United States District Court, D. Maryland
STEVEN J. SMITH, et al., Plaintiffs,
OCWEN LOAN SERVICING, LLC, Defendant.
L. Russell, III United States District Judge.
MATTER arises out of Plaintiffs Steven and Malisa Smith's
unsuccessful attempt to modify their mortgage refinance
through Defendant Ocwen Loan Servicing, LLC
(“Ocwen”), the loan's servicer. The Smiths
allege Ocwen violated federal and state law when it failed to
comply with mandatory procedures and made misrepresentations
regarding the Smiths' application for a loan
modification. Currently pending before the Court is
Ocwen's Motion to Dismiss (ECF No. 11). The Motion is
fully briefed and ripe for disposition. No hearing is
necessary. See Local Rule 105.6 (D.Md. 2016). For the reasons
outlined below, the Court will grant the Motion.
Loan Modification Attempts
March 30, 2007, the Smiths borrowed $329, 000 from American
Home Mortgage as part of a refinance transaction (the
“Loan”). (Compl. ¶ 60, ECF No. 2). The
Smiths' promissory note was secured by a deed of trust on
the residential property located at 929 Creek Park Road, Bel
Air, Maryland (the “Property”). (Id.
¶ 59, 60). At some unspecified time, Ocwen became the
Loan's servicer. (See Id. ¶ 10).
Smiths assert that they applied to modify their loan sometime
after April 24, 2014, yet they do not specify the exact date
on which they submitted their application to Ocwen.
(Id. ¶ 62). Regardless, on May 28, 2014, Ocwen
acknowledged receipt of the Smiths' application and
indicated that it ordered a valuation report to assess the
Smiths' eligibility for various loss mitigation options.
letter dated June 3, 2014, Ocwen stated that after evaluating
the Loan “for all loss mitigation options available,
including, but not limited to, the Home Affordable
Modification Program (‘HAMP'), ” Ocwen was
unable to offer any relief to the Smiths. (Id.). The
letter explained that the financial records the Smiths
provided indicated that they had the ability to pay their
mortgage using income, cash reserves, or other assets.
weeks later, in a letter dated June 27, 2014, the Smiths
appealed Ocwen's denial. (Id. ¶ 63). Ocwen
responded by letter dated July 3, 2014, explaining that at
the time of the initial review, the Smiths' loan was not
yet in default and they did not qualify for a proprietary
loan modification program “because guidelines
established by the investor of [the] loan, Deutsche Bank
National Trust Company, state that [the] loan must be in
default, or foreseeable default in order to be eligible for a
loan modification under any program.” (Id.).
Ocwen further stated that due to the incongruity between the
expenses considered during the Smiths' modification
review and the expenses in the Smiths' HAMP Financial
Form, Ocwen would use the “corrected expense
calculation” to reevaluate the Loan and determine
whether the Loan was eligible for Ocwen's alternative
modification program. (Id. ¶ 66). Ocwen
concluded by informing the Smiths that Ocwen would make a
decision on eligibility within the next fourteen days.
(Id.). But Ocwen never contacted the Smiths to
communicate a decision. (Id.).
parties then exchanged another series of correspondences in
July, August, and September 2014. On July 29, Ocwen contacted
the Smiths to notify them that they were fifty-eight days
delinquent on their mortgage. (Id. ¶ 67). On
August 13, the Smiths sent an email to Ocwen, explaining that
they had just recently received the July 3 letter and once
again appealed Ocwen's denial of a loan modification.
(Id. ¶ 68). In their email, the Smiths
“provided numerical proof that [Ocwen's]
calculations establishing any basis for denial involved
incorrect figures and flawed accounting.”
(Id.). The Smiths also disputed that they were two
months late on their mortgage. (Id.).
August 14, Ocwen responded to the Smiths' August 13
email, stating that based on the Smiths' request, Ocwen
would send the Smiths the “HAMP Escalated Case Dispute
Resolution Letter” (“HAMP Letter”).
(Id. ¶ 69). But Ocwen never sent the HAMP
Letter. (Id.). Then, on September 10, 2014, Ocwen
issued another letter, stating, “We are unable to offer
you a proprietary modification because: You failed to make
the initial trial payment within the required
timeframe.” (Id. ¶ 70). The Smiths were
“baffled” because they did not think they had
entered into a loan modification arrangement with
September 27, the Smiths responded to the September 10 letter
with a final request that Ocwen reconsider their application.
