Mortgage Servicers and Notice‑and‑Cure Clauses: The Seventh Circuit Limits “Assignee” Status Under Illinois Law in Milam v. Selene Finance

Introduction

The Seventh Circuit’s decision in Ramona Milam v. Selene Finance, LP recalibrates two important areas of federal and state law:

When a mortgage loan servicer may invoke a mortgage contract’s notice‑and‑cure provision as an “assignee” under Illinois law; and
What allegations suffice to establish Article III standing in Fair Debt Collection Practices Act (FDCPA) cases involving “time‑value of money” and early payment of a debt.

The case arises from collection letters sent by Selene Finance to an Illinois homeowner, Ramona Milam, after she fell behind on her mortgage payments. The letters warned Milam that failure to cure her default within 35 days “may result in acceleration” and foreclosure, even though, according to Milam, Selene could not and would not initiate foreclosure until the loan was at least 120 days delinquent, in part because of federal regulations and its own internal practices.

Milam sued under the FDCPA and Illinois law, alleging that Selene’s letters used an artificial, unenforceable deadline to panic borrowers into making payments sooner than necessary. The district court never reached the merits of those claims. Instead, it dismissed the action based on a mortgage clause requiring “Borrower” and “Lender,” and the Lender’s “successors and assigns,” to give pre‑suit notice and an opportunity to cure alleged breaches. The court held that Selene, as the servicer, qualified as an assignee of the lender and could invoke that contractual shield. It also rejected the state‑law claims for lack of pleaded pecuniary loss.

On appeal, Judge Scudder, writing for a unanimous panel, reversed and remanded. The opinion:

Uses 28 U.S.C. § 1653 to permit Milam to supplement her allegations and establishes that she suffered concrete monetary harm sufficient for Article III standing.
Holds that, on the current pleadings, Selene has not shown it is an “assignee” of the lender under Illinois law, as opposed to a mere delegate of servicing duties, and therefore cannot rely on the mortgage’s notice‑and‑cure clause at the Rule 12(b)(6) stage.
Directs the district court to revisit the state‑law claims in light of the supplemented allegations of pecuniary loss.

The decision is significant both doctrinally and practically. It tightens the evidentiary and pleading expectations for loan servicers trying to invoke “successors and assigns” language in Illinois mortgages, and it clarifies that FDCPA plaintiffs who pay earlier than they otherwise would—incurring fees or other monetary disruptions as a result of an allegedly misleading letter—can satisfy Article III’s concrete injury requirement.

I. Background and Procedural History

A. The Loan, Default, and Collection Letter

In 2005, Milam obtained a mortgage loan to purchase her home in Illinois. She executed a mortgage in favor of HSBC Mortgage Services, Inc., the original lender. By 2021, Selene Finance had become the servicer of Milam’s loan. The servicing relationship arises from a separate contract between Selene and the current holder of the mortgage (or another servicer), not from the mortgage itself. Selene’s role was to collect Milam’s mortgage payments and remit them to the lender.

In 2023, Milam became delinquent. On April 17, 2023, when her payment was 47 days overdue, Selene sent a letter that:

Notified her of her default and the amount needed to cure; and
Stated that the total cure amount “must be received by 05/22/2023” and that failure to cure by that date “may result in acceleration of the sums secured by the Security Instrument, sale of the property and/or foreclosure by judicial proceeding and sale of the property.”

The May 22 deadline gave Milam 35 days from the date of the letter, which combined with the existing 47‑day delinquency totaled 82 days in default. Milam responded by making a mortgage payment.

B. The Lawsuit and Claims

Milam then filed a putative class action in the Northern District of Illinois on behalf of herself and other Illinois homeowners who had received similar letters when they were at least 45 days delinquent.

She brought three claims:

An FDCPA claim, alleging that the letters were misleading and unfair debt collection practices because they threatened acceleration and foreclosure on a timeline Selene knew it could not or would not enforce;
A claim under the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA); and
A state‑law negligent misrepresentation claim.

Central to all claims was the same theory: due to (a) federal regulation (the mortgage servicing rules that forbid foreclosure proceedings until a loan is at least 120 days delinquent) and (b) Selene’s own internal policies, Selene did not and would not foreclose or accelerate at the 82‑day point indicated in the letter. The 35‑day cure period was therefore, in Milam’s view, an artificial deadline designed to “scare” homeowners into paying earlier than they otherwise would, causing financial disruption and harm.

