Bracken v. Fannie Mae Consumer Resource Center Inc et al
Filing
97
ORDER RULING ON REPORT AND RECOMMENDATION, The court GRANTS Fannie Maes motion for summary judgment 17 . The court GRANTS Brackens application to proceed IFP 76 . Plaintiffs motion to amend/correct his complaint 91 is DENIED as moot. Signed by Honorable Timothy M Cain on 10/31/2014. (gpre, ) Modified on 10/31/2014 to edit text (gpre, ).
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
GREENVILLE DIVISION
Joel Clay Bracken,
Plaintiff,
v.
Fannie Mae Consumer Resource
Center Inc., also known as Fannie Mae,
also known as Federal National Mortgage
Association, also known as FNMA
Defendants.
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Civil Action No. 6:13-1983-TMC
ORDER
Joel Clay Bracken (“Bracken”), the plaintiff, proceeding pro se, brought this suit against
the Federal National Mortgage Association (“Fannie Mae”), alleging that Fannie Mae violated
the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681 et. seq., by obtaining his consumer
report,1 without his permission, on five different occasions.2 (ECF No. 1). Pursuant to 28 U.S.C.
§ 636(b)(1)(A) and Local Rule 73.02(B)(2)(g), D.S.C., pre-trial matters have been referred to a
magistrate judge. This case is now before the court on the magistrate judge’s Report and
Recommendation (“Report”), recommending that the court deny Bracken’s amended in forma
pauperis (“IFP”) application and requiring him to submit the filing fee. (ECF No. 85). Bracken
timely objected to the Report. (ECF No. 89). Also before the court is Fannie Mae’s motion for
summary judgment. (ECF No. 64). The parties have fully briefed the motion.3 For the reasons
1
“Consumer report” and “credit report” will be used interchangeably to refer to the same type of document.
Although Bracken states in his memorandum in opposition of summary judgment that Fannie Mae obtained his
Equifax credit report on four separate dates, (ECF No. 80, p. 3), in his complaint (ECF No. 1, pp. 5-6) he states that
Fannie Mae accessed his credit report on five different occasions.
3
Bracken also filed an affidavit in opposition to Defendant’s motion for summary judgment. (ECF No. 88). In his
affidavit, however, he merely restates his arguments raised in his memorandum in opposition. Compare (ECF No.
88) with (ECF No. 80).
2
1
that follow, the court grants the defendant’s motion for summary judgment, and declines to adopt
the magistrate judge’s recommendation regarding Bracken’s IFP status.
I. Background
Bracken purchased land located at 3313 Lanewood Drive, Greenville, South Carolina
29607, in 2002 from Conseco Finance Servicing Corporation. (ECF No. 80, p. 4). To finance
the purchase, Bracken borrowed $95,500 from Coastal Mortgage Services, Inc. (ECF No. 80, p.
4). Fannie Mae was not a party to either the land purchase contract or the financing contract.
(ECF No. 80).
In October 2009, Bracken defaulted on the note.4 The property is currently in foreclosure
proceedings in Greenville County. (ECF No. 84-1). Fannie Mae obtained Bracken’s credit
report from Equifax on December 27, 2011, March 27, 2012, June 26, 2012, December 25, 2012,
and June 25, 2013.5 (ECF No. 1-2, p. 1). Bracken never consented to nor gave permission
directly to Fannie Mae to obtain his credit report nor did the parties ever directly interact. (ECF
No. 1-2, p. 1).
II. Motion for Summary Judgment
A.
Legal Standard
Summary judgment is appropriate if, after reviewing the entire record in a case, the court
is satisfied that no genuine issues of material fact exist and that the movant is entitled to
judgment as a matter of law. Fed. R. Civ. P. 56(a). An issue of fact is “genuine” if the evidence
4
Bracken denies in his memorandum in opposition to summary judgment that he is in default on the note, stating
that a trial is necessary because of this “disputed fact.” (ECF No. 80, pp. 8, 9, 10). The court, however, takes
judicial notice of another pending case filed in federal court by Bracken concerning the same property. See Bracken
v. Bank of America, C/A No. 6:14-cv-01814, at ECF No. 21 (filed May 6, 2014). In that action, he states in his
memorandum in opposition to defendant’s motion to dismiss: “Plaintiff [(Bracken)] has been in default of [the
Coastal Mortgage Services] loan since October 1, 2009.” See (ECF No. 84, p. 2-3) (informing the court of the
Bracken’s contradictory statement in the other action).
5
After the motion for summary judgment was fully briefed, Bracken moved to amend his complaint because Fannie
Mae allegedly accessed his consumer report in June 2014. (ECF No. 91). Because the court grants summary
judgment in favor of Fannie Mae, this motion is moot.
2
is such that a reasonable jury could return a verdict for the plaintiff. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). Issues of fact are “material” only if establishment of such facts
might affect the outcome of the lawsuit under the governing substantive law. Id.
