BOWLER, U.S.M.J.

MEMORANDUM AND ORDER RE: DEFENDANT BAC HOME LOANS' MOTION TO DISMISS
(DOCKET ENTRY # 10) BOWLER, U.S.M.J.

Pending before this court is a motion filed by defendant BAC Home Loans Servicing, LP ("defendant") to dismiss Count I and Count II of the complaint. (Docket Entry # 10). Plaintiffs Emmanuel Ording and Michelle Stewart ("plaintiffs"), husband and wife, oppose dismissal of the counts. (Docket Entry # 13). On August 17, 2010, this court held a hearing and took the motion (Docket Entry # 10) under advisement.

PROCEDURAL HISTORY

The two count complaint sets out the following claims against defendant: (1) a violation of the Truth in Lending Act, under 15 U.S.C. § 1641 ("section 1641" or "TILA") for failure to disclose required information (Count I); and (2) a violation of Massachusetts General Law chapter 93A, section nine ("chapter 93A") (Count II). (Docket Entry # 1). The motion seeks to dismiss both counts. (Docket Entry # 10).

Defendant argues that Count I is subject to dismissal because defendant is not a "creditor" under the statute and also that the claim is now moot. (Docket Entry # 11). Count II, defendant contends, is subject to dismissal because of the inadequacy of the TILA claim and because the federal Home Affordable Modification Program ("HAMP") does not provide a private right to recovery. Defendant additionally argues that recovery pursuant to chapter 93A would be incompatible with the objectives and enforcement mechanisms of HAMP. (Docket Entry # 11).

Plaintiffs submit that the complaint provides sufficient facts to demonstrate a viable TILA violation and a proper chapter 93A claim. (Docket Entry # 13). According to plaintiffs, the complaint adequately demonstrates that defendant is liable under TILA as either a creditor or an assignee of creditor. (Docket Entry # 13). Plaintiffs also contend that defendant is liable under chapter 93A for employing unfair or deceptive practices in violation of provisions set forth in TILA and HAMP. (Docket Entry # 13).

STANDARD OF REVIEW

The standard of review for a Rule 12(b)(6) motion is well established. To survive a motion to dismiss, the complaint must include factual allegations that when taken as true demonstrate a plausible claim for relief even if actual proof of the facts is improbable. Bell Atlantic v. Twombly, 550 U.S. 544, 555-558 (2007). While "not equivalent to a probability requirement, the plausibility standard asks for more than a sheer possibility that a defendant has acted unlawfully." Boroian v. Mueller, 616 F.3d 60, 65 (1^st Cir. 2010) (internal quotation marks omitted).

"[A]ccepting as true all well-pleaded facts in the complaint and making all reasonable inferences in the plaintiff's favor," Id. at 64, the "factual allegations 'must be enough to raise a right to relief above the speculative level.'" Gorelik v. Costin, 605 F.3d 118, 121 (1^st Cir. 2010). In considering the merits of a motion to dismiss, the court is limited in its review to the "facts alleged in the pleadings, documents attached as exhibits or incorporated by reference in the complaint, and matters of which judicial notice can be taken." Nollet v. Justices of the Trial Court of Mass., 83 F.Supp.2d 204, 208 (D.Mass. 2000). In certain circumstances a court may also "consider 'documents the authenticity of which are not disputed by the parties'" as well as "'documents central to the plaintiffs' claim'" and "'documents sufficiently referred to in the complaint.'" Curran v. Cousins, 509 F.3d 36, 44 (1^st Cir. 2007). "Drawing reasonable inferences in plaintiffs' favor but eschewing reliance on "'bald assertions, . . . unsubstantiated conclusions,'" Fantini v. Salem State College, 557 F.3d 22, 26 (1^st Cir. 2009), and legal conclusions, see Dixon v. Shamrock Financial Corp., 522 F.3d 76, 79 (1^st Cir. 2008) (rejecting "'unsupported conclusions or interpretations of law'" in reviewing Rule 12(b)(6) dismissal), the complaint sets out the following facts.