C. The Mortgage’s Notice‑and‑Cure Provision

Selene moved to dismiss under Rule 12(b)(6) based on a key provision of the mortgage, which states:

“Neither Borrower nor Lender may commence, join, or be joined to any judicial action (as either an individual litigant or the member of a class) that arises from the other party’s actions pursuant to this Security Instrument or that alleges that the other party has breached any provision of, or any duty owed by reason of, this Security Instrument, until such Borrower or Lender has notified the other party (with such notice given in compliance with the requirements of Section 15) of such alleged breach and afforded the other party hereto a reasonable period after the giving of such notice to take corrective action.”

The mortgage further provides:

“The covenants and agreements of this Security Instrument shall bind (except as provided in Section 20) and benefit the successors and assigns of Lender.”

Selene argued that:

It was an “assignee” of the lender under Illinois law; and
Therefore it stood in the lender’s shoes and could enforce the notice‑and‑cure provision, which barred Milam’s suit because she had not given any pre‑suit notice.

Milam disputed that any assignment had occurred, contending that Selene was merely a servicer acting under a separate contract and not an assignee of the mortgagee’s rights.

D. The District Court’s Dismissal

The district court treated Selene as an assignee and concluded that the notice‑and‑cure clause applied to Milam’s claims. Because Milam undisputedly failed to give contractually required notice before suing, the court dismissed the FDCPA and ICFA claims as barred by the mortgage’s pre‑suit notice requirement.

As to the state‑law claims (ICFA and negligent misrepresentation), the district court also found that Milam had not adequately pleaded any “pecuniary loss,” a required element of both claims under Illinois law, and dismissed them on that additional basis.

Milam appealed.

II. Summary of the Seventh Circuit’s Opinion

A. Article III Standing and the Use of 28 U.S.C. § 1653

The Seventh Circuit first flagged, sua sponte, a threshold question: Did Milam suffer a concrete injury sufficient to confer Article III standing?

Milam had paid a mortgage installment that was:

Undisputedly owed; and
Already overdue.

The panel noted its own prior FDCPA standing decisions and cited Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992), and Pierre v. Midland Credit Management, Inc., 29 F.4th 934 (7th Cir. 2022), which require a “concrete injury” beyond a bare statutory violation.

Initially, Milam’s briefing invoked the “time‑value of money” as her injury, but the panel found that notion “opaque” without “clear grounding in the alleged facts” of her complaint. At oral argument, the judges pressed Milam to explain how paying when she did harmed her, and then ordered supplemental briefing on standing.

Importantly, the court invited Milam to use 28 U.S.C. § 1653, which allows parties to cure “defective allegations of jurisdiction” on appeal. Citing:

Morgan v. Federal Bureau of Prisons, 129 F.4th 1043, 1048–49 (7th Cir. 2025) (holding § 1653 covers defective allegations of standing);
Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 831 (1989) (allowing correction of incorrect jurisdictional statements where jurisdiction actually exists); and
Chandler v. Miller, 520 U.S. 305, 313 n.2 (1997) (relying on factual representations at oral argument to defeat mootness),

the Seventh Circuit effectively opened the door for Milam to clarify her injury without restarting the case.

Milam accepted the invitation and filed a § 1653 motion adding specific factual allegations. She explained that:

No additional interest was accruing on her mortgage during her delinquency, so paying earlier provided no benefit in reduced interest; and
To make the payment on Selene’s deadline, she:
- Borrowed money to pay health insurance premiums; and
- Incurred overdraft fees on her bank account when withdrawing money needed for basic necessities such as food and utilities.

These new allegations satisfied the court that Milam had suffered concrete monetary harm by “act[ing] to her detriment” in reliance on Selene’s alleged misrepresentation—tracking language the court used in Brunett v. Convergent Outsourcing, Inc., 982 F.3d 1067, 1068 (7th Cir. 2020). The court granted the § 1653 motion and treated Milam’s complaint as supplemented by these factual allegations.

The panel suggested, but did not require, that Milam file a formal amended complaint on remand and instructed the district court to revisit the state‑law claims in light of the new allegations of pecuniary loss.

B. The Merits Issue: Is Selene an “Assignee” Under Illinois Law?

With jurisdiction secure, the court turned to the core state‑law issue: whether Selene, as loan servicer, was an “assign” (assignee) of the lender under the mortgage and Illinois law, such that it could enforce the mortgage’s notice‑and‑cure clause.

