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Diffley v. Nationstar Mortgage, LLC

United States District Court, W.D. Washington, Seattle

December 6, 2017

BRETT DIFFLEY, Plaintiff,
v.
NATIONSTAR MORTGAGE, LLC, et al., Defendants.

          ORDER GRANTING IN PART NATIONSTAR AND WELLS FARGO'S MOTION TO DISMISS, DENYING QLS'S MOTION TO DISMISS, AND GRANTING LEAVE TO AMEND

          RICARDO S. MARTINEZ, CHIEF UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         This matter comes before the Court on Defendants' Motions to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). Dkts. #11 and #13. Defendants seek dismissal of all claims with prejudice with respect to alleged violations of the Fair Debt Collection Practices Act (“FDCPA”), the Real Estate Settlement Procedures Act (“RESPA”), the Deed of Trust Act (“DTA”), and Washington State's Consumer Protection Act (“CPA”). Id. Plaintiff opposes the motion. Dkt. #17. Having reviewed the record before it, and neither party having requested oral argument on the motions, the Court now GRANTS IN PART Defendants Wells Fargo and Nationstar's motion and DENIES QLS's motion as discussed herein. The Court further grants Plaintiff limited leave to amend as set forth below.

         II. BACKGROUND

         On September 11, 2017, Plaintiff filed his Complaint, setting forth allegations pertaining to his mortgage. Dkt. #1. Plaintiff owns property located at 29288 218th Place SE, Black Diamond, King County, WA 98010. Dkt. #1 at ¶ 1. Plaintiff names Defendant Nationstar Servicing LLC (“Nationstar”), as the servicer of his defaulted mortgage loan; Defendant Wells Fargo Bank N.A. (“Wells Fargo”), as Trustee for Structured Adjustable Rate Mortgage Loan Trust, Series 2007-3; and Defendant Quality Loan Service Corporation of Washington (“QLS”) in this action.

         Plaintiff alleges the factual background to his claims as follows:

