After defaulting on her mortgage loan, an Ohio woman attempted to get a loan modification. However, because her ex-husband’s name was listed on the mortgage he also needed to agree to the modification, even though he had no interest in the home. When the ex-husband refused to cooperate, no modification was offered. The woman sued the owner of the loan, which asked the court to dismiss the action.
The case is Shavonda Blair v. PNC Bank (Case No. 1:21-cv-766. United States District Court, S.D. Ohio, Western Division).
The facts
Shavonda Blair in March of 2014 executed a promissory note for $75,660. for a home in Cincinnati and received a mortgage on her home which is owned and serviced by PNC Bank. Blair’s name is the only one that appears on the recorded deed and the note filed in the Hamilton County Recorder’s Office. However, when she took out the loan she was married to Joshua Blair. Thus, the recorded mortgage defines “borrower” as both “Shavonda Blair and Joshua D Blair, wife and husband.” In April 2018, the Blairs divorced.
That same month, Shavonda Blair defaulted on her mortgage and applied to PNC for loss mitigation assistance. PNC approved her for a trial payment plan while simultaneously initiating foreclosure proceedings against her. Blair completed the trial period payments and, on Dec. 19, 2018, PNC notified her it was prepared to offer her a permanent loan modification option. The letter from PNC contained a proposed loan modification agreement. The agreement warned, “If we do not receive the executed loan modification agreement by Jan. 2, 2019, this offer will be considered revoked.”
The modification agreement defined “borrower” as “Shavonda Blair and Joshua D. Blair.” So, even though Joshua Blair had no ownership interest in the home, the modification agreement required the signatures of both the Blairs. The ex-husband refused to sign the agreement. PNC contacted Shavonda Blair several times between December 2018 and January 2019 requesting that she instead secure a quitclaim deed relinquishing whatever interest her ex-husband had in her home.
She did not produce a quitclaim deed, nor did she ever return the signed loan modification agreement, and, as a result, the proposed modification agreement expired. On Jan. 8, 2019, PNC sent Blair a letter informing her that PNC was “unable to proceed further with [Blair’s] request for assistance” because “the executed [loan modification] documents were not received within the required time frame.”
On June 24, 2019, Blair sent PNC a letter purporting to be a Notice of Error (NOE). The NOE asserted that “Ms. Blair [wa]s entitled to receive a final modification plan,” and it was an error that “PNC ha[d] not provided” one. It further argued that, because Mr. Blair “was not on the original deed,” “[n]or was [he] on the promissory note,” his signature should not have been required to provide her final modification plan.
PNC responded on July 25, 2019, that “Ms. Blair’s ex-husband was required to sign the agreement because his name is listed on the title and PNC had not received a quit claim deed.”
Blair sued PNC under two counts of RESPA’s implementing regulations. She asserted liability under 12 C.F.R. § 1024.41(c) for PNC’s failure to review a complete loss mitigation application within 30 days. She also asserted liability under 12 C.F.R. § 1024.35(e) for PNC’s failure to properly respond to her NOE and perform a reasonable investigation or correct her asserted errors.
The ruling
U.S. Senior District Judge Timothy Black first ruled that Blair could not state a claim under 12 C.F.R. § 1024.41(c).
“Plaintiff does not allege that PNC failed to comply with any of these requirements. Instead, plaintiff accuses PNC of providing her ‘with improper loss mitigation options for her permanent modification.’ Separately, plaintiff alleges that PNC ‘fail[ed] to provide [her] with written notice of the proper determination.’ These claims are redundant. Offering an ‘improper’ modification option is indistinguishable from failing to offer a ‘proper’ modification option. At bottom, plaintiff prescribes liability because she disagrees with the form of PNC’s loan modification offer to plaintiff. The court cannot fill that prescription.”
Black then addressed Blair’s assertion she should not have needed her ex-husband’s signature because the loan modification agreement permits an exception when the borrower and co-borrower are divorced, and the property has been transferred to one spouse in the divorce decree.
“No divorce decree exists to show that Mr. Blair has no interest in plaintiff’s home. That is presumably why PNC requested a quit claim deed,” Black wrote. “Thus, nothing in Regulation X, nor PNC’s proposed agreement itself, provides any basis for the court to find the proposed agreement ‘improper.’ Plaintiff cannot sustain her claim under 12 C.F.R. § 1024.41(c).”
The judge granted PNC’s motion to dismiss Blair’s claims, writing:
“The court cannot conclude that PNC failed to perform a reasonable investigation and provide the appropriate written notice to plaintiff. PNC’s response to the NOE explained that it had ‘research[ed] the matter' and determined that [plaintiff’s] account [wa]s correct. The letter went on to explain that ‘Ms. Blair’s ex-husband was required to sign the agreement because his name is listed on the title and PNC had not received a quit claim deed. Plaintiff’s own documents illustrate that PNC’s investigation was not only reasonable, but also that it reached the correct conclusion.
“...This case reduces to the simple observation that Joshua Blair’s name does appear on the mortgage document that formed a part of plaintiff’s title in the Hamilton County Recorder’s Office. As troubling as it is that PNC effectively authorized plaintiff’s ex-husband to decide if plaintiff could stay in her home, the court is without power to call foul. PNC had discretion to set the terms of the loan modification agreement and therefore PNC’s reasonable investigation of the NOE correctly concluded PNC made no error in requiring Mr. Blair’s signature.”