United States District Court, D. Arizona
TEMPORARY RESTRAINING ORDER
G. Campbell United States District Judge
Margaret Rose Brown's has filed a Motion for Temporary
Restraining Order (“TRO”) with notice. Docs. 1-1,
1-7. The Court held a hearing on May 9, 2017. For the
following reasons, the Court will grant the TRO.
facts in this order are taken from Plaintiff's complaint.
Plaintiff (“Mrs. Brown”) is the widow of Gordon
Brown (“Mr. Brown”). Doc. 1-1 at 1. In 2006, Mr.
Brown obtained a home equity conversion loan, commonly known
as a “reverse mortgage, ” from Defendant CIT Bank
NA (“CIT Bank”). Id. at 2. A reverse
is a form of equity release in which a mortgage lender
(typically, a bank) makes payments to a borrower based on the
borrower's accumulated equity in his or her home. Unlike
a traditional mortgage, in which the borrower receives a lump
sum and steadily repays the balance over time, the borrower
in a reverse mortgage receives periodic payments (or a lump
sum) and need not repay the outstanding loan balance until
certain triggering events occur (like the death of the
borrower or the sale of the home). Because repayment can
usually be deferred until death, reverse mortgages function
as a means for elderly homeowners to receive funds based on
their home equity.
Bennett v. Donovan, 703 F.3d 582, 584-85 (D.C. Cir.
2013). Mr. Brown's reverse mortgage was secured by a deed
of trust recorded against the Browns' home in Apache
Junction, Arizona. Id. at 4, 45-55. The loan
documents listed Mr. Brown as the only borrower (id.
at 44), as did the deed of trust (id. at 55). Mrs.
Brown signed the deed of trust as a non-borrowing spouse.
Brown passed away on March 21, 2016. Doc. 1 at 2. Under the
terms of the reverse mortgage, the lenders could require
immediate payment of the loan principal and accrued interest,
provided that no surviving borrowers remained in residence at
the property. Doc. 1-4 at 3. On March 29, 2016, CIT Bank
initiated correspondence with Mrs. Brown, offering to
“evaluate possible workout options for your loan”
and asserting that CIT Bank might refer the loan to
foreclosure. Doc. 1 at 3. Three days letter, CIT Bank sent
another letter, informing Mrs. Brown that she had 35 days to
make a decision as to how to pay off the loan. Doc. 1 at 3.
Brown then obtained a “Non-Borrowing Spouse
Qualification Package” to apply for the Mortgagee
Optional Election (“MOE”) assignment program. The
MOE program provides that when a non-borrowing spouse of a
deceased borrower meets certain qualifications, the lender
may assign the reverse mortgage to the United States
Department of Housing and Urban Development
(“HUD”), rather than foreclosing or otherwise
requiring repayment of the loan. See generally Plunkett
v. Castro, 67 F.Supp.3d 1, 8-10, 13-16 (D.D.C. 2014);
see also U.S. Dep't of Housing and Urban Dev.,
Mortgagee Letter 2015-15 (June 12, 2015); U.S. Dep't of
Housing and Urban Dev., Mortgagee Letter 2014-07 (Apr. 25,
Brown completed the initial paperwork to apply for the MOE
and faxed it to CIT Bank. Doc. 1-1 at 3. CIT Bank
acknowledged receipt on April 5 and informed Mrs. Brown that
“Financial Freedom may assign Gordon Brown's HECM
loan to the Department of Housing and Urban Development
(‘HUD') and HUD may allow you to remain in the
Property if you provide certain information to Financial
Freedom and all qualifying conditions are met.”
Id. at 3, 62. The letter specified that the
following items must be provided to CIT Bank by July 14,
Proof of current residency in the Property (e.g.,
utility bills, Social Security benefits letter, etc.).
The enclosed completed and signed Occupancy Certification,
certifying that the Property is currently your principal
residence and has been since the origination date of the HECM
You must provide proof of obtaining good and marketable title
to the Property in your name or proof of legal right to
remain in the Property for life (e.g., executed
lease, court order, etc.) within ninety (90) days of the
passing of Gordon Brown.
You must sign and return the enclosed Eligible Surviving
Non-Borrowing Spouse Certification.
You must sign and return a Tolling Forbearance and Release
Agreement, which will be provided to you under separate cover
after the Qualification Package is complete and all other