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The Tides are Turning -- Rojecki v. Bank of America

While it is generally acknowledged and accepted that big banks are a necessary evil and exert an exorbitant amount of influence over our lives, at times we see the little guy prevail against the big machine. This phenomenon occurred during a recent federal court decision. The Honorable Judge Salas, a federal judge, denied Bank of America’s attempt to dismiss borrower, Edyta Rojecki’s, claims against the bank on violation of the Real Estate Settlement Procedures Act (RESPA). In addition to suing Bank of America for violating RESPA, Rojecki sued the bank for violating the New Jersey Consumer Fraud Act (NJCFA), negligent misrepresentation, negligent processing of loan modifications, negligence, unjust enrichment and intentional fraud.

Rojecki could not make her monthly mortgage payments and defaulted on her loan in March 2012. Upon which, she entered into a ping pong match, a series of back and forth, with Bank of America. Bank of America offered her a loan modification. Rojecki denied this initial offer. However, she subsequently submitted a full loan modification in November 2014, which was then denied by the bank. Rojecki was notified her property was scheduled for sale in February 2015. At this point, the bank had neither rejected nor denied her requests, but was continuing to review her application. She was later informed by the bank’s legal representation, Stern and Levinthal,  that the sale was postponed until March of 2015. Later, Bank of America outright denied the loan modification request, but informed Rojecki could reapply for the loan modification, which she did on May 18, 2015. On May 28, 2015, Stern and Levinthal notified Rojecki that her property was scheduled to be sold on June 5th.  The house was sold; interestingly, however, Bank of America sent Rojecki a letter afterwards that her loan modification was still under review.

Bank of America clearly violated RESPA in this situation because Rojecki’s property was sold while a loan modification application was under review. Under RESPA’s “Regulation X,” 12 C.F.R. §  1024.41, a loan servicer cannot refer a mortgage for foreclosure proceedings under certain circumstances. In particular, under 12 C.F.R. § 1024.41 (g), “if a borrower submits a complete loss mitigation application after a servicer has made the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process but more than 37 days before a foreclosure sale, a servicer shall not move for foreclosure judgment or order of sale, or conduct a foreclosure sale.” On this basis, the judge denied Bank of America’s motion to dismiss.

Bank of America challenged Rojecki’s May 18 loan modification on the grounds that it was incomplete and not timely submitted. However, the judge found that the bank’s request for additional documents at the time did factually not make the package incomplete and because Rojecki was notified about the sale, May 28, less than 37 days before the sale was scheduled, Bank of America’s argument did not hold water.