When Is "Payment Authorization" The Same As A "Payment"? Seventh Circuit Weighs In

A divided Seventh Circuit found that the Truth in Lending Act (TILA), 15 U.S.C. § 1601 et seq., requires mortgage servicers to credit online electronic payments on the day the customer authorizes the payment, despite not actually receiving the payment at that time. Fridman v. NYCB Mortg. Co., LLC, No. 14-2220 (7th Cir. Mar. 11, 2015).

TILA generally requires mortgage servicers to credit payments to consumer accounts on "the date of receipt," unless the delay has no impact on credit reporting or fees incurred. 15 U.S.C. § 1639f(a). In finding that "date of receipt" of payment meant date of receipt of authorization, the Seventh Circuit relied heavily on the Consumer Financial Protection Bureau (CFPB) regulation that defines "date of receipt" and its example that a payment by check is received when the mortgage servicer receives the check, not when the funds are collected.