Kemp v. Nationstar Mortgage
239 A.3d 798
Md. Ct. Spec. App.2020Background
- In 2007 Kemp obtained a residential mortgage from Countrywide that was later assigned to Fannie Mae; Seterus serviced the loan.
- Kemp became delinquent in 2017; Seterus ordered 12 post-default drive-by property inspections and charged $180 in inspection fees, disclosed in letters to Kemp.
- Seterus (on Fannie Mae’s behalf) offered and Kemp accepted a trial plan and later a loan modification; inspection fees were represented as included in payoff/loan balance and some payments were applied.
- Kemp sued Fannie Mae and Seterus under Maryland CL § 12-121 (prohibiting lender’s inspection fees) and related claims: statutory damages (CL § 12-114), declaratory/injunctive relief, unjust enrichment, MCDCA (and derivative MCPA), and MMFPA.
- The circuit court dismissed, principally ruling assignees/servicers are not “lenders” under § 12-121; Kemp appealed.
- The Court of Special Appeals reversed in part: it held § 12-121 applies to assignees/servicers, rejected the court’s factual finding that fees were waived/paid as part of modification, affirmed dismissal of MCDCA and derivative MCPA claims, found some claims waived and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does CL § 12-121’s prohibition on “lender’s inspection fees” apply to assignees and servicers? | § 12-121 bars assignees/servicers from imposing inspection fees; statute’s purpose and precedent support broad reach. | “Lender” is defined as a person who "makes" a loan; assignees/servicers did not make the loan and thus are not covered. | Reversed circuit court: § 12-121 applies to assignees (and servicers acting on their behalf); a narrow reading would frustrate statute’s purpose and conflict with precedent. |
| Did the loan modification waive or cause Seterus to pay the inspection fees (foreclosing unjust enrichment / MMFPA claims)? | Kemp alleges fees were capitalized into the loan and not waived; factual dispute remains. | Defendants argued the modification paid or waived the fees, so no claim. | Trial court erred to resolve this as a factual matter on dismissal; whether fees were waived/paid is a fact issue for discovery/trial. |
| Do Kemp’s MCDCA (CL § 14-202) claims survive based on communications about the fees? | Letters and statements attempting to collect illegal fees violated MCDCA (subsections (8) and (9)). | Letters contained bankruptcy-disclaimer language and were informational; not improper debt-collection methods. | Affirmed dismissal: plaintiff failed to plead an improper method of debt collection under MCDCA; subsection (9) argument waived for lack of appellate briefing. |
| Were MCPA/MMFPA claims preserved and pled with required particularity? | Kemp contends she adequately alleged deceit/mortgage fraud facts and reliance. | Defendants argue claims are derivative, inadequately pled, or waived. | Court held Kemp waived a new standalone MCPA deceit theory (not raised below) and waived appellate challenge that MMFPA was not pled with particularity; dismissal of MMFPA stands for lack of preserved, specific pleading argument. |
Key Cases Cited
- Taylor v. Friedman, 344 Md. 572 (1997) (interpreted § 12-121 broadly and treated assignees as “Lender” for purposes of the inspection-fee prohibition)
- Thompkins v. Mountaineer Invs., LLC, 439 Md. 118 (2014) (recognized the improbability that assignment would defeat ongoing statutory consumer protections)
- RRC Ne., LLC v. BAA Md., Inc., 413 Md. 638 (2010) (standard of appellate review on motion to dismiss: assume truth of well-pleaded facts)
- Blackstone v. Sharma, 461 Md. 87 (2018) (statutory interpretation principles—start with plain text and consider context, purpose, consequences)
- Chavis v. Blibaum Assocs., 246 Md. App. 517 (2020) (MCDCA targets improper collection methods, not a vehicle to challenge the underlying debt)