May 2024
"Taslis relies on two decisions by the Massachusetts Supreme Judicial Court . . ., which she argues supprt the conclusion that a mortgage loan does not need to strictly satisfy the PHLPA's statutory criteria to be considered a high-cost mortgage loan. Taslis argues that the analysis of whether a loan qualifies as a high-cost home mortgage loan should instead center on the concept of unfairness and a lender's recognition of a borrower's inability to repay. However, neither of the cited cases supports such a conclusion."
U.S. District Court Rejects Mortgagor’s Attempt to Expand theScope of the Predatory Home Loan Practices Act
On March 12, 2024, the U.S. District Court for the District of Massachusetts issued its decision in Taslis v. U.S. Bank NA, Tr., --- F.Supp.3d ---, 2024 WL 1069875 (D.Mass. Mar. 12, 2024), in which the Plaintiff-Mortgagor sought a preliminary injunction to avoid the Defendant’s foreclosure sale of her rental property based upon claims under the Massachusetts Predatory Home Loan Practices Act, G.L. c. 183C (“PHLPA”). The Plaintiff claims were premised upon alleged predatory practices in the origination and subsequent modification of the mortgage loan at issue. The PHPLA is a consumer protection statute that narrowly applies to mortgage loans that meet the statutory definition of the term “high cost home mortgage loan.” Id., at *3. Under the statute, a “high cost home mortgage loan” is a
consumer credit transaction that is secured by the borrower’s principal dwelling, other than a reverse mortgage transaction, a home mortgage loan that meets 1 of the following conditions:
(i) the annual percentage rate at consummation will exceed by more than 8 percentage points for first-lien loans, or by more than 9 percentage points for subordinate-lien loans, the yield on United States Treasury securities having comparable periods of maturity to the loan maturity as of the fifteenth day of the month immediately preceding the month in which the application for the extension of credit is received by the lender; and when calculating the annual percentage rate for adjustable rate loans, the lender shall use the interest rate that would be effective once the introductory rate has expired.
(ii) Excluding either a conventional prepayment penalty or up to 2 bona fide discount points, the total points and fees exceed the greater of 5 per cent of the total loan amount of $400; the $400 figure shall be adjusted annually by the commissioner of banks on January 1 by the annual percentage change in the Consumer Price Index that was reported on the preceding June1.
Id. (quoting G.L. c. 183C, § 2).
Because the mortgage loan at issue was originated in 2006 and modified in 2011, the Plaintiff advanced her claims under the PHLPA in an attempt to receive the benefit of the statute’s exception to the statute of limitations that typically applies to claims of predatory lending and claims under G.L. c. 93A. Id. at 5. Although the mortgage loan did not meet the statutory definition of a “high-cost home mortgage loan,” the Plaintiff argued that she was entitled to relief under the PHLPA as a result of dicta set forth in the Massachusetts Supreme Judicial Court’s (“SJC”) decisions in Commonwealth v. Fremont Investment & Loan, 452 Mass. 733, 897 N.E.2d 548 (2008) and HSBC Bank USA, N.A. v. Morris, 490 Mass. 322, 190 N.E.3d 485 (2022). See Taslis, 2024 WL 1069875, at 5.
Fremont did not involve a claim under the PHLPA, however, the SJC held that the PHLPA could serve as a foundation for demonstrating unfairness in the defendant’s loan origination practices. Fremont, 452 Mass. at 748-749. Nevertheless, as the U.S. District Court recognized, Fremont did not expand the scope of the PHLPA to allow claims that involve mortgage loans that do not meet the statutory definition of a “high cost home mortgage loan.” See id.; Taslis, 2024 WL 1069875, at 5. Rather, the SJC determined that the requirements of the PHLPA constitute an established concept of unfairness for the purposes of demonstrating a claim under G.L. c. 93A. See Fremont, 452 Mass. at 748-749. Nevertheless, to benefit from the statutory exception to the statute of limitations provided under the PHLPA, the mortgage loan at issue must fall within the statutory definition of the term “high-cost home mortgage loan.” Taslis, 2024 WL 1069875, at 5.
Because the mortgage loan at issue did not constitute a high cost home mortgage loan under the PHLPA, the U.S. District Court determined that the Plaintiff could not demonstrate a likelihood of success on the merits of her claims. As a result, the Court denied the Plaintiff’s motion for preliminary injunction.
If you would like to learn more about this decision or our Default Services in Maine, Massachusetts and New Hampshire please reach out and contact our Business Development Lead, Beth Stillings, to set up time to discuss. bs@dgandl.com
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