The opinion of the court was delivered by: Judge Edmond E. Chang
MEMORANDUM OPINION AND ORDER
Plaintiff Juanita Rodriguez alleges, on behalf of herself and a putative class, that Defendant Chase Home Finance violated the Homeowners Protection Act (HPA),12 U.S.C. § 4901 et seq., when it failed to disclose the amount and cancellation date of her private mortgage insurance upon offering her a loan modification (Count 1).*fn1 Rodriguez's complaint also alleges an individual claim under the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA), 815 ILCS 505/1 et. seq. (Count 2). Defendant has moved to dismiss [R. 19] both claims pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b). For the following reasons, the Court grants the motion to dismiss the federal claim, and calls for the parties to file position papers on whether to exercise jurisdiction over the state law claim.
At this stage of the litigation, we accept Plaintiff's allegations as true and draw reasonable inferences in her favor. In August 2007, Juanita Rodriguez obtained a Chase-serviced home loan for $350,000; private mortgage insurance (PMI) was required. R. 1 (Compl.) ¶ 9. In August 2009, Chase approved Rodriguez for a loan modification. Id. ¶ 10. The modification included a Trial Period Plan Agreement (TPP), which provided that if Rodriguez made three monthly payments of $2,252.22, she would be offered a permanent modification. Id. ¶¶ 11-12. The TPP stated that the trial payments were an estimate of the payments Rodriguez would be expected to pay under the loan modification once the trial period ended, and the payments included "payment for Escrow items, including real estate taxes, insurance premiums and other fees". Id. ¶ 13.
Rodriguez made the three monthly trial payments and successfully completed the TPP. Id. ¶¶ 15-16. In January 2010, Rodriguez received a letter from Chase stating that she qualified for a permanent loan modification, and she also received a proposed Modification Agreement.*fn2 Id. ¶ 16. At the time that Chase sent Rodriguez the Modification Agreement, Chase did not disclose the amount of the PMI or when the PMI could be cancelled or terminated. Id. ¶ 18. Under the Agreement, Rodriguez's monthly payments were $315.31 more than the monthly trial payments she made pursuant to the TPP. Id. ¶ 17. When Rodriguez inquired about the amount increase,
Chase informed her that the permanent monthly payments were higher under the Modification Agreement in part because they included Rodriguez's PMI premium, which had not been included in the trial period payments. Id. ¶¶ 19-20.
Under Federal Rule of Civil Procedure 8(a)(2), a complaint generally need only include "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). This short and plain statement must "give the defendant fair notice of what the claim is and the grounds upon which it rests." Bell Atl. v. Twombly, 550 U.S. 544, 555 (2007). The Seventh Circuit has explained that this rule "reflects a liberal notice pleading regime, which is intended to 'focus litigation on the merits of a claim' rather than on technicalities that might keep plaintiffs out of court." Brooks v. Ross, 578 F.3d 574, 580 (7th Cir. 2009) (quoting Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002)).
"A motion under Rule 12(b)(6) challenges the sufficiency of the complaint to state a claim upon which relief may be granted." Hallinan v. Fraternal Order of Police Chicago Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). "[W]hen ruling on a defendant's motion to dismiss, a judge must accept as true all of the factual allegations contained in the complaint." Erickson v. Pardus, 551 U.S. 89, 94 (2007); McGowan v. Hulick, 612 F.3d 636 (7th Cir. 2010) (courts accept factual allegations as true and draw all reasonable inferences in plaintiff's favor). A "complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. -, 129 S.Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 570). These allegations "must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555. And the allegations that are entitled to the assumption of truth are those that are factual, rather than mere legal conclusions. Iqbal, 129 S. Ct. at 1950.
Chase first argues that Rodriguez's HPA claim must be dismissed because the statute does not require servicers to provide new PMI disclosures upon modifying a loan. R. 20 (Def.'s Br.) at 2. In order to consider Chase's claim, the Court must first examine the plain language of the statute. See Barma v. Holder, 640 F.3d 749, 751 (7th Cir. 2011) ("In ascertaining the meaning of a statute, we begin with the plain language.").The statute provides that where PMI is required in connection with a "residential mortgage transaction," the servicer must provide the borrower with written notice of cancellation and termination dates.*fn3 12 U.S.C. § 4903(a). A "residential mortgage transaction" arises when a mortgage or equivalent security interest "is created or retained against a single-family dwelling that is the principal residence of the mortgagor to finance the acquisition, initial construction, or refinancing of that dwelling." § 4901(15).
In response, Rodriguez argues that her loan modification qualifies as a "residential mortgage transaction," and therefore PMI disclosures were required. R. 24 (Pl.'s Resp.) at 5. It is clear that Rodriguez's loan modification did not finance the "acquisition" or "initial construction" of her home, but whether the modification could constitute a "refinancing" under the statute warrants consideration.
An examination of the only provision in the HPA which addresses a "modification" of a loan demonstrates that the HPA does not treat every transaction that could be called a modification as the equivalent of a "residential mortgage transaction" (or more precisely ...