“The party moving for summary judgment has the [initial] burden of establishing that
there is no genuine issue as to any material fact and that he is entitled to judgment as a matter of
law.” Catawba Indian Tribe of S.C. v. South Carolina, 978 F.2d 1334, 1339 (4th Cir. 1992).
Thereafter, the party opposing summary judgment must come forth with “sufficient evidence
supporting the claimed factual dispute,” and cannot “rest upon the mere allegations or denials of
his pleading.” Anderson, 477 U.S. at 248 (quoting First Nat’l Bank of Ariz. v. Cities Serv. Co.,
391 U.S. 253, 288-89 (1968)). “Only disputes over facts that might affect the outcome of the
suit under the governing law will properly preclude the entry of summary judgment.” Id. at 247.
“Although the court must draw all justifiable inferences in favor of the nonmoving party, the
nonmoving party must rely on more than conclusory allegations, mere speculation, the building
of one inference upon another, or the mere existence of a scintilla of evidence.” Dash v.
Mayweather, 731 F.3d 303, 311 (4th Cir. 2013); see also Catawba Indian Tribe of S.C., 978 F.2d
at 1339 (“The non-moving party ‘must do more than simply show that there is some
metaphysical doubt as to the material facts.’” (quoting Matsushita Elec. Indus. Co. v. Zenith
Radio Corp., 475 U.S. 574, 586 (1986))); Williams v. Cerberonics, Inc., 871 F.2d 452, 459 (4th
Cir. 1989) (stating that the plaintiff “presented no evidence to support her claim other than her
own assertions” and set against the documentation, “no reasonable trier of fact could” find for
her); Ross v. Commc’ns Satellite Corp., 759 F.2d 355, 365 (4th Cir. 1985), overruled on other
grounds, 490 U.S. 228 (1989) (“Genuineness means that the evidence must create fair doubt;
wholly speculative assertions will not suffice.”). In sum, “[w]here the record taken as a whole
3
could not lead a rational trier of fact to find for the non-moving party, there is no ‘genuine issue
for trial.’” Matsushita Elec. Indus. Co, 475 U.S. at 587 (Cities Serv. Co., 391 U.S. at 289)).
B.
Discussion
Bracken argues that Fannie Mae violated his privacy rights under the FCRA by obtaining
Equifax credit reports without his permission and without a permissible purpose. (ECF No. 1, p.
5).
“Congress enacted the FCRA in 1970 to promote efficiency in the Nation’s banking
system and to protect consumer privacy.” TRW Inc. v. Andrews, 534 U.S. 19, 23 (2001).
Although the two goals may have tension, Congress permitted the furnishing of credit reports
because “[c]onsumer reporting agencies have assumed a vital role in assembling and evaluating
consumer credit and other information on consumers.” 15 U.S.C. § 1681(a)(3). To protect
consumers, the FCRA sought to have ”consumer reporting agencies adopt reasonable procedures
for meeting the needs of commerce for consumer credit, personnel, insurance, and other
information in a manner which is fair and equitable to the consumer, with regard to the
confidentiality, accuracy, relevancy, and proper utilization of such information.” 15 U.S.C. §
1681(b).
In addition to regulating and imposing liability on consumer reporting agencies, the
FCRA also protects consumers from any person who receives a consumer report for an improper
purpose. 15 U.S.C. § 1681b(f). The FCRA limits access to consumer reports for only certain
“permissible purposes.” See 15 U.S.C. § 1681b. One of the permissible grounds states that a
consumer reporting agency may furnish a consumer report . . . [t]o a person which
it has reason to believe (A) intends to use the information in connection with a
credit transaction involving the consumer on whom the information is to be
furnished and involving the extension of credit to, or review or collection of an
account of, the consumer.
4
15 U.S.C. § 1681b(a)(3)(A).
The FCRA creates civil liability for willful or negligent
noncompliance with its provision. 15 U.S.C. §§ 1681n, 1681o. “To prove willfulness under the
[FCRA, Bracken] must ‘show that the defendant knowingly and intentionally committed an act
in conscious disregard for the rights of the consumer.’” Ausherman v. Bank of Am. Corp., 352
F.3d 896, 900 (4th Cir. 2003) (quoting Dalton v. Capital Associated Indus., 257 F.3d 409, 418
(4th Cir. 2001)).
Bracken makes two types of arguments as to why the court should not grant summary
judgment.6 First, Bracken argues that an entity in the position of Fannie Mae cannot avail itself
to the permissible purposes in 15 U.S.C. § 1681b. Second, Bracken argues that Fannie Mae,
itself, cannot claim that it had a permissible purpose for obtaining his consumer report because it
is not the owner of the note and mortgage.
i.