10. The Loan was originated by First Independent Mortgage Company, which is now defunct. It was serviced by BAC Home Loans, Bank of America, and then Specialized Loan Servicing (“SLS”). As of the present, the servicing of the Loan is with Nationstar. The Loan is a subprime, high interest, adjustable rate loan.
11. Acting as agent of Nationstar, QLS issued a Notice of Default to Plaintiff by posting it at the Property and mailing it via certified mail (“Second NOD”) (Exhibit A, NOD issued by QLS). In this document, Nationstar declared that Wells Fargo, acting as trustee, is “the owner of the Note secured by the Deed of Trust.” However, QLS failed to furnish Plaintiff with a copy of the signed Note or the Deed of Trust referenced in the Second NOD. Other than the naked disclosure by Nationstar and QLS regarding the ownership of the Note, none of the named defendants has provided any documentary support that Plaintiff's Loan was in fact included in the Identified Securitized Trust, or that the Identified Securitized Trust actually owns the Note, or that Wells Fargo, or Nationstar, is the holder of the Note, or that Wells Fargo is the beneficiary under the Deed of Trust that Plaintiff executed at closing.
12. In fact, when Bank of America serviced the Loan in 2009, its foreclosing agent, Recontrust Company, previously issued another Notice of Default to Plaintiff (“First NOD”). Said Notice of Default made no mentioned of Wells Fargo or the Identified Securitized Trust's involvement. Rather, Plaintiff was informed by Bank of America/ReconTrust that “The creditor to whom the debt is owed: MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.” The serial loan servicers and inconsistent representations about who the lender, creditor, owner, and the lack of disclosure of who the note holder is all contribute to Plaintiff's feeling of frustration and insecurity about the entity he must talk to rein in his mortgage Loan (Exhibit B, First NOD).
. . .
14. For several years, Plaintiff tried desperately to obtain a loan modification with the prior loan servicer, Bank of America and Specialized Loan Servicing, to no avail. After Nationstar allegedly took over the servicing of the Loan, Plaintiff continued to seek a loan modification. All in all, Plaintiff has submitted approximately ten (10) application packages for loss mitigation, each time investing days gathering and updating financial information and documentation, and paying the costs for mailing, faxing, and shipping the information overnight.
15. Nationstar, like the previous servicers, continues to solicit Plaintiff to apply for loan modification and other loss mitigation options (Exhibit C, Composite of Nationstar's letters to Plaintiff regarding loss mitigation). Nationstar told Plaintiff that it has a “Foreclosure Prevention Department, ” dedicated to help struggling homeowners like Plaintiff. Nationstar uses impassioned language in its written inducement for Plaintiff to engage in loss mitigation including, including phrases like “To keep your account up to date, it would be very helpful if we could talk and explore your options, ” “We know the importance of homeownership and appreciate the opportunity to help you.” In July of 2017, Plaintiff was informed in writing that Nationstar has “partnered” with Urban League of Metropolitan Seattle to help Plaintiff “find solutions that could help avoid foreclosure, stay in your home, and continue to enjoy the benefits of homeownership.”
16. Ironically, during the same period of time during which Plaintiff actively responded to the described written solicitation and sought assistance from Nationstar to keep his home, Nationstar instructed QLS to advance nonjudicial foreclosure against him and the Property. To foreclose, QLS utilized a Foreclosure Loss Mitigation Form/Declaration Pursuant to RCW 61.24.031. In this document, Nationstar's Document Execution Specialist Chane Davis certifies under penalty of perjury that Nationstar “has exercised due diligence to contact the borrower as required in RCW 61.24.031(5) and the borrower did not respond.” (Exhibit D, Foreclosure Loss Mitigation Form). Nationstar's Declaration is simply not true in that Plaintiff has never stopped trying to obtain loss mitigation, regardless of who the loan servicer is.
17. Although Nationstar sends Plaintiff certain Periodic Statements, it failed to send Plaintiff a year-end escrow analysis for the year of 2016 when the annual computation of the Escrow Account would have been performed. Without said year-end escrow analysis, Plaintiff has been unable to verify what is due and owing on the Loan. Under 12 C.F.R. §1024.17(c)(3), Nationstar is obligated to conduct annual escrow analyses at the completion of the Escrow Account computation year to determine the Loan's monthly escrow account payments for the next computation year. Nationstar is further obligated to provide Plaintiff with the annual escrow account statements within 30 days of the completion of the account computation. Said annual escrow account statements must include, among other things, an account history and a projection of the activity in the account for the next year, pursuant to 12 C.F.R. §1024.17(i). Plaintiff believes he has never received an escrow analysis from Nationstar.
18. In the process of servicing the Loan, Nationstar has imposed certain property inspection and property preservation fees onto the Loan. In his full time occupancy of the Property during the relevant time period, Plaintiff believes he has never witnessed any event of property inspection or property preservation. Plaintiff believes he was never given any notice that such services were occurring or that the fees for such services would be paid by Nationstar and then charged to the Loan. When Plaintiff asked for documentation in support of the necessity for such services and Nationstar's proof of payments for such services, Nationstar has been nonresponsive.
. . .
20. Upon information and belief, in the process of servicing the Loan, Nationstar has imposed force-placed insurance or Lender Placed Insurance (“LPI”) upon the Property without prior notice to Plaintiff. Nationstar's imposition of LPI, which is much more expensive than hazard insurance that a borrower can obtain on his own, is a regular business practice of Nationstar. On information and belief, Nationstar utilizes Assurant Inc., as the LPI insurance company. Nationstar and Assurant were sued and agreed to pay $54 million in settlement to borrowers who have been harmed by the companies' force-placed inflated premiums on their properties.
21. In the process of servicing the Loan, Nationstar has imposed approximately $6, 795.27 in “Legal Fees” even though there has been no action or proceeding, including bankruptcy proceeding, implicating or affecting the Property as collateral for the Loan. The imposition of Legal Fees is unjustified and unwarranted as Nationstar had never informed Plaintiff of any “legal” proceeding involving the Loan or the Property.
22. QLS and Nationstar have provided Plaintiff with certain “Payoff Quote” and Periodic Statements that represent inconsistent numbers which prevents Plaintiff from knowing the true balance of what is due and owing on the Loan in order to (1) payoff the Loan, or (2) exercise his loss mitigation options.
23. QLS issued a Payoff Quote dated August 10, 2017, announcing that it would require $907, 881.78 to pay off the Loan. Nationstar issued a Periodic Statement dated August 16, 2017, representing a total payoff of $924, 160.00 (Interest Bearing Principal Balance $571, 345.15 plus Total Amount Due $352, 814.85) (Exhibit E, Comparison of Payoff Quote and Periodic Statement of 08/16/2017). There are discrepancies between the itemized amounts in the Payoff Quote and August Periodic Statement. In between the time that QLS issued the Payoff Quote, and Nationstar issued the August Periodic Statement - a mere eight days - the amount required to cure or to pay off the Loan increased by approximately $16, 278.22.


24. Within the Periodic Statements dated July and August of 2017, Nationstar has charged Plaintiff “Legal Fees” in the total amount of $6, 795.27 even though no “legal” event has occurred, and fees related to nonjudicial foreclosure had already been charged by Nationstar. Meanwhile, the Payoff Quote issued by QLS in August of 2017 omits such substantial amount for Legal Fees (Exhibit F, Payoff Quote compared to Periodic Statements dated July and August of 2017).
25. Being unable to understand the defendants' blatant inaccurate accounting, Plaintiff issued a Request for Information (“RFI”) and Notice of Error (“NOE”) to Nationstar, pursuant to Regulation X, RESPA, dated August 11, 2017, inquiring specifically about any property inspection or property preservation that Nationstar had imposed on the Loan. In the RFI and NOE, Plaintiff specifically referenced the Periodic Statement sent by Nationstar which represents $923.50 in property inspection or preservation fees and requested the invoices backing the charges.
26. In the same RFI and NOE, Plaintiff requested invoices supporting Nationstar's imposition of fees relating to a “prior foreclosure sale.” Nationstar has failed to response to Plaintiff's ...

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