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Love v. Lew

United States District Court, E.D. Michigan, Southern Division

January 7, 2015

DAEMON LOVE, et al., Plaintiffs,
v.
JACOB J. LEW, et al., Defendants

For Daemon Love, Daemon Love on behalf of himself and all others similarly situated, Gary & Beth Marshall, Plaintiffs: Stuart Sandweiss, Sandweiss Law Center, Southfield, MI.

ORDER GRANTING DEFENDANTS JACOB J. LEW'S AND SHAUN DONOVAN'S MOTION TO DISMISS (ECF #28)

Hon. MATTHEW F. LEITMAN, UNITED STATES DISTRICT JUDGE.

Plaintiffs Daemon Love (" Love") and Gary and Beth Marshall (the " Marshalls") are former homeowners whose homes were foreclosed upon. In this action, Plaintiffs challenge certain alleged policies of the United States Department of Housing and Urban Development (" HUD") and/or the United States Department of Treasury (the " Treasury") that, in their view, unlawfully prevented them from repurchasing or redeeming their homes for fair market value. ( See the First Amended Complaint, hereinafter the " Complaint, " ECF #6 at ¶ 2.) Defendant Secretary of the Treasury Jacob J. Lew and Defendant Secretary of HUD Shaun Donovan (collectively, the " Government Defendants") have now moved to dismiss Plaintiffs' Complaint. ( See the " Motion, " ECF #28.) For the reasons explained below, the Court GRANTS the Government Defendants' Motion.

FACTUAL BACKGROUND

Love obtained a loan from Wells Fargo Bank, N.A. (" Wells Fargo"), to purchase real property located at 20060 Conley Street, Detroit, Michigan. ( See Compl. at ¶ ¶ 8, 12.)[1] Love granted a mortgage to Wells Fargo as security for the loan. ( See id. at ¶ 12.) Love's loan was insured by HUD such that if Love defaulted on the loan and certain conditions were met, HUD would reimburse Wells Fargo the unpaid principal balance of the loan. ( See id. at ¶ ¶ 12, 23, 35; see also 12 U.S.C. § § 1709-10.) Love eventually defaulted on the loan, and Wells Fargo initiated foreclosure proceedings. ( See Compl. at ¶ ¶ 35, 58.) Wells Fargo ultimately acquired the property at the foreclosure sale with a bid that represented the full outstanding balance on Love's loan and was substantially higher than the actual fair market value of the property at that time (a " full-credit bid"). ( See id. at ¶ 35.) Love has conceded that his right to redeem the property pursuant to M.C.L. § 600.3240 has expired.

The Marshalls obtained a loan from Taylor, Bean & Whitaker Mortgage Corporation (" TBW") to purchase real property located at 16411 Sudbury Court, Macomb, Michigan. ( See id. at ¶ 9.) The Marshalls' loan was also insured by HUD. ( See id. at ¶ 13.) The Marshalls granted a mortgage to TBW as security for the loan. ( See id. at ¶ 13.) The Marshalls defaulted, and TBW ultimately acquired the property at a foreclosure sale. ( See id. at ¶ ¶ 35, 64.) TBW's bid at the foreclosure sale was a full-credit bid. ( See id. at ¶ 35.) Similar to Love, the Marshalls have conceded that their statutory right to redeem their property has expired. See M.C.L. § 600.3240.

PROCEDURAL HISTORY

On January 10, 2014, Plaintiffs filed their Complaint in this Court. As relevant here, Plaintiffs allege that the Government Defendants have adopted policies and/or regulations that require a foreclosing lender to submit a " full-credit bid[] ... far in excess of the actual market value" of the foreclosed property in order to obtain HUD insurance proceeds on the underlying loan (the " Alleged Full-Credit Bid Policy"). (Compl. at ¶ 28.) Plaintiffs contend that the Alleged Full-Credit Bid Policy prevented them from repurchasing or redeeming their properties for fair market value. ( See id. at ¶ 5.) Plaintiffs bring their claims on their own behalf and on behalf of a purported class of foreclosed-upon homeowners.

Plaintiffs' specific allegations and claims against the Government Defendants are summarized in Paragraphs 49-52 of their Complaint:[2]

49. As was outlined above, the Government has policies and/or regulations requiring foreclosing lenders such as [Wells Fargo and TBW] to go to foreclosure sales and full-credit bid properties such as the named Plaintiffs' properties even though the bids are far in excess of the market value of such properties so that the foreclosing lenders can collect insurance and/or government payments to be made whole in the event of a loss on a non-performing loan.
50. The government's policies and regulations are arbitrary and capricious and violate the purposes stated in 12 USC § 5201 and 24 C.F.R. § 203.500.
51. Furthermore, the government's policies and regulations violate the 14th Amendment to the United States Constitution as they discriminate against existing homeowners such as homeowners are not allowed to purchase and/or redeem their homes at the fair market value -- meaning the same price that a non-party would pay for the home once it becomes vacant after the homeowner is evicted.
52. These policies and/or regulations are further detrimental to the citizens of the United States as allowing the existing homeowners to purchase and/or redeem their homes for the fair market value would eliminate the costs to evict the homeowner and would further stabilize the housing market as opposed ...

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