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Afridi v. Residential Credit Solutions, Inc.

United States District Court, D. Massachusetts

May 24, 2016

NADEEM AFRIDI, Plaintiff,
v.
RESIDENTIAL CREDIT SOLUTIONS, INC., Defendant.

          MEMORANDUM & ORDER

          Nathaniel M. Gorton United States District Judge

         I. Background

         Plaintiff, Dr. Nadeem Afridi (“Dr. Afridi” or “plaintiff”), brought this case against Residential Credit Solutions, Inc. (“RCS” or “defendant”) with respect to a rescheduled foreclosure sale. Plaintiff claims that defendant’s conduct with respect to the sale was negligent and breached its duty of good faith and reasonable diligence.

         Plaintiff has filed a complaint and successive motions for leave to amend that complaint. Defendant, in turn, has filed a motion for judgment on the pleadings with respect to the initial complaint and oppositions to both of plaintiff’s motions for leave to amend.

         In the original complaint, plaintiff alleges two claims: (1) breach of the duty of good faith and reasonable diligence and (2) negligence. Defendant has moved for judgment on the pleadings on both claims.

         In the first amended complaint plaintiff seeks to add an additional claim: (3) violation of the Real Estate Settlement Procedures Act (“RESPA”), 15 U.S.C. § 2605(f). He also alleges additional facts regarding conduct which occurred after the original complaint was filed. Specifically, plaintiff seeks to add an allegation that defendant’s denial of plaintiff’s HAMP modification application was unlawful. Defendant opposes plaintiff’s first motion to amend the complaint on the grounds that the amendment is futile.

         In the second amended complaint, plaintiff seeks to join Bank of New York Mellon (“New York Mellon”), the current holder of the mortgage, and to add a fourth claim for declaratory judgment that defendant lacks standing to foreclose. Defendant opposes the second amendment, again because it would be futile.

         II. Factual and Procedural History

         Dr. Afridi purchased the real estate at issue (“the property”) in 1998 and utilized it as an investment property from 2002 to 2004 and 2006 to the present. In connection with his purchase of the property he secured a loan by granting a mortgage in favor of Registration Systems, Inc., which was ultimately assigned to New York Mellon. RCS is the current mortgage servicer.

         Dr. Afridi was formerly employed as a cardiology consultant for an internal medicine program. In 2011, he lost his job and fell behind on his mortgage payments. In 2012 he filed for bankruptcy. He has since become self-employed and he and his wife make a combined salary of $388, 000 per year.

         In September, 2015, defendant sought to foreclose on the property. In order to avoid that outcome, plaintiff applied for a mortgage modification under the Home Affordable Modification Program (“HAMP”). Defendant denied the application as incomplete, initially without explanation. Defendant ultimately provided a list of the missing documents and plaintiff updated his application.

         In October, 2015, defendant scheduled a foreclosure sale without first rendering a decision on plaintiff’s modification application. On the eve of the foreclosure, defendant requested that plaintiff cross-collateralize his personal home in exchange for a modification of the mortgage which plaintiff declined.

         Plaintiff then brought this suit and sought a preliminary injunction to stop the sale. The parties agreed to postpone the sale until March 15, 2016, and plaintiff withdrew his motion for the preliminary injunction.

         Defendant then denied plaintiff’s modification application because it allegedly would have resulted in an increased principal and interest payment. Defendant based its denial on two factors: an investor restriction which allegedly prohibited a term extension of plaintiff’s mortgage and its contention that it had opted out of the default debt to income ratio requirements of HAMP. Plaintiff challenges both of those grounds for denial.

         Following the denial, plaintiff filed a notice of error with defendant requesting supporting documents for defendant’s decision. Shortly thereafter, defendant refused to provide the requested documentation but summarily responded:

RCS has reviewed the evidence submitted with your correspondence dated November 16, 2016 and has determined there is no proof or insufficient proof to support the dispute. Therefore your dispute has been closed and there is no change in the original determination.

         In response, plaintiff seeks to amend his complaint a second time to include the recent facts regarding the denial of his loan modification application and to seek a declaratory judgment.

         III. Pending Motions

         A. Legal Standard

         Defendant moves for judgment on the pleadings. Fed.R.Civ.P. 12(c). Judgment on the pleadings follows the familiar demurrer standard. Aponte-Torres v. Univ. of P.R., 445 F.3d 50, 54 (1st Cir. 2006) (“motions [under 12(b)(6) and 12(c)] are ordinarily accorded much the same treatment”). The “modest difference” between the two is that a “Rule 12(c) motion, unlike a Rule 12(b)(6) motion, implicates the pleadings as a whole.” Id. at 54-55. We view the facts ...


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