FACTUAL BACKGROUND

Defendant, a subsidiary of Bank of America Corporation, N.A., is the mortgage servicer of two mortgages encumbering plaintiff's primary residence (the "mortgages"). (Docket Entry # 1). On October 26, 2009, plaintiffs sent a TILA request to defendant seeking the identity of the owner of the two mortgages. (Docket Entry # 1, Ex. A). Plaintiffs sought disclosure of this information in order to "pursue loan-modification and loss-mitigation assistance." (Docket Entry # 1). Defendant did not respond to the TILA request. (Docket Entry # 1). Without a response from defendant, plaintiffs were unable to explore loan modification and loss mitigation assistance. (Docket Entry # 1).

In the ordinary course of business, defendant regularly extended or offered to extend consumer credit. (Docket Entry # 1). Defendant services the mortgages on plaintiffs' primary residence. (Docket Entry # 1). Defendant services mortgages, in accordance with a mortgage servicing contract (the "servicing contract"), on behalf of the Federal National Mortgage Association ("Fannie Mae"). (Docket Entry # 1).

Under the terms of the servicing contract, defendant "collects mortgage payments, sends monthly billing statements, manages homeowners' accounts, and conducts collection and foreclosure activity." (Docket Entry # 1). In accordance with the servicing contract, defendant follows the loan servicing instructions supplied by Fannie Mae. (Docket entry # 1). As the servicer of plaintiffs' mortgages, defendant knew which companies owned the mortgages. (Docket Entry # 1).

HAMP, a "foreclosure-prevention program," was created in order to assist homeowners and minimize foreclosures through modification of the terms of a mortgage. (Docket Entry # 1). HAMP provides a series of loan servicing instructions including "supplemental directives." (Docket Entry # 1). Fannie Mae incorporates these supplemental directives by reference into the terms of the servicing contract, thus binding defendant to follow them. (Docket Entry # 1).

On November 2, 2009, plaintiffs submitted an application package to defendant in order to be considered for a loan modification. (Docket Entry # 1). The application package was sent to "Bank of America, Office of the President." (Docket Entry # 1). Defendant failed to provide written acknowledgment of the application package within ten business days in accordance with supplemental directive 09-07. (Docket Entry # 1, Ex. B). Additionally, defendant, as servicer of the mortgages, failed to provide a written response to plaintiffs regarding the application for a loan modification within 30 days as required under supplemental directive 09-07. (Docket Entry # 1).

On March 10, 2010, plaintiffs sent defendant a chapter 93A demand letter which defendant received on March 15, 2010. (Docket Entry # 1, Ex. C & D). Defendant failed to respond to the letter within 30 days and to date has failed to respond. (Docket Entry # 1). Due to the lack of response from defendant, plaintiffs filed the present suit. On July 1, 2010, in conjunction with the motion to dismiss, defendant disclosed to plaintiffs the entities that own the mortgages pursuant to the plaintiffs' TILA request. (Docket Entry # 13, Ex. 4).

DISCUSSION

I. TILA Violation

Defendant argues that Count I is subject to Rule 12(b)(6) dismissal because only creditors may be held liable for TILA violations. (Docket Entry # 11). Defendant suggests it is merely the servicer of the mortgages and as such does not meet TILA's statutory definition of "creditor" or "assignee of creditor." (Docket Entry # 11). Additionally, defendant argues that Count I fails because the claim is now moot, as defendant has disclosed the necessary information to plaintiffs. (Docket Entry # 11).

"TILA requires creditors to disclose, clearly and accurately, all the material terms of consumer credit transactions." McKenna v. First Horizon Home Loan Corp., 475 F.3d 418, 421 (1^st Cir. 2007). Among the numerous disclosures required under TILA "the servicer" of a mortgage, upon written request, "shall provide the obligor, to the best knowledge of the servicer, with the name, address, and telephone number of the owner of the obligation." 15 U.S.C. § 1641(f). Section 1641(f) does not specify a period for compliance with this obligation. Id. Thus, the requested information must be disclosed within a reasonable time. See 12 C.F.R. § 226.36(c)(1)(iii).

