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Helen Haymer v. Countrywide Bank

July 15, 2011

HELEN HAYMER, PLAINTIFFS,
v.
COUNTRYWIDE BANK, FSB; BANK OF AMERICA, N.A.; BAC HOME LOANS SERVICING, LP F/K/A COUNTRYWIDE HOME LOANS SERVICING, LP; VALOR FINANCIAL SERVICES, LLC; MARILYN J.CIESLAK; AND JOHN DOES 1-5, DEFENDANTS.



The opinion of the court was delivered by: Charles P. Kocoras, District Judge:

MEMORANDUM OPINION

This case comes before the Court on the motions of Defendants Countrywide Bank, FSB ("Countrywide"), Bank of America ("BoA"), BAC Home Loans Servicing, LP ("BAC"), (collectively, the "Defendants"), Valor Financial Services, LLC ("Valor"), and Valor's owner, Marilyn Cieslak ("Cieslak") to dismiss Plaintiff Helene Haymer's ("Haymer") complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).*fn1 For the reasons set forth below, the motions are denied in part and granted in part.

BACKGROUND

This dispute arises over a $157,624 loan made to Haymer by Countrywide. Haymer obtained the loan through Valor, an independent mortgage brokerage company. According to the allegations of the complaint, which we accept as true for purposes of this motion, Warth v. Seldin, 422 U.S. 490, 501 (1975), Haymer is a 73 year-old African-American disabled widow residing in a home that she purchased with a mortgage loan. Around January 2009, Haymer was seeking relief from an overly burdensome monthly mortgage payment. An acquaintance referred her to Valor for refinancing. On or about January 6, 2009, Marilyn Cieslak ("Cieslak"), Valor's sole owner, met Haymer at her home. During their meeting, Cieslak assisted Haymer in completing the initial loan application document by writing down information. Although Haymer informed Cieslak that her only source of income was $1,125 in monthly social security benefits, Cieslak failed to include the information in the application. Shortly after the meeting, Cieslak completed a typewritten application and submitted it to Countrywide. On January 18, 2009, Countrywide performed an appraisal of Haymer's property. The property was appraised at $175,000. The loan was approved on January 22, 2009, and the parties closed on the transaction on or about January 26, 2009. After the close of the transaction, Countrywide transferred the loan's servicing rights to BAC and assigned ownership to BoA.

Haymer alleges that the 2009 transaction was a fraud from start to finish. To begin, Haymer claims that Valor fraudulently brokered the deal because Cieslak intentionally excluded Haymer's monthly income during the application process to get the loan approved by the lender. Haymer alleges that Countrywide approved the loan either without verifying or by turning a blind eye to Haymer's financial ability to pay the loan and despite an excessive loan-to-value ratio of over 90%. Haymer also alleges that Valor and Countrywide fraudulently represented to her that the loan was affordable by concealing the monthly repayment amounts. For instance, prior to closing, the Defendants did not provide her with any preliminary disclosures of the loan terms, as required by law, which prevented her from discovering the repayment amounts. Valor also failed to disclose the specific terms of the loan during closing. In fact, Cieslak arrived with a single set of closing documents which Haymer signed and subsequently took all the documents away leaving only the loan application and the House and Urban Development Settlement Statement which did not disclose the monthly payment amounts. Haymer claims that the failure to provide final loan disclosures and other critical closing documents was intended to deprive her of her federal right to cancel the loan within three business days and to prevent her from discovering that she was accepting an unaffordable loan.

After closing, Haymer discovered that her monthly repayment was $1,049.19 which meant that 90% of her gross monthly income would be consumed in loan repayments. Haymer also discovered that Defendants had imposed a 5% interest rate on the mortgage which equated to an increase of .5% to 1% beyond the rate at which she actually qualified. Assigning to Haymer a higher interest rate meant that Countrywide benefited in the form of higher interest income over time or greater re-sale value on the secondary market while Valor cashed a premium in the amount of $2,167.33. Ultimately, Haymer defaulted on the loan and BoA and BAC filed a foreclosure action, now pending in Cook County Circuit Court.

On September 17, 2010, Haymer filed her initial complaint which was amended on February 16, 2011. The complaint now contains nine counts including violations of the Illinois Fairness in Lending Act ("IFLA") for improvident lending (Count I) and discrimination (Count VI), the Illinois Consumer Fraud Act ("ICFA") (Count III), and state law claims for fraud (Count II) and negligent misrepresentation (Count IV). The complaint also alleges violations of the Truth in Lending Act ("TILA") (Count V), the Civil Rights Act (Count VII), the Equal Credit Opportunity Act ("ECOA") (Count VIII), and the Fair Housing Act ("FHA") (Count IX). Counts I through IV are asserted against Countrywide, Valor, and Cieslak. Count V is asserted against Countrywide, BoA, and BAC. Counts VI through IX are asserted against Valor and Cieslak. Finally, counts VII and VIII are individual and class claims against Valor and Cieslak. All Defendants now move to dismiss Haymer's complaint for failure to state a claim.

LEGAL STANDARD

To survive a Rule 12(b)(6) motion, a complaint must overcome "two easy-to-clear hurdles:" (1) "the complaint must describe the claim in sufficient detail to give the defendant fair notice of what the claim is and the grounds on which it rests;" and (2) "its allegations must plausibly suggest that the plaintiff has the right to relief, raising that possibility above a speculative level." Tamayo v. Blagojevich, 526 F.3d 1074, 1084 (7th Cir. 2008) (internal quotation marks omitted). Where the well-pleaded facts "do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not shown-that the pleader is entitled to relief." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1950 (2009) (internal quotation marks omitted). The court must "take the complaint's well-pleaded factual allegations as true and draw all reasonable inferences in [plaintiff's] favor." Abcarian v. McDonald, 617 F.3d 931, 933 (7th Cir. 2010).

DISCUSSION

I. Counts I and VI - IFLA

Countrywide argues that Haymer's claim for improvident lending (Count I) underthe IFLA should be dismissed because this claim is expressly prohibited by the language of IFLA. For the same reason, Valor argues that Haymer's claims for improvident lending and for discrimination (Count VI) should be dismissed. IFLA states in part that "[i]f the same events or circumstances would constitute the basis for an action under this Act or an action under any other Act, the aggrieved person may elect between the remedies proposed by the two Acts but may not bring actions . . . under more than one of the two Acts in relation to those same events or circumstances." 815 Ill. Comp. Stat. 120/5(b). The plain language of the statute requires a plaintiff to choose between the IFLA or any other act that he wishes to pursue if the events which give rise to both claims are the same. As such, Haymer cannot successfully pursue claims under the IFLA, in addition to her other claims, because they all arise out of the January 2009 transaction. Accordingly, Count I is dismissed as to Countrywide and Valor, and Count VI is dismissed as to Valor.*fn2

II. Count II - Common Law Fraud

In Count II, Haymer alleges that Countrywide and Valor engaged in common law fraud when Valor failed to disclose Haymer's income information in the loan application and when Countrywide failed to provide preliminary and closing documents, disclose the precise amount of the monthly repayments, and disclose Haymer's inability to repay the loan. Countrywide argues that Haymer's common law fraud claim fails because, among other ...


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