Carson v. Ocwen Loan Servicing LLC, CIVIL NO. 2:15-CV-514-DBH
| Decision Date | 29 March 2017 |
| Docket Number | CIVIL NO. 2:15-CV-514-DBH |
| Parties | BERNARD AND NANCY CARSON, PLAINTIFFS v. OCWEN LOAN SERVICING LLC, THE BANK OF NEW YORK MELLON F/K/A THE BANK OF NEW YORK AS SUCCESSOR TO TRUSTEE FOR THE BENEFIT OF THE CERTIFICATEHOLDERS OF POPULAR ABS, INC. MORTGAGE PASS-THROUGH CERTIFICATES SERIES 2005-C, LITTON LOAN SERVICING LP, DEFENDANTS |
| Court | U.S. District Court — District of Maine |
This case involves Maine homeowners' attempts to reduce their monthly mortgage payments under the federal government's Home Affordable Modification Program (HAMP). The crux of the dispute is whether Bernard and Nancy Carson and their lender, through its agents, ever entered into a binding Modification Agreement with respect to the Carsons' loan. The defendants Litton Loan Servicing and Ocwen Loan Servicing LLC consecutively serviced the loan; the current holder of the note and mortgage is The Bank of New York Mellon f/k/a The Bank of New York as successor trustee for JPMorgan Chase Bank, N.A., as Trustee for the benefit of the Certificateholders of Popular ABS, Inc. Mortgage Pass-Through Certificates Series 2005-C. I will refer to them respectively as Litton, Ocwen, and Bank of New York.
After oral argument on March 16, 2017, I GRANT the plaintiffs' motion to file a surreply (ECF No. 59). At the argument, the defendants were able to address any issues in the surreply (ECF No 59-1) that they desired. I DENY the plaintiffs' motion for summary judgment (ECF No. 38), and I GRANT IN PART the defendants' motion for summary judgment (ECF No. 45). Genuine issues of material fact remain for most of the claims at trial.
Where the facts are disputed, I will say so, and I will take the version favorable to the nonmoving party. I also address more facts and factual disputes later in this opinion when they are material to particular issues.
In 2005, the Carsons signed a Note for $250,000 secured by a Mortgage on their Saco home.1 The Note called for monthly principal and interest payments of $1,588.40 plus an escrow for taxes and insurance.2 In 2006, the Carsons filed for Chapter 13 Bankruptcy in this District.3
On November 1, 2008, Litton began servicing the loan.4 In 2009, Bank of New York (or its predecessor) took an assignment of the Note and Mortgage.5 InSeptember 2011, Ocwen acquired Litton and assumed Litton's obligations.6 Ocwen has serviced the loan since 2011.7
On account of ongoing financial difficulties, the Carsons asked Litton in 2010 to request a solicitation package for the federal government's Home Affordable Modification Program (HAMP).8 They submitted a HAMP Request for Modification and Affidavit that same year to Litton.9 Litton approved the Carsons for a Modification Agreement on January 6, 2011,10 and in April delivered a Commitment Letter dated April 19 together with a document entitled Home Affordable Modification Agreement.11 The Commitment Letter offered to reduce the amount of the interest-bearing principal and to reduce the monthly payment on the Note to $1,435.75, not counting the monthly escrow payment12 and to modify the terms of the Note and Mortgage accordingly.13 Although these documents were dated in April of 2011, the Modification Agreement said it would be effective starting February 1, 2011, with the first modified payment due on March 1, 2011.14
Litton's Commitment Letter said that it was Litton's "offer to modify the referenced loan, subject to" stated "terms and conditions."15 In bold type it stated: 16 The Commitment Letter also said that Litton "offer[ed] to modify the Note and Mortgage . . . (as modified it will be called the 'Modified Mortgage'), listed "Terms of Modification" and "Contingencies,"17 and said:
If you choose to accept the offer for a Modified Mortgage upon the terms and conditions above, you must agree by signing the acceptance that follows this offer. The acceptance must be signed by each mortgagor and returned by May 3, 2011, or the offer will expire.18
Attached was a document entitled "Home Affordable Modification Agreement (Step Two of Two-Step Documentation Process),"19 which elaborated on all the ways in which the Note and Mortgage would be amended. It also stated: "I understand that after I sign and return two copies of this Agreement to the Lender, the Lender will send me a signed copy of this Agreement."20 The Lenderwas defined as "Servicer" or Litton.21 No conditions were listed for that obligation on the part of the Servicer. The Carsons timely signed and returned the Commitment Letter, thereby accepting the offer to modify the loan, Note and Mortgage, along with the attached Modification Agreement, returning both documents to Litton on April 27, 2011.22 Litton received them on the deadline, May 3, 2011.23 However, Litton did not return to the Carsons a signed copy of the Agreement as promised.24
