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Loveless v. Bank of America, N.A.

United States District Court, Middle District of Pennsylvania

August 7, 2014

BANK OF AMERICA, N.A., et al., Defendants




I. Introduction.

The plaintiffs, Russell R. Loveless and Mary Ellen Hennings, claim that the defendants failed to timely pay taxes from a mortgage-escrow account in violation of the terms of the mortgage. They also claim that the defendants violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692, et seq., in a number of instances. The defendants have filed a motion to dismiss the amended complaint. For the reasons set forth below, I recommend that the defendants’ motion to dismiss the amended complaint be granted in part and denied in part.

II. Background and Procedural History.

The plaintiffs began this action by filing a complaint in June of 2013. At that time they were represented by counsel, Anthony J. Moses, Esquire. The defendants filed a motion to dismiss the complaint, and the plaintiffs sought an extension of time to respond to that motion asserting that they could not reach Moses, that Moses closed his office, and that his phone numbers had been disconnected. The Court granted the plaintiffs an extension of time to respond to the motion, and it ordered that they obtain new counsel or proceed pro se. The plaintiffs subsequently filed an amended complaint pro se.

The amended complaint names five defendants: (1) Bank of America, N.A. (BOA); (2) BAC Home Loans Servicing, LP (BAC); (3) MERS Corp., Inc. (MERS Corp.); (4) Mortgage Electronic Registration Systems, Inc. (MERS Inc.); and (5) the Federal National Mortgage Association (Fannie Mae). The plaintiffs allege the following facts about the defendants. BOA is a national bank. BAC was a subsidiary of BOA until July of 2011, when BAC merged into BOA. MERS Corp. is owned by many of the most significant stakeholders in the mortgage industry, and it owns and operates an electronic registry system (MERS system) that purports to track the ownership and servicing rights of its members in residential loans. MERS Inc. is a wholly owned subsidiary of MERS Corp. MERS Inc. serves as the nominal mortgagee in the public land records for loans that are registered on the MERS system. Since 2001, MERS Inc. has served as the mortgagee of record for more than 1.5 million mortgages. Fannie Mae is a publically traded company that securitizes mortgages.

The plaintiffs’ claims stem from a mortgage, and they allege the following facts with respect to that mortgage and their involvement with the defendants. In May of 2007, the plaintiffs entered into a mortgage with Countrywide FSB, a federally chartered savings bank. The mortgage, which the plaintiffs attached to their amended complaint as an exhibit, lists the plaintiffs as the borrower/mortgagor, Countrywide Bank, FSB as the lender, and MERS Inc. as the mortgagee. Doc. 15-1 at 3. The mortgage provides that MERS Inc. is acting solely as a nominee for the Lender and the Lender’s successors and assigns. Id. The mortgage provides for an escrow for property taxes, and it provides among other things that the “Lender shall apply the Funds to pay the Escrow Items no later than the time specified under RESPA.” Doc. 15-1 at 11.

In August of 2007, the Pocono Mountain School District issued a tax bill in the amount of $1, 468.22 for taxes on the property subject to the mortgage. Countrywide FSB failed to pay those taxes from the escrow as it was required by the mortgage. The plaintiffs received a notice from the Coolbaugh Township tax collector that the taxes were unpaid, and the plaintiffs notified Countrywide that the taxes were due and payable. Still Countrywide failed to pay the taxes. In January of 2008, the Coolbaugh Township tax collector transferred the tax bill to the Monroe County Tax Claim Bureau. The Monroe County Tax Claim Bureau charged additional fees and interest bringing the new total due to $1, 666.01, for which the plaintiffs became liable. The plaintiffs claim that Countrywide FSB breached the mortgage by failing to pay the taxes when due. The plaintiffs allege that they exercised their right to rescind the contract.[1]

In 2008, Bank of America Corporation, the parent of BOA, purchased Countrywide Financial Corporation. On July 1, 2008, BAC acquired Countrywide FSB. Prior to April of 2009, BAC did business under the name “Countrywide Home Loan Services, LP.” According to the plaintiffs, Countywide FSB breached the mortgage by failing to pay the taxes before BOA acquired Countrywide.

