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Powell v. Countrywide Bank, Fsb

United States District Court, D. Maryland

October 4, 2016

COUNTRYWIDE BANK, FSB et al., Defendants.


          Paula Xinis United States District Judge

         Pending in this consumer lending case is a motion to dismiss for failure to state a claim filed by Bank of America, N.A., individually and as successor by merger to Countrywide Bank, FSB and Countrywide Home Loans Servicing, LP; Countrywide Home Loans Inc.; and Mortgage Electronic Registration Systems, Inc. (“MERS”). ECF No. 25. Janis and Charles Powell (collectively, “Plaintiffs”) have also requested leave to amend their Amended Complaint. ECF No. 28 at 3-4. The issues are fully briefed and the Court now rules pursuant to Local Rule 105.6 because no hearing is necessary. For the following reasons, the Defendants' motion to dismiss is granted and Plaintiffs' motion to amend is denied.

         I. BACKGROUND

         The facts outlined here are taken from the Plaintiffs' Amended Complaint and public records attached to the Defendants' motion to dismiss.[1] Unless otherwise noted, all facts are construed in the light most favorable to the Plaintiffs as the nonmoving parties.

         On January 10, 2008, the Plaintiffs appear to have executed a loan in favor of Countrywide Bank, FSB (“Countrywide Bank”) for $638, 600 for real property located at 11404 North Star Drive, Fort Washington, Prince George's County, Maryland. ECF No. 25-2. The loan is evidenced by a promissory note (“Note”) and secured by a Deed of Trust, executed on the same date as the Note, and which was recorded among the Land Records of Prince George's County, Maryland. Id. The Deed of Trust named Mortgage Electronic Registration Systems, Inc. (“MERS”) the beneficiary under the security interest as the nominee for the lender, Countrywide, its successors, and assigns.[2] Id.

         In executing the security instrument, the Plaintiffs agreed that “MERS holds only legal title to the interests granted by Borrower in this Security Instrument, but, if necessary to comply with law or custom, MERS (as nominee for Lender and Lender's successors and assigns) has the right: to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property; and to take any action required of Lender including, but not limited to, releasing and canceling this Security Instrument.” Id. at 3.

         The Deed of Trust states that “[t]he Note or a partial interest in the Note (together with this Security Instrument) can be sold one or more times without prior notice to Borrower.” Id. at 8. The Deed of Trust also clearly states that Plaintiffs' obligations remain the same, regardless of whether the Note is sold: “If the Note is sold and thereafter the Loan is serviced by a Loan Servicer other than the purchaser of the Note, the mortgage loan servicing obligations to Borrower will remain with the Loan Servicer or be transferred to a successor Loan Servicer and are not assumed by the Note purchaser unless otherwise provided by the Note purchaser.” Id.

         In February 2012, MERS, acting as nominee for Countrywide Bank, executed and recorded a Corporate Assignment of Deed of Trust in the Land Records for Prince George's County, Maryland, which granted all beneficial interest under the Deed of Trust to Defendant Bank of America, N.A. ECF No. 25-3. In September 2015, Plaintiffs' Note was pooled with several other notes in a residential mortgage-backed securitization trust, LSF9 Master Participation Trust. ECF No. 25-4.[3] An Assignment of Mortgage/Deed of Trust from Bank of America to the Trust was recorded in the Prince George's County Land Records on November 4, 2015. ECF No. 25-4. As the Maryland Court of Appeals has explained:

[s]ecuritization starts when a mortgage originator sells a mortgage and its note to a buyer, who is typically a subsidiary of an investment bank. The investment bank bundles together the multitude of mortgages it purchased into a “special purpose vehicle, ” usually in the form of a trust, and sells the income rights to other investors. A pooling and servicing agreement establishes two entities that maintain the trust: a trustee, who manages the loan assets, and a servicer, who communicates with and collects monthly payments from the mortgagors.

Deutsche Bank Nat. Trust Co. v. Brock, 430 Md. 714, 718 (2013) (quoting Anderson v. Burson, 424 Md. 232, 237 (2011)).

