PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

________________

No . 16

- 3069

________________

GINNINE FRIED

v.

JP MORGAN CHASE & CO; JP MORGAN CHASE BANK NA, d/b/a/ Chase, Appellants

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Appeal from the United States District Court for the District of New Jersey (D.C. Civil Action No. 2

- 15

- cv

- 02 512 ) District Judge: Honorable Madeline C. Arleo

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Argued January 18 , 2017

Before: AMBRO, VANASKIE , and SCIR ICA

, Circuit Judges

(Opinion filed : March 9 , 2017 )

Leonard A. Gail, Esquire Paul Berks, Esquire Massey & Gail2 50 East Washington Street, Suite 400 Chicago, IL 60602

Jonathan S. Massey, Esquire (Argued) Massey & Gail

1325 G Street, N.W., Suite 500 Washington, DC 20005

Counsel for Appellant s

Robert M. Brochin, Esquire Morgan Lewis & Bockius 200 South Biscayne Boulevard
5300 Southeast Financial Center Miami, FL 33131

Allyson N. Ho, Esquire Morgan Lewis & Bockius

1717 Main Street, Suite 3200 Dallas, TX 75201

Judd E. Stone, Esquire Morgan Lewis & Bockius 2020 K Street, N.W. Washington, DC 20006

Counsel for Amicus Appellant s: American Bankers Association ; Consumer Mortgage Coalition; Housing Policy Council;

I ndependent Community Bankers of America; Mortgage Bankers Association3 James E. Cecchi, Esquire Lindsey H. Taylor, Esquire

Care lla Byrne Cecchi Olstein Brody & Agnello

5 Becker Farm Road Roseland, NJ 07068

Antonio Vozzolo, Esquire (Argued)

345 Route 1 7 South Upper Saddle River, NJ 07458

Counsel for Appellee

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OPINION

___________ ____

AMBRO, Circuit Judge

Ginni n e Fried bought a home in 2007 for $553,330. I t was near high tide in the real estate market, but she had to believe she was getting a bargain, as an appraisal estimated the home’s value to be $570,000. Fried borrowed $497,950 at a fixed interest rate to make her purchase and mortgaged the
home as collateral. Because the loan

- to

- purchase

- price ratio ($497,950 / $553,330) was more than 80%, JPMorgan Chase
Bank , N.A. (“Chase”), the servicer for Fried ’s mortgage (that
is

, the entity who performs the day

- to

- day tasks for the loan, including collecting payments), required her to obtain private mortgage insurance

. Fr ied had to pay monthly premiums for
that insurance until the ratio reached 78%; in other words, the principal of the mortgage loan need ed to reduce to $431,597, which was projected to happen just before March 2016.4 We now know that the housing market cras hed in 2008, and the value of homes dropped dramatically. Fried

, like many homeowners, had trouble making mortgage payments. Help came when Chase modified Fried’s mortgage under a federal aid program by reducing the principal balance to $463,737. The rub w as that Chase extended Fried ’s
mortgage insurance premiums an extra decade to 2026

. Whether it could do this depends on how we interpret the Homeowners Protection Act (“ Protection Act ”), 12 U.S.C. § 4901 et seq. Does it permit a servicer to rely on an upda ted property value

, estimated by a broker

, to recalculate the length of a homeowner’s mortgage insurance obligation following a modification or must the ending of that obligation remain tied to the initial purchase price of the home? We
conclude the Protec tion Act requires the latter.

I. BACKGROUND

Mortgage insurance protects the owne r or guarantor of mortgage debt

— typically the Federal National Mortgage Association (“Fannie Mae”) or Federal Home Loan Mortgage Corporation (“Freddie Mac”)

— from a borrower’s risk of default. Traditional underwriting standards require homebuyers to pay at least 20% of a home’s purchase price in
cash

— that is, they require the homebuyer to obtain 20% equity in the home at the time of purchase and finance 80% of the home’s purchas e price. If homebuyer s cannot pay at least 20%, then they must purchase mortgage insurance

. Once the
balance due on a home loan falls below 80% o f the home’s purchase price, mortgage insurance is no longer necessary because “excessive [mortgage insurance] coverage does not
benefit the homeowner .

. . and provides little extra protection to a lender.” S. Rep. No. 105

- 129

, at 3 (1997).

B efore Congress took action by passing the Protection
Act in 1997, many lenders would continue to collect5 mortgage insurance payments after a homeowner had gone below the 80% loan

- to

- value mark. H.R. Rep. No. 105

- 55

, at 6 (1997). In the Act Congress set national standards for mortgage insurance termination. It requires mortgage servicers to (1) provide periodic notices to a bor rower/mortgagor 1 regar ding mortgage insurance obligations, (2) automatically terminate mortgage insurance

on a statutorily defined schedule, and (3) grant a borrower ’s request to cancel her mortgage insurance once certain conditions are met. 12 U.S.C. §§ 4 901

- 03.

Under the Protection Act , mortgage servicers must automatically terminate mortgage insurance for a fixed

- rate loan like Fried ’s on “the date on which the principal balance
of the mortgage .

. . is first scheduled to reach 78 percent of the origina l value of the property securing the loan .” 12 U.S.C. § 4901(18)(A). The “original value” of a home is “the lesser of the sales price of the property securing the mortgage, as reflected in the contract, or the appraised value at the time at which the subje ct resident ial mortgage transaction was

cons ummated.” 12 U.S.C. § 4901(12). As noted, t he purchase price of Fried ’s home was less than its appraised value, so her
home’s “ original value” is $553,330. Seventy

- eight percent of that figure

— the key value for m ortgage insurance
termination

— is $431,597.40. Under her loan’s amortization schedule, Fried ’s unpaid principal balance was set to reach $431,597.40 just before March 1, 2016, and therefore her mortgage insurance obligation would terminate on that date.

