Ayres v. Ocwen Loan Servicing, LLC, Civil No. WDQ–13–1597.

• Decision Date: 08 September 2015
• Docket Number: Civil No. WDQ–13–1597.
• Citation: 129 F.Supp.3d 249
• Parties: Angela AYRES, et al., Plaintiffs, v. OCWEN LOAN SERVICING, LLC, et al., Defendants.
• Court: U.S. District Court — District of Maryland

129 F.Supp.3d 249

Angela AYRES, et al., Plaintiffs,

v.OCWEN LOAN SERVICING, LLC, et al., Defendants.

Civil No. WDQ–13–1597.

United States District Court, D. Maryland, Northern Division.

Signed Sept. 8, 2015.

Phillip R. Robinson, Jesse Lee Iliff, Consumer Law Center LLC, Silver Spring, MD, for Plaintiffs.

Christopher M. Corchiarino, George S. Mahaffey, Jr., Goodell Devries Leech and Dann LLP, Baltimore, MD, for Defendants.

MEMORANDUM OPINION

WILLIAM D. QUARLES, JR., District Judge.

Angela Ayres and Stephan Ayres sued Ocwen Loan Servicing, LLC ("Ocwen") and Salomon Brothers Mortgage Securities VII ("Salomon Brothers"). Pending are Ocwen's motion to dismiss, Angela Ayres's motion for summary judgment,¹ and Salomon Brothers motion to quash service of process and to dismiss. No hearing is necessary. See Local Rule 105.6 (2014). For the following reasons, Salomon Brothers' motion will be granted, Ocwen's motion to dismiss will be granted in part and denied in part, Mrs. Ayres motion will be denied, and Ocwen's motion for limited discovery will be denied as moot.

I. Background²

On March 18, 1991, the Plaintiffs bought a property at 6600 Halleck Street, District Heights, Maryland ("the Property") with a loan of $72,660 from Market Street Mortgage secured by a Deed of Trust ("the Ayres Note"). See ECF No. 61 (hereinafter, "Am. Compl.") at ¶ 20. The Plaintiffs allege that "Mr. Ayres was and remains the only obligor/borrower on the Ayres Note [and] Mrs. Ayres has never agreed to assume any liability on the Ayres Note." Id. (emphasis in original). "The Ayres Note set the interest rate at 9.5% ... and had a maturity date in April 2021. The fixed monthly principal and interest payment on the Ayres Note equaled $610.96 and payments were due on the first day of the month and would not be subject to a late fee if paid by a grace period of 15 days of each month." Id. at ¶ 21.

On August 25, 1993, Mr. Ayres filed for bankruptcy under Chapter 13 of the Bankruptcy Code.³ Am. Compl. at ¶ 22. Under his Chapter 13 reorganization plan, Mr. Ayres "made all required payments with his then mortgage servicer related to the Ayres Note-i.e. First Union Mortgage Corp. ("First Union")-and the Chapter 13 Trustee also paid to First Union Mortgage Corp. the total of $4,731.91" Id. at ¶ 24. In June 1996, Stephan Ayres completed the bankruptcy plan, and the bankruptcy case was discharged. Id. ¶ 23, 26.

"Despite the fact that Mr. Ayres was current on the Ayres Note following the successful completion of his Chapter 13 Bankruptcy and discharge, the mortgage servicer for the Ayres Note, First Union, demanded sums not contractually due and owing on the Ayres Note." Am. Compl. at ¶ 27. In May 1998, First Union returned a mortgage payment stating that the Plaintiffs owed $13,972. Id. "Mr. Ayres attempted to get First Union to accept his continued payments from May 1998 and thereafter but it refused to accept the payments and continued to demand sums that were not contractually due." Id. at ¶ 28.

"[A] few months after failing to get First Union to correct its false records," Mr. Ayres requested that the U.S. Department of Housing and Urban Development ("HUD") "take over the Ayres Note and assign the Ayres Note to another servicer." Am. Compl. at ¶ 29. "[T]he Ayres Note was accepted into HUD's assignment program on November 9, 1998 and soon thereafter assigned to a new servicer Clayton National Inc. ("Clayton") who acted on behalf of HUD with respect to the loan."⁴ Id.

In December 2000, the loan was assigned from HUD to Salomon Brothers Realty Corp. and transferred to Litton Loan Servicing for servicing. Am. Compl. at ¶ 34, 36. "Litton began shortly thereafter claiming that Mrs. Ayres was a borrower on the Ayres Note when at no time did she agree to be obligated on the Ayres Note." Id. at ¶ 39. "Mr. Ayres had given Litton ... permission to discuss his mortgage account with Mrs. Ayres but that consent was never an agreement for her to have become obligated on the Ayres Note." Id. "On August 17, 2001, Lela Derouen, Assistant Vice President of Litton ... affirmed before a Notary Public from the State of Texas named Elizabeth H. Willard in a 'Lost Note Affidavit' that 'STEPHAN AYRES' was the only borrower on the Ayres Note...." Id. at ¶ 35.

"As of September 13, 2002, Litton reported that Mr. & Mrs. Ayres owed no delinquent sums of money on the Ayres Note. Litton intended for Mr. & Mrs. Ayres to rely upon this statement." Am. Compl. at ¶ 40. On May 15, 2003, however, Litton claimed that the Plaintiffs owed "in addition to the regular mortgage payment the sum of $23,383.28 for 'OTHER FEES DUE.' " Id. at ¶ 41. "Mrs. Ayres proceeded, on her husband's behalf and with his authority, to communicate with Litton over and over for several years, in writing and orally, regarding the basis of Litton's claim in May 2003 ... that $23,383.28 in additional 'OTHER FEES' was owed on the Ayres Note." Id. at ¶ 42.