Two provisions mattered:

The notice‑and‑cure clause, which binds “Borrower” and “Lender”; and
The “successors and assigns” clause, extending the benefits of the mortgage’s covenants and agreements to the lender’s “successors and assigns.”

Because the mortgage did not define “assign,” the court applied Illinois law. Illinois distinguishes sharply between:

Assignment: a transfer of a legal interest or right; and
Delegation: authorization for someone else to perform duties on your behalf, without transferring ownership of the underlying rights.

Relying on a cluster of Illinois authorities, the court explained:

“An assignment occurs when ‘there is a transfer of some identifiable interest from the assignor to the assignee.’” Cincinnati Ins. Co. v Am. Hardware Mfrs. Ass'n, 898 N.E.2d 216, 229–30 (Ill. App. Ct. 2008) (quoting Brandon Apparel Group v. Kirkland & Ellis, 887 N.E.2d 748, 756 (Ill. App. Ct. 2008)).
An assignment transfers “all the right, title or interest of the assignor in the thing assigned.” Cincinnati Ins. at 230.
“An assignment puts the assignee into the shoes of the assignor.” Collins Co., Ltd. v. Carboline Co., 532 N.E.2d 834, 839 (Ill. 1988).
By contrast, “Unlike an assignment, which involves only a transfer of rights, a delegation involves the appointment of another to perform one's duties.” Olson v. Etheridge, 686 N.E.2d 563, 567 (Ill. 1997).
Authorization to act is not the same as transferring ownership: directing someone to act for you “is not the same as the intent to permanently alienate or transfer an ownership interest.” Eychaner v. Gross, 779 N.E.2d 1115, 1134 (Ill. 2002).

The Illinois Supreme Court’s property‑manager example in Eychaner is instructive: an apartment owner can delegate management duties, including rent collection, to a property manager without assigning away her ownership or contractual rights.

The Seventh Circuit then applied those principles to Selene. On the pleadings:

It was clear that Selene had been authorized to service Milam’s loan, including collecting payments; but
The record did not contain the servicing contract or any other documentation showing that the lender had assigned its rights under the mortgage to Selene.

Crucially, Illinois law—and particularly the Illinois Appellate Court’s decision in Bayview Loan Servicing, L.L.C. v. Nelson, 890 N.E.2d 940 (Ill. App. Ct. 2008)—cautioned against presuming that a servicer is automatically an assignee:

In Bayview, the court held that a loan servicer was not an assignee of the lender where there was “no evidence that Bayview ever obtained any legal interest in the subject property,” and “[a]t most, the record indicate[d] that the [current lender] relied upon Bayview to service the mortgage payments.” Id. at 944.

The Seventh Circuit took that cue, concluding that Selene had, at most, been delegated servicing duties. Without the servicing agreement in the record, the court could not rule out the possibility that the lender retained all its substantive rights and merely appointed Selene to administer the loan.

Given Rule 12(b)(6)’s standard—under which the movant bears the burden to show entitlement to dismissal—the panel held that Selene had not shown, on the pleadings alone, that it was an assignee entitled to invoke the notice‑and‑cure clause. See Marcure v. Lynn, 992 F.3d 625, 631 (7th Cir. 2021) (requiring the moving party to establish its entitlement to dismissal).

The court therefore:

Reversed the district court’s dismissal; and
Remanded for further proceedings, including development of the record (e.g., Selene’s servicing agreement) and reconsideration of the state‑law claims.

III. Precedents and Authorities Cited

A. Article III Standing and Jurisdictional Allegations

Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992): The foundational case requiring a concrete and particularized injury that is actual or imminent. It frames the Article III analysis for all federal cases, including FDCPA suits.
Pierre v. Midland Credit Management, Inc., 29 F.4th 934 (7th Cir. 2022): Part of a line of Seventh Circuit cases insisting that FDCPA plaintiffs must allege more than confusion or annoyance; they must allege a concrete injury, often financial or otherwise tangible.
Brunett v. Convergent Outsourcing, Inc., 982 F.3d 1067 (7th Cir. 2020): Holds that standing exists where a debtor “acts to her detriment” based on a misleading debt‑collection communication, for example by paying money or otherwise changing position.
28 U.S.C. § 1653: Provides that “[d]efective allegations of jurisdiction may be amended, upon terms, in the trial or appellate courts.” The Seventh Circuit relies on this statute to allow Milam to correct or expand her allegations of standing on appeal.
Morgan v. Federal Bureau of Prisons, 129 F.4th 1043 (7th Cir. 2025): Confirms that § 1653 extends to defective allegations of standing (which are jurisdictional), not just other aspects of subject‑matter jurisdiction.
Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826 (1989): Describes § 1653 as addressing incorrect statements about jurisdiction that actually exists, and permits correction at the appellate level.
Chandler v. Miller, 520 U.S. 305 (1997): Cited to support reliance on additional factual representations—in that case at oral argument—to resolve jurisdictional questions like mootness. Here it bolsters the idea that jurisdictional facts can be supplemented beyond the initial complaint.