Permissible Purposes
Bracken argues that an entity in Fannie Mae’s situation cannot avail itself to the
permissible purposes of 15 U.S.C. § 1681b because only consumer reporting agencies can claim
a permissible purpose, and even if non-consumer reporting agencies could claim a permissible
purpose, only those entities that directly interacted with the consumer could allege a permissible
purpose. (ECF No. 80-1, p. 11-14). Section 1681b(a) states, in pertinent part:
Subject to subsection (c) of this section, any consumer reporting agency may
furnish a consumer report under the following circumstances and no other:
(1) In response to the order of a court having jurisdiction to issue such an
order, or a subpoena issued in connection with proceedings before a
Federal grand jury.
(2) In accordance with the written instructions of the consumer to whom it
relates.
(3) To a person which it has reason to believe—
6
Because Bracken is proceeding pro se in this matter, the court has liberally construed his arguments.
5
(A) intends to use the information in connection with a credit
transaction involving the consumer on whom the information is to
be furnished and involving the extension of credit to, or review or
collection of an account of, the consumer . . . .
15 U.S.C. § 1681b(a).
Bracken first argues that only consumer reporting agencies can avail themselves to the
exception because the statutory text applies only to them and that Fannie Mae is not a consumer
reporting agency. (ECF No. 80-1, p. 13-14). Fannie Mae is not a consumer reporting agency
under the FCRA.
Although Fannie Mae is not a consumer reporting agency, Bracken is incorrect in his
assertion that a creditor or a debt collector cannot avail itself to this provision. Section 1681b(f)
states, in pertinent part, that: “[a] person shall not use or obtain a consumer report for any
purpose unless (1) the consumer report is obtained for a purpose for which the consumer report is
authorized to be furnished under this section.” Person is defined as: "any individual, partnership,
corporation, trust, estate, cooperative, association, government or governmental subdivision or
agency, or other entity.” 15 U.S.C. § 1681a(b). Fannie Mae is a person under the definition.
Because Section 1681b(f) states that a “person” must have an authorized purpose to obtain a
consumer report and because Section 1681b(a) defines what an authorized purpose is under the
statute, Fannie Mae as a “person” can claim a permissible purpose. See Padin v. Oyster Point
Dodge, 397 F. Supp. 2d 712, 720 n.13 (E.D. Va. 2005) (stating that Section 1681b(f) makes
Section 1681b applicable to non-consumer reporting agencies). Moreover, the Fourth Circuit has
expressly stated that users of consumer reports must comply with Section 1681b. Yohay v. City
of Alexandria Emps. Credit Union, 827 F.2d 967, 972 (4th Cir. 1987). It would be an anomalous
result if an entity was required to comply with § 1681b, yet the entity could not claim that it had
a permissible purpose under § 1681b. See Korotki v. Attorney Servs. Corp., 931 F. Supp. 1269,
6
1275-76 (D. Md. 1996).
Accordingly, the court determines that non-consumer reporting
agencies can avail themselves to Section 1681b(a). See, e.g., Huertas v. Galaxy Asset Mngmt,
641 F.3d 28 (3d Cir. 2011); Stergiopoulos v. First Midwest Bancorp, Inc., 427 F.3d 1043, 104647 (7th Cir. 2005).
Bracken next argues that the only creditors who can avail themselves to this provision are
“creditors who become so by consent of the consumer debtor and who are seeking to collect on a
personal credit card or from a personal savings, checking or other type of bank account.” (ECF
No. 80, p. 12). He argues that the “[c]ollection efforts must be related to ‘an account of . . . the
consumer,” which evidences a requirement that the consumer consent to the account. (ECF No.
80, p. 12).
In Stergiopoulos, 427 F.3d 1043, the Seventh Circuit considered a similar argument made
by a purchaser of a vehicle against a finance company. In that case, the car dealership entered
into retail installment contracts (“RICs”) with the purchasers of cars, including the plaintiffs, and
then sought to sell the RICs to finance companies.7 Id. at 1044. First Midwest Rancorp was one
of those finance companies, and before deciding to purchase the plaintiffs’ RICs,8 it obtained the
plaintiffs’ credit reports. Id. It then refused to purchase the RICs. Id. The plaintiffs brought
7
The Seventh Circuit acknowledged that the plaintiffs were calling into question a “common scenario” in car
dealership finance. 427 F.3d at 1044. The court stated that: “Dealers routinely attempt to assign tentative financing
arrangements to lenders, and those lenders often rely on a consumer’s credit report to determine whether the deal is
worth taking. The question before us is whether, despite its routine nature, this practice is legal.” Id. The home
mortgage industry, much like the car dealership industry, has a routine process of lenders selling notes and
mortgages after the parties enter into them. Indeed, Bracken signed a deed of trust assigning the mortgage and note
to Mortgage Electronic Registration Systems, Inc. (“MERS”). (ECF No. 64-4). This system depends on being able
to calculate the risk of the “investment”, and to do so, the potential purchaser may need access to the credit
information of the borrower. See, e.g., Beau Phillips, MERS: The Mortgage Electronic Registration System, 63
Consumer Fin. L.Q. Rep. 262, 262-64 (2009). Bracken attempts to have this court potentially declare that system
illegal by holding that in order for a lender to access the consumer reports of a borrower, it must be the lender that
directly dealt with the borrower or have received the borrower’s permission. Perhaps it would be best practice for
lenders to include language in the note that future lenders may request consumer reports, but that is not required.
