In Edyta v. Bank of America, N.A., 2016 WL 3545521 (D.N.J. June 28, 2016), the District Court of New Jersey denied defendant Bank of America’s (“BoA”) motion to dismiss a residential mortgagor’s complaint alleging, among other things, violations of Real Estate Settlement Procedures Act (“RESPA”) and the New Jersey Consumer Fraud Act.

According to plaintiff’s complaint, on or about March 1, 2012, plaintiff defaulted under her residential mortgage with BoA. BoA subsequently offered plaintiff a loan modification, which Plaintiff rejected claiming that the payments were too high. BoA subsequently denied the loan modification. After the BOA’s denial of the modification, plaintiff claimed she submitted a full loan modification package for review by BoA, which BoA again denied. After the second denial, plaintiff requested a reconsideration of the loan modification and sent BoA a series of documents and information concerning a loan modification, which she claimed were being sent at the request of BoA. 

On or about January 17, 2015, plaintiff was informed that her property was scheduled for a foreclosure sale on February 27, 2015. Plaintiff claimed that, up until this point, BoA had never rejected or denied her requests in any form but was instead “continuing to review her situation.” Despite the pending sale, plaintiff continued to provide BoA with additional documentation, purportedly at the request of BoA. Prior to the scheduled sale, the law firm representing BoA in the foreclosure advised plaintiff that the sale had been postponed until March 27, 2015. Plaintiff continued to send BoA documentation regarding the loan modification after having been advised of the postponement. On or about April 3, 2015, BoA denied plaintiff’s loan modification request, but, on or about May 14, 2015, BoA informed plaintiff that she could reapply for a loan modification. Plaintiff claimed that after having received notice that she could reapply, she prepared another loan modification package. Plaintiff further claimed that neither BoA nor its attorneys notified plaintiff of a new foreclosure sale date.

On or about May 18, 2015, plaintiff submitted another loan modification package to BoA, and on or about May 20, 2015 and May 28, 2015, BoA requested additional documentation, which plaintiff provided. On or about May 28, 2015, BoA’s counsel advised plaintiff that the sale of her property was scheduled for June 5, 2015. Still, plaintiff continued to provide documents requested by BoA through June 2, 2015. On June 5, 2015, BoA sold plaintiff’s home. However, on June 16, 2015, BoA sent plaintiff a letter stating that it was still in the process of reviewing her loan for a loan modification and subsequently sent plaintiff additional correspondence requesting more documentation for its supposed review.

Plaintiff thereafter filed suit asserting causes of action for violations of RESPA and the New Jersey Consumer Fraud Act, negligence, unjust enrichment and fraud. BoA moved to dismiss, arguing that plaintiff’s claims under RESPA were barred on the grounds that (1) plaintiff’s loan modification submissions were incomplete and (2) even if they were complete, they were untimely submitted. 

The court found BoA’s arguments unpersuasive, and declined to dismiss plaintiff’s RESPA claim. Under RESPA's "Regulation X," 12 C.F.R. §1024.41, a loan servicer cannot refer a mortgage for foreclosure proceedings under certain circumstances where a borrower submits a complete loss mitigation application. The court declined to infer from BoA's requests for additional documentation that plaintiff submitted an incomplete application. Instead, the appropriate inference from plaintiff’s allegations was that her application was under active review. The court reserved adjudicating BoA's motion to dismiss plaintiff’s state law claims.