NewRez And Bank of New York Mellon Motion Federal Judge In Massachusetts To Toss Zombie Mortgage Class Action Lawsuit
NewRez and BNY Mellon have filed a motion to toss a zombie mortgage class action case in Massachusetts.
Mortgage servicers and consumer advocates alike are watching the high-profile case. NewRez LLC and The Bank of New York Mellon have asked a federal judge in Massachusetts to dismiss the lawsuit. Plaintiffs allege NewRez inflated balances on second mortgages that had been long dormant following bankruptcy discharges.
The case, Hodges v. NewRez LLC et al., centers on Eva Hodges. Hodges is a Massachusetts homeowner who filed for bankruptcy in 2008. She stopped receiving monthly statements on her home equity line of credit (HELOC) after. However, 15 years later, she was notified that she owed over $150,000 accrued interest and fees on the mortgage. Hodges believed she the loan was no longer enforceable.
The amended complaint accuses NewRez and BNYM of violating the FDCPA and Massachusetts state consumer protection laws. In addition to violating TILA disclosure rules. She claims NewRez failed to provide periodic billing statements for years. The company then sought to collect interest and fees retroactively. The suit seeks class certification on behalf of borrowers in similar situations.
Bankruptcy law allows consumers to discharge HELOCs in a bankruptcy. However, they can remain subject to lien enforcement and interest accruals.
NewRez’s Lawyers Make An Interesting Argument
NewRez and BNY-Mellon filed a motion to dismiss the lawsuit on May 20th. They argue that all of Hodges’ claims collapse without a valid TILA violation.
Defendants assert that as a mortgage servicer, they are not liable under TILA. Further, they argue TILA only applies to creditors or qualifying assignees.
Defendants also argue Hodges had already voluntarily dropped her original TILA claim. Therefore, they contend the plaintiff is FDCPA and state law as a way to repackage a non-existent TILA violation.
The motion states, “Plaintiff attempts to shoehorn the non-existent TILA violation into claims by other names.”
The motion states the amended complaint is an effort to “backdoor” an unenforceable claim.
