CitiMortgage, Inc. v. Platinum Home Mortg., Case No. 4:15-cv-01242-MTS

• Decision Date: 19 February 2021
• Docket Number: Case No. 4:15-cv-01242-MTS
• Parties: CITIMORTGAGE, INC., Plaintiff, v. PLATINUM HOME MORTGAGE, CORP. Defendant.
• Court: U.S. District Court — Eastern District of Missouri

CITIMORTGAGE, INC., Plaintiff, v. PLATINUM HOME MORTGAGE, CORP. Defendant.

Case No. 4:15-cv-01242-MTS

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MISSOURI EASTERN DIVISION

February 19, 2021

MEMORANDUM AND ORDER

This matter is before the Court on Plaintiff CitiMortgage, Inc.'s ("CMI" or "CitiMortgage") Renewed Motion for Summary Judgment, Doc. [273], and Platinum Home Mortgage Corporation's ("Platinum") Motion for Partial Summary Judgment RE: Foreclosed Loans, Doc. [277]. These motions are fully briefed and ready for disposition. For the reasons discussed below, CMI's Renewed Motion for Summary Judgment will be granted, and Platinum's Motion for Partial Summary Judgment will be denied.

I. BACKGROUND

A. The Parties' Agreement

On February 13, 2004, Platinum entered into a Correspondent Agreement Form 200 ("the Agreement") with CMI. Doc. [120-3]. The Agreement provides, in part, that "[f]rom time to time, Correspondent [Platinum] may sell to CMI and CMI may purchase from Correspondent [Platinum] one or more residential mortgage, home equity, or other loans ('Loan(s)') in accordance with the terms, conditions, requirements, procedures, representations and warranties set forth in the 'CitiMortgage, Inc. Correspondent Manual' and all amendments, bulletins, program requirements and supplements to such Manual (collectively hereinafter referred to as the 'CMI Manual'), and this Agreement." Id. The Agreement incorporates the CMI Manual by reference. Id.

Among the representations and warranties Platinum made to CMI under the Agreement are those set forth in Section 2(k), wherein Platinum represented and warranted:

That each mortgage, home equity or other Loan (i) shall be fully enforceable and originated in accordance with the terms, conditions, representations, warranties and covenants contained in the CMI Manual and this Agreement which were in effect as of the Loan closing date, (ii), if applicable, was serviced in accordance with applicable Fannie Mae, Freddie Mac, FHA, VA, and/or HUD requirements and industry standards, and (iii) is subject to no defects or defenses, including but not limited to damage to the property securing the Loan, lien imperfections or environmental risk.

Id. § 2(k). Additionally, pursuant to Section 2(q) of the Agreement, Platinum represented and warranted that it would "fully comply with all additional representations, warranties and covenants contained in the CMI Manual." Id. § 2(q). Section 2202 of the CMI Manual contained several additional representations and warranties, including, but not limited to, representations that all information relating to the loan was complete and accurate and contained no fraud or misrepresentation; that each individual loan sold met CMI guidelines or investor requirements, with the understanding that CMI may sell each loan to a third party; that the loan complied with all agency guidelines, including Freddie Mac, Fannie Mae, VA, and FHA guidelines, in effect at the time the loan was sold to CMI; and that any appraisal submitted with each loan was completed in accordance with all state and federal laws, was submitted in support of the value of the property, and could be relied on by CMI. Doc. [120-8] § 2202.

The Agreement contained a cure-or-repurchase provision, which provided in relevant part as follows:

If CMI, in its sole and exclusive discretion, determines any Loan purchased pursuant to this Agreement:

(i) was underwritten and/or originated in violation of any term, condition, requirement or procedure contained in this Agreement or the CMI Manual in effect as of the date CMI purchased such Loan;

(ii) was underwritten and/or originated based on any materially inaccurate information or material misrepresentation made by the Loan borrower(s), Correspondent, Correspondent's directors, officers, employees, agents, independent contractors and/or affiliates, or any other party providing information relating to said Loan;

(iii) was or is capable of being rescinded by the applicable borrower(s) pursuant to the provisions of any applicable federal (including but not limited to the Truth-in-Lending Act) or state law or regulation;

(iv) must be repurchased from any secondary market investor (including but not limited to the Fannie Mae, Freddie Mac, FHA, VA, HUD or Government National Mortgage Association) due to a breach by Correspondent of any representation, warranty or covenant contained in this Agreement or the CMI Manual or a failure by Correspondent to comply in all material respects with the applicable CMI Manual terms, conditions, requirements and procedures; and/or

(v) was subject to an Early Payment Default (as defined in the CMI Manual), an Early Payoff (as defined in the CMI Manual) or any other payment related defect (as defined in the CMI Manual)