1 The Protection Act defines “mor tgagor” as the “original borrower under a residential mortgage or his or her successors or assignees. ” 12 U.S.C. 4901(11). We therefore
use “borrower ,” “mortgagor,” and “homeowner” interchangeably throughout this opinion

.6 Wh en Fried ran into financial trouble followi ng the
financial crisis of 2008

, she and Chase agreed on January 10,
2011

, to modify her mortgage under the Home Affordable Mortgage Program (“HAMP”). The HAMP was enacted as part of the Emergency Economic Stabili zation Act of 2008 in response to the financial and housing crisis of that time

. See Spaulding v. Wells Fargo Bank, N.A. , 714 F.3d 769, 772 (4th Cir. 2013). Under the HAMP, participating mortgage “servicers agreed to identify homeowners who were in default or would likely soon be in default on their mortgage payments, and to modify the loans of those eligible under the program. In exchange, servicers would receive a $1,000 payment for each permanent modification, along with other incentives.” Id. at 773 (qu oting Wigod v. Wells Fargo Bank,
N.A. , 673 F.3d 547, 556 (7th Cir. 2012) )

. Per the modification agreement she reached with Chase, the principal balance of
Fried ’s loan was reduced to $463,736.98.

The Protection Act provides for the treatment of mortgage m odifications in 12 U.S.C. § 4902 (d):

If a mortgagor and mortgagee (or holder of the mortgage) agree to a modification of the terms

or conditions of a loan pursuant to a residential mortgage transaction, the cance l lation date, termination date, or final ter mination shall be
recalculated to reflect the modified terms and
conditions of such loan.

Accordingly, Chase was required to update Fried ’s termination date to reflect the “modified terms and conditions” to which the parties “agree[d .]” Pursuant to the
loa n’s modified amortization schedule (modified, that is, to account for the reduced principal), Fried ’s outstanding principal balance would reach 78% of her home’s original value ($431, 597 ) in July 2014. Comp l . ¶ ¶ 47, 50.7 After receiving the modification, F ried asked Chase when she would be relieved of her obligation to make monthly mortgage insurance payments. On August 31, 2012, Chase responded that her mortgage insurance obligation would automatically terminate on November 1, 2026. This
date was ten years later than her mortgage insurance
termination date before the modification and twelve years
later than the recalculated date based on her decreased principal balance . Her monthly mortgage insurance premium is approximately $ 252.83 , so a ten

- year extension of those premiums would cost her an additional $30,339.60. See Compl. ¶ 6.

With this in mind, Fried wrote Chase to question the
new termination date and ask how the bank reached its
conclusion. It responded on October 10, 2012

, and April 9,
2013

, stating that November 1, 2026

, is “when the loan will reach 78% based on the modified terms and conditions.” Compl. ¶ 53. Seventy

- eight percent of what exactly Chase did not say, so Fried wrote again.

Chase ’s response on October 4, 2013

, clarified how it
arrived at the 2026 termination date. In order to participate in the HAMP program, it was required to obtain a Broker’s Price Opinion (“BPO”) estimating the value of Fried ’s home
at the time of the modification. A BPO is a much less rigorous estimate of a propert y’s market value than is an appraisal. See In re Thomas , 344 B.R. 386, 393 (Bankr. W.D. Pa. 2006) (“Full appraisals, not just the ‘drive by’ Broker’ s Price Opinion, are used

. . . when the matter is contested.”);
see also In re Kasbee , 466 B.R. 71 9, 723 (B ankr. W.D. Pa. 2010) (b ank “realized that the comparables utilized in the BPO were inadequate and that as a result it was obtaining a full apprai sal to determine the true value ”)

.8 In any event, Chase explained that it had substituted its BPO of $420,000 f or the home’s $553,330 original value. Because the BPO was much smaller, Fried would not pay down her outstanding principal balance to 78% of the BPO ( 78% x $420,000 = $327,600) until November 1, 2026.

It is worth pausing for a moment to understand the

ma th behind Chase’s purported extension of Fried’s mortgage insurance obligation. Remember that the mortgage insurance obligation ends when Fried has paid down the principal balance owed on her mortgage to 78% of her home’s original value. That is, she must pay down her mortgage balance to
78% of $ 553,330 , which is $431,597

.
In this way, the Protection Act’s mortgage insurance
termination date sets a finish line that homeowners go toward by paying down their mortgage debts. Fried started with a mortgage deb t of $497,950 and would reach her finish line

once the outstanding principal debt was $431,597. Put differently, she would cross this threshold after making $66,353 of payments toward her mortgage’s principal balance, which

, according to her initial amorti zation schedule,
she would do in 2016. When her mortgage was modified, Fried leapt forward toward her goal: the modification decreased her outstanding principal balance to $463,737, so
she would reach the $431,597 finish line sooner, in 2014 , by making jus t $32,140 in principal payments. But when Chase
substituted the BPO for the original value of Fried’s home

, it
moved the finish line . Seventy

- eight percent of the $420,000
BPO is $327,600. According to her modified amortization
schedule , Fried would not pa y down her mortgage debt to Chase’s new $327,600 finish line

— more than $136,137 in mortgage principal payments away

— until 202 6.

