C. According to Achsah Jacob, Seterus does not accelerate borrowers loans and proceed to foreclosure even if the borrower fails to make a full payment equal to the default amount or amount due listed in the New York Final Letter and fails to make any additional payments that come due during the notice period. Carolina in regards to a North Carolina Final Letter; however, the North Carolina Final Letter and the New York Final Letters are substantially similar and the legal issues therein are comparable. 8

9 Case 1:18-cv LEK-ATB Document 1 Filed 09/07/18 Page 9 of 48 Put simply, Seterus does not customarily accelerate loans under the terms threatened by its New York Final Letter if homeowners make a partial payment sufficient to bring their loan less than 45 days past due. The New York Final Letters misrepresent the conditions under which Seterus intends to accelerate loans and deceives consumers into believing their loans will be accelerated if they fail to fully cure their default prior to the expiration date. The New York Final Letters cause the least sophisticated consumers to believe that they will lose their homes if all arrearages to Seterus are not paid by the stated expiration date; which is not true. The New York Final Letters cause the least sophisticated consumers to believe that they will lose their homes if they do not bring their loan current by the stated expiration date; which is not true. The New York Final Letters misrepresent Seterus s intentions and present homeowners with a false ultimatum that they must satisfy all arrearages within the deadline or face acceleration and immediate commencement of foreclosure proceedings. The New York Final Letters were materially misleading in that they threatened homeowners with acceleration and foreclosure when Seterus had neither the present intent, nor the present ability, to undertake such actions. The false or misleading threats of acceleration and foreclosure contained within the New York Final Letter are designed to scare and intimidate homeowners into paying all delinquent amounts, even if such payment is not required to avoid acceleration or the commencement of foreclosure proceedings. The false or misleading threats of acceleration and foreclosure contained within the 9

10 Case 1:18-cv LEK-ATB Document 1 Filed 09/07/18 Page 10 of 48 New York Final Letter have the potential of causing individuals to send additional money to Seterus that, absent the false and misleading statements, they could have utilized on other necessary expenditures, including food and utility payments. The misleading threats of acceleration and foreclosure make it impossible for the least sophisticated consumer to make a rational decision in response to the New York Final Letter because it threatens immediate, irreversible consequences. The misleading threats of acceleration and foreclosure are designed to scare homeowners into making payments they otherwise may not make. Upon information and belief, Seterus willfully crafted the New York Final Letter in such a way to frighten and intimidate consumers into paying money to Seterus in violation of federal and New York fair debt collection statutes. By misrepresenting Seterus actual policies and practices, the New York Final Letter deprived New York homeowners of accurate, non-misleading information upon which they could choose the best course of conduct for their individual financial and family situations. Accordingly, the New York Final Letters threaten action not actually intended to be taken by Seterus in the ordinary course of business where the borrower makes a partial payment, and constitute unfair threats, coercion, or attempts to coerce payments from consumers in violation of the FDCPA. Upon information and belief, Seterus uses substantially identical language in all of its New York Final Letters that are sent to New York homeowners whose mortgage loans are 45 or more days past due. Plaintiffs have received and read numerous New York Final Letters substantially identical to Exhibit A. 10

11 Case 1:18-cv LEK-ATB Document 1 Filed 09/07/18 Page 11 of 48 Upon information and belief, each Class member has received one or more New York Final Letter within the applicable statute of limitations. Each New York Final Letter constitutes a separate violation of the FDCPA in that, inter alia, the New York Final Letter threatens to take action not taken by Seterus in the ordinary course of business and that it did not intend to take. As a result of the foregoing, Plaintiffs have been deprived of accurate information from which to make informed decisions in response to Seterus collection attempts. Defendant s Violations Were Willful As an acknowledged debt collector subject to the FDCPA Seterus and its officers, managers, and employees are aware that these fair debt statutes forbid threatening to take action that the debt collector does not intend to take, and from making false or misleading statements to debtors. Seterus purposely crafted the New York Final Letter to threaten action that Seterus knew, based on its own corporate policy and practice as alleged herein, it did not intend to take. violated the FDCPA. In so doing, Seterus and its agents, officers, managers, and employees willfully The risk of violation of the FDCPA by Seterus s mailing of the New York Final Letter over the Class Period was more than merely careless. CLASS ALLEGATIONS Pursuant to Federal Rules of Civil Procedure 23, Plaintiffs brings this action on behalf of a Class defined as follows: All New York residential mortgagors whose mortgage servicing was transferred to Seterus while in a state of default, to whom Seterus sent a letter substantially similar to the New York Final Letter attached as Exhibit A to this Class Action Complaint, in that the 11

