# KAREEM v. PHH MORTGAGE CORPORATION

> District Court, D. New Jersey · March 1, 2022

URL: https://www.frixlaw.com/law-library/cases/10272668

## Case

- **Court:** District Court, D. New Jersey
- **Decided:** March 1, 2022
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

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- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10272668

## How later opinions describe it (automated extraction)

- holding that it would be “inappropriate for the court to convert the pre- answer motion to dismiss into a motion for summary judgment” in part because the court “[had] not been advised whether any discovery has taken place in this case”
- concluding that “taking notice of [certain exhibits attached to the defendant’s motion to dismiss] is inconsistent with the rationale of the integral documents exception” because the plaintiff asserted that he never saw the exhibits prior to filing his complaint

## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CAMDEN VICINAGE
__________________________________
:
HUSSAIN KAREEM, :
:
Plaintiff, :
: Civil No. 20-7846 (RBK/MJS)
v. :
: OPINION
PHH MORTGAGE CORPORATION, et :
al., :
:
Defendants. :
__________________________________

KUGLER, United States District Judge:
Presently before the Court is Defendants’ Motion to Dismiss the Third Amended
Complaint (ECF No. 35) pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons
set forth below, Defendants’ Motion to Dismiss is GRANTED in part and DENIED in part.
I. BACKGROUND
As with his prior complaints, Plaintiff’s Third Amended Complaint1 is often difficult to
follow. The Court does its best to interpret Plaintiff’s allegations.
A. Factual Background
In July of 2006, Plaintiff Hussain Kareem, a resident of Georgia, executed an adjustable
rate note with American Brokers Conduit for $159,200 in order to refinance his home. (ECF No.
29, “Third Am. Compl.” 2);2 (ECF No. 31-1, Ex. 1). To secure this loan, Mr. Kareem executed a
Security Deed for his property in favor of Mortgage Electronic Registration Systems, Inc. (ECF
No. 10-2, Ex. B); see (Third Am. Compl. 2). Around September 2008, Mr. Kareem attempted to

1 We note that Plaintiff’s self-titled Third Amended Complaint (ECF No. 29) is actually his second amended
complaint in this case. For simplicity, we refer to the instant complaint, (ECF No. 29), as the Third Amended
Complaint.
2 We refer to page numbers when citing to the Third Amended Complaint.
rescind his loan under an alleged Truth in Lending Act rescission procedure and halted all
payments on his mortgage until he was informed of the outcome. (Third Am. Compl. 2). He
presumed his mortgage debt was cancelled by the rescission notice. (Id.)
Ocwen Loan Servicing, LLC (“Ocwen”) serviced Mr. Kareem’s loan until its merger
with PHH Mortgage Corporation (“PHH”). (Id. at 3). PHH began servicing Plaintiff’s loan on

June 1, 2019. (Id.) On June 4, 2019, Mr. Kareem received a letter from PHH informing him of
his new mortgage servicer. (Id.) (citing ECF No. 17-3, Ex. A). Attached to this letter was an
addendum, which restated the status and terms of the loan. (Id.) (citing ECF No. 17-3, Ex. B).
Thereafter, Mr. Kareem submitted payments in the amount of $581.00 for the months of
July, August, and September of 2019. (Id. at 4) (citing ECF No. 17-3, Exs. C, D, E, F; ECF No.
21, Exs. G, L). PHH returned all payments to Mr. Kareem in August and September of 2019,
except for his July payment, informing him that these payments were “returned as [they were]
insufficient to bring [his] account current.” (Id.) (citing ECF No. 21, Exs. F, G, H).
Around October 16, 2019, Mr. Kareem received a delinquency notice from Defendants.