In April 2015, Fried filed a c omplaint on behalf of herself and similarly situa ted individuals

. She asserted that by9 relying on the BPO to calculate her mortgage insurance termination date, rather than her home’s original value, Chase

v iolated the Protection Act . Chase filed a motion to d ismiss, contending that its substitution of the BPO for the origina l
value did not violate the Protection Act and that Fried ’s action was barred by the Act ’s two

- year sta tute of
limitations. 2

The Distri ct Court denied Chase’s m otion but certified
its appeal to our Court, recognizing that whether Chase
violated the Protection Act is a controlling q uestion of law with substantial ground for difference of opinion that is likely

to advance this case ’s resolution

. See 28 U.S.C. § 1292(b); Katz v. Carte Blanche Corp. , 496 F.2d 747, 754 (3d Cir. 1974) ( en banc )

. We agreed to hear the appeal.

II. ANALYSIS

Chase contends that it was entitled to recalculate
Fried ’s termination date by substituting the BPO it obtained at the time of the modification for her home’s original value. It equivocates on whether it could do this only because of
certain HAMP rules or whether the Protection Act would permit the substitution more generally

. In either case Chase is

2 The c omplaint names both Chase a nd its parent

company, JPMorgan Chase & Co. (“JPMC”) , as defendants.
While t he District Court did not address the issue in its opinion, p arent companies are not, merely by dint of ownership , liable for the acts of their subsidiaries. Pearson v. Component T

ech. Corp. , 247 F.3d 471, 484 (3d Cir. 2001)

. At oral argument, Fried ’s counsel acknowledged that the

c omplaint did not allege any wrongdoing b y JPMC itself and

that the claims against JPMC should be dismissed. Oral Argument Jan. 18, 2017

, at 25:10

- 13.10 wrong: t he Protection Act required calculation of Fried ’s
termination date on the bas is of her home’s original value,
which under the Act is its purchase pric e.

Whether Fried knew or should have known of Chase’s
violation of the Protection Act outside of the statute

- of

limitations period is not clear on the face of her c omplaint,
and thus the District Court was correct not to dismiss on this ground.

A. The Ho meowners Protection Act

1. The Statute’s Text

Under the Protection Act a homeowner’s obligation to

pay mortgage insurance premiums ends on the “termination date if, on that date, the mortgagor is current on the payments required by the terms of the resi dent ial mortgage transaction [

. ] ” 12 U.S.C. § 4902(b)(1). For a fixed

- rate mortgage, like Fried ’s, the termination date is

the date on which the principal balance of the mortgage, based solely on the initial amortization schedule for that mortgage, and
irre spective of the outstanding balance for that mortgage on that date, is first scheduled to reach 78 percent of the original value of the property securing the loan [

. ]

12 U.S.C. § 4901(18) (A) . Simply put, a homeowner’s
termination date is when she will have paid down her loan’s principal balance to the point that it equal s 78% of her home’s11 original value. 3 All agree that the original value of Fried’s
home in 2007 was its purchase price of $553,330.

When Fried and Chase agreed to modify her mortgage
in 2011

, another provision of the Protection Act came into play. Section 4902(d) provides that “[i]f a mortgagor and
mortgagee .

. . agree to a modification of the terms or conditions of a loan . . . [

, the] termination date .

. . shall be
recalculated to reflect the modified terms and conditions of such loan.” The process envisioned by § 4902(d) is that we ask which terms or conditions of Fried’s loan she and Chase

agree d to modify ; then we recalculate her termin ation date to reflect the m odified terms and conditi ons.

Recall that to calculate initially the termination d ate for mortgage insurance payments we must determine when
the principa l balance of the mortgage is fir st scheduled to
reach 78% of the original value of the property sec uring the
loan. 12 U .S.C. § 4901(18). There is no question that Fried’s agreement with Chase modified the outstanding principal
balance of her mortgage by reducing it to $463,737, so her
termination date needed to be recalculated to account for that change. Reducing a homeowner’s pri ncipal balance moves
her closer to the finish line est ablished by the termination
date

— in Fried’s case, the date at which her outstanding principal balance would reach $431,597. According to the
modified amortization schedule reflecting the reduced princip al balance, the termination date , per 12 U.S.C. § 4902(d), would be recalculated to occur in 2014.

3 A homeowner’s mortgage insurance obligation will

not end p er § 4902(b)(1) on her termination date if she is not

“ current on the payments required by the terms of the residential mortgage transaction [,]” but that issue is not raised

in this case.12 But Chase went one step further. It replaced the original v alue of Fried ’s home with its BPO estimating the
ho me ’s value at the time of the 2011 modificatio n. The
BPO ’s estimate was substantially less than her home’ s original value. So the substitution had the effect of moving Fried’s finish line further away: she was not scheduled to pay
down her debt to 78% of the BPO ’s $420,000 value ( as noted, $327,600) u ntil 2026.

According to Fried ’s c omplaint, her written agreement
with Chase did not explicitly mention or change the original
value of her home as defined by § 4901(12). 4 Compl. ¶ 51.

4 Indeed, i t is not obvious that even an explicit agreement could depart from § 4901(12 )’s definition of “original value.” The Protection Act sets a timeline for terminating mortgage insurance premiums on the basis of specific facts about the property and elements of the mortgage
transaction : the purchase price or appraised value of the home

and the loan’s amortization schedule. 12 U.S.C. § 4901(18)

. Section 4902(d) updates that timeline with respect to terms

and condition s of the loan, like the amortization schedule, that have been modified. But a home’s purchase price and appraised value are not terms of the loan; they are facts that

do not change with the loan’ s provisions.

