Harry v. Am. Brokers Conduit
| Decision Date | 12 January 2017 |
| Docket Number | Civil Action No. 16-10895-FDS |
| Parties | TIMOTHY C. HARRY and KAREN C. HARRY, Plaintiffs, v. AMERICAN BROKERS CONDUIT; APEX MORTGAGE SERVICES; FIDELITY NATIONAL FINANCIAL, INC.; FIDELITY NATIONAL TITLE COMPANY; FIDELITY NATIONAL TITLE GROUP, INC.; AMERICAN HOME MORTGAGE SERVICING, INC.; DEUTSCHE BANK NATIONAL TRUST COMPANY, as trustee for AMERICAN HOME MORTGAGE ASSETS TRUST 2007-2 MORTGAGE-BACKED PASS-THROUGH CERTIFICATES, SERIES 2007-2; HOMEWARD RESIDENTIAL, INC.; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; and OCWEN LOAN SERVICING, LLC, Defendants. |
| Court | U.S. District Court — District of Massachusetts |
MEMORANDUM AND ORDER ON DEFENDANTS' MOTIONS TO DISMISS AND MOTION TO STRIKE
This is a dispute arising out of a mortgage issued to plaintiffs in 2006. On December 21, 2006, plaintiffs took out a $450,000 loan to refinance their existing mortgage and executed a new mortgage on their property to secure payment of that loan. Plaintiffs stopped making payments on the new mortgage in 2008. Several foreclosure attempts followed. Plaintiffs have now filed suit, alleging in substance that the note and mortgage are void because the lender, American Brokers Conduit, was not an incorporated entity and was not licensed to do business in any state at the time of the loan. The complaint further alleges that all subsequent assignments of the mortgage were void and all attempts to collect on the note or to foreclose on the property were unauthorized.
Plaintiffs do not dispute that they received the $450,000 loan to refinance their mortgage. They likewise do not dispute that they continue to possess the property and have made no mortgage payments for more than eight years.
This is not a typical situation in which homeowner plaintiffs are seeking to forestall a mortgage foreclosure, contending that there is some defect in the assignment of the mortgage or the note. Instead, plaintiffs claim that the entire 2006 lending transaction should be declared void. They seek "to have the original note marked cancelled and returned to [them]," "to have [the] mortgage . . . released in the land records," and to recover compensatory and punitive damages of more than $197 million. In other words, plaintiffs want to undo the loan transaction—but they also want to keep both the $450,000 loan proceeds (which, presumably, they used to discharge their prior mortgage) and the property. Put simply, plaintiffs want to erase their debt, keep the house (for free), and to be compensated handsomely for their trouble.
Defendants have moved to dismiss the complaint for the failure to state a claim upon which relief can be granted. There are multiple problems with plaintiffs' claims, beginning with the fact that the loan transaction occurred in 2006, and the limitations period for almost all of their claims expired some time ago. As to most of their claims, the only real question is whether the limitations period should be tolled for any reason. Because the complaint fails to allege any plausible reason why those limitations periods should be equitably tolled, the motions to dismiss, with one exception, will be granted.
The facts are set forth as described in the complaint.
Sometime prior to November 2006, plaintiffs Timothy and Karen Harry were contacted by defendant APEX Mortgage Services, LLC, a mortgage servicing company, about refinancing the mortgage on their home in Mashpee, Massachusetts. (Am. Compl. ¶¶ 1, 5, 15). In late November 2006, plaintiffs began the process of applying for a new loan. (Id. ¶ 15). APEX faxed to the plaintiffs a "Borrower's Certification and Authorization Certification" form dated December 2, 2006. (Id.). That form required plaintiffs' signatures, certifying that the information they provided in their loan application was true and complete. (Id.). The form also stated that APEX had the right to initiate a full documentation review to verify the information plaintiffs provided, and that it, and the mortgage guaranty insurer (if any), might verify the information in the loan application and in any other documentation provided in connection with the loan. (Id.). The form also required plaintiffs to authorize APEX to provide any requested documents to any investor to whom APEX might sell the mortgage. (Id.).
On December 13, 2006, plaintiffs formally applied with APEX for a refinancing loan. (Id. ¶ 17). The loan application was prepared by APEX, not by plaintiffs themselves, and was faxed to plaintiffs on December 13. (Id. ¶ 18). According to the complaint, the application indicated that it was for a loan amount of $445,500 with an interest rate of 1.750% for 480 months (40 years). (Id.). The complaint alleges that APEX falsified information on the application by, for example, significantly overstating plaintiffs' monthly income and referring to unspecified credit union accounts and life insurance policies. (Id.). It also alleges that theapplication was backdated to November 29, 2006, and that the application was prepared by Pierre Haber, "a known illegal robo-signer." (Id. ¶ 22).
