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Leland Anthony Neyer et al v. Gmac Homecomings Financial

January 20, 2011

LELAND ANTHONY NEYER ET AL.,
PLAINTIFF,
v.
GMAC HOMECOMINGS FINANCIAL BANK, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Craig M. Kellison United States Magistrate Judge

FINDINGS AND RECOMMENDATIONS

Plaintiffs bring this civil action alleging banking fraud in the context of their home mortgage. This action proceeds on plaintiffs' amended complaint (Doc. 34). Plaintiffs seek, among other things, an order to enjoin or set aside a foreclosure sale. In essence, plaintiffs allege that defendants have failed to produce a "mortgage audit trail" and that without such a trail any foreclosure is invalid. Pending before the court is defendants' amended motion to dismiss (Doc. 40) plaintiffs' amended complaint.

The matter was heard before the undersigned in Redding, California. Ronald Burns, Esq., specially appeared for defendants and plaintiffs appeared pro se. After the hearing, plaintiffs submitted a document entitled "Notice of Motion and Motion Citing Ignored Initial Disclosures; Memorandum of Points and Authorities; Request for Judicial Notice" (Doc. 50), which the court will consider as plaintiffs' opposition to defendants' motion to dismiss.

I. BACKGROUND

In addressing the prior motion to dismiss, the court's findings and recommendations stated:

Plaintiffs' action is essentially a "produce the note" action intended to delay a non-judicial foreclosure. Such claims have universally been rejected. See e.g. Pagtalunan v. Reunion Mortgage Inc., 2009 WL 961995 (N.D. Cal. 2009); Puktari v. Reconstruct Trust Co., 2009 WL 32567 (S.D. Cal. 2009); see also California Trust Co. v. Smead Inv. Co., 6 Cal. App. 2d 432 (1935) (holding that production of the original note is not required in a non-judicial foreclosure). However, in their briefs and at oral argument, plaintiffs suggest that they may be able to state a claim based on violation of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2601, et seq. Defendants indicated at oral argument no opposition to providing plaintiffs an opportunity to amend to state a claim under RESPA. If plaintiffs are able to successfully plead a claim based on violation of federal law, the court will then consider whether to exercise supplemental jurisdiction over plaintiffs' state law claims. Plaintiffs should not, however, be permitted to re-allege any claims based on violation of federal criminal statutes, which should be dismissed with prejudice.

The findings and recommendations were adopted in full and plaintiffs were granted leave to amend (which defendants did not oppose). In the amended complaint, plaintiffs set forth the following allegations relating to RESPA:

1. "Homecomings failed to offer the RESPA required 10 day Notice & Waiver of first lien priority of Modoc County Tax Collector to plaintiffs that would have allowed the Modoc County Tax Collector to subordinate their lien to Homecomings and thereby eliminate any threat to Homecomings lien." (Am. Comp. ¶ 13, p. 6).

2. "On May 26, 2009, plaintiffs document cited as a Qualified Written Request under RESPA had nine attached Exhibits that in totem clearly stated cited plaintiffs' Cause of Action pursuant to [the Truth In Lending Act]. See Exhibits 12 & 13." (Am. Comp. ¶ 28, p.12).*fn1

In their "Memorandum of Points and Authorities in Support of 3rd Amended Complaint" (Doc. 35), plaintiffs add:

1. "Under Section 6 of RESPA, borrowers who had a problem with the servicing of their loan (including escrow account questions), have lawfully required defendants to reply without success." (P&As ¶ 10, p.4).

2. "Homecomings, GMAC Mortgage, G.M., the defendants, and their counsels have failed to comply with the terms of RESPA, sec. 6 despite the repeated requests of Plaintiffs." (P&As ¶ 23, p.8).

3. "Homecomings' breached RESPA by intentionally, recklessly or negligently compiling erroneous loan history information concerning Plaintiffs and by failing to properly research and rescind such ruinous information within a ...


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