12 Case 1:18-cv LEK-ATB Document 1 Filed 09/07/18 Page 12 of 48 letter warned of immediate acceleration of the loan and/or commencement of foreclosure proceedings, upon less than full payment of the amount due or default amount, during the relevant statutory time periods under the FDCPA (one year) and NY GBL 349 (three years) preceding the date of the filing of this Class Action Complaint. Excluded from the Class are officers, directors, and managers of Seterus; the Court; and staff of the judicial officer(s) assigned to this action. The Class shall be for the relevant statutory time periods under the FDCPA (one year) and NY General Business Law 349 (three years) preceding the filing of this Class Action Complaint and ending on the last day of trial or, in the event of a class settlement, ending on the date of entry of an order preliminary approving such class settlement, whichever is later (the Class Period ). Numerosity: Upon information and belief, the Class contains several thousand members, based upon an analysis of the volume of Seterus s mortgage default servicing activity nationwide and in New York. impracticable. The size of the Class is so numerous that joinder of all members would be Commonality: Several common questions of law or fact pertaining to claims of the Class and of the Subclass are presented in this action, including without limitation: o Were Seterus s communications seeking to collect amounts it claimed were in default on home mortgages a form of debt collection under the FDCPA? o Is Seterus a debt collector as that term is defined by the FDCPA, 15 U.S.C. 1692(a)(6), when it communicates with homeowners whose mortgage servicing rights it acquired after default? o What were Seterus s policies and practices concerning acceleration of defaulted loans upon receipt of a partial payment? o What were Seterus policies and practices concerning the commencement of foreclosure proceedings against homeowners who made a partial payment of the 12

13 Case 1:18-cv LEK-ATB Document 1 Filed 09/07/18 Page 13 of 48 amount due or default amount as described in Seterus New York Final Letter? o Does the New York Final Letter violate the FDCPA in one or more of the ways alleged? o Does the New York Final Letter violate the NY GBL 349? Typicality: The claims of Plaintiffs are typical of the claims of the Class and all are based on the same facts and legal theories, as all such claims arise out of the complained-of Seterus conduct. Adequate Representation: Plaintiffs are adequate representatives of the Class in that they are members of the Class and do not have antagonistic or conflicting claims with other Class members. Plaintiffs have also retained counsel experienced in the prosecution of complex class actions, specifically including fair debt class actions involving mortgages. vigorously pursue this action. Neither Plaintiffs nor their counsel have any interests that might cause them not to Plaintiffs are aware of their responsibilities as class representatives and have accepted such responsibilities. Injunctive or Declaratory Relief. The grant of injunctive or declaratory relief is appropriate under Federal Rule of Civil Procedure 23(b)(2) because Seterus has acted and continues to act in violation of the FDCPA with respect to all New York homeowners whose mortgages it services. Seterus has acted and refused to act on grounds generally applicable to the Class making final injunctive and declaratory relief appropriate. Predominance: Under Federal Rule of Civil Procedure 23(b)(3), the common questions of law and fact listed above, and others, predominate over any individual issues that may 13

14 Case 1:18-cv LEK-ATB Document 1 Filed 09/07/18 Page 14 of 48 be presented. Seterus has sought to and continues to attempt to collect amounts it claims are due under defaulted home loan in New York using form letters, and its policies and practices regarding partial payments were and are consistently applied to all homeowners. Superiority: Under Federal Rule of Civil Procedure 23(b)(3), the Class is appropriate for certification because a class action is superior to other available methods for the fair and efficient adjudication of this controversy. Actual tangible damages are unlikely based upon the violations alleged, and the statutory damages sought on behalf of Class members are small, such that individual Class members could not economically pursue individual actions. Absent a class, Class members would be unlikely to receive any recovery. Accordingly, individual Class members do not have an interest in controlling the prosecution of separate actions. Plaintiffs counsel anticipate no undue difficulties in the management of this action on a class basis. Alternatively, absent a class courts throughout New York may be confronted with a multiplicity of lawsuits, which would unnecessarily burden the courts while also creating the risk of inconsistent rulings and contradictory judgments. 14