Moreover, permitting lenders and servicers to modify

at will the mortgage insurance termina tion date set by the Protection Act by redefining “original value” would arguably undermine the Act’s purpose

— to safeguard consumers from

over paying mor tgage insurance premiums by setting a consistent and predictable termination date. If lenders and

servic ers could contract around the Act’s timeline by redefining key terms, the Act would be no more th an a13 Chase does not conte nd otherwise, but instead responds that
substitutio n of the BPO for the home’s original value was permissible because it was a “term” or “condition” of Fried ’s
modification under § 4902(d) that the HAMP rules required

. Hence we turn to those rules.

The Making Home Affordable Program Handbook for
Servicers of Non

- GSE Mortgages ( the “HAMP Handbook”) states that “[s]ervicers must obtain an assessment of the current value of the property securing the mortgage loan being evaluated for HAMP.” HAMP Handbook, 6.8 Property Valuation, Version 3.0, 73, available at
h ttps://www.hmpadmin.com/portal/programs/docs/hamp_serv icer/mhahandbook_30.pdf (December 2, 2010). It goes on to specify that “[s]ervicers may use either an automated valuation model (AVM), .

. . a broker’s price opinion (BPO), or an appraisal ” to measure t he property’s value at the time of
modification. Id. The Handbook , however, says nothing about using the BPO to calculate the period of a homeowner’s mortgage insurance obligation. HAMP rules to ld Chase to get
the BPO, but they did not require Chase to sub stitute that
value for the “original value” that the statute, § 4901(18), relies on to compute the mortgage insurance termination date

.

Chase responds that , even if not required by the HAMP, use of the BPO for the termination date calculation was a “condi tion” of the modification because Chase would not have modified the loan without first getting an updated property valuation

. This argument suffers from the same logical flaw as Chase’s argument tied more closely to the
HAMP Handbook : e ven if Chase’s obtai ning a BPO was a prerequisite to Fried ’s mortgage modification, that cursory calculation does not replace under the Protection Act the

contractual default rule that a few lines of boilerplate could
override. This issue, however, we need not decide.14 original value of Fried’s property for mortgage insurance

purposes

.

Should we interpret “conditions” expansively to incl ude any necessary precursors to the modification of
Fried ’s loan? We think not, as § 4902(d) relies on changes to
the terms and conditions of the loan itself. No matter what led to the modification, the key inquiry is which of the loan’s

ter ms and conditio ns were modified, not any conditions precedent.

M ost significantly, however, the Protection Act updates the termination date only with respect to the loan provisions that the parties “agree” to modify: “ If a mortgagor and mortgagee .

. . agree to a modifi cation of the terms or conditions of a loan . . . [

, the] termination date [for mortgage insurance payments]

. . . shall be recalculated to reflect the modified terms and conditions of such loan.” 12 U.S.C. § 4902(d). Here we come full circle to what did F ried and Chase actually agree.

The obvious objection is that if courts must look to each modification agreement to determine which terms and conditions the borrower agreed to modify in order to calculate the mortgage insurance obligation , the inquiry will be so individualized and factually intensive as to destabilize the mortgage market. But calculation of an updated termination date always requires reference to the modification agreement. There is no other way to know which terms and conditions of
the loa n have been modified. At the least, the updated principal balance and interest rate (whether fixed or variable) will depend on the agreement. M oreover, as Fried points out

, inquiry into the terms of modification agreement s likely will
be a routine exercise

, as servicers like Chase use an industry
standard form for modifications. See

, e.g. , Rice v. Green Tree Servicing, LLC , No. 3:14

- CV

- 93, 2015 WL 5443708, at *515 (N.D.W. Va. Sept. 15, 2015) (“Under the Servicing Guidelines, servicers are directed to use Form 3157, a standard form, durin g the loan modification process .

. . .”).

Chase retorts that , regardless what its written agreement with Fried might say

, its reliance on the BPO was justified because “all applicable or relevant laws must be read into the ag reement of the parties just as if expressly provided by them, except where contrary intention is evident.”
Williams v. Stone , 109 F.3d 890, 896 (3d Cir. 1997) ( quoting Wright v. Commercial & Sav. Bank , 464 A.2d 1080, 1083 ( Md. 1983) ). According to Chase, F ried impliedly agreed to
substitute the BPO’s estimate for her home’s original value
because the HAMP Handbook provided the background law for the modification agreement.

We disagree, for (as already discussed) nothing in the HAMP’s requirements (even ass uming they are “applicable or relevant laws”) required substitution of the B PO for original
value. And , in any event

, § 4902(d) updates a homeowner’s
termination date to reflect the terms and conditions of her
loan s he agreed to modify and does not incorpo rate the provisions of a handbook that guides her servicer.

What is ironic is that Chase advocates a heads

- I

- win,
tails

- yo u

- lose, interpretation of the HAMP. As the Seventh Circuit observed, when “homeowners [have] tried to assert rights arising under HAMP itself [against servicers,] [c] ourts have uniformly rejected these claims because HAMP does not create a private federal right of action for borrowers against servicers.” Wigod , 673 F.3d at 559 n.4; see also Senter v. JPMorgan Chase Bank, N.A. , 810 F. Sup p. 2 d 1339, 1350

– 51 (S.D. Fla. 2011) (“Plaintiffs’ reliance on the HAMP
Gu idelines [,] rather than a formula contained in their [agreements with Chase] to provide the terms of their permanent modifications [,] is an improper attempt to assert a16 private right of action under the HAMP.”); Puzz v. Chase Home Fin., L.L.C. , 763 F. Supp . 2d 1116, 1123 (D. Ariz. 2011) (“ Even assuming that HAMP guidelines encourage lenders to provide [certain benefits] to their debtors, there is no authority for the proposition that HAMP or its regulations or guidelines create a private right of action against lenders who begin foreclosure without doing so .”); Coulibaly v. J.P. Morgan Chase Bank, N.A. , No. CIV.A. DKC 10

- 3517, 2011
WL 34769 94, at *15 (D. Md. Aug. 8, 2011) (“Plaintiffs may not establis h liability by relying on Chase’ s alleged violations of certain servicing guidelines promulgated by the U.S. Department of the Treasury in connection with HAMP .”). 5 The proverb “what is good for the goose is good for the gander” applies: th e HAMP’s provisions do not bind the parties to a mortgage modification only when they benefit
Chase.

