Source: https://casetext.com/case/in-re-moffitt-11
Timestamp: 2020-07-09 01:39:18
Document Index: 380576698

Matched Legal Cases: ['§ 105', '§ 2605', '§ 3500', '§ 1692', '§ 2605', '§ 2605', '§ 362', '§ 2605']

In re Moffitt, 3:04-bk-22708 E, 3:07-ap-01054 | Casetext Search + Citator
Full title:IN RE: DONALD EDWARD MOFFITT, and PHYLLIS JOY MOFFITT, CHAPTER 13, Debtors…
Court:United States Bankruptcy Court, E.D. Arkansas, Jonesboro Division
3:04-bk-22708 E, 3:07-ap-01054 (Bankr. E.D. Ark. Jun. 18, 2008)
United States Bankruptcy Court, E.D. Arkansas, Jonesboro Division
3:04-bk-22708 E, 3:07-ap-01054.
AUDREY EVANS, Chief Bankruptcy Judge
On February 28, 2007, Plaintiffs/Debtors (the " Moffitts") filed a complaint against Defendant, America's Servicing Company (" ASC") and Everhome Mortgage Company (" Everhome") for actual and punitive damages pursuant to §§ 105 and 362, 501, 502, 503, 506, 524, 1327 and 1328 of the Bankruptcy Code; Federal Rules of Bankruptcy Procedure 2016, 3001 and 3007; the Court's holding in In re Edith Smith, 290 B.R. 102 (Bankr. E.D. Ark. 2004); the Real Estate Settlement and Procedures Act (" RESPA"), §§ 2605(e)(1)(B)(2), 2605(e)(2)(C)(1), and 2605(f) of Title 12 of the United States Code; and § 3500.21(e)(3) of Regulation X. By Agreed Order entered December 14, 2007, separate defendant Everhome was dismissed with prejudice. The Moffitts amended their complaint on January 29, 2008, to add claims under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. and Arkansas state law.
On December 21, 2007, the Moffitts filed a Motion for Temporary Injunction and Restraining Order (the " TRO Motion") along with a Certificate of Service certifying that notice of this motion was provided to all interested parties, including ASC. In response to the Moffitts' TRO Motion, the Court entered a Temporary Restraining Order and Order Setting Date for Hearing on Temporary Injunction on December 26, 2007. The Court heard the Moffitts' TRO Motion on January 14, 2008 (the " Injunction Hearing"). Debra J. Reece and Joel G. Hargis appeared on behalf of the Moffitts, who were also present. Kimberly D. Burnette appeared on behalf of ASC. Amy Viers appeared as a representative of ASC. Following the presentation of evidence and testimony of witnesses, the Court granted a temporary injunction against ASC, and subsequently entered its Order Granting Preliminary Injunction on January 23, 2008, enjoining ASC from: (1) contacting the Moffitts except by regular monthly mortgage statements showing only true and accurate information as to what is owed by the Moffitts on their mortgage; and (2) attempting to collect any arrearages, late fees, or any other amounts exceeding the Moffitts' monthly mortgage payments so long as the Moffitts continue to make timely mortgage payments. The injunction is to remain in effect until a trial on the merits of this adversary proceeding is concluded. The Moffitts were also awarded their attorneys' fees and costs, to be determined by a separate order.
This Memorandum Opinion serves to make findings of fact and conclusions of law based on the evidence taken at the Injunction Hearing. Pursuant to Federal Rule of Civil Procedure 65(a)(2) (made applicable to bankruptcy proceedings by Federal Rule of Bankruptcy Procedure 7065), ". . ., evidence that is received on the motion and that would be admissible at trial becomes part of the trial record and need not be repeated at trial." The Court enters this Memorandum Opinion to document the evidence introduced at the Injunction Hearing, which need not be repeated at trial, and to make findings of fact. The Court is not entering a judgment on the merits of the Plaintiffs' Complaint. The Court recognizes that additional evidence may be put on by the parties at the trial on the merits to rebut these findings. See University of Texas v. Camenisch, 451 U.S. 390, 395, 101 S.Ct. 1830, 1834, 68 L.Ed.2d 175 (1981) (holding that the findings of fact and conclusions of law made by a court granting a preliminary injunction are not generally binding at trial on the merits).
The Moffitts received a chapter 13 discharge on April 6, 2006. Prior to the discharge being entered, the Court entered an Order dated March 27, 2006, stating that ASC's claim had been paid in full, and the Moffitts were to begin making their monthly mortgage payments directly to ASC. The same day, the Moffitts paid their mortgage creditor, ASC, an additional $10,000 with written directions that it be applied to principal. Around the same time, the chapter 13 Trustee (the " Trustee") made final disbursements to ASC totaling $9,581.57. Without communicating with the Moffitts, ASC recorded the $10,000 payment first, and rather than applying it to the Moffitts' mortgage principal, used it to catch up the Moffitts' arrearage, pay fees, and pay the Moffitts' mortgage ahead a few months. ASC recorded the Trustee payments later that month, using part of it to pay the mortgage ahead a few more months, and put the rest into something called "Trustee Suspense." Mrs. Moffitt wrote ASC on April 20, 2006, and again on July 13, 2006, to correct the application of the $10,000, and then called ASC constantly in an effort to sort out the discrepancies and to determine what had happened to the $10,000 principal payment.
The Moffitts had previously filed a chapter 13 bankruptcy on June 27, 2000, which was later converted to a chapter 7 in June 2004; they received a chapter 7 discharge on August 26, 2004.
Everhome was the mortgage servicer when the Moffitts filed bankruptcy; the loan was later transferred to ASC. Additionally, according to ASC's representative appearing at the TRO hearing, ASC is a fictitious name for Wells Fargo Bank and not a separate legal entity. ASC's representative testified that ASC was created to distinguish between the loans that Wells Fargo services for clients and those that it services on its own behalf.
Because the Moffitts' many attempts to resolve their mortgage issues with ASC (including writing three letters and repeatedly calling ASC) were unsuccessful, the Moffitts reopened their bankruptcy case on July 31, 2006. The Moffitts subsequently made a Qualified Written Request upon ASC, and ASC responded in December 2006 by providing the Moffitts with a payment transaction history on the Moffitts' mortgage (the " Initial Payment History") and a loan pay-off letter. The Moffitts filed their complaint against ASC on February 28, 2007. The complaint alleged that ASC's predecessor, Everhome, had charged unlawful fees and costs to the Moffitts' mortgage. The complaint also alleged that ASC had misapplied the Trustee payments, the Moffitts' $10,000 payment, and the Moffitts' pre- and post-petition payments. The Moffitts also alleged in their complaint that they began receiving two mortgage statements per month in August 2006 with varying principal balances.
A "qualified written request" under the Real Estate Settlement Procedures Act is defined in 12 U.S.C. § 2605(e)(1)(B) as:
. . . a written correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer, that —
Your Honor, the company can agree to that. The problem is, you know, I have discussed that with my witness, you can never guarantee anything a hundred percent. And I just — we talked about different ways to do it, but the — you know, the evidence, you know, will show there actually was a stop calls put on this loan. The plaintiffs have that information. I've given it to them. They're aware of that.
ASC also acknowledged at the Injunction hearing that the transaction history it provided the Moffitts in December 2006 as a response to the Qualified Written Request was inaccurate in some respects. The Friday before the Injunction Hearing, ASC provided the Moffitts with a new payment history that corrected certain transactions (although it is not clear whether ASC pointed these corrections out to the Moffitts or not). The Court refers to this history as the " Revised Payment History." The allocations or transactions made by ASC and described in this Opinion are taken from the payment histories provided by ASC. Unless otherwise noted, both the Initial Payment History and Revised Payment History show the same transactions through December 2006 (only the Revised Payment History records transactions beyond December 2006).
A Qualified Written Request places an obligation on the servicer to review their records and provide an accurate transaction history. See 12 U.S.C. § 2605(e)(2) (requiring a mortgage servicer upon receipt of a Qualified Written Request to conduct an investigation with respect to the borrower's account, make corrections if necessary, and provide the borrower with a written explanation or clarification as to why the servicer believes the account information is correct). See also In re Payne, ___ B.R. ___, 2008 WL 1961489 (Bankr. D. Kan. 2008).
The Moffitts received 38 mortgage statements between April 2006 and December 2007 (a 21 month time period), and those statements were introduced as Plaintiffs' Exhibit 5. The Court finds that the statements presented incomplete, inaccurate, and incomprehensible information; some are described in detail in this Opinion to document the information that the Moffitts had been receiving about their mortgage. Copies of the first statement and last statement are attached to this Opinion as Appendix B. Further, tables reflecting the information on all 38 statements are attached to this Opinion as Appendix C. The Court prepared the tables' form for the purpose of reader convenience. Because each table contains the exact information provided in the ASC statements, they are at times confusing and difficult to follow. The statements are numbered for reference in chronological order according to the "principal balance as of" date, which is probably the date the statement was generated, according to ASC's representative, Amy Viers. (There was no evidence as to when the statements were actually received, and Ms. Viers could not say for sure when the statements were generated, but believed the "principal balance as of date" was probably when they were generated.) Ms. Viers testified that a statement is generated whenever a payment is received or late charges assessed.
The Court takes judicial notice of the case docket and all documents filed in a bankruptcy case. See Fed.R.Evid. 201; In re Henderson, 197 B.R. 147, 156 (Bankr. N.D. Ala. 1996) ("The court may take judicial notice of its own orders and of records in a case before the court, and of documents filed in another court.") (citations omitted); see also In re Penny, 243 B.R. 720, 723 n. 2 (Bankr. W.D. Ark. 2000).
Per our phone conversation yesterday, I am sending you a copy of the Order issued by Judge Audrey Evans of the United [sic] Bankruptcy Court Eastern Western District of Arkansas, showing that our arrearage has now been paid in full.
From what I read, I assume that we will be sent a statement for the April payment that is due on our home sometime this month, I understand that it is due on the 1st, but we did not receive the order until yesterday. I will be sending a payment today for the April statement and will simply put our loan # on the check and indicate that it is for the April payment. I also sent out a check yesterday for $10,000.00 to be paid directly to the principal and expect to be sending another check within 2 months to pay our balance in full.
Mrs. Moffitt testified that she made this $10,000 payment on principal in an effort to pay her home mortgage down as quickly as possible since she had become disabled as a result of the accident. She also noted on the check memo line "to be pd to principal." The check Mrs. Moffitt sent for her April payment also noted on the memo line that it was for that month's payment, as did all checks that Mrs. Moffitt sent to ASC.
The Trustee filed a Certification of Final Payment and Application for Issuance of Order of Discharge (" Certification of Final Payment") on April 5, 2006, and the Moffitts received a Chapter 13 discharge on April 6, 2006. The Bankruptcy Noticing Center sent ASC a copy of the discharge order on April 8, 2006. The Moffitts also faxed ASC a copy of their discharge order on April 20, 2006, with a letter that once again noted their arrearage had been paid in full, that their April payment had been made and cleared their bank, and that they had made a $10,000 principal payment that had also cleared their bank. Mrs. Moffitt inquired again about their escrow overage. A copy of Mrs. Moffitt's fax and confirmation of receipt was admitted as Plaintiffs' Exhibit 3, and her faxed letter reads as follows:
The case was closed on June 7, 2006.
