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Brown v. CIT Bank NA

United States District Court, D. Arizona

May 9, 2017

Margaret Rose Brown, Plaintiff,
v.
CIT Bank NA, et al., Defendants.

          TEMPORARY RESTRAINING ORDER

          David G. Campbell United States District Judge

         Plaintiff 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.

         I. Background.

         The 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”).[1] Id. at 2. A reverse mortgage

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. Id.

         Mr. 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.[2] 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.

         Mrs. 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, 2014).

         Mrs. 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, 2016:

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 loan.
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 ...

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