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Burke v. Nationstar Mortgage, LLC

United States District Court, E.D. Virginia, Richmond Division

August 9, 2016

FLOYD RONALD BURKE, on behalf of himself and others similarly situated, Plaintiffs,
v.
NATIONSTAR MORTGAGE LLC, EVERBANK, EVERBANK FINANCIAL CORPORATION, EVERHOME MORTGAGE LLC, and JOHN DOE COMPANY, Defendants.

          MEMORANDUM OPINION

          James R. Spencer, United States District Judge

         THIS MATTER comes before the Court on the Motion for Judgment on the Pleadings filed by Defendant Nationstar Mortgage LLC ("Nationstar") pursuant to Federal Rule of Civil Procedure 12(c).[1] ECF No. 25. Nationstar contends that Plaintiff Floyd Ronald Burke fails to state a claim against Nationstar upon which relief can be granted. Burke opposes the motion. ECF No. 29. For the reasons that follow, the Court will grant in part and deny in part Nationstar's Motion for Judgment on the Pleadings.

         I. PROCEDURAL HISTORY

         On December 16, 2014, Burke filed a seven-count Class Action Complaint in this Court, alleging the following: "breach of contract for breach of [the] implied covenant of good faith and fair dealing, " ("Count I"); a class claim ("Count II") and an individual claim ("Count III") for violations of the Federal and Virginia Equal Credit Opportunity Act ("ECOA"); violation of the Real Estate Settlement and Procedures Act ("RESPA") ("Count IV"); violations of the Fair Debt Collection Practices Act ("FDCPA") ("Counts V and VI"); and breach of contract ("Count VII").

         On March 13, 2015, Defendants Nationstar and Everbank (collectively, the "Defendants") moved to dismiss Count I, Count III, Count V, and Count VI of the Complaint (the "Motion to Dismiss"). ECF No. 11. On April 17, 2015, Burke filed a response and voluntarily withdrew Counts V and VI, the FDCPA claims alleged in the Class Action Complaint. ECF No. 18. The Court subsequently granted the Motion to Dismiss with respect to Count I.

         On October 13, 2015, Nationstar filed the Motion for Judgment on the Pleadings, seeking to dismiss the remaining claims: Count II, Count III, Count IV, and Count VII. ECF No. 25. Burke filed a response on November 11, 2015. ECF No. 29. On December 1, 2015, Nationstar filed a reply. ECF No. 30. This matter is now ripe for review.

         II. FACTUAL BACKGROUND[2]

         Burke purports to represent a class of homeowners who have been damaged by Nationstar's alleged failures to comply with applicable law in connection with their mortgage loan modification requests. The following is taken from the facts as set forth in Burke's Complaint and echoed in this Court's Opinion on the Motion to Dismiss. Where appropriate, the Court additionally notes allegations as set forth by Nationstar, some of which the Court may consider on a Rule 12(c) motion.[3]

         In June of 2008, Burke "executed a Note in the principal sum of $101, 246.00 and Deed of Trust secured by his primary residence and backed by the Federal Housing Administration CFHA')." Complaint ("Compl.") ¶ 14. On or about July 1, 2008, after Burke executed the loan documents, "Bank of America acquired the servicing rights for [his] mortgage." Id. ¶ 23. In 2011, Burke "experienced financial hardship due primarily to divorce" and "filed [for] Chapter 7 bankruptcy, " but "filed a Statement of Intention to reaffirm his mortgage debt to Bank of America." Id. ¶¶ 24-25. When Burke received his bankruptcy discharge in November of 2011, he was "current on his mortgage." Id. ¶ 26.

         On November 14, 2012, Burke, still "current on his mortgage" payments of "757.27 per month, " applied to Bank of America for a new loan in the form of "a loan modification." Id. ¶¶ 27-28. Subsequently, "[b]y letter dated November 20, 2012, Bank of America informed [Burke] that it had received his application for loan modification and requested additional income documentation, which [he] immediately provided." Id. ¶ 30. Thereafter, "Bank of America notified [Burke] that servicing of the loan had been transferred to Nationstar beginning December 4, 2012." Id. Burke then started "making payments of $739.90 to Nationstar."[4] Id. ¶¶ 31. According to Nationstar, the initial payment "was subsequently returned and reversed due to an invalid account number." Answer ¶ 31.

         "In January 2013, [Nationstar] sent a letter to [Burke] offering review for Home Affordable Modification Program (HAMP), " to which Burke responded by "submitting] the completed application and required documents." Compl. ¶ 32. On "February 2, 2013, Nationstar Mortgage sent a letter to [him] stating he was in default for the January 1, 2013 and February 1, 2013 payments." Id. ¶ 33.

         Burke alleges that "[i]n May 2013, his mortgage payment increased to $747.28 per month." Id. ¶ 34. On May 22, 2013, Nationstar informed Burke that "he had been approved to enter into a Trial Period Plan [("TPP")]... under the FHA HAMP Modification Program." Id. 135- Specifically, Burke alleges that the letter approving the TPP provided:

Congratulations! You are approved to enter into a trial period plan under the FHA HAMP Modification Program. This is the first step toward qualifying for more affordable mortgage payments. Please read this letter so that you understand all the steps you need to take to modify your mortgage payments.

Id. ¶ 36. According to Burke, with respect to payments, the letter from Nationstar instructed:

What you need to do... To accept this offer, you must make new monthly "trial period payments" in place of your normal monthly mortgage payment. Send your monthly trial period payments instate [sic] of your normal monthly mortgage payment as follows:
• 1st payment: $575.40 by 7/1/2013
• 2nd payment: $575.40 by 8/1/2013
• 3rd payment: $575.40 by 9/1/2013
• 4th payment: $575-40 by 10/1/2013

Id. ¶ 37; see also Answer ¶ 37. The letter further provided that Nationstar was "not obligated or bound to make any modification of the Loan Documents" and that Nationstar would "hold the payments received... in a non-interest bearing account until they total an amount that is enough to pay [Burke's] oldest delinquent monthly payment on [the] Loan in full." May 22, 2013 Letter from Nationstar to Burke at 3 (ECF No. 26-2).

         During the trial period, Burke alleges that "he made all four payments of $575.40, due July 1, August 1, September 1, and October 1." Compl. ¶ 38; see also Answer ¶ 35. During this trial loan modification period, however, Burke continued to receive monthly statements from Nationstar in the amount of $747.28 per month. Compl. ¶ 38. The Complaint provides that after Burke contacted Nationstar to "inquire about the correct amount that should be paid for the mortgage, " a "Nationstar representative informed [Burke] not to worry about the amount that was in his monthly statements" and instructed him to "continue to pay per the TPP instructions." Id. ¶ 39.

         In November 2013, after completing the trial loan modification, Burke "received permanent Loan Modification documents from Nationstar, " which he alleges to have "signed and notarized" before sending them back to Nationstar. Id. ¶¶ 41-42. Burke further asserts that the documents provided that his modified mortgage payment would be $569.42 per month. Id.

         ¶ 41. Nationstar points out that "the Loan Modification Agreement expressly provided, 'Borrower agrees to make and execute other documents or papers as may be necessary to effectuate the terms and conditions of this Agreement which, if approved and accepted by the Lender, shall bind and inure to the heirs, executors, administrators, and assigns of the Borrower." Answer ¶ 41. The Loan Modification Agreement also instructed Burke to "sign and have the documents notarized." Id. Moreover, the Loan Modification documents warned that the "modification [would] not be ...


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