While it is the servicer of the loan that has the obligation to provide the information to the borrower pursuant to section 1641(f), liability for violations of TILA rests squarely and solely with creditors. Horton v. Country Mortg. Services, Inc., 2010 WL 55902, *3 (N.D.Ill. Jan. 4, 2010). "TILA expressly disclaims any liability for mere servicers 'unless the servicer is or was the owner of the obligation.'" Id. (quoting 15 U.S.C. § 1641(f)(1)). "Moreover, a servicer is not to be treated as an assignee for purposes of liability under TILA 'on the basis of an assignment of [an] obligation from the creditor or another assignee to the servicer solely for the administrative convenience of the servicer in servicing the obligation.'" Id. (quoting 15 U.S.C. § 1641(f)(2)).

To be a creditor under TILA one must meet the requirements of a two prong test: (1) one must regularly extend consumer credit "which is payable by agreement in more than four installments or for which the payment of a finance charge is or may be required;" and (2) the creditor must be "the person to whom the debt arising from the consumer credit transaction is initially payable." Harris v. Option One Mortg. Corp., 261 F.R.D. 98, 105 (D.S.C. 2009); accord Roach v. Option One Mortg. Corp., 598 F.Supp.2d 741, 749 (E.D.Va. 2009).

Plaintiffs suggest that defendant meets the TILA definition of creditor because, as defendant's eventual disclosure reveals, the owner of one of the loans was Bank of America Corporation, N.A. ("BOA" or "creditor"). In the complaint plaintiffs allege that defendant is a subsidiary of BOA. (Docket Entry # 1). Plaintiffs, in their reply brief opposing dismissal, assert that through several intermediary business entities BOA holds the sole interest in defendant. (Docket Entry # 13). Therefore, plaintiffs argue, BOA's status as creditor should be imputed to defendant. (Docket Entry # 13).

Plaintiffs' argument fails for at least two reasons. As an initial matter, plaintiffs have not properly plead that BOA owned either of their mortgages. (Docket Entry # 1). It is true that the letter in response to plaintiffs' TILA information request (the "TILA response") was attached by defendant to its memorandum in support of dismissal. (Docket Entry # 11, Ex. 4). That document, however, while perhaps appropriate for consideration on a motion for summary judgment is not properly part of the record appropriate for consideration for purposes of this motion to dismiss.

"'Ordinarily, the Court may not consider documents outside of the Complaint or not expressly incorporated therein, unless the motion is converted into one for summary judgment.'" Velazquez Arroyo v. MCS Life Ins. Co., 418 F.Supp.2d 11, 14 (D.Puerto Rico 2006) (quoting Alternative Energy, Inc. v. St. Paul Fire and Marine Ins. Co., 142 F.Supp.2d 126, 130 (1^st Cir. 2001). In a narrow set of circumstances, however, an exception to this general rule may be made "for documents the authenticity of which are not disputed by the parties; for official public records; for documents central to plaintiffs' claim; or for documents sufficiently referred to in the complaint." Id. The TILA response fails to satisfy any of these narrowly construed exceptions. The TILA response was not referred to in the complaint, it is not an official public record and, as will be discussed further, it is not central to plaintiffs' claim. Finally, while the authenticity of the TILA response does not appear to be disputed, this court is not persuaded that it should consider a document that has not otherwise been properly made part of the record for purposes of this motion, absent a reason to do so, simply because it is accepted as authentic by the parties. Therefore, consideration of the TILA response is inappropriate.

Even if this court were to consider the TILA response and conclude that BOA owned one of plaintiffs' mortgages, plaintiffs' TILA claim still fails. Firstly, not only would BOA's position as owner of the note need to be accepted as true, but plaintiffs' unsupported contention that BOA is the sole interest holder in defendant would need to be accepted as true. In addition, this court would need to go further in order to arrive at a dispositive conclusion and pierce not one, but a multitude of corporate veils and determine that defendant and creditor were not legally separate entities.

