HENOK v. CHASE HOME FINANCE, LLC et al
MEMORANDUM OPINION AND ORDER denying plaintiff's motion 35 for partial summary judgment and granting Chase's cross-motion 37 for partial summary judgment. Signed by Judge Richard W. Roberts on 5/30/13. (lcrwr1)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
Civil Action No. 12-336 (RWR)
CHASE HOME FINANCE, LLC,
MEMORANDUM OPINION AND ORDER
Pro se plaintiff Araya Henok brings this action against
Chase Home Finance, LLC (“Chase”) and Fannie Mae,1 challenging
the legality of the foreclosure on a property he owned on 16th
Street N.E. in Washington, D.C. (“the property”).
for partial summary judgment against Chase on his claim under the
Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2601
et seq., arguing that Chase failed to respond to Henok’s requests
for the amount to cure his default.
Chase cross-moves for
summary judgment arguing that RESPA does not apply to Henok’s
Because the undisputed facts show that Chase is entitled
to judgment as a matter of law, Henok’s motion for partial
summary judgment will be denied, Chase’s cross-motion for partial
Marco Acevedo has also been listed as a defendant in this
case, but Henok does not seek judgment against Marco Acevedo.
See Am. Compl. at 19. In addition, Shapiro and Burson, LLP was
terminated as a defendant by order dated April 17, 2013.
-2summary judgment will be granted, and judgment on the RESPA claim
will be entered for Chase.
Henok purchased the property in 2006 with financing from JP
Morgan Chase Bank.
Am. Compl. ¶ 6; Def. Chase Mem. of Law in
Opp’n to Pl.’s Second Mot. for Partial Summ. J. and in Supp. of
Cross Mot. for Summ. J. (“Chase’s Mem.”) ¶ 1.
In August 2009,
Chase returned Henok’s monthly payment and “stated that [his]
property [was] going into foreclosure.”
Am. Compl. ¶ 8.
Mae bought the property in a foreclosure sale on November 18,
Id. ¶ 15, Exs. 5-6; Pl.’s Mot. for Partial Summ. J.
Against Chase (“Pl.’s Summ. J. Mot.”) ¶ 7; Chase’s Mem. ¶ 19.
Henok filed a complaint in February 2012 in D.C. Superior
Court challenging the foreclosure.
He alleged, in part, that
Chase violated RESPA by failing to respond to his written
requests for cure figures.
The defendants removed the case to
federal court and answered the complaint.
Henok moves for
partial summary judgment on his RESPA claim.
Chase opposes and
cross-moves for summary judgment arguing that since RESPA does
not govern loans on property used for business purposes and Henok
uses the property for rental income, RESPA does not apply to
Summary judgment is warranted on an individual claim or part
of a claim if “there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a).
RESPA provides that if the loan servicer
receives a “qualified written request” from the borrower for
information about his loan, the servicer is required to provide
“a written response acknowledging receipt of the
12 U.S.C. § 2605(e)(1)(A).
“does not apply to credit transactions involving extensions of
credit . . . primarily for business, commercial, or agricultural
12 U.S.C. § 2606(a).
In interpreting this
provision, courts have found that RESPA does not apply to loans
for non-owner occupied rental properties.
See, e.g., Johnson v.
Wells Fargo Home Mortg., Inc., 635 F.3d 401, 417 (9th Cir. 2011);
Ford v. Central Loan Admin., No. 11–0017–WS–C, 2011 WL 4702912,
at *4 & n.8 (S.D. Ala. Oct. 5, 2011).2
Johnson reasoned that RESPA’s implementing regulation,
Regulation X, 24 C.F.R. § 3500.5, refers to Regulation Z, 12
C.F.R. 226.3(a)(1), the implementing regulation for the Truth in
Lending Act, to define business purpose loans. See 24 C.F.R.
§ 3500.5(b)(2) (“Business purpose loans. An extension of credit
primarily for a business, commercial, or agricultural purpose, as
defined by Regulation Z, 12 CFR § 226.3(a)(1). Persons may rely
on Regulation Z in determining whether the exemption applies.”).
Although Regulation Z does not explicitly define business purpose
loans, the Official Staff Commentary for that regulation provides
Non-owner-occupied rental property. Credit extended to
acquire, improve, or maintain rental property
-4Here, Chase argues that RESPA does not apply because the
property is a non-owner occupied rental property.