(Id.) (citing ECF No. 21, Ex. I); (ECF 31, Ex. I). It indicated that he was delinquent on his
mortgage loan by over 3000 days and needed to tender $108,243.69 to bring his account current.
(Id.) On November 6, 2019, Plaintiff received another letter from Defendants informing him
again that certain of his payments had been returned because they were insufficient to cure the
default on the account. (Id.) (citing ECF No. 21, Ex. H); (ECF No. 31, Ex. H). The letter also
stated that “[t]he payment of $581.00 received on 07/09/2019 was applied to the suspense
account.” (ECF No. 31, Ex. H). The letter further provided that Plaintiff’s account “was assessed
with Lender Placed Insurance by Ocwen” and noted that “if we do not receive proof of insurance
on the property . . . we . . . assess Lender Placed Insurance (LPI) or Force Placed Insurance
(FPI) on the property. This will result in a negative escrow balance and an escrow payment will
be added to the monthly payment amount in order to collect the escrow advance.” (Id.)
In February 2020, Mr. Kareem was sent a letter informing him that PHH had retained a
law firm in connection with his loan. (Third Am. Compl. 4) (citing ECF No. 1-1, Ex. J). This law
firm sent a letter to Mr. Kareem on May 22, 2020, indicating that his mortgage loan debt was

immediately due and payable in full. (Id.) It also indicated that a foreclosure sale for his property
was scheduled to take place on July 7, 2020. (Id.) On May 27, 2020, Plaintiff sent a letter to
Defendants, entitled “Qualified Written Request,” claiming they erred by imposing forced-place
insurance on his property. (Id.) (citing ECF No. 1-1, Ex. K); (ECF No. 31, Ex. K).
B. Procedural History
On June 26, 2020, Plaintiff filed a complaint in this Court asserting claims against
Defendant PHH Mortgage Corp. (ECF No. 1). On July 22, Plaintiff amended his complaint to
add Defendant NewRez LLC. (ECF No. 3).
On September 30, 2020, Defendants moved to dismiss the amended complaint. (ECF No.

10). On December 1, 2020, Plaintiff filed a motion for leave to file a Second Amended
Complaint in response to the motion to dismiss, (ECF No. 17), which Defendants opposed, (ECF
No. 20). On May 24, 2021, this Court granted Plaintiff’s motion to amend in part and denied
Defendants’ motion to dismiss as moot. (ECF Nos. 25, 26).
On June 22, 2021, Plaintiff filed a Third Amended Complaint (“TAC”). (ECF No. 29).
Defendants filed a motion to dismiss the TAC on August 4, 2021. (ECF No. 35, “Def. Mot.”).
Plaintiff filed a brief in opposition to Defendants’ motion, (ECF No. 37, “Pl. Opp’n Br.”), to
which Defendants replied on September 27, 2021, (ECF No. 40).
II. LEGAL STANDARD
A. Motion to Dismiss Under Rule 12(b)(6)
Federal Rule of Civil Procedure 12(b)(6) allows a court to dismiss an action for failure to
state a claim upon which relief can be granted. When evaluating a motion to dismiss, “courts
accept all factual allegations as true, construe the complaint in the light most favorable to the
plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff

may be entitled to relief.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009)
(quoting Phillips v. Cty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008)). A complaint survives a
motion to dismiss if it contains enough factual matter, accepted as true, to “state a claim to relief
that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).
To make this determination, courts conduct a three-part analysis. Santiago v. Warminster
Twp., 629 F.3d 121, 130 (3d Cir. 2010). First, the Court must “tak[e] note of the elements a
plaintiff must plead to state a claim.” Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 675 (2009)).
Second, the Court should identify allegations that, “because they are no more than conclusions,
are not entitled to the assumption of truth.” Id. (quoting Iqbal, 556 U.S. at 680). “Threadbare