On April 28, 2009, MERS, Inc., as nominee for Countrywide FSB, assigned and transferred the mortgage to Countrywide Home Loans Servicing LP. That assignment was executed by Serena Harmon and David Perez, identified on the assignment as assistant vice presidents of MERS, Inc. The plaintiffs allege, however, that Perez was not a duly authorized officer of MERS, Inc.[2]

On May 18, 2009, BAC, formerly known as Countrywide Home Loan Servicing LP, filed a mortgage foreclosure action in the Court of Common Pleas of Monroe County, Pennsylvania against the plaintiffs. The complaint in that case, which the plaintiffs attached to their amended complaint as an exhibit, alleged that the mortgage was in default because monthly payments of principal and interest were due and unpaid for December 1, 2008 and each month thereafter. Doc. 15-4 at 4. The verification attached to the foreclosure complaint was signed by David Perez, as assistant vice president of BAC. In November of 2009, the Court of Common Pleas entered a default judgment against the plaintiffs in the amount of $134, 204.54, and a few days later, BAC filed a praecipe for a writ of execution. Execution proceedings were stayed, however, in January of 2011.

In January of 2011, the plaintiffs discovered, through Fannie Mae’s website, that Fannie Mae claimed to own their mortgage. Also, customer service representative of Fannie Mae informed Loveless that Fannie Mae has owned the mortgage since its origination. In late January of 2011, the plaintiff sent a request to BAC asking for the full name, address, and phone number of the current holder of their loan, but BAC did not respond. At a reconciliation meeting ordered by the state court, an attorney representing BOA stated that Bank of America owns the loan.[3] BOA, MERS, Inc., and Fannie Mae have failed to produce any evidence of ownership of the mortgage and note.

In July of 2011, the Court of Common Pleas of Monroe County ordered the default judgment stricken, the writ of execution stricken, and a scheduled sheriff’s sale canceled. A short time later, BAC filed a praecipe to discontinue the foreclosure action.

Loveless contends that he was misled as to which entity owned his mortgage and note.[4] According to the plaintiffs, although Bank of America no longer owns the mortgage and the note, they are still attempting to initiate a foreclosure action.

On June 1, 2013, Loveless received an Act 91/Act 6[5] notice purportedly from the law offices of McCabe, Weisburg, and Conway, P.C. The notice was transmitted, however, by BOA with a return address that belongs to BOA. The notice states that BAC is the lender even though BAC was merged into BOA in July of 2011. The notice demands payment for erroneous fess including property inspection fees of $281.00 and property preservation fees of $768.00. The plaintiffs claim that the notice violated 15 U.S.C. § 1692e(3), § 1692e(2), and 1692f(6)(A).

Loveless filed the complaint in this case in this Court on June 11, 2013, and he was represented by Attorney Moses. He alleges that even though he was represented by an attorney, BOA, or persons claiming to represent BOA, continued to contact him by phone and mail, which Loveless claims violated 15 U.S.C. § 1692c(2). Loveless advised the persons who contacted him that he had an attorney and that he had filed a suit in federal court. One representative verified that it was documented in BOA’s computer system that Loveless was represented by an attorney.

On June 14, 2013, Loveless received a letter from BOA, which according to Loveless gave a false and misleading impression that he should vacate his property. The letter, which is attached as an exhibit to the amended complaint, provides in pertinent part:

Thank you for your interest in the Mortgage Release™ program. After careful review, we are unable to assist with your request for the following reason(s):
• You did not vacate the property on the date you previously agreed to.

Doc. 15-10 at 2. Fine print at the end of the letter provides, in part: “Bank of America is working with a third party service provider, REDC Default Solutions. Federal law requires that we communicate to you that Bank of America and REDC Default Solutions are debt collectors.” Doc. 15-10 at 3. Loveless alleges that he never agreed to vacate ...

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