For Publication UNITED STATES DISTRICT COURT DISTRICT OF ...

Case 3:16-cv-00449-FLW-LHG Document 31 Filed 10/31/16 Page 1 of 52 PageID: 351

For Publication

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

___________________________________

:

FLORENCE BLOCK,

:

:

Civil Action No. 16-0449 (FLW)(LHG)

Plaintiff,

:

:

OPINION

v.

:

:

SENECA MORTGAGE SERVICING; :

OCWEN LOAN SERVICING, LLC;

:

FAY SERVICING LLC; ARLP

:

SECURITIZATION TRUST, SERIES :

2015-1. JOHN DOES I-X;

:

:

Defendants. :

___________________________________ :

Hon. Freda L. Wolfson, U.S.D.J.: Before the Court are the motions of Defendants Seneca Mortgage Servicing, Ocwen Loan

Servicing, Fay Servicing, and ARLP Securitization Trust to dismiss the complaint of Plaintiff

Florence Block, alleging breach of contract and violations of the Fair Debt Collection Practices

Act ("FDCPA"), 15 U.S.C. ? 1692, the Real Estate Settlement Procedures Act ("RESPA"), 12

U.S.C. ?? 2601?2617, and the New Jersey Consumer Fraud Act ("NJCFA") as the result of

Defendants' handling of Plaintiff's mortgage modification. For the reasons set forth below,

Defendants' motions are granted in part and denied in part as follows: All of Defendants'

motions to dismiss Count I, Plaintiff's breach of contract claim, are denied; Defendant Ocwen's

motion to dismiss Count II, Plaintiff's FDCPA claim, is granted in part and denied in part

(granted as to Plaintiff's claim under 15 U.S.C. ? 1692d, granted as to Plaintiff's claim under 15

U.S.C. ? 1692e based upon the February 2013 telephone call with Ocwen's employee, granted

on the basis of the statute of limitations for any conduct prior to January 26, 2015, and denied as

to all other claims); Defendant Fay's motion to dismiss Count II, Plaintiff's FDCPA claim is 1

Case 3:16-cv-00449-FLW-LHG Document 31 Filed 10/31/16 Page 2 of 52 PageID: 352

granted (with prejudice as to Plaintiffs 15 U.S.C. ? 1692c(a) claim, without prejudice with respect to all other claims); Plaintiff is given leave to amend the complaint to address the status of Plaintiff's default at the time servicing responsibilities for her mortgage were transferred from Ocwen to Fay; Defendant Fay's motion to dismiss Count III, Plaintiff's RESPA claim, is granted; Defendant Seneca's motion to dismiss Count IV, Plaintiff's NJCFA claim, is denied. FACTUAL BACKGROUND & PROCEDURAL HISTORY

Unless otherwise identified as originating from another source, the facts alleged in the complaint are as follows. Plaintiff purchased the real property located at 40 Constitution Way, Bernards, New Jersey in 1997. Compl. ? 8. On or about May 22, 2007, Plaintiff entered into a refinance mortgage loan transaction. Id. at ? 10. As part of the refinance, Plaintiff executed a promissory note payable to the order of EquiFirst Corporation in the amount of $580,500.00 and a mortgage to secure the promissory note. Id. at ? 11. As has become de rigueur in the mortgage industry, since origination, Plaintiff's loan has been sold multiple times and the servicing rights of the loan have been transferred several times.1 Id. at ? 15. Plaintiff defaulted on her mortgage loan obligation in 2010. Id. at ? 16.

On January 4, 2013, the law firm of Pluese, Becker & Saltzman, LLC filed a debt collection foreclosure action in New Jersey Superior Court on behalf of The Bank of New York

1 The servicing rights and beneficial ownership interest in a given mortgage note are legally distinct and can be and often are transferred separately. The ownership interest is originally held by the mortgage lender who loaned the money to purchase the property and can be sold by the lender thereafter. Servicing rights encompass the day-to-day administration of the loan and typically include the processing of loan payments, responding to borrower inquiries, keeping track of the principal and interest balance on the loan, managing the loan's escrow account, and initiating foreclosure actions. Servicing rights are initially assigned to an entity at the time the mortgage is originated and may be assigned to other entities thereafter. See Consumer Financial Protection Bureau, "What's the difference between a mortgage lender and a servicer?" available at .

