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Kenneth J. Taggart v. Gmac Mortgage

November 26, 2012


The opinion of the court was delivered by: J. William Ditter, Jr., J.


AND NOW, this 26th day of November, 2012, upon consideration of the motion to dismiss filed by defendants, the Department of Housing and Urban Development ("HUD"), the Federal Housing Administration ("FHA"), and the United States of America (the "federal defendants")*fn1

(Dkt. 7, 20) and plaintiff's opposition (Dkt. 19), I HEREBY ORDER that defendants' motion to dismiss is GRANTED.*fn2 However, plaintiff's due process claim regarding the adequacy of his hearing with HUD officials, as raised in his response to the federal defendants' motion to dismiss and incorporated in his second amended complaint, is allowed to proceed. Defendants shall file an answer or other pleading within 20 days of this order.

In connection with this order, I make the following findings and reach the following conclusions:

1. Plaintiff, Kenneth Taggart, alleges that his mortgage servicer, GMAC, erroneously reported him in default on his FHA-insured mortgage which led HUD to rescind his eligibility to appraise FHA mortgages -- a decision made without affording him due process or a fair trial.

2. Taggart filed his original complaint on January 26, 2012, and an amended complaint on March 22, 2012, alleging violations of his federal and Pennsylvania constitutional rights and various other tort claims. Taggart's first amended complaint includes 15 separate claims for relief, which are described in detail below.

3. According to his first amended complaint, Taggart had a disagreement with GMAC regarding the amount of his mortgage payments, in addition to escrow calculations and payment of hazard insurance. Taggart did not pay the monthly payments demanded by GMAC. Am. Compl. ¶ 15; Pl.'s Resp. 2. As a result, GMAC filed a foreclosure complaint for non-payment in August 2009 in the Court of Common Pleas of Montgomery County. Am. Compl. ¶ 16. That case is still pending. See GMAC Mortgage, LLC, v. Taggart, No. 2009-25338 (Montgomery Cnty. Ct. Com. Pl. filed Aug. 14, 2009).*fn3

4. Taggart was in the business of appraising properties in order to determine the maximum insurable mortgage for both FHA-insured mortgages and non-FHA-insured mortgages. Am. Compl. ¶¶ 4, 44.*fn4 In order to appraise a property that is to be the security for an FHA-insured single family mortgage, Taggart must be on HUD's list of approved appraisers, referred to as the "Appraiser Roster." See 24 C.F.R § 200.200. To be on the Appraiser Roster, he must be a state-certified appraiser with certain credentials and he must not be listed on one of three lists, including HUD's Credit Alert Verification Reporting System ("CAVRS"). *fn5 See § 200.202(b).

HUD can remove an approved appraiser at any time from the Appraiser Roster "for cause" due to, inter alia, the failure to maintain the eligibility requirements set forth in 24 C.F.R. § 200.202(b). See § 200.204(a)(1)(vii).

5. HUD is then required to follow the procedures for removal described in 24 C.F.R. § 200.204(a)(2).*fn6 HUD must provide written notice to the appraiser of his or her proposed removal, with the notice containing the reason(s) for and duration of the proposed removal. § 200.204(a)(2)(i). The appraiser has 20 days from the date of the notice to submit a "written response appealing the proposed removal and to request a conference." § 200.204(a)(2)(ii).

HUD will provide a final decision of the appeal, either affirming, modifying, or canceling the removal, within 30 days (or more if the time is extended by HUD with notice to the appraiser) of receiving the appraiser's written response or completing the conference. § 200.204(a)(2)(iii). If the appraiser does not request a conference or submit a written appeal, the removal is effective 20 days after the date of HUD's initial notice. § 200.204(a)(2)(iv).

6. In response to Taggart's alleged non-payment, GMAC reported him as being in default via HUD's CAVRS. Am. Compl. ¶ 17. As a consequence, HUD removed Taggart from the Appraiser Roster on January 27, 2010. Id. While it is unclear whether Taggart is claiming that he did not get notice of this decision by HUD, he does allege that he never received a conference or an opportunity to challenge the facts upon which his removal was based, despite his repeated requests to HUD and other government officials. Id. at¶ 19. Moreover, the federal § 200.202 (effective Feb. 7, 2008 through Dec. 22, 2011). I will use the current term. defendants acknowledge HUD's failure to follow the regulations, stating in their motion to dismiss that "HUD determined that it did not follow the required procedures to remove Taggart from the Appraiser Roster." Defs.' Br. 5.

7. More than two years after removing Taggart from the Appraiser Roster, and after Taggart filed the present action, HUD attempted to remedy its earlier mistake by rescinding his removal and reinstating him to the Appraiser Roster. Defs.' Br. 5. This was done by letter dated April 5, 2012, with an updated version, without any significant differences, sent to Taggart on April 12, 2012. Pl.'s Resp., Ex. C. The letter informed Taggart that he was reinstated to active status and simultaneously advised him of HUD's intent to initiate the process of removing him from the Appraiser Roster pursuant to 24 C.F.R. § 200.204. Id. HUD cited Taggart's failure to maintain the eligibility requirements, i.e., being listed on CAVRS, as the reason for removal. Id. The April 12, 2012 letter also advised Taggart of the process of removal and reinstatement, and notified him that he had until May 2, 2012, to submit a written response appealing the decision and/or requesting a conference. Id.

8. On April 16, 2012, Taggart sent a letter to HUD requesting a conference and also objecting to the conference because it was not a jury trial. Pl.'s Resp., Ex. E; Defs.' Br., Ex. B. Nevertheless, on May 17, 2012, Taggart attended and participated ...

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