Correspondent will, upon notification by CMI, correct or cure such defect within the time prescribed by CMI to the full and complete satisfaction of CMI. If, after receiving such notice from CMI, Correspondent is unable to correct or cure such defect within the prescribed time, Correspondent shall, at CMI's sole discretion, either (i) repurchase such defective Loan from CMI at the price required by CMI ("Repurchase Price") or (ii) agree to such other remedies (including but not limited to additional indemnification and/or refund of a portion of the Loan purchase price) as CMI may deem appropriate. If CMI requests a repurchase of a defective Loan, Correspondent shall, within ten (10) business days of Correspondent's receipt of such repurchase request, pay to CMI the Repurchase Price by cashier's check or wire transfer of immediately available federal funds. If such defective Loan is owned by CMI at the time of repurchase by the Correspondent, CMI shall, upon receipt of the Repurchase Price, release to Correspondent the related mortgage file and shall execute and deliver such instruments of transfer or assignment, in each case without recourse or warranty, as shall be necessary to vest in Correspondent or its designee title to the repurchased Loan.

Doc. [120-8] § 11.

The "Repurchase Price" referenced in Section 11 is defined in the CMI Manual as follows:

REPURCHASE PRICE: The Repurchase Price is defined as the sum of: (i) the current principal balance on the loan as of the paid-to date; (ii) the accrued interest calculated at the mortgage loan Note rate from the mortgage loan paid-to date up to and including the repurchase date; (iii) all unreimbursed advances (including but not limited to tax and insurance advances, delinquency and/or foreclosure expenses, etc.) incurred in connection with the servicing of the mortgage loan, (iv) any price paid in excess of par by CitiMortgage on the funding date, and (v) any other fees, costs or expenses charged by or paid to another investor in connection with the repurchase of the mortgage loan from such investor but only to the extent such fees, costs and expenses exceed the total of items (i) through (iv) above.

Doc. [120-8] § 2301.

The Agreement also contains two other provisions relevant to the instant motions. Section 1 of the Agreement states in relevant part:

CMI may purchase Loans with or without conducting a complete review of the Loan documentation. CMI's review of, or failure to review, all or any portion of the Loan documentation shall not affect CMI's rights to demand repurchase of a Loan or any other CMI right or remedy provided by this Agreement.

Doc. [120-3] § 1.

Section 14 of the Agreement states in relevant part:

The failure of either party to exercise any right given to it under this Agreement or to insist on strict compliance of any obligation under the Agreement shall not constitute a waiver of any right, including the right to insist on strict compliance in the future.

Id. § 14.

B. The Loans at Issue

Pursuant to the Agreement, Platinum sold at least 749 loans to CMI. (Plaintiff CitiMortgage's Statement of Uncontroverted Material Facts in Support of Plaintiff's Motion for Summary Judgment on its Complaint, Doc. [119] ("PSUMF"), ¶ 24 and response thereto). Those sales included the seven residential mortgage loans at issue in this lawsuit (the "Loans"): the Delahuerta Loan, the Harris Loan, the Vitale Loan, the Smith Loan, the Mack Loan, theSzczepaniak Loan, and the Raper Loan. Id. ¶ 26. Platinum underwrote or originated each of the Loans. Id. ¶ 28. The Loans were sold to CMI between April 25, 2006 and February 28, 2008. Id. ¶¶ 32-38. CMI subsequently sold the Loans to investors such as Fannie Mae and Freddie Mac. Id. ¶ 3. After purchasing the Loans from Platinum, CMI determined that each of the seven Loans contained one or more defects, including but not limited to one or more of the following: the loan application package misrepresented the borrower's income; the debt-to-income ratio for the loan exceeded applicable guidelines; the appraisal contained in the loan application package failed to comply with applicable guidelines and was unsupported; the loan-to-value ratio for the loan exceeded applicable guidelines; the required documentation verifying monthly payments was missing from the loan application; CMI was required to repurchase the loan from an investor, Freddie Mac or Fannie Mae; or the loan application package was missing necessary income documentation. Id. ¶¶ 39-70. For each loan, CMI sent a letter to Platinum providing notice of the loan defects (the "Initial Repurchase Letters"). Id. ¶ 72. In addition, in cases where CMI received a letter from an investor (such as Fannie Mae or Freddie Mac) identifying a potential defect in a loan, CMI sent a letter notifying Platinum of the investor's findings (the "Citing Notification Letters"). Id. ¶ 74. Platinum did not cure or correct the alleged defects to the full and complete satisfaction of CMI. Id. ¶ 76. CMI subsequently sent letters to Platinum with respect to each loan informing Platinum that repurchase was required, stating that repurchase must be confirmed on or before thirty days from the date of the...