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Weisheit v. Rosenberg & Associates, LLC

United States District Court, D. Maryland

July 16, 2019

ROSENBERG & ASSOCIATES, LLC, et al, Defendants


          James K. Bredar Chief Judge.

         I. Background

         Sherry Weisheit filed this case on her own behalf and on behalf of similarly situated individuals against Rosenberg & Associates, LLC ("Rosenberg"), and Bayview Loan Servicing, LLC ("Bayview"). (Compl., ECF No. 1.) After motions to dismiss were denied (ECF Nos. 29, 30), and a scheduling order was entered (ECF No. 35), the Court granted Weisheit's request for leave to file a second amended complaint (ECF Nos. 57, 58), which is now the operative complaint (hereinafter referred to as the "complaint") (ECF No. 59).

         Weisheit has pled three causes of action alleging violation of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2601 et seq., and the regulations promulgated thereunder, and violation of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 etseq. She asserts in Count I that Bayview improperly scheduled a foreclosure sale while her loss mitigation application was pending, did not respond within thirty days of her appeal of Bayview's denial of her loan modification application, and did not state in the denial the specific reasons for its decision. In Count II, Weisheit alleges Rosenberg and Bayview violated the FDCPA by scheduling and advertising the foreclosure sale when they were prohibited from doing so, which also constituted a materially unfair or deceptive practice under the FDCPA. In Count III, Weisheit alleges Bayview failed to acknowledge receipt of a Notice of Error within five days of receipt and failed to correct the errors in the Notice of Error within thirty days of receipt. Her complaint alleges Bayview wrongly denied her a loan modification under the Home Affordable Mortgage Program ("HAMP"). (2d Am. Compl. ¶ 64.)

         Pending before the Court are Bayview's motion for summary judgment (ECF No. 75), Bayview's motion to seal (ECF No. 76), and Weisheit's cross motion for partial summary judgment (ECF No. 97).[1] Briefing has been completed on the motions (ECF Nos. 103, 105), and no hearing is required, Local Rule 105.6 (D. Md. 2018). Bayview's motion for summary judgment will be granted. Its motion to seal will be granted in part and denied in part. And Weisheit's cross motion for summary judgment will be denied.

         II. Standard for Summary Judgment

         "The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing predecessor to current Rule 56(a)). The burden is on the moving party to demonstrate the absence of any genuine dispute of material fact. Adickes v. S.R Kress & Co., 398 U.S. 144, 157 (1970). If sufficient evidence exists for a reasonable jury to render a verdict in favor of the party opposing the motion, then a genuine dispute of material fact is presented and summary judgment should be denied. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). However, the "mere existence of a scintilla of evidence in support of the [opposing party's] position" is insufficient to defeat a motion for summary judgment. Id. at 252. The facts themselves, and the inferences to be drawn from the underlying facts, must be viewed in the light most favorable to the opposing party, Scott v. Harris, 550 U.S. 372, 378 (2007); Iko v. Shreve, 535 F.3d 225, 230 (4th Cir. 2008), who may not rest upon the mere allegations or denials of his pleading but instead must, by affidavit or other evidentiary showing, set out specific facts showing a genuine dispute for trial, Fed.R.Civ.P. 56(c)(1). Supporting and opposing affidavits are to be made on personal knowledge, contain such facts as would be admissible in evidence, and show affirmatively the competence of the affiant to testify to the matters stated in the affidavit. Fed.R.Civ.P. 56(c)(4). A cross-motion for summary judgment is viewed separately on its own merits. Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir. 2003). "When considering each individual motion, the court must take care to 'resolve all factual disputes and any competing, rational inferences in the light most favorable' to the party opposing that motion." Id. (citation omitted).

         III. Home Affordable Modification Program

         Reacting to the 2008 economic crisis, Congress enacted the Emergency Economic Stabilization Act for various purposes, including the preservation of home ownership. 12 U.S.C. § 5201. In carrying out the Act's purposes, the Secretary of the Treasury was directed to use the authority of that office "to encourage the servicers of the underlying mortgages, considering net present value to the taxpayer, to take advantage of the HOPE for Homeowners Program under section 1715z-23 of [Title 12] or other available programs to minimize foreclosures." 12 U.S.C. § 5219(a)(1).

