Block v. Seneca Mortgage Servicing
221 F. Supp. 3d 559
D.N.J.2016Background
- Plaintiff Florence Block defaulted on a 2007 mortgage and, in 2014, entered a Trial Modification Agreement (TMA) with servicer Seneca requiring a down payment and six trial payments; the TMA acknowledged prior acceleration and foreclosure and included waivers of defenses.
- Block made the required trial payments (totaling $32,543.59) and alleges she fully performed the TMA by November 2014; servicing then transferred from Seneca to Ocwen (Dec. 1, 2014), and later to Fay (Mar. 20, 2015); loan ownership later went to ARLP.
- Plaintiff alleges Seneca, Ocwen, and Fay failed to properly review and convert the TMA into a permanent modification; Ocwen allegedly told Plaintiff it would send a permanent modification (Feb. 6, 2015) but never did; Fay offered a new trial plan in July 2015 which Plaintiff did not accept.
- Plaintiff filed suit (Jan. 26, 2016) asserting: (Count I) breach of contract against Seneca, Ocwen, Fay, ARLP for failing to provide a permanent modification; (Count II) FDCPA claims against Ocwen and Fay; (Count III) RESPA claim against Fay for failing to respond to a Notice of Error; (Count IV) NJCFA claim against Seneca for deceptive conduct during the modification process.
- The court considered motions to dismiss; it accepted as true allegations that Plaintiff performed and that defendants accepted payments, but noted factual disputes (e.g., timing, assignment/privity) that generally precluded dismissal of the breach claim at pleading stage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Existence & consideration for TMA (breach) | TMA is a binding contract; Block gave consideration by surrendering legal rights and making payments | Payments on preexisting debt cannot be new consideration; lack of servicer signature defeats contract | Court: TMA plausibly enforceable; surrender of legal rights suffices as consideration; motions to dismiss Count I denied |
| Performance / compliance under TMA | Block performed (made trial payments on due dates); defendants accepted payments | Payments were not in "certified funds" and some were late; thus no performance | Court: factual disputes; acceptance of payments and attached checks suffice to plead performance at pleading stage; denied dismissal |
| FDCPA liability for communications (Ocwen/Fay) | Monthly statements and certain communications misrepresented amounts and were collection communications; Ocwen employee’s promise was deceptive | Some calls were not "in connection with" debt collection; Fay not a debt collector if loan not in default when acquired; TILA/Reg Z periodic-statement rules may require direct statements to borrower | Court: Ocwen’s Feb. 6 call not actionable under FDCPA (not collection communication) — dismissed without prejudice; monthly statements can be debt-collection communications — FDCPA claims survive except time-barred claims pre-1/26/2015; Fay’s §1692c(a) claim dismissed with prejudice because TILA/Reg Z periodic-statement rules bar FDCPA cessation theory; Fay’s FDCPA claims otherwise dismissed without prejudice to pleading default status at transfer |
| RESPA notice-of-error (Fay) | Fay received Qualified Written Request/Notice of Error and failed to acknowledge/investigate within required time; caused damages (overbilling/time expense) | Plaintiff fails to allege actual damages proximately caused by RESPA violation | Court: Plaintiff failed to plead actual damages causally linked to the RESPA violation (preparation costs not compensable; no allegation she paid inflated bills post-violation); Count III dismissed without prejudice |
| NJCFA (Seneca) | Seneca induced plaintiff to enter TMA (fraud/deception), accepted payments, then failed to honor agreement — causing ascertainable loss | Claim duplicative of breach of contract and lacks particularity/causal loss | Court: NJCFA claim adequately pleaded given alleged fraudulent inducement and ascertainable damages tied to breach; motion denied |
Key Cases Cited
- Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547 (7th Cir. 2012) (TPP/TMA can be an enforceable offer; surrender of legal rights and debtor performance can obligate servicer to provide modification subject to limited review)
- McLaughlin v. Phelan, Hallinan & Schmieg, LLP, 756 F.3d 240 (3d Cir. 2014) (communications need not be explicit demands to constitute debt-collection activity; statements about amounts and status can trigger FDCPA)
- Simon v. FIA Card Servs., N.A., 732 F.3d 259 (3d Cir. 2013) (adopts the animating-purpose analysis; distinguishes debtor-initiated ministerial responses from collection communications)
- Brown v. Card Serv. Ctr., 464 F.3d 450 (3d Cir. 2006) (FDCPA construed broadly for consumer protection; use least-sophisticated-debtor standard)
- Gonzalez v. Wilshire Credit Corp., 207 N.J. 557 (N.J. 2011) (NJCFA covers deceptive practices in mortgage lending/servicing and provides consumer a private remedy in loan-modification context)