recitals of the elements of a cause of action, supported by mere conclusory statements, do not
suffice.” Id. (quoting Iqbal, 556 U.S. at 678). Finally, “where there are well-pleaded factual
allegations, a court should assume their veracity and then determine whether they plausibly give
rise to an entitlement for relief.” Id. (quoting Iqbal, 556 U.S. at 679).
“To decide a motion to dismiss, courts generally consider only the allegations contained
in the complaint, exhibits attached to the complaint and matters of public record.” Schmidt v.
Skolas, 770 F.3d 241, 249 (3d Cir. 2014) (citation omitted). A court may also consider
documents explicitly relied on or integral to the complaint. Id. (citing In re Burlington Coat
Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997)). “[T]he justification for the integral
documents exception is that it is not unfair to hold a plaintiff accountable for the contents of
documents it must have used in framing its complaint, nor should a plaintiff be able to evade
accountability for such documents simply by not attaching them to his complaint.” Id. at 250.
B. Pro se Litigants
Where litigants are proceeding pro se, the court “must liberally construe [the plaintiff’s]

pleadings, and … ‘apply the applicable law, irrespective of whether a pro se litigant has
mentioned it by name.’” Higgins v. Beyer, 293 F.3d 683, 688 (3d Cir. 2002) (quoting Holley v.
Dep't of Veteran Affairs, 165 F.3d 244, 247–48 (3d Cir. 1999)). The Court need not, however,
credit a pro se plaintiff's “bald assertions” or “legal conclusions.” Morse v. Lower Merion School
Dist., 132 F.3d 902, 906 (3d Cir. 1997) (citation omitted).
III. DISCUSSION
In our May 24 Order and Opinion, this Court dismissed the following of Plaintiff’s
claims with prejudice: (1) the claims for breach of contract based on the notice of servicing
transfer letter and addendum; (2) the claims for breach of Georgia’s Residential Mortgage Act;

(3) any Fair Debt Collection Practice Act (“FDCPA”) claim based on the notice of servicing
transfer and addendum; (4) the claims for violation of Sections 1692e(5) and 1692e(10) of the
FDCPA; and (5) the claim for violation of 12 C.F.R. § 1024.41. (ECF Nos. 25, 26). To the extent
that Plaintiff attempts to reinstate these claims in his Third Amended Complaint, we again
dismiss those claims with prejudice for the reasons stated in our May 24 Opinion. Plaintiff
should carefully adhere to the Court’s orders going forward.
We turn now to Plaintiff’s four remaining claims: (1) a breach of contract claim based on
Section 22 of the Security Deed; (2) a claim for violation of Section 1692e of the FDCPA, 15
U.S.C. § 1692e, based on the delinquency notice; (3) a claim for violation of 12 C.F.R. §
1024.35; and (4) a claim for violation of 12 U.S.C. § 2605(k)(1)(A). Defendants move to dismiss
all four claims. We address each argument in turn.
A. Breach of Contract Claim
Plaintiff alleges that pursuant to the terms of Section 22 of the Security Deed, Defendants
were required to give him notice of his rights to reinstate after acceleration and to bring a court

action to assert the non-existence of a default or raise any other defense. (Third Am. Compl. 20-
21, 25). He further alleges that the delinquency notice did not inform him of these rights and
thereby caused him damages. (Id.) Defendants contend that they “did not breach the terms of
section 22 of the Security Deed” because “Ocwen, PHH’s predecessor and former loan servicer,
sent Plaintiff a notice of default letter (“Notice of Default”)” in 2014 that satisfied all of Section
22’s requirements. (Def. Mot. 10-11). Defendants have attached a copy of the 2014 Notice of
Default to their motion as an exhibit. (Id. at Ex. A).
Because we are at the motion to dismiss stage, the Court may only consider the 2014
Notice of Default letter if we convert Defendants’ 12(b)(6) motion into one for summary

