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King v. Federal Home Loan Mortgage Corp.

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

July 17, 2018

STACEY KING, Plaintiff,
v.
FEDERAL HOME LOAN MORTGAGE CORPORATION, et al, Defendants.

          MEMORANDUM OPINION

          Leonie M. Brinkema Virginia United States District Judge.

         Before the Court are defendant Professional Foreclosure Corporation's Motion to Dismiss [Dkt. No. 12] and defendants Federal Home Loan Mortgage Corporation and Nationstar Mortgage LLC's Motion to Dismiss [Dkt. No. 14]. The motions have been fully briefed and the Court has determined that oral argument would not aid the decisional process. For the reasons that follow, both motions will be granted and the Complaint will be dismissed.

         I. BACKGROUND

         In this civil action, plaintiff Stacey King ("King" or "plaintiff) brings a variety of counts against defendants Federal Home Loan Mortgage Corporation ("Freddie Mac"), Nationstar Mortgage LLC ("Mr. Cooper"[1]), and Professional Foreclosure Corporation of Virginia ("PFC") (collectively, "defendants") alleging improper conduct related to the November, 2017 foreclosure sale of a property she owned (the "Property").[2]

         On December 28, 2006, King executed a deed of trust (the "Deed of Trust") and a promissory note (the "Note"), whereby King borrowed $206, 320 from Countrywide Home Loans, Inc. and used the Property to secure the loan. Compl. [Dkt. No. 1-1] ¶¶ 14-17. The Deed of Trust also named MERS as Beneficiary and Samuel I. White, P.C., as Trustee. Id. ¶ 16. The same day, King executed a second deed of trust ("Credit Line Deed of Trust"), which was recorded after the Deed of Trust. Id. ¶ 18.

         In 2013, SLS began servicing the loan related to the Credit Line Deed of Trust. Id. On September 18, 2017, MERS, acting as "nominee for Countrywide Home Loans, Inc.," assigned the Deed of Trust to Mr. Cooper. Id. ¶ 19. Four days later, Mr. Cooper, claiming to be the holder of the Note, executed an Appointment of Substitute Trustee, replacing Samuel I. White, P.C., with PFC. Id. ¶ 22.[3] In addition, at some point between 2006 and 2017, Mr. Cooper began servicing the loan associated with the Deed of Trust. Id. ¶ 25. Plaintiff went into default on the first loan. As a result, on November 1, 2017, PFC sold the Property at a foreclosure sale, and the Property was transferred via a Trustee's Deed to Freddie Mac. Id. ¶¶ 26-27.

         After the sale, SLS notified King that it was now the servicer of the loan associated with the Deed of Trust. Id. ¶ 28. On March 9, 2018, King sent both Mr. Cooper and SLS Qualified Written Requests ("QWRs") pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2605(e). Id. ¶¶ 29-30. In response, Mr. Cooper and SLS each stated that it is the servicer of the loan associated with the Deed of Trust and each produced a copy of the Note. Id. ¶¶ 31-34. According to King, neither Freddie Mac, Mr. Cooper, nor SLS has the Note, and these entities have "provided conflicting and inaccurate information regarding possession of the Note." Id. ¶ 36. In addition, no entity has produced documentation showing a change of ownership of the Note from Countrywide Home Loans, Inc. Id. ¶ 37.

         The present civil action followed. King's Complaint includes five counts. Count 1, which is brought only against Mr. Cooper, alleges that it violated 12 U.S.C. § 2605(b)(1)-(2), which requires that a servicer "notify the borrower in writing of any assignment, sale, or transfer of the servicing of the loan to any other person" no less than 15 days before the date of transfer, because servicing of the loan associated with the Deed of Trust was transferred to SLS on December 18, 2017 but Mr. Cooper never notified King of this transfer. Count 1 also alleges that Mr. Cooper has "a pattern or practice of noncompliance with the requirements of this section." Compl. ¶ 46. King seeks actual damages, statutory damages, and costs and attorney's fees as remedies. Counts 2 and 3, which are brought against Freddie Mac, Mr. Cooper, and PFC, each allege breach of contract. Specifically, Count 2 alleges that the Deed of Trust requires that the lender provide King with a pre-acceleration notice that meets various requirements and that none of the defendants sent this notice before foreclosing on the property. Count 3 alleges that the Deed of Trust requires that the lender or trustee provide King, "and all other persons, notice of sale as required by Applicable Law"; that Virginia law requires that written notice be provided to the property owner before any foreclosure sale; and that none of the defendants provided such notice to King. For each of Counts 2 and 3, King seeks $50, 000 in damages and costs and attorney's fees. Count 4, which is brought only against PFC, alleges a breach of fiduciary duty and specifically that PFC took various actions to facilitate and complete the foreclosure sale without performing reasonable due diligence to ensure that the party requesting the foreclosure sale was authorized to make such a request and that the requirements set out in the Deed of Trust were followed. For Count 4, King requests $25, 000 in damages. In Count 5, which is brought against all defendants, plaintiff claims that the assignment of the Deed of Trust to Mr. Cooper and the appointment of the Substitute Trustee, as well as the subsequently issued Trustee's Deed, were invalid and have created a cloud on plaintiffs title. Accordingly, plaintiff seeks injunctive relief directing state officials to remove the assignment of the Deed of Trust, the appointment of the Substitute Trustee, and the Trustee's Deed from the land records.

         II. DISCUSSION

         A. Standard of Review

         To survive a motion to dismiss under Fed.R.Civ.P. 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face."' Ashcroft v. Iabal. 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombl v. 550 U.S. 544, 570 (2007)). Plausibility requires "more than a sheer possibility that a defendant has acted unlawfully"; instead, the plaintiff must plead "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id.

         B. Analysis

         1. Count 1

         In Count 1, King alleges that Mr. Cooper violated 12 U.S.C. § 2605 by not providing her with timely notification of the transfer to SLS of the servicing of the loan associated with the Deed of Trust before such transfer occurred on December 18, 2017. Section 2605(b) imposes an obligation on "[e]ach servicer of any federally related mortgage loan" to "notify the borrower in writing of any assignment, sale, or transfer of the servicing of the loan to any other person." Even assuming for the sake of argument that this obligation continued to apply to Mr. Cooper after the foreclosure sale occurred in November 2017, [4] Count 1 will be dismissed because King has not alleged any facts that give rise to a plausible claim of damages caused by Mr. Cooper's failure to provide the requested notice. Although King has conclusorily alleged that she "has suffered damages as a result of Mr. Cooper's aforementioned violations, including attorney's fees incurred," Compl. ¶ 45, she has not explained in any concrete way how she was injured by Mr. Cooper's actions.[5] For example, she has not alleged that she tried to send payments on the loan to Mr. Cooper and that those payments were not credited to her account because the servicing of the loan had been transferred. Moreover, because the transfer of the servicing obligations occurred after the foreclosure sale, King is unable to trace any harm related to the foreclosure on the Property to Mr. Cooper's failure to provide this notice. ...


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