Iaffaldano v. Sun W. Mortg. Co.
| Decision Date | 09 April 2019 |
| Docket Number | No. 18-11098,18-11098 |
| Parties | MICHELINA IAFFALDANO, Plaintiff-Appellant, v. SUN WEST MORTGAGE COMPANY, INC., Defendant-Appellee. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
[DO NOT PUBLISH]
D.C. Docket No. 2:17-cv-14222-RLR
Appeal from the United States District Court for the Southern District of Florida
Before MARCUS, GRANT and HULL, Circuit Judges.
Plaintiff Michelina Iaffaldano, a Florida homeowner, brought this suit against defendant Sun West Mortgage Company Inc. ("Sun West"), the servicer of a reverse mortgage that Iaffaldano obtained on her home. In her complaint, Iaffaldano alleged, among other things, that Sun West violated the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2605, and its implementing regulation, Regulation X, 12 C.F.R. § 1024, when it charged her for force-placed hazard insurance instead of advancing monies to her insurance carrier through an escrow account.
Following a two-day bench trial, the district court entered judgment in favor of Sun West. After careful review of the record and the parties' briefs, and with the benefit of oral argument, we affirm.
Iaffaldano resides in a home in St. Lucie County, Florida, which is subject to a home-equity conversion mortgage, commonly called a "reverse mortgage," that she took out in 2009. A reverse mortgage is a financial instrument designed to allow older homeowners to convert their home equity into liquid assets. Estate of Jones v. Live Well Fin., Inc., 902 F.3d 1337, 1338-39 (11th Cir. 2018). As in a typical reverse-mortgage transaction, Iaffaldano received a loan that is secured by a mortgage on her home. See id. The loan was for $255,000. Iaffaldano was not obligated to repay the loan until a later "triggering" event, such as if she sold thehome. See id. Indeed, Iaffaldano was not required to make monthly payments to Sun West.
Under the mortgage's terms, Iaffaldano was required to maintain hazard insurance ("insurance") on her property and pay all necessary insurance premiums and taxes. When obtaining the mortgage, Iaffaldano signed a written form electing to make those insurance and tax payments herself. Iaffaldano did not establish an escrow account, or otherwise set aside funds, with Sun West to pay for her insurance and taxes. At trial, a representative of Sun West confirmed that Iaffaldano did not have an escrow account with it or any other monetary set-aside for insurance and taxes.
Iaffaldano initially purchased the necessary insurance coverage, but the policy lapsed in 2010 when she did not pay the premiums. Despite numerous notifications sent by Sun West, she still failed to renew the insurance.
Eventually and upon the request of Iaffaldano, Sun West advanced her a total of $5,407 so that she could obtain insurance for her property in 2012 and 2013. Sun West paid the premiums directly to the insurance carrier, the People's Trust Insurance Company, and Iaffaldano's property was properly insured from August 2012 through August 2014. During this time period, Sun West alsoadvanced Iaffaldano $644 in funds to pay her taxes, increasing the amount to $6,051 that she owed Sun West.
In 2013, Iaffaldano and Sun West entered into a Repayment Plan Agreement ("Agreement"), wherein Iaffaldano agreed to repay Sun West the $6,051 in advanced funds in 12 monthly installments of $504.25. Under the Agreement, Sun West did not set aside any additional money for future insurance premiums and taxes. Rather, the Agreement concerned only Iaffaldano's repayment of the money Sun West already had advanced to pay her insurance and taxes in 2012 and 2013. The Agreement made clear that Iaffaldano's failure to make the scheduled payments could result in a default of the reverse mortgage.
Iaffaldano, however, did not make any payments at all to Sun West under the Agreement and therefore defaulted on both that Agreement and the reverse mortgage. According to Sun West, this signaled that Iaffaldano neither intended to obtain insurance for her property on her own, nor intended to reimburse Sun West for the $6,051 it had advanced for her insurance and taxes in 2012 and 2013.
On December 31, 2013, Sun West instituted a foreclosure action in Florida state court due to Iaffaldano's failure to pay the required insurance premiums and taxes under the reverse mortgage. Thereafter, in August 2014, Iaffaldano's insurance coverage lapsed again. As a result, Sun West sent two lettersencouraging Iaffaldano to purchase insurance and explaining that if she did not do so, Sun West would be required to force-place the insurance, which is typically more expensive. Iaffaldano still did not obtain insurance for her property.
