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Aurora Loan Services, LLC v. Lucero

August 12, 2009


The opinion of the court was delivered by: Irma E. Gonzalez, Chief Judge United States District Court


Presently before the Court is Defendant's motion to set aside the Clerk's entry of default. (Doc. No. 22.) For the reasons stated herein, the Court denies the motion.


I. Factual Background

Plaintiff Aurora Loan Services ("Plaintiff") is the loan servicer for the loan giving rise to this dispute. Plaintiff is responsible for collecting monthly mortgage payments and enforcing the terms of the Note and the Deed of Trust further described below. Defendant Margaret Lucero ("Defendant"), proceeding pro se, is the borrowing party in the agreement giving rise to this dispute.

On November 1, 2006, Defendant entered into a written loan agreement (the "Loan") with CMG Mortgage, Inc. ("CMG") to refinance her primary residence located at 4434 Brisbane Way #3, Oceanside, California 92054 (the "Property"). In connection with the Loan, Defendant executed an adjustable rate note ("The Note") in the original principal amount of $339,000 payable to CMG and its successors and assigns. (Ex. A to Compl.) The note was secured by a Deed of Trust on the Property. (Ex. B. to Compl.) Plaintiff alleges Defendant was timely provided with all disclosures required under the federal Truth in Lending Act. ("TILA").

On November 22, 2006 CMG sold and assigned its interest in the Loan to Lehman Brothers Bank, FSB, its successors and assigns. (Compl., ¶ 9.) During Plaintiff's audit of Defendant's loan file in April 2007, Plaintiff discovered a clerical error in the final TILA disclosure Defendant had executed. Specifically, the disclosure understated the total finance charge by $1,915.19.

Plaintiff sent Defendant a letter on June 12, 2007 notifying her of the error and enclosing a refund check in the amount of $1, 915.19. In connection with this disclosure and refund, Plaintiff also provided Defendant with a new Notice of Right to Cancel form "re-opening" Lucero's rescission period pursuant t 15 U.S.C. § 1635 et seq. (See Ex. C to Compl.) On June 16, 2007, within the three day period provided in the new Notice of Right to Cancel, Defendant sent Plaintiff a written notice of her election to cancel the Loan. (Ex. D to Compl.)

Plaintiff contends that it has been and is presently prepared to rescind the Loan pursuant to 15 U.S.C. § 1635(b).*fn1 It contends it has contacted Defendant, informed her of the payoff amount necessary for her to tender the loan proceeds, and requested confirmation that she would be able to tender to effect her requested rescission under TILA. Thereafter Plaintiff allegedly made fruitless efforts over the course of several months to reach an amicable resolution whereby it would refund certain amounts due under TILA (such as finance charges) and Defendant would tender. Plaintiff contends Defendant was represented by counsel for part of this time. Plaintiff contends it is still unable to complete the rescission because Defendant has failed to tender or provide a sufficient indication of her ability and intent to tender.

II. Procedural Background

On May 29, 2008, Plaintiff brought the instant Complaint for rescission under TILA and for declaratory relief. Specifically, Plaintiff's rescission claim requests that the court equitably modify the rescission procedures set forth in 15 U.S.C. § 1635(b) and require Defendant to tender in advance of any rescission. Alternatively, Plaintiff seeks a declaration from the Court that Defendant's request to rescind the loan under TILA is denied, the loan is not rescinded, and all terms of the Note, Deed of Trust and other loan documents remain in full force and effect according to their terms.

Defendant was served with the complaint on July 27, 2008. (Doc. No. 5.) On August 18, 2008 Defendant filed a motion for extension of time to answer the complaint (Doc. No. 8,) because the parties were in "settlement negotiations" and that Plaintiff's counsel had consented to the extension. Defendant attached an email from Plaintiff's counsel stating Plaintiff "would be willing to consent to the extension during the pendency of our settlement negotiations." ("August 28th Email.") On August 22, 2008 the Court granted Defendant a thirty day extension. (Doc. No. 9.)

On September 22, 2008 Defendant filed another motion for an extension of time to respond to the complaint, again stating Plaintiff's counsel had consented to the extension, and attaching the August 28th Email. (Doc. No. 11.) The Court granted the motion on September 30, 2008, allowing Defendant thirty additional days to respond to the Complaint. (Doc. No 12.)

On October 30, 2008, Defendant filed a third motion for extension of time, this time for 90 days or more, again stating the parties were still in negotiations and that Plaintiff's counsel had assented to the extension. Defendant again attached the August 28th Email. (Doc. No. 14.) Plaintiff filed an Opposition on November 7, 2008 (Doc. No. 15,) stating that it had not consented to Defendant's motion, and that the extension sought was unreasonable in length. Plaintiff further stated that its negotiations with Defendant reached an impasse in the middle of October. Plaintiff also stated it did ...

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