I am sending you a copy of our discharge from Chapter 13 bankruptcy. Our arrearage has been paid and our mortgage is now current. I also sent a check #2606 for our April payment and a check #2604 for $10,000.00 to be paid on the principal. Both of these checks have already been paid according to our bank.
Ms. Viers testified that the $10,000 payment was not initially applied to the Moffitts' principal balance because the loan was delinquent at the time, and the mortgage dictated that payments first be applied to escrow, then interest, then amortized principal and interest. Although the March 27, 2006 Order stated that ASC had been paid in full (and therefore, the Moffitts' mortgage should not have been delinquent), and although the Trustee had already filed a Certification of Final Payment on April 5, 2006, ASC did not record the final trustee payments of $1,045.78 and $8,535.79 until April 26, 2006, according to its payment histories. No evidence was submitted to explain why there would be a delay between the Trustee's Certification of Final Payment, and ASC's recording the payments as received.
Although ASC had received the Moffitts' $10,000 principal payment, $9,581.57 in Trustee payments, and three regular mortgage payments of $332.46 each between March 27, 2006, and May 31, 2006 (a total of $20,578.95), the first five statements the Moffitts received (dated between April 3, 2006, and May 31, 2006) show a total reduction in principal of only $863.58. Statement 1, generated on April 3, 2006, showed a principal reduction of $418.43, a payment of $782.28 with no explanation as to how it was applied, and two regular mortgage payments received on April 3, 2006. Statement 2, generated on April 26, 2006, showed ASC's receipt of the Trustee payments of $8,535.79 and $1,045.78, with three regular mortgage payments applied. Statement 3, generated on May 3, 2006, showed one application of a regular mortgage payment on May 3, 2006. Statement 4, generated on May 16, 2006, showed that two regular mortgage payments were applied on May 16, 2006. Statement 5, generated on May 31, 2006, showed the application of four regular mortgage payments. The "next payment" indicated on each of these statements ranges from the May 1, 2006, to September 1, 2007. None of these statements reflect that ASC received or applied the Moffitts' $10,000 payment. (See tables representing statements in Appendix C.)
I am writing this letter per a request I received today asking me to state in letter form that the check #2604, written on March 27, 2006, for $10,000.00 on my personal account, to Americas Servicing Company, for account #1172006772, was to be paid to principal only as I indicated on the check.
This request is one of the most ludicrous things that I have been asked to do in a very long time. Not only did I indicate on the check that this was to be paid to principal only, indicated on the payment coupon that this was to be paid to principal only, I have called Americas Servicing Company about this matter once a week every week since this check was written. Americas Servicing Company as far back as April had informed me that my personal check had been used to pay off my arrearage and paid me ahead several months in payments. This mortgage company informed me in April that they had taken the check that the Bankruptcy Court sent them for $8584.19, along with all the house payments that I have made every month and put them into suspense. They have also repeatedly assured me that they would take the check sent by the Bankruptcy Court along with the payments that they had put me ahead and pay the $10,000.00 to my principal as they should have done in the first place.
I have also been repeatedly reassured that my loan was now out of bankruptcy until two weeks ago when I asked why we had not received the check for $2747.28 in surplus escrow, that we had requested be sent to us. I was told then that the bankruptcy department would not release it because there was something still in dispute. Although I have spoken to someone at Americas Servicing Company every week since March, this was the first time that I had heard anything about a dispute, and quite oddly no one could or would tell me what the dispute was about.
August 1, 2006 through February 28, 2007 : The Next Seven Months
During the Fall of 2006, the Moffitts sent ASC a Qualified Written Request. ASC replied by a letter dated December 12, 2006 (Plaintiffs Exhibit 11), in which ASC informed the Moffitts' counsel that it was enclosing a Customer Account Activity Statement outlining the transaction history on their loan from May 1, 1999, to the present date, enclosing a copy of the Moffitts' mortgage document allowing for the charging of fees to the loan, and enclosing a payoff statement for the loan. The letter also states that any other information requested and not provided is privileged information that cannot be released. The Customer Account Activity Statement is actually a replica of a payment transaction history on the Moffitts' mortgage that covered transactions from October 2004 (not May 1, 1999) through December 2006 (the " Initial Payment History"). This history was admitted into evidence as Plaintiffs' Exhibit 9. Ms. Viers testified that she did not personally prepare the Initial Payment History, but that it was manually prepared based on the information in ASC's automated computer system to put the information into a more user friendly format. Ms. Viers stated that a line item entry is made on the history whenever any payment on the mortgage comes in, or anything is assessed against the mortgage or removed from it for any reason.
Ms. Viers testified that these fees represented foreclosure related fees that were assessed while Everhome serviced the mortgage.
On June 26, 2006, ASC reversed every payment applied since April 3, 2006. ASC reversed a total of 32 mortgage payments (a total of $10,616.12 consisting of 16 payments at $332.46; 14 payments at $325.88; one payment of $389.34; and one payment of $345.10), and the principal payment of $418.43 (out of Debtor Suspense). ASC placed all of these monies in Debtor Suspense.
Despite the Moffitts making a Qualified Written Request, filing a lawsuit, and a motion for a TRO, ASC did not find its error. ASC's application of 14 payments at $332.46 instead of $325.88 was not mentioned during the Injunction Hearing. The Court found this error by examining the payment histories.
Ms. Viers testified that ASC periodically reversed late fees to give the Moffitts the benefit of the doubt because they were in an adversarial relationship with ASC. Until the Injunction Hearing, ASC did not acknowledge that the fees were charged in error because the Moffitts were not in fact late in making payments.