judgment, Fed. R. Civ. P. 12(d), or if the exhibits are “integral to or explicitly relied upon in the
complaint[.]” Doe v. Univ. of the Scis., 961 F.3d 203, 208 (3d Cir. 2020) (citing In re Burlington
Coat Factory Sec. Litig., 114 F.3d at 1426). We have discretion to accept materials beyond the
pleadings. Glob. Naps, Inc. v. Bell Atl.-New Jersey, Inc., 287 F. Supp. 2d 532, 538 n.8 (D.N.J.
2003) (“To the extent that the parties have submitted documents that are not matters of public
record, these materials will convert the motion to dismiss into one for summary judgment if the
Court relies on them. … It is within this Court's discretion whether to rely on them or not.”
(internal citation omitted)).
Here, the Notice of Default letter is not integral to or explicitly relied upon in the TAC. In
fact, Plaintiff challenges the authenticity of the Notice of Default and denies ever having
received the 2014 letter. (Pl. Opp’n Br. 5); cf. Schmidt v. Skolas, 770 F.3d 241, 250 (3d Cir.
2014) (concluding that “taking notice of [certain exhibits attached to the defendant’s motion to
dismiss] is inconsistent with the rationale of the integral documents exception” because the

plaintiff asserted that he never saw the exhibits prior to filing his complaint). Seeing as it is
unclear from the docket whether discovery has commenced in this case and given Plaintiff is
proceeding pro se, we are not inclined to convert Defendant’s pre-answer motion to dismiss into
a motion for summary judgment. See Childs v. Meadowlands Basketball Assocs., 954 F. Supp.
994, 997 (D.N.J. 1997) (holding that it would be “inappropriate for the court to convert the pre-
answer motion to dismiss into a motion for summary judgment” in part because the court “[had]
not been advised whether any discovery has taken place in this case”); Scalercio-isenberg, No.
20-4501, 2020 WL 5810527, at *2 (D.N.J. Sept. 30, 2020) (“Although the Court may choose to
convert the Motion into a motion for summary judgment … the Court will not do so here

because no discovery has been conducted and Plaintiffs were not put on notice that the Court
might construe the Motion to Dismiss as one for summary judgment.” (internal citation
omitted)). As such, we decline to consider the Notice of Default at this time.
As the Notice of Default is the basis of Defendants’ argument that they have not breached
Section 22 of the Security Deed, the Court denies Defendants’ motion to dismiss Plaintiff’s
breach of contract claim as to the Security Deed without prejudice.
B. Federal Debt Collection Practices Act
As best the Court can discern, Plaintiff next alleges that Defendants’ delinquency notice
violated Section 1692e(2)(A) of the FDCPA when it listed his balances for the months of July,
August, and September 2019 as “unpaid” because he did remit payments for those months but
had the August and September payments returned to him. (Third Am. Compl. 9-12, 27).3
“To prevail on an FDCPA claim, a plaintiff must prove that (1) [he] is a consumer, (2)
the defendant is a debt collector, (3) the defendant's challenged practice involves an attempt to
collect a ‘debt’ as the Act defines it, and (4) the defendant has violated a provision of the

FDCPA in attempting to collect the debt.” Jensen v. Pressler & Pressler, 791 F.3d 413, 417 (3d
Cir. 2015) (citation omitted). As before, only the fourth prong is disputed here.
Section 1692e generally provides that debt collectors “may not use any false, deceptive,
or misleading representation or means in connection with the collection of any debt.”
Reichenbach v. Hayes, Johnson & Conley, PLLC, No. 3:19-CV-00932-ARC, 2019 WL 4511698,
at *5 (M.D. Pa. Sept. 19, 2019). “This includes falsely representing ‘the character, amount, or
legal status of any debt’ under § 1692e(2)(A)[.]” Id. This provision deals with debt collectors’
representations to debtors. We analyze such communications “from the perspective of the least
sophisticated debtor.” Rosenau v. Unifund Corp., 539 F.3d 218, 221 (3d Cir. 2008) (quoting

Brown v. Card Serv. Ctr., 464 F.3d 450, 454 (3d Cir. 2006)). This low standard “effectuate[s] the
basic purpose of the FDCPA: to protect all consumers, the gullible as well as the shrewd.” Id.
(internal quotation marks and alterations omitted). Still, the least sophisticated debtor is held to
“a quotient of reasonableness, a basic level of understanding, and a willingness to read with

