Yeh Ho v. Wells Fargo Bank, N.A.
Filing
85
OPINION AND ORDER granting in part and denying in part 71 Motion for Summary Judgment. Signed by Judge Kenneth A. Marra on 2/19/2020. See attached document for full details. (ir)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 15-81522-CIV-MARRA
KAREN C. YEH HO,
Plaintiff,
v.
WELLS FARGO BANK, N.A.,
Defendant.
_______________________/
OPINION AND ORDER ON MOTION FOR SUMMARY JUDGMENT
THIS CAUSE is before the Court upon Defendant Wells Fargo Bank, N.A.’s
Motion for Summary Final Judgment [DE 71]. The Court has carefully considered the
motion, response, reply, the entire Court file, and is otherwise fully advised in the
premises.
Background
Following this Court’s dismissal of Plaintiff’s Complaint in its entirety, the
Court of Appeal for the Eleventh Circuit reversed the dismissal of Plaintiff’s Real
Estate Settlement Practices Act (“RESPA”) claim and remanded to this Court.
Defendant filed an Answer and Affirmative Defenses to the Complaint. Thereafter,
Plaintiff was granted leave to file an Amended Complaint. Defendant filed a Motion
to Dismiss the Amended Complaint, and this Court entered an Order granting
Defendant’s Motion to Dismiss as to Plaintiff’s Fair Housing Act claim (Count II), and
denied the Motion to Dismiss as to Plaintiff’s Equal Credit Opportunity Act claim
(Count I) and her RESPA violation claim (Count III). Plaintiff did not file a Second
Amended Complaint, therefore, the remaining claims before the Court are Count I
alleging a violation of Equal Credit Opportunity Act, and Count III alleging a violation
of RESPA. Defendant moves for summary judgment as to both claims.
Undisputed Material Facts1
1. On November 30, 2007, Plaintiff executed a promissory note (“Note”)2 secured
by a mortgage (“Mortgage”)3 executed by Plaintiff and her husband, Wing Kei
Ho (collectively, “Borrowers”) on the subject Property. The loan was
subsequently transferred to Defendant, who filed a foreclosure complaint on
February 16, 2012 against the Borrowers alleging payment defaults since August
1, 2011. DE 41 at 83-91. The loan related to the servicing of a residential
mortgage. DE 41 at 1, ¶ 1.
2. Based on a review of their records, Defendant offered Plaintiff a streamlined
modification trial period plan in July 2013 (“Offer Letter”). DE 72-1, see also
DE 41 at 241-248. The Offer Letter informed her that she was eligible for a
loan modification as an option to stay in her home and, if she wanted to pursue
this option, the offer required her to make timely payments on her Mortgage
under a Streamlined Modification Trial Period Plan (“Trial Period Plan” or
“TPP”). Id.
3. The TPP required three payments in the amount of $2,495 due on September 1,
2013, October 1, 2013, and November 1, 2013. Plaintiff made three timely TPP
payments. DE 78, ¶ 13.
1
“All material facts set forth in the movant’s statement filed and supported as required by [Local Rule
56.1(a)] will be deemed admitted unless controverted by the opposing party’s statement, provided that
the Court finds that the movant’s statement is supported by evidence in the record.” S.D. Fla. L.R.
56.1(b).
2
DE 41 at 89-91 shows portions of the Note, which was executed solely by Plaintiff.
3
DE 82-1 shows the Mortgage, signed and initialed by both Plaintiff and her husband, Wing Kei Ho.
Page 2 of 23
4. In November 2013, Plaintiff was approved for a loan modification and
Defendant generated a Loan Modification Agreement (“Modification
Agreement” or “Agreement”). DE 41 at 142-156; DE 72, Ex. B. The
Modification Agreement required the signatures of Plaintiff and Wing Kei Ho –
Plaintiff’s husband and co-signor on the Mortgage. Id.
5. Defendant received back the Modification Agreement on December 6, 2013
with only Plaintiff’s signature. Wing Kei Ho had not signed the Modification
Agreement although his signature was expressly required by the terms of the
Modification Agreement. DE 41 at 142-156.
6. Plaintiff states she sent back the copy of the loan modification she received
with her signature notarized by “a Florida Notary that can be found when you
do a Notary search.” DE 78, ¶ 16. Plaintiff states that she thought if she
“wait[ed] for [Defendant’s] notary any longer,” the delay would result in her
“sending in payment and package late which [Defendant] can use as rejection.”
Id., ¶ 15.
7. Plaintiff alleges that after Defendant’s receipt of the Agreement on December
6, 2013, it accepted two more payments under the TPP in December 2013 and
January 2014, but rejected payments made thereafter. DE 41 at 10, ¶¶ 16, 1920.
8. Plaintiff “never got a written confirmation of [Defendant]’s receipt of the
agreement or any indication of whether the agreement was complete or other
loan modification options were available.” Yeh Ho v. Wells Fargo Bank, N.A.,
739 F.App’x 525, 527 (11th Cir. 2018).
Page 3 of 23
9. Plaintiff avers that on December 6, 2013, Defendant told her “that they
received the permanent streamline loan modification package and the
December 2013 check. I asked if there is any problem. The representative
state no problem.” Plaintiff Affidavit (“Aff.”), DE 78, ¶ 23.
10. “On December 17, 2014, [Plaintiff] received the first written response from
[Defendant] about her loan modification agreement. This was over a year after
she’d sent the agreement to [Defendant] and after her home was sold. In the
letter, [Defendant] explained it rejected [Plaintiff’s] loan modification
agreement as incomplete because it was unsigned by her husband.” Yeh Ho v.