Litton did not provide documentation explaining the "other fees." Am. Compl. at ¶ 43. Instead, on November 26, 2001, Litton informed the Plaintiffs "an Arrearage Bond of $23,280.02 was added to the loan" because of the Plaintiff's previous participation in HUD's Fresh Start Program. Id. "Litton never provided Mr. & Mrs. Ayres with any audit or other information supporting its claim that an 'Arrearage Bond' was authorized, consented to, and added to the Ayres Note. Litton only provided an incomprehensible and false accounting of the Ayres Note from the time it commenced servicing the loan." Id. at ¶ 44. The Plaintiffs continued to request documentation. Id. at ¶ 45. On September 7, 2007, Litton "modified" its explanation of the Arrearage Bond, explaining that "the sums it claimed were due were made in consideration of Mr. & Mrs. Ayres for various loan modifications which simply worked to capitalize the disputed sums claimed due and extend the term of the Ayres Note beyond the initial 30 year period." Id. at ¶ 46. "In addition, Litton attempted to add Mrs. Ayres by these proposed offers as an additional obligor on the Ayres Note when it knew she was not a co-borrower." Id.

In June 2009, the Plaintiffs defaulted on the loan. Am. Compl. at ¶ 47. "However, by approximately January 2010 the payments were caught up and were current again." Id. In April 2010 Litton reevaluated the Ayres Note; however, "it utilized the [ ] false financial records ... and as a result ... the 'owner of the [Ayres Note] did not approve a modification.' " Id. at ¶ 48. Further, on June 23, 2011, Litton claimed that the Plaintiffs "had not timely returned certain financial information to it as part of its consideration of various loan modification applications." Id. at ¶ 49. The Plaintiffs allege that they "had timely returned all required documents and Litton kept asking for the same documents over and over but Litton would only claim it did not receive the requested documents." Id.

In November 2011, Litton transferred the servicing of the loan to Ocwen. Am. Compl. ¶ 53. On December 6, 2011, Ocwen sent the Plaintiffs a letter stating that "mortgage payments are past due, which puts you in default on your loan agreement." Id.⁵ On numerous dates from November 2011 to May 2012, "Ocwen sent statements to Mr. & Mrs. Ayres which it intended them to rely upon and[,] in which[,] [Ocwen] demanded false sums due on the Ayres Note ... and also falsely claimed that Mrs. Ayres owed it certain sums...." Id. at ¶ 55.

In January 2012, the Plaintiffs filed a complaint with the Maryland Division of Financial Regulations. Am. Compl. at ¶ 56. On March 15, 2012, the Plaintiffs sent Ocwen a Qualified Written Request ("QWR"). Id. at ¶ 58. Other than sending a "basic acknowledgment of receipt" to the Plaintiffs, Ocwen provided "no substantive information" in response to the QWR. Id.

On April 6, 2012, Ocwen informed the Maryland Commissioner of Financial Regulation that Mrs. Ayres was a borrower on the Ayres Note, "admitted that it and Litton had demanded false sums due related to the escrow for property taxes," "represented that the payments made by the Ayres were applied to the account in a sequence contrary to the Ayres Note and associated Deed of Trust," and "adopted the false accounting and prior false statements of its predecessors." Am. Compl. at ¶ 59. Despite these representations, on April 10, 2012, Ocwen sent the plaintiffs a statement asserting that the Plaintiffs "would need to pay a monthly escrow payment of $262.37 for their annual tax es...." Id. at ¶ 60. The Plaintiffs' prior attorney sent several letters identifying misapplied payments and overcharges. ECF No. 1 ¶¶ 61, 65, 66, 68.⁶ Ocwen did not correct the account or respond. Id.

In July 2012, Ocwen provided the following facts to the Maryland Commissioner of Financial Regulation: Mrs. Ayres was a borrower on the Ayres Note, Mrs. Ayres had filed for Chapter 13 Bankruptcy along with Mr. Ayres, the loan "may have become current as of June 26, 1996," and "Ocwen had assessed an incorrect sum due for the escrow account related to the Ayres Note and demanded sums not validly due for property taxes." Am. Compl. at ¶¶ 62–63. On July 31, 2012, Ocwen sent the Plaintiffs a Notice of Default. Id. at ¶ 64. On September 28, 2012, "Ocwen attempted to induce Mr. & Mrs. Ayres to enter into a loan modification of the Ayres Note which would have obligated Mrs. Ayres on the Ayres Note and included the disputed sums it had previously admitted to Mr. & Mrs. Ayres that it could not directly prove were due." Id. at ¶ 67. On October 3, 2014, the Plaintiffs discovered that Ocwen "was falsely reporting a trade line to Equifax related to Mrs. Ayres[,] claiming that she was a borrower/debtor on the Ayres Note and that she was allegedly past due...."⁷ Id. at ¶ 72.

On June 6, 2013, the Plaintiffs pro se⁸ sued the Defendants for claims related to mortgage fraud. ECF No. 1. On August 27, 2014, the Court granted the Defendants' motion to dismiss. ECF Nos. 55–56. However, "[b]ecause the Plaintiffs are...