NOT RECOMMENDED FOR PUBLICATION

File Name: 15a0657n.06

No. 15-1241

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

RODERICK RAY; MATTIE RAY,

Plaintiffs-Appellants,

v.

U.S. BANK NATIONAL ASSOCIATION, 

Successor Trustee to Bank of America, Successor by 

Merger to LaSalle Bank, N.A., Trustee,

Defendant-Appellee.

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ON APPEAL FROM THE 

UNITED STATES DISTRICT 

COURT FOR THE EASTERN 

DISTRICT OF MICHIGAN

BEFORE: BATCHELDER, ROGERS, and COOK, Circuit Judges.

ROGERS, Circuit Judge. In this case arising out of the mortgage litigation in Michigan, 

Roderick and Mattie Ray seek to have the foreclosure of their home by US Bank set aside due to 

alleged violations of both Michigan and federal law relating to the foreclosure proceeding and 

the loan modification process. The Rays have not adequately alleged prejudice from the 

Michigan statutory violations, and cannot state a claim for failure of US Bank to comply with 

certain federal regulations that were not in force at the time of foreclosure. The Rays’ other 

claims also fail, and the district court therefore properly dismissed all of the Rays’ claims.

In 2006, the Rays obtained a $175,000 loan from First Franklin, a division of National 

City Bank, and granted Mortgage Electronic Registration Systems, Inc. (“MERS”) a mortgage 

against their home as security for the loan. MERS assigned the mortgage to LaSalle Bank 
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National Association. In 2009, LaSalle foreclosed on the home; however, as a result of postforeclosure litigation, LaSalle set aside the 2009 foreclosure and revived the mortgage. 

In April 2012, the Rays submitted a loan modification application to Bank of America, 

the servicer of the loan. In December 2012, LaSalle assigned the mortgage to US Bank, the 

defendant-appellee in the present action. Bank of American never modified the Rays’ loan, and 

the Rays defaulted. US Bank then initiated foreclosure proceedings and purchased the Rays’ 

home at a sheriff’s sale on June 20, 2013. 

Under Michigan law, mortgagors may redeem the property during the six months

following a sheriff’s sale. Mich. Comp. Laws § 600.3240. After the redemption period expired 

on December 20, 2013, US Bank filed a summary proceeding in Michigan’s 36th District Court 

to evict the Rays. On February 28, 2014, the Rays filed six counterclaims against US Bank, 

seeking to have the foreclosure sale set aside: (I) violation of Mich. Comp. Laws § 600.3205, 

et seq., now repealed, but which at the time governed the loan modification process; 

(II) violation of the Real Estate Settlement Procedures Act (“RESPA”) regulation 12 C.F.R. 

§ 1024.41, which prohibits a loan servicer from foreclosing on a property after a borrower 

submits a loan modification application unless certain conditions are met, and RESPA provision

12 U.S.C. § 2605(k)(1)(E), which prohibits mortgage servicers from failing to comply with 

regulations implementing RESPA; (III) common-law negligence based on US Bank’s alleged 

failure to comply with guidelines established by the federal Home Affordable Mortgage Program 

(“HAMP”); (IV) illegal foreclosure in violation of Mich. Comp. Laws § 600.3204, et seq., for 

failure to give proper notice of the foreclosure; (V) racial discrimination in violation of the Fair 

Housing Act, 42 U.S.C. § 3605; and (VI) exemplary damages. 
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The 36th District Court severed the Rays’ counterclaims and transferred them to the 

Wayne County Circuit Court as a separate action. US Bank removed the action to the Eastern 

District of Michigan under diversity jurisdiction and then moved to dismiss the Rays’ six claims 

under Federal Rule of Civil Procedure 12(b)(6). The district court granted US Bank’s motion, 

and the Rays now appeal the dismissal of five of the six of their claims.1 

The district court reasoned that Counts I and IV should be dismissed because the Rays’

claims came after the expiration of the statutory redemption period and because the Rays did not 

sufficiently allege that they were prejudiced by a fraud or irregularity in the foreclosure 

procedure. Next, the district court ruled that Count II should be dismissed because the RESPA 

regulation did not become effective until after the Rays’ foreclosure sale and does not apply 

retroactively. The district court then dismissed Count III because courts have overwhelmingly 

held that HAMP does not impose a duty of care on a mortgage lender or servicer. The district 

court also dismissed Count V because the Rays failed to allege both that they met all relevant 

qualifications for a loan modification under HAMP and that US Bank continued to engage in 