         Plaintiffs allege that these assignments were improperly executed by “robo signing agents” and thus the Defendants “do not have lawful ownership or a security interest in Plaintiff's [sic] home.” ECF No. 24 at 4. Plaintiffs also maintain that their loan was not properly securitized and that the Defendants have no standing to institute a foreclosure action because “none of the Defendants have an executed true original copy of the Note.” Id. at 6.

         According to the Plaintiffs, one of the Defendants issued a Notice of Intent to Foreclose in December 2015. ECF No. 24 at 10. Although Plaintiffs have defaulted on the Loan, no foreclosure has occurred or is currently pending. On January 21, 2016, Plaintiffs filed a Complaint in the Circuit Court for Prince George's County against Countrywide Bank; Bank of America; Bank of New York as Trustee for Securitized Trust CWABS Asset-Backed Certificates Trust 2007-13; Countrywide Home Loans; CWABS, Inc.; Countrywide Home Loans Servicing LP; Mortgage Electronic Registration System (“MERS”); and Does 1 through 100 inclusive (collectively, “Defendants”).[4] The original complaint alleged ten causes of action: (1) Lack of Standing/Wrongful Foreclosure; (2) Fraud in the Concealment; (3) Fraud in the Inducement; (4) Intentional Infliction of Emotional Distress; (5) Slander of Title; (6) Quiet Title; (7) Declaratory Relief; (8) violations of Truth in Lending Act (“TILA”) and Home Ownership and Equity Protection Act (“HOEPA”); (9) violations of the Real Estate Settlement Procedures Act (“RESPA”); and (10) Rescission. ECF No. 2. Defendants timely removed the case to this Court pursuant to 28 U.S.C. §§ 1331, 1367, 1441, and 1446. ECF No. 1.

         On June 17, 2016, Plaintiffs filed an Amended Complaint. ECF No. 24. The Amended Complaint eliminates claims regarding lack of standing and intentional infliction of emotional distress. Also, Plaintiffs attached to the Amended Complaint a “Property Securitization Analysis Report” prepared for the Plaintiffs which details the alleged transfers and assignments of the Plaintiffs' Deed of Trust. ECF No. 24-1. Lastly, Plaintiffs newly allege that while they executed a Deed of Trust and Note, the documents they executed did not involve Countrywide Bank or Bank of America. See, e.g., ECF No. 24 at 5.

         After Plaintiffs filed their Amended Complaint, Defendants filed a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure. ECF No. 25. Plaintiffs opposed Defendants' motion to dismiss and requested leave to file a second amended complaint. ECF No. 28. In their opposition, Plaintiffs allege that they never saw the Deed of Trust before Defendants attached it to their motion to dismiss. Id. at 3. After reviewing the Deed of Trust, Plaintiffs are convinced that their signatures on the document are forged and “that they did not originate any note or refinance any note with Defendant's [sic] Countrywide Bank.” Id. To buttress this allegation, they provide personal affidavits attesting that the Deed of Trust was forged by “some third party.” ECF No. 29; ECF No. 29-2. Plaintiffs also request leave to amend their Complaint to add additional counts against Countrywide Bank for the alleged forgery.[5]


         When ruling on a motion under Rule 12(b)(6), the court must “accept the well-pled allegations of the complaint as true, ” and “construe the facts and reasonable inferences derived therefrom in the light most favorable to the plaintiff.” Ibarra v. United States, 120 F.3d 472, 474 (4th Cir. 1997). “The mere recital of elements of a cause of action, supported only by conclusory statements, is not sufficient to survive a motion made pursuant to Rule 12(b)(6).” Walters v. McMahen, 684 F.3d 435, 439 (4th Cir. 2012) (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). To survive a motion to dismiss, a complaint's factual allegations “must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations omitted). A pro se plaintiff is held to a “‘less stringent'” standard than a lawyer, and the Court must liberally construe a pro se plaintiff's complaint. Erickson v. Pardus, 551 U.S. 89, 94 (2007) (quoting Estelle v. Gamble, 429 U.S. 97, 106 (1976)).