15 Case 1:18-cv LEK-ATB Document 1 Filed 09/07/18 Page 15 of 48 forth herein. 1692a(6). FIRST CAUSE OF ACTION (Violations of the Fair Debt Collection Practices Act, 15 U.S.C. 1692, et seq.) Plaintiffs repeat and reallege the allegations in the preceding paragraphs as if set Seterus frequently acts as a debt collector as that term is defined by 15 U.S.C. Each member of the proposed FDCPA Sub-Class are consumers, as that term is defined by the FDCPA, 15 U.S.C. 1692a(3). Each member of the proposed FDCPA Sub-Class has a debt, as defined by the FDCPA, 15 U.S.C. 1692a(5). Each member of the proposed FDCPA Sub-Class has a debt for which Seterus acquired the servicing rights after the debt was in default. herein. The foregoing allegations are hereby reincorporated by reference as if fully restated Seterus is a debt collector, as defined by the FDCPA, 15 U.S.C. 1692(a)(6). Seterus is a debt collector in servicing Plaintiffs mortgage because her loan was in default at the time Seterus obtained the servicing rights. Plaintiffs and all members of the Subclass are consumers, as defined by the FDCPA, 15 U.S.C. 1692(a)(3), since they are natural persons allegedly obligated to pay a consumer debt. At all material times, Plaintiffs debt and the debts of the Subclass members were debt, as defined by the FDCPA, 15 U.S.C. 1692(a)(5). Dunning letters such as those attached as Exhibits A-C hereto are to be evaluated by the objective least sophisticated consumer standard. 15

16 Case 1:18-cv LEK-ATB Document 1 Filed 09/07/18 Page 16 of 48 FDCPA 15 U.S.C. 1692(e) states in part: A debt collector may not use false, deceptive, or misleading representations or means in connection with the collection of any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:... (5) The threat to take any action that cannot legally be taken or that is not intended to be taken.... (10) The use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer. Seterus has attempted to collect debt in violation of 15 U.S.C. 1692(e), in that it used false representations and deceptive means to collect or attempt to collect the Debt; threatened action it did not intend to take; and/or threatened to take action that it could not legally take. Seterus has attempted to collect debt in violation of 15 U.S.C. 1692(e), in that it utilized false threats and misleading representations regarding the amounts that consumers must pay, and when they must pay it, in order to continue to own their homes. Seterus has attempted to collect debt in violation of 15 U.S.C. 1692(e) in that it falsely represented its intention to accelerate and foreclose on Plaintiffs home in an effort to induce the payment of additional funds. Seterus has attempted to collect debt in violation of 15 U.S.C. 1692(e), in that it misrepresented its intentions and presented Plaintiffs and other consumers with a false ultimatum that they must pay all arrearages within the false deadline identified in the New York Final Letters, or face immediate acceleration and initiation of foreclosure proceedings. Seterus has attempted to collect debt in violation of 15 U.S.C. 1692(e), in that it has threatened to take action, including acceleration and foreclosure, when it had no intention of taking such measures under the terms threatened in its New York Final Letter. 16

17 Case 1:18-cv LEK-ATB Document 1 Filed 09/07/18 Page 17 of 48 Seterus violations of 15 U.S.C. 1692(e) were material, inter alia, because the New York Final Letter mislead consumers about information necessary to permit them to determine their best course of conduct; created a substantial risk of causing homeowners to make less than optimal decisions in managing their finances; and increased and foreseeably increase the anxiety of homeowners regarding the risk of immediate acceleration or commencement of foreclosure proceedings. Moreover, Congress has expressly determined that Seterus s violations are material by specifically designating that threats to take actions that the debt collector does not intend to take are an unfair collection practice and a violation of the FDCPA. Seterus has attempted to collect debt in violation of 15 U.S.C. 1692(e) by using false representations and deceptive means, including false threats of acceleration and commencement of foreclosure proceedings, and the New York Final Letters are therefore illegal. FDCPA 1692(f) states in pertinent part that a debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt. Seterus has attempted to collect debt in violation of 15 U.S.C. 1692(f) in that it unfairly utilized false threats and misleading representations regarding the amounts that consumers must pay, and when they must pay it, in order to continue to own their homes. Seterus has attempted to collect debt in violation of 15 U.S.C. 1692(f) in that it falsely represented its intention to accelerate and foreclose on Plaintiffs home in an effort to induce the payment of additional funds. Seterus has attempted to collect debt in violation of 15 U.S.C. 1692(f), in that it misrepresented its intentions and presented Plaintiffs and other consumers with a false ultimatum that they must satisfy all arrearages within the false deadline identified in the New York Final 17