See Stergiopoulos, 427 F.3d at 1047 (“While it may be a better practice for car dealers explicitly to inform their
customers that unknown third-party lenders might request the customers’ credit reports, we are not convinced that a
failure to do so violates the FCRA as it is now written.”).
8
This case, unlike the case currently before the court, concerned the portion of § 1681b(a)(3)(A) that deals with
extension of credit.
7
suit under the FCRA, arguing—as Bracken does here—that “First Midwest was not authorized to
receive the plaintiffs’ credit reports under [the FCRA] because no ‘credit transaction involving
the consumer’ existed between the plaintiffs and First Midwest.” Id. at 1046. The Seventh
Circuit stated that “the statute does not require that the consumers expressly approve each
request for a report,” and all that the statute requires is “that the entity . . . be engaged in a credit
transaction in which the consumer is participating.” Id. at 1046-47.
The court finds the Seventh Circuit’s reasoning persuasive. Bracken admits that he
voluntarily signed the note and mortgage with Coastal Mortgage Services. (ECF No. 1). Thus,
he consented to the initial transaction. Similar to how in Stergiopoulos the plaintiffs had no
direct contact with the entity that obtained their credit report, id. at 1044-45, here Fannie Mae did
not have any direct contact with Bracken. (ECF No. 1-2, p. 1). And much like in Stergiopoulos
where First Midwest became involved in the transaction because of actions of the other party to
the contract, id., in this case, Fannie Mae became involved in the transaction because of the
actions of the lender, not Bracken.
Bracken cites to Pintos v. Pac. Creditors Ass’n, 504 F.3d 792 (9th Cir. 2007),9 to support
his argument that an entity cannot claim a permissible purpose under § 1681b(a) unless it was the
original creditor. In Pintos, police officers had Pintos’s vehicle towed; after Pintos did not pay
the towing company, it obtained a lien on the vehicle. 504 F.3d at 796. The towing company
then transferred the lien to Pacific Creditors Association (“PCA”), a collection agency. Id. at
796-97. PCA obtained a consumer report to aid in its collection of the debt. Id. at 797. The
Ninth Circuit held that PCA could not claim a permissible purpose under Section 1681b(a)(3)(A)
because there was not a “credit transaction.” Id. at 798-99. The court reasoned that a “‘credit
9
Opinion withdrawn and superseded by, 565 F.3d 1106 (9th Cir. 2009), opinion amended and superseded on denial
of rehearing by, 605 F.3d 665 (9th Cir. 2010).
8
transaction’ is a transaction in which the consumer directly participates and voluntarily seeks
credit.” Id. at 798. The court further stated that once “[a] consumer . . . chooses to initiate a
credit transaction[, he] implicitly consents to the release of his credit report for related purposes.”
Id. at 799.
The court finds that Pintos does not support Bracken’s argument. Unlike in Pintos where
“the debt arose by statute when the lien sale price of her vehicle failed to cover the towing and
impound charges” and Pintos “never sought to have her vehicle towed,” id. at 799, here, Bracken
voluntarily sought a loan from Coastal Mortgage Services and thus “chose to initiate a credit
transaction.” (ECF No. 80-2). Accordingly, he “implicitly consent[ed] to the release of his
credit report for related purposes.” Id. This interpretation of Pintos is further supported by the
fact that the Ninth Circuit expressly relied on the Seventh Circuit’s decision in Stergiopoulos.
Id. at 798-99. Therefore, the court finds that an entity like Fannie Mae can avail itself to the
benefits of Section 1681b(a)(3)(A).
ii.
Fannie Mae can Avail Itself to the Provision
Bracken’s next argument is that even if an entity like Fannie Mae could claim protection
under FCRA, Fannie Mae, in this case, cannot because Fannie Mae is not the owner of the note.
(ECF No. 80, p. 4-11). Under the FCRA, Fannie Mae could obtain a consumer report if it
“intend[ed] to use the information in connection with a credit transaction involving the consumer
on whom the information is to be furnished and involving the . . . review or collection of an
account of, the consumer.” Id.
Fannie Mae argues that, as owner of the note and mortgage, it rightfully could obtain a
copy of Bracken’s consumer report once he defaulted on the note. (ECF No. 64, p. 5). In
support, Fannie Mae has attached the note, mortgage, an affidavit of John Curcio (“Curcio”), an
9
AVP10 for Fannie Mae, and its answers to discovery requests stating it owns the note. (ECF No.