3 In our prior Opinion, we found that Plaintiff’s Section 1692(e) claim with respect to the delinquency notice was
not clearly futile because the delinquency notice had two possible interpretations, one of which was inaccurate.
(ECF No. 25 at 16). However, Plaintiff does not make any claim that the delinquency notice is subject to two
reasonable interpretations in his TAC. Instead, Plaintiff alleges that the delinquency notice was misleading under
Section 1692(e) because it conflicted with the notice of servicing transfer and addendum. (Third Am. Compl. 9-10).
However, as the Court previously explained, any claims related to the notice of servicing transfer and addendum are
barred by the statute of limitations. (ECF No. 25 at 11-13). As such, Plaintiff cannot rely on purported discrepancies
between the delinquency notice and notice of servicing transfer and addendum to form the basis for his FDCPA
claim. To the extent Plaintiff claims the delinquency notice violated Section 1692e because the notice differed from
the notice of servicing transfer and addendum, the Court dismisses this claim.
care.” Knight v. Midland Credit Mgmt. Inc., 755 F. App’x 170, 174 (3d Cir. 2018) (quoting
Caprio v. Healthcare Revenue Recovery Grp., LLC, 709 F.3d 142, 149 (3d Cir. 2013)).
In the instant motion to dismiss, Defendants assert that Plaintiff cannot contend that the
delinquency notice’s statement that Plaintiff had missed payments was false or a
misrepresentation because Plaintiff “admitted he hasn’t made payments on the Loan and

presumed his debt was cancelled when he allegedly attempted to rescind his Loan back in 2008.”
(Def. Mot. 13-14). Defendants assert that Plaintiff “nowhere manages to allege how the
‘character or amount’ of any debt was falsely represented.” (Id. at 14).
We disagree. The TAC alleges that Plaintiff remitted mortgage payments to PHH for
several months in 2019. (Third Am. Compl. 9-10). PHH returned most of those payments to
Plaintiff. (Id.) However, Plaintiff contends, and Defendants do not dispute, that Defendants
retained his July 2019 payment.4 (Id.) (“[T]he Delinquent notices were falsely stated and
materially misleading to imply that Mr. Kareem missed all payments throughout calendar year
for 2019, even though PHH retained the July 1, 2019 payment.”). Presuming that this allegation

is true, the delinquency notice, which lists the July 2019 amount as unpaid, may mispresent the
amount of debt owed. See (ECF No. 31, Ex. I). Therefore, Plaintiff has stated a plausible claim
for relief under Section 1692e(2)(A).5
C. Real Estate Settlement Procedures Act (RESPA) and Regulation X

4 It is not clear to the Court the purpose for which PHH retained the July 2019 payment. The November 2019 letter
from Defendant NewRez to Plaintiff states only that “[t]he payment of $581.00 received on 07/09/2019 was applied
to the suspense account.” (ECF No. 31, Ex. H). However, Defendants’ do not address this issue, and we must
presume that Plaintiff’s well-pleaded allegations are true for the purposes of this motion to dismiss.
5 In our prior Opinion, we concluded that Defendants were entitled to refuse any of Plaintiff’s payments that did not
bring the loan current. (ECF No. 25 at 15 n.7). We found that: “[t]his conclusion forecloses Plaintiff’s argument that
Defendants violated 15 U.S.C. § 1692(e) by failing to provide him with an accurate accounting in subsequent
billings letters” as “[t]his claim seems to be premised on the fact that the billing letters were allegedly inaccurate
because they did not include Plaintiff’s attempted payments.” (Id.) (emphasis added). For clarity, we stress that our
holding here is limited to Plaintiff’s July 2019 payment, which was not an “attempted” payment but was instead
allegedly retained by Defendants.
i. 12 C.F.R. § 1024.35
In our previous Opinion, we construed Plaintiff’s claim under 12 C.F.R. § 1024.35(b) as
an allegation that Defendants failed to timely respond to his notice of error. (ECF No. 25 at 20).
12 C.F.R. § 1024.35(a) provides:

