Patrick v. CitiMortgage, Inc. (In re Patrick)
| Decision Date | 22 December 2014 |
| Docket Number | ADV. NO. 13-6103,CASE NO. 13-61661 |
| Court | U.S. Bankruptcy Court — Northern District of Ohio |
| Parties | IN RE: ANNIE MARIE PATRICK, Debtor. ANNE MARIE PATRICK, Plaintiff, v. CITIMORTGAGE, INC., Defendant. |
On December 14, 2013, Annie Marie Patrick ("Debtor") filed an adversary complaint against CitiMortgage, Inc. ("CitiMortgage") under the Real Estate Settlement Procedures Act ("RESPA") and State of Ohio common law, based on CitiMortgage's actions during a mortgage modification. On July 22, 2014 Debtor filed a motion to compel discovery, which CitiMortgage responded to on August 5, 2014. Both parties have also filed motions for summary judgment: CitiMortgage on August 4, 2014 and Debtor on August 6, 2014. The competing motions for summary judgment, as well as the discovery dispute, are properly before the court.
This opinion is not intended for publication or citation. The availability of this opinion, in electronic or printed form, is not the result of a direct submission by the court.
Debtor initially filed for bankruptcy protection under chapter 7 of the United States Bankruptcy Code ("the Code") on June 27, 2013. Debtor's bankruptcy petition included real property located in Wooster, Ohio (the "Wooster Property") with an estimated value of $46,370.00, secured by a $96,301.95 mortgage. Debtor's efforts in retaining the Wooster Property are the underlying basis of the adversary.
Debtor and her husband purchased the Wooster Property in 1970, and have lived in, and until the last few years, consistently made on time mortgage payments. Unfortunately, due to complications with diabetes, Debtor's husband passed away in August of 2012. Prior to her husband's death, Debtor drove her husband to various medical appointments and provided him with extensive personalized care. Medical expenses combined with the loss of income caused Debtor to fall behind on her mortgage. It was during this period of financial hardship that Debtor contacted CitiMortgage seeking a home mortgage modification under the Home Affordable Modification Program ("HAMP"). HAMP is a government program enacted in the wake of the "Great Recession" of 2008 seeking to stave off mortgage foreclosures by giving banks incentives to reduce a borrower's monthly mortgage payments to a sustainable level. Young v. Wells Fargo Bank, N.A., 717 F.3d 224, 228 (1st Cir. 2013).
After preliminary communications, CitiMortgage determined in September of 2012 that Debtor was eligible for a home mortgage modification under HAMP, and sent Debtor a number of loan modification documents, one of which was a trail period plan ("TPP"). Once a borrower is identified as eligible for a modification, the lender offers the borrower a TPP, which requires the borrower to make a reduced monthly payment for three months. If the debtor makes the three payments, the lender will offer the borrower a permanent loan modification. Debtor encountered numerous difficulties in obtaining her TPP. First, Debtor alleges that CitiMortgage employees were unhelpful during the modification process, often giving conflicting information, and on at least one occasion attempted to convince Debtor to abandon the modification and give up her home. Nevertheless, Debtor returned her TPP paperwork to CitiMortgage on October 2, 2012. Shortly thereafter, CitiMortgage sent Debtor a request for additional information, which Debtor also provided. After further communications, which Debtor describes as stressful and confusing, Debtor finally received a TPP from CitiMortgage. Debtor noticed discrepancies between the information she provided to CitiMortgage and the information in the TPP. For example, the TPP listed Debtor's monthly gross income as $1,657.38, but her actual income was only $1,226.00. Debtor also alleges that insurance payments were improperly added to her monthly mortgage payment. Based on the allegedly faulty information, the TPP required Debtor to make three monthly payments of $520.02. Subject to certain exceptions and rules, HAMP generally caps a borrower's monthly mortgage payments at 31% of monthly gross income. Debtor believes her monthly mortgage payments under the TPP did not comply with the 31% cap. While Debtor was unhappy with the TPP, she nevertheless made the three payments.
After completing the trial period, Debtor was offered and accepted a permanent loan modification ("Modification Agreement"). All parties agree that the Modification Agreement is a valid and properly executed contract. However, similar to the TPP, Debtor is not happy with theterms of the Modification Agreement and believes her payments are larger than allowed under HAMP. Nevertheless, the Modification Agreement reduced Debtor's monthly mortgage payments from $816.97 to $519.78. Debtor's explanation for signing the Modification Agreement, even with knowledge of the alleged errors, was her belief that she would be able to afford the payments. Debtor also anticipated difficulty in communicating with CitiMortgage, and any delay in receiving a new modification would cause substantial financial hardship.
