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Nunez v. J.P. Morgan Chase Bank, N.A.

United States District Court, M.D. Florida, Orlando Division

May 1, 2017

ARELIS NUNEZ, Plaintiff,
v.
J.P. MORGAN CHASE BANK, N.A., Defendant.

          ORDER

          GREGORY A. PRESNELL UNITED STATES DISTRICT JUDGE

          This matter comes before the Court, without hearing, on the Motion for Partial Summary Judgment (Doc. 86) filed by the Plaintiff, Arelis Nunez; the Response in Opposition (Doc. 92) filed by the Defendant, J.P. Morgan Chase Bank, N.A. (“Chase”); Nunez's Reply thereto (Doc. 97); Chase's Motion for Summary Judgment (Doc. 87); Nunez's Response in Opposition (Doc. 93); and Chase's Reply thereto (Doc. 98).

         I. Background

         A. Summary of the Facts

         On June 29, 2006, Nunez financed the purchase of her home in Palm Bay, Florida with a mortgage in the amount of $156, 000. (Doc. 24 ¶ 6.) Chase serviced Nunez's mortgage up until September 16, 2014. (Id. ¶ 10.) Sometime in 2010, Nunez fell behind on her mortgage payments, and Chase began foreclosure proceedings. (Id. ¶ 12.) The state court entered a Final Summary Judgment of Mortgage Foreclosure on October 17, 2012, and set the property for auction on December 19, 2012. (Doc. 75-1.) In the meantime, Nunez applied for a mortgage modification. (Doc. 75-2 at 9.) While Chase reviewed Nunez's application, it filed a motion to cancel the foreclosure sale. (Id.) The state court granted Chase's motion on December 18, 2012, and postponed the foreclosure sale until March 20, 2013. (Doc. 75-3.)

         In January 2013, Nunez and Chase entered into a trial modification agreement that required Nunez to make three trial payments. (Doc. 86-1 at 18:7-14.) Nunez made her first payment on February 18, 2013. (Doc. 86-1 at 19:21-20:3.) Despite the agreement and its receipt of Nunez's first payment, Chase did not timely move to cancel the foreclosure sale and, instead, moved only after the sale had already been completed. (Doc. 75-4.) Predictably, the state court denied Chase's motion. (Doc. 24-2 at 2.) Even so, Nunez submitted her next two trial payments on time, and on May 29, 2013, she executed the “permanent mortgage modification agreement” sent to her by Chase. (Doc. 86-1 at 19:21-20:3; Doc. 24-5 at 19; 24-1 at 5.)

         On November 26, 2013, Chase filed its first motion to vacate the foreclosure sale. (Doc. 75-5.) The state court denied the motion on December 9, 2013, and Chase received a certificate of title to the property the following month. (Doc. 75-6.)

         1. Nunez's First Notice of Error Letter

         On March 3, 2014, Nunez sent her first notice of error to Chase (“First NOE”). (Doc. 24-1.) The First NOE asserted that Chase made two errors: (1) that it failed to timely and properly advise the state court of the trial modification agreement, potentially avoiding foreclosure, and (2) that it erroneously returned payments that Nunez submitted under the modified loan agreement. (Doc. 24-1 at 2.) Nunez concluded her letter demanding that Chase investigate the alleged errors and take corrective action in accordance with the Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601-17 (“RESPA”), and its implementing regulation, 12 C.F.R. § 1024 (“Regulation X”).

         Chase responded to the First NOE on March 13, 2014. (Doc. 24-2.) Chase began its response with the conclusion that there was no error. Despite its conclusion, Chase all but admitted that it failed to timely move to cancel or postpone the foreclosure sale. Specifically, Chase said:

On January 20, 2013, we again asked our foreclosure attorneys to request a postponement of the March 20, 2013, sale. We received confirmation on February 21, 2013, that the sale was still on hold.
On March 15, 2013, our foreclosure attorneys advised us that Brevard County required that a hearing to cancel the foreclosure sale must be scheduled 10 days prior to the scheduled sale. As that date had passed, we would have to proceed with the sale.

(Id. at 1-2.)

         As to the alleged payments rejected in error, Chase explained that, when it received Nunez's payments, “they could not be applied to her loan because the foreclosure sale had taken place.” (Id. at 2.) Thus, any received funds “were placed in a suspense fund” pending the outcome of Chase's attempt to vacate the sale. (Id.) Once the state court denied Chase's motion to vacate, Chase cancelled Nunez's modification and applied her payments “to outstanding attorney's fees and costs.” (Id.) And any payments Chase received after its rescission action failed were simply returned as insufficient. Chase concluded its response by notifying Nunez that it had begun another rescission effort and, if successful, it would review Nunez's mortgage for modification a second time. (Id.)