According to Ms. Viers, the recording fee is for releasing the lien in the event the loan was paid off. Ms. Viers was not sure what the attorney fees charge was for, because she did not believe ASC charged attorney fees when a person paid off their loan. Ms. Viers did not think any fees were due and owing at that time, so that the attorney fees charge would not be legitimate.
The Revised Payment History (which was not provided to the Moffitts until the Friday before the Injunction Hearing) shows that this amount was computed by adding together $133 in Debtor Suspense and $100.16 in Trustee Suspense. These amounts would be what was left over from the unapplied July 2006 payment after ASC incorrectly reapplied 18 mortgage payments at $332.46 each, instead of 14 payments of $325.88 and four payments of $332.46.
In the meantime, the Moffitts received eight mortgage statements generated between August 2007 and December 2007. After sending the Moffitts 31 statements showing them to be in bankruptcy when they were not, the format of ASC's statements finally changed with statement number 32 generated on August 31, 2007. The "Important Message" regarding their loan being protected by a bankruptcy plan is removed, and instead of "Next Payment" followed by a date, the statements clearly state when the next payment is due and identifies "overdue payment(s)" and "unpaid late charge(s)."
It took ASC over 17 months to change the Moffitts' loan from one in bankruptcy to one out of bankruptcy despite receipt of the Court's order directing the Moffitts to pay ASC directly, notice of the Moffitts' Discharge (sent by both the Court and the Moffitts), and two faxed letters from Mrs. Moffitt informing ASC of their discharge.
With respect to the two payments due in December 2007 as reflected on statement 37, Ms. Viers testified that she had no explanation for why that statement showed an overdue payment due for December 2007 and a current payment due for December 2007.
December 2007: TRO Motion Filed ASC Discovers its Mistake
I have no record that we ever were shown a payment — this payment discrepancy, that it was ever put out in black and white really what was going on. And that — and we were never provided even proof of payments to show that all the payments were made in accordance with the order until today. The TRO, like I said, just brought to light that there was a payment discrepancy and made obvious that they felt that they should be current and not be charged the late fees.
After the Moffitts' counsel pointed out that ASC had already created the Initial Payment History (in December 2006) which showed the July 2006 payment going into suspense and not being applied as a regular mortgage payment, Ms. Viers stated, "[i]n looking at this, it's not clear the intentions of the payments and how the mortgagors intended for those to be applied." Ms. Viers was asked how this could be so when Mrs. Moffitt sent her payment in with a payment coupon and also noted on her check's memo line that the payment was for her "July payment." Ms. Viers said:
Actually that's — and I understand — and that's actually commonplace. A lot of times people will just send in their most recent coupon with their payment, and that's not necessarily where it's intended to be applied.
Ms. Reece asked Ms. Viers:
So ASC doesn't train their people to look on their memo section of the check and the payment coupon to see what date this is supposed to be applied?
Ms. Viers responded:
And those aren't always accurate. Those could be a misunderstanding, there could be a check that was never received. There are a lot of issues that could go into play.
A review of the Revised Payment History reflects that only $130.33 of the Moffitts' July 2006 mortgage payment ultimately remained in Debtor suspense while $110.16 remained in Trustee Suspense. The Initial Payment History showed $240.49 remaining in Debtor Suspense, and $0 in Trustee Suspense.
In addition to the Revised Payment History, ASC also provided the Moffitts' counsel with a communications record at some point prior to the Injunction Hearing. The communications record prepared by Ms. Viers is full of abbreviations and is unintelligible to a lay person not familiar with such records. Ms. Viers explained that a "D" indicates that an automated calling system called Davox initially makes the calls — that is, dials the mortgagor's phone number. If an answering machine or a person answers the telephone, the call is forwarded to an employee's phone line at ASC. Ms. Viers testified that there are always two transactions for every call — one for the automated dialer and one for the employee. If the line is dead once the representative gets it, it is assumed that the person answering the phone hung up, or that the connection was somehow lost. On the communications record at issue, there were several notations that the mortgagor had hung up, but Ms. Viers could not say for sure whether the mortgagor in fact hung up, or whether the connection was lost.
contact the mortgagor, basically what they consider a soft call, just to remind that we show that your account would be one payment past due. That would give the opportunity for any discrepancy to be amended at that time. That would also give to — late — if there was a need for a payment plan or a hardship that would need to be done, where that could be arranged at that phone call.
The communications record also indicates that a broker price opinion was ordered on August 22, 2007, and indicated a value of $31,500 for the Moffitts' home. Ms. Viers testified that $95.00 of the $243.16 sitting in suspense (and referenced in ASC's August 14, 2007 letter) was ultimately applied to a broker's price opinion charge, and the remainder was applied to principal. Ms. Viers testified that a broker price opinion is a drive-by inspection of the mortgaged property to make sure that someone is living there and to check the condition of the property and make sure there is no major damage to the home. Ms. Viers explained that these price opinions are done when an account is 30 days delinquent.
It is not clear how ASC intends to make up a full $319.25 payment, as Ms. Viers only listed $164.34 in other reversals and advancements.
It — these people took my money, did not apply it correctly. It was money from my settlement where I was hit. And they — they did not apply it correctly. They would not apply it correctly. They had the opportunity at anytime to take my home away from me, and that's all that went through my mind was I went through bankruptcy to hang onto this stupid house.
(4) whether the public interest will be served by issuing a preliminary injunction.
See United Indus. Corp. v. Clorox Co., 140 F.3d 1175, 1179 (8th Cir. 1998).
