Moronta v. Nationstar Mortgage, LLC
41 N.E.3d 311
Mass. App. Ct.2015Background
- In 2007 Moronta refinanced his Quincy home with Fremont via two loans totaling $370,000: an adjustable-rate first loan (amortized over 50 years with a 30‑year balloon) and a fixed-rate second loan.
- The refinancing paid off the prior Wells Fargo loan and provided Moronta cash to pay credit cards and repairs; initial combined payments were about $3,046 but could rise substantially after rate adjustments and with the balloon obligation.
- Moronta alleges his income on the application was inflated (he says $6,000 vs. $8,500 listed) and that Fremont structured loans it should have known he could not repay. He defaulted in 2008; Nationstar (assignee/servicer) foreclosed and bought the property in 2009.
- Fremont transferred the loans/servicing to Nationstar in 2007 (defendants rely on this); Moronta points to a 2009 recorded MERS assignment to argue assignee notice obligations might apply.
- Moronta sued asserting violations of an injunction (re Fremont), violations of G. L. c. 93A for predatory origination and deceptive practices (including loan‑modification conduct), and sought an injunction against eviction; summary judgment for defendants was entered below.
- The Appeals Court reviewed whether genuine issues of fact existed on the c. 93A claim arising from loan origination and reversed as to that claim, affirming dismissal of the injunction/notice and modification‑practice claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether assignee violated injunction/notice requirements before foreclosure | Nationstar, as Fremont’s assignee/servicer, had to notify AG before foreclosing | Fremont transferred loans/servicing to Nationstar in 2007 (before injunction extended to assignees), so no notice required | Nationstar did not violate the injunction; summary judgment for defendants on this issue affirmed |
| Whether defendants engaged in unfair/deceptive loan‑modification practices under c. 93A | Negotiating offers and foreclosing while negotiations occurred was unfair/deceptive | Nationstar made a modification offer (reduced payment $500); foreclosure while borrower in default is not unfair | Modification‑practice claim fails; summary judgment for defendants affirmed |
| Whether loan origination violated c. 93A (predatory origination) | Fremont structured loans (short introductory ARM, large piggy‑back, 50‑yr amortization with huge balloon, high rates) that it should have known borrower could not repay | Loan paid off prior debt and provided benefits; appraisal showed LTV ~88%; defendants dispute income and other facts | Genuine issue of material fact exists whether Fremont should have recognized borrower could not repay; summary judgment reversed on c. 93A origination claim |
| Whether assignee liability bars c. 93A claims | (argued by Nationstar on appeal) assignee not liable for originator's conduct | Assignees are not shielded from c. 93A liability under common law | Court did not decide the new argument raised on appeal; noted assignees can be liable under precedent |
Key Cases Cited
- Drakopoulos v. U.S. Bank Natl. Assn., 465 Mass. 775 (discusses standard for lender should have recognized borrower could not repay and assignee liability under c. 93A)
- Commonwealth v. Fremont Inv. & Loan, 452 Mass. 733 (identified four characteristics of presumptively unfair home loans and guidance to lenders)
- Frappier v. Countrywide Home Loans, Inc., 645 F.3d 51 (1st Cir.) (quoted in Drakopoulos regarding lender recognition of inability to repay)
- American Intl. Ins. Co. v. Robert Seuffer GMBH & Co. Kg., 468 Mass. 109 (standard of review on summary judgment cited)
- Carey v. New England Organ Bank, 446 Mass. 270 (procedural rule: arguments raised first on appeal generally not considered)