Perun v. Carrington Mortgage Services, LLC

Background

Steve Perun sought an emergency order preventing a foreclosure of his home that was scheduled for the following day. He had fallen behind on mortgage payments, and the lenders sent a notice of default in January 2021. Perun then applied for a loan modification.

The lenders stated that they sent Perun a February 10, 2021 letter notifying him that his application was complete, as required by 12 C.F.R. § 1024.41(b). Perun acknowledged receiving that letter. The lenders also stated that they sent a February 26 letter effectively denying his application. Perun claimed that he never received the February 26 letter and that the lenders therefore violated 12 C.F.R. § 1024.41(c). The court noted that the lenders had previously submitted a copy of the letter and had earlier obtained dismissal.

Motion to Dismiss

The court applied Rule 12(b)(6), which tests whether a complaint states a legally sufficient claim. It granted Carrington’s motion to dismiss the Second Amended Complaint.

Perun argued that the lenders might have prepared the February 26 letter without sending it because they later requested supplemental documents in March and April. The court found that the more plausible explanation was that those later communications related to subsequent loan-modification offers. Because the lenders had already determined that Perun’s application was complete in the February 10 letter, the court found it implausible that they would prepare a denial letter, hold it, and then request more documents.

The court stated that Perun’s claims under § 1024.41 depended on his proving that he had not received the February 26 letter, which the court believed he was almost certainly unable to show. The court also stated that he could not show actual damages, which it identified as necessary for an actionable violation of the relevant regulation. The court rejected Perun’s argument that the later communications amounted to improper “dual-tracking,” finding that they did not begin a foreclosure process sufficient to qualify as such. It also rejected his argument that the loan-modification offers were made in bad faith. The offer required a $16,000 payment before reducing payments on $171,437.90 in arrears under a $1,499,250 mortgage, and the court found that it provided a meaningful loss-mitigation option. The court also noted that a home liquidation sale was considered a modification option and that Perun had no right to a particular result.

The court stated that Perun’s other claims failed for the reasons given in the earlier dismissal order and that the new complaint and temporary-restraining-order application did not change that analysis.

Temporary Restraining Order

The court denied Perun’s application for a temporary restraining order. Such an order requires, among other things, a showing that the plaintiff is likely to succeed on the merits or, under an alternative test, that there are serious questions going to the merits. The court concluded that Perun could not satisfy either requirement. Although the court stated that Perun could show likely irreparable harm without relief, it held that irreparable harm alone was insufficient.

Disposition

The court granted the motion to dismiss the Second Amended Complaint, denied the application for a temporary restraining order, and denied leave to amend. It stated that Perun had made several unsuccessful attempts to amend, that further amendment would be futile, and that the case would soon be largely or entirely mooted by the foreclosure. The opinion does not state that the dismissal was with or without prejudice.