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Christopher Ayden Brewster v. Sun Trust Mortgage; Nationstar Mortgage


August 1, 2012


The opinion of the court was delivered by: Honorable Larry Alan Burns United States District Judge


Brewster filed this action against Sun Trust Mortgage and Nationstar Mortgage on February 21, 2012, alleging violations of the Servicemembers Civil Relief Act. Sun Trust answered, and Nationstar filed a motion to dismiss.

I. Background

Sun Trust is the main Defendant here. It refinanced Brewster's San Diego home in April 2007 with a $400,000 loan and, according to Brewster, subsequently failed to extend to him the protections of the SCRA when he was called to active duty from the Marine Corps Reserve. Specifically, Brewster alleges that Sun Trust: (1) failed to reduce his interest rate to the statutory maximum of 6 percent; (2) instituted negative credit reporting and improper collection methods; and (3) attempted to unlawfully foreclose on his home by filing a notice of default when Brewster fell behind on his loan payments.

Nationstar's involvement in this case is limited. It began to service Brewster's loan in November 2010, and Brewster's only grievance with Nationstar is that it refused to remove from his account fees associated with Sun Trust's attempted foreclosure. Thus, it is only Brewster's unlawful foreclosure claim under 50 U.S.C. § 533 that is also alleged against Nationstar. Section 533 "forbids foreclosures or forced sales of real or personal collateral of an active military member pledged before activation, unless the creditor obtains court permission to do so . . . ." Newton v. Bank of McKenney, 2012 WL 1752407 at *4 (E.D. Va. May 16, 2012).

II. Discussion

Nationstar argues that it can't be liable under § 533 because it was Sun Trust, not Nationstar, that attempted to foreclose on Brewster's home. All it did was attempt to collect foreclosure-related fees remaining on Brewster's account after it assumed servicing responsibilities.(In his opposition brief, Brewster reveals that Nationstar backed off of the fees when he filed this action.) Brewster's response is that this violates the spirit of the SCRA, and that surely the assignee of a mortgage inherits the SCRA obligations of the assignor. He cites Frazier v. HSBC Mortgage Servs., 2009 WL 4015574 (M.D. Fla. Nov. 19, 2009), for this principle. Even assuming Nationstar was assigned Sun Trust's interest in Brewster's loan, which it was not, Frazier is not on point.

Frazier dealt with that provision of the SCRA that limits the interest a service member may be assessed on any obligation he incurred before entering military service. But HSBC wasn't a defendant in virtue simply of being an assignee of the loan at issue; it was a defendant because Frazier alleged that it directly engaged in conduct prohibited by the SCRA. See id. at *1 ("In support of this allegation, Frazier attaches her HSBC account statements from July 2006 to September 2006. During these months, HSBC clearly calculated the finance charge with an interest rate of 13 percent or greater.").

The Court certainly understands where Brewster is coming from. There's no doubt that Nationstar attempted to collect fees that, if Brewster's other allegations are accurate, should probably have never been assessed. But there is no cause of action for violating the spirit of the SCRA. Brewster sued Nationstar under § 533, which forbids foreclosing on the home of a service member under certain circumstances. Because Nationstar in no way foreclosed on Brewster, it can't be liable under § 533. Brewster's § 533 claim against Nationstar is therefore DISMISSED WITH PREJUDICE.

III. Conclusion

Brewster cannot allege a § 533 claim against Nationstar, which merely attempted to collect fees for an allegedly unlawful foreclosure by Sun Trust. Nationstar's motion to dismiss is therefore GRANTED.



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