Consumer Finance Litigation

Cataldi v. New York Community Bank (N.D. GA Feb. 3, 2013) (Loss Mitigation & Dual Tracking)

This action involves one of the first decisions issued pursuant to the new mortgage servicing regulations under the "Dodd-Frank Wall Street Reform Act and Consumer Protection Act." Plaintiff sought injunctive relief for violation of the Act, including a claim that the Defendant did not fairly offer and negotiate loss mitigation options and pursued "dual track" foreclosure. The facts established that the parties engaged in modification negotiations, that one or more modifications were offered, that Plaintiff did not agree to the offered modifications, and that foreclosure notices were issued after the modification was denied. Plaintiff alleged that the offer was inadequate and in fact a "blatant fraudulent attempt" at "illegal extortion."

The court noted that the claims appeared to be based on a new regulation enacted by the Consumer Financial Protection Bureau ("Regulation X," 12 C.F.R. § 1024.41). The Court declared that the regulation can be privately enforced under Section 6(f) of the Real Estate Settlement Procedures Act (12 U.S.C. 2605(f)), but that Section 6(f) of RESPA only allows suits for damages and costs, not injunctive relief. Therefore, the Court held that the plaintiff could not assert a claim for injunctive relief. In addition, the Court held that "[n]othing in § 1024.41 imposes a duty on a servicer to provide any borrower with any specific loss mitigation option." 12 C.F.R. § 1024.41(a). Finally, the Court declared that Plaintiff failed to allege any fraud with the particularity required by law, and failed to state any facts showing a likelihood of success with regard to the allegation that Defendant's offer of a modification violated any legal duty under Regulation X or otherwise. For more information on consumer finance litigation topics, please contact one of the Burr & Forman team members for assistance. We are happy to answer any questions or concerns you may have.