Wells Fargo Bank, N.A., 739 F.App’x 525, 527 (11th Cir. 2018).
11. Specifically, the December 17, 2014 letter (“Denial Letter”) stated
Upon successful completion of the trial payment plan, a modification
agreement was approved. On November 26, 2013, we sent the original packet
with the terms of the modification to First American Notary and a copy of the
modification packet to you.
The original modification packet was sent to the notary who was to contact you
to set up a time to sign the modification documents. The loan modification
copy sent to your attention included instructions that a notary would be in
contact with you to sign the original modification documents.
From November 27, 2013, through December 06, 2013, we attempted to
contact you via telephone to see if you had been contacted by First American
Notary service to establish a time to sign the modification documents.
On December 06, 2013, we received the signed agreement from you. However,
upon review of the signed agreement, we found that Wing Kei Ho did not sign
and the agreement was stamped “copy”. As a result, the signed agreement
was not accepted.
From December 09, 2013, through December 31, 2013, we attempted multiple
times to contact you via telephone to inform you that the following items were
needed to complete the loan modification:
•
We received a Quit Claim Deed but also needed a divorce decree
Page 4 of 23
•
•
Signed redrafted modification documents or original modification
documents signed by both you and Wing Kei Ho
Your marital status
We’re unable to complete a modification for your account as you did not return
the original signed modification documents. As a result, your account was
removed from this review on January 13, 2014.
DE 72 at 33-34, Ex. E.
12. On May 27, 2014, the foreclosure case was set for a non-jury trial on July 17,
2014. DE 10, Ex. A, Doc. 85. Just two days before trial, Plaintiff, through
counsel, filed a motion for continuance, which was denied at a hearing the
morning of trial. DE 41 at 138-140, 157-158.
13. On the day of trial, counsel for Defendant and the Borrowers’ attorney
(apparently without Plaintiff’s knowledge or consent) executed a stipulation to
the entry of judgment in favor of Defendant (“Stipulation to Judgment”)
whereby Defendant agreed to request a sale date no less than one-hundred
twenty days from the date of the judgment and the Borrowers (i)
acknowledged Defendant’s standing; (ii) admitted their default; (iii) admitted
Defendant fulfilled all conditions precedent; (iv) admitted their interest in the
subject property was inferior; (v) withdrew all affirmative defenses or
counterclaims regarding fulfillment of conditions precedent; (vi) acknowledged
the validity of the debt; (vii) consented to entry of judgment; and (viii) waived
all rights or defenses to object or otherwise impede or delay the foreclosure
sale and issuance of the certificate of title. DE 41 at 159-162. Accordingly, a
final judgment was entered (“Final Judgment”), setting a foreclosure sale date
of November 14, 2014. DE 41 at 163-169.
Page 5 of 23
14. On October 14, 2014, an order was entered permitting counsel to withdraw
from the foreclosure action. DE 41 at 183. On that same day, Plaintiff appears
to have filed a motion to vacate the sale and set a trial date. DE 41 at 181.
Similarly, on November 10, 2014, Plaintiff filed yet another motion to cancel
the sale. DE 41 at 184. On November 12, 2014, the foreclosure court denied
Plaintiff’s requests to cancel the sale. DE 41 at 185.
15. On November 14, 2014, pursuant to the Final Judgment, the Property was sold
at a foreclosure sale (“Foreclosure Sale”) to Federal National Mortgage
Association (“FNMA”) for a credit-bid of $250,100. DE 10, Ex. A, Doc 126.
16. On January 16, 2015, the foreclosure court denied Plaintiff’s request to vacate
Final Judgment or rescind the Foreclosure Sale. DE 41 at 226.
17. On January 23, 2015 the Borrowers filed a Notice of Appeal with the Fourth
District Court of Appeal. DE 10, Ex. B. On February 13, 2015, Plaintiff filed
her brief. Id. Following the briefing, on October 1, 2015 the Appellate Court
entered its decision affirming the foreclosure on the Property. Id.
18. On November 4, 2015, Plaintiff filed her Complaint against Defendant in this
Court. DE 1. On August 29, 2016, this Court entered an Order granting
Defendant’s Motion to Dismiss and dismissed Plaintiff’s Complaint in its
entirety. DE 15. Plaintiff appealed the Order of Dismissal to the Eleventh
Circuit Court of Appeal. DE 21.
19. On appeal, the Eleventh Circuit affirmed the dismissal of all causes of action
except for the RESPA claim. DE 25. In sum, the appellate Court held that the
claim was not barred by Florida’s litigation privilege and that Plaintiff had
Page 6 of 23
alleged facts sufficient to state a claim under RESPA. Id. Accordingly, the
Eleventh Circuit remanded the action as to the RESPA claim to this Court for
further proceedings. Id. This Court filed an Order reopening the case on July
25, 2018. DE 26.
Standard of Review
A court must grant summary judgment when, viewing the evidence and factual
inferences in the light most favorable to the nonmoving party, the court finds that
there is no genuine issue as to any material fact and that the movant is entitled to
judgment as a matter of law. Lofton v. Sec’y of Dept. of Children & Family Servs.,
358 F.3d 804, 809 (11th Cir. 2004) (citing Fed. R. Civ. P. 56(c)). Importantly, in
evaluating a motion for summary judgment, a court must disregard factual disputes
that are immaterial under the governing substantive law. Id. (“Only factual disputes
that are material under the substantive law governing the case will preclude entry of
summary judgment.”); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986) (“Only disputes over facts that might affect the outcome of the suit under the
governing law will properly preclude the entry of summary judgment. Factual disputes
that are irrelevant or unnecessary will not be counted.”).