64). In his affidavit, Curcio states that Fannie Mae became the owner of the Note and Mortgage
in 2003. (ECF No. 64-6, p. 3). He also explains that Fannie Mae contracts with other banks to
“service the loan.” (ECF No. 64-6, p. 3). He asserts that Fannie Mae obtains and reviews credit
reports of its borrowers when a loan becomes delinquent, for quality control purposes, and to
provide an array of loss mitigation and foreclosure avoidance options. (ECF No. 64-6, p. 3). He
states that Bracken became delinquent in September 2009.11 (ECF No. 64-6, p. 4). In addition,
Fannie Mae attached screenshots of Fannie Mae’s ownership of the note on the property to the
affidavit, which Curcio confirms.12 (ECF No. 64-6). Curcio also states that Fannie Mae has a
website that provides the general public with the ability to determine whether a mortgage loan is
owned by Fannie Mae. (ECF No. 64-6, pp. 3-4).
Moreover, Fannie Mae argues that under South Carolina law, if the loan was “owned,
securitized, or guaranteed” by Fannie Mae or Freddie Mac, the mortgage servicer would be
required to partake in foreclosure mitigation before a foreclosure action could be instituted or
sold. See In re Mortg. Foreclosure Actions, 720 S.E.2d 908 (S.C. 2011) (requiring foreclosure
forbearance prior to instituting a foreclosure action or staying of pending foreclosure actions);
Mortg. Foreclosures & Home Affordable Modification Program, 2009-05-22-01 (S.C. Supr. Ct.
May 22, 2009) (making the Home Affordable Modification Program applicable to loans “owed,
securitized, or guaranteed” by Fannie Mae or Freddie Mac). In the foreclosure action, BAC
10
Fannie Mae did not define what AVP stands for. Presumably, it means “assistant vice president.”
Bracken claims that he became delinquent on the note on October 1, 2009. See supra note 4. The court finds that
the distinction between dates is irrelevant to the underlying issue, which is whether Fannie Mae could obtain
consumer reports on the dates in question. See Anderson, 477 U.S. at 247 (“Only disputes over facts that might
affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.”).
12
Bracken’s Experian credit report that he provided in his other case, Bracken v. Bank of America, C/A No. 6:14-cv01814, at ECF Nos. 1-8 and 1-9, has the same loan number for the mortgage as provided on the screenshot by
Fannie Mae, further supplying documentary proof of ownership, and his Equifax credit report that he provided in
that case also states that the Bank of America loan is a “Fannie Mae account.” See (ECF No. 84, p. 3) (informing
the court of the identification number and information in Bracken’s other suit).
11
10
Home Loans Servicing LP and Bracken engaged in foreclosure intervention and forbearance.
(ECF No. 84-1). Accordingly, Fannie Mae has met its initial burden for summary judgment. See
Catawba Indian Tribe of S.C., 978 F.2d at 1339 (“The party moving for summary judgment has
the [initial] burden of establishing that there is no genuine issue as to any material fact and that
he is entitled to judgment as a matter of law.”).
In opposition to the motion for summary judgment, Bracken has made many allegations
about how Fannie Mae has failed to prove it owns the note and mortgage. (ECF No. 80-1).
Bracken argues: (1) the note that Fannie Mae introduced was altered;13 (2) Fannie Mae failed to
authenticate the chain of ownership of his account; (3) Fannie Mae failed to authenticate who it
purchased the account from; (4) Fannie Mae failed to authenticate the precise amount due on the
debt and that Bracken is in default on the note14; (5) Fannie Mae servicers have claimed
ownership to Bracken’s account; (6) Fannie Mae failed to specify the specific date that Bracken
defaulted on the note and mortgage; (7) Fannie Mae failed to provide a required notice of default
and acceleration pursuant to the note; and (8) John Curio’s affidavit is unauthenticated and
inadmissible hearsay. (ECF No. 80-1). He does not argue that the purposes that Fannie Mae
provided were impermissible, rather his argument stems from the belief that Fannie Mae did not
own the note and mortgage and therefore could not have a permissible purpose.
In support of his argument, Bracken attached the note, a letter from an attorney of Bank
of America, and an assignment of the mortgage. (ECF No. 80). The letter provides that Fannie
Mae owns the note and mortgage. See (ECF No. 80-3). The letter states: “The current owner of
13
Bracken attached a copy of an “unaltered note,” arguing that the inconsistencies between the copies create genuine
issues of material facts. (ECF No. 80, p. 4-5). The only inconsistencies between the copies is that on the Fannie
Mae copy there is a black bar covering up “BRAC32S2517,” apparently an identification number, and the signature
of an employee of Coastal Mortgage Services, Inc. and stamps of Countrywide Home Loans, Inc. The court does
not find that these distinctions are material. See Anderson, 477 U.S. at 247 (“Only disputes over facts that might
affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.”).
14
As stated in footnote 4, the court finds this allegation contradicts Bracken’s own statements.
11
the note is FNMA [(Fannie Mae)], with an address of 13150 World Gate Dr., Herndon, VA
20170. Bank of America is the servicer of the Loan.”15 (ECF No. 80-3, p. 4). The assignment
states that Mortgage Electronic Registration Systems, Inc. assigned the mortgage to BAC Home
Loans Servicing, LP.16 (ECF No. 80-4). The assignment was dated September 7, 2010. (ECF
No. 80-4).
