U.S. District Court
Where a plaintiff has brought suit over an allegedly defective pre-foreclosure notice sent by the defendants, the complaint must be dismissed because the defendants strictly complied with the regulatory scheme.
“Plaintiff Robert Davalos (‘Davalos’) has filed this lawsuit relating to an allegedly defective pre-foreclosure notice sent by Defendants HSBC Bank USA, National Association, as Trustee for Freemont Home Loan Trust, 2006-E, Mortgage-Backed Certificates, Series 2006-E (‘HSBC’), NewRez LLC (‘NewRez’), and PHH Mortgage Corporation (‘PHH’) (collectively, ‘Defendants’). … Specifically, Davalos asserts claims for declaratory judgment that the ‘default letter/right to cure notice’ sent by Defendants contained misleading language and is ‘null and void’ (Count I), violation of the statutory power of sale contained at Mass. Gen. L. c. 183, §21 (Count II), and breach of contract (Count III). …
“The basis of Davalos’ claims is that the Notice here was misleading and did not sufficiently comply with the aforementioned requirements. … Specifically, Davalos contends that the Notice repeatedly states that he ‘must pay the past due amount of $263084.63,’ but also states that ‘[i]f your payment is not accepted or your payment is for less than the total amount due (which we may accept without waiving any of our rights), this matter will not be resolved.’ … In his view, the use of the phrase ‘total amount due,’ as opposed to ‘past due amount,’ is unclear and dilutes a mortgagor’s unequivocal right to reinstate the mortgage after acceleration, by leaving him unsure of whether he is required to pay only a ‘past due’ partial reinstatement amount or the entire accelerated amount to reinstate the loan. …
“This issue has been addressed by a different session of this Court. See Lanier v. PHH Mortg. Corp., 618 F. Supp. 3d 31, 34–35 (D. Mass. 2022); Giannasca v. PHH Mortg. Corp., 615 F. Supp. 3d 9, 12–14 (D. Mass. 2022). …
“… First, the Notice at issue here is entitled ‘90 Day Right to Cure Your Mortgage Default,’ not ‘Notice of Default’ or ‘Default Notice.’ … Second, the Notice does not purport to be sent pursuant to Paragraph 22 and ‘concerns neither the power of sale nor any action that must be taken in connection with foreclosure.’ … Third, it is uncontested that the Notice follows the required language issued by the Division of Banks for mortgagees to include in a §35A notice. … Fourth, the Notice did not indicate the loan was being accelerated and informed Davalos that only the past-due amounts were owed. … Lastly, as the loan has not been accelerated and no foreclosure auction has taken place, there is no indication that Defendants intended the Notice to be a hybrid notice, i.e., one to satisfy their obligations under both Paragraph 22 and §35A. Although Davalos alleges the Notice is a hybrid notice, … nothing in the Notice, incorporated by reference in the complaint, makes that allegation plausible, D. 10-1 at 29–36. As such, Davalos’ arguments are unavailing because strict compliance ‘has no application to the Right to Cure Letters.’ …
“Even assuming arguendo that the Notice was hybrid (i.e. not just giving notice pursuant to §35A but also notice pursuant to Paragraph 22 of default, acceleration, and statutory power of sale), Defendants strictly complied with the regulatory scheme for such a notice. … Here, the Notice stated that (1) Davalos ‘did not make [his] monthly loan payment(s) due on’ dates spanning August 1, 2017 through August 1, 2022; (2) Davalos ‘must pay the past due amount of $263084.63 on or before November 1, 2022 which is 90 days from the date of this notice;’ (3) ‘[f]ailure to cure the default on or before the date specified in this notice may result in acceleration of the sums secured by the Mortgage and sale of the Property;’ and (4) Davalos has ‘the right to reinstate the loan after acceleration and the right to bring a court action to assert the non-existence of a default or any other defense [he] may have to acceleration and sale.’ … A hybrid notice with nearly identical language was found to be in strict compliance with this regulatory scheme. …
“For all of these reasons, as the Court has concluded that the Notice complied with the regulatory scheme and the basis of each of Davalos’ claims was the alleged failure to comply and misleading nature of the Notice, dismissal of his claims is warranted.”
Davalos v. HSBC Bank USA, et al. (Lawyers Weekly No. 02-261-23) (11 pages) (Casper, J.) (Docket No. 23-cv-10270-DJC) (June 13, 2023).
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