B. Illinois Law on Assignment vs. Delegation

Cincinnati Ins. Co. v. American Hardware Manufacturers Ass’n, 898 N.E.2d 216 (Ill. App. Ct. 2008), and Brandon Apparel Group v. Kirkland & Ellis, 887 N.E.2d 748 (Ill. App. Ct. 2008):
- Define an assignment as a “transfer of some identifiable interest from the assignor to the assignee.”
- Stress that an assignment passes “all the right, title or interest” in the relevant thing.
Collins Co., Ltd. v. Carboline Co., 532 N.E.2d 834 (Ill. 1988): Emphasizes that an assignee steps into the assignor’s shoes, enjoying the same rights and subject to the same defenses.
Olson v. Etheridge, 686 N.E.2d 563 (Ill. 1997): Explains the difference between assignment (transfer of rights) and delegation (appointment of another to perform duties). This is critical to distinguishing a loan servicer from a true assignee of mortgage rights.
Eychaner v. Gross, 779 N.E.2d 1115 (Ill. 2002): Provides the property‑manager example: appointing a manager to collect rent and handle maintenance is a delegation of duties, not an assignment of ownership or contractual rights. The owner can always “step in” and exercise retained rights.
Bayview Loan Servicing, L.L.C. v. Nelson, 890 N.E.2d 940 (Ill. App. Ct. 2008): Holds that a loan servicer was not an assignee where there was no evidence it held a legal interest in the property; the servicer was merely administering payments on behalf of the true lender.

C. Federal Procedural Law

Federal Rule of Civil Procedure 12(b)(6): The Seventh Circuit invokes Marcure v. Lynn, 992 F.3d 625, 631 (7th Cir. 2021), to underline that:
- The party moving to dismiss bears the burden of showing entitlement to dismissal; and
- On the pleadings, reasonable inferences must be drawn in the non‑movant’s (here, Milam’s) favor, not the movant’s.

IV. Detailed Legal Analysis

A. Article III Standing and the “Time‑Value of Money” Injury

The standing portion of the opinion reflects the Seventh Circuit’s ongoing effort to police the boundary between:

Merely “informational” or “procedural” harms; and
Concrete, real‑world injuries traceable to alleged statutory violations.

Milam initially framed her harm as the “time‑value of money”—she had to part with funds earlier than necessary because of Selene’s misleading deadline. In economic terms, paying earlier deprives a consumer of the ability to use that money for other purposes or to earn interest on it. However, the court found this bare formulation inadequate for three reasons:

It was not grounded in specific factual allegations in the complaint (e.g., what she would have done with the money if she had not paid on Selene’s timeline);
The loan itself was undisputedly due, and interest was not accruing during the delinquency; and
The court’s own precedents, such as Pierre and Brunett, demand more than abstract economic concepts—there must be a real, concrete loss or change in position.

By contrast, the supplemented allegations cured these deficiencies:

Milam specifically alleged that she:
- Borrowed funds to pay for health insurance premiums; and
- Incurred bank overdraft fees when she used her own funds to pay for necessities after diverting money to the mortgage payment.
She also clarified that she gained no offsetting interest‑savings benefit from paying early because the loan was not accruing additional interest while delinquent.

These facts collectively show:

An economic harm (overdraft fees, costs of borrowing) directly traceable to the allegedly misleading deadline; and
A real-world change in financial position—Milam rearranged her finances and incurred costs “in response to a debt collector’s letter,” aligning with the “act to her detriment” standard in Brunett.

This part of the decision is important because it:

Clarifies that paying an already‑owed debt can be associated with concrete injury if the method or timing of payment causes additional out‑of‑pocket costs or other financial disruption; but
Confirms that plaintiffs must plead those real costs with some specificity—“time‑value of money” as a label is insufficient without concrete, particularized allegations.