Looking at the evidence in the light most favorable to Bracken, the court determines that
there is not a genuine issue of material fact about the ownership of the note and mortgage. The
letter from an attorney representing Bank of America that Bracken provided to the court states
that Fannie Mae is the owner of the note. Moreover, Bracken’s introduction of the assignment to
BAC Home Loans in 2010 is not relevant as to whether Fannie Mae owned the note when it
acquired the consumer reports in late 2011, 2012, and 2013.17 As stated in Bracken’s exhibit,
Bank of America—the parent company of BAC Home Loans—stated that Fannie Mae is the
owner of the loan, not Bank of America or BAC Home Loans. (ECF No. 80-3, p. 4). To defeat
summary judgment in this regard, Bracken would have needed to come forth with “sufficient
evidence supporting the claimed factual dispute,” rather than “rest[ing] upon the mere allegations
or denials of his pleading.” Anderson, 477 U.S. at 248 (quoting Cities Serv. Co., 391 U.S. at
15
In addition, Bracken attached a letter from Bank of America to his complaint in the other pending action
concerning this property, in which Bank of America stated: “Please be advised that the true owner of this obligation
is: Federal National Mortgage Association.” Bracken v. Bank of America, 6:14-cv-01814, (EFC No. 1-3). See (ECF
No. 84, p. 3) (informing the court of attachments Bracken made in his other action that contradict his statements in
his memorandum in opposition to summary judgment).
16
BAC Home Loans is a subsidiary of Bank of America. See (ECF No. 80-1, p. 9).
17
The assignment was probably the result of the impending foreclosure action that was being brought against
Bracken. According to Fannie Mae policy, “MERS must not be named as a plaintiff in any judicial action filed to
foreclose on a mortgage owned or securitized by Fannie Mae.” Fannie Mae Announcement 06-24 (Dec. 7, 2006).
“Therefore, in most jurisdictions, the servicer will need to prepare a mortgage assignment from MERS to the
servicer, and then bring the foreclosure in its own name.” Id. The policy further states that the “assignment from
MERS to the servicer should be in recordable form (e.g., executed and notarized) and, in some jurisdictions, it will
need to be recorded.” Id. The foreclosure action was filed on October 7, 2010. (ECF No. 84-1). MERS assigned
the mortgage to BAC Home Loans Servicing, LP on September 7, 2010. (ECF No. 80-4). As Bank of America’s
lawyer stated, Bank of America is the servicer, and Fannie Mae is the owner of the note and mortgage. (ECF No.
80-3, p. 4). Although the court understands that mortgage industry practices may be confusing, a trial is only
necessary if there are material factual disputes, not misunderstandings.
12
288-89). Given that all the evidence, including evidence supplied by Bracken, indicates that
Fannie Mae owns the note, and Bracken has introduced no evidence that it does not own the
note, the court finds that his bare allegations do not create a genuine issue of material fact.
Mayweather, 731 F.3d at 311 (“Although the court must draw all justifiable inferences in favor
of the nonmoving party, the nonmoving party must rely on more than conclusory allegations,
mere speculation, the building of one inference upon another, or the mere existence of a scintilla
of evidence.” (emphasis added)). As the owner of a note that the borrower was in default on,
Fannie Mae had a right to obtain copies of Bracken’s consumer reports. See 15 U.S.C. § 1618b;
see also Humphreys v. Fed. Nat’l Mortg. Ass’n, No. 12-cv-06261, 2014 WL 348639, at * 2 (E.D.
Pa. Jan. 30, 2014) (stating that as owner of the note, Fannie Mae had a permissible purpose to
obtain a consumer report under the FCRA).
Nonetheless, even if Bracken could come forth with some evidence, other than mere
allegations, showing that Fannie Mae was not the owner of the note, the court still determines
that Fannie Mae is entitled to summary judgment. Under Section 1681b, all that is required is
that Fannie Mae had “reason to believe” that it had a permissible purpose to access Bracken’s
credit report, not that it was the actual owner of the account. See, e.g., Stergiopoulos, 427 F.3d at
1046-47; Korotki v. Attorney Servs. Corp., 931 F. Supp. 1269, 1276 (D. Md. 1996); Cambridge
Title Co. v. Transamerica Title Ins. Co., 817 F. Supp. 1263, 1278-79 (D. Md. 1992), aff’d 989
F.2d 491 (4th Cir. 1993); Zeller v. Samia, 758 F. Supp. 775, 781-82 (D. Mass. 1991).
Fannie Mae acquires consumer reports on delinquent consumers for an array of purposes.