A servicer shall comply with the requirements of this section for any written notice
from the borrower that asserts an error and that includes the name of the borrower,
information that enables the servicer to identify the borrower’s mortgage loan
account, and the error the borrower believes has occurred. . . . A qualified written
request that asserts an error relating to the servicing of a mortgage loan is a notice
of error for purposes of this section, and a servicer must comply with all
requirements applicable to a notice of error with respect to such qualified written
request.

Oddly, Plaintiff does not explicitly reference § 1024.35 in his TAC. Reading the TAC
liberally, however, we construe Plaintiff’s allegations that: (1) he “sent a timely letter to PHH
entitled ‘Qualified Written Request’ to the Servicer’s address that handles the notices of errors”;
(2) “PHH did not complete their investigation on this matter until six months later”; (3) “PHH’s
research letter on his mortgage account was sent to Plaintiff six (6) months later”; and (4) “PHH
has been stubbornly resistant and slow to respond in good faith to his legal QWR requests to
remove the LPI fees and make adjustments to his escrow account” to constitute a claim under §
1024.35. (Third Am. Compl. 4, 6, 8).
1. Actual Damages
Defendants ask this Court to dismiss Plaintiff’s § 1024.35 claim because “Plaintiff failed
to properly allege he suffered actual damages.” (Def. Mot. 15). Specifically, Defendants assert
that Plaintiff “wholly [failed] to connect any emotional distress to his allegations Defendants
violated Regulation X by failing to respond to his qualified written request (“QWR”).” (Id.)
“[D]amages are an essential element in pleading a RESPA claim.” Lloyd v. New Jersey
Hous. & Mortg. Fin. Agency, 845 F. App'x 139, 144 (3d Cir. 2021) (quoting Renfroe v.
Nationstar Mortg., LLC, 822 F.3d 1241, 1246 (11th Cir. 2016)). There are two types of damages
recoverable when a loan servicer fails to comply with its RESPA duties: (1) actual damages and
(2) statutory damages. Bukowski v. Wells Fargo Bank, N.A., 757 F. App'x 124, 128 (3d Cir.
2018). For the reasons expressed in our prior opinion, only actual damages are relevant here. See
(ECF No. 25 at 18-19). To recover actual damages, a borrower must prove that the loan servicer

violated a RESPA requirement and that actual damages were sustained as a result. 12 U.S.C. §
2605(f)(1)(A); Bukowski, 757 F. App'x at 128. “There must be a ‘causal link between the alleged
violation and the damages.’” Lloyd, 845 F. App'x at 144 (quoting Renfroe, 822 F.3d at 1246).
Courts in this district have concluded that an allegation that a debt collector’s failure to
respond to a QWR letter caused the plaintiff emotional distress, without more, does not establish
the causal link necessary to show actual damages. See Giordano v. MGC Mortg., Inc, 160 F.
Supp. 3d 778, 784-85 (D.N.J. 2016) (holding that a plaintiff’s allegations of “non-pecuniary
damages caused by the stress, anxiety and emotional distress that occurred when MGC failed to
respond to the RFI and QWR letter” were “insufficient” to establish actual damages “as they do

not establish that the alleged distress was ‘as a result of’ the failure to respond to the RF1/QWR
letter as opposed to the financial hardships [the plaintiff] was already experiencing”); Schmidt v.
Wells Fargo Bank, N.A., No. 2:17-CV-01708, 2019 WL 4943756, at *4 (D.N.J. Oct. 8, 2019).
This is because “[i]f a plaintiff simply can allege that failure to respond to a letter caused
distress, without more, any RESPA claim would survive a motion to dismiss.” Giordano, 160 F.
Supp. 3d at 785.
Here, Plaintiff makes several allegations of emotional distress in the TAC:
• “Plaintiff alleges along with damages to his escrow account by excessive
premiums, Mr. Kareem has sustained actual damages from undergoing emotional
stress and anxiety. His health has suffered related to the hours and effort he has
spent trying to get PHH to adjust its servicing errors. Whereas, Mr. Kareem
incurred stress, weight fluctuations, restless nights and high blood pressure related
to PHH’s servicing tyranny.” (Third Am. Compl. 7-8)

