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Taggart v. GMAC Mortgage, LLC

United States District Court, Third Circuit

August 12, 2013

KENNETH J. TAGGART
v.
GMAC MORTGAGE, LLC, et al.

MEMORANDUM

J. WILLIAM DITTER, JR., J.

Plaintiff, Kenneth Taggart, alleges that his mortgage servicer, GMAC, erroneously reported him in default on his FHA-insured mortgage which led the Department of Housing and Urban Development (“HUD”) to rescind his eligibility to appraise FHA mortgages – a decision he claims was made without affording him due process. Before me is the motion of the United States, HUD, and FHA (collectively referred to as the “federal defendants”) for summary judgment, which I will grant.[1]

I. BACKGROUND[2]

The facts and procedural history of this case are detailed in my November 26, 2012 opinion dismissing all but one of plaintiff’s claims (Dkt. 21), but I will provide a brief summary of the relevant background information for ease of reference.

Taggart had a disagreement with GMAC regarding the amount of his payments, including escrow calculations and payment of hazard insurance, on an FHA-insured mortgage serviced by GMAC. GMAC assessed additional payments for hazard insurance because it determined that Taggart failed to show proof that he was carrying the appropriate insurance. Taggart contends that he was properly insured and therefore he did not pay the monthly payments demanded by GMAC. As a result, GMAC filed a foreclosure complaint for nonpayment in August 2009 in the Court of Common Pleas of Montgomery County, Pennsylvania.

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. 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”). See Id . § 200.202(b).[3] If an appraiser is on CAVRS, HUD will then remove him or her from the Appraiser Roster “for cause” due to the failure to maintain the eligibility requirements set forth in 24 C.F.R. § 200.202(b). Id. § 200.204(a)(1).

HUD is then required to follow the procedures for removal described in 24 C.F.R. § 200.204(a)(2). Accordingly, 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. 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. 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.

In response to Taggart’s alleged non-payment, GMAC reported him as being in default via CAVRS. HUD subsequently removed Taggart from the Appraiser Roster on January 27, 2010. It is undisputed that Taggart did not receive a notice or an opportunity to attend a conference, as prescribed by the above-mentioned regulations, prior to his removal.

More than two years after initially removing Taggart from the Appraiser Roster, and after Taggart filed the present action, HUD reinstated him to the Appraiser Roster. 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. to Fed. Defs.’ First Mot. Dismiss, Exh. C.[4] 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 indefinitely from the Appraiser Roster pursuant to 24 C.F.R. § 200.204. HUD cited Taggart’s failure to maintain the eligibility requirements, i.e., being listed on CAVRS, as the reason for removal. The letter stated, “According to HUD’s records, your FHA Insured Lender, GMAC, has entered data input into the [CAVRS] reflecting your default on your FHA insured mortgage for a property located at 521 Cowpath Road, Telford, PA 18969.” Id. The April 12 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.

On April 16, 2012, Taggart sent a response letter to HUD, objecting to the fact that it was said he violated an eligibility requirement, challenging that requirement as unconstitutional, requesting a conference while also objecting to that conference because it was not a jury trial, and asking for additional information regarding the conference process and procedures. Pl.’s Resp., Exh. E. On May 10, 2012, HUD responded to Taggart’s letter wherein it acknowledged his request for a conference and his “six questions regarding the conference.” Pl.’s Resp., Exh. F. HUD offered Taggart two dates from which he could choose to have the conference – May 14 or May 17. HUD also informed Taggart that the proceeding was an “informal conference” and it was “not a hearing.” Id. The letter advised Taggart that he or his “designated representative” would have the “opportunity to explain why you should not be removed from the FHA Appraiser Roster, and given the opportunity to provide any support for that proposition.” Id.

As to Taggart’s specific concerns raised in his April 16 letter, HUD informed Taggart that he could bring a court reporter to the conference at his own expense, and that there was no discovery or issuance of subpoenas in light of the informal nature of the conference. Finally, HUD stated that “any and all documentation that you may present at the conference will be carefully considered by HUD prior to the issuance of a final determination.” Id. (emphasis added).

On May 17, 2012, Taggart attended and participated in a conference with HUD representatives at HUD’s Philadelphia office. See Pl.’s Resp., Exh. H (transcript of the proceeding). In addition to Taggart and the court reporter brought by Taggart, the other individuals present were HUD representatives, Kathleen Roe, Technical Advisor; Andrea Durham, Legal Counsel; and Anthony Triolo, Supervisory Housing Program Specialist.

Following the conference, Triolo notified Taggart via letter dated June 14, 2012, that his default status was accurate and his removal from the Appraiser Roster was warranted and would be effective immediately. Pl.’s Resp., Exh. M. In addition to explaining the basis for Taggart’s ineligibility, Triolo discussed the various allegations Taggart made at the conference concerning improper forced hazard insurance and fraudulent foreclosure documents, HUD’s consideration of those issues, and his confirmation that Taggart was in default on the FHA-loan in question. See Id . (stating that Triolo “confirmed that you are 39 months in default, owing your FHA-insured lender in excess of $162, 000.00 in principal and interest payments, in addition to property taxes and insurance advanced on your behalf”). Finally, Triolo informed Taggart that he could reapply for placement on the Appraiser Roster if he met all eligibility requirements.

Taggart’s original and amended complaints alleged 16 separate claims for relief. As a result of rulings on my part and various motions, the only issue now before me is whether Taggart was afforded due process when he was terminated as an FHA appraiser. Oral argument on the federal defendants’ motion to dismiss this remaining claim was held on April 30, 2013. Pursuant to Federal Rule of Civil Procedure 12(d), I converted the federal defendants’ motion to dismiss to a motion for summary judgment. As both parties have had the opportunity to file additional briefs and exhibits, the matter is ripe for resolution.

II. STANDARD OF REVIEW

The standard for summary judgment is well established. I must consider the evidence in a light most favorable to the non-moving party. If there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law, summary judgment is appropriate. An issue is genuine only if the evidence is such that a reasonable jury could return a verdict for the non-moving party.

However, the non-moving party cannot rely on unsupported assertions, conclusory allegations, or mere suspicions to defeat a summary judgment motion. Here, Taggart must “do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Electrical Industrial Corp. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). He “must present affirmative evidence in order to defeat a properly supported motion” and cannot “simply reassert factually unsupported allegations.” Williams v. Borough of West Chester, 891 F.2d 458, 460 (3d Cir. 1992). He ...


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