Attorney Andrea Bopp Stark and her co-counsels received a good decision last week in Dionne v. Chase, Fannie Mae pending in the New Hampshire Federal District Court. The decision outlined the rights and responsibilities of borrowers and loan servicers in the loan modification process. Some highlights include:

  • Loan servicers must comply with Regulation X and the Real Estate Settlement Procedures Act (RESPA) by reviewing borrowers at least once after the effective date of Reg. X under REPSA, January 10, 2014,for all loss mitigation options. Reviewing for loss mitigation options before January 10, 2014 does not relieve servicers of this responsibility
  • Pursuant to § 1024.41(b)(3), the determination of the application’s timeliness for RESPA purposes had to be made as of October 17, the date a complete application was submitted. On that date, no foreclosure sale was scheduled to occur in 37 days or less and, in fact, there was no pending foreclosure sale as of that date. The court therefore rejects defendants’ argument that even if the Dionnes submitted a complete loss mitigation application on October 17, it was untimely under RESPA.
  • The court is not aware of any authority for the proposition that a complete loss mitigation application is rendered incomplete as a matter of law when the lender later discovers that part of the application was inaccurate when submitted. RESPA states that an application is complete when a servicer receives all the information it requires from a borrower, but says nothing about the accuracy of such information. See § 1024.41(b)(1). Further, defendants provide no authority to support the conclusion that a borrower has a duty to correct information that becomes outdated while an application is pending, or that such mistakes or misrepresentations render an otherwise complete application incomplete for purposes of RESPA.
  • Re: whether Chase was a debt collector for purposes of the Fair Debt Collection Practices Act (FDCPA) the Court found: Although the [FDCPA] does not define ‘in default,’ courts interpreting §1692a(6)(F)(iii) look to any underlying contracts . . . governing the debt at issue. Thus, the terms of a borrower’s note dictate whether the debt was in default when the servicer acquired the loan. Chase’s loan servicing notes indicate that on October 4, 2008, the Dionnes were 33 days delinquent in their loan payments. Thus, Chase’s own records show that the Dionnes missed their September 1, 2008 loan payment, and defendants offer no evidence to contradict Chase’s servicing notes. The Dionnes’ note states: “If I do not pay the full amount of each monthly payment on the date it is due, I will be in default.”

The Dionnes defeated most of Chase’s requests for summary judgment and the case is now scheduled to go to trial.

The Decision can be found here: