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Wallace v. Ocwen Loan Servicing, LLC

United States District Court, D. Maryland

November 1, 2016




         John and Annie Wallace sued Ocwen Loan Servicing (“Ocwen”) in the Circuit Court for Prince George's County on June 2, 2016 alleging violations of the Maryland Consumer Protection Act (“MCPA”), Md. Code Ann., Com. Law § 13-101, et seq., and breach of contract in connection with the modification of the terms of their mortgage loan. ECF No. 2. Ocwen removed the matter to this Court and has filed a Motion to Dismiss. ECF No. 8. For the reasons discussed below, the Court will GRANT the Motion.


         In November 2013, the Wallaces requested a modification of the mortgage on their primary residence at 6907 Aspen Leaf Court, Bowie, Maryland, due to severe financial hardship. ECF No. 2 ¶¶ 2, 3. Indymac Bank Home Loan Servicing (“Indymac”), then their loan servicer, offered the Wallaces reduced payments for a trial period (hereinafter “Trial Plan”), agreeing that, “providing [that] the terms of the agreement are met and your financial situation shows affordability to service your debts, [Indymac] will re-evaluate your financial situation in order to review a loan modification . . . ” ECF No. 8-3 at 2.

         The Wallaces apparently believed their modification was part of the Government's Home Affordable Modification Program (“HAMP”). In modifications made pursuant to the HAMP program, a certified lender and borrower negotiate a new monthly payment and if the borrower makes that payment in full and on time during a several month “trial period, ” the new monthly payment is formalized in a loan modification.

         After the Wallaces made their first payment, the rights to service their loan were transferred to Ocwen Loan Servicing (“Ocwen”). ECF No. 2. ¶ 4. The Wallaces allege that Ocwen failed to honor the terms of the agreement they had made with Indymac, offering them instead loan modification terms that were significantly less generous. Id. ¶ 6. Because they could not afford those new terms, the Wallaces further allege that their credit scores have suffered and they are in danger of foreclosure. Id. ¶¶ 9, 10.

         Ocwen counters that it was under no obligation to make permanent the reduced payments that the Wallaces had negotiated with Indymac after the term of the Trial Plan because that agreement was not made pursuant to the HAMP program. ECF No. 8-2 at 5. Instead, says Ocwan, Indymac only committed to “re-evaluate” the Wallaces' financial situation, which Ocwen did, and as a result, offered them a different loan modification. Id.

         The Wallaces, represented by counsel, filed suit in the Circuit Court of Prince George's County on June 2, 2016. Ocwen was served with process on July 5, 2016 and timely removed the case to this Court on August 3, 2016. Ocwen filed a Motion to Dismiss on August 8, 2016, which has not been opposed by Plaintiffs.

         II. ANALYSIS

         Whether a complaint adequately states a claim for relief is normally judged under Federal Rule of Civil Procedure 8(a)(2), which requires “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a plaintiff must plead facts sufficient to “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). This standard requires “more than a sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Although a court will accept factual allegations as true, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements do not suffice.” Id. A court can look to materials attached to a motion to dismiss without transforming it into a motion for summary judgment where they “(1) [are] clearly integral to, and [were] relied upon in, [the] complaint; and (2) [the opposing party] does not dispute [their] authenticity. Blankenship v. Manchin, 471 F.3d 523, 526 n.1 (4th Cir. 2006).

         The Wallaces' claims under MCPA contain allegations of fraud. Claims for fraud must meet the heightened pleading standard of Rule 9(b), which requires a party to “state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally.” Fed.R.Civ.P. 9(b). A plaintiff alleging claims that sound in fraud must, at a minimum, describe the “the time, place, and contents of the false representations, as well as the identity of the person making the misrepresentation and what he obtained thereby.” Weidman v. Exxon Mobil Corp., 776 F.3d 214, 219 (4th Cir. 2015) (internal quotation marks omitted).

         The Complaint alleges two causes of action. First, the Wallaces allege that Ocwen violated the MCPA by representing to the Wallaces that the payments owed under Ocwen's proposed modification would be different than those under the Trial Plan. ECF No. 2 ¶ 22. Second, the Wallaces allege that Ocwen failed to “properly service” the Wallaces' mortgage loan account by (1) failing to “apply proper HAMP guidelines” to their modification application, and (2) failing to “honor the HAMP modification agreement made with Indymac.” ECF No. 2 ¶ 26.

         a. MCPA Claims[1]

         The MCPA prohibits “unfair or deceptive trade practices, ” defined, among other things, as any “false, falsely disparaging, or misleading oral or written statement[s] . . . which has the capacity, tendency, or effect of deceiving or misleading consumers.” Md. Code Ann., Com. Law § 13-301(1). Under Maryland law, in “attempting to collect an alleged debt, ” a collector may not “[c]laim, attempt, or threaten to enforce a right with knowledge that the right does not exist.” Md. Code Ann., Com. Law § 14-202 (8). A “collector” is “a person collecting or attempting to collect an alleged debt arising out of a consumer transaction.” Md. Code Ann., Com. ...

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