2

Case 3:16-cv-00449-FLW-LHG Document 31 Filed 10/31/16 Page 3 of 52 PageID: 353

Mellon Trust Company seeking to enforce Plaintiff's promissory note.2 Id. at ? 18. After the

foreclosure litigation had been filed, servicing of the mortgage loan transferred to Defendant

Seneca.3 Id. at ? 19.

On or about May 12, 2014, Seneca provided Plaintiff a "Trial Modification Agreement"

("TMA").4 Id. at ? 20. The relevant provisions of the TMA are as follows:

Section 1:

. . . In consideration of the mutual promises in this Agreement the receipt and sufficiency of which is hereby acknowledged, you and we agree as follows, notwithstanding anything to the contrary contained in the Note or Mortgage evidencing your Loan:

1. You [Plaintiff] acknowledge that default occurred and your loan has been properly accelerated and is fully due and payable.

2. You further acknowledge that a mortgage foreclosure proceeding was properly brought against you and your property as a result of your default.

3. You and we [Defendant Seneca] agree that your Loan will be reviewed for a permanent modification if the following payments are made, in certified funds:

A deposit in the amount of $ 4,887.73 to be made immediately.

Six trial monthly payments of $ 4,609.31 each, beginning 6-01-14, and the same day of each month after that as detailed on the attached Trial Payment Schedule.5

2 Although not explicitly alleged in the complaint, it appears from the attached exhibits that Bank of New York Mellon was the owner of Plaintiff's loan, by at least January 2013. 3 It is unclear from the allegations in the complaint whether the original creditor or another servicer was responsible for servicing the loan prior to Seneca, but for the purposes of the present motions to dismiss, it is sufficient to observe that Plaintiff has alleged that Seneca took over the servicing of Plaintiff's mortgage sometime after January 4, 2013. 4 When deciding a motion to dismiss, a court may consider the pleadings and attached exhibits "which [are] a part of the pleading for all purposes," Fed. R. Civ. P. 10(c); Dowdell v. University of Med. & Dentistry, 94 F. Supp. 2d 527, 529 (D.N.J. 2000) (citations omitted). See also 2 Moore's Federal Practice ? 12.34[2] (3d ed. 2014) (""court may consider only the facts alleged in the pleadings, documents attached as exhibits or incorporated by reference in the pleadings, and matters of which the judge may take judicial notice."). The Trial Modification Agreement provided to Plaintiff by Seneca is attached to the complaint as Exhibit A. The Court considers the text of the Trial Modification Agreement as a document attached to the pleadings. 5 The Trial Payment Schedule, attached as Section 3 of the TMA, provides: You agree to make payments under your trial modification plan, as follows: AMOUNT AND DATE PAYMENT MUST BE RECEIVED:

Trial Payment Schedule Down Payment Amount: $ 4,887.73

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Case 3:16-cv-00449-FLW-LHG Document 31 Filed 10/31/16 Page 4 of 52 PageID: 354

Your trial monthly payments include principal, interest at a fixed rate of 6%, and escrow. That portion of your trial monthly payment used to pay escrow (the \\Escrow Payment'') includes payments to cover taxes, insurance premiums, assessments and other escrow items.

...

