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Ephraim v. Ehomecredit Corp.

March 13, 2006


The opinion of the court was delivered by: Judge Munley


Before the court for disposition are two motions to dismiss. One is filed by Defendant eHomeCredit Corp., which seeks to dismiss Counts I, II, III and IV of plaintiff's amended complaint. The other motion is filed by Defendant Raintree Homes and seeks to dismiss Counts III and VI of the Amended Complaint. The matters have been fully briefed and are ripe for decision.


Plaintiff Joseph Ephraim is an adult individual residing in Tannersville, Pennsylvania. Defendant Raintree Homes, Inc. ("Raintree") is in the business of custom home building and design. Defendant eHomeCredit Corporation ("eHome") is a business engaged in sub-prime mortgage lending and servicing. Defendant Countrywide Home Loans ("Countrywide") is in the business of brokering loans in the sub-prime mortgage lending industry.*fn2

In September 2000, Defendant Raintree represented to plaintiff that purchasing and financing the cost of a newly constructed home in the Poconos would be beneficial to him. Raintree represented that by entering into a new home purchase agreement, the price of the home would be $199,826.00 less a promotional giveaway of $10,575.00. Thus, Raintree represented that the adjusted price of the real estate at issue was $189,251.00, and that this amount was the value of the property. Raintree further indicated that, as an inducement for plaintiff to enter into the purchase agreement, it would provide $8000.00 towards repayment of any costs or expenses arising out of obtaining financing. Based upon Raintree's representations, plaintiff contracted with it for the construction of a new home in the amount of $189,251.00. Plaintiff asserts that the fair market value of the real estate at issue was drastically lower than the purchase price.

Raintree then assisted plaintiff in obtaining the interest of eHome in providing financing to plaintiff for construction of the new home. EHome promised to obtain a new mortgage loan for plaintiff that would carry a low rate of interest and a single low monthly payment. A mortgage loan closing was held on June 7, 2002. Among the documents executed at the closing was a Note and Mortgage prepared by eHome for approximately $170,300.00 at a contract rate of interest of 7%. The settlement sheet for the loan reflects an appraisal fee of $300.00 and appraisal review fee of $50.00 that are not bona fide and not reasonable because Raintree drastically inflated the value of the house. Raintree hired an appraiser to deceptively inflate the actual fair market value of the real property at issue. EHome and Raintree acted together as part of a deceptive scheme to induce plaintiff to borrow a higher loan amount than was actually required due to the inflated sales price of the property at issue. Raintree and eHome also acted in collusion with the appraiser to inflate the value of the house in order to obtain a higher purchase price and higher mortgage loan from plaintiff. Thus, plaintiff asserts that eHome offered him a larger loan than he had requested, and that eHome made the loan without regard to his ability to repay it. Ehome further charged unreasonable fees in the loan, all of which were financed into the mortgage, increasing plaintiff's indebtedness to eHome.

The servicing rights and obligations with respect to plaintiff's loan were undertaken by Countrywide. In July 2003, Countrywide, without explanation, began charging plaintiff a higher mortgage payment than agreed upon. Countrywide is charging plaintiff fees that are undisclosed and/or placing unnecessary amounts in escrow without explanation.

Due to the defendants' actions, plaintiff has suffered financial detriment and extreme emotional distress. Accordingly, plaintiff filed the instant six-count complaint asserting the following: Count I, Truth-in-Lending Act violation; Count II, Equal Credit Opportunity Act violation; Count III, Breach of Contract; Count IV, Negligent Servicing; Count V, Pennsylvania Fair Credit Extension Uniformity Act violation; Count VI, Pennsylvania Consumer Protection Law violation.

Defendants Raintree and eHome have filed motions to dismiss portions of the plaintiff's complaint bringing the case to its present posture.


As plaintiff seeks to recover under the Federal Truth in Lending Act we have jurisdiction pursuant to 28 U.S.C. § 1331 ("The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States."). We have supplemental jurisdiction over the plaintiff's state law claims pursuant to 28 U.S.C. § 1367.

Standard of review

When a 12(b)(6) motion is filed, the sufficiency of a complaint's allegations are tested. The issue is whether the facts alleged in the complaint, if true, support a claim upon which relief can be granted. In deciding a 12(b)(6) motion, the court must accept as true all factual allegations in the complaint and give the pleader the benefit of all reasonable inferences that can fairly be drawn therefrom, and view them in the light most favorable to the plaintiff. Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997).

I. Defendant Raintree's Motion To Dismiss

Defendant Raintree moves to have itself dismissed from Counts III and IV. (Doc. 33). We shall ...

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