"Likelihood of success on the merits requires that the movant find support for its position in governing law." B D Land and Livestock Co. v. Conner, 534 F.Supp.2d 891, 906 (N.D. Iowa 2008). With respect to the requirement that the party seeking an injunction show that he or she is likely to succeed on the merits, the Eighth Circuit has stated:
"[A]t the early stage of a preliminary injunction motion, the speculative nature of this particular ['likelihood of success'] inquiry militates against any wooden or mathematical application of the test. Instead, a court should flexibly weigh the case's particular circumstances to determine whether the balance of equities so favors the movant that justice requires the court to intervene to preserve the status quo until the merits are determined." United Indus. Corp. v. Clorox Co., 140 F.3d 1175, 1179 (8th Cir. 1998) (internal citations and quotation marks omitted).
B D Land and Livestock Co., 534 F.Supp.2d at 906 (quoting United Indus. Corp. v. Clorox Co., 140 F.3d at 1179).
The Moffitts' Complaint also alleges that ASC violated the automatic stay under 11 U.S.C. § 362(a)(3) by misapplying funds paid to it by the Trustee pursuant to the Moffitts' confirmed plan, and by charging additional fees and late charges to be assessed on the Moffitts' account as a result of the misapplication of funds. Because the Moffitts have shown that RESPA was violated, it is unnecessary for the Court to address the Moffitts' likelihood of success on this cause of action.
In re Payne, ___ B.R. ___, 2008 WL 1961489, *10 (Bankr. D. Kan. 2008) (citing 12 U.S.C. § 2605(e)(2)(A), (B), and (C)). ASC responded to the Moffitts' Qualified Written Request in a timely manner, but its response was inadequate under RESPA. ASC assumed its records were accurate, apparently without conducting any investigation whatsoever (as evidenced by the fact that Ms. Viers, who was assigned to the loan, did not discover ASC's failure to apply the Moffitts' July 2006 payment until the Moffitts filed their TRO Motion in December 2007), and simply sent the Moffitts a transaction history, copy of the mortgage, and a payoff letter. Accordingly, ASC made no corrections to the Moffitts' account, and did not inform the Moffitts why it believed the account was correct.
Having exhausted every avenue to obtain information (including making calls, writing letters, making a Qualified Written Request, and filing a lawsuit), the Moffitts still had no way of ascertaining why ASC sent them 18 statements showing them as being one month behind, and despite the Moffitts' efforts, ASC made no attempt to determine what was wrong with the Moffitts' mortgage and why the Moffitts contended they were current while ASC showed them as behind. In fact, after the Moffitts' loan was assigned to Ms. Viers (just before the Moffitts sued ASC in February 2007), there was a six month delay before Ms. Viers began work on the file in August 2007, and it took another four months and the filing of the TRO Motion for Ms. Viers to recognize that the Moffitts were current on their mortgage payments and that ASC had made a mistake in not applying the Moffitts' July 2006 payment. Ms. Viers testified that the Moffitts should have provided ASC with proof of payment. Yet, the Moffitts had no way of knowing that ASC needed proof of payment — they had received statements showing their payments had been received, and in particular, statement 6 showing their July 2006 payment was received and applied. The Moffitts had no way of knowing, based on the statements they received, that the July 2006 mortgage payment had been reversed and placed in "suspense."
This is a long detailed opinion about what should have been a relatively simple prepayment on a mortgage. The Moffitts made an additional $10,000 payment to be applied to principal, and this one unusual transaction caused the Moffitts' mortgage to go into complete disarray. The Moffitts received their discharge and their bankruptcy case was closed. ASC provided the Trustee with a final payoff to bring the Moffitts current, and that payment was made. ASC, however, recorded the $10,000 payment first, misapplied it, and then while correcting the misapplication of the $10,000 principal payment and the Trustee's final payments, ASC incorrectly applied 14 mortgage payments. This misapplication of payments caused a portion of the Moffitts' July 2006 payment to be used for a shortage, leaving a balance that was insufficient to make a full payment for that month. ASC did not find this mistake and continued to show the Moffitts one month behind until the Injunction Hearing. ASC never questioned why it had extra money in a suspense account — ASC never attempted to understand what the problem was until the TRO Motion was filed. The Moffitts acted honorably in trying to secure their home — they made the extra $10,000 payment on principal and continued to make full and timely monthly mortgage payments despite ASC continually showing them one month behind, and despite the bi-monthly inaccurate, incomprehensible mortgage statements they received from ASC. Clearly, a preliminary injunction was necessary to prevent ASC from continuing its efforts to collect payments from the Moffitts which they did not owe. The Moffitts have shown all the factors necessary for the entry of a preliminary injunction. Trial in this matter will be set by subsequent notice.
