Bailey v. PHH Mortg. Corp.

• Decision Date: 30 September 2021
• Docket Number: GJH-20-2577
• Parties: LAWRENCE BAILEY et al., Plaintiffs, v. PHH MORTGAGE CORPORATION et al., Defendants.
• Court: U.S. District Court — District of Maryland

LAWRENCE BAILEY et al., Plaintiffs,
v.
PHH MORTGAGE CORPORATION et al., Defendants.

No. GJH-20-2577

United States District Court, D. Maryland, Southern Division

September 30, 2021

MEMORANDUM OPINION

GEORGE J. HAZEL, UNITED STATES DISTRICT JUDGE

Plaintiffs Lawrence Bailey and Deborah Bailey brought this civil action against Defendants PHH Mortgage Corporation (“PHH”), HSBC Bank USA, National Association (“HSBC”), and Ocwen Loan Servicing, LLC (“Ocwen”) alleging breach of contract (Counts I- III), violations of the Truth in Lending Act (“TILA”), 15 U.S.C. § 1631 et seq (Count IV) and 15 U.S.C. § 1639g (Count V), the Maryland Consumer Protection Act, (“MCPA”), Md. Code Ann., Com. Law § 13-316(b) et seq (Count VI), the federal Fair Housing Act, 42 U.S.C. § 3604(b) (Counts VII-VIII), and abuse of process under Maryland state law (Count IX). ECF No. 12. Pending before the Court is Defendants' Motion to Dismiss Certain Counts of Plaintiff's First Amended Complaint. ECF No. 14. No. hearing is necessary. See Loc. R. 105.6 (D. Md. 2021). For the following reasons, Defendants' Motion to Dismiss is granted.

I. BACKGROUND^[1]

A. Factual Background

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On January 16, 2007, Plaintiffs Lawrence and Deborah Bailey, both African American, ECF No. 12 ¶ 7-8, executed a $415, 000 Note in favor of Fidelity Mortgage, which was secured by a mortgage on Plaintiff's real property located at 7603 Allentown Farm Court, Fort Washington, Maryland 20744 (the “Property”). Id. ¶ 9. At a time unknown to Plaintiffs, HSBC acquired Fidelity Mortgage's interest in the Property, and at all times relevant to this action, HSBC was the Note Holder of Plaintiffs' mortgage. Id. ¶¶ 10-11.

On May 3, 2018, an Order to Docket was filed in Prince George's County Circuit Court (Case No. CAEF18-13986) alleging that Plaintiffs defaulted on the repayment terms of their loan and, at the time of the filing of the Order to Docket, Ocwen was the loan servicer for Plaintiff's mortgage. Id. ¶¶ 12-13. At all times relevant, Ocwen, acting as an agent of HSBC, “collected monthly mortgage payments and, when appropriate, modified mortgage terms, released liens, paid property insurance taxes, and initiated foreclosure proceedings.” Id. ¶¶ 14-15. Plaintiffs' Emergency Motion for a Temporary Restraining Order (Case No. CAEF18-13986) was denied, and the Property was sold at a foreclosure action on October 16, 2018. Id. ¶ 16. The Property was “bought back” by HSBC, Ocwen continued to act as the loan servicer, id. ¶ 17, and Ocwen placed the Property in its “property preservation unit.” Id. ¶ 18. Plaintiffs timely appealed the denial of the Temporary Restraining Order to the Court of Special Appeals on October 16, 2018 (CSA-REG-2719-2018), id. ¶ 19, and while the case was pending appeal, the foreclosure was ratified by the Prince George's County Circuit Court on December 27, 2018. Id. ¶ 20.

On April 23, 2019, after a successful mediation (CSA-REG-2719-2018), Plaintiffs executed a Settlement Agreement and Loan Modification Agreement. Id. ¶¶ 21-22. Plaintiffs allege that Ocwen was a party to the written Settlement Agreement in its capacity as HSBC's agent, id. ¶¶ 23-24, “the terms of which are binding on the beneficiaries and investors in the

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mortgage and their predecessors, successors, assigns, principals, parents, affiliates, and clients of all parties to the Agreement.” Id. ¶ 23. Plaintiffs, Ocwen, and HSBC were parties to the written Loan Modification, the terms of which are also binding on the successors and assigns. Id. ¶ 25. The terms of the Loan Modification Agreement were incorporated into the Settlement Agreement and under the terms of the Loan Modification Agreement, the new monthly payments were $2369.32, which included $893.67 for taxes and forced place insurance. Id. ¶¶ 26-28. Additionally, a term of the Loan Modification Agreement was that Plaintiffs' monthly payments would be lowered upon providing proof of insurance, which Plaintiffs provided on March 28, 2019. Id. ¶¶ 29, 31. Ocwen reserved the right to determine what constituted proof of adequate insurance. Id. ¶ 32. It was projected to Plaintiffs in the Loan Modification Agreement that the monthly payment would decrease by at least $370.23. Id. ¶ 30. The Loan Modification Agreement further provided that all notices should be sent directly to Plaintiffs at the Property. Id. ¶ 33.

