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Ranujoy D. Pandit and Debora A. Pandit, Individually and On Behalf of Others Similarly Situated v. Saxon Mortgage Services

September 17, 2012

RANUJOY D. PANDIT AND DEBORA A. PANDIT, INDIVIDUALLY AND ON BEHALF OF OTHERS SIMILARLY SITUATED,
PLAINTIFFS,
v.
SAXON MORTGAGE SERVICES, INC., DEFENDANT.



The opinion of the court was delivered by: Seybert, District Judge:

MEMORANDUM & ORDER

Plaintiffs Ranujoy and Debora Pandit ("Plaintiffs") sued Defendant Saxon Mortgage Services, Inc. ("Saxon" or "Defendant") in a case that arises out of Saxon's alleged promise to modify Plaintiffs' home mortgage loan as a part of a program aimed at stemming foreclosures during the recent financial crisis. Pending before the Court is Defendant's motion to dismiss (Docket Entry 6); for the reasons that follow, this motion is GRANTED IN PART and DENIED IN PART.

BACKGROUND

In very general terms, the federal Home Affordable Modification Program ("HAMP") is a program that was conceived during the financial crisis as a part of the broader Troubled Asset Relief Program. Under HAMP, certain mortgage lenders and servicers contracted with the federal government to modify qualified borrowers' home loan mortgages to reduce borrowers' monthly mortgage payments. Participating lenders and servicers, including Defendant, signed "Servicer Participation Agreements" ("SPAs"). Broadly speaking, the SPAs required lenders and servicers to identify loans in their portfolios that may be subject to permanent modification; collect financial and other information from borrowers to evaluate their eligibility; offer temporary plans whereby borrowers pay reduced monthly payments for three months ("Trial Period Plans" or "TPPs"); offer permanent modifications for borrowers who successfully complete their Trial Period Plans; and notify borrowers who applied for modifications in writing whether they were found eligible for relief. (Compl. ¶¶ 5-8.)

Plaintiffs own a home in Westbury, New York. Their mortgage is owned by the Bank of New York and serviced by Defendant. By 2008, Plaintiffs were having difficulty making mortgage payments. (Id. ¶¶ 66-68.)

Plaintiffs applied for HAMP relief in October 2008. After months of delays and inconsistent responses, Defendant offered Plaintiffs a TPP in May 2009. (Id. ¶ 69.) Its offer letter provided, in part: "If you qualify under the federal government's Home Affordable Modification Program and comply with the terms of the Trial Period Plan, we will modify your mortgage loan and you can avoid future foreclosure." (Id. ¶ 70.) As is relevant here, the TPP itself contained the following language:

If I am in compliance with this Trial Period Plan (the "Plan") and my representations in Section 1 continue to be true in all material respects, then the Lender will provide me with a Home Affordable Modification Agreement ("Modification Agreement") as set forth in Section 3, that would amend and supplement (1) the Mortgage on the Property, and (2) the Note secured by the Mortgage.

(Def. Ex. 7, Pls. TPP, at 1.) The TPP provided that Plaintiffs would make three reduced monthly mortgage payments and that this monthly amount was "an estimate of the payment that will be required under the modified loan terms, which will be finalized in accordance with Section 3, below." (Id. § 2.)

The TPP also stated that:

F. If prior to the Modification Effective Date, (i) the Lender does not provide me a fully executed copy of this Plan and the Modification Agreement; (ii) I have not made the Trial Period payments required under Section 2 of this Plan; or (iii) the Lender determines that my representations in Section 1 are no longer true and correct, the Loan Documents will not be modified and this Plan will terminate. In this event, the Lender will have all of the rights and remedies provided by the Loan Documents, and any payment I make under this Plan shall be applied to amounts I owe under the Loan Documents and shall not be refunded to me; and

G. I understand that the Plan is not a modification of the Loan Documents and that the Loan Documents will not be modified unless and until (i) I meet all the conditions required for modification; (ii) I receive a fully executed copy of a Modification Agreement; and (iii) the Modification Effective Date has passed. I further understand and agree that the Lender will not be obligated or bound to make any modification of the Loan Documents if I fail to meet any one of the requirements under this Plan. I understand and agree that the Lender will not be obligated or bound to make any modification of the Loan Documents or to execute the Modification Agreement if the Lender has not received an acceptable title endorsement and/or subrogation agreements from other lien holders, as necessary, to ensure that the modified mortgage Loan retains its first lien position and is fully enforceable. (Id. § 2.F, G.) The TPP continued:

The Modification. I understand that once Lender is able to determine the final amounts of unpaid interest and any other delinquent amounts (except late charges) to be added to my loan balance and after deducting from my loan balance any remaining money held at the end of the Trial Period under Section 2.D above, the Lender will determine the new payment amount. If I comply with the requirements in Section 2 and my representations in Section 1 continue to be true in all material respects, the Lender will send me a Modification Agreement by the Lender and me, this Plan shall terminate and the Loan Documents, as modified by the Modification Agreement, shall govern the terms between the Lender and me for the remaining term of the Loan. (Id. § 3.)

Plaintiffs returned the TPP, provided the required information, and made the reduced monthly payments called for under the plan. (Compl. ¶ 71.) They did not receive a permanent loan agreement, though, and when they asked Defendant about the status of their modification, they were told to resubmit basically the same information that they had already provided. (Id. ¶¶ 72-73.) They resubmitted the necessary documents at least three times. (Id. ¶ 73.) In the meantime, they continued to make mortgage payments (at the reduced, trial-period rate) (see id. ¶ 74), and, on August 30, 2010, Defendant finally told Plaintiffs that their application for a permanent modification had been denied (id. ¶ 75).

Plaintiffs purport to assert claims on their own and on behalf of three classes of plaintiffs. The "Contract Class" is defined as:

All persons whose home mortgage loans were or are serviced by Saxon, and who (i) entered into a [TPP] with Saxon; (ii) made all payments required by their [TPP]; but (iii) were denied a loan modification as represented in the [TPP]. (Id. ΒΆ 81.) The "New York Class" is defined as: "All persons whose home mortgage loans were serviced by Saxon and who ...


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