Along with the loan application, APEX also sent plaintiffs a Good Faith Estimate ("GFE") form and Truth in Lending ("TIL") disclosure statement, both dated November 20, 2006. (Id. ¶¶ 25, 30). The GFE stated a loan number of 0611EM005801, a base loan amount of $445,500, an interest rate of 1.750%, a term of 480 months (40 years), as well as a number of fees associated with the loan. (Id. ¶ 25). According to the complaint, the information provided in the TIL disclosure differed from that in the GFE. (Id. ¶ 31). The TIL disclosure stated a loan amount of $458,089.49, an APR of 6.246%, and a term of 30 years. (Id. ¶¶ 30, 52).
On December 21, 2006, defendant Fidelity Title Company prepared a HUD-1A settlement statement for plaintiffs' loan. (Id. ¶ 36). The complaint alleges that Fidelity Title Company does not exist. (Id. ¶¶ 8, 38). According to the complaint, the HUD-1A included a number of differences from the GFE and TIL disclosure statement. The HUD-1A allegedly stated that American Brokers Conduit was the lender, provided a different loan number of 0001552524, and stated a loan amount of $450,000. (Id. ¶ 38). The complaint alleges that American Brokers Conduit did not legally exist as an entity in 2006 and has never been legally incorporated in any state. (Id. ¶¶ 4, 37). Accompanying the HUD-1A was a form prepared by Chicago Title Insurance Company, apparently explaining the title insurance policy that it was issuing to American Brokers Conduit for the plaintiffs' mortgage. (Id. ¶ 42). The insurance form stated a commitment date of November 20, 2006, and a loan amount of $450,000. (Id.).
The loan closing took place on December 21, 2006. On that day, the note was issued and a mortgage on plaintiffs' property executed in order to secure payment of the note. (Id. ¶¶ 49, 58, 61). The note issued to plaintiffs stated an interest rate of 1.725%, but on January 1, 2007,the interest rate allegedly jumped to 10.083%. (Id. ¶ 50). It appears that an adjustable rate rider and a prepayment rider accompanied the note. (Id. ¶ 65). The note also stated the loan was a 40-year loan in the amount of $450,000. (Id. ¶¶ 51-52).
The mortgage stated a loan amount of $450,000, payable to Mortgage Electronic Registration System, Inc. ("MERS"), as nominee for American Bankers Conduit. (Id. ¶ 61). According to the complaint, the MERS identification number listed on the mortgage is associated with American Home Mortgage Holding, Inc., and not with American Brokers Conduit. (Id. ¶ 63). The mortgage was recorded on February 7, 2007, in the Barnstable Registry of Deeds by Fidelity Title Group. (Id. ¶ 61). According to the complaint, plaintiffs' signatures on the mortgage do not match their signatures on the adjustable rate and prepayment riders, and therefore their signatures were forged. (Id. ¶ 65).
Plaintiffs began making payments on February 1, 2007. (Id. ¶ 56). The last payment they made was on October 1, 2008. (Id.).
On May 1, 2009, MERS, as nominee for American Brokers Conduit, assigned the mortgage, but not the underlying note, to Deutsche Bank National Trust Company as Trustee for American Home Mortgage Assets Trust 2007-02. (Id. ¶ 71). The assignment was allegedly backdated, stating that it was effective as of April 27, 2009. (Id. ¶ 73). According to the complaint, that assignment was void because American Brokers Conduit did not exist, and therefore could not appoint MERS as its nominee, and therefore MERS had nothing to assign. (Id. ¶ 75). The complaint further alleges that the trust to which the mortgage was transferred had "closed" in February 2007, and therefore could not have accepted the assignment in 2009. (Id.). The assignment was prepared and recorded by DOCX, a subsidiary of Fidelity Financial. (Id. ¶76). The complaint alleges that six "illegal robo-signers," all MERS employees, executed the assignment. (Id. ¶ 78).
On July 7, 2010, MERS again assigned the mortgage to Deutsche Bank as Trustee for the same trust. (Id. ¶ 82). According to the complaint, the second assignment provided a new trust address, which was that of American Home Mortgage Servicing, Inc. ("AHMSI"). Also according to the complaint, the second assignment was intended to correct defects in the first assignment. (Id. ¶ 85). However, the complaint alleges that the second assignment was also signed by "another known illegal robo-signer." (Id. ¶ 85). The complaint alleges that all defendants knew or should have known that the assignments were fraudulent and void. (Id. ¶ 87).
On May 15, 2012, plaintiffs received a letter from AHMSI informing them of the availability of several payment options. (Id. ¶ 129). That communication listed plaintiffs' gross monthly income as $5,063.78, as compared to the gross monthly income of $14,950.00 that was stated on the loan application allegedly...
To continue reading
Request your trial