United States District Court, D. Maine
MARK A. BOWEN, Plaintiff,
DITECH FINANCIAL LLC, f/d/b/a/ GREEN TREE SERVICING LLC, and FEDERAL NATIONAL MORTGAGE ASSOCIATION, Defendants.
ORDER ON MOTION TO DISMISS
A. WOODCOCK, JR. UNITED STATES DISTRICT JUDGE
plaintiff brings this action against the owner of his loan
and the loan servicer for unfair and misleading debt
collection attempts in violation of statutory and common law.
The defendants moved to dismiss the complaint and, in support
of their motion, they have attached several documents. The
Court grants in part and denies in part the defendants'
motion to dismiss (ECF No. 66).
April 5, 2016, Mark A. Bowen filed a complaint against Ditech
Financial LLC (Ditech), f/d/b/a Green Tree Servicing LLC
(Green Tree), and the Federal National Mortgage Association
(Fannie Mae) alleging common law and statutory violations for
“repeated coercive and harassing attempts to collect on
monies not owed by [him].” Compl. at 1 (ECF
No. 1). Ditech and Fannie Mae answered on June 3, 2016.
Defs.' Answer and Affirmative Defenses (ECF No.
November 18, 2016, Mr. Bowen filed a motion for leave to
amend his Complaint due to newly discovered facts and
evidence, Pl.'s Mot. for Leave to Amend Compl.
at 1 (ECF No. 25), which the Court granted without objection
on December 13, 2016. Order (ECF No. 28). Mr. Bowen
filed the First Amended Complaint on December 14, 2016.
First Am. Compl. (ECF No. 29) (Am. Compl.).
The Amended Complaint contains six counts: Count I-Fraud and
Fraudulent Misrepresentation; Count II-violations of the
Maine Unfair Trade Practices Act (MUTPA), 5 M.R.S.
§§ 205-A et seq.; Count III-violations of
the Maine Fair Debt Collection Practices Act (MFDCPA), 32
M.R.S. §§ 11001 et seq.; Count
IV-violations of the Fair Debt Collection Practices Act
(FDCPA), 15 U.S.C. §§ 1692 et seq.; Count
V-violations of the Real Estate Settlement Procedures Act
(RESPA), 12 U.S.C. §§ 2601 et seq.; and
Count VI-Breach of Fiduciary Duty. Id. The Amended
Complaint contains thirty-three exhibits as attachments.
Id. Attachs. 1-33.
January 13, 2017, the Defendants moved to dismiss Mr.
Bowen's First Amended Complaint. Mot. to Dismiss
First Am. Compl. (ECF No. 48). Four days later, both
parties notified the Court of their intent to file summary
judgment motions. Ditech Financial LLC f/d/b/a Green Tree
Servicing LLC and Federal National Mortgage Association
Pre-Conference Filing (ECF No. 49); Pl.'s
Pre-Filing Conference Mem. (ECF No. 50). At the Rule
56(h) pre-filing conference on January 30, 2017, the Court
suggested that instead of briefing three separate dispositive
motions, the parties submit the case to the Court on a
stipulated record. Procedural Order at 1-2 (ECF No.
59). Counsel initially agreed, pending approval from their
clients, and so the Court dismissed without prejudice the
Defendants' Motion to Dismiss the First Amended
Complaint. Id. at 2-3. However, after consulting
with their clients, the parties informed the Court during a
teleconference on February 7, 2017 that they preferred to
proceed with traditional dispositive motions, and the Court
vacated its earlier procedural order. Further Procedural
Order (ECF No. 63).
February 8, 2017, the Defendants refiled the motion to
dismiss, including eight exhibits, and requested oral
argument. Mot. to Dismiss First Am. Compl. (ECF No.
66) (Defs.' Mot.); Mot. for Oral
Arg./Hr'g (ECF No. 67). Neither these eight exhibits
nor the exhibits attached to the Amended Complaint included a
document the Defendants relied upon in their motion to
dismiss-namely, the parties' April 24, 2015 confidential
settlement agreement and release with regard to the
Defendants' foreclosure action, captioned Green Tree
Servicing LLC v. Mark A. Bowen, et al., No. AUSBSC RE
2014-00044 (State of Maine Superior Court, Androscoggin).
See Defs.' Mot. Attachs. 1-8. On March 10, 2017,
Mr. Bowen objected to the motion to dismiss. Pl. Mark A.
Bowen's Opp'n to Defs.' Mot. to Dismiss (ECF
No. 82) (Pl.'s Opp'n).
THE FACTUAL ALLEGATIONS
December 20, 2005, Mr. Bowen and his now-ex-wife, Nancy E.
Bowen, executed and delivered to Bank of America, N.A. (BOA)
a promissory note in the amount of $204, 422.00. Am.
Compl. ¶ 20. To secure the promissory note, Mr.