Moreover, courts have held

— at least twice at Chase’s
behest

— that the HAMP’s rules are not themselves the terms of modification agreements between borrowers and servicers

. E.g.

, Short v. Chase Home Fin. LLC , No. CV

- 11

- 133

- PHX

DGC, 2011 WL 9160941, at *3 (D. Ariz. Aug. 22, 2011) (“ HAMP is not a contract between Plaintiffs and Chas e, and did not amend Plaintiffs’ loan documents. ”); Wright v. Chase
Home Fin. LLC , No. CV

- 11

- 0095

- PHX

- FJM, 2011 WL 2173906, at *2 (D. Ariz. June 2, 2011) (“HAMP is not a contract between plaintiff and defendants, did not amend plaintiff’s loan contracts, and does not contai n a private right of action.”) ; see also Grona v. CitiMortgage, Inc. , No. 3

- 12

- 0039, 2012 WL 1108117, at *5 (M.D. Tenn. Apr. 2, 2012)

5 Where courts have allowed HAMP

- related actions, the
substantive “ claims [were] based on contract, tort, and/or

state consumer fraud statutes [,]” rather than the provisions of

the HAMP itself. Wigod , 673 F.3d at 559 n.4.17 (“ HAMP is not a contract between Plaintiff and Defendant. HAMP did not modify Plaintiff's Loan Documents, and HAMP does not contain a private right of action. ”).

For these reasons, the Protection Act ’s text does not support replacement of the $553,330 original value of Fried’s
home with Chase’s $420,000 BPO

.

2. Statutory Structure and Legislative History

Chase looks to the Protection Act ’s statutory structure and legislative history to counter the result we reach , but these guides to the Act’s intent only strengthen our conclusion. Congress amended in 2000 the Protection Act with respect to loan modifications and refinancing
transactions. See Private Mortgage Insurance Technical
Corr ections and Clarification Act ( the “Corrections Act”),
P.L. 106

- 569, 114 Stat. 2944 (2000) ( amending 12 U.S.C. §§ 4901, 4902, 4903, 4905 ) . The purpose of the Corrections Act was, among other things, to eliminate “uncertainty relating to
the cancellation an d termination of [mortgage insurance] for .
. . loans whose terms or rates are modified over the life of the loan.” 146 Cong

. Rec

. H

. 3578

- 02, H3579 (May 23, 2000).

With respect to mortgage refinance transactions, which are distinct from mortgage modific ations, Congress amended the definition of “original value” such that “[i]n the case of a residential mortgage transaction for refinancing the principal residence of the mortgagor, [original value] means only the appraised value relied upon by the mortgage e to approve the
refinance transactio n.” 12 U.S.C. § 4901(12). Thus

, when a homeowner refinances her home mortgage loan, the “original value” of her home will become the appraised value relied on18 by the mortgagee. 6 And

, accordingly, her termination date
wi ll reflect the new “original value.” See 12 U.S.C. § 4901(18).

But for mortgage modifications Congress did not make any such provision to update a home’s original value . Instead, with respect to modifications like Fried ’s, Congress added the language dis cussed above that “[i]f a mortgagor and
mortgagee

. . . agree to a modification of the terms or conditions of a loan pursuant to a residential mortgage transaction, the .

. . termination date .

. . shall be recalculated
to reflect the modified terms and co nditions of such loan.” Corrections Act, PL 106

– 569, 114 Stat 2944 (2000) ; 12 U.S.C. § 4902(d). Unlike the refinance provision, the language Congress chose for mortgage modifications does not change the “original value” of a home when the modification

occu rs. Only the “terms and conditions” of the loan modified by the parties’ agreement are updated, and

, for the reasons
detailed earlier , replacement of the original value with some
other value is not necessarily one of them

.
Chase contends that “Congress us ed different language and different statutory provisions with respect to loan
modifications and refinanc[ings] , but it provided that updated property valuations be used for [bot h modifications and refinancing transactions ].” Chase’s Reply at 14. Of course,

6 Not ably, even for a refinance transaction the “original
value” is not ne cessarily the value of the home at the time of

re financing . Section 4901(12) incorporates the “appraised

value relied upon by the mortgagee to approve the refinance
transaction.” Id. (emphasis added). If the mortgagee relied on the appraisal performed at t he time of the home’s initial sale, that appraised value would remain the “original value” of the home even after the refinancing.19 when Congress uses different language in the same act, we usually presume the opposite

— that different language points

to a different result. INS v. Cardoza

- Fonseca , 480 U.S. 421, 432 (1987) (“Where Congress includes particular language in
one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the d isparate inclusion or
exclusion ” (internal brackets, quotation marks, and citation omitted)).

