Milam v. Selene Finance

What’s at Stake

Corporations should not be allowed to use contracts about one thing to prevent lawsuits about a totally different thing, nor should they be allowed to use contracts they were never part of in the first place to avoid consequences for breaking the law.

Update: On December 22, 2025, the Seventh Circuit reversed the dismissal of Ramona Milam’s claims and remanded the case for further proceedings. The court held that Milam adequately established Article III standing by alleging a concrete monetary harm caused by Selene Finance’s misleading default letter: she was forced to use her money to pay Selene rather than spend it on other necessities. Then, drawing a distinction under Illinois law between assignment and delegation, the Seventh Circuit explained that authorizing a servicer to collect payments does not automatically transfer the lender’s contractual rights. Because Selene’s servicing agreement was not in the record and the pleadings did not establish an assignment as a matter of law, the district court should not have dismissed the case. The court rejected Selene’s arguments and made clear that loan servicers cannot short-circuit consumer protection claims by assuming contractual rights they have not shown they possess.

Because of this ruling, mortgage servicers cannot evade accountability by trying to enforce contractual provisions to which they are not a party. The decision marks an important victory for homeowners, ensuring that Milam’s consumer protection claims, and those of similar borrowers, can move forward in court rather than being prematurely shut down.

Background

Ramona Milam was threatened by her mortgage servicer, Selene Finance, after she got behind on her mortgage. Selene Finance sent her a collection letter stating:

“To cure this default, you must pay all amounts due under the terms of your Note and Security Interest[.] … The total amount you must pay to cure the default stated above must be received [35 days later]. Failure to cure the default on or before the date specified may result in acceleration of the sums secured by the Security Interest, sale of the property and/or foreclosure by judicial proceeding and sale of the property.”

Ms. Milam contends this was a false threat, since federal law prevents a debt from being accelerated until it is 120 days due. Federal law also prohibits companies from trying to collect a debt by threatening to do things they are not permitted or do not intend to do. Ms. Milam brought a class action against Selene Finance, alleging that Selene’s threat was illegal under the Fair Debt Collection Practices Act.

The trial court concluded that she had failed to follow the notice-and-cure provision in the agreement with her mortgage lender (a separate company that is not Selene) and dismissed her case. We filed an appeal for the dismissal of her case to the U.S. Court of Appeals in the Seventh Circuit on April 24, 2025. The appeal was granted and has been fully briefed. Oral arguments took place on October 27, 2025 and the court reversed the district court decision dismissing our client’s claims. The court held that Ms. Milam had standing and then held that Selene cannot show as a matter of law that it is an assign of Ms. Milam’s mortgage such that it could enforce a provision requiring her and each other class member to provide notice to Selene before filing suit.

Core Legal Problem

In the appeal, we argue that the notice-and-cure provision does not apply to Ms. Milam’s claims because they did not arise out of the mortgage, they are from the misrepresentations made by Selene in its letters to consumers. We are also arguing Selene was not the mortgage lender or an assignee authorized to enforce the contract’s notice-and-cure provision, so following the notice-and-cure procedures would have been futile for Ms. Milam.