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Ademiluyi v. Pennymac Mortgage Investment Trust Holdings I, LLC

United States District Court, D. Maryland

May 22, 2015




This action arises out of the attempt by defendant PennyMac Holdings, LLC ("PennyMac")[1] to collect plaintiff Christie Ademiluyi's delinquent mortgage debt without a debt collection license, allegedly in violation of the Fair Debt Collection Practices Act ("FDCPA" or the "Act"), 15 U.S.C. §§ 1692 et seq., as well as the Maryland Collection Agency Licensing Act ("MCALA"), Md. Code (2010 Repl. Vol., 2012 Supp.), § 7-301 of the Business Regulation Article ("B.R."). See ECF 53 ("Amended Complaint"). Ademiluyi seeks statutory damages as well as attorney's fees and costs. Id. at 27.

Plaintiff initially filed her Complaint in March 2012, as a putative class action, alleging violations of the FDCPA, MCALA, and other provisions of Maryland and federal law, seeking damages in excess of eight million dollars. ECF 1. Plaintiff named as defendants both PennyMac and a related entity, PennyMac Mortgage Investment Trust ("Trust"). Id. at 1. PennyMac and Trust filed a motion to dismiss in May 2012, ECF 10 ("MTD Motion"), with exhibits. After substantial briefing by the parties, see ECF 11, 12, 15, 16, 20, 22, 23, 24, 25, I granted in part and denied part defendants' MTD Motion. See ECF 26 ("MTD Memorandum"); ECF 27 ("MTD Order") ( Ademiluyi v. PennyMac Mortgage Inv. Trust Holdings I, LLC, 929 F.Supp.2d 502 (D. Md. 2013)). In effect, I dismissed all of plaintiff's claims against Trust, and certain claims against PennyMac. ECF 27. But, I denied PennyMac's MTD Motion with respect to part of plaintiff's claim under the Maryland Mortgage Fraud Protection Act ("MMFPA"), see ECF 27, a claim which plaintiff has since abandoned. Compare Complaint, ECF 1 (Complaint) with Amended Complaint, ECF 53. I also denied PennyMac's MTD Motion with respect to plaintiff's FDCPA claim, see ECF 27, which is the only claim that remains pending. See ECF 53. See also Bradshaw v. Hilco Receivables, LLC, 765 F.Supp.2d 719, 728-31 (D. Md. 2011) (holding failure to obtain license required by MCALA is a violation of the FDCPA).

Plaintiff filed an Amended Complaint in March 2014, near the end of discovery, which removed Trust as a defendant, as well as plaintiff's MMFPA claim and her claim for actual damages under the FDCPA. Id. It also included new factual allegations gleaned in discovery. Id.

Plaintiff subsequently filed a Motion for Summary Judgment (ECF 62, "Plaintiff's Motion"), with a supporting memorandum of law (ECF 62-1, "Plaintiff's Memo"), and a Motion to Certify a Class (ECF 61, "Class Motion"). In response, PennyMac filed a Cross-Motion for Summary Judgment (ECF 69, "Defendant's Motion"), with a supporting memorandum of law (ECF 69-1, "Defendant's Memo"), and opposed both plaintiff's Motion and the Class Motion. See ECF 68. Plaintiff has replied and has opposed Defendant's Motion. ECF 72 ("Plaintiff's Reply"). Defendant replied to plaintiff's opposition. ECF 74 ("Defendant's Reply"). Both sides have also filed a "Statement of Material Facts not in Dispute, " see ECF 60 ("Plaintiff's Facts"); ECF 67 ("Defendant's Facts"), along with numerous exhibits.

In February 2015, for the reasons described in a Memorandum Opinion issued on February 10, 2015, I denied the Class Motion. See ECF 97 (Memorandum); ECF 98 (Order).

Plaintiff's Motion and Defendant's Motion (collectively, the "Motions") have been fully briefed, and no hearing is necessary to resolve them. See Local Rule 105.6. For the reasons that follow, I will grant Defendant's Motion (ECF 69) and deny Plaintiff's Motion (ECF 62).