Here the distinction Co ngress drew makes sense. When a borrower refinances her mortgage, she pays off her old debt with a new loan, often from a different lender. A refinancing is a new “residential mortgage transaction .” 12 U.S.C. § 4901(15) (“a transaction .

. . in which a mor tgage

. . .
or

. . . security interest is created or retained .

. . to finance the acquisition, initial construction, or refinancing of that dwelling”). T he new lender thus should not be bound by the property valuation relied on by the initial lender.

A m odification, on the other hand, is merely “an alteration or amendment” to the existing mortgage contract,

see Modification , Black’ s Law Dictionary (10th ed. 2014), and is not a new “residential mortgage transaction,” see 12 U.S.C. § 4901(15). While t he Pro tection Act presumes that a lender will rely on an appraisal before completing a refinancing transaction, see 12 U.S.C. § 4901(18) , the HAMP

H andbook makes clear an appraisal is not a prerequisite to a mortgage modification . HAMP Handbook, at 73 (“Servicer s may use either an automated valuation model (AVM), .

. . a broker’s price opinion (BPO), or an appraisal.”).

Cha se directs us to several passages of the Congressional Record to support its contention that § 4902(d)

— despite its text

— permits substitution of an updated property value at the time of modification for a20 ho me’s original value

. 7 Not one of the passages it points to actually says that, nor do t hey overcome § 4902(d)’s text,

structure

, or amendment history

.
Congress reasonably chose to treat mort gage modifications and refinancing transactions differently. Its explicit command to update the original value of a home
when a mortgage is refinanced is strong evidence that it
declined to permit such an update impliedly for mortgage
modifications.

3. Fannie Mae Servicing Guidelines

Chase next argues that the Fa nnie Mae Servicing
Guidelines support its position. Unlike the sources discussed above, the y do permit what Chase did. However, we decline to follow the Servicing Guidelines because the Protect ion Act explicitly overrides them, and Fannie Mae’s interpretation of
the Protection Act is not entitled to deference.

Taken together, Fannie Mae and Freddie Mac “own or guarantee close to half of the home loans in the United

7 For example, both in its brief and at oral argument Chase brought our attention to a statement of the Corrections Act’s spo nsor that the bill “clarifies that [,] in the case of .

. . loan modifications, [loan

- to

- value] calculations are made

based on the most recent amortization schedule, not based on

an outdated schedule .” 146 Cong

. Rec

. H

. 3578

- 02, H3580 (May 23, 2000) . But Fr ied does not dispute that an updated

amortization schedule must be used to calculate her termination date. The amortization schedule was necessarily
altered when he r principal balance was decreased as agreed in the mortgage modification. Chase’s mistake wa s its reliance
as well on an updated value for her home

.21 States.” S ee Town of Babylon v. Fed. Hous. Fin. Agency , 699 F.3d 221, 225 (2d Cir. 2012)

. Even for mortgages not owned or guaranteed by them , mortgage lenders and servicers “are guided in their decisions by Fannie Mae and Freddie Mac requirements.” Id. (internal quotation marks omitt ed). As is typical in the secondary mortgage market

, t h e pooling

- and

servicing agreement between Chase and the owners of Fried ’s mortgage debt incorporates the Fannie Mae Servicing
Guidelines. 8

The Guidelines provide that servicers must calculate “[mortg age insurance] termination eligibility .

. . [by] us[ing] the amortization schedule of the modified mortgage loan and the property value at the time of the mortgage loan modification.” Fannie Mae Servicing Guide, B

- 8.1

- 04: Termination of Conventional Mortgage Insura nce , https://www.fanniemae.com/content/guide/servicing/b/8.1/04.
html ( Jan. 18, 2017 ) (emphasis added)

. The Guidelines add that servicers must “adhere to applicable state law related to the type of valuation to use to determine the property value at

8 Chase does not argue that the pooling

- and

- servicing agreement or the Fannie Mae Guidelines it incorporates are directly binding on Fried

. See e.g., Fellows v. CitiMortgage,

Inc. , 710 F. Supp. 2d 38 5, 405 (S.D.N.Y. 2010) (Servicing Guidelines are not incorporated into contracts between borrowers and lenders). It relies on the Fannie Mae Servicing Guidelines only as an interpretive guide to the Protection Act

. See Oral Argument Jan. 18, 2017

, at 34:14

- 22 (“[W] e’re not contesting that the statute obviously ranks higher than .

. . the Fannie Mae guide, but in trying to understand what 4902(d) means, we would look to Fannie Mae’s consistent interpretation since 2010 [.] ”).22 the time of the mortgage loan modification [,] ” bu t that generally “[a] BPO or a new appraisal may be used[.]” Id.

According to Chase, the Servicing Guidelines provide the definitive interpret ation of the Protection Act ’s requirements. But Congress anticipated the possibility of
conflicts between the Ac t and pooling

- and

- servicing agreements that rely on the Servicing Guidelines and explicitly provided that the Protection Act would take precedence:

The provisions of this chapter shall supersede any conflicting provision contained in any agreement relatin g to the servicing of a residential mortgage loan entered into by the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, or any private investor or note holder (or any successors thereto).

12 U.S.C. § 4908 (b) . If the Servic ing Guid elines would produce a result that departs from the Protection Act ’s text

, there is a conflict, and per § 4908(b) the statute prevails.