HAMP loan modifications with individuals outside of the Rays’ protected class while continuing 

to deny the Rays a modification. Finally, the district court dismissed Count VI because 

exemplary damages are a form of compensation and do not constitute a cause of action. 

The Rays challenge the district court’s rulings on appeal, but their arguments lack merit.

First, the Rays have failed to state a claim upon which relief can be granted for either of 

the alleged violations of Michigan foreclosure laws (Counts I and IV) because their claims come

after the expiration of the statutory redemption period and because the Rays’ complaint does not 

sufficiently allege prejudice caused by fraud or irregularity in the foreclosure procedure. The 

 

1 The Rays did not list as an issue presented in their brief, nor discuss in the brief’s argument section, the district 

court’s dismissal of Count VI of their complaint, which contained a claim for exemplary damages. Thus, the Rays 

have waived this argument. See, e.g., Ahlers v. Schebil, 188 F.3d 365, 374 (6th Cir. 1999).
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Rays allege that US Bank violated Mich. Comp. Laws § 600.3205, et seq., and Mich. Comp. 

Laws § 600.3204, et seq., by failing to provide proper notice of the foreclosure, foreclosing on 

their property while they were under review for a loan modification, not complying with loan 

modification guidelines, not working with the Rays to determine if they qualified for a loan 

modification, and foreclosing via advertisement rather than by judicial sale. 

However, under Michigan law, all of the mortgagor’s “right, title, and interest in and to 

the property” are extinguished at the end of the six-month statutory redemption period. Conlin v. 

Mortg. Elec. Registration Sys., Inc., 714 F.3d 355, 359 (6th Cir. 2013) (quoting Piotrowski v. 

State Land Office Bd., 4 N.W.2d 514, 517 (Mich. 1942)); see Bryan v. JPMorgan Chase Bank, 

848 N.W.2d 482, 485 (Mich. Ct. App. 2014). Michigan law does provide an exception to this 

rule: a mortgagor may seek to set aside a foreclosure sale after the expiration of the redemption 

period if the mortgagor can make a “clear showing of fraud[] or irregularity” in the foreclosure 

procedure that “prejudiced” the mortgagor. Conlin, 714 F.3d at 359-61 (quoting Schulthies v. 

Barron, 167 N.W.2d 784, 785 (Mich. Ct. App. 1969) and Kim v. JPMorgan Chase Bank, N.A., 

825 N.W.2d 329, 337 (Mich. 2012)); see also Diem v. Sallie Mae Home Loans, Inc., 859 N.W.2d 

238, 242 (Mich. Ct. App. 2014).

Regardless of whether the Rays have adequately shown fraud or irregularity in the 

foreclosure procedure (which US Bank maintains that they have not), the Rays’ claims fail 

because their complaint does not sufficiently allege that they were prejudiced by US Bank’s 

purported violations. The Michigan Supreme Court has explained that in order to demonstrate

prejudice, mortgagors “must show that they would have been in a better position to preserve their 

interest in the property absent defendant's noncompliance with the statute.” Kim, 825 N.W.2d at 

337. Here, the Rays’ complaint merely alleges that they were “severely prejudiced by the 
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misconduct” of US Bank, that they “have suffered prejudice and damages including the 

foreclosure of their home,” that they experienced “pain and suffering,” and that the allegedly 

illegal foreclosure caused “harm and prejudice.” 