Plaintiffs fail to sufficiently allege BOA's ownership of either of their mortgages, and while plaintiffs sufficiently plead that a parent subsidiary relationship exists between BOA and defendant (Docket Entry # 1) they fail to plead facts that make plausible the notion that defendant and creditor should be treated as one and the same. Based on the facts properly in the record and appropriate for consideration for the purposes of this motion to dismiss the only inference that can reasonably be made is that defendant is the servicer of plaintiffs' mortgages. Pursuant to TILA only creditors may be held liable for TILA violations. Thus, Count I seeking relief from defendant for violating TILA is subject to dismissal.

While no longer relevant, this court briefly addresses the argument made by defendant that the claim is now moot. When the specific relief sought by the plaintiff is no longer available, the claim is moot. Carrington v. Commonwealth, 918 N.E.2d 788, 789 (Mass. 2009). "It is the general rule that courts decide only actual controversies." Metros v. Secretary of the Commonwealth, 484 N.E.2d 1015, 1018 (Mass. 1985). An exception to this rule applies when "the issue is 'capable of repetition, yet evading review.'" Id.; see also Southern Pac. Terminal Co. v. Interstate Commerce Comm'n, 219 U.S. 498, 515 (1911).

Count I states that defendant violated TILA by failing to disclose the identity of the owners of plaintiffs' mortgages. (Docket Entry # 1). Disclosure of that information, however, is not the remedy sought by plaintiffs. (Docket Entry # 1). Plaintiffs seek damages for injuries caused by defendant's failure to disclose the requested information. Those injuries, while possibly mitigated by defendant's eventual disclosure, were not cured by it. Thus defendant's argument that the claim is moot fails.

II. Chapter 93A Claim

Count II alleges that defendant, by its violations of TILA and HAMP, engaged in unfair or deceptive business practices in violation of chapter 93A. (Docket Entry # 1). In pertinent part, Count II contends that: (1) defendant violated TILA "by failing to respond to Plaintiffs' request on October 26, 2009 for the identity of the owner of their mortgage obligation," (Docket Entry # 1); (2) defendant first violated HAMP by failing to provide plaintiffs with written acknowledgment within ten days that it received the application for loan modification in accordance with supplemental directive 09-07 (Docket Entry # 1) and further violated HAMP by failing to provide a written response to the loan application package within 30 calendar days as required by supplemental directive 09-07 (Docket Entry # 1); and (3) that the violation of those statutory requirements contravened chapter 93A's prohibition against unfair or deceptive business practices.

Defendant argues that the chapter 93A claim cannot succeed based on a violation of TILA because defendant as a servicer is not liable for the underlying TILA claim as described in Count I. (Docket Entry # 11). Moreover, defendant contends that Count II cannot succeed under HAMP because HAMP does not allow for a private right of action and additionally a recovery under chapter 93A is incompatible with the objectives and enforcement mechanisms of HAMP. (Docket Entry # 11).

A. TILA

Chapter 93A protects against "unfair or deceptive acts or practices in the conduct of any trade or commerce." Acting in accordance with authority granted in chapter 93A, section 2(c), the Massachusetts Attorney General enacted 940 Massachusetts Code Regulation 3.16 ("regulation 3.16"), which states: "The attorney general may make rules and regulations interpreting the provisions of subsection 2(a) of this chapter [referring to chapter 93A]." 940 M.C.R. § 3.16. Pursuant to regulation 3.16 an act or practice is a violation of Chapter 93A, section 2 if:

(1) It is oppressive or otherwise unconscionable in any respect; or

(2) Any person or other legal entity subject to this act fails to disclose to a buyer or prospective buyer any fact, the disclosure of which may have influenced the buyer or prospective buyer not to enter into the transaction; or

(3) It fails to comply with existing statutes, rules, regulations or laws, meant for the protection of the public's health, safety, or welfare promulgated by the Commonwealth or any political subdivision thereof intended to provide the consumers of this Commonwealth protection; or

(4) It violates the Federal Trade Commission Act, the Federal Consumer Credit Protection Act or other Federal consumer protection statutes within the purview of [Mass.] G.L. c. 93A, § 2.