Chase contends that we should defer to Fannie Mae’s interpretation of the Protection Act under the doctrine of Skidmore v. Swift & Co ., 323 U.S. 134 (1944) , which offers
deference according to the “‘thoroughness evident in [the agency’s] consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all
those factors which give it power to persuade, if lacking power to control.’” Gonzales v. Oregon , 546 U.S. 243, 268 (2006) (quoting Skidmore , 323 U.S. at 140). But Fannie Mae’s Guidelines are not entitled to deference. First, they simply do not square with the text of the Pr otection Act

.23 Second, Skidmore deference is available only to agencies interpreting the statutes they administer. See Mead Corp. , 533 U.S. at 228. Fannie Mae and Freddie Mac are not administrative agencies . T hey “are federally

- chartered but privately own ed corporations that issue publicly traded securities.” Delaware Cty., Pa. v. Fed. Hous. Fin. Age ncy, 747 F.3d 215, 219 (3d Cir. 2014). 9

Nor does it administer the Protection Act . When Congress passed the Act it did not designate a regulator to interpret it . 146 Cong

. Rec

. H

. 3578

- 02, H 3581 (May 23, 2000) (“Unfortunately, when we passed the Homeowner’s Protection Act, we were unable to prevail on one issue, and that was to actually have a regulator to work out some of the
details of the statute and the und erlying policy.” (Rep. Vento)). Indeed, if deference to any entity would be appropriate under the Protection Act , we would owe it to the several financial regulatory agencies that Congress authorized
to enforce the Act. See 12 U.S.C. § 4909(b).

Fourth, ap plication of the Servicing Guidelines in this
context would conflict with guidance issued by the Consumer Financial Protection Bureau (“CFPB”), one of the agencie s

9 When Fannie Mae and Freddie Mac were in desperate

financial distress in 2008, “ Congress created [an agency called the Federal Housing Finance Agency] to act as

conse rvator for Fannie and Freddie.” Delaware Cty

. , 747 F.3d

at 219 (internal quotation marks and citation omitted). “ A

conserv atorship is like a receivership, except that a conservator, like a trustee in a reorganization under Chapter 11 of the Bankruptcy Code, tries to return the bankrupt party
to solven cy, rather than liquidating it.” Id. (internal quotation marks and citation omitted).24 authorized to enforce the Protection Act

. A CFPB Compliance Bulletin provides as follows:

Ma ny mortgage loans are owned by
Government

- Sponsored Enterprises, or GSEs,
such as Fannie Mae or Freddie Mac. These and
other loan investors often creat e their own internal [mortgage insurance] cancellation guidelines that may include [mortgage insurance] c ancellation provisions beyond those
that the [ Protection Act ] provides.

The CFPB cautions servicers to implement investor guidelines in a way that does not lead
them to violate consumer financial law. Both
the [ Protection Act ] and some investor requiremen ts contain similar [loan

- to

- value]
thresholds for [mortgage insurance] cancellation and termination, and use similar measures of the property’s value. Servicers should nonetheless remember that investor guidelines cannot
restrict the [mortgage insurance] c ancellation and termination rights that the [ Protection Act ] provides to borrowers.

CFPB Bulletin 2015

- 03, Compliance Bulletin: Private Mortgage Insuran ce Cancellation and Termination, at 5

, ht tp://files.consumerfinance.gov/ f/201508_cfpb_compliance

bullet in

- private

- mortgage

- insurance

- cancellation

- and

termination.pdf (Aug. 4, 2015 ) (emphasis in original). Chase
relied on the Servicing Guidelines to ext end Fried ’s mortgage insurance obligation and thereby limited her termination rights, things ( as t he Bullet in advises ) they cannot do.25 Finally, as noted above, Fannie Mae and Freddie Mac own or guarantee nearly half the home mortgage loans in
America

. Mortgage insurance covers against loss to a loan’s
owner or guarantor from a borrower’s default, and Fannie
Ma e is the beneficiary of mortgage insurance

. See 12
U.S.C. § 1717(b)(2) (Fannie Mae charter provision requiring mortgage insurance when the outstanding principal balance of the mortgage at the time of purchase exceeds 80% of the value of the property securi ng the mortgage). Consequently,
when it sets mortgage

- insurance

- related guidelines, Fannie Mae is not acting as an administrative agency neutrally interpreting laws for the marketplace; it is a market participant interpreting laws for the benefit of its sh areholders
and is not entitled to deference.

For these reasons, the Fannie Mae Servicing Guidelines are not persuasive and do not alter our conclusion
that , taking the facts alleged in Fried ’ s c omplaint as true,
Chase violated the Protection Act

.

4. Pu rpose and Consequences

Hoping to avoid the result dictated by the Protection
Act ’s text, Chase contends that the statute’s purpose and the consequences of the District Court’s interpretation support reversal. We disagree.

Chase notes that the purpose of the Protection Act is to protect consumers from continuing to pay mortgage insurance premiums after they have accrued 20% equity in their homes, at which point mortgage insurance is no longer necessary. Our interpretatio n of the Protection Act is at odds w ith this

purpose, Chase contends , because Fried (whose home’s value dropped ) may stop paying mortgage insurance premiums
before she reaches 20% equity, while other consumers (whose26 home values have risen) may continue paying after obtaining 20% equity.

W h en Congress enacted the Protection Act

, however, it chose to prioritize predictability of consumers’ mortgage insurance obligations over economic precision

. T he Act sets a homeowner’s mortgage insurance termination date as the day her outstanding principal balance “is first scheduled to reach 78 percent of the original value of the property securing the
loan [

. ] ” 12 U.S.C. § 4901(18). Because housing values can
fluctuate with national economic trends (as Fried ’s example demonstrates), the Protection Act ’s ti meline does no more
than approximate the economic need for mortgage insurance in any particular case

. This sacrifice of precision for predictability allows t he Act to provide both consumers and lenders with certainty as to their respective mortgage insuran ce obligations from the moment the original value is
known and the amortization schedule is set

.