18 Case 1:18-cv LEK-ATB Document 1 Filed 09/07/18 Page 18 of 48 Letters, or face acceleration and ultimately foreclosure. Seterus has attempted to collect debt in violation of 15 U.S.C. 1692(f), in that it has threatened to take action, including acceleration and foreclosure, when it had no intention of taking such measures. Seterus has attempted to collect debt in violation of 15 U.S.C. 1692(f) by using unfair and unconscionable means, including false threats of acceleration and foreclosure. As a result of Seterus unlawful attempts to collect debt, Plaintiffs and the FDCPA Class Members are entitled to statutory damages, as well as their reasonable attorneys fees. forth herein. SECOND CAUSE OF ACTION (Violation of NY GBL 349) Plaintiffs repeat and reallege the allegations in the preceding paragraphs as if set New York General Business Law section 349(a) prohibits "deceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state." An individual "injured by reason of any violation of this section may bring an action in his own name to enjoin such unlawful act or practice, an action to recover his actual damages or fifty dollars, whichever is greater, or both such actions." N.Y. Gen. Bus. Law 349(h). Seterus engaged in deceptive acts and practices in the conduct of their businesses. Seterus s conduct has had a broad impact on consumers at large. Seterus committed the deceptive acts and practices willfully and/or knowingly. Seterus s wrongful and deceptive acts have caused injury and damages to Plaintiffs and class members and unless enjoined, will cause further irreparable injury. Seterus s violations of NY GBL 349 include, but are not limited to: 18

19 Case 1:18-cv LEK-ATB Document 1 Filed 09/07/18 Page 19 of 48 a. Seterus has falsely represented that failure to immediately and completely satisfy all arrearages would result in acceleration of their loan in contravention of Seterus s specific intentions and ordinary practices; b. Seterus has attempted to collect debt using false representations and deceptive means to collect or attempt to collect the Debt; c. Seterus has threatened action it did not intend to take; d. Seterus has threatened to take action that it could not legally take; e. Seterus has attempted to collect debt utilizing false threats and misleading representations regarding the amounts that consumers must pay, and when they must pay it, in order to continue to own their homes; f. Seterus has attempted to collect debt utilizing false threats and misleading representations regarding the amounts that consumers must pay, and when they must pay it, for the sole purpose of coercing additional payments; g. Seterus has falsely represented its intention to accelerate and foreclose on Plaintiff s home in an effort to induce the payment of additional funds; h. Seterus has misrepresented its intentions and presented Plaintiffs and other consumers with a false ultimatum that they must satisfy all arrearages within the false deadline identified in the NY Final Letters, or face acceleration and ultimately foreclosure; i. Seterus has threatened to take action, including acceleration and foreclosure, when it had no intention of taking such measures and when such actions are not taken in the usual course of business; and j. Seterus has attempted to collect debt by using unfair threats and coercion, 19

20 Case 1:18-cv LEK-ATB Document 1 Filed 09/07/18 Page 20 of 48 including empty threats of acceleration and foreclosure. As a direct and proximate result of these violations of section 349 of the General Business Law, Plaintiffs and putative class members have suffered compensable harm and are entitled to preliminary and permanent injunctive relief, and to recover actual and treble damages, costs and attorney's fees. JURY DEMAND Plaintiffs hereby demands a trial by jury on all issues so triable. PRAYER FOR RELIEF WHEREFORE, Plaintiffs Robert J. Heinitz and Sandra L. Heinitz, on their own behalf and on behalf of all others similarly situated, pray the Court for judgment as set forth below: Certifying this action as a class action as provided by Rule 23(b)(2) and (b)(3) of the Federal Rules of Civil Procedure, appointing Plaintiffs as class representatives, and appointing the undersigned as Class counsel; Declaring that Seterus has violated the FDCPA and NY GBL 349 in the ways alleged in this Class Action Complaint; Enjoining further violations of the FDCPA and NY GBL 349 by Seterus and its agents and employees; Awarding Plaintiffs and the Class statutory damages under the FDCPA and NY GBL 349; Awarding Plaintiffs and the Class their reasonable attorneys fees and costs incurred pursuant to the FDCPA and the NY GBL 349; Ordering that the costs of this action be taxed to Seterus; and 20

