The District Court of the Northern District of Illinois denied the motion to dismiss Zachary Boyd’s claims against U.S. Bank, and Wilshire Credit Corporation (now known as Bank of America) based on violations of the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA), and the Equal Credit Opportunity (ECOA) Act that stemmed from foreclosure actions instituted against Boyd.
The court however granted the motion to dismiss Boyd’s claim that relied on the Illinois Homeowner Protection Act (IHPA). Boyd v. U.S. Bank, N.A., ex rel. Sasco Aames Mortg. Loan Trust, Series 2003-1, No. 10 C 3367, 2011 WL 1374986 (N.D. Ill. Apr. 12, 2011).
Boyd took out two home loans in July of 2003. Ultimately, his mortgage debt became owned by a trust of which US Bank acts as a trustee. Wilshire Bank, and then Bank of America, serviced the loans. While foreclosure actions had been brought against Boyd since 2005, after the defendants became the mortgage holder and servicer, they instituted another foreclosure action in August 2009. The next month, Boyd called Wilshire Credit and requested a loan modification under the Home Affordable Modification Program (HAMP). HAMP guidelines, which are issued by the Treasury Department, result in a Service Provider Agreement (SPA), which requires the bank to take certain steps before initiating foreclosure proceedings.
However, despite providing information regarding his eligibility for HAMP, the defendants took steps to dispossess Boyd of his property without notice or court approval the very next day. In response, Boyd brought a number of claims against the defendants in June 2010 as a putative class action, charging a violation of numerous statutes with regards to failing to provide proper notice about pre-foreclosure counseling, and failing to evaluate his eligibility or explain why they denied his request for a HAMP modification. Boyd also brought personal claims related to trespass and invasion of privacy that defendants did not seek to dismiss under Rule 12(b)(6).
As to the first count, the court denied the motion to dismiss Boyd’s claim related to unfair practices under the ICFA, but granted the defendants’ motion to dismiss Boyd’s claim predicated under the IHPA. The court noted that neither HAMP nor IHPA creates a private right of action, but held that ICFA claims, which can be based on a range of unfair business practices, could be based on a violation of HAMP and IHPA if the challenged practice “offends public policy.” As such, the court found that defendant’s violation of HAMP directives requiring considering a loan for modification was sufficient to bring an unfair conduct claim under the ICFA. The count was dismissed to the extent that it relied on alleged IHPA violations based on a failure to send a grace notice.
Analyzing the second count, the court denied the motion to dismiss Boyd’s claim alleging that defendants’ breaking into and locking Boyd out of his home without notice constituted an unfair practice under the ICFA. The court concluded that a defendant does not have to violate a statute expressly enumerated within the ICFA, and thus Boyd’s alleging a violation of the Illinois Mortgage Foreclosure Law (IMFL) was permitted since it was independently deceptive or unfair within the meaning of the ICFA.
The court also denied the motion to dismiss Boyd’s claim related to a violation of ECOA based on defendants’ failure to inform him why they denied his HAMP loan modification. It found that Boyd’s eligibility information provided to Wilshire Credit over the phone was sufficient to qualify as a “completed application” under ECOA.
The court held that Boyd’s pleadings contained sufficient allegations to join U.S. Bank, trustee, as a defendant. The court also announced that its decision not to deny these motions to dismiss did not mean that Boyd could bring these claims as a class action under ICFA or ECOA.