One of the main disputes in the current case is the extent the Modification Agreement references and incorporates HAMP guidelines. The Modification Agreement is titled "Home Affordable Modification Agreement." The Modification Agreement is a standard form titled "MULTISTATE HOME AFFORDABLE MODIFICATION AGREEMENT - Single Family - Fannie Mae/Freddie Mac UNIFORM INSTRUMENT." The Modification agreement also requires, in a section titled "[Borrower's] Representation and Covenants," that the borrower disclosed all income except for "child support or alimony unless [the borrower chooses] to rely on such income when requesting to qualify for the Home Affordable Modification Program." The same section also requires that "all documents and information [a borrower] has provided to [the lender] in connection with the [modification agreement], including the documents and information regarding [the borrower's] eligibility for [HAMP], are true and correct." The Modification Agreement also references HAMP when requiring a debtor to undergo credit counseling in certain situations. The Modification Agreement "shall supersede any provisions to the contrary in [Debtor's original mortgage]," and modifies Debtor's monthly mortgage payments as follows:
Years
Monthly Principal
and Interest
Estimated Monthly
Escrow
Total Monthly
Payment
1-5
$ 414.60
$ 105.18
$ 519.78
$ 453.58
May adjust
periodically
May adjust
periodically
7-25
$ 472.92
May adjust
periodically
May adjust
periodically
Debtor also disputes the calculation of her monthly escrow payment. Escrow payments are often made to a mortgage servicer to cover insurance and property taxes. The Modification Agreement notes that escrow payments may change, but Debtor nevertheless argues that CitiMortgage improperly calculated her escrow payments. Debtor received an "Interim Escrow Analysis," indicating an escrow arrearage resulting in a payment increase from $519.78 to $584.57. Debtor, in order to discover the reason for the increase, sent a letter to CitiMortgage, which Debtor describes as a Qualified Written Request ("QWR") under RESPA. Debtor sent the letter to a location in St. Louis, Missouri, which is not CitiMortgage's dedicated facility for answering a QWR. CitiMortgage nevertheless responded to Debtor's inquiry, explaining that the escrow arrearage relates to the payment of duplicative insurance premiums. Debtor argues that CitiMortgage should refund the excess insurance premium, while CitiMortgage believes Debtor is the only party able to seek a refund from the insurance company.
Debtor and CitiMortgage also disagree about the scope of discovery. Debtor sent interrogatories and requests for the production of documents to CitiMortgage on April 9, 2014,and CitiMortgage responded on May 16, 2014. Debtor believes CitiMortgage has withheld documents under an erroneous claim of privilege without the required background information allowing the court to analyze the claim. According to Debtor, CitiMortgage also failed to respond to certain requests due to a baseless lack of relevance argument. Based on these violations, Debtor moved for discovery sanctions, including a request that certain factual matters be deemed admitted. CitiMortgage disagrees, arguing that it adequately answered Debtor's questions via written responses and the production of approximately five-hundred pages of business records.
Before turning to Debtor and CitiMortgage's arguments, the court must first determine its own jurisdiction. Debtor believes the court has jurisdiction over the current adversary proceeding under 28 U.S.C. § 157(b)(2)(A), (E) and/or (O). CitiMortgage's answer denies that the court has proper jurisdiction, but does not addressed any potential jurisdictional defects in subsequent court filings. Federal courts are courts of limited jurisdiction, and are under a duty to police their own jurisdictional limits. Justice v. Bureau of Worker's Comp. (In re Justice), 224 B.R. 631, 633 (Bankr. S.D. Ohio 1998).
Federal district courts are given subject matter jurisdiction over "all civil proceedings arising under [the Code], or arising in or related to cases under [the Code]." 28 U.S.C. § 1344(b). When determining a bankruptcy court's subject matter jurisdiction, it is not necessary to distinguish between cases arising under, arising in, or related to the Code, as each category "operate[s] conjunctively to define the scope of [bankruptcy] jurisdiction. Mich. Emp't Sec. Comm'n v. Wolverine Radio Co. (In re Wolverine Radio Co.), 930 F.2d 1132, 1141 (6th Cir. 1991). Because "related to" jurisdiction is the most expansive, the court has subject matter jurisdiction over any matter related to bankruptcy. Id.
The United States Supreme Court, as well as the...
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