Bocci v. Nationstar Mortg.

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CANDACE BOCCI, Plaintiff, v. NATIONSTAR MORTGAGE LLC d/b/a MR. COOPER et al.; DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE FOR BCAP TRUST LLC 2007-AA3 MORTGAGE PASS-THROUGH CERTIFICATES SERIES 2007-AA3, Defendants.

No. 23-CV-1780 (JPC) (KHP)

United States District Court, S.D. New York

June 28, 2024

REPORT AND RECOMMENDATION ON MOTION TO DISMISS

KATHARINE H. PARKER, United States Magistrate Judge

TO THE HONORABLE JOHN P. CRONAN, UNITED STATES DISTRICT JUDGE FROM: KATHARINE H. PARKER, UNITED STATES MAGISTRATE JUDGE.

Before the Court for a Report and Recommendation is Defendants' Motion to Dismiss (the “Motion”). The Defendants - Nationstar Mortgage LLC d/b/a Mr. Cooper (“Nationstar”) and Deutsche Bank National Trust Company, as Trustee for BCAP Trust LLC 2007-AA3 Mortgage Pass-Through Certificates Series 2007-AA3 (“DBNTC”) (collectively, the “Defendants”) - have moved pursuant to Federal Rule of Civil Procedure 12(b)(6) (“Rule 12(b)(6)”) to dismiss Plaintiff's First Amended Complaint (the “Complaint” or “FAC”) located at ECF No. 14 for failure to state a claim. For the reasons stated below, I respectfully recommend that the Motion be GRANTED in part and DENIED in part.

BACKGROUND^[1]

1. Facts Alleged in the Complaint

On March 22, 2007, Plaintiff closed on the purchase of a condominium unit located in Manhattan. (FAC at ¶ 9.) In connection with such transaction, Plaintiff executed a mortgage in the amount of $760,000, (the “Mortgage”) with Countrywide Bank, the original lender. (Id.) Plaintiff alleges that pursuant to the terms of the Mortgage, Plaintiff was only responsible for making payments on the interest for the first ten years (that is, between 2007 and 2017), after which she would pay interest and principal for the remainder of the loan term. (Id. at ¶ 13.) The terms of the loan meant that Plaintiff's monthly mortgage payment was set to increase at year ten and, indeed, it did increase from $2,137.50 to $4,605.00 beginning on March 22, 2017. (Id.)

Plaintiff alleges that she called Nationstar on October 30, 2017 to inquire about temporary loan modification options, given the increased monthly payment, and because Plaintiff had recently lost her job. (Id. at ¶¶ 14-15.) Plaintiff was in communication with Nationstar for the next several months concerning a potential loan modification and received conflicting answers from Nationstar representatives regarding whether delinquency was a prerequisite for loan modification eligibility. (Id. at ¶¶ 15-17, 23-24.)

In December of 2017, Plaintiff submitted a loan modification application to Nationstar. (Id. at ¶¶ 30-32.) On January 22, 2018, Plaintiff received a letter from Nationstar dated January 12, 2018 (the “Forbearance Letter”) stating that Plaintiff had qualified for the unemployment program and was therefore being granted a temporary forbearance. This would allow her to pay a lower monthly payment of $909.44 for six months, beginning on February 1, 2018 (the “Temporary Forbearance Plan”). (Id. at ¶ 34.) The letter stated that “as a result of making reduced payments, you will become delinquent on your mortgage” but clarified that “[w]e will not refer your loan to foreclosure or proceed to foreclosure sale during this Forbearance Plan, provided you are complying with the terms of the Forbearance Plan.” (Id. at Exhibit (“Ex.”) 9.) The Forbearance Letter also noted that “as a result of making reduced payments, you will become delinquent on your mortgage. The estimated amount of accrued but unpaid balance that will be due at the end of the Forbearance Plan is $26,781.51.” (Id.)

On February 1, 2018, Plaintiff made her first payment under the Temporary Forbearance Plan. (Id. at ¶ 35.) The following day, Nationstar confirmed receipt of Plaintiff's payment via letter, which stated the funds had been placed in an “unapplied funds account” since the amount paid was insufficient to be applied as a full payment. (Id. at Ex. 10.)

In late February 2018, Plaintiff began receiving demand letters and collection calls from Nationstar regarding the Mortgage. (Id. at ¶ 38.) Plaintiff alleges that typically when she received collection calls, the Nationstar representative would first state they didn't know of a forbearance plan and then several minutes later would locate a forbearance plan record in the system. (Id.) Plaintiff also alleges that on February 19, 2018, she received a letter from Nationstar dated February 15, 2018, which stated that Nationstar needed additional time to review Plaintiff's application for a loan modification due to third party involvement. (Id. at ¶ 37.) Since Nationstar already informed Plaintiff she had qualified for temporary forbearance and had accepted Plaintiff's first payment under the Temporary Forbearance Plan, she assumed the letter was sent in error. (Id.)