21 Case 1:18-cv LEK-ATB Document 1 Filed 09/07/18 Page 21 of 48 Providing such other and further relief as the Court deems just and proper. Respectfully submitted, /s Elmer Robert Keach, III Dated: September 7, 2018 Elmer Robert Keach, III, Esquire NYND Bar Roll Number Maria K. Dyson, Esquire LAW OFFICES OF ELMER ROBERT KEACH, III, PC One Pine West Plaza, Suite 109 Albany, NY bobkeach@keachlawfirm.com Scott C. Harris (NC 35328) Patrick M. Wallace (NC 48138) WHITFIELD BRYSON & MASON, LLP 900 W Morgan St Raleigh, NC Phone: (919) Fax: (919) scott@wbmllp.com pat@wbmllp.com Edward H. Maginnis (NC 39317) Karl S. Gwaltney (NC 45118) Asa C. Edwards (NC 46000) MAGINNIS LAW PLLC 4801 Glenwood Ave, Suite 310 Raleigh, NC Phone: (919) Fax: (919) emaginnis@maginnislaw.com kgwaltney@maginnislaw.com aedwards@maginnislaw.com Counsel for Plaintiffs and the Proposed Class 21

22 Case 1:18-cv LEK-ATB Document 1 Filed 09/07/18 Page 22 of 48 EXHIBIT A

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49 JS 44 (Rev. 06/17) Case 1:18-cv LEK-ATB Document 1-1 Filed 09/07/18 Page 1 of 2 CIVIL COVER SHEET The JS 44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service of pleadings or other papers as required by law, except as provided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk of Court for the purpose of initiating the civil docket sheet. (SEE INSTRUCTIONS ON NEXT PAGE OF THIS FORM.) I. (a) PLAINTIFFS DEFENDANTS Robert J. Heinitz and Sandra L. Heinitz Seterus, Inc. (b) County of Residence of First Listed Plaintiff Ulster (EXCEPT IN U.S. PLAINTIFF CASES) County of Residence of First Listed Defendant North Carolina (IN U.S. PLAINTIFF CASES ONLY) NOTE: IN LAND CONDEMNATION CASES, USE THE LOCATION OF THE TRACT OF LAND INVOLVED. (c) Attorneys (Firm Name, Address, and Telephone Number) Attorneys (If Known) Elmer Robert Keach, III, Maria Dyson, Law Offices of Elmer Robert Unknown Keach, III, PC, One Pine West Plaza, Suite 109, Albany, NY 12205; II. BASIS OF JURISDICTION (Place an X in One Box Only) III. CITIZENSHIP OF PRINCIPAL PARTIES (Place an X in One Box for Plaintiff (For Diversity Cases Only) and One Box for Defendant) 1 U.S. Government 3 Federal Question PTF DEF PTF DEF Plaintiff (U.S. Government Not a Party) Citizen of This State 1 1 Incorporated or Principal Place 4 4 of Business In This State 2 U.S. Government 4 Diversity Citizen of Another State 2 2 Incorporated and Principal Place 5 5 Defendant (Indicate Citizenship of Parties in Item III) of Business In Another State Citizen or Subject of a 3 3 Foreign Nation 6 6 Foreign Country IV. NATURE OF SUIT (Place an X in One Box Only) Click here for: Nature of Suit Code Descriptions. CONTRACT TORTS FORFEITURE/PENALTY BANKRUPTCY OTHER STATUTES 110 Insurance PERSONAL INJURY PERSONAL INJURY 625 Drug Related Seizure 422 Appeal 28 USC False Claims Act 120 Marine 310 Airplane 365 Personal Injury - of Property 21 USC Withdrawal 376 Qui Tam (31 USC 130 Miller Act 315 Airplane Product Product Liability 690 Other 28 USC (a)) 140 Negotiable Instrument Liability 367 Health Care/ 400 State Reapportionment 150 Recovery of Overpayment 320 Assault, Libel & Pharmaceutical PROPERTY RIGHTS 410 Antitrust & Enforcement of Judgment Slander Personal Injury 820 Copyrights 430 Banks and Banking 151 Medicare Act 330 Federal Employers Product Liability 830 Patent 450 Commerce 152 Recovery of Defaulted Liability 368 Asbestos Personal 835 Patent - Abbreviated 460 Deportation Student Loans 340 Marine Injury Product New Drug Application 470 Racketeer Influenced and (Excludes Veterans) 345 Marine Product Liability 840 Trademark Corrupt Organizations 153 Recovery of Overpayment Liability PERSONAL PROPERTY LABOR SOCIAL SECURITY 480 Consumer Credit of Veteran s Benefits 350 Motor Vehicle 370 Other Fraud 710 Fair Labor Standards 861 HIA (1395ff) 490 Cable/Sat TV 160 Stockholders Suits 355 Motor Vehicle 371 Truth in Lending Act 862 Black Lung (923) 850 Securities/Commodities/ 190 Other Contract Product Liability 380 Other Personal 720 Labor/Management 863 DIWC/DIWW (405(g)) Exchange 195 Contract Product Liability 360 Other Personal Property Damage Relations 864 SSID Title XVI 890 Other Statutory Actions 196 Franchise Injury 385 Property Damage 740 Railway Labor Act 865 RSI (405(g)) 891 Agricultural Acts 362 Personal Injury - Product Liability 751 Family and Medical 893 Environmental Matters Medical Malpractice Leave Act 895 Freedom of Information REAL PROPERTY CIVIL RIGHTS PRISONER PETITIONS 790 Other Labor Litigation FEDERAL TAX SUITS Act 210 Land Condemnation 440 Other Civil Rights Habeas Corpus: 791 Employee Retirement 870 Taxes (U.S. Plaintiff 896 Arbitration 220 Foreclosure 441 Voting 463 Alien Detainee Income Security Act or Defendant) 899 Administrative Procedure 230 Rent Lease & Ejectment 442 Employment 510 Motions to Vacate 871 IRS Third Party Act/Review or Appeal of 240 Torts to Land 443 Housing/ Sentence 26 USC 7609 Agency Decision 245 Tort Product Liability Accommodations 530 General 950 Constitutionality of 290 All Other Real Property 445 Amer. w/disabilities Death Penalty IMMIGRATION State Statutes Employment Other: 462 Naturalization Application 446 Amer. w/disabilities Mandamus & Other 465 Other Immigration Other 550 Civil Rights Actions 448 Education 555 Prison Condition 560 Civil Detainee - Conditions of Confinement V. ORIGIN (Place an X in One Box Only) 1 Original 2 Removed from Proceeding State Court VI. CAUSE OF ACTION VII. REQUESTED IN COMPLAINT: VIII. RELATED CASE(S) IF ANY DATE 3 Remanded from 4 Reinstated or 5 Transferred from 6 Appellate Court Reopened Another District (specify) Cite the U.S. Civil Statute under which you are filing (Do not cite jurisdictional statutes unless diversity): Multidistrict Litigation - Transfer 8 Multidistrict Litigation - Direct File 15 U.S.C. Sec Brief description of cause: Fair Debt Collection Practice Act and Unfair Trade Practices Against Debt Collector CHECK IF THIS IS A CLASS ACTION DEMAND $ CHECK YES only if demanded in complaint: UNDER RULE 23, F.R.Cv.P. JURY DEMAND: Yes No (See instructions): JUDGE SIGNATURE OF ATTORNEY OF RECORD DOCKET NUMBER 09/07/2018 /s Elmer Robert Keach, III FOR OFFICE USE ONLY ANYNDC RECEIPT # AMOUNT $ APPLYING IFP JUDGE LEK MAG. JUDGE ATB Case No.: 1:18-CV-1076