Bowen and Nancy Bowen executed a mortgage deed in favor of
BOA securing the property located at 17 Orchard Lane, Minot,
Maine 04258. Id. ¶ 21. As a part of the
mortgage, BOA created an escrow account to pay real estate
taxes and hazard insurance on the property, and BOA used a
portion of Mr. Bowen's monthly payment to fund the escrow
account. Id. ¶¶ 22-23.
Loan Modification Agreement
2012, Mr. Bowen fell behind on the loan due to his divorce
from Nancy Bowen, and he applied for a loan modification
through BOA. Id. ¶¶ 26-27. Mr. Bowen
received a Fannie Mae Trial Period Plan in February 2013,
which required three payments of $928.24 due on March 1,
April 1, and May 1, 2013. Id. ¶¶ 27-28.
The Plan stated that if Mr. Bowen made the trial plan
payments on time and continued to meet all of the eligibility
requirements of the modification program, his mortgage would
be permanently modified. Id. ¶ 29. Mr. Bowen
accepted the Trial Period Plan offer and made all three
payments to BOA on time. Id. ¶ 30.
30, 2013, BOA sent Mr. Bowen a permanent Fannie Mae Loan
Modification Agreement with an effective date of July 1,
2013. Id. ¶ 31. Under the Modification
Agreement and Clarity Commitment, the new monthly payment on
the loan would be $930.67 and would include principal,
interest, taxes, and insurance. Id. Additionally,
according to the terms of the Modification Agreement, $38,
495.97 would be capitalized into the loan for a new modified
principal balance of $217, 698.97 to bring the loan current.
Id. ¶ 32. The modification allowed for $65,
309.66 of the new principal balance to be deferred, interest
free. Id. The Modification Agreement stated that of
the $38, 495.97 capitalized amount, $8, 202.81 would be
applied to past due interest, $26, 662.46 would be applied to
servicing expenses, and $3, 630.70 would be applied to taxes
and insurance that had been advanced by BOA. Id.
Bowen signed and returned the Modification Agreement to BOA
in a timely manner. Id. ¶ 34.
Transfer of Loan Servicing
transferred servicing of the loan to Green Tree effective
June 1, 2013, and the mortgage deed was eventually assigned
to Green Tree on June 18, 2013. Id. ¶¶ 25,
35. Green Tree was responsible for servicing the loan on
behalf of and under the authority and direction of Fannie
Mae. Id. ¶ 36. Green Tree was obligated to
follow the Fannie Mae Single Family Servicing Guide in
servicing Mr. Bowen's loan. Id. ¶ 37.
Additionally, Green Tree was responsible for the handling and
maintenance of the escrow account on the loan. Id.
Green Tree's Underfunding of the Escrow Account
Tree did not implement the loan modification and treated Mr.
Bowen's loan as if it were in default when it began
servicing the loan. Id. ¶ 39. On or around the
end of January 2014, Green Tree did capitalize at least $38,
495.97 in interest, servicing expense, and escrow advances to
the unpaid principal balance of the loan. Id. ¶
40. However, in this process, Green Tree failed to properly
apply the correct amounts per the Clarity Commitment and Loan
Modification Agreement to the escrow account. Id.
¶ 41. Mr. Bowen alleges, upon information and belief,
that more servicing fees had accrued than were accounted for
on the Clarity Commitment and that Green Tree made the
unilateral decision to pay themselves back about $27, 521.86
in servicing fees and then allocate the remaining $2, 384.66
to the escrow account. Id. ¶¶ 42, 43. This
decision contradicted the agreed-upon terms of the Clarity
Commitment and was done without Mr. Bowen's consent or
knowledge. Id. ¶ 44. The amount allocated to
the escrow account was short of the $3, 630.70 the Clarity
Commitment stated would be allocated to the escrow account,
and the account was underfunded by $1, 246.04. Id.
terms of Mr. Bowen's mortgage, monthly payments are to be
applied in the following order: interest, then principal,
then escrow. Id. ¶ 46. If the payment is not
enough to cover all three, it is placed in unapplied funds
until another payment makes up the difference. Id.
Because the monthly payment is not applied to the month in
which it is received, the loan is considered past due and
eventually in default. Id. By disregarding the
Clarity Commitment and Loan Modification and “secretly
applying the capitalized funds to their own questionable
servicing fees first, ” Ditech thereby left a
deficiency in the escrow account that, two years later, it
would seek to recoup as part of an increased monthly payment.
Id. ¶ 47. In doing so, Ditech put Mr.
Bowen's loan at risk of default. Id. Because
this was not disclosed to Mr. Bowen, he was not able to
dispute any of the extra undisclosed servicing fees.
Id. ¶ 48.
