Walker v. Seterus, Inc.

Filing 76

MEMORANDUM OPINION AND ORDER signed by the Honorable Matthew F. Kennelly on 7/21/2019: For the reasons stated in the accompanying Memorandum Opinion and Order, the Court grants summary judgment in favor of defendant on Count 1 of plaintiff's complaint but denies defendant's motion for summary judgment on Count 2. The case is set for a status hearing on July 30, 2019 at 9:30 a.m. for the purpose of setting a trial date and discussing the possibility of settlement. (mk)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
ROSALYNN WALKER,
Plaintiff,
vs.
SETERUS, INC.,
Defendant.

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Case No. 17 C 7194

MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY, District Judge:
Rosalynn Walker obtained a home mortgage loan that was serviced by Seterus,
Inc. When Walker defaulted on her payments, Seterus offered Walker a loan
modification. But when she did not return the required modification agreement, Seterus
denied her loan modification application and referred her account for foreclosure.
Walker has sued Seterus for violating the Real Estate Settlement Procedures Act
(RESPA) and the Illinois Consumer Fraud and Deceptive Business Practices Act
(ICFA).
Facts
In 2008, Walker obtained a loan from CitiMortgage, Inc. secured by a mortgage
of her home. The loan was later sold to Federal National Mortgage Association (Fannie
Mae). Seterus serviced the loan starting in February 2014. Later in 2014, Walker fell
behind on her payments and defaulted on her loan.
In July 2014, Seterus offered Walker a trial period plan that, if she successfully

completed it, would result in a loan modification. Specifically, Walker was required to
make three monthly payments in specified amounts starting on August 1, 2014. Walker
did so, and Seterus sent her a modification agreement on November 12, 2014 via
FedEx overnight delivery. A letter enclosed with the agreement said that to accept it,
Walker had to sign the agreement and return it by December 1; it also said that if she
did not do so, Seterus could revoke its offer. The envelope was, however, returned to
Seterus on December 1 because it had not been delivered after more than one attempt.
On December 23, Seterus says, it sent the material again by U.S. Mail, along
with a letter stating that Seterus had not received the modification agreement and that if
Walker did not sign and return it by January 6, the proposed modification would be
cancelled, and Seterus could continue collection activity. Seterus did not receive a
signed agreement by the deadline. Walker says, however, that she did not receive the
December 23 letter or its contents.
On January 6, 2015, Seterus sent Walker a letter stating that it had denied the
loan modification. Walker admits that she received this letter but says that she did not
get it until late January or early February. After sending the January 6 letter, Seterus
made a number of automated calls to Walker stating that she was in default and asking
her to contact Seterus. In April 2015, Walker submitted a "borrower response package"
to Seterus. Seterus acknowledged receipt of the package but determined it was
incomplete.
Fannie Mae filed a foreclosure lawsuit against Walker later in April 2016. At that
point, the loan was more than four months overdue. But Walker kept making payments
to Seterus, and Seterus offered her a loan modification in July 2015. Walker signed the

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modification and returned it to Seterus in late July.
In mid-August, Fannie Mae dropped the foreclosure lawsuit. Walker contends,
however, that this modification was less financially favorable to her than the proposed
2014 modification; she incurred additional late fees and charges in the interim; and she
incurred expenses in connection with the foreclosure case while it was pending.
Discussion
"Summary judgment is proper where there are no genuine issues of material fact
and the movant is entitled to judgment as a matter of law." Richardson v. Chi. Transit
Auth., 926 F.3d 881, 886 (7th Cir. 2019) (internal quotation marks omitted). In
considering a motion for summary judgment, the Court construes the facts and draws
reasonable inferences "in favor of the party against whom the motion under
consideration was filed." Id.
1.

RESPA claim
Walker's first claim against Seterus is asserted under RESPA, specifically 12

U.S.C. § 2605(k)(1)(E). That provision prohibits a servicer of a federally-related
mortgage like this one from failing to comply with Bureau of Consumer Financial
Protection regulations. Walker cites several such regulations. First, 12 C.F.R. §
1024.41(e)(1) states that if the servicer receives a complete loss mitigation application
90 days or more before a foreclosure sale, it may require the borrower to accept or
reject a loss mitigation option no earlier than 14 days after the servicer provides the
offer. Walker contends Seterus violated this provision by, effectively, requiring her to
accept the modification agreement even before it provided the agreement to her.
Second, 12 C.F.R. § 1024.41(f) prohibits a servicer from making the first notice or filing

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required for any foreclosure process if the borrower submits a complete loss mitigation
application beforehand, unless (1) the servicer gave notice to the borrower that she is
ineligible for any loss mitigation or appeal option, (2) the borrower rejects all loss
mitigation options, or (3) the borrower fails to fulfill the loss mitigation agreement. 12
C.F.R. § 1024.41(f). Walker contends that none of the exceptions apply, and thus
Seterus violated this provision by referring her account for foreclosure. Third, 12 C.F.R.
§ 1024.41(c)(1) states that if the servicer receives a full loss mitigation application more
than 37 days before a foreclosure sale, it must provide the borrower within 30 days a
notice listing loss mitigation options the servicer will offer. Walker contends that Seterus
violated this regulation by sending her a letter stating that it denied her modification
more than 30 days after allegedly receiving her complete application. Finally, 12 C.F.R.
§ 1024.41(h) requires a servicer to allow a borrower to appeal the servicer's decision
deny a loss mitigation application if the servicer receives a complete application 90 days
or more before a foreclosure sale; Walker contends that Seterus did not allow her an
appeal.
Walker cannot maintain a claim under RESPA for violations of the cited
regulations. Each of the cited regulations requires receipt of a complete loss mitigation
application from the borrower, defined as "an application in connection with which a
servicer has received all the information that the servicer requires from a borrower in
evaluating applications for the loss mitigation options available to the borrower." 12
C.F.R. § 1024.41(b). It is not genuinely disputed that Walker did not provide Seterus
with a complete loss mitigation application before it commenced foreclosure
proceedings. Walker claims that she completed a loss mitigation application by

