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Orazi v. BAC Home Loans Servicing, LP

United States District Court, D. Maryland

September 6, 2018

JAMES A. ORAZI and KIMBERLY RIDER-ORAZI
v.
BAC HOME LOANS SERVICING, LP, RUSHMORE LOAN MANAGEMENT SERVICES, LLC, and U.S. BANK NA as LEGAL TITLE TRUSTEE FOR TRUMAN 2013 SC3 TITLE TRUST

          MEMORANDUM

          Richard D. Bennett United States District Judge.

         Plaintiffs James A. Orazi ("Orazi") and Kimberly Rider-Orazi ("Rider-Orazi") bring this lawsuit against defendants Bank of America, N.A. ("BANA"), [1] Rushmore Loan Management Services, LLC ("Rushmore"), and U.S. Bank NA as Legal Title Trustee for Truman 2013 SC3 Title Trust ("US Bank") for alleged breach of contract in connection with a loan modification. Now pending is defendants' joint motion for summary judgment (ECF No. 101). The motion is fully briefed, and no oral argument is necessary. See Local Rule 105.6. For the reasons below, defendants' motion is GRANTED and Judgment is ENTERED in favor of all three Defendants against the Plaintiffs.

         BACKGROUND

         This dispute concerns a mortgage loan obtained by plaintiff Orazi from defendant BANA to finance the purchase of real property located at 2503 Garsden Court, Phoenix, Maryland 21131 (the "Property"). ECF No. 101-3. Spouses Orazi and Rider-Orazi purchased the Property on June 29, 2007 for $1, 160, 000. ECF No. 101-2. The original principle of the loan from BANA was $812, 000 (the "BANA Loan"), secured by an Adjustable Rate Note (the "Note") executed by Orazi and the Deed of Trust to the Property (the "Deed of Trust") executed by Orazi and, as a co-signer, Rider-Orazi. ECF Nos. 101-3, 101-4. In 2010, plaintiffs began having trouble making their loan payments, so they sought a loan modification from BANA. This attempt was ultimately unsuccessful and is now the subject of this suit. Defendants U.S. Bank and Rushmore are the current owner and servicer, respectively, of the Loan. ECF Nos. 101-18; 101-21.

         The Deed of Trust requires Orazi to "pay when due the principal of, and interest on, the debt evidenced by the Note and any prepayment charges and late charges under the Note." ECF No. 101-4, ¶ 1. As a co-signer, Rider-Orazi is not "personally obligated to pay the sums" secured by the Deed of Trust. Id. at ¶ 13. Under the terms of the Deed of Trust, Orazi's payments pursuant to the Note would "be applied to each Periodic Payment in the order which it became due," meaning that any payment would be applied to the earliest month in arrears. Id. at 101-4, ¶ 2.

         From June 2007 to December 2010, Orazi made full monthly mortgage payments to BANA. ECF No 116-2, Orazi Tr. 83:7-8. In December 2010, Orazi lost his job and fell behind on the payments, breaching the terms of the Note and Deed of Trust. Id; ECF No. 101-5, Orazi Tr. 193:14-194:2. After falling behind on payments, Orazi and Rider-Orazi persistently pursued a loan modification from BANA. As part of these efforts, Orazi obtained a loan of $49, 597 (the "State Loan") through the Emergency Loan Assistance Program of the Maryland Department of Housing and Community Development ("DHCD") to use to bring the BANA Loan current. ECF No. 116-3. The State Loan had 0% interest, and its balance would be forgiven after five years if Orazi maintained his residence and remained current on his BANA Loan. ECF No. 101-11, ¶¶ 3-4; ECF No. 116-2, Orazi Tr. 89:4-19. DHCD paid the balance of the State Loan directly to BANA, satisfying all amounts due under the BANA Loan. ECF No. 101-10, p. 16.

         After the State Loan was used to satisfy the arrearage of the BANA Loan, BANA continued to work with Orazi to determine if he was eligible for a loan modification. BANA informed Orazi multiple times throughout the process that Orazi was required to remain current on the BANA loan to be eligible for a loan modification. For example, on December 27, 2011, Sonia Velazquez ("Velazquez"), a Mortgage Servicing Specialist at BANA, emailed Orazi notifying him that he would need to bring the loan current to receive a loan modification. ECF No. 101-13, p. 7-8. On December 28, 2011, Velazquez emailed Orazi stating, "Please keep calling customer service...so they can appl[y] all of your payments to your mortgage, you have to show current to finish the modification process." Id. at p. 6.

