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Weisheit v. Rosenberg & Associates, LLC

United States District Court, D. Maryland

November 15, 2017

ROSENBERG & ASSOCIATES, LLC, et al., Defendants.


          James K. Bredar Chief Judge

         Plaintiff Sherry L. Weisheit brings this action against Defendants Rosenberg & Associates, LLC (“Rosenberg”) and Bayview Loan Servicing, LLC (“Bayview”) alleging violations of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2601 et seq., and the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., in connection with Defendants' servicing of Plaintiff's mortgage and their scheduling of a foreclosure sale in March 2017. Plaintiff filed this action on March 27, 2017 (Compl., ECF No. 1) and then amended her complaint on August 11, 2017. Defendants responded with motions to dismiss under Federal Rule of Civil Procedure 12(b)(6). (See Bayview Mot. Dismiss, ECF No. 21; Rosenberg Mot. Dismiss, ECF No. 22.) Plaintiff has responded (ECF No. 25), Bayview has replied (ECF No. 28) and the issues have been fully briefed. No hearing is necessary to resolve the matter. See Local Rule 105.6 (D. Md. 2016). Plaintiff has stated a claim against Bayview for violations of RESPA and against both Defendants for violations of the FDCPA. Accordingly, Defendants' motions will be denied by accompanying order.

         I. Facts [1]

         Plaintiff Sherry Weisheit executed a mortgage in 2007, went into default in 2009, and Bayview took over servicing the loan in 2012. (Id. ¶¶ 13-15.) On April 26, 2016, Rosenberg, working as a debt collector for Bayview, began foreclosure proceedings against Plaintiff. (Id.) Almost five months later, but more than thirty-seven days prior to any scheduled foreclosure sale, Plaintiff submitted a “complete loan modification application” to Bayview, applying for a loan modification under the Home Affordable Mortgage Program (“HAMP”). (Id. ¶ 17); see Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 556-57 (7th Cir. 2012) (explaining HAMP). Under RESPA and its implementing regulations if a borrower submits a complete loss mitigation application[2] more than thirty-seven days prior to a scheduled foreclosure sale, the loan servicer must evaluate that application before proceeding with foreclosure. 12 C.F.R. § 1024.41(g). To proceed with foreclosure while loss mitigation is pending is to engage in a prohibited practice known as “dual-tracking.” (Am. Compl. ¶ 46.) After a failed attempt at mediation, Bayview denied Plaintiff's application by letter on November 15. (Id. ¶ 20; Denial Letter, Compl. Ex. 1, ECF No. 1-1.)

         In Bayview's denial letter (“Denial Letter”), Bayview explained that it denied Plaintiff's request for a HAMP Modification because the modified monthly payment that would result from such a modification was outside the “required range of 10-55% of [Plaintiff's] monthly gross income.” (Denial Letter at 1, ECF No. 1-1 at 2.) In the vernacular of mortgage regulations, Bayview believed that Plaintiff could not meet the qualification of 10-55% DTI (“debt to income ratio”) for a HAMP Tier 1 loan modification. (See Am. Compl. ¶ 20.) Essentially, the Denial Letter stated that Plaintiff's loss mitigation application was denied because the monthly payment that Plaintiff would have to make if the loan was paid off over 480 months would be outside (either above or below) 10-55% of Plaintiff's gross income. (See Denial Letter at 5, ECF No. 1-1 at 8 (listing the amortization term as 480 months).)

         Under RESPA and its regulations, a borrower is entitled to appeal the denial of her loss mitigation application, see 12 C.F.R. § 1024.41(h), and Plaintiff availed herself of this opportunity, (Am. Compl. ¶ 21). Plaintiff's appeal (“Appeal Letter”), on November 29, 2016, notified Bayview that Plaintiff's monthly debt payment in fact would be within 10-55% of her income. (Id.; Appeal Letter, Compl. Ex. 2, ECF No. 1-2.) In other words, Bayview had done the math wrong. Bayview sent Plaintiff a response (“Response Letter”) dated December 29, 2016. (Response Letter, Compl. Ex. 3, ECF No. 1-3.)