         The Secretary was also directed to

revise the supplemental directives and other guidelines for the Home Affordable Modification Program of the Making Home Affordable initiative of the Secretary of the Treasury ... to require each mortgage servicer participating in such program to provide each borrower under a mortgage whose request for a mortgage modification under the Program is denied with all borrower-related and mortgage-related input data used in any net present value (NPV) analyses performed in connection with the subject mortgage. Such input data shall be provided to the borrower at the time of such denial.

12 U.S.C. § 5219a(a). Further, in carrying out the Home Affordable Modification Program ("HAMP"), the Secretary was to

establish and maintain a site on the World Wide Web that provides a calculator for net present value analyses of a mortgage, based on the Secretary's methodology for calculating such value, that mortgagors can use to enter information regarding their own mortgages and that provides a determination after entering such information regarding a mortgage of whether such mortgage would be accepted or rejected for modification under the Program, using such methodology.

12 U.S.C. § 5219a(b)(1).

         HAMP was created as part of the Troubled Assets Relief Program but was not itself codified into law. Cleveland v. Aurora Loan Servs., LLC, No. C 11-0773 PJH, 2011 WL 2020565, at *3 (N.D. Cal. May 24, 2011). Under HAMP, mortgage loan servicers entered into Servicer Participation Agreements ("SPAs") with the Federal National Mortgage Association ("Fannie Mae") serving as the financial agent for the United States government; a servicer's obligations were set forth in the SPA as well as in Treasury Department Program Guidelines. Id.

         "Before HAMP, there was no standard approach among loan servicers or investors about how to help homeowners who wanted to keep making payments, but needed mortgage assistance. By setting standards for what constitutes a sustainable modification across the mortgage industry, HAMP has helped to make private loan modifications more affordable for homeowners." U.S. Dep't of the Treasury, Making Home Affordable: Home Affordable Modification Program (HAMP), Pages/hamp.aspx (last visited June 18, 2019) ("Making Home Affordable Announcement").

         In HAMP's original form, a borrower could be eligible for a HAMP modification if various requirements were met, including that the proposed modification was for a mortgage loan that originated before January 1, 2009, and secured the borrower's primary residence, the mortgage loan had not previously received a HAMP modification, and the mortgage payments amounted to more than 31% of the borrower's gross monthly income. Markle v. HSBC Mortg. Corp. (USA), 844 F.Supp.2d 172, 177 (D. Mass. 2011). A "servicer conducts a Net Present Value test, which assesses whether the expected cash flow from a modified loan would exceed the cash flow from the unmodified loan." Id. See also 15 U.S.C. § 1639a(a) (to extent servicer owes investors or others duty to maximize net present value, servicer deemed to satisfy duty by entering into qualified loss mitigation plan based on determination, inter alia, that modification would "likely provide an anticipated recovery on the outstanding principal mortgage debt that will exceed the anticipated recovery through foreclosures"). Participating servicers were not required to modify mortgage loans, but only to consider modifications to them. Escobedo v. Countrywide Home Loans, Inc., No. 09cv1557 BTM (BLM), 2009 WL 4981618, at *3 (S.D. Cal. Dec. 15, 2009) (SPA "does not state that Countrywide must modify all mortgages that meet the eligibility requirements").