The court’s reliance on § 1653 also underscores its pragmatic approach: instead of dismissing the appeal for lack of standing, it allowed Milam to correct defective jurisdictional allegations where jurisdiction in fact existed, thereby preserving judicial resources and avoiding needless relitigation.

B. The Mortgage Notice‑and‑Cure Clause: Scope and Beneficiaries

Contractually, the central issue was whether Selene could take advantage of a clause that, by its terms, binds only “Borrower” and “Lender” but extends “benefit” to the lender’s “successors and assigns.”

The logic of Selene’s argument was straightforward:

Under the mortgage, the lender is entitled to pre‑suit notice and an opportunity to cure any alleged breach related to the mortgage.
The mortgage expressly states that its covenants and agreements benefit the lender’s successors and assigns.
As the loan servicer, Selene claimed to be an assignee and therefore a beneficiary of this contractual protection.

If Selene were indeed an assignee, the clause would bar Milam’s suit—at least temporarily—because she never sent the required pre‑suit notice. But that conclusion depends critically on Selene’s status as an “assign.”

The Seventh Circuit emphasized that the mortgage itself:

Did not transfer lender rights to Selene; and
Did not name Selene at all; its connection to the loan derived entirely from a separate servicing contract not in the record.

That left the status question to Illinois law: does servicing the loan, by itself, establish assignee status? The answer, given Bayview and related Illinois cases, is “not necessarily.”

C. Servicer Status: Assignment vs. Delegation Under Illinois Law

Illinois law draws a clear conceptual line:

Assignment = Transfer of rights (often all rights in a specific interest). The assignee acquires the assignor’s legal interest and can enforce the contract in its own name, subject to existing defenses.
Delegation = Transfer of duties for performance, with the delegating party retaining the underlying rights and ultimate control. A delegate acts on behalf of the principal but does not become the owner of the contract rights.

The Eychaner illustration is almost directly analogous to loan servicing:

The apartment building owner is like the lender/mortgagee.
The property manager is like the servicer.
Authorizing a property manager to collect rent and make management decisions does not assign away the owner’s right to rents, title, or enforcement of the leases; it only delegates performance.

Applying this framework to Selene:

Selene collected payments, sent default letters, and generally managed the day‑to‑day interface with Milam—classic delegated duties.
There was no evidence (at least on the pleadings) that the lender had:
- Transferred title to the mortgage or note to Selene;
- Assigned the right to enforce all mortgage covenants; or
- Otherwise permanently alienated its legal interest in the loan.

Following Bayview, where a similarly situated loan servicer was held not to be an assignee absent evidence of a legal interest in the property, the Seventh Circuit concluded that Selene’s servicing role could be just a delegation of duties. Without the servicing agreement in the record, the court could not resolve the question definitively. It could not, for example, rule out a contract that had actually assigned lender rights to Selene, but no such contract was before the court.

At the Rule 12(b)(6) stage, this uncertainty matters. Under Marcure, the movant (Selene) must show entitlement to dismissal on the face of the pleadings. Ambiguity about whether there was an assignment versus a delegation must be resolved in the plaintiff’s favor. Therefore:

Selene failed to show it was an assignee as a matter of law based solely on its status as servicer; and
It could not invoke the notice‑and‑cure clause to bar the suit at the pleading stage.

The court’s approach leaves open the possibility that, on a fuller record (e.g., in summary judgment), Selene might establish true assignee status if the servicing agreement contains an actual assignment of rights. But for purposes of this appeal, Selene had not yet cleared that hurdle.

D. Procedural Posture and Pleading Burdens Under Rule 12(b)(6)

The opinion reinforces two important procedural points:

The defendant bears the burden on a motion to dismiss. As Marcure notes, the movant must demonstrate its entitlement to dismissal. If Selene needs facts outside the complaint (such as its servicing contract) to prove its assignee status, that typically cannot be resolved under Rule 12(b)(6) unless those documents are properly before the court and undisputed.
All reasonable inferences are drawn in the plaintiff’s favor. Given the lack of evidence of an actual assignment, and given Illinois law’s distinction between assignment and delegation, it was improper to assume that “servicer” equals “assignee” as a matter of law at this early stage.