Once the moving party has met its burden, Rule 56(e) requires the nonmoving
party to go beyond the pleadings and by its own affidavits, or by the depositions,
answers to interrogatories, and admissions on file, designate specific facts showing
that there is a genuine issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324
(1986). For an Equal Credit Opportunity Act claim of discrimination based on sex or
Page 7 of 23
marital status, the ultimate burden of persuasion remains with the claimant. Equal
Credit Opportunity Act, § 701(a)(1), 15 U.S.C.A. § 1691(a)(1); 12 C.F.R. § 202.1.
“A document filed pro se is “to be liberally construed,” and “a pro se
complaint, however inartfully pleaded, must be held to less stringent standards than
formal pleadings drafted by lawyers.” Erickson v. Pardus, 551 U.S. 89, 94 (2007)
citing Estelle v. Gamble, 429 U.S. 97, 106 (1976). “A careful and meticulous analysis
first by the parties, but ultimately by the district court will aid significantly in
preventing the waste of private and judicial resources and time.” Barker v. Norman,
651 F.2d 1107, 1123 (5th Cir 1981); Gordon v. Watson, 622 F.2d 120, 123 (5th Cir.
1980).
Equal Credit Opportunity Act4
The Equal Credit Opportunity Act (“ECOA”) is an anti-discrimination statute
which creates a private right of action against a creditor who “discriminate[s] against
any applicant, with respect to any aspect of a credit transaction ... on the basis of
race, color, religion, national origin, sex or marital status, or age.” 15 U.S.C. §
1691(a)(1). The ECOA is a remedial statute that must be construed “broadly to
effectuate its remedial goals.” Regions Bank v. Legal Outsource PA, 936 F.3d 1184,
1208 (11th Cir. 2019) citing Barney v. Holzer Clinic, Ltd., 110 F.3d 1207, 1211 n.6 (6th
Cir. 1997); Securities and Exchange Commission v. Levin, 849 F.3d 995, 1001 (11th Cir.
4
Plaintiff’s original Complaint did not include an ECOA claim, so when Plaintiff raised it before the
Eleventh Circuit on appeal, the appellate court determined that it was “not properly before [it] on
appeal.” The Eleventh Circuit advised Plaintiff “[t]he proper way to raise a new claim is to amend the
complaint through the procedures in Federal Rule of Civil Procedure 15.” Yeh Ho v. Wells Fargo Bank,
N.A., 739 F.App’x 525, 531 (11th Cir. 2018). This she did, and now this ECOA claim is properly before
the Court.
Page 8 of 23
2017) (observing that remedial legislation “is entitled to a broad construction”); and
Morante-Navarro v. T&Y Pine Straw, Inc., 350 F.3d 1163, 1166 (11th Cir. 2003).
It “was enacted, in part, to address discrimination against married women in
obtaining credit.” Richardson v. Everbank, 152 So.3d 1282, 1285 (Fla. Dist. Ct. App.
2015). “Regulation B,5 which was promulgated to implement the prohibition, 12
C.F.R. § 202.1 (2012), specifically bans a lender from requiring an applicant's spouse
to guarantee a loan if the applicant otherwise qualifies for the loan.” Id.
“However, the signature of a spouse or other party may properly be required in
a number of circumstances, including to make the property relied upon for credit
accessible to the creditor in the event of default or where the liability of an
additional party is necessary to support the credit requested. 12 C.F.R. § 202.7(d).”
Id.; see also Gonzalez v. NAFH Nat'l Bank, 93 So.3d 1054, 1057–58 (Fla. Dist. Ct. App.
2012) (finding no violation of ECOA and explaining that it was “not just reasonable but
prudent for the creditor bank to have [wife] execute the mortgage” where real
property securing loan was jointly owned by husband and wife).
It appears that pro se Plaintiff is asserting a number of ECOA violations,
including that Defendant violated the ECOA when, in its Denial Letter, it inquired
about her marital status, when it requested a divorce decree (in response to receiving
a quit claim deed), and when it required her husband’s signature on the Modification
Agreement. Complaint (“Compl.”), DE 41, ¶¶ 124, 127-129, UMF, ¶ 7. It also appears
5
“Congress mandated that the agency charged with overseeing ECOA - first the Federal Reserve, now
the Consumer Financial Protection Bureau - promulgate regulations ‘to carry out the [statute's]
purposes.’” RL BB Acquisition, LLC v. Bridgemill Commons Dev'pt Grp., LLC, 754 F.3d 380, 383 (6th Cir.
2014) (quoting 15 U.S.C. § 1691b(a)). “Regulation B is the result of Congress's directive.” Id.
Page 9 of 23
Plaintiff is complaining that the original lender violated the ECOA when it required
her husband to co-sign the Mortgage in 2007. DE 41, ¶ 124.