         In 2012, HAMP was expanded to increase the pool of eligible borrowers. Making Home Affordable Announcement. That expansion introduced Tier 2 to HAMP, with the original methodology for determination of net present value ("NPV") becoming Tier 1. MHA Handbook for Servicers of Non-GSE Mortgages, Ch. H: HAMP p. 66 n.3 (version 5.1 May 26, 2016) ("MHA Handbook"), Bayview Mot Summ. J. Ex. E, ECF No. 75-7. According to the MHA Handbook, a mortgage loan may be eligible for HAMP Tier 2 if it satisfied the threshold HAMP criteria but not the Tier 1 criteria or was considered for but did not receive a Tier 1 modification. Id. pp. 66-67. In HAMP Tier 2, "the borrower's post-modification monthly mortgage payment ratio (also called a debt-to-income ratio or DTI ratio) must be greater than or equal to ten percent and less than or equal to 55 percent (Expanded Acceptable DTI Range)." Id. p. 105.

         A servicer considering a HAMP modification was required to follow a "waterfall" methodology. Id. p. 109. Before undertaking the Tier 1 waterfall, the servicer was required to identify any investor restrictions such as those related to rate reduction, term extension or forbearance, or a cap on the percentage of loans in a securitization that can be modified. Id.

For loans that satisfy the eligibility requirements . . . [for HAMP, generally] and ... for HAMP Tier 1 . .., servicers must apply the modification steps enumerated below in the stated order of succession until the borrower's monthly mortgage payment ratio is reduced to 31 percent .... If the servicer cannot reduce the borrower's monthly mortgage payment ratio to the target of 31 percent, the modification will not satisfy HAMP Tier 1 requirements and the servicer must evaluate the borrower for HAMP Tier 2.

Id. The four basic waterfall steps under both Tier 1 and Tier 2 are determination of capitalized unpaid principal balance, interest rate adjustment, term extension, and principal forbearance, but the respective Tier 1 and Tier 2 calculations are not based on identical values. Id. pp. 109-12.

         Bayview has provided evidence that a servicer receiving a complete loss mitigation application would use the online Treasury Department HAMP Portal to determine whether modification should occur by submitting "the raw data-such as borrower's monthly gross income, borrower's total monthly obligations, escrow advances, taxes, and insurance" to the Portal. (Flick Aff. ¶¶ 18, 19, Bayview's Mot. Summ. J. ECF No. 75-2.) In turn, the Portal "successively reduced the interest rate, extended the loan term, determined a principal forbearance, and forgave principal in a two-tier evaluation for a HAMP loan modification." (Id. ¶ 19.) Finally, "[a]fter fully applying the HAMP loan modification waterfall and considering any identified investor restrictions, the Treasury Portal sent the loan servicer a single HAMP eligibility determination and NPV chart values." (¶ 22.)

         IV. Evidence

         On April 26, 2007, Weisheit executed a promissory note to repay $417, 000 in principal plus interest for the purpose of financing her thirty-year mortgage loan on her home in Darlington, Maryland. (Promissory Note, Bayview's Mot. Summ. J. Ex. J, ECF No. 75-12.) A security instrument-referenced as "a Mortgage, Deed of Trust, or Security Deed"-was incorporated into the promissory note. (Id. ¶ 10.) The monthly payment was in the amount of $2, 601.54, and Weisheit's first payment was due June 1, 2007. (Id. ¶ 3.) The last payment received from Weisheit was on October 1, 2009. (Foreclosure Notice, Bayview's Mot. Summ. J. Ex. K, ECF No. 75-13.)

         On December 27, 2012, Bay view sent Weisheit a letter inviting her to apply for a loan modification and supplying her with information and forms needed to submit an application. (Letter, Dec. 27, 2012, Bayview's Mot. Summ. J. Ex. L, ECF No. 75-14.) Similar letters were sent to Weisheit on April 2, 2013; September 5, 2013; May 12, 2014; August 6, 2014; May 12, 2015; July 22, 2015; and August 6, 2015. (Id.) Nothing in the record indicates Weisheit responded to these letters.