Plaintiffs allege that the Settlement Agreement provided several conditions. First, the parties subject to the agreement could reveal “the contents of the agreement to a lender in connection with an application for credit and that any release of known or unknown claims did not apply to any party who failed to perform under the terms of the agreement.” Id. ¶ 34. Second, the Settlement Agreement's release “did not include claims arising from, or related to, the Parties or to a party's continuing relationship as mortgagor and mortgagee.” Id. ¶ 35. Third, the Settlement Agreement provided that “any release, and the terms of the agreement were subject to good faith, and that at the time of execution, each party represented that there was no actual or implied knowledge of past or projected misconduct or material misrepresentations.” Id. ¶ 36.

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On May 8, 2019, Plaintiffs allege that, at the direction of Ocwen, a third party was sent to the Property to cut down a tree, and Plaintiffs were informed that their property was listed as “abandoned.” Id. ¶ 37. Plaintiffs allege that Ocwen was informed of this incident the day it occurred. Id. ¶ 38. Then, from May 8, 2019 to May 13, 2019, Ocwen sent various third parties to the Property to make alterations, all of whom indicated to Plaintiffs that “their property was listed as abandoned and that they were authorized to be there.” Id. ¶ 39. On May 13, 2019, Plaintiffs allege that Ocwen cancelled all their utilities, id. ¶ 40, and two days later, on May 15, 2019, Ocwen executed the Settlement Agreement and Loan Modification and “assured Plaintiffs that any property preservation activities would stop.” Id. ¶ 41. HSBC also executed the Loan Modification Agreement on May 15, 2019. Id. ¶ 42. Plaintiffs allege that Ocwen continued to act as the loan servicer for Plaintiffs' mortgage at the direction of HSBC and on its behalf following the dismissal of the foreclosure action (CAEF18-1398) and Plaintiffs' related appeal (CSA-REG-2719-2018) in May 2019. Id. ¶ 45, 43-44.

Plaintiffs further allege that in June and July 2019, Ocwen initially refused to accept Plaintiffs' payments “for reasons never articulated, ” id. ¶ 46, and on July 19, 2019, by Consent Order, the ratification of the sale in the foreclosure case (CAEF18-13986) was vacated, the report of sale was withdrawn, ownership in the Property was re-vested to Plaintiffs, and the Deed of Trust was revived.^[2] Id. ¶ 47. Plaintiffs allege that notwithstanding the dismissal of both the appeal and the foreclosure matters, Ocwen failed to: (1) discuss the status of Plaintiffs' account with them, only instructing Plaintiffs that “the matter was in litigation, ” (2) restore Plaintiffs' online account access or resume sending Plaintiffs' billing statements or account summaries, (3) terminate property preservation efforts, specifically with respect to third parties entering the

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Property “post[ing] notices, survey[ing] the property, and [tak]ing pictures, and (4) inform utility companies that the Property revested to Plaintiffs. Id. ¶¶ 49-52. Plaintiffs allege that they were unable to restore utility service accounts at the Property. Id. ¶ 53.

In August 2019, Plaintiffs allege that they attempted to refinance their loan with another lender but that Ocwen “refused to provide any of the needed financial information or needed paperwork” to complete their applications, specifically Plaintiffs' pay-off amount. Id. ¶ 54. Ocwen also continued to charge Plaintiffs for forced place insurance despite Plaintiffs providing proof of insurance in March 2019. Id. ¶¶ 55, 31. Further, Plaintiffs contend that taxes on the Property were not paid, despite Plaintiffs' monthly payments including such payments, and that they ultimately had to pay these taxes separately, in addition to their monthly payments to Ocwen. Id. ¶ 56. Because Plaintiffs believed that Ocwen was in breach of the terms of the Settlement and Loan Modification Agreements, Plaintiffs, through their counsel, contacted Ocwen to discuss their concerns. Id. ¶ 57. Then, between August 2019 and October 2019, HSBC changed Plaintiffs' loan servicer from Ocwen to PHH Mortgage Services. Id. ¶ 58. PHH Mortgage Services merged with PHH Mortgage Corporation on December 21, 2015. Id. ¶ 59.

Plaintiffs allege that neither HSBC nor Ocwen informed them that PHH would be their new loan servicer for their mortgage. Id. ¶ 61. Plaintiffs allege that PHH, as an agent of...