United States District Court, D. Massachusetts
MEMORANDUM AND ORDER ON DEFENDANT'S MOTION TO
Dennis Saylor IV, United States District Judge.
a dispute concerning an upcoming mortgage foreclosure.
Plaintiff Kevin Kenney has been in default on his mortgage
for approximately nine years. U.S. Bank, N.A., the current
holder of the note, now seeks to foreclose. Kenney has
brought suit against U.S. Bank under state law seeking to
enjoin the foreclosure and recover damages. U.S. Bank has
moved to dismiss the complaint in its entirety. For the
following reasons, the motion to dismiss will be granted in
part and denied in part.
facts are set forth as alleged in the complaint and attached
Kenney owns a residential property located at 1 Chamberlain
Street in Hopkinton, Massachusetts (the
“property”). (Compl. ¶ 3). U.S. Bank is the
successor-in-interest to various parties who were assigned
the note. (Id. ¶ 2).
April 24, 2006, Kenney applied for his first mortgage
refinancing with Mortgage Lenders Network USA, Inc. According
to the complaint, Mortgage Lenders was a “prodigious
‘subprime' lender” that has since filed for
bankruptcy. (Id. ¶¶ 4-5). Mortgage Lenders
served as the mortgage broker on the transaction and received
a commission for its services. (Id. ¶ 6).
Before Kenney signed the mortgage documents, Mortgage Lenders
representatives allegedly told him that he would receive an
“interest only” fixed-rate loan with a 6%
interest rate. (Id. ¶¶ 7-8). However, the
loan included an adjustable rate “balloon” note
with an initial rate of 8.69%, capped at 14.69%.
(Id. ¶ 9). During the 2006 refinancing process,
Kenney contends that he was unaware he was signing an
adjustable rate mortgage, because the loan documents were
“misleading and confusing.” (Id.
¶¶ 10, 20-21). The principal amount of the
refinancing loan was $380, 700. (Compl. Ex. F. at 3).
Lenders allegedly did not require written verification of
Kenney's income during the application process. (Compl.
¶ 11). The complaint alleges that Mortgage Lenders
inflated Kenney's income, as his actual resources would
not justify the “terms and provisions of the
mortgage.” (Id. ¶¶ 12-13). The
complaint further alleges that Mortgage Lenders knew that it
was misleading Kenney and other borrowers about their
mortgages, allegedly as part of the practice of
“mortgage flipping, ” whereby lenders saddle
borrowers with debt to eliminate home equity and increase the
likelihood of foreclosure. (Id. ¶¶ 16,
18). Mortgage Lenders allegedly encouraged its brokers to
falsify loan documents to increase the number of subprime
mortgages. (Id. ¶ 23).
went into default on his loan in 2008. (Compl. Ex. A at
In October 2014, he was offered a temporary loan modification
through the Home Affordable Modification Program. (Compl.
¶ 24). He would receive a permanent loan
modification if he successfully made all payments under a
trial period plan (“TPP”). (Id.).
the terms of the TPP, Kenney was required to make three
monthly payments of $2, 580.44 on December 1, 2014; January
1, 2015; and February 1, 2015. (Compl. Ex. A at 6). The first
two payments were made on time without issue. (Id.
at 1; Compl. ¶ 25).
series of severe snowstorms then hit New England in January
2015, causing severe disruptions to the area. (Compl. Ex. A
at 2). According to the complaint, the loan servicer, Wells
Fargo (doing business as America's Servicing Company)
allegedly assured Kenney that “his loan was in
forbearance” and that the February 1, 2015 payment due
date would be postponed until the weather improved.
(Id.). The letter does not, however, indicate when
the payment was actually going to be due; instead, it alleges
that “the bank would wait until the weather improved
and commerce returned to normalcy before any payment was
required.” (Id.). Sometime after February 1,
2015-the letter does not say when-Kenney attempted to make
the third TPP payment. (Id.). However, the payment
was declined as late.
proceedings have now commenced. (Id. at 2-3). U.S.
Bank, which has acquired the note, allegedly has not yet
offered a “face-to-face” meeting with Kenney
under Massachusetts's right-to-cure law. (Compl. ¶
filed suit in state court on July 14, 2017. The complaint
asserted ten counts: violation of Mass. Gen. Laws ch. 93A
(Count 1); violation of Mass. Gen. Laws ch. 183C (Count 2);
violation of 940 CMR 8.00 et seq. (Count 3);
violation of the Truth in Lending Act (Count 4); violation of
the Federal Real Estate Settlement Procedures Act (Count 5);
unconscionability (Count 6); fraud (Count 7); unjust
enrichment (Count 8); estoppel (Count 9); and breach of
contract (Count 10).
same day, Kenney also filed an ex parte motion for a
temporary restraining order and preliminary injunction to
prevent the bank from foreclosing on his property, which was
then scheduled for July 18, 2017. The state court issued the
TRO and scheduled a preliminary injunction hearing for July
21, 2017, which was later rescheduled for August 8, 2017.
Because of the TRO, defendant postponed the foreclosure sale.
The bank then ...