920 F.3d 269
5th Cir.2019Background
- Germain refinanced his home in 2005; Ocwen began servicing the loan in 2012 and U.S. Bank became note holder in 2014. Germain stopped paying in 2014 and repeatedly submitted loss-mitigation applications (four total) between 2012–2014.
- Ocwen denied several modification requests because the loan owner would not allow modification, offered other options (e.g., short sale), and sent written notices after applications.
- § 1024.41 (CFPB loss-mitigation rule) became effective January 10, 2014; it requires servicers to evaluate and notify borrowers and contains §1024.41(i) limiting compliance to a single complete application.
- Defendants accelerated the loan and scheduled foreclosure in 2015; Germain sued in state court asserting RESPA violations, TDCA claims, promissory estoppel, and declaratory relief; case was removed and defendants moved for summary judgment.
- The district court granted summary judgment for defendants; the Fifth Circuit affirmed, holding defendants complied with §1024.41, §1024.41(i) is not an affirmative defense requiring pleading, and Germain’s TDCA and other claims fail.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 12 C.F.R. §1024.41(i) is an affirmative defense that must be pleaded | §1024.41(i) is an avoidance defense and defendants waived it by not pleading it | The defendants’ denial of noncompliance encompassed §1024.41(i); invoking it on summary judgment expanded the denial, not a new affirmative defense | Not an affirmative defense; defendants were not required to plead §1024.41(i) separately |
| Whether §1024.41 must be applied to multiple loss-mitigation applications (retroactivity/single-application scope) | Requiring single compliance effectively imposes the rule retroactively for pre-effective-date conduct | §1024.41 is not retroactive; but if servicers complied pre-effective-date that compliance counts toward the single-application requirement | Regulation not applied retroactively; servicer compliance before effective date counts, so servicer need only comply once |
| Whether defendants violated §1024.41(c)/(d) on Germain’s February 2014 application | Defendants failed to evaluate all options and/or provide required written reasons (including owner identity) | Defendants evaluated options, provided written notice stating which options available and that owner disallowed modification; prior notices had identified owner | No genuine dispute: defendants satisfied §1024.41(c); summary judgment for defendants on RESPA claims |
| Whether TDCA claims (deceptive practices) survive independent of RESPA | Defendants induced repeated applications and disclosed financials while intending to deny them | Defendants did not promise modification and offered other mitigation options; no evidence of a scheme to mechanically deny applications | TDCA claims dismissed—no factual showing defendants knowingly made false or deceptive representations |
Key Cases Cited
- McCoy v. City of Shreveport, 492 F.3d 551 (5th Cir. 2007) (summary judgment standard review)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (U.S. 1986) (nonmovant must show evidence creating genuine dispute)
- Little v. Liquid Air Corp., 37 F.3d 1069 (5th Cir. 1994) (conclusional allegations insufficient to defeat summary judgment)
- I.N.S. v. St. Cyr, 533 U.S. 289 (U.S. 2001) (framework for retroactivity analysis)
- Perez Pimentel v. Mukasey, 530 F.3d 321 (5th Cir. 2008) (retroactivity test)
- Campbell v. Nationstar Mortg., [citation="611 F. App'x 288"] (6th Cir. 2015) (holding §1024.41 not retroactive to conduct before effective date)