         III. ANALYSIS

         “A motion to dismiss tests the sufficiency of a complaint, ” Occupy Columbia v. Haley, 738 F.3d 107, 116 (4th Cir. 2013), and a court's evaluation is thus generally limited to a review of the allegations of the complaint itself. Goines v. Valley Cmty. Servs. Bd., 822 F.3d 159, 166 (4th Cir. 2016). However, the court may also consider documents that are explicitly incorporated into the complaint by reference, Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007), and those attached to the complaint as exhibits. See Fed. R. Civ. P. 10(c); Goines, 822 F.3d at 166 (“[T]he Court may consider any and all exhibits attached to plaintiff's complaint.”). The court may also properly take judicial notice of matters of public record. Sec'y of State For Defence v. Trimble Navigation Ltd., 484 F.3d 700, 705 (4th Cir. 2007).

         Plaintiffs' individual claims arise from a set of common legal theories. Plaintiffs argue, for example, that the securitization of their mortgage loan amounts to fraud because it effectively “changed the character” of Plaintiffs' Note. ECF No. 24 at 10. Plaintiffs allege that the securitization had “an adverse effect on the value of Plaintiff's [sic] home, ” without providing any more specificity. But it is well-established in this Court and others that “[a]s a matter of law, securitization alone does not render a note or deed of trust unenforceable and does not alter a borrower's obligation to pay back his or her loan.” Howes v. Wells Fargo Bank, N.A., No. ELH- 14-2814, 2015 WL 5836924, at *26 (D. Md. Sept. 30, 2015) (internal quotation marks omitted) (citing cases); see also Benson v. Ocwen Loan Servicing, LLC, No. 2:14-CV-02495-TLN, 2014 WL 6775262, at *4 (E.D. Cal. Dec. 1, 2014). “[S]ecuritization merely creates a separate contract, distinct from [Plaintiffs'] debt obligations under the note and does not change the relationship of the parties in any way.” Reyes v. GMAC Mortgage LLC, No. 2:11-CV-100 JCM RJJ, 2011 WL 1322775, at *3 (D. Nev. Apr. 5, 2011) (citations and internal quotation marks omitted). It is “not some sort of illicit scheme that taints the underlying debt.” Thompson v. Bank of Am., N.A., 773 F.3d 741, 749 (6th Cir. 2014). Therefore, as a matter of law, the securitization process cannot have harmed Plaintiffs, or, more pointedly, amount to fraud.

         Plaintiffs also argue throughout their Amended Complaint that the Defendants do not have an interest in the property because the assignments of their Deed of Trust were not properly executed for a variety of reasons. This Court has consistently held that plaintiffs lack standing to challenge the propriety of the assignment of a mortgage loan. See, e.g., Henry v. Aurora Loan Servs., LLC, No. TDC-14-1344, 2016 WL 1248672, at *3 (D. Md. Mar. 25, 2016); Pruitt v. Bank of Am., N.A., No. TDC-15-1310, 2016 WL 337531, at *2 (D. Md. Jan. 28, 2016); Danso v. Ocwen Loan Servicing, LLC, No. PX 16-1396, 2016 WL 4437653, at *4 (D. Md. Aug. 23, 2016). In the consumer lending context, a party “generally must assert his own legal rights and interests, and cannot rest his claim to relief on the legal rights or interests of third parties.” Wolf v. Fed. Nat'l Mortgage Ass'n, 512 F. App'x 336, 342 (4th Cir. 2013) (per curiam) (citation and internal quotation marks omitted).

         Here, Plaintiffs were not a party to the assignment from MERS to Bank of America, or from Bank of America to the Trust. Nor were they an intended beneficiary of either of these assignments. Thus, Plaintiffs cannot challenge their validity. See Id. (holding that a mortgagor lacks standing to challenge the propriety of the assignment of the note); Quattlebaum v. Bank of Am., N.A., No. CIV.A. TDC-14-2688, 2015 WL 1085707, at *4 (D. Md. Mar. 10, 2015) (“What the lender chooses to do with that entitlement-whether to keep it or to sell it to another financial institution-is a decision [the plaintiff] has no standing to challenge.”). The intervening assignments do not ...

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