This quarter, the cases involved allegations of alleged kickback or misleading payment schemes similar to those encountered in previous cases. In one case, the court permitted the plaintiffs to amend their complaint in an effort to avoid the statute of limitations on a claim alleging an improper captive reinsurance scheme.
RESPA claim alleging improper captive reinsurance scheme was allowed to proceed.
1. White v. PNC Financial Services Group, Inc., No. 11-7928, 2017 WL 85378 (E.D. Pa. Jan. 10, 2017)
Claim alleging that mortgage lender accepted charges for the rendering of services which were not actually performed was brought too late.
Homeowners brought a class action suit against insurers, lenders, and reinsurers alleging RESPA violations. The homeowners allege that the defendants engaged in a captive reinsurance scheme by creating subsidiary companies to serve as reinsurers. The lenders refer homeowners to the insurers, who then use the captive reinsurers owned by the lender, whom the homeowners assert are really just an extension of the lenders. The borrowers allege this scheme violated RESPA because the defendants gave kickbacks, the reinsurers did not assume any real risk, and the reinsurers did not actually perform any real services.
In a prior decision, the court granted the defendants’ motion to dismiss because the claims were barred by the statute of limitations. In this decision, the court considered the homeowners’ motion to amend their complaint to allege continuing violations on behalf of the defendants. Under the continuing violations doctrine, the statute of limitations on a RESPA claim does not run until the date of the most recent RESPA violation. Thus, if the borrowers could establish continuing violations, the borrowers claim could proceed against the lenders. The court granted the borrower’s motion to amend their complaint.
2. Kelmetis v. Federal National Mortgage Association, No. 1:16-CV-00246, 2017 WL 395120 (N.D.N.Y. Jan. 27, 2017)
The borrower/homeowner alleged that a mortgage lender violated RESPA by accepting charges for the rendering of services which were other than for services actually performed. The claim was barred by the one-year statute of limitations because it was filed more than ten years after origination of the loan. The trial court granted the lender’s motion to dismiss.
A RESPA claim was dismissed because the complaint did not identify misleading payments.
3. Lavine v. Aames Funding Corp., No. 3:16-CV-01489-MO, 2017 WL 944216 (D. Or. March 9, 2017)
The borrower alleges that the lenders violated RESPA by making payments between them that were misleading and designed to create a windfall. Because the borrower failed to identify the specific actions by the defendants giving rise to the claim, the borrower failed to properly state a claim against the lender. The court granted the defendants’ motion to dismiss.
B. Statutes and Regulations
No RESPA statutes or regulations were retrieved this quarter.
C. Volume of Materials Retrieved
RESPA issues were identified 5 times in 4 cases (see Tables 1, 2).