As far as her claim that Defendant violated the ECOA when, in its Denial Letter,
it inquired about her marital status, and requested a divorce decree (in response to
receiving a quit claim deed), this claim also fails as a matter of law. Discrimination is
an essential element that must be established for a claimant to proceed under section
1691(a). Bowen v. First Family Fin. Servs., Inc., 233 F.3d 1331, 1336 (11th Cir. 2000);
Ballerino v. Countrywide Home Loans, Inc., No. 09-20239, 2009 WL 2460739, at *2
(S.D. Fla. July 15, 2009). The ECOA specifically spells out that “activities not
constituting discrimination” include a creditor’s “inquiry of marital status if such
inquiry is for the purpose of ascertaining the creditor’s rights and remedies applicable
to the particular extension of credit and not to discriminate in a determination of
credit-worthiness.” 15 U.S.C. § 1691(b)(1) (emphasis supplied).
In addition, there is an express exception for requiring a spouse’s signature in
section 1691d of the ECOA, which states that requests for a spouse's signature “for
the purpose of creating a valid lien, passing clear title, waiving inchoate rights to
property, or assigning earnings, shall not constitute discrimination” under the Act. 15
U.S.C. § 1691d(a); see also 12 C.F.R. § 202.7(d)(1) (stating “[e]xcept as provided in
this paragraph, a creditor shall not require the signature of an applicant's spouse or
other person, other than a joint applicant, on any credit instrument if the applicant”
is creditworthy for the amount and terms requested) (emphasis supplied); 12 C.F.R. §
202.7(d)(4) (confirming that with regard to “secured credit, a creditor may require
the signature of the applicant's spouse ... on any instrument necessary, or reasonably
Page 10 of 23
believed by the creditor to be necessary ... to make the property being offered as
security available to satisfy the debt in the event of a default, for example, an
instrument to create a valid lien, pass clear title, waive inchoate rights, or assign
earnings”).
Cases in both Florida and across the country have applied this exception. See,
e.g., Gonzalez v. NAFH Nat. Bank, 93 So. 3d 1054, 1057–58 (Fla. Dist. Ct. App. 2012)
(holding that requiring signature of both spouses of jointly owned property “not just
reasonable but prudent for the creditor bank to have [wife] execute the mortgage so
as to create a valid lien against this property to assure payment in the event of a
default.”); In re Woodford, 600 B.R. 520, 524 (Bankr. W.D. Va. 2019) (rejecting ECOA
claim by debtor-wife that requiring husband to execute deed of trust as collateral for
wife’s loan was discriminatory); Ballard v. Bank of Am., N.A., 734 F.3d 308, 311 (4th
Cir. 2013) (“ECOA regulations clarify that, in an application for secured credit, ‘a
creditor may require the signature of the applicant's spouse ... on any instrument
necessary, or reasonably believed by the creditor to be necessary, under applicable
state law to make the property being offered as security available to satisfy the debt
in the event of default.’”) (quoting 12 C.F.R. § 202.7(d)(4)); United States v. Joseph
Hirsch Sportswear, Co., No. 85–CV–1546, 1989 WL 20604, at *2 (E.D.N.Y. Feb. 28,
1989) (holding that execution of mortgages by spouses to establish valid liens is a
“practice that does not violate the ECOA”) (citing 15 U.S.C. § 1691d(a)).
Therefore, Plaintiff’s argument that Defendant violated ECOA when it required
her husband execute the Modification Agreement is directly contradicted by the plain
language of the statute. As indicated in the letter dated November 25, 2013,
Page 11 of 23
Defendant explicitly noted “[a]ll mortgagors needed to sign their name as it is printed
on the documents in blue or black ink.” DE 72, Ex. B. This same letter further
explained upon provision of additional documents showing a mortgagor would no
longer be included, Defendant could remove them, such as a divorce decree. Id.
It is undisputed that Plaintiff’s husband is a co-owner on the deed6 and is a
signatory to the Mortgage. Even if Plaintiff’s husband conveyed his interest in the
property to Plaintiff by way of a quit claim deed, if he was still married to Plaintiff
and residing at the property, he would have a homestead right to the property. Jones
v. Federal Farm Mortg. Corp., 188 So. 804, 805 (Fla. 1939) (it is settled law that the
homestead cannot be mortgaged without the joint consent of both spouses); Taylor v.
Maness, 941 So.2d 559, 563 (Fla. Dist. Ct. App. 2006) (“the owner of homestead real
estate must, if married, be joined by his or her spouse in order to alienate the
homestead”); Pitts v. Pastore, 561 So.2d 297, 300 (Fla. Dist. Ct. App. 1990) (the
Florida constitution “requires the owner's spouse to join in any alienation of
homestead property”). Thus, an inquiry about his marital status relative to Plaintiff
was reasonable, relevant, and not discriminatory. See 12 C.F.R. § 202.7(d)(4)
(confirming that with regard to “secured credit, a creditor may require the signature
of the applicant's spouse ... on any instrument necessary, or reasonably believed by
the creditor to be necessary ... to make the property being offered as security
available to satisfy the debt in the event of a default, for example, an instrument to
create a valid lien, pass clear title, waive inchoate rights, or assign earnings”). This
6
The Court takes judicial notice of the recorded deed at Book Number 22301, Page 1318 from Palm
Beach County Public Records. Fed. R. Evid. 201(b); Horne v. Potter, 392 F.App'x 800, 802 (11th Cir.
2010) (holding district court may take judicial notice of public records)
Page 12 of 23
regulation also defeats Plaintiff’s assertion that the ECOA “prohibition states that is is
(sic) illegal for creditors to insisted (sic) on Karen Yeh Ho’s husband, Wing Kei Ho
must sign the mortgage.” Compl. ¶ 124.