In September 2014, because of this lapse, Sun West obtained a force-placed insurance policy for Iaffaldano's property through Proctor Financial, Inc. ("Proctor"), with whom it has an exclusive business relationship to purchase that type of insurance.1 Because the Department of Housing and Urban Development requires continual insurance coverage on reverse mortgages, Sun West's force-placed policy was effective retroactively to eliminate a gap in coverage in 2012. Sun West obtained force-placed insurance again for Iaffaldano in 2015. In total, Sun West paid $11,736.30 for the force-placed insurance policy, that is $4,942.77 for each year in 2014 and 2015, and $1,850.76 for the 2012 coverage.
In July 2016, the past due balance Iaffaldano owed to Sun West was brought current through funds provided by the Florida Hardest-Hit Fund Elderly Mortgage Assistance Program ("ELMORE"), a state-run forgivable loan program. The state agency gave $36,689.68 to Sun West, of which $30,758.05 was used to pay offIaffaldano's past due balance, representing the accumulated insurance premiums and taxes owed on Iaffaldano's reverse mortgage. After paying the balance Iaffaldano owed, there was extra money left over, $5,931.63, that Sun West in 2016 placed in a trust account. This 2016 trust account was later used to pay for property insurance that came due in the future. Once Iaffaldano's balance was current, Sun West dismissed the foreclosure action.
Ultimately, Iaffaldano personally did not make any payments to Sun West to cover the cost of the force-placed insurance that it purchased for her home in 2014 or 2015. Nor did she personally repay Sun West for the funds it advanced her to cover her insurance premiums and taxes in 2012 and 2013.
In her amended complaint, Iaffaldano alleged in relevant part that Sun West and Proctor violated RESPA, 12 U.S.C. § 2605(m), with the force-placed insurance transactions in 2014 and 2015 because the charges were not bona fide and reasonable. Iaffaldano also alleged that Proctor engaged in an unlawful business relationship with Sun West. The district court entered judgment for Proctor on both claims. Iaffaldano does not seek review of the district court's disposition of her claims against Proctor. Thus, Sun West is the only defendant on appeal.
In the parties' joint pretrial statement, Iaffaldano alleged further that Sun West violated Regulation X, specifically 12 C.F.R. § 1024.17, when it purchased the force-placed insurance in 2014 and 2015 because her 2013 Repayment Plan Agreement established an escrow account. Iaffaldano argued that, under 12 C.F.R. § 1024.17(k)(5), Sun West was prohibited from force-placing insurance on her property in 2014 and 2015 and, instead, had an affirmative obligation to advance her additional funds through an escrow account so that she could purchase and maintain her voluntary insurance coverage through the People's Trust Insurance Company. Iaffaldano alleged that she was damaged as a result because the force-placed insurance in 2014 and 2015 was unnecessary and more expensive.
After the bench trial, the district court determined, inter alia, that Iaffaldano's force-placed insurance claims lacked merit. As to her allegation that Sun West violated 12 C.F.R. § 1024.17(k)(5) by force-placing the insurance instead of advancing her additional funds for her insurance premiums, the district court concluded that RESPA does not create a private right of action for allegations that a mortgage servicer violated § 1024.17(k)(5). In addition, the district court found that § 1024.17(k)(5) does not apply in any event because Iaffaldano had not proven that she had an escrow account with Sun West in 2014 and 2015 or that the 2013 Repayment Plan Agreement established such an escrow account.Accordingly, the district court entered judgment in favor of Sun West on her claims. This appeal followed.2
On appeal, Iaffaldano argues that the district court erred in finding that no private right of action existed for her claims that Sun West violated § 1024.17(k)(5) when it purchased the force-placed insurance. She contends that § 1024.17(k)(5) was promulgated under § 6 of RESPA, specifically 12 U.S.C. § 2605(k). Because § 2605(f) provides an express private right of action for violations of § 6 of RESPA, Iaffaldano asserts that a private right of action exists for her claims that Sun West violated § 1024.17(k)(5). Alternatively, Iaffaldano argues that her claims are cognizable under the Qualified Written Request provision of RESPA found at 12 U.S.C. § 2605(e).3
We need not decide whether a private right of action exists under RESPA for Iaffaldano's force-placed insurance claims. Even assuming arguendo that a private right of action exists, the district court did not clearly err in finding that Iaffaldanodid not have an escrow account with Sun West in 2014 and 2015 to trigger any obligation under § 1024.17(k)(5) in the first place.
RESPA is a consumer protection statute that regulates the real estate settlement process. Hardy v. Regions Mortg., Inc., 449 F.3d 1357, 1359 (11th Cir. 2006). RESPA requires mortgage...
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