• “Plaintiff alleges that his extreme anxieties come from his concerns that he might
lose his home.” (Id. at 8)
• “Mr. Kareem has been stressed by the added pressures of assisting with the health
conditions of his disabled wife. PHH’s actions have placed unwarranted mental,
emotional and physiological stress on the whole household.” (Id.)
• “Mr. Kareem re-alleges that at all times PHH’s actions were the directly or the
proximate cause of his health damages sustained by PHH under the applicable
consumer and state laws.” (Id.)
These allegations still do not show a sufficient causal connection between Plaintiff’s

emotional distress and Defendants’ alleged § 1024.35 violation. Plaintiff has not tied his
emotional distress to Defendants’ alleged failure to timely respond to his QWR letter,
specifically. Rather, Plaintiff alleges that his emotional distress stems from the servicing errors
on his account and a general, very understandable, fear that he would lose his home. (Third Am.
Compl. 7-8). Further, Plaintiff’s conclusory allegation that “PHH’s actions were the directly or
the proximate cause of his health damages sustained by PHH” is insufficient to show causation.
(Id.); see Schmidt, 2019 WL 4943756, at *4 (“The Court need not accept the conclusory
statement that ‘[t]he failure to respond to the notice caused the plaintiffs additional emotional
distress….’”). Without the requisite causal link, Plaintiff cannot show that he suffered any actual
damages from Defendants’ purported violation of § 1024.35. As such, we must dismiss
Plaintiff’s § 1024.35 claim.6
ii. 12 U.S.C. § 2605(k)(1)(A)
Last, Plaintiff alleges that Defendants violated 12 U.S.C. § 2605(k)(1)(A) by charging
him forced-placed hazard insurance fees even though he had his own insurance coverage. See

(Third Am. Compl. 6, 7, 19, 24).
Section 2605(k)(1)(A) provides “[a] servicer of a federally related mortgage shall not . . .
obtain force-placed hazard insurance unless there is a reasonable basis to believe the borrower
has failed to comply with the loan contract’s requirements to maintain property insurance.” 12
U.S.C. § 2605(k)(1)(A). Force-placed insurance is “hazard insurance coverage obtained by a
servicer of a federally related mortgage when the borrower has failed to maintain or renew
hazard insurance on such property as required of the borrower under the terms of the mortgage.”
Id. at § 2605(k)(2). Section 2605(l) provides that a servicer does not have a reasonable basis to
obtain force-placed hazard insurance unless:

(A) the servicer has sent, by first-class mail, a written notice to the borrower containing--
(i) a reminder of the borrower’s obligation to maintain hazard insurance on the property
securing the federally related mortgage;
(ii) a statement that the servicer does not have evidence of insurance coverage of such
property;
(iii) a clear and conspicuous statement of the procedures by which the borrower may
demonstrate that the borrower already has insurance coverage; and
(iv) a statement that the servicer may obtain such coverage at the borrower’s expense if
the borrower does not provide such demonstration of the borrower’s existing coverage in
a timely manner;
(B) the servicer has sent, by first-class mail, a second written notice, at least 30 days after
the mailing of the notice under subparagraph (A) that contains all the information
described in each clause of such subparagraph; and

