Missouri MortgageThe Missouri Mortgage
S. W. 3d ----, 2014 WL 4086671 (Mo., 2014) and Watson v. Wells Fargo Home Mortg.
S. W. 3d ----, 2014 WL 4086486 (Mo., 2014) - provide a clear statement on the extent of mortgage service provider liabilities under the Missouri Merchandising Practices Act (the "MMPA"). MMPA provides that "[t]he act of deceit, cheating, false pretence, falsehood, promise, falsehood, dishonest representation, dishonest practices or the non-disclosure, repression or failure to disclose any essential fact relating to the selling or advertising of goods in business or industry or the request for provision of money for a good cause .... in or from the State of Missouri is .... an illegal act.
At Conway, the court was confronted with the emerging problem of whether a mortgage operator who had not taken out the relevant credit could be found responsible under the MMPA. It concerned the legal meaning of the term "in relation to" as used in the MMPA. In particular, the Court had to establish whether the service provided by a credit intermediary was'related' to the granting of the credit (the MMPA requests that the behaviour be related to the initial sales of the product).
Conversely, the District Tribunal dismissed the claim and the Tribunal gave its reasons: "Given that a credit is an on-going transaction, collection procedures, whether initiated by a lender or a credit intermediary, are carried out " in conjunction " with the initial acquisition of the credit....... "In other words, service providers who have not been and/or are not lenders may continue to be responsible for breaches of MMPA.
After defining the MMPA' s field of application at Conway, the Court approached Watson with the subsidiary issue of whether claims that an employee had been acting in bad faith in credit amendment proceedings could be held responsible under the MMPA. Obviously, this effort to expand the MMPA' s range was a bridging that went too far for the Court.
The Court dismissed the complaint and found that'because Wells Fargo did not enforce the conditions of the initial credit when negotiating the credit amendment, its claims did not infringe MMPA as they were not'related to' the sales of the initial credit...'. Mortgages service employees should be aware of possible MMPA liabilities, even if they have not received the credit they service for Missouri borrower.
The Missouri Supreme Court, however, does not seem willing to "open the floodgates" and turn the MMPA into a catchall hypothesis on which creditors can make all kinds of claims and appeals against service providers. Service employees should also be aware that MMPA does not extend to certain organizations, businesses or corporations under charter ing, license or regulatory control by the Director of the State Ministry of Insurance, Financial Services and Occupational Registration.
The exception may help to avoid that some service providers holding licences in this state fall under the roof of the "bad news" of the Conway court ruling.