         Following Chase's response, Nunez joined Chase in its April 4, 2014, motion to vacate the foreclosure sale and dismiss the action.[1] (Doc. 75-9.) The state court granted the motion on April 21, 2014, and reversed the sale. (Doc. 75-10.) Meanwhile, Nunez had been sending the payments required under the purportedly-cancelled loan modification to her attorney to be held in escrow. (Doc. 94 ¶ 13.)[2]

         On June 4, 2014, Chase contacted Nunez's attorney and informed her that the modification agreement could be reinstated, but it needed $3, 450 to bring the loan current. Nunez's attorney requested a letter stating the exact amount required by Chase, which she received on June 25, 2014.

         Nunez's attorney sent the required payment from the funds held for Nunez in escrow, and Chase received the payment on July 3, 2014. (Doc. 24-6 at 2.) But two weeks later, Chase sent two letters to Nunez stating its intent to accelerate the mortgage and begin foreclosure proceedings yet again. (Doc. 24-4 at 1, 5.) The letters also stated that Chase was holding over $5, 000 of Nunez's payments in a suspense account. (Id.) Chase's stated reason for the acceleration, threatened foreclosure, and suspension of funds was its non-receipt of Nunez's payments since July 2009. (Id.) Following these letters, Nunez, again, began sending her mortgage payments to her attorney to be held in escrow. (Doc. 94 ¶ 17.)

         On August 15, 2014, Chase sent another letter that threatened acceleration and foreclosure and stated that the total payments held in suspense was now nearly $7, 000. (Doc. 24-5 at 4.) In spite of these letters, Chase countersigned the loan modification agreement on August 18, 2014- more than one year after Nunez affixed her signature. (Doc. 24-5 at 11; Doc. 86-1 at 42:7-19.)

         2. Nunez's Second Notice of Error Letter

         On September 8, 2014, Nunez sent her second notice of error letter (“Second NOE”) to Chase. Like the First NOE, the Second NOE identified two purported errors: (1) the confinement of Nunez's payments to a suspense account, and (2) the continued failure to honor the loan modification agreement, as evidenced by Chase's collection efforts. (Doc. 24-5 at 2.) Two days later, on September 10, 2014, Nunez filed the current action, and on September 16, 2014, Chase transferred the servicing of the loan to Bayview Loan Servicing, LLC (“Bayview”), who serviced the loan in conjunction with Manufacturers and Traders Trust Company (“M&T”). (Doc. 24-6 at 3.)

         Chase sent its response to the Second NOE on October 27, 2014. (Id. at 1.) Chase, again, stated that it found no error in the servicing of Nunez's loan and began with a summary of its findings:

• We responded timely to your previous Notice of Error.
• We applied the modification terms of the loan appropriately.
• Funds on the account listed on our August 15, 2014, letter were momentarily held in suspense during the process of correctly applying the terms of the modification to [Nunez's] account.
• Corporate advances listing in our August 15, 2014, letter were listed on the account until they were resolved through the application of the terms of the loan modification.

(Id.) Following this list, Chase explained that the mortgage modification process was delayed due to the need to rescind the foreclosure sale. Specifically, Chase stated that, while rescission of the foreclosure sale was completed on May 15, 2014, Chase did not reverse the cancellation of the mortgage modification plan until August 18, 2014. Further, the loan updates were not completed until August 22, 2014. (Id.) Thus, Chase explained that Nunez's payments-including the $3, 450 sent by her attorney-were held in suspense until it completed loan updates and reinstated the mortgage modification. (Id. at 2.) Lacking, however, is any mention of Chase's collection efforts.

         3. Bayview and M&T

         Not even a month after the servicing of her mortgage was transferred, Nunez began receiving debt collection letters from both Bayview and M&T. (Doc. 24-7 at 4, 18.) And, on October 8, 2014, Nunez sent a notice of error to Bayview detailing the correspondence that Nunez had with Chase and providing that, given Chase's alleged, repeated misapplication of her funds, she was reluctant to remit payment until she could get assurances that her loan modification was in place and would be honored. (Id. at 2.) Neither Bayview nor M&T ever responded, and on February 18, 2016, while the current case was still pending, Bayview filed a foreclosure action against Nunez (Doc. 93-1).

         B. ...


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