Foreclosure Action & Settlement Agreement
March 10, 2014, Green Tree initiated a foreclosure action
captioned Green Tree Servicing LLC v. Mark A. Bowen, et
al., No. AUSBSC RE 2014-00044 (State of Maine Superior
Court, Androscoggin) (foreclosure action) that should not
have been initiated due to the permanent loan modification.
Id. ¶ 49. Mr. Bowen amended his answer to the
foreclosure action and added counterclaims on January 5,
2015. Id. ¶ 50. As alleged in Mr. Bowen's
counterclaims in the foreclosure action, including claims for
fraud and negligent misrepresentations and violations of the
MFDCPA, FDCPA, RESPA, and MUTPA, Green Tree failed to
properly implement the permanent modification that brought
the loan current, and Green Tree continued to attempt to
collect on the pre-modified terms of the loan and monies not
owed by Mr. Bowen. Id. ¶ 50.
foreclosure action was transferred to the Maine Business and
Consumer Court on January 22, 2015, and the docket number
changed to BCD-RE-15-01. Id. ¶ 51. On April 17,
2015, the parties entered into a confidential settlement
agreement and release. Id. ¶ 52. The parties
filed a Stipulation of Dismissal of the foreclosure action
dated April 30, 2015, stating that “[e]ach party shall
bear its own costs and attorneys' fees.”
Id. ¶ 53.
Reinstatement Quote & Green Tree's Improper Fee
the effective date of the settlement, Green Tree, through
their attorneys at Shapiro and Morley, provided Mr. Bowen a
reinstatement quote of $21, 056.30 good through May 12, 2015
to reinstate the loan per the terms of the permanent loan
modification. Id. ¶ 54. The loan was considered
in foreclosure status at the time the reinstatement quote was
issued. Id. ¶ 55.
itemization of the reinstatement amount included (a)
twenty-three past due payments, including principal,
interest, and escrow amounts for taxes and insurance, from
July 1, 2013 through May 1, 2015 per the terms of the loan
modification, (b) late fees of $37.53, and (c) unpaid amounts
in the loan's suspense account of $386.64. Id.
¶ 56. The reinstatement quote did not include any funds
allegedly owed for any additional advanced escrow amounts or
make any reference to any escrow deficiency. Id.
¶ 57. Green Tree failed to provide a history of the
escrow account within ninety days of the reinstatement.
Id. ¶ 60.
8, 2015, Mr. Bowen hand-delivered a check in the amount of
$21, 056.30 to counsel for Green Tree to effectuate the
reinstatement. Id. ¶ 58. In a mortgage
statement dated June 14, 2015, Green Tree acknowledged
receipt of the $21, 056.30 payment and reflected the terms of
the loan modification in the regular monthly payment due of
$930.67 for principal, interest, and escrow. Id.
¶ 59. In addition, Green Tree attempted to collect
$35.70 in “Total Fees and Charges Due” for a
grand total of $966.37. Id. Mr. Bowen made a payment
of $966.37 to Green Tree on or around June 25, 2015 for July
to cover the additional $35.70 charge. Id. ¶
mortgage statement dated July 14, 2015, Green Tree again
attempted to collect $35.70 in “Total Fees and Charges
Due.” Id. ¶ 62. Mr. Bowen made a payment
of $966.37 to Green Tree on or around July 28, 2015 for
August. Id. ¶ 63.
Bowen contacted Green Tree to dispute the $35.70 charge
several times by phone, explaining that the fees were part of
a settlement and he should not have to pay them. Id.
¶ 64. In a letter dated July 28, 2015, Green Tree
claimed the $35.70 was a proper fee on the account.
Id. ¶ 65. When Green Tree failed to correct the
error, Mr. Bowen retained counsel to assist him with his
dispute. Id. ¶ 66.
counsel, on August 3, 2015, Mr. Bowen delivered a Qualified
Written Request (QWR), including a Notice of Error (NOE) and
Request for Information (RFI), to Green Tree explaining that
Mr. Bowen did not owe the fees and charges Green Tree was
attempting to collect. Id. ¶ 67. Green Tree
received the letter on August 10, 2015. Id.
mortgage statement dated August 14, 2015, Green Tree again
attempted to collect $35.70 in “Total Fees and Charges
Due.” Id. ¶ 68. However, in a letter
dated August 20, 2015, Green Tree stated that it had
determined that the additional monthly fee of $35.70 was
improper and would be removed from the loan. Id.
¶ 69. Enclosed with the letter was a document entitled
“Advances, ” which showed a series of amounts
paid from the account that include attorney's fees, legal
costs, filing fees, and foreclosure costs. Id.
though it had determined that the fee was improper, in a
letter dated August 26, 2015, Green Tree stated that it would
take out a payment from Mr. Bowen's bank account that
included the $35.70 fee. Id. ¶ 70. Green Tree
did take this money from Mr. Bowen's account.
Id. ¶ 71.
Ditech Continues to ...