Henok does not dispute that the property is a non-owner
occupied rental property.
Indeed, Henok’s amended complaint and
partial summary judgment motion seek damages based on rental
revenue from the property.
Am. Compl. at 20; Pl.’s Summ. J. Mot.
Henok attaches a purported “rental history” of the
property to support his damages claim.
Pl.’s Summ. J. Mot.,
Henok argues, though, that RESPA still applies to his loan
because the deed of trust makes RESPA applicable to his loan.
Pl.’s Reply to Def.’s Opp’n to Pl.’s Mot. for Summ. J. and Pl.’s
Opp’n to Def.’s Mot. for Summ. J. at 1-2 (citing Chase’s Mem.,
Ex. 2, Deed of Trust at 2-3, 5).
Henok cites the definition
section in the deed of trust which provides that:
As used in this Security Instrument, “RESPA” refers to
all requirements and restrictions that are imposed in
regard to a “federally related mortgage loan” even if
the Loan does not qualify as a “federally related
mortgage loan” under RESPA.
Chase’s Mem., Ex. 2, Deed of Trust at 2-3.
He also cites the
“Funds for Escrow Items” covenant of the deed of trust which
(regardless of the number of housing units) that is not
owner-occupied is deemed to be for business purposes.
12 C.F.R. Pt. 226, Supp. I, Cmt. 3(a)(4) (West 2011). Thus, “a
loan to acquire, improve, or maintain non-owner occupied rental
property” is excluded under 12 U.S.C. § 2606(a) because it is a
loan for a business purpose. Johnson, 635 F.3d at 417.
-5incorporates some of RESPA’s requirements when the borrower and
lender use an escrow account.
Id., Ex. 2, Deed of Trust ¶ 3.
D.C. courts interpret deeds under the “‘objective law of
Joyner v. Estate of Johnson, 36 A.3d 851, 855 (D.C.
2012) (quoting Dyer v. Bilaal, 983 A.2d 349, 354 (D.C. 2009)).
Under this principle, the written language in the agreement
governs unless the language is unclear or there is fraud, duress
or mutual mistake.
“‘If a deed is unambiguous, the court’s role
is limited to applying the meaning of the words[.]’”
(quoting Found. for the Pres. of Historic Georgetown v. Arnold,
651 A.2d 794, 796 (D.C. 1994)).
The plain language of the definition section does not
reflect that RESPA applies to Henok’s loan.
The deed’s RESPA
definition does not say that all of RESPA’s requirements and
restrictions apply even if the loan is a non-covered business
purpose loan for non-owner occupied rental property.
the fifteen-page deed say so in the single-spaced text of any of
its twenty-four covenants.
Other than one mention of RESPA in
covenant 20 requiring notice to the borrower of any change in
loan servicer, Chase’s Mem., Ex. 2, Deed of Trust ¶ 20, RESPA is
mentioned only in covenant 3 governing funds collected for escrow
items, id., Ex. 2, Deed of Trust ¶ 3.
Neither that covenant nor
any other provision in the deed adopts RESPA’s provisions under
12 U.S.C. § 2605(e)(1)(A) for responding to a borrower’s requests
for amounts to cure a default.
Therefore, RESPA’s requirements
-6were not triggered by Henok’s requests for cure figures, and
Chase, rather than Henok, is entitled to summary judgment on
Henok’s RESPA claim.
CONCLUSION AND ORDER
Business purpose loans are exempted from RESPA’s coverage
and loans involving non-owner occupied rental properties are
business purpose loans under RESPA’s implementing regulations.
It is undisputed that Henok’s loan involved a non-owner occupied
RESPA, then, does not apply to Henok’s loan,
and the deed of trust does not otherwise incorporate RESPA’s
Thus, Chase is entitled to judgment
as a matter of law on Henok’s RESPA claim.
Accordingly, it is
ORDERED that plaintiff’s motion  for partial summary
judgment be, and hereby is, DENIED.
It is further
ORDERED that Chase’s cross-motion  for partial summary
judgment be, and hereby is GRANTED.
Judgment is ENTERED for
Chase concerning the RESPA claim.
SIGNED this 30th day of May, 2013.
RICHARD W. ROBERTS
United States District Judge
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