Adverse Action
In the end, the anti-discrimination protections of ECOA are inapplicable to
Plaintiff’s case, as Plaintiff’s loan was already in default and in active foreclosure at
the time Plaintiff attempted to apply for a loan modification. DE 41 at 83-91; McNeal
Decl. ¶ 8 (DE 72); 15 U.S.C. § 1691(d)(6); 12 C.F.R. § 202.2(c)(2)(ii). It is undisputed
that Plaintiff had already defaulted on her mortgage loan when Defendant offered her
a loan modification.7 Under the plain language of the ECOA and its regulations,
Defendant's ultimate refusal to allow Plaintiff to modify her loan, which was in
foreclosure, does not constitute an adverse action and therefore her claim for
discrimination fails as a matter of law. Molina v. Aurora Loan Services, LLC, 635
F.App’x 618, 624 (11th Cir. 2015) (“Molina”) cert. denied sub nom. Molina v. Aurora
Loan Srvcs., -- U.S. --, 136 S.Ct. 2465 (2016); see also, Stefanowicz v. SunTrust
Mortg., No. 3:16-00368, 2017 WL 1103183, at *7–8 (M.D. Pa. Jan. 9, 2017), (rejecting
a plaintiff's ECOA discrimination claim, in part because “[i]t is also clear from the
facts alleged that [plaintiff] was in default at the time of the alleged discrimination,
under which circumstances the defendants' failure to allow her to modify her loan
does not constitute a prohibited ‘adverse action’” (citations omitted)), report and
recommendation adopted, No. 3:16-CV-00368, 2017 WL 1079163 (M.D. Pa. Mar. 22,
2017); Berry v. Wells Fargo, No. 15-5269, 2015 WL 8601866, at *4 (N.D. Ill. Dec. 14,
7
UMF ¶ 1.
Page 13 of 23
2015) (rejecting a Plaintiff's ECOA discrimination claim because “the latest alleged
‘credit transaction’ that could qualify as an ‘adverse action’ under the ECOA was
[plaintiff's] November 2009 attempt to receive a loan modification. The foreclosure
proceedings and all the allegations that accompany those proceedings do not fall
within the ‘adverse action’ definition necessary to state an ECOA claim”); Mashburn
v. Wells Fargo Bank, N.A., No. C11–0179–JCC, 2011 WL 2940363, *6 (W.D. Wash.
Jul.19, 2011) (“Defendant’s denial of the loan modification does not constitute an
adverse action, because it was a refusal to extend additional credit under an existing
credit arrangement where the applicant was delinquent.”).
Notification
Finally, Plaintiff alleges an ECOA violation pursuant to 15 U.S.C. § 1691(d)(1)8
which provides that within thirty days “after receipt of a completed application for
credit, a creditor shall notify the applicant of its actions on the application.” 9 See
Regions Bank v. Legal Outsource PA, 936 F.3d 1184, 1192 (11th Cir. 2019); 12 C.F.R. §
202.9(a); Compl. ¶ 123. “At least one court has correctly observed that the case law
in the Eleventh Circuit is ‘scant’ as to the question of whether a showing of
8
A plaintiff may maintain a private right of action to recover actual damages, punitive damages, costs
and attorney fees caused by violations of ECOA notification requirements. See 15 U.S.C. § 1691e(a),
(b), (d); Stevens v. GFC Lending, LLC, 138 F.Supp.3d 1345, 1348 (N.D. Ala. 2015); Chen v. Whitney Nat.
Bank, 65 So.3d 1170, 1172–73 (Fla. Dist. Ct. App. 2011); Ford v. Citizens and Southern Nat. Bank, 700
F.Supp. 1121, 1123 (N.D. Ga. 1988); Cherry v. Amoco Oil Co., 490 F.Supp. 1026, 1029 (D.C. Ga. 1980).
9
There are two different potential ECOA violations: claims for discrimination (15 U.S.C. § 1691(a)) and
claims for inadequate notice (15 U.S.C. § 1691(d)). These are separate causes of action with their own
elements. See, e.g., Green v. Central Mortgage Co., 148 F. Supp. 3d 852, 879 (N.D. Cal. 2015)
(distinguishing between discrimination claims under § 1691(a)-(c) and violations of procedure under §
1691(d)-(e)); Davis v. U.S. Bancorp, 383 F.3d 761, 766 (8th Cir. 2004) (setting apart ECOA's procedural
requirements for extending credit and communicating with applicants from “generalized prohibition of
discrimination”); see also Vasquez v. Bank of Am., N.A., 2013 WL 6001924 at *11 (N.D. Cal. Nov. 12,
2013) (noting that courts “have explicitly recognized that the ECOA's notice requirements are distinct
from the prohibition against discrimination in lending”).
Page 14 of 23
discrimination is required to trigger the [notification] protections of section 1691(d).”
Adams v. Bank of America, N.A., 237 F. Supp. 3d 1189, 1209 (N.D. Ala. 2017) citing
Ramos v. Wells Fargo Bank, N.A., 2016 WL 233142, at *5 (S.D. Fla. Jan. 13, 2016)
(which followed the logic of Vasquez v. Bank of America, N.A., 2013 WL 6001924, at
*11 (N.D. Cal. Nov. 12, 2013) and held that a plaintiff need not plead that she was a
victim of discrimination to state a claim under the ECOA).
Courts that have addressed this issue have squarely held that plaintiffs alleging
a violation of the notice requirement of the ECOA pursuant to subsection (d) were not
required to allege discrimination or be members of a protected class. See Cannon v.
