United States District Court: Mortgagor Lacks Standing to Bring RESPA Claim

CFPB RESPA

On August 11, the U.S. District Court for the District of New Hampshire rejected the addition of a potential RESPA claim to plaintiff’s complaint due to lack of standing, and the court dismissed the remaining counts for failure to state a claim. Sharp v. Deutsche Bank National Trust Company, As Trustee For Morgan Stanley ABS Capital Inc. Trust 2006-HE3, No. 14-cv-369 (D.N.H. Aug. 11, 2015). Although plaintiff and his father were both mortgagors on the mortgage document, the promissory note identified plaintiff’s father as the sole borrower for the loan. After plaintiff’s father died and plaintiff defaulted on the mortgage, plaintiff sought to enjoin the bank’s subsequent foreclosure proceedings. Plaintiff moved to amend his complaint to add a RESPA claim based on the bank’s allegedly inadequate responses to his requests for information pursuant to 12 C.F.R. § 1024.35 and 12 C.F.R. § 1024.36. The court determined that plaintiff lacked standing to assert his RESPA claim because the RESPA provisions at issue only applied to borrowers, not mortgagors like plaintiff. The court also rejected plaintiff’s argument that his status as the successor-in-interest to his father under 12 C.F.R. § 1024.38 established standing to bring the RESPA claim. The court confirmed that plaintiff was protected by 12 C.F.R. § 1024.38, but the court relied on the CFPB’s official interpretation of 12 C.F.R. § 1024.38 to determine that no private right of action existed to enforce the rule.  The court also dismissed plaintiff’s original claims that sought to enjoin foreclosure by asserting that the bank (i) lacked authority to foreclose because the bank could not demonstrate that it was an assignee of the mortgage and (ii) it breached the implied covenant of good faith and fair dealing by pursuing foreclosure despite plaintiff’s request to postpone it. The court held that the bank had authority to foreclose because New Hampshire law did not require the bank to record the assignment in order to exercise the statutory power of sale. Regarding plaintiff’s second claim, the court determined that the bank did not breach the implied covenants because its actions were consistent with its contractual rights and there was no duty to postpone the foreclosure sale upon plaintiff’s request.