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Ford v. Nationstar Mortgage, LLC

United States District Court, D. Nevada

May 28, 2018

GEORGINA FORD and THE ESTATE OF MURRAY D. FORD, Plaintiffs,
v.
NATIONSTAR MORTGAGE, LLC, Defendant.

         Motion for Summary Judgment

          ORDER

          RICHARD F. BOULWARE, II UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         Before the Court is Defendant's Motion for Summary Judgment. ECF No. 50. For the reasons stated below, the Motion is granted in part and denied in part.

         II. BACKGROUND

         Plaintiffs filed the Complaint on February 19, 2016. ECF No. 1. Defendant filed an Answer on April 18, 2016. ECF No. 13. Defendant filed the instant Motion for Summary Judgment on February 14, 2017. ECF No. 50. Defendant filed a Motion to Supplement [50] Motion for Summary Judgment on April 7, 2017. ECF No. 58. Plaintiffs filed their Response on April 28, 2017. ECF No. 59. Defendant filed its Reply on May 12, 2017. ECF No. 61. The Court held a hearing to discuss the Motion for Summary Judgment on September 18, 2017. ECF No. 64.

         III. LEGAL STANDARD

         A. Motion for Summary Judgment

         Summary judgment is appropriate when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); accord Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). When considering the propriety of summary judgment, the court views all facts and draws all inferences in the light most favorable to the nonmoving party. Gonzalez v. City of Anaheim, 747 F.3d 789, 793 (9th Cir. 2014). If the movant has carried its burden, the non-moving party “must do more than simply show that there is some metaphysical doubt as to the material facts . . . . Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial.” Scott v. Harris, 550 U.S. 372, 380 (2007) (alteration in original) (internal quotation marks omitted).

         IV. UNDISPUTED FACTS

         The Court finds the following facts to be undisputed. In August 2004, Plaintiffs obtained a promissory note and deed of trust (collectively, the “Loan”) on their home at 3204 Grey Dolphin Drive, Las Vegas, Nevada 89117. A Bank of America affiliate originated and initially serviced the Loan. Plaintiffs ultimately defaulted on the Loan and filed for bankruptcy in November, 2009, in order to keep their home. As a result, Plaintiffs entered into a Loan Modification Agreement (the “Modification”) with Bank of America in April, 2010. The Modification rolled $22, 892.22 of delinquent interest, fees, and costs into the Loan principal and converted the Loan into a step rate loan, in which the interest rate on Plaintiffs' Loan would increase from 2.000% to 3.000% on specified dates between June 1, 2010 and June 1, 2015; Plaintiffs' monthly payment would increase from $644.87 to $967.30 on those same dates; and those monthly payments would be interest-only (i.e., they would not decrease the principal of the loan). Plaintiffs were also responsible for making monthly escrow payments to cover taxes and insurance on their home. The amount necessary for Plaintiffs' escrow account was based upon the applicable taxes, property value, and insurance costs.

         On July 1, 2013, Nationstar began servicing Plaintiffs' Loan. Nationstar is required as servicer to collect the escrow amounts until such sums are paid out to the applicable third parties (e.g., the state or local government and insurer). Escrow amounts change regularly, and Nationstar does not keep any unused funds in escrow accounts. Instead, such funds are typically applied for the benefit of the borrower or, as may be otherwise required, returned to the borrower.

         In February 2014, Plaintiffs filed an Adversary Complaint in their bankruptcy against Bank of America and Nationstar, complaining of errors made in the servicing of their account while Bank of America was the servicer. On or about March 13, 2015, Plaintiffs, Bank of America, and Nationstar settled the Adversary Complaint. To that end, the parties entered into a confidential settlement agreement (the “Settlement Agreement”).

         Bank of America and Nationstar made their respective payments to provide the Settlement Payment to Plaintiffs. As also required, the Holdback Payment was applied to Plaintiffs' Loan. Plaintiffs kept the remaining Settlement Payment. However, in applying the Holdback Payment, Nationstar used an incorrect escrow calculation. This incorrect calculation increased the amount of the escrow, and thus a larger share of the Holdback Payment was applied to the escrow. This also resulted in less of the Holdback Payment being applied to outstanding principal and interest. As a result, despite the Holdback Payment, Nationstar believed Plaintiffs owed additional amounts.

         On or about July 13, 2015, Plaintiffs' attorney sent Nationstar a letter, which he followed with a “Request for Information Pursuant to 12 C.F.R. § 1024.36” (the “RFI”) on August 31, 2015, expressing concerns about the Loan and seeking information concerning it, including a transaction history and payoff statement. Nationstar responded to Plaintiffs' correspondence on September 9, 2015, stating that, after conducting an investigation, Nationstar had identified no errors on Plaintiffs' Loan. Nationstar's September 9, 2015 letter also included the Detail Transaction History Plaintiffs had requested, and invited Plaintiffs to provide additional documentation if they still believed there was an error on their Loan. Nationstar provided Plaintiffs with the requested payoff statement on or about September 22, 2015.

         On or about September 26, 2015, Plaintiffs, still believing there were errors on their Loan, took Nationstar up on its invitation to obtain additional documentation through a “Notice of Error(s) pursuant to 12 C.F.R. § 1024.35(b); and Request for Information pursuant to 12 C.F.R. § 1024.36” (“NOE #1”), which Plaintiffs sent to Nationstar via certified mail. On September 30, 2015, Plaintiffs sent another “Notice of Error(s) pursuant to 12 C.F.R. § 1024.35(b); and Request for Information pursuant to 12 C.F.R. § 1024.36” (“NOE #2”), again via Certified Mail. NOE #2 ...


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