Appendix A Moffitts' Payment History
Check No. Date Payment Cleared Month/Year Payment Due Amount
2604 April 5, 2006 Principal Payment Only $10,000 2606 April 5, 2006 April 2006 $332.46 2616 May 5, 2006 May 2006 $332.46 2502 June 2, 2006 June 2006 $332.46 2518 July 3, 2006 July 2006 $332.46 2525 August 2, 2006 August 2006 $332.46 2660 August 30, 2006 September 2006 $319.19 Online payment September 28, 2006 October 2006 $319.19 Online payment October 24, 2006 November 2006 $319.19 Online payment November 22, 2006 December 2006 $319.19 Online payment December 27, 2006 January 2007 $319.19 Online payment January 24, 2007 February 2007 $319.19 Online payment February 23, 2007 March 2007 $319.19 Online payment March 29, 2007 April 2007 $319.19 Online payment April 24, 2007 May 2007 $319.19 Online payment May 29, 2007 June 2007 $319.19 Online payment June 29, 2007 July 2007 $319.19 Online payment July 31, 2007 August 2007 $319.19 Online payment August 31, 2007 September 2007 $319.19 Online payment September 28, 2007 October 2007 $319.19 Online payment November 2, 2007 November 2007 $319.25 Online payment December 4, 2007 December 2007 $319.25 Online payment January 4, 2007 January 2008 $319.25
Appendix B Examples of Mortgage Statements
Appendix C Tables Representing Mortgage Statements
The statements also include an area showing "activity since your last statement" which is reflected on the bottom portion of each table. The information there is taken directly off the statements — if something seems to be missing such as a total under the column named "total," that is because it was blank on the statement. Also, the word "suspense" often appears in the late charge column but based on Ms. Viers' testimony, that probably refers to where a payment came from or went to. No. Principal Principal Balance Next Payment 05/01/06 Balance as of date 1 Activity Since Date Description Total Principal Interest Escrow Late Charge Misc. Last Statement No. Principal Principal Balance Next Payment 08/01/06 Balance as of date 2 Activity Since Date Description Total Principal Interest Escrow Late Charge Misc. Last Statement No. Principal Principal Balance Next Payment 09/01/06 Balance as of date 3 Activity Since Date Description Total Principal Interest Escrow Late Charge Misc. Last Statement No. Principal Principal Balance Next Payment 11/01/06 Balance as of date 4 Activity Since Date Description Total Principal Interest Escrow Late Charge Misc. Last Statement No. Principal Principal Balance Next Payment 09/01/07 Balance as of date 5 Activity Since Date Description Total Principal Interest Escrow Late Charge Misc. Last Statement No. Principal Principal Balance Next Payment 07/01/06 Balance as of date 6 Activity Since Date Description Total Principal Interest Escrow Late Charge Misc. Last Statement No. Principal Principal Balance Next Payment 08/01/06 Balance as of date 7 Total payment $664.92 Activity Since Date Description Total Principal Interest Escrow Late Charge Misc. Last Statement No. Principal Principal Balance Next Payment 08/01/06 Balance as of date 8 Activity Since Date Description Total Principal Interest Escrow Late Charge Misc. Last Statement No. Principal Principal Balance Next Payment 09/01/06 Balance as of date 9 Total payment $664.95 Activity Since Date Description Total Principal Interest Escrow Late Charge Misc. Last Statement No. Principal Principal Balance Next Payment 10/01/06 Balance as of date 10 Total payment $651.15 Activity Since Date Description Total Principal Interest Escrow Late Charge Misc. Last Statement No. Principal Principal Balance Next Payment 10/01/06 Balance as of date 11 Total payment $331.96 Activity Since Date Description Total Principal Interest Escrow Late Charge Misc. Last Statement No. Principal Principal Balance Next Payment 11/01/06 Balance as of date 12 Total payment $663.92 Activity Since Date Description Total Principal Interest Escrow Late Charge Misc. Last Statement No. Principal Principal Balance Next Payment 11/01/06 Balance as of date 13 Total payment $344.73 Activity Since Date Description Total Principal Interest Escrow Late Charge Misc. Last Statement No. Principal Principal Balance Next Payment 12/01/06 Balance as of date 14 Total payment $676.69 Activity Since Date Description Total Principal Interest Escrow Late Charge Misc. Last Statement No. Principal Principal Balance Next Payment 12/01/06 Balance as of date 15 Total payment $357.50 Activity Since Date Description Total Principal Interest Escrow Late Charge Misc. Last Statement No. Principal Principal Balance Next Payment 01/01/07 Balance as of date 16 Total payment $651.15 Activity Since Date Description Total Principal Interest Escrow Late Charge Misc. Last Statement No. Principal Principal Balance Next Payment 01/01/07 Balance as of date 17 Total payment $331.96 Activity Since Date Description Total Principal Interest Escrow Late Charge Misc. Last Statement No. Principal Principal Balance Next Payment 02/01/07 Balance as of date 18 Total