While, as a general rule courts have been hesitant to find that, pursuant to regulation 3.16, a violation of a federal statute is per se a violation of chapter 93A, violations of TILA are among the exceptions to the rule. Barnes v. Fleet Nat. Bank, N.A., 370 F.3d 164, 176 (1^st Cir. 2004) ("[v]iolations of TILA . . . constitute "unfair and deceptive acts or practices" for purposes of [chapter] 93A . . . and [regulation] 3.16(4)"). Defendants suggest, however, that even if it failed to comply with its TILA obligations, that failure cannot be the basis for a chapter 93A claim because TILA does not provide a remedy against defendant as servicer of the loan. As discussed supra, defendants suggestion that there is no liability for servicers under TILA is true. Horton, 2010 WL 55902 at 3. While dispositive with regard to Count I, that axiom does not shield defendant with regard to Count II.

Even where a statute does not provide for a private remedy, chapter 93A "is the appropriate avenue through which the [plaintiff] may seek a remedy for the violation" thereof. J.E. Pierce Apothecary, Inc. v. Harvard Pilgrim Health Care, Inc., 365 F.Supp.2d 119, 142 (D.Mass. 2005); see Whitehall Co. Ltd. v. Merrimack Valley Distrib. Co., 780 N.E.2d 479, 483 (Mass.App.Ct. 2002) ("violation of a specific statute that does not itself permit private recovery may give rise to a private claim under [chapter] 93A"). Where a statute does not provide a private means of recovery, for a cause of action pursuant to chapter 93A to proceed, the violation must be determined to be unfair or deceptive in and of itself and additionally it must be shown that "recovery under [chapter] 93A is compatible with the objectives and enforcement mechanisms of the underlying statute." Id. at 143 ("must show that the statutory violation also violates Chapter 93A . . . or that the Defendants' behavior was in itself an unfair method of competition"); see Flood v. Midland Nat'l Life Ins. Co., 643 N.E.2d 439, 183-184 (Mass. 1994) (not every act that violates policy violates chapter 93A).

An inquiry into the inherent unfairness of defendant's TILA violation, however, is not required. As noted before, violations of TILA are per se unfair or deceptive in violation of chapter 93A and recovery thereunder is deemed compatible with the objectives of TILA. Barnes, 370 F.3d at 176. As also previously noted, a private right of action under a statute is not a prerequisite for raising a chapter 93A claim for a violation thereof. J.E. Pierce Apothecary, 365 F.Supp.2d at 142 (noting that, even if no private right of action under statute chapter 93A claim may still be cognizable); Whitehall, 780 N.E.2d at 483 ("violation of a specific statute that does not itself permit private recovery may give rise to a private claim under [chapter 93A] if the violation amounts to . . . an unfair or deceptive practice").

Therefore, violations of TILA give rise to a claim under 93A ipso facto and regardless of plaintiffs' inability to seek relief for the TILA violation under the terms of that statute. Plaintiffs have adequately plead a chapter 93A claim against defendant based on the underlying TILA violation. Thus, Count II couched in terms of the TILA violation survives dismissal.

B. HAMP

Defendant argues that Count II warrants dismissal inasmuch as the chapter 93A claim is based on defendant's violation of HAMP. Defendant suggests that HAMP does not provide a private cause of action under which borrowers may sue servicers. (Docket Entry #11). This is true. Durmic v. J.P. Morgan Chase Bank, N.A., 2010 WL 4825632, *2 n. 9 (D.Mass. Nov. 24, 2010) ("HAMP explicitly precludes any private right of action); McKensi v. Bank of America, N.A., 2010 WL 3781841, *5-6 (D.Mass. Sept. 22, 2010) (finding no expressed, implied or third party beneficiary private right of action for HAMP violations); Marks v. Bank of America, N.A., 2010 WL 2572988, *6 (D.Ariz. June 22, 2010) ("The lack of any express authorization, in addition to the exclusive compliance authority delegated to Freddie Mac, demonstrates that Congress did not intend to create a private cause of action"); accord Zoher v. Chase Home Financing, 2010 WL 4064798, *3 (S.D.Fla. Oct. 15, 2010). As discussed previously, the lack of a private cause of action under HAMP, however, does not automatically dispose of the chapter 93A claim.