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telephone, but it is undisputed that Seterus does not accept telephonic loss mitigation
applications. The Court understands that Walker contends Seterus did not actually get
a loss mitigation application into her hands before foreclosure proceedings were
initiated, but the fact is that she did not submit a completed modification agreement
before that date. Thus she cannot maintain a claim under RESPA for violation of the
cited regulations.
Walker also alleged in her complaint, as part of her RESPA claim, that Seterus
violated regulations requiring servicers to maintain certain types of policies and
procedures. Compl. ¶¶ 75-82. Seterus sought summary judgment on this aspect of
Walker's RESPA claim as well, saying that it had demonstrated it had appropriate
policies and procedures in place. See Def.'s Mem. in Support of Motion for Summ. J. at
6. In response, Walker did not argue otherwise; rather, she contended that the
existence of these procedures did not show that Seterus followed them in her case.
See Pl.'s Resp. in Opp. of Def.'s Mot. for Summ. J. at 14. This amounts to a concession
that she cannot maintain a RESPA claim for failure to maintain the required policies and
procedures.
For these reasons, Seterus is entitled to summary judgment on Walker's RESPA
claim (Count 1).
2.

ICFA claim
To sustain a claim under the ICFA, a plaintiff must prove: "(1) a deceptive or

unfair act or practice by the defendant; (2) the defendant's intent that the plaintiff rely on
the deceptive or unfair practice; (3) the unfair or deceptive practice occurred during
course of conduct involving trade or commerce." Siegel v. Shell Oil Co., 612 F.3d 932,

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934 (7th Cir. 2010). Walker contends that Seterus's conduct amounted to an unfair
practice violative of the ICFA. Conduct is unfair under the statute if it "(1) violate[s]
public policy; (2) [is] so oppressive that the consumer has little choice but to submit,
and; (3) cause[s] consumers substantial injury." Id. at 935. A court may, however, find
unfairness even if the conduct does not satisfy all three of these criteria. Id.
Walker contends that Seterus committed an unfair practice by offering her a loan
modification; effectively making it impossible for her to obtain a modification by failing to
deliver it to her successfully; and then referring her loan and mortgage for foreclosure
even though it ought to have known that the modification agreement had never been
delivered. In seeking summary judgment, Seterus relies upon the presumption of
receipt of mailed materials, saying that it mailed Walker the required application and she
should be deemed to have received it. See Godfrey v. United States, 997 F .2d 335,
338 (7th Cir. 1993). As this Court has stated, however,
[t]he presumption of delivery following mailing is rebuttable by evidence of
nondelivery. For example, in In re Longardner & Assoc., 855 F.2d 455,
459 (7th Cir. 1988), the Seventh Circuit found that the plaintiff's denial of
the delivery created a genuine issue of material fact. See also Vaden v.
IndyMac Bank, F.S.B., No. 02 C 1150, 2003 WL 22136306, at *4–5 (N.D.
Ill. Sept. 16, 2003) (denying summary judgment because plaintiff denied
receipt at his deposition); Jones v. Citibank, FSB, 844 F. Supp. 437, 441
(N.D. Ill. 1994) (denying summary judgment because co-plaintiff's affidavit
unequivocally denied receipt of a letter).
Davenport v. Potter, No. 06 C 4614, 2008 WL 4126603, at *4 (N.D. Ill. Aug. 15, 2008)
(Kennelly, J.). Walker has denied under oath that she received the materials from
Seterus, and this is sufficient to rebut the presumption of delivery. Her actual receipt of
the materials from Seterus is genuinely disputed.
Seterus separately relies on a term of the mortgage stating that any notice to the

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borrower connected with the mortgage "shall be deemed to have been given to
Borrower when mailed by first class mail." But Walker is not asserting a breach of
contract claim, and Seterus cites no authority to support the proposition that a
contractual term like this one defeats an unfair practice claim asserted under the ICFA.
Seterus also argues that its unfair conduct did not proximately cause Walker's
damages. Rather, it contends, any damages were caused by Walker's own default on
the mortgage loan. This contention may have merit, but its determination involves
genuinely disputed inferences that the Court cannot appropriately draw against Walker
on a motion for summary judgment.
For these reasons, Seterus is not entitled to summary judgment on Walker's
ICFA claim (Count 1).
Conclusion
For the reasons stated above, the Court grants summary judgment in favor of
defendant on Count 1 of plaintiff's complaint but denies defendant's motion for summary
judgment on Count 2. The case is set for a status hearing on July 30, 2019 at 9:30 a.m.
for the purpose of setting a trial date and discussing the possibility of settlement.
Date: July 21, 2019
________________________________
MATTHEW F. KENNELLY
United States District Judge

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