Plaintiff made her second and third payments under the Temporary Forbearance Plan on March 2, 2018 and March 30, 2018, respectively. (Id. at ¶¶ 39, 41.) After both payments, Plaintiff received a letter stating the funds paid had been placed in an unapplied funds account. (Id. at ¶¶ 40, 42.)

On April 5, 2018, Plaintiff called Nationstar concerning demand letters and notices of default she had recently received, despite making the Temporary Forbearance Plan payments. (Id. at ¶ 43.) The Nationstar representative informed Plaintiff that the system was showing Plaintiff's loan modification application as still under review, but then a few minutes later the representative located the Temporary Forbearance Plan and told Plaintiff the system reflected Nationstar had received a payment in January 2018, but none since then. (Id.) The Nationstar representative instructed Plaintiff to email proof of the payments made in February through April to a particular email address, which Plaintiff did. (Id. at ¶¶ 43, 45.)

On April 18, 2018, Plaintiff received a collection call from a Nationstar representative who informed Plaintiff that once Plaintiff made her final payment under the Temporary Forbearance Plan in July of 2018, Nationstar would automatically “roll” Plaintiff into a permanent loan modification with a new interest rate and term. (Id. at ¶ 47.)

On May 1, 2018, Plaintiff made her fourth payment under the Temporary Forbearance Plan. (Id. at ¶ 48.) On May 14, 2018, Plaintiff received a letter from Nationstar, dated April 16, 2018, stating that the “trial period plan” had been approved in error because Nationstar's underwriter approved it without first getting investor approval, as required under the terms of the loan (the “Error Letter”).^[2] (Id. at Ex. 15.) The Error Letter further stated that a denial letter should have been sent to Plaintiff, but was never sent, and that to correct the error, Nationstar had submitted Plaintiff's account to the investor to review for a standard loan modification. (Id.)

On May 30, 2018, Plaintiff was in communication with DBNTC, and a DBNTC representative informed Plaintiff that Nationstar was the responsible party making all decisions on Plaintiff's loan, rather than DBNTC. (Id. at ¶ 52.) That same day Plaintiff received a collection call from Nationstar informing Plaintiff that her May 1 payment had been returned because her temporary forbearance application was denied. (Id. at ¶ 51.) Plaintiff wrote a letter to Nationstar's General Counsel, seeking clarification on why Plaintiff's payments were not being put towards her account. (Id. at ¶ 56.) In that letter, Plaintiff asked Nationstar to advise Plaintiff on what she would need to do for her payments to be accepted. (Id. at Ex. 17.)

On June 1, Plaintiff made her fifth payment under the Temporary Forbearance Plan. (Id. at ¶ 57.) On June 15, 2018, Plaintiff checked her bank record and discovered that Nationstar had credited back her May 1, 2018 and June 1, 2018 payments (i.e., not accepted them). (Id. at ¶ 59.) On June 20, 2018, Plaintiff spoke with a Nationstar representative who told her that Plaintiff would be receiving a loan modification agreement from Nationstar in July 2018, after she completed the Temporary Forbearance Plan. (Id. at ¶ 61.)

On July 14, 2018, Plaintiff received a letter from Nationstar dated July 6, 2018, stating that her Temporary Forbearance Plan payments would not be accepted, and the only amount that would be accepted was a “full reinstatement” of the loan. (Id. at ¶ 62, Ex. 19.) This letter further stated that Plaintiff's loan modification request submitted to the investor was denied in error on June 4, 2018, but that Nationstar had “reopened” the case and was evaluating the account for modification assistance to correct the error. (Id. at Ex. 19)

In mid-July 2018, Plaintiff hired an attorney, Scott Lanin, to assist her with handling her loan modification with Nationstar. (Id. at ¶ 64.) On July 20, 2018, Mr. Lanin sent Nationstar a Qualified Written Request (“QWR”) containing several information requests related to Plaintiff's loan modification application, the handling of such application, and details of Plaintiff's Mortgage. (Id. at Ex. 20.)

On July 31, 2018, Shapiro, DiCaro & Barak, LLC (“Shapiro”), counsel for Nationstar, filed with the New York City Department of Finance the recording of mortgage assignment from the original lender to DBNTC. (Id. at ¶ 68.) Plaintiff alleges that such filing demonstrates the investor approval requirement cited by Nationstar as the reason for denying her forbearance was, in actuality, not a requirement because Plaintiff's mortgage had not yet been assigned to DBNTC. (Id.)

Plaintiff's Complaint is silent as to whether she has made any mortgage payments since July 2018, but it appears that she did not make further payments toward her Mortgage because, as discussed below, foreclosure proceedings were initiated and she...