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Lavis v. Reverse Mortgage Solutions, LLC

United States District Court, S.D. West Virginia, Beckley Division

May 9, 2018

TERESA LAVIS, Plaintiff,
v.
REVERSE MORTGAGE SOLUTIONS, LLC, Defendant.

          MEMORANDUM OPINION AND ORDER

          IRENE C. BERGER UNITED STATES DISTRICT JUDGE

         The Court has reviewed the Plaintiff's Motion for Partial Summary Judgment (Document 27), the Plaintiff's Memorandum in Support of Motion for Partial Summary Judgment (Document 28), Defendant Reverse Mortgage Solutions, Inc.'s Memorandum in Opposition to Plaintiff's Motion for Partial Summary Judgment (Document 33), and the Plaintiff's Reply Memorandum in Support of Her Motion for Partial Summary Judgment (Document 38).

         The Court has also reviewed Defendant Reverse Mortgage Solutions, Inc.'s Motion for Summary Judgment (Document 29), Defendant Reverse Mortgage Solutions, Inc.'s Memorandum in Support of Motion for Summary Judgment (Document 30), Plaintiff Teresa Lavis' Memorandum in Opposition to Defendant Reverse Mortgage Solutions, LLC's Motion for Summary Judgment (Document 36), and Defendant Reverse Mortgage Solutions, Inc.'s Reply Memorandum in Support of Motion for Summary Judgment (Document 39). In addition, the Court has reviewed all exhibits. For the reasons stated herein, the Court finds that the Plaintiff's motion should be denied and the Defendant's motion should be granted in part and denied in part.

         FACTS

         The Plaintiff, Teresa Lavis, sought a reverse mortgage from the Defendant, Reverse Mortgage Solutions (RMS), in 2013 in an effort to obtain funds to care for her ill mother.[1] Ms. Lavis spoke with RMS loan officer Scott Schindler about how the reverse mortgage would work. She asserts that he told her the reverse mortgage was a government loan and that she would never have to pay interest or make a house payment again. She further avers that Mr. Schindler did not tell her that she would still need to pay taxes and insurance for her house, although she expected to continue paying taxes. Her insurance had previously been paid through her mortgage, and she did not understand that she would be required to obtain and pay for insurance directly. She testified at her deposition that Mr. Schindler told her she could expect to receive approximately 70% of the value of her home. Mr. Schindler arranged for an appraiser to visit Ms. Lavis' property on October 1, 2013, and Ms. Lavis states that she paid the $150.00 appraisal fee to the appraiser at that time. She asserts that Mr. Schindler told her that he was not permitted to disclose the appraisal results to her.

         In June 2013, Ms. Lavis received loan counseling related to the reverse mortgage. In her affidavit, she asserts that someone from RMS “called and said that a counselor would call [her] at home, ” and set up the call with a loan counselor of her choice.[2] (Lavis Aff. at ¶11) (Document 36-1.) In her deposition, Ms. Lavis testified that RMS gave her a number and directed her to call it to receive the counseling. RMS denies having any business or other relationship with the loan counselor, Robert Packett, beyond maintaining a list of potential counselors. Ms. Lavis describes the conversation as brief and perfunctory, with Mr. Packett declining to answer her questions about RMS or alternatives to a reverse mortgage. She recalls Mr. Packett ending the conversation by saying “I am supposed to tell you that this is a great loan.” (Lavis Acc. At ¶ 12.) She testified in her deposition that she does not recall much of the conversation, but that it was rushed and uninformative. She now asserts that, with accurate information about the nature of the loan and her options, she would have assisted her mother in getting a reverse mortgage on her mother's home, rather than getting one on her own home. She signed a Certificate of HECM Counseling form, which contains a certification that the loan counseling included discussion of financial implications and alternatives to a reverse mortgage, the available payment plans, the costs, when the loan would become due and payable, and other specified topics. (Document 33-1 at 11.) In her deposition, she testified that those topics were not, in fact, addressed.

         Ms. Lavis completed a reverse mortgage loan application on September 5, 2013. She believes her home was worth approximately $180, 000, based on a conversation with a realtor. She owed less than $14, 000 on a traditional mortgage.[3] RMS used a home value of approximately $112, 000. When Ms. Lavis signed the loan application and the comparison form, she also signed a form detailing the anticipated accrued interest and annual loan balance, home value, and net equity, a form listing the total annual loan cost, a Good Faith Estimate form estimating the settlement charges and closing costs, a Disclosure of Third Party Fees and Costs form, a Required Provider Disclosure form listing the providers of third-party services whose fees would be included at closing, a list of HUD approved counseling agencies, [4] an alternative contact form, a borrower identification disclosure form, and a counseling disclosure form.[5]

         The loan closing took place on November 22, 2013, at Ms. Lavis' home. RMS sent a woman identified as a closing agent, and a notary. Ms. Lavis asserts that the closing was rushed, and the closing agent handed her papers, pointed out where to sign, then put the papers in a pile or handed them to the notary. She states that she did not understand the documents and did not have the opportunity to read or ask questions about them. She received copies of the papers in the mail sometime later. The papers signed at closing include an Adjustable Rate Note payable to RMS, a second Adjustable Rate Note payable to the Secretary of Housing and Urban Development (HUD), a Home Equity Conversion Loan Agreement, and two Adjustable Rate Deed of Trust documents, securing payment on the two Adjustable Rate Notes. She also signed the Settlement Statement, another copy of the Loan Application, and a Truth in Lending Disclosure form.