(ECF Nos. 64-1, p. 3; 64-6, p. 2). In his affidavit, Curcio states that Fannie Mae obtains credit
reports for quality control, when loans become delinquent, and to provide loss mitigation and
13
foreclosure avoidance options.18 (ECF No. 64-6). Bracken does not argue that the purposes put
forth by Fannie Mae were impermissible, see (ECF 80-1), nor does he contest that those were not
the actual purposes for obtaining his credit report. In any event, the court finds these purposes
are related to the “review or collection of an account” and are permissible. See, e.g., Huertas,
641 F.3d at 34 (holding that a permissible purpose existed for a lender to obtain a consumer
report of a borrower even though collection of the debt was time barred by the statute of
limitations); Cooper v. Pressler & Pressler, LLP, 912 F. Supp. 2d 178, 187-88 (D.N.J. 2012)
(holding that a permissible purpose existed for a charged off account); Kortki, 931 F. Supp. at
1276-77 (holding that obtaining a consumer report for the purposes of finding an address to serve
the consumer on an account was a permissible purpose); Zeller v. Samia, 758 F. Supp. 775, 781
(D. Mass. 1991) (holding that a permissible purposes existed because the purpose for obtaining
the consumer report was to verify a charge off or prepare for a civil proceeding about the
property at issue in the loan). Therefore, even assuming that Fannie Mae did not own the note
and mortgage, its purpose in obtaining a consumer report was permissible because Fannie Mae
had reason to believe plaintiff owed it a debt. Kortki, 931 F. Supp. at 1276. Accordingly, the
court grants Fannie Mae’s motion for summary judgment.
III. Bracken’s IFP Status
The Report recommends denying Bracken’s amended IFP application because Bracken
failed to prove his IFP status. (ECF No. 85, p. 3). The magistrate judge determined after
initially granting IFP status to Bracken that he actually owned a home, even though he answered
on the application that he did “not own . . . real estate.” (ECF No. 85, p. 3). At the hearing, after
admitting he owned real property, Bracken then claimed to have no knowledge of the value of
18
Fannie Mae obtained Bracken’s credit reports during the time when the foreclosure action on the property was
stayed for foreclosure intervention. (ECF Nos. 1, 84-1). The foreclosure action was stayed around November 16,
2011, and became active on April 9, 2014. (ECF No. 84-1).
14
the residence, amount due on the mortgage, and any resulting equity. (ECF No. 85, p. 2). Based
on that information, the magistrate judge determined Bracken failed to provide sufficient
information and recommended denying his IFP application. (ECF No. 85, p. 3).
“In enacting the federal in forma pauperis statute [28 U.S.C. § 1915], Congress ‘intended
to guarantee that no citizen shall be denied an opportunity to commence, prosecute, or defend
and action, civil or criminal, in any court of the United States, solely because . . . poverty makes
it impossible . . . to pay or secure the costs’ of litigation.” Denton v. Hernandez, 504 U.S. 25, 31
(1992) (quoting Adkins v. E.I. DuPont de Nemours & Co., 335 U.S. 331, 342 (1948)). Section
1915(a) “allows a litigant to commence a civil or criminal action in federal court in forma
pauperis by filing in good faith an affidavit stating, inter alia, that he is unable to pay the costs
of the lawsuit.” Neitzke v. Williams, 490 U.S. 319, 324 (1989) (superseded on other grounds).
“At the same time that it sought to lower judicial access barriers to the indigent, however,
Congress recognized that ‘a litigant whose filing fees and court costs are assumed by the public,
unlike a paying litigant, lacks an economic incentive to refrain from filing frivolous, malicious,
or repetitive lawsuits.’” Denton, 504 U.S. at 31 (quoting Neitzke, 490 U.S. at 324). “To prevent
such abusive or captious litigation, § 1915(d) [requires] federal courts to dismiss a claim filed in
forma puaperis ‘if the allegation of poverty is untrue, or if satisfied that the action is frivolous or
malicious.’” Neitzke, 490 U.S. at 324 (quoting 28 U.S.C. § 1915(d)).
Bracken’s IFP application states that he does not have any gross wages or income. (ECF
No. 76, p. 1). He states that the amount of money in his savings account is $369.28. (ECF No.
76, p. 2). Bracken attached a sworn affidavit of indigence to his objections to the Report. (ECF
No. 89-1). In this affidavit, he attests that he is “without income of financial funds to pay any
15
costs related to this lawsuit.” (ECF No. 89-1, p. 2). He further states that he is unemployed and
receives SNAP or food stamps. (ECF No. 89-1, p. 2).
The court agrees with the magistrate judge that Bracken was far from forthcoming
concerning the valuation of his house, amount due on the mortgage, and any resulting equity.
Bracken states that someone from the clerk of court’s office should have contacted him when
they determined his amended IFP application was inadequate concerning the valuation
information, and he would have provided the court with the information. (ECF No. 89, p. 3-4).
Bracken, however, still has not provided the court with the information. He instead states that he
“truly does not know these figures” and he has “no certifications or authority to evaluate real
estate.”
(ECF No. 89, p. 5).19
Thus, it is unclear whether he would have provided the
information.