Metro Ford, Inc., 242 F. Supp. 2d 1322, 1331 (S.D. Fla. 2002) (finding “that Plaintiff
need not allege membership in a protected class to state a claim for violation of the
ECOA's written notification requirements, 15 U.S.C. § 1691(d), as implemented by 12
C.F.R. § 202.9(a)(2).”); Baez v. Potamkin Hyundai, Inc., No. 09-21910, 2010 WL
11553183, at *7 (S.D. Fla. July 3, 2010) (same); Jochum v. Pico Credit Corp., 730 F.2d
1041, 1043 n.3 (5th Cir. 1984) (finding that although the plaintiffs had not alleged
discrimination, they stated a “cognizable claim” if they could prove that the creditor
“failed to comply with the separate and independent notification requirements of §
1691(d)”); Banks v. JP Morgan Chase Bank, N.A., 2015 WL 2215220, at *5 (C.D. Cal.
May 11, 2015) (holding that the elements of an ECOA notice claim do not include
“borrower's membership in a protected class”); Sayers v. General Motors Acceptance
Corp., 522 F. Supp. 835, 840 (W.D. Mo. 1981) (“If a creditor fails to satisfy these
[notification] requirements, he is in violation of the ECOA, regardless of whether he is
engaged in any prohibited discriminatory action.”); Green v. Central Mortgage Co.,
Page 15 of 23
148 F. Supp. 3d 852, 879 (N.D. Cal. 2015) (finding that “[t]he defendants' argument
does not distinguish between violations of ECOA's discrimination provisions and
violations of ECOA's procedural requirements” and “ECOA's procedural requirements
apply regardless of whether the [discrimination elements] have been satisfied”);
Thompson v. Galles Chevrolet Co., 807 F.2d 163, 166 (10th Cir. 1986) (regardless of
whether it engaged in any prohibited discriminatory actions, a creditor violates the
ECOA if it fails to satisfy the notification requirements, even for incomplete
applications); Coulibaly v. J.P. Morgan Chase Bank, N.A., No. 10-3517, 2012 WL
3985285, at *4 (D. Md. Sept. 7, 2012) (“When a creditor fails to comply with
[Regulation B notification] requirements, it is in violation of the ECOA, regardless of
whether it engaged in any prohibited discrimination”).
Complete vs. Incomplete Application
Defendant's obligation to notify Plaintiff that her application was approved,
that a counteroffer was made, or that an adverse action was taken, pursuant to 15
U.S.C. § 1691(d)(1) and 12 C.F.R. § 202.9(a)(I), arises, however, only when an
application is complete. Wright v. Suntrust Bank, No. 04-CV-2258, 2006 WL 2714717,
at *4 (N.D. Ga. Sept. 18, 2006). An application is deemed complete once a creditor
“has received all the information that the creditor regularly obtains and considers in
evaluating applications for the amount and type of credit requested (including, but
not limited to, credit reports [and] any additional information requested from the
applicant).” 12 C.F.R. § 202.2(f).
In this case, the record fails to reflect that Plaintiff's application was complete
when received by Defendant on December 6, 2013, as Plaintiff’s husband had not
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signed it. Therefore, the Court finds that Defendant did not have any obligation to
notify Plaintiff pursuant to 15 U.S.C. § 1691(d)(1) or 12 C.F.R. § 202.9(a)(i), as
alleged.
However, the fact that the notification obligations associated with complete
applications were not triggered by receipt of Plaintiff’s incomplete Modification
Agreement on December 6, 2013 does not end the inquiry. Regulation B provides, in
pertinent part, that after receiving an application that is incomplete regarding
matters that an applicant can complete, the creditor must notify the applicant 30
days after receiving the application that the application is incomplete. See 12 C.F.R.
§ 202.9(c)(1)(ii)). 10
With respect to the notification of incompleteness, Regulation B specifies that
if additional information is needed from an applicant, the creditor must send a
written notice to the applicant specifying the information needed, designating a
reasonable period of time for the applicant to provide the information, and informing
the applicant that failure to provide the information requested will result in no
further consideration being given to the application (12 C.F.R. § 202.9(c)(2)), although
10
“(c) Incomplete applications—
(1) Notice alternatives. Within 30 days after receiving an application that is incomplete regarding
matters that an applicant can complete, the creditor shall notify the applicant either:
(i) Of action taken, in accordance with paragraph (a) of this section; or
(ii) Of the incompleteness, in accordance with paragraph (c)(2) of this section.
(2) Notice of incompleteness. If additional information is needed from an applicant, the creditor shall
send a written notice to the applicant specifying the information needed, designating a reasonable
period of time for the applicant to provide the information, and informing the applicant that failure to
provide the information requested will result in no further consideration being given to the application.
The creditor shall have no further obligation under this section if the applicant fails to respond within
the designated time period. If the applicant supplies the requested information within the designated
time period, the creditor shall take action on the application and notify the applicant in accordance
with paragraph (a) of this section.
(3) Oral request for information. At its option, a creditor may inform the applicant orally of the need
for additional information. If the application remains incomplete the creditor shall send a notice in
accordance with paragraph (c)(1) of this section.” 12 C.F.R. § 202.9(c).
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it also provides that, at its option, a creditor may inform the applicant orally 11 of the
need for additional information. But, if after orally notifying the applicant, the
application remains incomplete, the creditor must then send written notice of
incompleteness. See 12 C.F.R. § 202.9(c)(3).
