Talton v. BAC Home Loans Servicing LP
839 F. Supp. 2d 896
E.D. Mich.2012Background
- Plaintiffs Larry and Stacie Taitón defaulted on a mortgage on their Southfield, Michigan home and faced foreclosure by BAC Home Loans Servicing, which had MERS as the nominee for the lender; TBW allegedly assigned its interest to BAC and the foreclosure was by advertisement.”
- The loan originated April 25, 2008 from TBW for $187,271 with a note and a mortgage granting MERS power of sale; MERS acted as the lender’s nominee.
- Plaintiffs sought loan modification and alleged a long, costly HAMP process with allegedly improper denials and delays; they claimed BAC misled them and delayed, while attempting to modify.
- Trott & Trott recorded the MERS assignment to BAC, and a 14-day foreclosure notice was prepared; foreclosure was stayed pending this action.
- Plaintiffs asserted numerous counts in Oakland County Circuit Court, Defendant removed to federal court and moved to dismiss; Court held remaining counts subject to dismissal as pleaded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Foreclosure authority via MERS and assignment validity | MERS could not foreclose; assignment to BAC invalid without proper power of attorney and TBW dissolution. | BAC served as servicer with authority to foreclose; assignment valid and compliant with statute. | Count 1 dismissed with prejudice. |
| Foreclosure stay pending modification requirement | Defendant violated 600.3204(4)/3205c by pursuing foreclosure while modification eligible. | Plaintiffs did not allege housing counselor contact as required; statute not satisfied. | Count 2 dismissed as a matter of law. |
| Authority to designate modification contact and compliance with 600.3205a(l)(c) and 600.3205c | Trott & Trott’s designation as agent to modify violated statute. | Designation complies with statute; no authority shown to challenge otherwise. | Count 3 dismissed. |
| Private right of action under HUD servicing regulations | HUD servicing regulations create private rights to enforce modification practices. | No private right of action; regulations do not create claims absent congressional intent. | Count 5 dismissed. |
| Remaining counts for fraud/unclean hands/good faith/contract promissory estoppel etc. | Various counts allege improper conduct and reliance to obtain modification or relief. | Michigan law/Rule 9(b) pleading standards require specific pleading; many claims fail. | Counts 7,8,11,12,14,15 largely dismissed; 14 and 15 dismissed without prejudice; others dismissed with prejudice where stated. |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (plausibility pleading standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (plausibility pleading standard applied to federal pleadings)
- In re Brown, 342 F.3d 620 (6th Cir. 2003) (precedes burden to prove contract terms and breach)
- Residential Funding Co., LLC v. Saurman, 490 Mich. 909 (Mich. 2011) (MERS foreclose by mortgagee authorized; discussion of chain of title)
- Parry v. Mohawk Motors of Michigan, Inc., 236 F.3d 299 (6th Cir. 2000) (federal regulations alone do not create private causes of action)