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Redman v. Federal National Mortgage Association

United States District Court, W.D. Virginia, Charlottesville Division

January 12, 2015

JONATHAN AND KARA REDMAN, Plaintiffs,
v.
FEDERAL NATIONAL MORTGAGE ASSOCIATION, et al., Defendants.

MEMORANDUM OPINION

GLEN E. CONRAD, Chief District Judge.

This case is presently before the court on motions to dismiss filed by Federal National Mortgage Association ("Fannie Mae"), Ocwen Loan Servicing, LLC ("Ocwen"), and Atlantic Trustee Services, LLC ("Atlantic"). For the reasons set forth below, Fannie Mae and Ocwen's motion will be granted in part and denied in part, and Atlantic's motion will be granted.

Background

The following facts, taken from the plaintiffs' amended complaint, are accepted as true for purposes of the defendants' motions to dismiss. See Erickson v. Pardus, 551 U.S. 89, 94 (2007).

On April 12, 2007, Jonathan and Kara Redman ("the Redmans") obtained a home mortgage loan from American Brokers' Conduit for property located at 5834 Jefferson Mill Road, Scottsville, Virginia. The loan was evidenced by a promissory note and secured by a deed of trust on the property. The note was later assigned to Fannie Mae.

In 2012, the Redmans' mortgage loan was serviced by American Home Mortgage, Inc., which later changed its name to Homeward Residential. The Redmans made their mortgage payments electronically by remitting payments directly from their bank account to the servicer's bank account.

In December of 2012, Ocwen purchased Homeward Residential and took over responsibility for servicing the Redmans' loan. Ocwen changed the loan account number, the name of the payee, and the address at which to send loan payments. However, Ocwen did not notify the Redmans of these changes. Consequently, from January of 2013 through April of 2013, the Redmans continued to make electronic payments to the bank account that had been used by American Home Mortgage, Inc. None of these payments were credited to the Redmans' loan account, and two of the payments were returned to the Redmans' bank account without their knowledge.

In May of 2013, the Redmans learned that Ocwen had taken over responsibility for servicing their loan. The Redmans spoke to an Ocwen representative by telephone, and discovered that their two most recent loan payments had been returned to their bank account. The Ocwen representative provided a new bank account number for electronic loan payments. The Redmans then forwarded two payments to Ocwen to cover the amount that had been returned to their bank account.

On May 7, 2013, Ocwen issued a statement indicating that $5, 179.98 was due as of March 1, 2013, which included overdue payments and outstanding late charges. The Redmans claim that the $5, 179.98 figure was incorrect and that it did not reflect payments that were previously made in 2013.

In July of 2013, Mr. Redman contacted Ocwen to attempt to make another loan payment. An Ocwen representative told Mr. Redman that the loan payment was past due and, thus, that Ocwen "could not accept any normal payments on the account unless he paid several thousand dollars in addition to this normal payment to bring the account current." Am. Compl. ¶ 41, Docket No. 14. Based on this representation, which the Redmans claim was inaccurate, the Redmans made no payment in July of 2013, because they did not have the amount demanded by Ocwen. The Redmans allege that they could have made their loan payment if they had been told the correct amount due.

On August 5, 2013, the law firm of Glasser & Glasser, PLC ("Glasser & Glasser") mailed the Redmans a notice advising them that their loan was in default. Mr. Redman subsequently spoke to one of the law firm's employees, Elizabeth Rankin, who "insisted[ed] that a very large sum of money was necessary to resinstate the loan, and that the only way for the Redmans to avoid foreclosure was to pay this very large amount." Id . ¶ 54. Mr. Redman indicated that he had funds available in his retirement account to reinstate the loan, and that he would withdraw those funds and pay the amount that was demanded. In response, Ms. Rankin provided Mr. Redman with a reinstatement figure of $7, 603.46. With this figure in mind, Mr. Redman subsequently made preparations to withdraw funds from his retirement account.

On September 27, 2013, Glasser & Glasser issued a notice advising the Redmans that Atlantic had been appointed as substitute trustee, and that the Redmans' property would be sold at a foreclosure sale on October 16, 2013. Although the Redmans acknowledge that this notice was sent, the Redmans maintain that they did not receive a copy of the notice until after the foreclosure sale had already occurred, and that they had no knowledge of the foreclosure sale until October 18, 2013, when Mr. Redman called Ms. Rankin and learned that the property had been sold two days earlier.

Fannie Mae purchased the Redmans' property at the foreclosure sale. After the foreclosure deed was recorded, Fannie Mae initiated an unlawful detainer action against the Redmans in the General District Court of Albemarle County. The General District Court awarded possession of the property to Fannie Mae.

On January 21, 2014, the Redmans filed the instant action against Fannie Mae, Ocwen, Glasser & Glasser, and Atlantic in the Circuit Court of Albemarle County. Fannie Mae and Ocwen removed the case to this court. Upon removal, the Redmans filed an amended complaint in which they asserted the following claims: breach of contract by Fannie Mae (Count One); conversion by Fannie Mae and Ocwen (Count Two); violations of the Federal Debt Collection Practices Act by Glasser & Glasser (Count Three); breach of fiduciary duties by Atlantic (Count Four); violations of the Federal Real Estate Settlement Procedures Act by Ocwen (Count Five); quiet title against Fannie Mae (Count Six); ...


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