         On September 14, 2015, Bayview sent Weisheit a letter formally notifying her she was in default and that Bayview, on behalf of the Note Holder, intended to initiate foreclosure action on the mortgaged property. (Foreclosure Notice.) The letter stated the foreclosure would be conducted in the name of "THE BANK OF NEW YORK MELLON FKA THE BANK OF NEW YORK, AS TRUSTEE (CWALT 2007-18CB)." (Id.) The letter indicated all payments from November 1, 2009, forward were in default; the total monthly payments overdue were $216, 900.02 and additional charges of $4, 162, 56 for late fees and $511.00 for a "corporate advance balance" were assessed, bringing the unpaid total Weisheit owed on that date to $221, 573.58. (Id.) The principal balance remaining on the loan was $404, 925.11. (Id.) Weisheit was given fourteen days to cure the default; after that time, Bayview told her "the lender intends to exercise its rights to accelerate the mortgage debt and instruct its attorneys to start legal action to foreclose upon your mortgaged property." (Id.)

         On September 28, 2015, attorney Gerard Uehlinger wrote Bayview, indicating Weisheit had retained him to represent her regarding the loan and requesting "[a] copy of the [promissory] note, [a] copy of the security instrument with assignments establishing the right to foreclose, [a] copy of the payment history since the loan was last less than 60 days past due, and [t]he name of the investor that holds the loan." (Letter, Sept. 28, 2015, Bayview's Mot. Summ. J. Ex. M, ECF No. 75-15.) The letter was received by Bayview on October 5, 2015. (Id.)

         On October 8, 2015, Bayview wrote Uehlinger[2] to say it expected to resolve his inquiry by November 3, 2015. (Letter, Oct. 8, 2015, Bayview's Mot. Summ. J. Ex. N, ECF No. 75-16.) On October 16, 2015, Bayview wrote Uehlinger, providing the information that the name of the investor holding the loan is "THE BANK OF NEW YORK MELLON TRUSTEE" and the address of the investor was "101 BARCLAY STREET 8W, NEW YORK, NY 10286." (Id.) The letter indicated it included enclosures of "a copy of the payment history, copy of Note, and copy of Deed of Trust pertaining to the account per your request." (Id.)

         On December 21, 2015, Bayview wrote Weisheit in care of Uehlinger at his office address and titled the letter as "NOTICE OF DEFAULT AND INTENT TO ACCELERATE." (Letter, Dec. 21, 2015, Bayview's Mot. Summ. J. Ex. O, ECF No. 75-17.) By that time, the total amount to cure the default had risen to $231, 221.48. (Id.) The letter stated it was a formal demand to pay the sum owed and further stated, "If the default, together with additional payments that subsequently become due, is not cured by 01/25/2016, BLS [Bayview Loan Servicing] will take steps to terminate your ownership in the property by a foreclosure proceeding or other action to seize the property." (Id.) Then, the letter said,

IF YOU ARE UNABLE TO BRING YOUR ACCOUNT CURRENT, BLS offers consumer assistance programs designed to help resolve delinquencies and avoid FORECLOSURE. These services are provided without cost to our customers. You may be eligible for a loan workout plan or other similar alternative. If you would like to learn more about these programs, you may contact the Loss Mitigation Department at 1-877-205-9958, 9:00 a.m. - 6:00 p.m., Monday - Friday, Eastern Standard Time. WE ARE VERY INTERESTED IN ASSISTING YOU.
If you are experiencing financial difficulty, you should know that there are several options available to you that may help you keep your home. You may contact a government approved housing counseling agency which provides free or low-cost housing counseling. You should consider contacting one of these agencies immediately. These agencies specialize in helping homeowners who are facing financial difficulty. Housing counselors can help you assess your financial condition and work with us to explore the possibility of modifying your loan, establishing an easier payment plan for you, or even working out a period of loan forbearance. For your benefit and assistance, there are government approved homeownership counseling agencies designed to help homeowners avoid losing their homes. To obtain a list of approved counseling agencies, please call 1-800-569-4287 or visit
You may be eligible for assistance from the Homeownership Preservation Foundation or other foreclosure counseling agency. You may call the following toll-free number to request assistance from the Homeownership Preservation Foundation: l-888-995-HOPE(4673). If you wish, you may also contact us directly at 1-800-771-0299 and ask to discuss possible options. This matter is very important.
Please give it your immediate ...

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