I. Factual Background[2]

A. The Parties

Christie Ademiluyi is a licensed real estate broker who, at all relevant times, has resided on Maple Street in Laurel, Maryland (the "Property"). See Defendant's Facts Ex. 3, Deposition of Christie Ademiluyi dated Oct. 28, 2013 ("C. Ademiluyi Depo."), ECF 67-21 at 9-10, 4-5.

PennyMac "invests in mortgage assets." See Plaintiff's Facts Ex. 2, Deposition of Jeffrey P. Grogin dated Jan. 14, 2014 ("Grogin Depo."), ECF 60-2 at 5. And, as the owner of the assets, id. at 4, it then "contracts for mortgage servicing with another company and it contracts for investment advisory services with another company." Id. at 5-6. According to Jeffrey P. Grogin, who served as PennyMac's Secretary and Chief Administrative and Legal Officer as of June 2014, [3] see Defendant's Facts Ex. 2, Affidavit of Jeffrey P. Grogin ("Grogin Aff."), ECF 67-19 ¶ 1, PennyMac "does not have any employees and it does not conduct any operations whatsoever." Grogin Depo., ECF 60-2 at 5. Grogin describes PennyMac's "business thesis" as "to modify loans." Id. at 6. In other words, "the premise of the company is to acquire, in some instances, loans that can be modified so that borrowers get to stay in their homes." Id.

It is undisputed that, at the commencement of this action, PennyMac did not have a debt collection license in the State of Maryland. Nor was it licensed as a mortgage lender in Maryland. See ECF 57 (Answer to Amended Complaint) ¶ 14; Plaintiff's Facts, ECF 60 at 6.

PennyMac is a subsidiary of former defendant Trust. Grogin Depo., ECF 60-2 at 5. Trust describes itself in filings with the U.S. Securities and Exchange Commission ("SEC") as "a specialty finance company that invests primarily in residential mortgage loans and mortgage-related assets." MTD Motion Ex. D, Form 10-K filed with the SEC for FY ending Dec. 31, 2011 ("Form 10-K"), ECF 10-6 at 5. Trust does not have any employees. Id. at 8. It is managed by PNMAC Capital Management, LLC ("PCM"), which is a wholly-owned subsidiary of Private National Mortgage Acceptance Company, LLC ("PNMAC"). Id. at 5. "Most of the loans" Trust holds in its investment portfolio are serviced "by another wholly-owned PennyMac subsidiary, PennyMac Loan Services, LLC" ("Services"). Id.

Trust's manager, PCM, "specializes in acquiring distressed residential mortgage assets that are sold by financial institutions including banks, thrifts, and non-bank mortgage lenders." Form 10-K, ECF 10-6 at 6. Services's "activities include collecting principal, interest and escrow account payments, if any, with respect to mortgage loans, as well as managing loss mitigation, which may include, among other things, collection activities, loan workouts, modifications and refinancings, foreclosures, short sales, sales of REO[4] and financing to facilitate such sales." Id. at 7-8. Services "provides... servicing to the [PNMAC] funds and entities in which they have invested as well as third parties." Id. at 8.

In briefings on the MTD Motion, PennyMac asserted that Services was, at all relevant times, "appropriately registered under Maryland law as a mortgage lender and... therefore exempted from the MCALA licensing requirement." See ECF 10-1 at 12; see also ECF 69-1 at 12. Plaintiff has not disputed this contention, nor has she named Services as a defendant.

B. The Debt & The Forbearance

On April 30, 2007, plaintiff executed an Adjustable Rate Note for $465, 000 ("Note") with lender ABN AMRO Mortgage Group, Inc. ("ABN"). See Note, MTD Motion Ex. A, ECF 10-3. The Note was secured by the Property, as reflected in the Deed of Trust dated April 30, 2007 ("Deed"). Deed, MTD Motion Ex. B, ECF 10-4. The Deed was recorded in the land records of Prince George's County, Maryland. Id.

Sometime within the next two years, as a result of a drop "to zero" in plaintiff's real estate sales business, plaintiff fell behind on her mortgage payments due under the Note. See Defendant's Facts Ex. E, ECF 67-6 at 30 (letter from plaintiff to mortgage servicer dated September 2009). It appears that CitiMortgage, Inc. ("Citi") had acquired the Note by that time. See C. Ademiluyi Depo., ECF 67-21 at 13-14; Note, ECF 10-3 at 5 (Note Allonge referencing undated transfer of interest in the Note to Citi as successor by merger with ABN); ECF 67-6 at 30 (2009 letter to Citi).