         On April 6, 2012, BANA sent Orazi a letter conditionally approving the BANA Loan for a loan modification (the "LMA"). ECF No. 101-15. The BANA Loan was current as of the date of this letter due to the payments from the State Loan. ECF No. 101-12, Deloney Tr. 30:1-5. The LMA was subject to two conditions: (1) the enclosed documents had to be signed, notarized, and returned to BANA by April 20, 2012, and (2) Orazi had to make his normal monthly payment for April 1, 2012 in the amount of $5, 667.51. ECF No. 101-15, p. 2. The Orazis timely signed, notarized, and returned the required documents and submitted one mortgage payment in April 2012. ECF No. 101-12, Deloney Tr. 34:6-23.

         When the Orazis made their April 2012 payment, however, the BANA Loan was no longer current, and the April 2012 payment was applied to the last installment that was due. ECF No. 101-12, Deloney Tr. 46:1-22. The BANA Loan was no longer current because DHCD realized it had overpaid the State Loan and requested a refund from BANA. Id. at 36:9-17. BANA returned the requested funds, causing Orazi's account to fall into arrears for January, February, and March 2012. Id. Because the Deed of Trust, which remained in effect despite the LMA, requires BANA to apply any payment by Orazi "to each Periodic Payment in the order in which it became due," BANA applied the April payment made by the Orazis to January 2012, the earliest month that was in arrears. ECF No. 101-4, ¶ 2. Accordingly, the condition of the LMA requiring Orazi to make the April 2012 payment was never satisfied. ECF No. 101-12, Deloney Tr. 34:13-23.

         On May 8, 2012, Velazquez informed Orazi that BANA would still honor the LMA if Orazi brought the BANA Loan current by making the February, March, and April 2012 mortgage payments. ECF No. 101-16, p. 3. Orazi was unable to make these payments. Id. at p. 2. Accordingly, the BANA Loan remained delinquent, and the LMA never became effective. On March 5, 2013, BANA offered Orazi another loan modification which would not require Orazi to bring the BANA loan current. ECF No. 101-17, p. 2-4. Orazi rejected this offer because the interest rate for the new modification would be higher than the interest rate under the LMA. ECF No. 116-2, Orazi Tr. 117:5-17.

         In 2013, BANA sold the Loan to defendant U.S. Bank, and servicing of the loan was transferred to defendant Rushmore. ECF Nos. 101-18, 101-21. BANA notified Orazi of the sale and transfer on December 26, 2013. ECF No. 101-21. On August 5, 2014, the Orazis provided a copy of the LMA to Rushmore, and Rushmore informed the Orazis that it would submit the LMA to U.S. Bank for approval. ECF No. 101-22. Rushmore also asked if the Orazis could make the past due LMA payments (from May 1, 2012 to October 1, 2014), but counsel for the Orazis told Rushmore he did not know whether the Orazis could make the payments. ECF No. 101-23.

         Until the filing of this litigation, the Orazis made deposits into a segregated account in the amount called for by the LMA. ECF No. 116-2, Orazi Tr. 49:11-52:5. The Orazis, however, have never offered or attempted to make any past due LMA payments to Rushmore or U.S. Bank. ECF No. 101-5, Orazi Tr. 62:7-18. In fact, Orazi has not made a mortgage payment since April 2012, the payment that was applied to the arrears due for January 2012. Id. at 192:6-8. Despite not having made payments in six years, no foreclosure has been filed, and the Orazis have remained in the Property. Id. at 249:5-7; ECF No. 101-24, Rider-Orazi Tr. 199:3-6.

         The Orazis filed suit against defendants in the Circuit Court for Baltimore County on April 16, 2015, and on May 26, 2015, defendants removed the case to this Court based on diversity of citizenship. ECF No. 1 (citing 28 U.S.C. §§ 1332, 1441, and 1446). The Orazis allege four counts against defendants, all arising from defendants' alleged refusal to honor the LMA: (I) specific performance, (II) declaratory judgment, (III) breach of contract, and (IV) promissory estoppel. ECF No. 2. On November 9, 2015, this Court denied Rushmore's and U.S. Bank's motion to dismiss. ECF No. 25. This Court also denied the Orazis' motion ...


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