6 As Plaintiff was given leave to amend to sufficiently plead his § 1024.35 claim and has failed to do so, we dismiss
this claim with prejudice. See Davis v. Deutsche Bank Nat'l Tr. Co., No. 16-5382, 2017 WL 6336473, at *8 (E.D.
Pa. Dec. 12, 2017) (“Because Plaintiffs have previously been granted leave to amend their complaint to ‘set[ ] forth
a more specific damages claim providing a causal connection between Ocwen’s actions and Plaintiffs' damages’ and
have failed to do so despite this Court’s express invitation, no further leave to amend will be granted.”).
(C) the servicer has not received from the borrower any demonstration of hazard
insurance coverage for the property securing the mortgage by the end of the 15-day
period beginning on the date the notice under subparagraph (B) was sent by the servicer.

Defendants put forth two main arguments for dismissing Plaintiff’s § 2605 claim: (1)
Plaintiff failed to allege that Defendants did not have a reasonable basis for obtaining force-
placed insurance on Plaintiff’s property; and (2) Defendants had a reasonable basis under §
2605(l) for obtaining hazard insurance coverage. (Def. Mot. 18-20).
With respect to Defendants’ first argument, we find that Plaintiff has adequately alleged
that Defendants lacked a reasonable basis for obtaining hazard insurance for his property.
Admittedly, Plaintiff’s complaint is not a model of clarity. Construing the TAC liberally,
however, we interpret Plaintiff’s allegations that PHH “failed to perform the requisite
investigation prior to casting such [LPI] fees and costs on his account,” “largely ignored his
compliance in maintaining the hazard insurance,” and “prematurely added additional LPI fees
without making an investigation for hazard insurance coverage” to be assertions that PHH did
not have a “reasonable basis” under § 2605(l) for imposing forced-place hazard insurance on
Plaintiff’s property. (Id. at 7, 19, 24). Plaintiff also appears to allege that Ocwen obtained forced-
place insurance for Plaintiff’s property dating back to 2017 without his knowledge. (Id. at 6).
These factual allegations are sufficient to allow his § 2605 claim to survive a motion to dismiss.
To support their second argument, Defendants attach several exhibits to their motion to
dismiss that purportedly show that they complied with the requirements of § 2605(l). (Id.) The
exhibits consist of three letters allegedly sent by Ocwen to Plaintiff in 2015 that instruct Plaintiff
to provide Ocwen with proof of hazard insurance for Plaintiff’s property and advising Plaintiff
that, if no proof was provided, Ocwen could obtain its own hazard insurance for the property at
Plaintiff’s expense. (Def. Mot., Exs. C-E). In their motion to dismiss, Defendants note that
“[w]hile the previously referenced notices were from 2015, Defendants have continued to send
similar such letters to Plaintiff while they have serviced the loan.” (Id. at 19).
It may be true that Defendants had a reasonable basis for obtaining force-placed
insurance for Plaintiff’s property. However, as above, we decline to consider Defendants’
attached exhibits, which are neither integral to nor explicitly relied on in the complaint, at the

motion to dismiss stage. The resolution of this issue requires a fact-intensive inquiry and is
therefore better addressed at the summary judgment stage, after the parties have the benefit of
discovery. Cf. Dennis v. Ocwen Loan Servicing LLC, No. 3:16-CV-836-BH, 2017 WL 4682143,
at *12 (N.D. Tex. Oct. 17, 2017) (finding that a loan servicer was entitled to summary judgment
with respect to the plaintiff’s claim that the servicer improperly obtained forced-place insurance
for her property where the plaintiff failed to show that she had provided the servicer with notice
of an existing hazard policy). Accordingly, we deny without prejudice Defendants’ motion to
dismiss the Section 2605(k)(1)(A) claim.
IV. CONCLUSION

For the reasons expressed above, Defendants’ motion to dismiss is GRANTED in part
and DENIED in part. An order follows.

Dated: 02/28/2022 /s/Robert B. Kugler
ROBERT B. KUGLER
United States District Judge

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10272668. Public record. Not legal advice.