Thus, the creditor has a duty to notify an applicant if the application is
incomplete. If the creditor elects to notify the applicant orally, and the application
remains incomplete, then the creditor is required to send written notice of the
incompleteness. Piotrowski v. Wells Fargo Bank, NA, No. 11–3758, 2015 WL 4602591,
at *7 (D. Md. July 29, 2015) citing Kirk v. Kelley Buick of Atlanta, Inc., 336 F. Supp.
2d 1327, 1332 (N.D. Ga. 2004). And a creditor is required to use reasonable diligence
in obtaining the information necessary to complete an applicant’s application.12
Regulation B provides that “[w]ithin 30 days after receiving an application that is
incomplete regarding matters that an applicant can complete, the creditor shall
notify the applicant either: (i)[o]f action taken ...; or (ii)[o]f the incompleteness....”
12 C.F.R. § 202.9(c)(1); Wright v. Suntrust Bank, No. 04-CV-2258, 2006 WL 2714717,
at *4 (N.D. Ga. Sept. 18, 2006).
11
Regulation 202.9(c)(3) provides that creditors can request the additional information from the
applicant orally. Defendant claims to have attempted just this: that between December 9, 2013 and
December 31, 2013, it “attempted multiple times to contact [Plaintiff] via telephone to inform” her
that certain items were needed to complete the loan modification. UMF ¶ 7. However, because the
application remained incomplete, Defendant was required to send a written notice in accordance with
paragraph (c)(1). Regulation 202.9(c)(1) required Defendant either to notify Plaintiff of the action
taken in accordance with 202.9(a) or provide a written notice of incompleteness in accordance with
paragraph 202.9(c)(2).
12
An Official Staff Interpretation of Regulation B states that although, with respect to what is a
completed application, a creditor has the latitude to establish its own information requirements, the
creditor nevertheless must act with reasonable diligence to collect information needed to complete
the application, so that, for example, the creditor should request information from third parties, such
as a credit report, promptly after receiving the application, and if additional information is needed
from the applicant, such as an address or a telephone number to verify employment, the creditor
should contact the applicant promptly. 12 C.F.R. Pt. 202, Supp. I § 202.2, ¶ 2(f)(6).
Page 18 of 23
Plaintiff states in her Concise Statement of Material Facts that on “December
6, 2013, Wells Fargo Bank, N.A. told me that they received the permanent streamline
loan modification package and the December 2013 check. I asked if there is any
problem. The representative state no problem.” DE 80 ¶ 3. A reasonable trier of
fact could conclude that Plaintiff believed that her Modification Agreement had been
accepted because Defendant accepted the new mortgage payment on January 2,
2014. DE 80 ¶ 4. It was only in February 2014 that Defendant first refused Plaintiff’s
payment. DE 80 ¶¶ 15-16.
Since Defendant presents no evidence of having given Plaintiff any written
notice (until one year later, after her home was foreclosed), the Court finds that a
genuine issue of material fact exists regarding whether Defendant violated Regulation
B by failing to notify Plaintiff that it would not extend credit based on her incomplete
application or that her application was incomplete. Yeh Ho v. Wells Fargo Bank,
N.A., 739 F.App’x 525, 527 (11th Cir. 2018); Kirk v. Kelley Buick of Atlanta, Inc., 336
F. Supp. 2d 1327, 1332 (N.D. Ga. 2004).
Real Estate Settlement Practices Act Claim
Plaintiff also alleges Defendant violated RESPA and its implementing
regulations, known as Regulation X. See 12 U.S.C. § 2605(f); 12 C.F.R. §1024.41(a).
DE 41 at 157-174. Specifically, Plaintiff contends that Defendant: (1) violated 12
C.F.R. § 1024.41(b) by not providing her with a written confirmation on the
completeness of her “loan modification package” within five business days after
receipt; (2) violated 12 C.F.R. § 1024.41(c) by not providing her a written response
“on acceptance or other modification options” within 30 days of receipt of the “loan
Page 19 of 23
modification package”; (3) violated 12 C.F.R. § 1024.41(c) by not providing Plaintiff
with written notification of its evaluation of the “loss mitigation documents”; and (4)
violated 12 C.F.R. § 1024.41(g) by proceeding with the foreclosure action on or about
December 6, 2013, while her “permanent streamline loan modification [was] in
place.” DE 41 at 36-38, ¶¶ 159-174.
Under RESPA, a consumer protection statute that regulates the real
estate settlement process, the Consumer Financial Protection Bureau (“CFPB”)
is tasked with prescribing rules and regulations. See 12 U.S.C.S § 2617(a).
RESPA’s Regulation X, became effective January 10, 2014. See Mortgage
Servicing Rules Under the Real Estate Settlement Procedures Act (Regulation
X), 78 Fed. Reg. 10696–01, 10696 (Feb. 14, 2013). This regulation places
certain obligations on mortgage servicers when a borrower submits a loss
mitigation application and lays out distinct procedures and rules for submitting
such applications regarding measures for assessing completeness, timelines and
evaluation protocols. See generally 12 C.F.R. § 1024.41.
Clark v. HSBC Bank USA, National Association, 664 F. App’x 810, 811–12 (11th Cir.