payment $663.92 Activity Since Date Description Total Principal Interest Escrow Late Charge Misc. Last Statement No. Principal Principal Balance Next Payment 02/01/07 Balance as of date 19 Total payment $344.73 Activity Since Date Description Total Principal Interest Escrow Late Charge Misc. Last Statement No. Principal Principal Balance Next Payment 03/01/07 Balance as of date 20 Total payment $676.69 Activity Since Last Date Description Total Principal Interest Escrow Late Charge Misc. Statement No. Principal Principal Balance Next Payment 03/01/07 Balance as of date 21 Total payment $357.50 Activity Since Date Description Total Principal Interest Escrow Late Charge Misc. Last Statement No. Principal Principal Balance Next Payment 04/01/07 Balance as of date 22 Total payment $688.11 Activity Since Date Description Total Principal Interest Escrow Late Charge Misc. Last Statement No. Principal Principal Balance Next Payment 04/01/07 Balance as of date 23 Total payment $368.92 Activity Since Date Description Total Principal Interest Escrow Late Charge Misc. Last Statement No. Principal Principal Balance Next Payment 05/01/07 Balance as of date 24 Total payment $699.47 Activity Since Date Description Total Principal Interest Escrow Late Charge Misc. Last Statement No. Principal Principal Balance Next Payment 05/01/07 Balance as of date 25 Total payment $380.28 Activity Since Date Description Total Principal Interest Escrow Late Charge Misc. Last Statement No. Principal Principal Balance Next Payment 06/01/07 Balance as of date 26 Total payment $710.83 Activity Since Date Description Total Principal Interest Escrow Late Charge Misc. Last Statement No. Principal Principal Balance Next Payment 06/01/07 Balance as of date 27 Total payment $391.64 Activity Since Date Description Total Principal Interest Escrow Late Charge Misc. Last Statement No. Principal Principal Balance Next Payment 07/01/07 Balance as of date 28 Total payment $722.19 Activity Since Date Description Total Principal Interest Escrow Late Charge Misc. Last Statement No. Principal Principal Balance Next Payment 07/01/07 Balance as of date 29 Total payment $403.00 Activity Since Date Description Total Principal Interest Escrow Late Charge Misc. Last Statement No. Principal Principal Balance Next Payment 08/01/07 Balance as of date 30 Total payment $733.55 Activity Since Date Description Total Principal Interest Escrow Late Charge Misc. Last Statement No. Principal Principal Balance Next Payment 08/01/07 Balance as of date 31 Total payment $415.71 Activity Since Date Description Total Principal Interest Escrow Late Charge Misc. Last Statement No. Principal Principal Balance Current Monthly Payment $317.84 Balance (Principal and/or Interest, Escrow) as of date 32 Total Payment Due 09/01/07 $317.84 Activity Since Your Last Statement Date Description Total Principal Interest Escrow Late Charge Misc. No. Principal Principal Balance Current Monthly Payment 10/01/07 $319.25 Balance (Principal and/or Interest, Escrow) as of date 33 Total Payment Due 10/01/07 $649.80 Activity Since Your Last Statement Date Description Total Principal Interest Escrow Late Charge Misc. No. Principal Principal Balance Current Monthly Payment 10/01/07 $319.25 Balance (Principal and/or Interest, Escrow) as of date 34 Total Payment Due 10/01/07 $330.61 Activity Since Your Last Statement Date Description Total Principal Interest Escrow Late Charge Misc. No. Principal Principal Balance Current Monthly Payment 11/01/07 $319.25 Balance (Principal and/or Interest, Escrow) as of date 35 Total Payment Due 11/01/07 $651.27 Activity Since Your Last Statement Date Description Total Principal Interest Escrow Late Charge Misc. No. Principal Principal Balance Current Monthly Payment 12/01/07 $319.25 Balance (Principal and/or Interest, Escrow) as of date 36 Total Payment Due 12/01/07 $664.04 Activity Since Your Last Statement Date Description Total Principal Interest Escrow Late Charge Misc. No. Principal Principal Balance Current Monthly Payment 12/01/07 $319.25 Balance (Principal and/or Interest, Escrow) as of date 37 Total Payment Due 12/01/07 $638.50 Activity Since Your Last Statement Date Description Total Principal Interest Escrow Late Charge Misc. No. Principal Principal Balance Current Monthly Payment 01/01/08 $319.25 Balance (Principal and/or Interest, Escrow) as of date 38 Total Payment Due 01/01/08 $651.27 Activity Since Your Last Statement Date Description Total Principal Interest Escrow Late Charge Misc.