This is particularly significant in cases where defendants seek to use contractual notice‑and‑cure provisions as a threshold bar to suit. It prevents servicers from short‑circuiting FDCPA and state‑law claims merely by invoking generic “successors and assigns” language, without showing that they in fact hold the lender’s rights.

E. Implications for State‑Law Claims on Remand

The Seventh Circuit also signaled consequences for the state‑law claims:

The district court’s dismissal of the ICFA and negligent misrepresentation claims rested partly on lack of pleaded “pecuniary loss.”
Milam’s new allegations (borrowed funds to pay health insurance, overdraft fees, loss of funds for necessities) provide clear examples of pecuniary harm under Illinois law.

On remand, the district court will need to:

Reassess whether the notice‑and‑cure clause applies at all, which now requires fact‑finding concerning the nature of Selene’s servicing rights;
Consider whether Milam’s supplemented allegations adequately plead pecuniary loss for ICFA and negligent misrepresentation; and
Address, at last, the underlying merits of whether Selene’s letter violated the FDCPA and Illinois law (issues the Seventh Circuit did not reach).

V. Simplifying Key Legal Concepts

1. The FDCPA’s Role in This Case

The Fair Debt Collection Practices Act (FDCPA) is a federal statute that regulates how “debt collectors” may communicate with consumers when collecting debts. It prohibits, among other things:

False, deceptive, or misleading representations in connection with the collection of any debt; and
Unfair or unconscionable means to collect or attempt to collect any debt.

Milam argues that Selene’s letter was misleading because it:

Set a 35‑day deadline and threatened acceleration and foreclosure at that time;
Even though Selene allegedly could not, under federal regulation and its own policy, initiate foreclosure until the loan was at least 120 days delinquent; and
Thus used a “fake” deadline to pressure her into early payment, causing financial harm.

The Seventh Circuit did not decide whether this conduct actually violates the FDCPA—that question is left to the district court on remand. The appellate decision only clears away procedural barriers (standing and the notice‑and‑cure clause) so the merits can be litigated.

2. Article III Standing Explained

For any case to be heard in federal court, the plaintiff must show:

Injury in fact: a concrete, particularized, and actual (or imminent) injury;
Causation: the injury must be fairly traceable to the defendant’s conduct; and
Redressability: a favorable court decision must likely redress the injury.

In FDCPA cases, courts often reject standing where:

The plaintiff alleges only confusion, annoyance, or a “bare” statutory violation; or
The plaintiff paid a debt but suffered no additional harm (e.g., no fees, no loss of other opportunities, no affected credit decision).

Milam met the standing requirement by alleging:

She changed her financial behavior because of Selene’s letter (causation);
This change caused concrete, out‑of‑pocket losses like overdraft fees and borrowing costs (injury in fact); and
Damages or other relief could redress those harms (redressability).

3. Assignment vs. Delegation in Plain Terms

Think of a contract (like a loan or lease) as a bundle of:

Rights (e.g., the right to receive payments, the right to foreclose); and
Duties (e.g., the duty to provide services, the duty to send statements or notices).

Under Illinois law:

Assignment happens when a party transfers its rights to someone else. The assignee becomes the “new owner” of those rights and can enforce the contract as if it were the original party.
Delegation happens when a party authorizes someone else to perform its duties while keeping ownership of the contract rights. The original party remains the legal holder of the rights and still ultimately controls the relationship.

In mortgage servicing:

If the lender simply hires a servicer to collect payments and manage paperwork, that is usually a delegation.
If the lender actually transfers the mortgage and note to the servicer, giving it the right to receive payments and foreclose in its own name, that would be an assignment.

The Seventh Circuit held that, on the existing record, Selene looked like a delegate of duties, not an assignee of rights.

4. Notice‑and‑Cure Clauses in Mortgages

A notice‑and‑cure clause requires that before one party can sue the other for breach of the agreement, it must:

Notify the other party of the alleged breach; and
Give a reasonable opportunity to correct it.

In the mortgage context, such clauses are often designed:

To prevent immediate litigation over minor or curable issues;
To encourage informal resolution; and
To provide a buffer before costly litigation.

Here, the clause was bilateral: it applied to both “Borrower” and “Lender,” with benefits extended to the lender’s successors and assigns. The Seventh Circuit’s decision means that a loan servicer cannot automatically piggyback on this protection unless it can show it actually holds the lender’s rights through an assignment.