Chase contends that

, while Fried is harmed by the replacement of her home’s original value with an updated value, most consumers would benefit from such a sub stitution. Its rationale is that

, because most home values rise over time, we can safely assume that most borrowers seeking mortgage modifications will see the value of their
homes increase between purc hase and modification, and thus
substitution of new fo r old home values will lead to shorter mortgage insurance obligations for most borrowers.

Based on recent history, t he links in Chase’s logical
chain are weak. It is far from obvious that most homeowners seeking mortgage modifications would have seen thei r individual homes follow this upward trend. Indeed, if most homeowners receiving modifications bought during the recent housing bubble and modified after the burst, substitution of updated housing values for original values would27 substantially increase th e ir premium burden s if mortgage insurance termination dates change as Chase claims . It is exactly this narrative that Fried ’s case represents.

When it passed the Protection Act , Congress made a tradeo ff between precision and predictability that we are not
free to rebalance. Accordingly, we affirm the District Court’s holding that Fried has adequately stated a claim that Chase
violated the Act

.

B. Statute of Limitations

This case is before us because the District Court certified interlocutory review of th e controlling question of law discussed above. However, “once leave to appeal is granted the court of appeals is not restricted to a decision of the question of law which in the district judge’s view was controlling.” Katz , 496 F.2d a t 754. Thus our Court may consider the other ground for dismissal Chase asserted in the
District Court.

The Protection Act ’s statute of limitations provides that “[n]o action may be brought by a mortgagor .

. . later than 2 years after the date of the discovery of the violatio n that is the subject of the action.” 12 U.S.C. § 4907(b). Chase
contends that Fried discovered its alleged violation of the
Protection Act more than two years before she filed her

c omplaint and that it therefore must be dismissed.

“Technically, the Feder al Rules of Civil Procedure require a defendant to plead an affirmative defense, like a statute of limitations defense, in the answer, not in a motion to dismiss.” Schmidt v. Skolas , 770 F.3d 241, 249 (3d Cir. 2014) . “In this circuit, however, we permit a limitations defense to be raised by a motion under Rule 12(b)(6) only if the time alleged in the statement of a claim shows that the28 cause of action has not been brought within the statute of limitations.” Id. (internal quotation marks and citation
omitted ). “Since the applicability of the statute of limitations usually involves questions of fact for the jury,” Van Buskirk v. Carey Can. Mines, Ltd. , 7 60 F.2d 481, 498 (3d Cir. 1985)

, “if the bar is not apparent on the face of the complaint, then it
may not a fford the basis for a dismissal of the complaint
under Rul e 12(b)(6)[,] ” Schmidt , 770 F.3d at 249 (internal quotation marks , brackets, and citation omitted).

Chase argues that the statute of limitations began to run in August 2012 when Fried received its letter with the
2026 mortgage insurance termination date. But

, after receiving that letter, Fried wrote back to ask how Chase
arrived at the new date. It responded in October 2012 that “November 1, 202 6 . . . is the date when the loan will reach
78% based on the modified terms and conditions.” Compl. ¶
53. Even then

, the denominator of the fraction ( 78% of
what ? ) remained a mystery. It was only in October 2013, following additional inquiries , that Chase specified that it

us ed the BPO estimate of $420,000 o btained at the time of the mortgage modification to calculate Fried ’s termination date

. Fried filed her c omplaint less than two years later in April
2015.

Whether Fried knew or should have known of “the violation that is the subject of [her] action[,]” 12 U.S.C. § 4907(b), when she received notice of the new termination
date or notice of the basis of its calculation is a factual question. She asserts that she did not know, and could not have known, of the violation until she knew why Chase had
said that he r mortgage insurance obligation would automatically terminate in 2026

. Indeed, the argument continues, until she knew the basis of Chase’s move

- back of the mortgage insurance finish line , she could not have know n29 whether it was Chase ’s conduct (or some oth er entity ’s ) that may have violated the Act.

Moreover, when she received Chase’s letters, Fried had not yet suffered the sort of injury that ordinarily would put one on notice of a legal violation. Her initial mortgage insurance obligation ran through Mar ch 1, 2016 (and her correctly modified termination date would have fallen in July 2014) . Thus

, w hen Fried received Chase’s letters in 2012 and 2013, she was still paying mortgage insurance premiums as expected and had not yet been required to pay premiums she
did not owe.

Fried’s plausible contentions are enough to defeat Chase’s motion to d ismiss. Which of Chase’s letters would
h ave led Fried to discover her action is a factual question, and
the answer to it is not clear from the face of the c omplaint.
Se e Schmidt , 770 F.3d at 249. It is ripe for our remand.

* * * * *

The Protection Act sets the finish line ( i.e. , the termination date) for each homeowner’s mortgage insurance obligation on the basis of her home’s original value and measures her progress t oward it by looking to her outstanding principal balance. Fried’s mortgage modification decreased her principal balance, but her home’s original value under the
Act did not change. The modification thus moved her toward
the finish line per § 4 902 (d) of the Act

, but, although her home had dropped in value, it did not move the line itself. Fried’s termination date is the day her mortgage’s outstanding principal balance was scheduled to reach $431,597. If she was

current on her mortgage payments at that date, her mortgage insurance obligation ended then

.30 In this context , we affirm the District Court’ s determination declining to dismiss Fried ’s claim against
Chase and remand for further proceedings consistent with this opinion.