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Nathaniel Johnson, Individually and As v. Metlife Bank

August 7, 2012

NATHANIEL JOHNSON, INDIVIDUALLY AND AS
HEIR TO THE ESTATE OF JOSIE JOHNSON,
DECEASED
v.
METLIFE BANK, N.A., SUCCESSOR TO BNY MORTGAGE COMPANY, LLC, ET AL.



The opinion of the court was delivered by: Padova, J.

MEMORANDUM

This action arises out of a 2007 reverse mortgage transaction pursuant to which Plaintiff Nathaniel Johnson conveyed his interest in his family home to his mother, Josie Johnson, and then Josie Johnson entered into a reverse mortgage with BNY Mortgage Company, LLC ("BNY"). The Third Amended Complaint asserts claims of unfair and deceptive practices under the Pennsylvania Unfair Trade Practices and Consumer Protection Law ("UTPCPL"), 73 Pa. Stat. Ann. § 201-1 et seq., against Defendant MetLife Bank, N.A. ("MetLife"), the successor to BNY, as well as against two assignees of the mortgage: Reverse Mortgage Solutions, Inc. ("RMS"), and Bank of America Corporation ("BoA") (collectively, the "Assignees"). MetLife and the Assignees have filed separate Motions for Summary Judgment pursuant to Federal Rule of Civil Procedure 56. For the following reasons, we grant MetLife's Motion in part and deny it in part, and grant the Assignees' Motion in full.

I. BACKGROUND

Unless otherwise noted, the following facts are undisputed. Plaintiff Nathaniel Johnson purchased his residence at 6528 Theodore Street, Philadelphia, Pennsylvania, ("the Property") in 1995. (Johnson Dep. at 26, 28.) In 1996, he deeded the Property to himself and his mother, Josie Johnson ("Mother"), who also resided there. (Id. at 33-34.) In 2007, Plaintiff and Mother desired a loan in order to finance repairs to the home. (Id. at 42-43.) Plaintiff attempted unsuccessfully to obtain such a loan from several banks. (Id. at 41-42.)

In early 2007, BNY began discussing the possibility of a reverse mortgage with Plaintiff and Mother. (See MetLife Ex. B.) Julie Lobacz, a BNY reverse mortgage specialist, met with Plaintiff and Mother on at least two occasions to discuss the transaction. (Lobacz Dep. at 42.) According to Plaintiff, Lobacz told him that he and Mother would be co-borrowers on a "hectom" loan, which would have an interest rate of approximately 7%, and that Plaintiff could make monthly payments on the loan. (Johnson Dep. at 67.) Plaintiff had little experience in mortgages and relied on Lobacz's representations. (Id.at 66-67.) He testified that he told Lobacz that he would not go through with any deal if he had to sell the Property or if the loan did not provide for monthly payments. (Id. at 66, 89.)

On August 14, 2007, Lobacz met with Mother and Plaintiff at their home. All three signed an Ownership Interest Certification. (Assignees' Ex. F.) The Ownership Interest Certification stated that owners of the property who themselves were not eligible for a reverse mortgage, such as Plaintiff,*fn1 would be required to relinquish their interest in the property in order for the other owner to obtain a reverse mortgage. (Id.) The Ownership Interest Certification further stated that the reverse mortgage would become due and payable on the death of the borrower, and that the borrower's estate would be responsible for paying it off. (Id.) Plaintiff signed the Ownership Interest Certification as a "Non-Borrowing Resident," and Mother signed it as a "Borrower." (Id.) On this day, Plaintiff, Mother, and Lobacz also signed a "Notice to Non-Borrowing Spouse or Resident." (Assignees' Ex. G.) This document stated that the reverse mortgage loan could not be assumed by the non-borrowing resident upon the borrower's death, and that the loan would become due and payable upon the borrower's death. (Id.) Again, Plaintiff signed this document as a "Non-borrowing spouse or resident" and Mother signed it as a "Borrower." (Id.) Following this meeting, Lobacz sent to Plaintiff a sample of the repayment letter that would normally be sent out after the borrower's death. (Assignees' Ex. I.) This letter stated that the borrower's estate would have 180 days from the borrower's death to pay off the mortgage, and that if it failed to do so, BNY could institute foreclosure proceedings on the property. (Id.) Lobacz testified that it was out of the ordinary for her to provide a sample of the letter as part of the reverse mortgage negotiations, but that she did so in this case because Plaintiff wanted more information about what would happen when Mother died. (Lobacz Dep. at 59.)

On October 27, 2007, Lobacz met again with Plaintiff and Mother to finalize the reverse mortgage. Plaintiff and Mother signed a deed on that date transferring the property into Mother's name alone. (Assignees' Ex. J.) Plaintiff testified that he did not understand that he was transferring his interest in the Property when he signed this document and that he had no intention to do so. (Johnson Dep. at 99-100.) Also on that day, Mother entered into the reverse mortgage with BNY. (Assignees' Ex. L.) Plaintiff's name does not appear anywhere on this document and he did not sign this document. (Id.) Only Mother is listed as a borrower. (Id.) The reverse mortgage provided for a total loan in the amount of $100,500, some of which went to pay off the purchase money mortgage on the Property and the outstanding taxes and utility bills. (Assignees' Ex. M.) Plaintiff and Mother used other proceeds from the loan to make home repairs. (Johnson Dep. at 128-31.)

Mother died on December 11, 2009, and the reverse mortgage became due and payable.

(MetLife's Statement of Material Facts ¶ 8; Plaintiff's Statement of Material Facts ¶¶ 19-20.) Defendant Reverse Mortgage Services, the servicer of the mortgage, instituted foreclosure proceedings on the residence in April 2011. (MetLife's Statement of Material Facts ¶ 9.) Defendant BoA is the current owner of the mortgage. (Id.)

In June 2011, Plaintiff sent to World Alliance Financial Corp., the then-holder of the reverse mortgage, a request to rescind the mortgage, pursuant to the UTPCPL's rescission provision. (Assignees' Ex. O.) The request was denied. (Id.)

Plaintiff's Third Amended Complaint brings three claims. Count One is a claim under the UTPCPL's catch-all provision against MetLife only, as successor to BNY, in which Plaintiff alleges that Lobacz misled Plaintiff as to the terms of the reverse mortgage, and that Plaintiff, had he known the actual terms, would not have deeded his share of the residence to Mother. Count Two is a claim against all three Defendants pursuant to the UTPCPL's rescission provision, in which Plaintiff alleges that he had a right to rescind the reverse mortgage and that Defendants violated this right by refusing his request to rescind the deal. Count Three is a claim to quiet title against all three Defendants, in which Plaintiff requests that the Court enter a judgment declaring him the sole owner of the residence, unencumbered by the reverse mortgage.*fn2

MetLife and the Assignees have separately filed Motions for Summary Judgment, raising substantially similar arguments. They argue that all three of Plaintiff's claims fail and request that we enter judgment on their behalf.

II. LEGAL STANDARD

Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). An issue is "genuine" if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 248 (1986). A ...


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