United States District Court, D. Rhode Island
DELINDA M. MARTINS, Plaintiff,
FEDERAL HOUSING FINANCE AGENCY, FEDERAL NATIONAL MORTGAGE ASSOCIATION, AND GREEN TREE SERVICING, LLC, Defendants.
MEMORANDUM AND ORDER
J. McConnell, Jr. United States District Judge.
complaint arises out of Delinda M. Martins' assertion
that Defendants, Federal Housing Finance Agency
("FHFA"), Federal National Mortgage Association
("Fannie Mae"), and Green Tree Servicing, LLC
("Green Tree") (collectively "Defendants")
violated a number of her rights by foreclosing upon her home,
including her constitutional due process rights by failing to
provide her adequate notice of their non-judicial
foreclosure, and her contractual right to proper notice
pursuant to her mortgage.
Court is now faced with Defendants' Motion to Dismiss Ms.
Martins' complaint claiming it is moot because Fannie Mae
rescinded the complained of nonjudicial foreclosure, and
Cross-Motions for Summary Judgment on Fannie Mae's
counterclaim for judicial foreclosure. Defendants'
argument in this case is twofold. First, they argue that Ms.
Martins' claims are moot and the Court should dismiss
them because it rescinded the non-judicial foreclosure.
Second, they argue that the Court should grant summary
judgment on their counterclaim seeking a judicial foreclosure
under Rhode Island General Laws § 34-27-1, because that
section does not require compliance with the mortgage
Martins argues that her claims are not moot because the
Defendants voluntary ceased the unlawful conduct and there is
a reasonable expectation that the alleged unlawful conduct
will recur unless the Court grants relief. Furthermore, Ms.
Martins asserts that the Court should dismiss the
counterclaim for judicial foreclosure because compliance with
Paragraph 22 of the Mortgage is required as a condition
precedent even when seeking a judicial foreclosure, and
Defendants' notice failed to (1) specify a date not less
than thirty days by which default must be cured, (2) advise
Ms. Martins of her right to reinstate the mortgage after
acceleration, and (3) inform Ms. Martins of her right to
bring a court action to assert the non-existence of default
or any other defense to acceleration and foreclosure.
2007, Ms. Martins borrowed money from Shamrock Financial
Corporation ("Shamrock") to finance the purchase of
her home in Smithfield, Rhode Island (the
"Property"). The Note was secured by a mortgage
(the "Mortgage") in favor of Shamrock and Mortgage
Electronic Registration Systems, Inc. ("MERS"), as
nominee for Shamrock and its successors and assigns. MERS
later assigned its interest to Fannie Mae,  which then
assigned its interest to Bank of America, N.A.
("BOA"). In 2013, BOA transferred its interest in
the Mortgage to Green Tree.
in 2009, at the time of this country's devastating
economic downturn and housing crisis, Ms. Martins failed to
make her required payments. Under Paragraph 22 of her
Mortgage, the lender has the right to accelerate the amount
of the Mortgage; however, in doing so, the Mortgage requires
notice of six required pieces of information prior to its
acceleration. A notice must specify (1) that the mortgagor is
in default; (2) the action required to cure default; (3) a
date, not less than thirty days by which default must be
cured; (4) that failure to cure default may result in
acceleration and sale of the Property; (5) the right to
reinstate after acceleration, " and (6) the right to
bring a court action claiming the nonexistence of default or
any other defense.
Tree sent Ms. Martins a notice of default on February 11,
2014, stating its intent to accelerate the
Mortgage. The February 11, 2014 letter provided that (1) Ms.
Martins was in default, (2) default could be corrected in
thirty days from the date of the notice by paying $93,
240.41, and (4) failure to cure default could result in
acceleration and sale of the Property. It further provided
that Ms. Martins should check the Mortgage Agreement for any
right to reinstate after acceleration,  and Ms.
Martins' right to "assert in the foreclosure
proceeding the non-existence of a default or any other
defense available to [Ms. Martins]."
Tree sent Ms. Martins' default mortgage account to Harmon
Law Offices, P.C. ("Harmon"), which sent a notice
to Ms. Martins dated April 22, 2014. The notice stated that
Harmon had been retained by Green Tree to foreclose on the
Property, Ms. Martins was "in breach of the conditions
of the loan documents, " the Mortgage was "hereby
accelerated, " Ms. Martins may still have the right to
reinstate the loan, and the total due.
then sent a notice of foreclosure sale to Ms. Martins,
evidencing Green Tree's intent to initiate a non-judicial
foreclosure via Rhode Island's power of-sale statute.
R.I. Gen. LAWS § 34-11-22 (1956). Fannie Mae conducted a
foreclosure sale of the Property, in which it entered the
only bid of $280, 096.02. Fannie Mae signed a document, which
it recorded in the land records for the Town of Smithfield.
Martins filed suit seeking declaratory and injunctive relief
and damages. She alleged that as a governmental entity
Defendant Fannie Mae was required to afford Ms. Martins her
federal constitutional due process rights before conducting a
non-judicial foreclosure. Ms. Martins also alleged that all
of the Defendants failed to give her proper notice pursuant
to Paragraph 22 of the Mortgage before the foreclosure.
Finally, she asserted that a mediation conference and
certificate of compliance were required pre-foreclosure. R.I.
GEN. LAWS § 34-27-3.2.
Mae filed an assented-to-Motion to Set Aside the Non-Judicial
Foreclosure (ECF No. 10), which the Court granted. Fannie Mae
then filed a counterclaim against Ms. Martins (ECF No. 14),
seeking a judicial foreclosure under Rhode Island's
Complaint to Foreclose statute. R.I. GEN. LAWS §
34-27-1. Given its rescission of the non-judicial
foreclosure, Fannie Mae filed its Motion to Dismiss Ms.
Martins' complaint alleging the matter was now moot. (ECF
same day it filed its Motion to Dismiss, Fannie Mae also
filed a Motion for Summary Judgment on its counterclaim for
judicial foreclosure against Ms. Martins. (ECF No. 21). Ms.
Martins then filed a Cross-Motion for Summary Judgment as to