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Seog v. Carrington Mortgage Services, LLC

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

February 28, 2018

ROXANNE SEOG, et al., Plaintiffs,
v.
CARRINGTON MORTGAGE SERVICES, LLC, et al., Defendants.

          OPINION AND ORDER DENYING DEFENDANTS' MOTION TO DISMISS AND NOTICE OF SETTLEMENT CONFERENCE

          BERNARD A. FRIEDMAN SENIOR UNITED STATES DISTRICT JUDGE

         This matter is presently before the Court on defendants' motion to dismiss [docket entry 10]. Plaintiffs have filed a response in opposition and defendants have filed a reply. Pursuant to E.D. Mich. LR 7.1(f)(2), the Court shall decide this motion without a hearing.

         This is a breach of contract and wrongful foreclosure action. Plaintiffs, a married couple, allege that defendants, their mortgagee and loan servicer, failed to provide them with proper notice of foreclosure-by-advertisement proceedings, thereby breaching the terms of plaintiffs' mortgage and loan agreement, and “whipsawed” plaintiffs by offering loan modification agreements and, at the same time but without plaintiffs' knowledge, foreclosing. Plaintiffs seek damages, costs, attorney fees, and equitable relief.

         The documents attached to the parties' briefs show that in 2004 Republic Bank loaned plaintiffs $166, 683 in exchange for a mortgage on real property commonly known as 2021 Grange in Trenton, Michigan. Defs.' Ex. A. In 2010 the mortgage was assigned to BAC Home Loans Servicing, L.P. (“BANA”). Defs.' Ex. B. By letter dated February 24, 2015, BANA notified plaintiffs that their “loan payment is past due and your property may be referred to foreclosure unless immediate action is taken.” Defs.' Ex. C (Pg ID 203). By letter dated June 30, 2015, BANA notified plaintiffs that their loan “is in serious default” and that if the default was not cured by August 9, 2015, “the mortgage payments will be accelerated . . . and foreclosure proceedings will be initiated at that time.” Defs.' Ex. C (Pg ID 207-208). By letter dated August 6, 2015, BANA notified plaintiffs that their “mortgage loan payment is past due and your property may be referred to foreclosure unless immediate action is taken.” Defs.' Ex. C (Pg ID 214).

By letter dated January 10, 2017, BANA informed plaintiffs:
You were approved and offered a trial period plan or permanent loan modification. . . . [W]e regret to inform you that you are not eligible at this time for Federal Housing Administration Home Affordable Modification Program (FHA-HAMP) Modification with Partial Claim for the following reason(s):
- You didn't make all of the required Trial Period Plan payments on time.
If you believe our decision is incorrect, you have 30 calendar days from the date of this letter to contact us . . .
* * *
During the 30-day period in which you may contact us and provide information that you believe shows our decision is incorrect, we may begin or resume the foreclosure process and even conduct a foreclosure sale, as permitted by your loan documents and applicable law.

Defs.' Reply Ex. 1.

         At a sheriff's sale on February 16, 2017, BANA bid $108, 000 and obtained a sheriff's deed to 2021 Grange. Defs.' Ex. D. The deed states that “a notice was duly published and a copy thereof was duly posted in a conspicuous place upon the premises described in said mortgage that the said premises . . . would be sold on 16th day of February, 2017, at a public vendue that being the place of holding the Circuit Court for Wayne County.”[1] Id. However, the referenced notice, which was published in the Detroit Legal News on June 8, June 15, June 22, and June 29, 2016, stated that the sheriff's sale would take place “at 11:00 AM on July 7, 2016.” Id. (Pg ID 219-22). Defendants have offered no proof that they published any notice of the date when the sheriff's sale actually took place, i.e., February 16, 2017. The deputy sheriff appointed to make the sale avers that she adjourned the sale at BANA's request from July 7, 2016, to July 14, 2016, and then every week thereafter until February 16, 2017, and that she “posted the Notice of Adjournment before or at the time of the sale and at the place of the sale.” Defs.' Reply Ex. 2 (Pg ID 315-347).

         By letter dated April 12, 2017, BANA notified plaintiffs that “[t]he servicing of your home loan will transfer to Carrington Mortgage Services, LLC on May 02, 2017.” Defs.' Ex. F. This notice stated that as of that date “the servicing of your above referenced mortgage loan will transfer to Carrington [which] . . . will support all of your loan servicing, including billing, payment processing, and customer support.” Id. On May 16, 2017, BANA assigned the mortgage to Wilmington Savings Fund Society, FSB, as Trustee of Stanwich Mortgage Loan Trust. Defs.' Ex. E. This mortgage assignment was prepared by Carrington. Id. On August 7, 2017, plaintiffs commenced the instant action. In a letter to plaintiffs dated September 19, 2017, BANA that “[w]e've received your recent home loan request and are in the process of concluding our review.” Pls.' Ex. 4.

         Plaintiffs claim that defendants breached the terms of the loan and mortgage “by moving forward with a total acceleration of the debt and a default in the contract without notice as required by the contract.” Am. Compl. ¶ 25. They also claim that defendants' failure to give notice “resulted in [their] loss of the right to cure the default/acceleration under the contract.” Id. ¶ 30. In the wrongful foreclosure count, plaintiffs claim that defendants “never notified [them] of the actual sale date on February 16, 2017 (by posting or publication) as required by Michigan law.” Id. ¶ 37. Further, plaintiffs allege that they “were lead to believe by agents of the Defendant that no sale had taken place and that they were awaiting the next ...


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