         The Settlement Statement outlines the settlement charges and loan amounts. The settlement charges include $2, 625 in “adjusted origination charges, ” $375 for appraisal fee, $15.15 for a credit report, $5.75 for flood certification, $2, 240 for mortgage insurance premium, $2, 113.56 for “homeowner's insurance for 1 years to State Farm, ” $1, 715 for title service and lender's title insurance, $174 for government recording charges, and $125 for a counseling fee. (Settlement Statement, Document 27-2.) Those amounts were deducted from the cash settlement available to Ms. Lavis. The settlement statement specified an initial interest rate of 2.418%. The total principal of the reverse mortgage loan at closing was $66, 976. Of that, settlement charges amounted to $9, 389.47. An additional $13, 577.57 was paid to United Bank to satisfy Ms. Lavis' prior traditional mortgage. Ms. Lavis received a lump sum of $44, 008.96.

         In a January 16, 2014 letter, RMS informed Ms. Lavis that it had no evidence of hazard insurance on file, and that it would purchase insurance and charge her if she did not provide insurance information. Ms. Lavis testified that she was unaware of her insurance coverage or the purchase of insurance, and she did not receive a refund from either RMS or an insurance company for the $2, 113.56 withheld from her cash payment for insurance. A letter mailed February 14, 2014, from Aegis Security Insurance Company, contains a notice that Ms. Lavis' insurance policy would be cancelled on March 3, 2014.[6] RMS sent another letter on March 6, 2014, informing Ms. Lavis that records showed her insurance had been cancelled on March 3, 2014, and again indicating that it would charge her for force-placed insurance if she did not provide proof of insurance. Another letter, titled “Second and final notice, ” was dated April 10, 2014. A letter dated May 8, 2014, states that RMS had purchased insurance and that Ms. Lavis would be responsible for the $575 cost of the insurance, but could select her own and RMS would cancel the policy it had purchased. Additional letters informing Ms. Lavis that RMS would purchase insurance and charge her for it if she did not purchase her own were dated January 16, 2015, March 13, 2015, January 22, 2016, and March 18, 2016. She does not recall receiving any of the letters related to insurance.

         A letter dated July 9, 2014, requested that Ms. Lavis provide proof of payment of her property taxes, which were delinquent in the amount of $150.34 in RMS' review of tax records. RMS paid $29.38 for property taxes on March 3, 2016. That amount was returned, and documents show that the unpaid taxes were actually due on a property with the same street address in Buford County, Georgia. RMS claims that it adjusted the amount due downward by $29.38 on April 13, 2016. Ms. Lavis testified that she recalled sending RMS proof of payment of her property taxes at some point, but does not recall when.

         A letter dated April 22, 2015, memorializes an agreement that Ms. Lavis would make payments of $56.97 per month for 24 months to satisfy a $1367.30 debt accumulated from homeowner's insurance payments. RMS' records reflect receipt of a single payment of $56.97. A letter dated August 20, 2015, states that the repayment plan was canceled due to failure to comply with its terms, and requested payment of the outstanding debt of $1, 310.33. A letter dated August 21, 2015, states that she failed to pay taxes and insurance, owes $1, 310.33, and that failure to resolve the matter could result in foreclosure. RMS sent a notice of default, dated September 18, 2015, advising Ms. Lavis that, to avoid foreclosure, she would need to either cure the default by paying $1, 310.33 to reinstate the reverse mortgage loan, or pay the accelerated loan balance of $72, 929.82. Another letter, dated March 8, 2016, sent by Reisenfeld & Associates, contains another notice of right to cure default, with a total amount in default of $1, 946.71. Ms. Lavis testified that she did not recall receiving these letters, but does recall that she contacted an attorney and ultimately initiated this suit due to the threat of foreclosure.

         Ms. Lavis sent a letter, dated May 12, 2016, stating: “This is notice that I rescind the November 22, 2013 loan and mortgage on my home at 235 Church St., Beckley, WV, effective today.” (Lavis Rescission, att'd as Document 27-11.) The record does not contain a response from RMS. Ms. Lavis testified that she would need to obtain a loan in order to tender the proceeds of the reverse mortgage loan back to RMS and complete rescission.

         In Count I of Ms. Lavis' complaint, she asserts class claims for illegal and excessive fees, charges, and costs, in violation of the West Virginia Residential Mortgage Lender, Broker and Servicer Act, the West Virginia Reverse Mortgage Enabling Act, and the implementing regulations. The Court granted a motion to dismiss count one based on the statute of limitations. She also asserts seven individual claims. Count II alleges unconscionable inducement. Count III asserts misrepresentation. Count IV alleges unfair debt collection. Count V asserts refusal of payment, in violations of W.VA. Code § 46A-2-115. Count VI asserts breach of contract. Count VII asserts that Ms. Lavis properly rescinded the loan. Count VIII asserts failure to honor rescission.

         STANDARD OF REVIEW

         The well-established standard in consideration of a motion for summary judgment is that “[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a)-(c); see also Hunt v. Cromartie, 526 U.S. 541, 549 (1999); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986); Hoschar v. Appalachian Power Co., 739 F.3d 163, 169 (4th Cir. 2014). A “material fact” is a fact that could affect the outcome of the case. Anderson, 477 U.S. at 248; News & Observer Publ'g Co. v. Raleigh-Durham Airport Auth., 597 F.3d 570, 576 (4th Cir. 2010). A “genuine issue” concerning a material fact ...


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