The Carsons then began making payments according to the modification.25 But Litton never implemented the terms of the Modification Agreement.26 Before the Carsons obtained bankruptcy court approval, Litton transferred servicing of the loan and the Carsons' signed Modification Agreement to Ocwen on September 1, 2011.27 Litton incorrectly reported the loan to Ocwen as "HAMP APPLICATION RECEIVED BY PRIOR SERVICER AND IS NOT DECISIONED YET," and Ocwen retained this same code upon the transfer.28 On September 23, 2011, the Carsons filed a motion in the bankruptcy court to approve the loan modification.29 They sent notice of the motion to Litton,30 butnot directly to Ocwen.31 Ocwen made its appearance in the bankruptcy court on October 11, 2011, when it filed a Transfer of Claim for Security in the Carson's bankruptcy.32 The bankruptcy court granted the Carsons' motion on October 31, 2011.33 Ocwen received a copy of the bankruptcy court's order on November 15, 2011.34
In the meantime, treating the Carsons' original modification request as not yet approved, Ocwen sent the Carsons a letter requesting additional documentation by October 29, 2011, including an updated HAMP Request for Modification and Affidavit and paystubs, so that, from its perspective, the application could be finalized.35 Ocwen sent the Carsons additional letters on November 1 and 18, 2011, requesting these same documents for purposes of the HAMP application.36 On December 13, 2011, Ocwen sent the Carsons a letter informing them that, based on a review of the documents they had provided, they were not eligible for a HAMP modification.37
On July 18, 2012, the Carsons filed in the bankruptcy court a Motion to Determine Status of Mortgage as Current.38 They sent notice of the motion's filing to Ocwen.39 The bankruptcy court granted their motion, determining the mortgage current on August 20, 2012.40 Around that same date, Ocwen receivednotice of the bankruptcy court's order determining that the mortgage was current.41 But Ocwen did not change its treatment of the loan status.42 On August 28, 2013, the bankruptcy court entered the Carsons' Chapter 13 Order of Discharge, with notice to Ocwen.43
From November 2011 to March 2015, Mr. Carson and his housing counselor contacted Ocwen at least nineteen times attempting to straighten things out, to clarify that the Carsons had already accepted the proposed loan modification and to request that the terms of the modification be implemented.44 Ocwen never raised the failure to promptly obtain bankruptcy court approval or the lack of the Servicer's signature as the reason for failure to honor the modification. During this time period, the Carsons generally made monthly payments according to the Modification Agreement,45 but Ocwen treated the payments according to the original terms of the Note and Mortgage, as if there had been no Modification Agreement.46 Because the payments did not satisfy the unmodified terms, Ocwen's system placed the payments in a suspense account and showed that the Carsons were late on their payments.47
Accordingly, Ocwen sent the Carsons a letter indicating that it had not received payments for December 1, 2014 and January 1, 2015, followed by adelinquency notice and a notice of default in February of 2015.48 Ocwen subsequently sent letters in March and April, informing the Carsons that it had not received payments and that it might refer the loan to foreclosure.49 In April, Ocwen sent the Carsons another notice of default, again advising of potential foreclosure if they did not provide payment.50 Afraid of losing their home, the Carsons paid Ocwen $5,546.61 on May 6, 2015 and subsequently made increased payments of approximately $2,080 per month.51
On September 16, 2015, the Carsons' lawyer sent Ocwen a letter claiming that Ocwen and Litton's "gross pattern and practice of ongoing misconduct was in violation of at least the FDCPA, RESPA, UTPA, Maine Consumer Credit Code, 11 U.S.C. § 362 and 11 U.S.C. § 524 for which the Carsons are entitled to actual, compensatory, punitive, and statutory damages."52 On June 14, 2016, Ocwen implemented most of the terms of the Modification Agreement.53 Following application of all the payments, Ocwen applied any remaining money on the Carsons' account to the principal.54
The Carsons filed this lawsuit on December 17, 2015.55 According to the Amended Complaint,56 they make twelve claims against the defendants: Count One, violation of the bankruptcy court automatic stay, 11 U.S.C. § 362 (Ocwenand Bank of New York); Count Two, violation of the bankruptcy court discharge injunction, 11 U.S.C. § 524 (Ocwen and Bank of New York); Count Three, violation of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 (Ocwen); Count Four, violation of the Maine Fair Debt Collection Practices Act (MFDCPA), 32 M.R.S. § 11001 (Ocwen); Count Five, illegal, fraudulent or unconscionable conduct...
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