Once you timely complete this payment schedule, you will be reviewed for a permanent modification. However, there is no guarantee that we will agree to permanently modify your Loan even if you make all trial payments, and even if you continue to make other payments. Acceptance by SMS or any of its agents, employees or other representatives of any payment or partial payment, including any trial modification payments, shall not be construed as a waiver of your default under the Loan unless and until SMA agrees to permanently modify your Loan and the permanent modification agreement is fully executed by all parties. A payment will be considered to be "timely" if we receive it before the date we can charge you a late charge as provided in the note evidencing your Loan.6

Section 2:

You will qualify for a permanent modification at the end of the trial period if (1) you timely make all trial payments; and (2) we conclude, after review, that there has not been a material adverse change in your financial status or any other change in circumstances that render you ineligible for a permanent modification. We will endeavor to complete our review and implement any permanent modification to which you may be entitled as soon as reasonably possible.

If you qualify for a permanent modification at the end of the trial period, your permanent modification will be as follows:

Down Payment Due Date: 5-15-14 Trial Plan Monthly Payment: $4,609.31 Term of Trial Plan: 6-01-14 -- 11-01-14 6 "As a general matter, a district court ruling on a motion to dismiss may not consider matters extraneous to the pleadings. . . . However, an exception to the general rule is that a "document integral to or explicitly relied upon in the complaint" may be considered "without converting the motion [to dismiss] into one for summary judgment." In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997). See also In re Donald J. Trump Casino Sec. Litig.-Taj Mahal Litig., 7 F.3d 357, 368 (3d Cir. 1993) (quoting Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993) ("a court may consider an undisputedly authentic document that a defendant attaches as an exhibit to a motion to dismiss if the plaintiff's claims are based on the document.")). Under the terms of the original adjustable rate mortgage note, provided to the Court by Defendant Fay and incorporated into the complaint by reference, Plaintiff's loan servicers were permitted to charge a late fee on "any monthly payment" not received "by the end of 15 calendar days after the date it is due." Adjustable Rate Note Section 7(A).

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Case 3:16-cv-00449-FLW-LHG Document 31 Filed 10/31/16 Page 5 of 52 PageID: 355

Your monthly installments of principal and interest will be $ 3,770.57, starting on 6-0114, and the same day each month after that. You will additionally have to make an Escrow Payment. We will provide you with notice of the amount of your Escrow Payment. Your current Escrow Payment is $838.74. If your Escrow Payment remains the same when your permanent modification becomes effective, then your total monthly payment for principal and interest, plus your Escrow Payment, would be $4,609.31. However, your actual total monthly payment may vary depending on the actual amount of your Escrow Payment

If your Loan is permanently modified, the interest rate on your Loan will be fixed at 6% for the life of the Loan.

As of the date of this Agreement, the total amount necessary to pay off your Loan is $801,809.66. Your modified monthly payment was calculated by applying your interest rate to an adjusted principal balance of $650,000.00. If your loan is permanently modified, we will capitalize the other past due amounts of $138,491.27. This "balloon payment'' of $138,491.27 will remain owed but will be deferred until maturity or payoff of the Loan.

4. We agree to suspend taking further action in your foreclosure proceeding, including any scheduled foreclosure sale, so long as you meet all obligations under this Agreement, including the obligation to make timely payments. You agree that our suspension of foreclosure proceeding will not affect any of our rights to continue our foreclosure proceeding against you and your property and will not be deemed to be a waiver of our rights to continue our foreclosure proceeding if you do not timely make all payments required by this Agreement, or if we otherwise determine that you do not qualify for a permanent modification. You further agree that your Loan was properly accelerated and that you received proper notice of acceleration, including pursuant to a Notice of Intention to Foreclose dated May 24, 2012. Moreover, you agree that no new notice of default, notice of intent to accelerate, notice of acceleration, or similar notice will be necessary to continue the foreclosure action, and all rights to such notices are hereby waived to the extent permitted by applicable law. You also waive any right to mediation, conciliation or arbitration in the foreclosure proceeding to the extent permitted by applicable law.

...

8. If you fail to meet all of your obligations under this Agreement, including timely making the deposit and your trial payments:

Your Loan will remain in default and your Loan will be governed by the Note and Mortgage evidencing your Loan as If this Agreement had not been entered Into.

You will be deemed to have waived any statute of limitations related to acceleration of your Loan.

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