Fiecke-Stifter v. MidCountry Bank - TILA/FDCPA Claims in Foreclosure

JD Supra Finance & Banking

Filed March 23rd, 2026

Detected March 30th, 2026

Summary

The 8th Circuit affirmed dismissal of a TILA claim in Fiecke-Stifter v. MidCountry Bank, holding that 15 U.S.C. § 1639f(a) permits servicers to credit payments upon receipt and later return insufficient funds. The court vacated and remanded an FDCPA claim against foreclosure counsel, directing the district court to determine whether failing to provide a reinstatement amount within three days under Minnesota § 580.30 deprives counsel of the "present right to possession" required by § 1692f(6)(A). The case arose from a Minnesota nonjudicial foreclosure where the heir redeemed property for $77,159 versus a $58,722 loan balance.

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What changed

The 8th Circuit issued a mixed ruling in a Minnesota nonjudicial foreclosure dispute. The court affirmed dismissal of the heir's TILA claim, holding that 15 U.S.C. § 1639f(a) requires servicers to credit mortgage payments as of the date received but does not prohibit subsequently returning insufficient funds used to reinstate a loan. The court vacated and remanded the FDCPA claim against foreclosure counsel for further analysis on whether counsel's alleged failure to provide the requested reinstatement amount within three days, as required by Minnesota § 580.30, violated the "present right to possession" requirement under 15 U.S.C. § 1692f(6)(A) before proceeding with nonjudicial dispossession.

Banks and their foreclosure counsel should review practices for handling borrower reinstatement requests to ensure compliance with both federal FDCPA requirements and state foreclosure statutes. While TILA's payment crediting requirements are clarified, the remand signals that courts may find FDCPA violations where state law grants mortgagors an "absolute right" to cure a default but the creditor proceeds with foreclosure without providing required information. No compliance deadline applies to this judicial decision.

What to do next

Review foreclosure counsel practices for providing reinstatement payoff amounts within required timeframes under applicable state law
Ensure mortgage servicers document the date payments are received and maintain procedures for handling insufficient funds
Assess whether state foreclosure statutory violations could expose counsel to FDCPA liability under the "present right to possession" standard

Source document (simplified)

March 30, 2026

Eighth Circuit affirms TILA dismissal, revives FDCPA claim

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On March 23, the U.S. Court of Appeals for the 8th Circuit affirmed in part, vacated in part, and remanded in a case arising from a Minnesota nonjudicial foreclosure, upholding the dismissal of a TILA claim against a national bank but reinstating an FDCPA claim against the bank’s foreclosure counsel. According to the opinion, after the original mortgagors died and their heir defaulted, the bank initiated foreclosure in February 2022. Before the sheriff’s sale, the heir’s attorney requested a payoff amount to reinstate the mortgage. Foreclosure counsel allegedly acknowledged the request but did not provide the figure. One week later, the property was sold at auction, and the heir subsequently redeemed it for approximately $77,159, significantly more than the roughly $58,722 loan balance at the time of her request. The heir later sued, alleging (i) a TILA violation for crediting two mortgage payments upon receipt and then refunding the funds because they were insufficient to reinstate; and (ii) an FDCPA violation for proceeding with the sale and dispossessing her without providing the requested reinstatement amount.

With respect to the TILA claim, the court held that 15 U.S.C. § 1639f(a) requires servicers to credit payments as of the date of receipt but does not prohibit later returning the funds, particularly where they are insufficient to cure a default. The court therefore affirmed dismissal. As to the FDCPA claim, the appellate court’s analysis focused on whether the foreclosure counsel’s alleged failure to provide the requested reinstatement amount within three days, as required by Minnesota statute § 580.30, meant they lacked the “present right to possession” that § 1692f(6)(A) of the FDCPA requires before nonjudicial dispossession. The 8th Circuit acknowledged the district court’s concern about broadly converting state foreclosure-statutory violations into federal FDCPA claims but found its analysis incomplete because it did not address whether a violation of Minnesota’s reinstatement statute, which grants an “absolute right” to cure a default and is “intended to protect mortgagors and be construed in their favor,” is distinguishable for purposes of establishing a present right to possession. The 8th Circuit remanded the case to the district court to determine whether such a violation under Minnesota law would deprive foreclosure counsel of that present right under § 1692f(6)(A).

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CFR references

15 CFR 1026.40 15 CFR 1026.41

Named provisions

TILA Payment Crediting (15 U.S.C. § 1639f(a)) FDCPA Present Right to Possession (15 U.S.C. § 1692f(6)(A)) Minnesota Foreclosure Reinstatement (Minn. Stat. § 580.30)