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Williams v. 21st Mortgage Corp.

United States District Court, D. Maryland

March 27, 2017

21ST MORTGAGE CORPORATION, et al., Defendants.



         Pending before the Court is a Motion to Dismiss filed by Defendants 21st Mortgage Corporation and Ocwen Loan Servicing (“Ocwen”) (ECF Nos. 33 and 34). The relevant issues have been fully briefed and the court now rules pursuant to Local Rule 105.6 because no hearing is necessary. For the reasons set forth below, the Court will GRANT Defendants' Motion to Dismiss.

         I. BACKGROUND[1]

         A. Factual Background

         Plaintiff Aminata M. Williams (“Plaintiff”) resides at 13107 Ogles Hope Drive, Bowie, Maryland 20720 (the “Property”). This matter arises out of foreclosure proceedings on the Property, initiated by Defendant Ocwen as attorney-in-fact for Defendant 21st Mortgage Corporation. See Amended Complaint, ECF No. 25 at 17; Defendant Ocwen's Reply, ECF No. 44 at 3. Defendant Residential Funding Company, LLC (“Residential Funding”) was a prior holder of the note and deed of trust at issue, ECF No. 25 at 7; ECF No. 33-8 at 13, and Defendant U.S. Bank, N.A. (“U.S. Bank”) acted as Residential Funding's trustee. ECF No. 25 at 11; see ECF No. 33-8 at 14. At the heart of Plaintiff's claim is her purported rescission of her mortgage loan in 2008.

         On September 25, 2006, Plaintiff refinanced her mortgage, executing a promissory note (the “Note”) in the original principal amount of $732, 000.00, payable to the Mortgage Lenders Network USA, Inc., ECF No. 33-6 at 1, and secured by a properly recorded deed of trust (the “Deed of Trust”). ECF No. 33-8; ECF No. 25 at 4. Plaintiff defaulted on the note in July 2007, after making nine monthly payments. ECF No. 25 at 6.

         Plaintiff alleges that she never received any closing documentation from the title company, APlus Title Agency, Inc. (“APlus”). ECF No. 25 at 5. Further, Plaintiff alleges that the settlement documentation she received in response to her 2008 Qualified Written Requests to APlus and Homecomings Financial, the mortgage servicer, were inadequate. ECF No. 25 at 6.

         On September 19, 2008, Plaintiff then sought to rescind her loan. Specifically, Plaintiff sent a letter to Homecomings Financial asserting rescission because the failure to provide proper disclosure and documents amounted to a Truth in Lending Act violation. Notice of Rescission, ECF No. 33-2; ECF No. 25 at 6. On November 25, 2008, Homecomings Financial replied to Williams, stating that they “reviewed [the] file and [found] no basis to conclude that there were any material disclosure errors that would give rise to an extended right or rescission.” ECF No. 25 at 6-7.

         Almost four years after this purported notice of rescission, Defendant Residential Funding held the Note and Deed of Trust from September 11, 2012 to June 17, 2013, ECF No. 25 at 9, and Defendant U.S. Bank was a Trustee to Residential Funding during that same time period. ECF No. 25 at 11; see ECF No. 33-8 at 14. The Note and Deed of Trust was then transferred to Defendant 21st Mortgage Corporation. ECF No. 25 at 9. Plaintiff maintains that the rescission was valid, ECF No. 25 at 15, so consequently Defendant 21st Mortgage Corporation is the holder of an invalid Note and Deed of Trust and lacked standing to initiate the foreclosure in 2013.

         B. Procedural History

         On August 27, 2009, Homecomings Financial, the financial institution which secured the mortgage at the time, filed an action to foreclose on the Property in the Circuit Court for Prince George's County Maryland in Burson, et al. v. Williams, CAE 09-25087. This action was dismissed without prejudice by the Substitute Trustees on January 13, 2011.

         On April 27, 2010, Plaintiff filed a Chapter 7 bankruptcy petition in the District of Maryland, In re Williams, Ch. 7 Case No. 10-19317 (“2010 Bankruptcy Proceeding”), one of Plaintiff's seven bankruptcy petitions to date. Plaintiff received a Chapter 7 discharge on August 10, 2010 and the case was dismissed on February 3, 2012. As a result of this bankruptcy adjudication, Plaintiff received a discharge of the Note obligation. See 2010 Bankruptcy Proceeding, Discharge Order, ECF No. 26; Schedule F, ECF No. 1-1 (listing mortgage debt on 1307 Ogles Hope Drive in the amount of $904, 263.00).

         On November 7, 2013, 21st Mortgage Corporation, through Substitute Trustees, initiated another foreclosure action in the Circuit Court for Prince George's County Maryland, CAEF13-33472 (the “State Foreclosure Action”). Plaintiff filed a Motion to Stay and or Dismiss in the State Foreclosure Action pursuant to Md. Rule 14-211, seeking to stay the sale of the property and dismiss the foreclosure action.[2] In Plaintiff's motion, she argued:

[Plaintiff Williams] rescinded the loan. As is clear from 15 USC § 1635(b), [Williams] upon exercise of the right of rescission, “is not liable for any finance or other charge, and any security interest given by the obligor, including any such interest arising by operation of law, becomes void upon such a rescission.”
[Williams] asserts that the Noet [sic] and Deed of Trust are void and cannot be a basis for the order to docket. Plaintiff asserts that 21st Mortgage holds no interest in and to the underlying loan and that any interest it may have was void in 2008 and the case should be dismissed . . . .
Despite the fact that the loan is void, 21st Mortgage does not have standing to challenge this motion or legal standing to enforce the void Promissory Note under Maryland law.

         State Foreclosure Action, ECF No. 18 at 7.

         On May 5, 2016, the Circuit Court for Prince George's County denied Plaintiff's motion in an order authorizing the Substitute Trustees to proceed with selling the Property. The Court specifically held that:

Upon review of the filings and opposition hereto, it is apparent to this Court that [Williams'] motion does not state a valid defense or present meritorious argument. [Williams] points the Court to 15 U.S.C. § 1635(a) in support of her claim that she rescinded her residential mortgage transaction in 2008, however 15 U.S.C. § 1635(e)(1)-(2) exempts mortgage and refinance transactions from section 1635 of the U.S. Code and 12 C.F.R. § 226.23 is inapplicable in this case. Additionally, [Williams'] request [for a hearing] is not timely filed . . .
ORDERED that [Williams'] emergency motion is DENIED without a hearing pursuant to MD Rule ...

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