In the Fall of 2009, plaintiff filed for bankruptcy under Chapter 7 of the United States Bankruptcy Code. See Amended Complaint, ECF 53 ¶ 34; In re Ademiluyi, 09-24463 (D. Md. Bankr. filed Aug. 5, 2009). She also applied for a federally subsidized loan modification through Citi.[5] See Defendant's Facts Ex. D, "Home Affordable Modification Program Hardship Affidavit, " ECF 67-5 at 2; Defendant's Facts Ex. 6, Deposition of April Ademiluyi, Esq., dated Apr. 3, 2014 ("A. Ademiluyi Depo."), ECF 67-24 at 12.[6]

In October 2009, plaintiff entered into a trial modification program with Citi, A. Ademiluyi Depo., ECF 67-24 at 12, with significantly lower monthly payments than called for by the Note. C. Ademiluyi Depo., ECF 67-21 at 16. Plaintiff completed her bankruptcy proceeding in November 2009. See In re Ademiluyi, 09-24462, Doc. 21 ("Final Decree" and closure of case). Although the parties have not provided any details regarding the bankruptcy matter, it appears that plaintiff's obligation with respect to the Note survived the proceedings. Cf. In re Ademiluyi, 09-24462, Doc. 5 ("Chapter 7 Individual Debtor's Statement of Intention, " showing plaintiff intended to reaffirm her debt owed to Citi and secured by the Property).[7] Further, it appears that plaintiff successfully made all payments due under her trial loan modification. See C. Ademiluyi Depo., ECF 67-21 at 16 (plaintiff stating she made her payments under the trial agreement).

Plaintiff entered into a permanent loan modification with Citi in June 2010, which required higher monthly payments than the trial modification agreement. A. Ademiluyi Depo., ECF 67-24 at 14; ECF 53 ¶ 35. Plaintiff maintains that she unintentionally entered into this agreement by opening an e-mail. C. Ademiluyi Depo., ECF 67-21 at 16-19. With the help of her daughter, April Ademiluyi, Esquire, plaintiff disputed with Citi that she had actually agreed to the modification, and continued to seek a new agreement with Citi until, in January 2011, plaintiff submitted a new loan modification application to Citi. A. Ademiluyi Depo., ECF 67-24 at 14-17; ECF 53 ¶ 36, 38; C. Ademiluyi Depo., ECF 67-21 at 21.

Meanwhile, in December 2010, plaintiff entered into a forbearance agreement (the "Forbearance") with Citi. Defendant's Facts Ex. 12, ECF 67-30 at 2 (copy of Forbearance agreement between plaintiff and Citi with signature dated Dec. 28, 2010); Defendant's Facts Ex. 23, ECF 67-41 at 2 (letter from plaintiff to Citi dated Nov. 30, 2010 requesting forbearance); A. Ademiluyi Depo., ECF 67-24 at 16. The Forbearance provided, in relevant part, as follows, ECF 67-30 at 2:[8]

In return for CitiMortgage, Inc., ... forbearing from proceeding with the pending foreclosure[ [9] ] of my mortgage loan, which is still in default under the original security instruments, we agree to the following terms and conditions :
Monthly Payments: A payment of $4, 374.70 must be received... on or before 12/28/10 in certified funds. Payments will be received... on the 30TH day of every month of $418.33 plus the regular mortgage payment of $2187.35 totaling $2605.68 for SEVENTEEN (17) consecutive months beginning on 1/30/11 and ending 05/30/12, with a last payment amount totaling $2605.08. Regular monthly payments of $2187.35 will resume on 06/01/12.
We understand that if the above terms and conditions or the terms of the original security instrument are not met, a default will occur and this forbearance will be voided. If a default occurs, [Citi] may proceed with foreclosure immediately. There is no grace period for late or partial payments and you will not receive an additional 30-day demand letter. All funds will be applied first towards outstanding fees, as allowed by applicable law. Once fees are paid in full, funds will then be applied towards principal, interest, and, if applicable, escrow amounts. We understand that all the rights and obligations of the original note and security instrument, except as changed by this payment plan, remain in full force....