2016) (“Clark”). Among a servicer’s duties under Regulation X — relevant to the
violations alleged in this action — are duties to: (1) evaluate a borrower’s loss
mitigation application for completeness, (2) timely notify the borrower of missing
documents and information, and (3) refrain from obtaining a foreclosure judgment or
order of sale if a borrower submits a complete loss mitigation package after the
servicer has initiated foreclosure proceedings. Id. at 812 (citing 12 C.F.R. §
1024.41(b), (c), (g)).
In her Amended Complaint, Plaintiff asserts that Defendant violated all three
of the aforementioned provisions. DE 41 at 33-38. However, Plaintiff’s loan
modification agreement was received by Defendant on December 6, 2013,13 before
13
Plaintiff concedes in her Opposition memorandum that Defendant “received her signed agreement
on December 6, 2013.” DE 79 at 3.
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the effective date of Regulation X on January 10, 2014, relieving Defendant from any
obligation to comply with Regulation X. DE 41 at 35, ¶ 142; McNeal Decl. ¶ 19.
When a borrower submits an application for a loan modification to the loan
servicer prior to the effective date of Regulation X, the borrower is precluded from
sustaining a claim against the servicer under Regulation X. See Lage v. Ocwen Loan
Servicing LLC, 145 F. Supp. 3d 1172, 1184 (S.D. Fla. 2015) (“Lage”) (concluding that
borrower could not sustain a claim as a matter of law against loan servicer for a
violation of Regulation X where borrower’s loan modification application was
submitted prior to the January 10, 2014 effective date of Regulation X);14 Clark, 664
F.App’x at 813 (same); Miller v. Bank of New York Mellon, 228 F. Supp. 3d 1287, 1291
(M.D. Fla. 2017) (same).
In Lage, for example, the Court considered Ocwen’s motion for summary
judgment and recognized the obligations imposed upon servicers by Regulation X, but
concluded that “in order for a borrower to avail himself or herself of Regulation X’s
protections, the borrower’s application must be received by the servicer after the
Effective Date [of Regulation X].” Id. at 1184 (emphasis added). Regulation X
became effective on January 10, 2014.15 Id. at 1186 (“By imposing an effective date
of January 10, 2014, the CFPB intended to institute a clear starting point with respect
to when a servicer’s obligations under Regulation X would be triggered.”).
14
Lage was affirmed by the 11th Circuit, but the Court more narrowly held that because the
application was not filed within the timeframe provided by 12 C.F.R. §1024.41(c), the protections of
that provision were not triggered. See Lage v. Ocwen Loan Servicing LLC, 839 F.3d 1003, 1011 (11th
Cir. 2016).
15
Plaintiff acknowledges the January 10, 2014 effective date of Regulation X in her Amended
Complaint. See DE 41 at 4.
Page 21 of 23
Therefore, even if a loss mitigation application is submitted before the
effective date of Regulation X and becomes complete or “facially complete”
sometime after the effective date, the servicer’s obligations under 12 C.F.R. §
1024.41 do not apply. See id. at 1186 (“[T]he submission of the application on or
after January 10, 2014 is a prerequisite to obtaining these protections set forth in 12
C.F.R. § 1024.41.” (emphasis in original)). Thus, in Lage, where the borrower’s
application for a loan modification was received two days prior to the effective date
of Regulation X, the servicer had no obligation to abide by Regulation X. See id. at
1188 (“Because Ocwen was under no obligation to review Plaintiffs’ application at the
point of its original submission under Regulation X, it had no continuing obligation to
determine whether the application had achieved completeness. Thus, there was no
requirement that Ocwen review the application within the 30-day period provided by
12 C.F.R. § 1024.41(c), and Ocwen was free to proceed with the foreclosure sale
without fear of violating 12 C.F.R. § 1024.41(g).”). Consequently, the borrower’s
claim against the servicer for violations of 12 C.F.R. § 1024.41 failed as a matter of
law. See id.
The same conclusion is required here. Defendant sent, and Plaintiff received,
an offer for the TPP from Defendant in July 2013. DE 41 at 8, 241-248; McNeal Decl.
¶ 12, Ex. A. Defendant sent, and Plaintiff received, the Modification Agreement in
November 2013. DE 41 at 9-10; McNeal Decl. ¶ 16, Ex. B. Plaintiff signed the
Modification Agreement on December 4, 2013, and returned it to Defendant with only
her signature. Defendant received it on December 6, 2013. DE 41 at 10, 142-156,
McNeal Decl. ¶ 10. Plaintiff makes no allegation that she submitted an application for
Page 22 of 23
a loan modification after sending the Modification Agreement to Defendant in earlyDecember 2013 — approximately one month before the January 10, 2014 effective
date of Regulation X. As such, there is no evidence to support Plaintiff’s claim that
she submitted an application for a loss mitigation to which Regulation X would apply.
See Lage, 145 F. Supp. 3d at 1186. Because Defendant had no obligation to abide by
the requirements of 12 C.F.R. § 1024.41, Plaintiff’s claim is precluded by the
Effective Date, fails as a matter of law, and Defendant is entitled to summary
judgment. See id. Accordingly, it is hereby
ORDERED AND ADJUDGED that Defendant Wells Fargo Bank, N.A.’s Motion for
Summary Final Judgment [DE 71] is granted in part and denied in part. It is granted
as to Count III, the RESPA claim. It is denied as to Count I where genuine issues of
material fact remain as to whether the notification provided by Defendant fell short
of the notification requirements of the ECOA.
DONE AND ORDERED in Chambers at West Palm Beach, Palm Beach County,
Florida, this 19th day of February, 2020.
KENNETH A. MARRA
United States District Judge
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