(Id. ¶ 71). The Smiths urged Ocwen to
“use correct and generally-accepted mathematical
principles” and “to refer to [Consumer Financial
Protection Bureau] guidelines and act accordingly
at some unspecified time, the Smiths sent Ocwen another loan
modification application. (Id. ¶ 72). Ocwen
responded on February 18, 2015 with a letter that was nearly
identical to Ocwen's May 28, 2014 letter in response to
the Smiths' initial loan modification application.
(Id.). Ocwen also sent an April 24, 2015
correspondence stating, “We sent you an earlier letter
outlining assistance options . . . . Since that time a
foreclosure action has been initiated on [your property]. But
even though the foreclosure process has begun, you may still
have foreclosure prevention alternatives available - BUT YOU
SHOULD ACT QUICKLY!” (Id. ¶ 73). The
Smiths allege that Ocwen's February 18, 2015 letter was
“some kind of generic form letter that did not deal
specifically with [the Smiths'] situation.”
Debt Collection and Validation Communications
5, 2015, the law firm McCabe, Weisberg & Conway, LLC (the
“Firm”) wrote the Smiths to advise that Ocwen
retained the Firm in connection with the Smiths' debt.
(Id. ¶ 74). The Firm's letter stated that the
Firm was attempting to collect a debt and that the debt was
$454, 961.52 -- an amount the Smiths allege is
“unverified and unsubstantiated.” (Id.).
Shortly thereafter, on May 8, 2015, the Firm sent the Smiths
a “Notice of Intent to Foreclose, ” stating that
the Smiths' loan went into default on June 2, 2014 and
the total amount required to cure the default was $36,
832.62. (Id. ¶ 75).
4, 2015 the Smiths requested that the Firm validate and
verify their debt and provide proof of ownership of the
promissory note underlying the loan. (Id. ¶
77). Ocwen responded on June 30, 2015 with a
“Reinstatement Quote” reflecting that the total
amount due to reinstate the loan was $39, 483.08.
(Id. ¶ 76). Less than three weeks later, on
July 17, 2015, Ocwen notified the Smiths that the foreclosure
proceedings were on hold. (Id. ¶ 78). Then, on
July 20, 2015, the Firm again contacted the Smiths, this time
advising that it had verified the debt and providing a copy
of the assignment of mortgage evidencing a transfer to Ocwen.
(Id. ¶¶ 79, 94).
August 12, 2015, the Smiths responded to the Firm's July
20 letter with a correspondence captioned “NOTICE OF
INSUFFICIENT VALIDATION/VERIFICATION OF DEBT, ” in
which the Smiths asserted that neither the Firm nor Ocwen had
properly validated or verified the debt. (Id. ¶
80). The Smiths allege Ocwen did not properly verify the
Smiths' debt because the “loan transaction history
report” Ocwen prepared was “hastily and
amateurishly assembled” and it “did not
accurately or even chronologically reflect ledger
values.” (Id.). On September 1, 2015, Ocwen
responded with a letter stating, “The Validation of
Debt remains unchanged and a copy of the closing
documentation is enclosed.” (Id. ¶ 81).
The Smiths do not allege whether the Firm ever finalized a
January 11, 2016, the Smiths commenced this action in the
Circuit Court for Harford County, Maryland. (Compl.). Ocwen
removed the case to this Court on February 22, 2016. (ECF No.
1). The Smiths assert Ocwen violated the following
regulations and statutes: (1) 12 C.F.R. § 1024.41, a
federal regulation under the Real Estate Settlement
Procedures Act (“RESPA”), 12 U.S.C. §§
2601, et seq. (Count I); (2) the Fair Debt Collection
Practices Act (“FDCPA”), 15 U.S.C. §§
1692, et seq. (Count II); (3) the Consumer Financial
Protection Act of 2010 (“CFPA”), 12 U.S.C.
§§ 5481, 5564 (Count III); and (4) the Maryland
Consumer Protection Act (“MCPA”), Md. Code Ann.,
Com. Law §§ 13-301 et seq. (West 2016) (Count IV).
(Compl. ¶¶ 96- 124). The Smiths seek injunctive
relief, monetary damages, and attorneys' fees and costs.
moved to dismiss on March 25, 2016. (ECF No. 11). The Smiths
responded in opposition on May 19, 2016 (ECF No. 18), and