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Harry v. Countrywide Home Loans, Inc.

United States District Court, D. Massachusetts

November 30, 2016



          Nathaniel M. Gorton United States District Judge

         This case arises from a dispute concerning a mortgage on property located at 89 Pimlico Pond in Mashpee, Massachusetts (“the property”). A motion to dismiss filed by defendants Ditech Financial, LLC, f/k/a Green Tree Servicing, LLC (“Ditech”), Mortgage Electronic Registration Systems, Inc. (“MERS”) and the Bank of New York Mellon, f/k/a the Bank of New York as Trustee for the Certificate Holders of CWABS, Inc. Asset-Backed Certificates, Series 2005-17 (“BNY Mellon”) is pending before the Court. For the reasons that follow, the motion will be allowed.

         I. Background

         Thomas Harry, Jr. and Gretchen Harry (collectively, “plaintiffs”) took title to the mortgaged property in 2002. In November, 2005, plaintiffs refinanced their property with a loan of approximately $245, 000 from Countrywide Home Loans, Inc. (“Countrywide”) that was secured by a mortgage in favor of MERS. Bank of America, N.A. (“BANA”) was the original servicer of the loan. In October, 2011, MERS assigned the mortgage to BNY Mellon which then retained Ditech to service the loan.

         In plaintiffs' view, Countrywide engaged in “predatory table funding lending” by using “bait [and] switch” tactics. Plaintiffs claim that Countrywide “induce[d] them into an alleged loan that they couldn't afford”, charged “excessive” fees and never notified them of their right to rescind. They also allege that the “title documents” do not match “what actually happened on Wall Street's secondary market”.

         Plaintiffs further assert that the mortgage is void because, while the note and mortgage list the lender as “Countrywide Home Loans, Inc.”, the United States Department of Housing and Urban Development Settlement Statement (“HUD Statement”) describes the lender as “Countrywide Home Loans Corporation”. As does the mortgage, the HUD Statement dates back to November, 2005 and is signed by plaintiffs. They also contest the assignment of the mortgage from MERS to BNY Mellon, contending that signatures by “illegal robo-signer[s]” render it void.

         Plaintiffs admit that they made payments on the note only from January, 2006 through November, 2009.

         In August, 2011, plaintiffs received a letter from Harmon Law Offices (“Harmon”) stating that Harmon had been instructed to foreclose on their property on behalf of BNY Mellon. In November, 2011 Harmon filed a complaint on behalf of BNY Mellon in the Massachusetts Land Court Department of the Trial Court. By December 23, 2011, plaintiffs had retained counsel who disputed the foreclosure.

         In February, 2014, Ditech provided plaintiffs with a notice of default and in March, 2015, Harmon again notified plaintiffs that it was going to foreclose on the property on behalf of BNY Mellon and Ditech. Plaintiffs responded by sending a notice of rescission under the Truth in Lending Act, 15 U.S.C. § 1635 (“TILA”). Ditech, in turn, sent plaintiffs copies of various mortgage-related documents, including an unsigned loan application for $257, 000. Plaintiffs assert that they did not complete that application and that it was part of a scheme to defraud them.

         Thereafter, in September, 2015, Harmon yet again served plaintiffs with a notice of foreclosure, and in March, 2016, plaintiffs filed a complaint in Massachusetts Superior Court seeking, inter alia, quiet title, to have the note declared null and void, to have the mortgage “released”, to have their TILA rescission enforced and to recover damages. The Massachusetts Superior Court allowed an ex parte motion for the recording of a lis pendens that same month. In April, 2016 defendants BANA, Countrywide and Bank of America Corporation removed the case to this Court on the basis of federal question jurisdiction. In October, 2016, plaintiffs moved to enjoin BNY Mellon and Ditech from foreclosing on the property. After a hearing on that motion, this Court denied it.

         Defendants Ditech, MERS and BNY Mellon (collectively, “defendants”) have now moved to dismiss plaintiffs' claims pursuant to Fed.R.Civ.P. 12(b)(6). That motion is the subject of this memorandum and order.

         IV. Defedants Ditech, MERS and BNY Mellon's Motion to Dismiss

         A. Legal Standard

          To survive a motion to dismiss for failure to state a claim under Fed.R.Civ.P. 12(b)(6), a complaint must contain “sufficient factual matter” to state a claim for relief that is actionable as a matter of law and “plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 667 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible if, after accepting as true all non-conclusory factual allegations, the court can draw the reasonable inference that the defendant is liable for the misconduct alleged. Ocasio-Hernandez v. Fortuno-Burset, 640 F.3d 1, 12 (1st Cir. 2011). A court may not disregard properly pled factual allegations even if actual proof of those facts is improbable. Id. Rather, the relevant inquiry focuses on the reasonableness of the inference of liability that the plaintiff is asking the court to draw. Id. at 13.

         When rendering that determination, a court may not look beyond the facts alleged in the complaint, documents incorporated by reference therein and facts susceptible to judicial notice. Haley v. City of Boston, 657 F.3d 39, 46 (1st Cir. 2011).

         B. Application

         Throughout their complaint, plaintiffs assert that their mortgage is void, the unsigned loan application for $257, 000 proves that defendants committed fraud and the assignment of their mortgage ...

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