         The substance of Bayview's response is highly important to the outcome of this motion. Bayview did not dispute the accuracy of Plaintiff's calculations, but instead of reversing course and approving Plaintiff's loss mitigation application, Bayview asserted that it was bound by an “investor restriction” that prevented it from extending the term of the loan (Id. at 2-3, ECF No. 1-3 at 3-4.). The Response Letter did not name the investor nor did it describe the nature of the investor restriction, other than to say that it prevented extension of the loan term. Towards the end of Bayview's Response Letter it stated that “[w]e have enclosed all supporting documentation used to complete the review on your account.” (Response Letter at 3, ECF No. 1-3 at 4.) The letter, however, did not contain any such documents. (Am. Compl. ¶ 24.) Plaintiff responded to Bayview stating that she would be appealing this denial once she had received the supporting documentation. (January 12 Letter to Bayview, Compl. Ex. 4, ECF No. 1-4.) She also let Rosenberg know that she was still in the process of appealing and that Rosenberg should therefore not restart the foreclosure process - a request with which Rosenberg appeared to agree. (See Rosenberg Emails, Compl. Ex. 5, ECF No. 1-5.)

         Despite Rosenberg's apparent agreement, the next communication Plaintiff received from Rosenberg was a letter on February 9, 2017 informing her that her home would be sold one month later, on March 9. (Am. Compl. ¶ 30.) This notice informed Plaintiff not only that her home was to be sold but that the sale had been advertised in a local newspaper. (Notice of Sale, Compl. Ex. 6, ECF No. 1-6.) It was not until February 22 that Plaintiff received her next communication from Bayview: a letter dated February 15 that did not address the foreclosure at all, but did explain that the “supporting documentation” language had been in error and there was no such documentation forthcoming. (February 15 Letter, Compl. Ex. 7, ECF No. 1-7.)

         Plaintiff responded to this letter and the notice of foreclosure by mailing a letter to Bayview on February 28. (See February 28 Letter, Compl. Ex. 8, ECF No. 1-8.) Plaintiff set forth her appeal of Bayview's decision in its Response Letter, explaining that even if there were “investor restrictions” preventing Bayview from extending the loan term, Plaintiff would still meet the DTI requirements. (Id. at 2, ECF No. 1-8 at 3.) In addition to appealing the denial of her loss mitigation application, Plaintiff also set forth the rules and regulations of RESPA and explained that “[b]y scheduling a foreclosure sale of Ms. Weisheit's home for March 9, 2017, Bayview is engaging in dual tracking” because Plaintiff was “still engaged in loss mitigation with Bayview.” (Id. at 3, ECF No. 1-8 at 4.)

         Bayview did not respond. (Am. Compl. ¶ 34.) Neither Rosenberg nor Bayview agreed to cancel the foreclosure sale even after multiple requests from Plaintiff, forcing Plaintiff to file an Emergency Motion to stay the sale, which was granted on March 8, 2017. (Id. ¶¶ 35, 37.) The state court stated that the sale of the home was stayed “until loss mitigation has been completed, ” strongly suggesting that the state court, at least, believed that loss mitigation was ongoing as of March 8, 2017. (Id. ¶ 37.)

         Throughout this process, Plaintiff has been required to expend attorneys' fees to prevent Bayview and Rosenberg from proceeding with the foreclosure, has seen attorneys' fees and costs assessed to her mortgage account, and has suffered emotional distress. (Am. Compl. ¶ 42.) Not long after succeeding in having the state court stay the foreclosure sale, Plaintiff brought this action against Bayview and Rosenberg, alleging violations of RESPA, as well as the FDCPA. Defendants have moved to dismiss Plaintiff's complaint under Rule 12(b)(6). (See ECF Nos. 21, 22.)

         II. Standard for Dismissal for Failure to State a Claim

         A complaint must contain “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Facial plausibility exists “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. An inference of a mere possibility of misconduct is not sufficient to support a plausible claim. Id. at 679. As the Twombly opinion stated, “Factual allegations must be enough to raise a right to relief above the speculative level.” 550 U.S. at 555. “A pleading that offers ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action will not do.' . . . Nor does a complaint suffice if it tenders ‘naked assertion[s]' devoid of ‘further factual enhancement.'” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555, 557).

         III. ...

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