In his objections, Bracken argues “[t]he precedent that the Plaintiff should sell or borrow
money upon his home to fund this legitimate lawsuit is utterly outrageous.” (ECF No. 89, p. 5).
Bracken further states “[t]he value of an applicant’s home does not a [sic] determine in forma
pauperis status in the Fourth Circuit.” (ECF No. 89, p. 5). These arguments indicate to the court
that Bracken has some equity in his house. Moreover, Bracken errs when he concludes that the
home value is not a relevant factor when deciding whether to grant an IFP application. This
error stems from the confusion that by providing this information, the court would require him to
19
The court finds this suggestion disingenuous given that in his other action against Bank of America, he attached a
letter stating that “As of October 29, 2010, you owe $94,856.78.” See Bracken v. Bank of America, C/A No. 6:14cv-01814, at ECF No. 21-2 (Date Filed July 10, 2014). Another letter from Bank of America states: “Enclosed for
your records is a true and correct copy of Federal Truth-in Lending Disclosure Statement, Good Faith Estimate,
Original Appraisal, HUD-1 Settlement Statement and Initial Uniform Residential Loan Application.” Id. at ECF
No. 1-2, p. 3. The letter also states that Bank of America attached a payment history. Id. at 2. Bracken received the
documents. See id. at ECF No. 1-4, p. 1. Therefore, Bracken could have provided some documentation to permit
the magistrate judge and the court to determine the equity in the house. Presumably, the amount due on the
mortgage was also provided in the foreclosure action, and he probably could have acquired it upon a request from
the servicer of the loan. Moreover, he could have provided the court with the value provided on the tax assessment
of his property.
16
“live on the street or under the bridge.” See (ECF No. 89, p. 5). Neither the court nor the
magistrate judge has indicated that it would require Bracken to choose between living on the
street and instituting the lawsuit or living in his home. The court believes that the IFP statute
was enacted in part to avoid such a draconian choice. But that does not mean that the valuation
of the house is irrelevant to the determination as to whether to grant an IFP application. Clearly
if an IFP applicant owed multiple residences or had an extravagant house with sufficient equity,
it would be entirely unfair to require the public to bear the cost for the suit. It appears Bracken
may have been careless or evasive on his first IFP application and in his subsequent responses to
the court. However, given the totality of the circumstances, including the pending foreclosure
proceeding in state court, and in light of the court’s ruling herein, the court will grant Bracken’s
application for IFP status in this case.20
Although Bracken is pro se and may not be familiar with legal documentation, the court
would caution him that in the future he should exercise care in what he says and files with the
court.21
20
Given that the court’s ruling on Fannie Mae’s motion for summary judgment dismisses this action, the effect of
this ruling is that Bracken will not have to pay the $400 filing fee. (ECF No. 85, p. 4).
21
The documentation that Bracken has provided to the court in this action and in his action against Bank of America
contradicts what he alleges in his discovery responses, affidavits, and memorandums to the court. See Bracken v.
Bank of America, 6:14-cv-01814, at ECF No. 21, p. 2 (filed May 6, 2014) (admitting he is in default on his loan);
Id. (ECF No. 1-3, p 3) (Letter from Bank of America stating that Fannie Mae is the owner of the note); Id. (ECF No.
1-8, p. 2) (Experian credit report providing Fannie Mae Identification number for the account on the note); Id. (ECF
No. 1-9, p. 4) (Equifax credit report stating that the account is a “Fannie Mae account”). The purpose of the IFP
statute is to ensure that federal courts do not have a financial barrier that prevents indigent people from instituting
actions, not to permit litigants to tell one story in an action when it is beneficial to that action and another story in
the other action when it suits that action. Cf. Mullins v. Hallmark Data Systems, LLC, 511 F. Supp. 2d 928, 941
(N.D. Ill. 2007) ((“If [the applicant’s] argument is that dismissal with prejudice cannot occur even in cases of
intentional misrepresentations on the IFP form, so long as in the end the applicant is actually impoverished, it is an
argument that has no support either in the text, the legislative history, or the cases construing § 1915. It would
accord to in forma pauperis applicants a right to lie.”).
17
IV. Conclusion
Therefore, after a thorough review of the record in this case, the court finds that there is
no genuine issue of material fact and that Fannie Mae is entitled to judgment as a matter of law.
Accordingly, the court GRANTS Fannie Mae’s motion for summary judgment (ECF No. 17).
The court also GRANTS Bracken’s application to proceed IFP (ECF No. 76). It is further
ORDERED that Plaintiff’s motion to amend/correct his complaint (ECF No. 91) is DENIED as
moot.
IT IS SO ORDERED.
s/Timothy M. Cain
United States District Judge
October 31, 2014
Anderson, South Carolina
NOTICE OF RIGHT TO APPEAL
The parties are hereby notified of the right to appeal this order pursuant to Rules 3 and 4
of the Federal Rules of Appellate Procedure.
18
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