The Rays’ claims of prejudice fail because they are too general and vague; for example, 

the Rays did not allege that they were able to or intended to redeem the property or pay off the 

debt, that they were exposed to double liability, or that they were misled about the occurrence of 

the foreclosure sale. Holliday v. Wells Fargo Bank, N.A., 569 F. App’x 366, 372 (6th Cir. 2014); 

Derbabian v. Bank of Am., N.A., 587 F. App’x 949, 957 (6th Cir. 2014); Conlin, 714 F.3d at 362; 

Diem, 859 N.W.2d at 242-43. Thus, the district court correctly dismissed Counts I and IV 

because the Rays did not allege any facts that show that they would have been in a better position 

to protect their interest in their home but for US Bank’s purported violations of the foreclosure 

statutes.

Additionally, regarding the alleged violations of Mich. Comp. Laws § 600.3205, et seq., 

the Rays argue that they were prejudiced because they were engaged in loss mitigation at the 

time of the foreclosure. Thus, the Rays’ argument appears to be that they were prejudiced 

because the modification that could have resulted from the loss-mitigation process might have 

allowed them to become current on the loan. However, the only remedy Michigan law provided 

for violations of Mich. Comp. Laws § 600.3205, et seq., was to permit mortgagors to convert a

foreclosure by advertisement into a judicial foreclosure; the statute did not permit a court to 

invalidate a completed foreclosure. Mich. Comp. Laws § 600.3205c(6) (repealed); Elsheick v. 

Select Portfolio Servicing, Inc., 566 F. App’x. 492, 499 (6th Cir. 2014). Accordingly, the

statutory remedy to convert the foreclosure by advertisement into a judicial sale was necessarily 

only available when the foreclosure process itself was still pending and is inapplicable to a case, 
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such as this one, where the foreclosure sale has been completed. Holliday, 569 F. App’x at 370 

(citing Smith v. Bank of Am. Corp., 485 F. App’x 749, 756 (6th Cir. 2012)). Therefore, the Rays’ 

argument that the foreclosure sale should be set aside because US Bank foreclosed on their home

while they were still engaged in loss mitigation is unavailing. Terry v. Fed. Nat’l Mortg. Ass’n, 

No. 321141, 2015 WL 4546570, *2 (Mich. Ct. App. July 28, 2015). 

Second, the district court also properly dismissed Count II, which alleges violations of 

12 C.F.R. § 1024.41 and 12 U.S.C. § 2605(k)(1)(E), because § 1024.41 did not become effective 

until after the foreclosure of the Rays’ home and because the regulation does not apply 

retroactively. Section 1024.41, which prohibits a loan servicer from initiating foreclosure if a 

mortgagor has submitted a loan-modification application unless certain conditions are met, 

became effective on January 10, 2014—more than six months after the foreclosure sale of the 

Rays’ home on June 20, 2013. Recently, in a case brought by the Rays’ counsel on behalf of 

other clients in which counsel submitted a nearly identical brief, this court held that § 1024.41

does not apply retroactively. Campbell v. Nationstar Mortg., No. 14-1751, 2015 WL 2084023, 

at *6-8 (6th Cir. May 6, 2015).

We explained in Campbell that § 1024.41 does not apply retroactively under the two-part 

test enunciated by the Supreme Court in Fernandez-Vargas v. Gonzales, 548 U.S. 30, 37-38 

(2006), because the regulation specifically includes an effective date of January 10, 2014, and 

because retroactive application would impermissibly impose new substantive duties on already 

completed foreclosures. Id. at *7-8. We reasoned that the first inquiry of the Fernandez-Vargas 

test—“whether Congress has expressly prescribed the statute’s proper reach”—indicates that the 

Consumer Financial Protection Bureau (“CFPB”) did not intend the regulation to apply 

retroactively because it carefully chose the effective date of January 10, 2014, in order to give
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regulated entities sufficient time to implement the new requirements and in order to make 

§ 1024.41 consistent with the effective dates of other regulations issued pursuant to the DoddFrank Act. Id. at *7 (quoting Fernandez-Vargas, 548 U.S. at 37). Additionally, we reasoned 

that the second prong of the Fernandez-Vargas test—whether applying the statute retroactively 

would affect “substantive rights, liabilities, or duties [on the basis of] conduct arising before [its] 

enactment”—also weighed against applying the regulation retroactively because retroactive 

application would impose on the defendant the duty not to foreclose on the property if the 

mortgagor had submitted a loan modification application when no such duty existed under the 

law at the time of the foreclosure sale. Id. at *7-8 (quoting Fernandez-Vargas, 548 U.S. at 37).