In short, the Forbearance spread plaintiff's outstanding mortgage loan delinquency across seventeen months, to be paid in addition to the regular payment due under the Note. Id. In exchange, Citi agreed not to foreclose on plaintiff's home so long as plaintiff complied with the terms of the Forbearance. Id.

It appears that plaintiff made a substantial payment on December 27, 2010, see Forbearance, ECF 67-30 at 2 (handwritten notation), and that the first payment due under the Forbearance was received in full on or before December 30, 2010. Defendant's Facts Ex. K, ECF 67-12 (copy of plaintiff's payment history while loan was serviced by Citi) at 2;[10] C. Ademiluyi Depo., ECF 67-21 at 22 (showing plaintiff agrees she made full payment of "$4, 374, 70 on or before December 28, 2010"). According to a copy of plaintiff's payment history while her loan was serviced by Citi (ECF 67-12, "Citi Payment Record"), the first full payment due under the Forbearance was applied to satisfy payments due under the Note in August and September, presumably of 2010. ECF 67-12 at 2.

On or before January 28, 2011, plaintiff made another payment of $2187.35. Citi Payment Record, ECF 67-12 at 2. According to the Forbearance, that amount was equal to plaintiff's regular mortgage payment. ECF 67-30 at 2. Citi applied that payment to satisfy the payment due under the Note in October 2010. Id. The Citi Payment Record also shows a "Single Receipt" of $418.33 paid at the same time, i.e., on or before January 28, 2011. ECF 67-12 at 2. That amount is equal to the extra monthly payment due under the Forbearance. See Forbearance, ECF 67-30 at 2.

According to PennyMac, it was assigned plaintiff's Note on February 28, 2011, before plaintiff's next payment was due under the Forbearance. PennyMac relies on an Affidavit by Michael Drawdy, Senior Vice President for Asset Management of Services, to support this assertion. See Defendant's Facts Ex. 1, Affidavit of Michael Drawdy ("Drawdy Aff."), ECF 67-1; Defendant's Facts, ECF 67 ¶ 14 (relying on Drawdy Aff. ¶ 7); Defendant's Memo, ECF 69-1 at 29 (relying on Defendant's Facts ¶ 14 for date of acquisition). Drawdy avers, in relevant part: "Holdings [ i.e., PennyMac] acquired Plaintiff's loan on February 28, 2011...." ECF 67-1 ¶ 7. Additionally, in her Amended Complaint, plaintiff avers that PennyMac sent her a letter dated March 28, 2011, in which PennyMac "claimed that it had acquired ownership of Ms. Ademiluyi's loan on February 28, 2011." ECF 53 ¶ 40.[11] See also A. Ademiluyi Depo., ECF 67-24 at 17 ("Q: Subsequently the loan was transferred to PennyMac in or about February 2011. Is that your understanding? A: Yes.").

In her Reply, plaintiff disputes PennyMac's contention that "the loan was acquired on February 28, 2011." ECF 72 at 7. She asserts: "The actual assignment is dated March 9, 2011." Id. In support, plaintiff cites one of her own exhibits, titled "Assignment of Mortgage" ("Assignment"). Id. (citing Plaintiff's Facts Ex. 9, ECF 60-9). The Assignment shows that an assignment of the mortgage from Citi to PennyMac was executed on March 9, 2011. Id. at 2; see also MTD Motion Ex. C, ECF 10-5 at 2 (copy of same document).

From February 28, 2011, through March 25, 2011, Citi continued to service plaintiff's loan on behalf of PennyMac. See Drawdy Aff., ECF 67-1 ¶ 7. On March 26, 2011, Services assumed the servicing of plaintiff's loan on behalf of PennyMac. Id.; Amended Complaint, ECF 53 ¶ 42. A copy of an undated "Notice of Assignment, Sale, or Transfer of Servicing Rights" submitted by defendant states: "You are hereby notified that the servicing of your mortgage loans, that is, the right to collect payments from you, is being assigned, sold or transferred from CitiMortgage, Inc. to PennyMac Loan Services, LLC effective March 26, 2011." Defendant's Facts Ex. M, ECF 67-14 at 2. The notice further instructed that the "present servicer", Citi, would stop accepting payments ...

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