50 JS 44 Reverse (Rev. 06/17) Case 1:18-cv LEK-ATB Document 1-1 Filed 09/07/18 Page 2 of 2 INSTRUCTIONS FOR ATTORNEYS COMPLETING CIVIL COVER SHEET FORM JS 44 Authority For Civil Cover Sheet The JS 44 civil cover sheet and the information contained herein neither replaces nor supplements the filings and service of pleading or other papers as required by law, except as provided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk of Court for the purpose of initiating the civil docket sheet. Consequently, a civil cover sheet is submitted to the Clerk of Court for each civil complaint filed. The attorney filing a case should complete the form as follows: I.(a) (b) (c) II. III. IV. Plaintiffs-Defendants. Enter names (last, first, middle initial) of plaintiff and defendant. If the plaintiff or defendant is a government agency, use only the full name or standard abbreviations. If the plaintiff or defendant is an official within a government agency, identify first the agency and then the official, giving both name and title. County of Residence. For each civil case filed, except U.S. plaintiff cases, enter the name of the county where the first listed plaintiff resides at the time of filing. In U.S. plaintiff cases, enter the name of the county in which the first listed defendant resides at the time of filing. (NOTE: In land condemnation cases, the county of residence of the "defendant" is the location of the tract of land involved.) Attorneys. Enter the firm name, address, telephone number, and attorney of record. If there are several attorneys, list them on an attachment, noting in this section "(see attachment)". Jurisdiction. The basis of jurisdiction is set forth under Rule 8(a), F.R.Cv.P., which requires that jurisdictions be shown in pleadings. Place an "X" in one of the boxes. If there is more than one basis of jurisdiction, precedence is given in the order shown below. United States plaintiff. (1) Jurisdiction based on 28 U.S.C and Suits by agencies and officers of the United States are included here. United States defendant. (2) When the plaintiff is suing the United States, its officers or agencies, place an "X" in this box. Federal question. (3) This refers to suits under 28 U.S.C. 1331, where jurisdiction arises under the Constitution of the United States, an amendment to the Constitution, an act of Congress or a treaty of the United States. In cases where the U.S. is a party, the U.S. plaintiff or defendant code takes precedence, and box 1 or 2 should be marked. Diversity of citizenship. (4) This refers to suits under 28 U.S.C. 1332, where parties are citizens of different states. When Box 4 is checked, the citizenship of the different parties must be checked. (See Section III below; NOTE: federal question actions take precedence over diversity cases.) Residence (citizenship) of Principal Parties. This section of the JS 44 is to be completed if diversity of citizenship was indicated above. Mark this section for each principal party. Nature of Suit. Place an "X" in the appropriate box. If there are multiple nature of suit codes associated with the case, pick the nature of suit code that is most applicable. Click here for: Nature of Suit Code Descriptions. V. Origin. Place an "X" in one of the seven boxes. Original Proceedings. (1) Cases which originate in the United States district courts. Removed from State Court. (2) Proceedings initiated in state courts may be removed to the district courts under Title 28 U.S.C., Section When the petition for removal is granted, check this box. Remanded from Appellate Court. (3) Check this box for cases remanded to the district court for further action. Use the date of remand as the filing date. Reinstated or Reopened. (4) Check this box for cases reinstated or reopened in the district court. Use the reopening date as the filing date. Transferred from Another District. (5) For cases transferred under Title 28 U.S.C. Section 1404(a). Do not use this for within district transfers or multidistrict litigation transfers. Multidistrict Litigation Transfer. (6) Check this box when a multidistrict case is transferred into the district under authority of Title 28 U.S.C. Section Multidistrict Litigation Direct File. (8) Check this box when a multidistrict case is filed in the same district as the Master MDL docket. PLEASE NOTE THAT THERE IS NOT AN ORIGIN CODE 7. Origin Code 7 was used for historical records and is no longer relevant due to changes in statue. VI. VII. Cause of Action. Report the civil statute directly related to the cause of action and give a brief description of the cause. Do not cite jurisdictional statutes unless diversity. Example: U.S. Civil Statute: 47 USC 553 Brief Description: Unauthorized reception of cable service Requested in Complaint. Class Action. Place an "X" in this box if you are filing a class action under Rule 23, F.R.Cv.P. Demand. In this space enter the actual dollar amount being demanded or indicate other demand, such as a preliminary injunction. Jury Demand. Check the appropriate box to indicate whether or not a jury is being demanded. VIII. Related Cases. This section of the JS 44 is used to reference related pending cases, if any. If there are related pending cases, insert the docket numbers and the corresponding judge names for such cases. Date and Attorney Signature. Date and sign the civil cover sheet.

51 ClassAction.org This complaint is part of ClassAction.org's searchable class action lawsuit database and can be found in this post: Consumers Claim Seterus Misrepresented Foreclosure Policy in Threatening Letter