Our reasoning in Campbell was sound. Accordingly, the district court correctly 

dismissed Count II because § 1024.41 was not in effect at the time of foreclosure sale of the 

Rays’ home and does not apply retroactively.

Third, the Rays’ common-law negligence claim (Count III) based on violations of the 

HAMP regulations fails to state a claim upon which relief can be granted because the 

HAMP regulations do not impose a duty of care on servicers to borrowers. The Rays allege that 

US Bank failed to comply with regulations under HAMP, which is a federal program established 

by the Emergency Stabilization Act, 12 U.S.C. § 5201, et seq., that is designed to help 

homeowners avoid foreclosure by modifying their loans. Relying on Mik v. Federal Home Loan 

Mortgage Corp., 743 F.3d 149 (6th Cir. 2014), the Rays argue that violations of a federal statute, 

such as the HAMP regulations, can be used “offensively” to establish a common-law negligence 

claim. 

However, this court recently ruled in Campbell as well as in Rush v. Freddie Mac, 

792 F.3d 600 (6th Cir. 2015)—both cases again involving substantially similar briefs submitted 
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by the Rays’ counsel on behalf of other clients—that the HAMP regulations do not impose a 

duty of care, an essential element of any negligence claim, on servicers to borrowers under 

Michigan law. Rush, 792 F.3d at 605-06; Campbell, 2015 WL 2084023, at *9. In Rush

(in which we explicitly relied on Campbell), we explained that Michigan courts have not 

recognized that servicers owe a duty to borrowers based on the HAMP regulations because under 

Michigan law “the duties established by the mortgage contract govern the relationship between 

the parties” and because a Michigan homeowner “who has defaulted may not simply waive the 

contract and sue in negligence.” Rush, 792 F.3d at 605 (citing Campbell, 2015 WL 2084023, at 

*9). 

Our published opinion in Rush is binding. Because any duty US Bank owed to the Rays 

arose out of the mortgage contract, the district court correctly ruled that the HAMP regulations 

do not impose a duty of care on US Bank under Michigan tort law and consequently that the 

Rays may not base a common-law negligence claim on violations of the HAMP regulations.

Finally, the Rays fail to state a claim upon which relief can be granted under the Fair 

Housing Act (Count V) because their complaint omitted one of the essential elements of a prima 

facie case of racial discrimination under 42 U.S.C. § 3605. The Rays, who are AfricanAmerican, allege that US Bank refused to review their loan for a modification under HAMP 

because of their race. The Rays acknowledge that they do not have direct evidence of US Bank’s 

alleged discrimination; accordingly, to state a claim under § 3605, they must plead that: 

(1) they were a member of a protected class; (2) they attempted to 

engage in a “real estate-related transaction” with [the defendant], 

and met all relevant qualifications for doing so; (3) [the defendant] 

refused to transact business with the plaintiffs despite their 

qualifications; and (4) the defendant[] continued to engage in that 

type of transaction with other parties with similar qualifications.
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Mich. Prot. & Advocacy Serv., Inc. v. Babin, 18 F.3d 337, 346 (6th Cir. 1994) (citing Sec’y, 

United States Dept. of Hous. & Urban Dev. ex rel. Herron v. Blackwell, 908 F.2d 864, 870 

(11th Cir. 1990)).

Here, even assuming that the Rays’ conclusory statement that they qualified for a loan 

modification is sufficient to show that they “met all relevant qualifications” without any further

facts in the complaint actually demonstrating their qualifications, the Rays’ claim fails because 

their complaint makes no allegation that US Bank continued to engage in loan-modification 

reviews with other similarly qualified individuals outside of their race. Accordingly, because the 

Rays did not plead one of the essential elements of a discrimination claim under § 3605 of the 

Fair Housing Act, the district court correctly dismissed Count V of their complaint.

For the foregoing reasons, the judgment of the district court dismissing the Rays’ claims

is affirmed.