Crofton v. Bank of America Home Loans
2:11-cv-10124
E.D. Mich.Mar 31, 2011Background
- Croftons executed June 17, 2008 loan: 30-year FHA mortgage for $152,793 with 6.375% interest; MERS identified as mortgagee/nominee for Countrywide.
- HUD/FHA insurance application identified Countrywide as lender and disclosed UPIP; HUD-1 revealed closing costs and that some items were paid outside closing (POC).
- Itemization disclosed prepaid items (e.g., loan processing fee, UPIP) and stated financed amount of $149,280.31; HUD-1 showed no disclosed yield spread premium or broker fees at closing.
- Plaintiffs allege RESPA kickbacks via yield spread premium concealed by third-party fees; argue Countrywide acted as both broker and lender for the loan.
- Plaintiffs filed state court complaint November 10, 2010; case removed to federal court; Defendants moved to dismiss under Rule 12(b)(6).
- Court grants motion to dismiss: RESPA, ECOP, MBLSLA, fraud, and conspiracy claims are dismissed for time-bar, lack of state-law basis, or failure to plead with particularity.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| RESPA applicability and time-bar as to MERS and BoA | Crofton argues RESPA violation via kickbacks and concealment. | Defendants contend RESPA claims are time-barred and MERS is not a RESPA settlement service provider. | RESPA claims time-barred; MERS not liable for RESPA settlement services. |
| ECOP claim timeliness | ECOP violation by refusing terms. | ECOP claims are time-barred and inconsistent with loan documents. | ECOP claims time-barred. |
| MBLSLA applicability | MBLSLA applies to alleged fraud by Countrywide/MERS. | MBLSLA does not apply to depository institutions or their affiliates here. | MBLSLA does not apply; claims fail. |
| Fraud claims adequacy under Rule 9(b) | Allegations show misrepresentation about rate and broker behavior. | Allegations insufficiently pleaded with specificity and misrepresentation was opinion/puffery. | Fraud claim failure under Rule 9(b); not plausibly pled. |
| Civil conspiracy claim viability | Conspiracy based on underlying fraud. | No underlying tort proven; conspiracy claim fails. | Civil conspiracy claim fails for lack of underlying tort. |
Key Cases Cited
- Allan v. GreenPoint Mortgage Funding, Inc., 730 F. Supp. 2d 1071 (N.D. Cal. 2010) (RESPA and related pleading standards cited for concealment and timing)
- Lane v. Residential Funding Corp., 323 F.3d 739 (9th Cir. 2003) (yield spread premium analyses in RESPA context)
- Watts v. Polaczyk, 619 N.W.2d 714 (Mich. Ct. App. 2000) (presumed knowledge of signed instruments; signature acknowledgement governs)
- Webb v. First of Michigan Corp., 491 N.W.2d 851 (Mich. Ct. App. 1992) (reliance issues and fraud pleadings under Michigan law)
- Frank v. Dana Corp., 547 F.3d 564 (6th Cir. 2008) (Rule 9(b) particularity requirements for fraud claims)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for pleading a claim)