As explained by the Massachusetts Appeals Court in Whitehall:

Violation of a specific statute that does not itself permit private recovery may give rise to a private claim under [chapter] 93A if the violation amounts to an unfair method of competition or an unfair or deceptive practice independently prohibited by [chapter] 93A, § 2, and if recovery under [chapter] 93A is compatible with the

objectives and enforcement mechanisms the underlying statute contains.

As stated by defendant in its brief in support of dismissal: "[a]ll servicers of loans that are owned or guaranteed by Fannie Mae or Freddie Mac ("GSE loans") must participate in the HAMP program as to those loans." (Docket Entry # 11). Defendant correctly points out that "plaintiffs never allege that Fannie Mae is the owner of either of their mortgage notes," and that "the complaint alleges that plaintiffs were," in fact, "unable to acquire the name of the current owner of their mortgage notes." (Docket Entry # 11). Plaintiffs do allege that defendant is bound by the requirements of HAMP as it is generally a servicer of Fannie Mae backed mortgages. (docket Entry # 1). Defendant, however, is only bound by HAMP supplemental directives when it is specifically servicing a Fannie Mae owned or backed mortgage. (Docket Entry # 11, Ex. 3 P. 1). Plaintiffs fail to allege in the complaint that either of the mortgages were owned by Fannie Mae.

As noted before, defendant did attach the TILA response to its memorandum in support of its motion to dismiss. (Docket Entry # 11, Ex. 4). The TILA response reveals Fannie Mae to be the owner of one of the loans (loan # 14987133). (Docket Entry # 11, Ex. 4). To be sure, any failure to plead Fannie Mae's ownership of plaintiffs' mortgage was likely a result of defendant's failure to satisfy its disclosure requirements under TILA in a timely manner. While the TILA response indicates that Fannie Mae is the owner of one of the mortgages (Docket Entry # 11, Ex. 4), that document is not properly part of the record appropriate for consideration here. The fact that defendant attached the TILA response to its memorandum in support of its motion to dismiss does not cure the shortcomings of the complaint.

While plaintiffs allege that HAMP is applicable to defendant, the allegation as stated is conclusory and need not be credited here. See Ashcroft v. Iqbal, ___ U.S. ___ , 129 S.Ct. 1937, 1949 (2009) ("[t]hreadbare recitals of the legal elements, supported by mere conclusory statements, do not suffice to state a cause of action"); accord Maldonado v. Fontanes, 568 F.3d 263, 268 (1^st Cir. 2009). Said another way, on the face of the complaint and the exhibits attached thereto it is merely possible that defendant was bound by the requirements of HAMP. Plaintiffs fail to provide additional facts, namely that Fannie Mae owned one or both of the mortgages or that BOA had entered into a servicer participation agreement with regard to non-Fannie Mae backed loans, that would make that bald assertion plausible and thus sufficiently plead. Therefore, Count II is dismissed with regard to the HAMP violation for failure to plead facts demonstrating that statutes applicability.

CONCLUSION

In accordance with the foregoing discussion, defendant's motion to dismiss (Docket Entry # 10) is ALLOWED as to Count I and ALLOWED in part and DENIED in part as to Count II. In the event discovery uncovers sufficient facts to remedy the shortcomings of plaintiffs' pleading described in the foregoing, or if plaintiffs currently possesses such facts, plaintiffs may seek leave to amend the complaint.

/s/ Marianne B. Bowler

MARIANNE B. BOWLER

United States Magistrate Judge