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Young v. Flagstar Bank, FSB

United States District Court, W.D. Missouri, Central Division

August 1, 2014

JAMES YOUNG, Plaintiff,
v.
FLAGSTAR BANK, F.S.B., Defendant.

ORDER

NANETTE K. LAUGHREY, District Judge.

Defendant Flagstar Bank F.S.B.'s motion to dismiss for failure to state a claim [Doc. 4] is GRANTED.

I. Background

This case concerns Young's home mortgage and a March 2014 attempted foreclosure. Young pleads that Flagstar breached a contractual arrangement between the parties relating to his mortgage, and intentionally caused him emotional distress. [Doc. 1-2.]

Young purchased real property in Eldon, Missouri in 2008.[1] He signed a 30-year Note, or mortgage loan, secured by a Deed of Trust on the property. The Note and Deed provided that in the case of a borrower's default, including failure to timely make monthly payments, the lender could require immediate payment in full of the loan. [Doc. 4-2, pp. 1-2, ¶ 6; Doc. 4-3, p. 5, ¶ 9.] If the borrower defaulted and the lender required immediate payment in full, the lender could invoke the power of sale and any other remedies permitted by law, and foreclose on the property. [Doc. 4-3, at p. 7, ¶ 18.] But the borrower had the right, with some exceptions, to be "reinstated" by tendering in a lump sum all amounts required to bring the account current. [ Id. at p. 6, ¶ 10.] "If circumstances occur[ed] that would permit the [l]ender to require immediate payment in full, but [the lender] did not require such payments, [the lender did] not waive its rights with respect to subsequent events." [ Id. at p. 5, ¶ 9(c); see also Doc. 4-2, p. 2, ¶ 6.]

Between May and September 2012, Young failed to make monthly payments, totaling about $4, 000, on his loan. [Doc. 4-5, pp. 1-2.]

The Deed of Trust was assigned in September 2012 to Flagstar, which then began foreclosure proceedings. At Young's request, Flagstar gave him an opportunity to reinstate the loan, which Young accomplished, halting foreclosure.

But sometime in or after October 2012, Young again failed to make monthly payments. Flagstar sent Young a notice of default and acceleration of the loan. At Young's request, Flagstar gave him another opportunity to reinstate the loan if Young met the terms of a "trial [reinstatement] plan" or agreement. [Doc. 1-2, p. 7.] The parties' agreement provided that Young's then-current arrearages totaled $8, 455.20. It also provided that the loan would be reinstated if Young paid $1, 538.88 in total, to be paid in equal installments on April 1, May 1, and June 1, 2013. Young's account would "be allowed to remain delinquent as long as the terms of th[e] agreement [were] followed and abided by." [Doc. 1-2, p. 7.] "Late charges accrued during the agreement [would] be eliminated when [the] agreement [was] completed." [ Id. ] The agreement further provided, in relevant part:

• This account will not be considered current after this agreement ends. Additional documentation will be required to determine your alternatives to cure the delinquency. Please contact the office no later than Jun[e] 2, 2013 as we may continue your loss mitigation review for a Home Affordable Modification. [ Id. ]
• [N]othing herein shall in any way impair the security now held on the... loan, nor shall waive, annul, vary or affect any provision, condition, covenant or agreement contained in the loan documents, including... the Note, Deed of Trust..., or Mortgage, nor affect or impair any rights, powers, remedies under the Note, Deed of Trust..., or Mortgage. [ Id. at p. 8]

Young alleges he "followed and abided by all the terms of the agreement." [Doc. 1-2, p. 4, ¶ 8.[2]

On October 10, 2012, Flagstar was replaced by a Successor Trustee, South & Associates, P.C., a debt collector, and an Appointment of Successor Trustee was recorded a week later. [Doc. 4-6, Exhibit E.] Young was not notified of the appointment of a successor trustee to the Deed of Trust. [Doc. 1-2, pp. 4-5, ¶ 17.]

Foreclosure proceedings commenced again, sometime after June 2, 2013. Young was provided an opportunity to reinstate the loan by February 10, 2014. The reinstatement quote, dated January 17, 2014, reflected that Young owed about $16, 700 in late payments alone. [Doc. 4-7, p. 2.] Young was sent written notice of foreclosure proceedings set for March 4, 2014. [Doc. 1-2, p. 4, ¶ 10.] The foreclosure did not proceed because Young filed suit against Flagstar in state court and on March 4, 2014 ...


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