04/03/06 $28,795.67 Payment $332.46 04/03 PRINCIPAL $418.43 SUSPENSE $418.43- PMT 04/03 PAYMENT $332.46 $47.51 $219.46 $65.49 04/03 PAYMENT $332.46 $47.15 $219.82 $65.49 04/03 PAYMENT $782.28 04/26/06 $28,641.52 Payment $332.46 04/26 PAYMENT $8,535.79 SUSPENSE $8,535.79 04/26 PAYMENT $51.77 $215.20 $65.49 04/26 PAYMENT $51.38 $215.59 $65.49 04/26 PAYMENT $1,045.78 $51.00 $215.97 $64.59 SUSPENSE $48.40 05/03/06 $28,589.36 Payment $332.46 05/03 PAYMENT $332.46 $52.16 $214.81 $65.49 05/16/06 $28,483.87 Payment $332.46 05/16 PAYMENT $52.94 $214.03 $65.49 05/16 PAYMENT $52.55 $214.42 $78.13 SUSPENSE - 677.56 05/31/06 $27,932.09 Payment $332.46 05/31 PAYMENT $57.05 $209.92 $65.49 05/31 PAYMENT $56.63 $210.34 $65.49 05/31 PAYMENT $56.21 $210.76 $65.49 05/31 PAYMENT $55.79 $211.18 $65.49 06/30/06 $29,890.76 Payment $332.46 Other Payment(s) $5,651.82 Total Payment $5,984.28 06/30 PAYMENT $332.46 $42.47 $224.50 $65.49 PMT 06/26 REVERSAL $42.47- $224.50- $58.91- SUSPENSE $325.88 PMT 06/26 REVERSAL $42.79- $224.18- $58.91- SUSPENSE $325.88 PMT 06/26 REVERSAL $43.11- $223.86- $58.91- SUSPENSE $325.88 07/21/06 $17,678.44 Payment $332.46 Other Payment(s) $332.46 07/21 PAYMENT $133.38 $133.59 $65.49 07/21 PAYMENT $132.39 $134.58 $65.49 07/21 PAYMENT $131.40 $135.57 $65.49 07/21 PAYMENT $130.42 $136.55 $65.49 07/31/06 $17,544.06 Payment $332.46 07/31 PAYMENT $332.46 $134.38 $132.59 $65.49 07/25 LATE $13.04 CHARGE ADJ 07/24 ESCROW $3,011.87- $3,011.87- REFUND 07/24 PMT $13.04- $13.04 REVERSAL SUSPENSE 08/16/06 $17,544.06 Payment $319.19 Other Payment(s) $332.46 Late Charges $13.30 08/16 LATE FEE $13.30- 08/09 FLOOD INS $241.00- $241.00- PMT 09/18/06 $17,408.67 Payment $319.19 Other Payment(s) $319.19 Late Charges $12.77 09/18 LATE FEE $12.77- 09/22/06 $17,272.27 Payment $319.19 Other Payment(s) $.00 Late Charges $12.77 09/22 PAYMENT $319.19 $136.40 $130.57 $52.22 10/16/06 $17,272.27 Payment $319.19 Other Payment(s) $319.19 Late Charges $25.54 10/16 LATE FEE $12.77- 10/11 HAZARD $44.00- $44.00- INS PMT 10/04 HAZARD $301.00- $301.00- INS PMT 10/23/06 $17,134.84 Payment $319.19 Other Payment(s) $.00 Late Charges $25.54 10/23 PAYMENT $319.19 $137.43 $129.54 $52.22 11/16/06 $17,134.84 Payment $319.19 Other Payment(s) $319.19 Late Charges $38.31 11/16 LATE FEE $12.77- 11/21/06 $16,996.38 Payment $319.19 Other Payment(s) $.00 Late Charges $38.31 11/21 PAYMENT $319.19 $138.46 $128.51 $52.22 12/18/06 $16,996.38 Payment $319.19 Other Payment(s) $319.19 Late Charges $12.77 12/18 LATE FEE $12.77- 12/06 LATE FEE $38.31 ADJ 12/26/06 $16,856.88 Payment $319.19 Other Payment(s) $.00 Late Charges $12.77 12/26 PAYMENT $319.19 $139.50 $127.47 $52.22 01/16/07 $16,856.88 Payment $319.19 Other Payment(s) $319.19 Late Charges $25.54 01/16 LATE FEE $12.77- 01/23/07 $16,716.34 Payment $319.19 Other Payment(s) $.00 Late Charges $25.54 01/23 PAYMENT $319.19 $140.54 $126.43 $52.22 02/16/07 $16,716.34 Payment $319.19 Other Payment(s) $319.19 Late Charges $38.31 02/16 LATE FEE $12.77- 02/15 PAYMENT $1.32 SUSPENSE $1.32 02/22/07 $16,574.74 Payment $319.19 Other Payment(s) $.00 Late Charges $38.31 02/22 PAYMENT $319.19 $141.60 $125.37 $52.22 03/16/07 $16,574.74 Payment $317.84 Other Payment(s) $319.19 Late Charges $51.08 03/16 LATE FEE $12.77- 03/14 MISC INS PMT $63.00- $63.00- 03/28/07 $16,432.08 Payment $317.84 Other Payment(s) $.00 Late Charges $51.08 03/28 PAYMENT $319.19 $142.66 $124.31 $52.22 04/16/07 $16,432.08 Payment $317.84 Other Payment(s) $317.84 Late Charges $63.79 04/16 LATE FEE $12.71- 04/23/07 $16,288.35 Payment $317.84 Other Payment(s) $.00 Late Charges $62.44 04/23 PAYMENT $319.19 $143.73 $123.24 $50.87 $1.35 05/16/07 $16,288.35 Payment $317.84 Other Payment(s) $317.84 Late Charges $75.15 05/16 LATE FEE $12.71- 05/02 COUNTY $22.46- $22.46- TAX PMT 05/29/07 $16,143.54 Payment $317.84 Other Payment(s) $.00 Late Charges $73.80 05/29 PAYMENT $319.19 $144.81 $122.16 $50.87 $1.35 06/18/07 $16,143.54 Payment $317.84 Other Payment(s) $317.84 Late Charges $86.51 06/18 LATE FEE $12.71- 06/29/07 $15,997.65 Payment $317.84 Other Payment(s) $.00 Late Charges $85.16 06/29 PAYMENT $319.19 $145.89 $121.08 $50.87 $1.35 07/16/07 $15,997.65 Payment $317.84 Other Payment(s) $317.84 Late Charges $97.87 07/16 LATE FEE $12.71- 08/01/07 $15,850.66 Payment $317.84 Other Payment(s) $.00 Late Charges $97.87 08/01 PAYMENT $146.99 $119.98 $50.87 SUSPENSE $317.84- 07/31 PAYMENT $319.19 SUSPENSE $319.19 08/31/07 $15,702.57 Overdue Payment(s) $.00 Unpaid Late Charge(s) $.00 08/31 PAYMENT $1.35 SUSPENSE $1.35 08/31 PAYMENT $317.84 $148.09 $118.88 $50.87 08/14 LATE CHARGE ADJ $97.87 08/09 FLOOD INS PMT $286.00- $286.00- 09/17/07 $15,702.57 Overdue Payment(s) 09/01/07 $317.84 Unpaid Late Charge(s) $12.71 09/17 LATE FEE $12.71- 09/17 HAZARD INS RFD $32.00 $32.00 09/28/07 $15,553.37 Overdue Payment(s) $.00 Unpaid Late Charge(s) $11.36 09/28 PAYMENT $319.19 $149.20 $117.77 $50.87 $1.35 09/19 HAZARD INS PMT $301.00- $301.00- 10/16/07 $15,415.22 Overdue Payment(s) 10/01/07 $319.25 Unpaid Late Charge(s) $12.77 10/16 LATE FEE $12.77- 10/16 PRINCIPAL PMT $138.15 SUSPENSE $138.15- 10/16 PAYMENT SUSPENSE $95.00- 10/16 PAYMENT $11.36 SUSPENSE $11.36- 11/16/07 $15,263.86 Overdue Payment(s) 11/01/07 $319.25 Unpaid Late Charge(s) $25.54 11/16 LATE FEE $12.77- 12/04/07 $15,111.37 Overdue Payment(s) 12/01/07 $319.25 Unpaid Late Charge(s) $.00 12/04 PAYMENT $319.25 $152.49 $114.48 $52.28 11/20 LATE CHARGE ADJ $25.54 12/17/07 $15,111.37 Overdue Payment(s) 12/01/07 $319.25 Unpaid Late Charge(s) $12.77 12/17 LATE FEE $12.77-