VI. Broader Impact and Future Litigation

A. Implications for Loan Servicers and Lenders

The decision has immediate contractual and litigation implications for servicers operating in Illinois (and likely influences thinking in other jurisdictions as well):

No automatic “assignee” status. Servicers can no longer assume that they will be treated as “successors and assigns” of the lender simply because they manage the loan. Courts will require evidence of an actual assignment of rights, not just a servicing arrangement.
Contract drafting and documentation. Lenders and servicers who want servicers to benefit from notice‑and‑cure or other lender protections may:
- Explicitly assign certain enforcement rights to the servicer; and/or
- Include express language in the mortgage or addenda naming the servicer as a third‑party beneficiary of relevant clauses.
Litigation strategy. Servicers relying on notice‑and‑cure clauses will need to place their servicing contracts or other assignment documents in the record, at least at the summary‑judgment stage. Bare assertions that “we are the lender’s assignee” may no longer suffice to win early dismissals.

B. Implications for Borrowers and Consumer Litigation

For borrowers and consumer advocates:

Easier access to the courthouse against servicers. This decision removes a common procedural obstacle (notice‑and‑cure defenses) where the servicer cannot prove a genuine assignment of rights. It allows FDCPA and state‑law claims against servicers to be heard on the merits more frequently.
Roadmap for alleging concrete harm. The standing analysis offers a template for pleading:
- How early or coerced payment caused additional fees, borrowing costs, or other monetary disruptions; and
- Why generic references to “time‑value of money” need to be tied to specific financial consequences.
Potential class actions. Since the mortgage clause also restricts “class” litigation (“as either an individual litigant or the member of a class”), limiting servicers’ ability to invoke that clause may facilitate class‑wide FDCPA and state‑law cases where servicers use standardized letters and practices.

C. Development of FDCPA Standing Jurisprudence

The Seventh Circuit has been a focal point in developing post‑Spokeo FDCPA standing doctrine, often dismissing cases for lack of concrete injury. Milam continues this trend of rigorous scrutiny but also:

Recognizes that misrepresentations which cause a consumer to reconfigure finances, incur fees, or borrow funds can constitute concrete harm; and
Demonstrates a flexible, case‑specific use of § 1653 to avoid punishing plaintiffs for initially incomplete jurisdictional allegations when real injuries do exist.

Future FDCPA plaintiffs will likely cite Milam for the proposition that:

Early payment induced by deceptive threats can be an injury if it leads to concrete financial costs; and
Courts should allow jurisdictional amendments where clarifying facts can show such injury exists.

D. Influence on State‑Law Claims and Pecuniary Loss Standards

The decision also impacts state‑law deceptive practices and misrepresentation claims:

By signaling that bank fees, borrowing costs, and similar monetary disruptions qualify as pecuniary loss, the opinion gives plaintiffs clearer guidance on how to plead damages under Illinois law.
It encourages courts not to truncate these claims at the pleading stage merely because the plaintiff also paid a debt that was technically owed.

Conclusion

Milam v. Selene Finance is an important precedent at the intersection of consumer protection, mortgage servicing, and contract law. Its principal contributions are:

Clarifying that mortgage servicers are not automatically “assignees” of lenders under Illinois law. Servicing a loan—even with authority to collect payments and communicate with borrowers—may be only a delegation of duties. Without proof of an actual assignment of rights, a servicer cannot rely on a mortgage’s notice‑and‑cure clause to block borrower suits at the motion‑to‑dismiss stage.
Refining Article III standing in FDCPA cases involving early payment. The court restates that plaintiffs must allege concrete, particularized harm. But it confirms that early payment induced by allegedly misleading collection tactics can satisfy this requirement when it produces real financial consequences—such as bank fees, borrowing costs, or the diversion of funds from other necessary uses.
Affirming the usefulness of 28 U.S.C. § 1653 to cure defective jurisdictional allegations on appeal. Rather than dismissing for lack of standing, the Seventh Circuit allowed Milam to supplement her allegations, ensuring that cases with real injuries are not derailed by pleading omissions.

On remand, the district court will confront the unresolved substantive questions: whether Selene’s letters violated the FDCPA and Illinois law, and whether its practices concerning artificial foreclosure deadlines amount to abusive debt collection. But those merits determinations will now occur against the backdrop of a robust appellate precedent limiting servicers’ ability to invoke contractual shields and clarifying how consumers can demonstrate concrete injury from deceptive collection tactics.