Marine Has a Case Over Hasty Foreclosure Fees
(CN) - Citing federal law aimed to "protect those who have been obliged to drop their own affairs to take up the burdens of the nation," the 9th Circuit revived a Marine's claims over improper foreclosure fees.
Christopher Brewster, a lieutenant colonel in the U.S. Marine Corps Reserve, said he took out a mortgage on his home in 2007 and was called up to active duty three times over the next few years.
Sun Trust Mortgage allegedly began foreclosure proceedings against Brewster in 2009 after he failed to make required payments during the recall to active-duty service.
Though Sun Trust rescinded the notice of default in August 2010, it did not remove foreclosure fees from his account, Brewster claimed.
While Brewster was on active duty again in November 2010, Sun Trust allegedly transferred the servicing rights on his mortgage to Nationstar Mortgage.
That company also did not remove the fees and pursued the charges for five months of Brewster's active-duty service, three months of which Brewster spent deployed overseas.
Brewster sued Sun Trust and Nationstar in 2012, but a federal judge in San Diego dismissed the claims against Nationstar for failure to state a claim.
A three-judge panel of the 9th Circuit found Friday that Brewster had indeed stated a claim under Section 533 of the Servicemembers Civil Relief Act.
"The Servicemembers Civil Relief Act was passed 'to enable [servicemembers] to devote their entire energy to the defense needs of the Nation,'" Judge Ronald Gould wrote for the court. "It accomplishes this purpose by imposing limitations on judicial proceedings that could take place while a member of the armed forces is on active duty, including insurance, taxation, loans, contract enforcement, and other civil actions. These limitations are 'always to be liberally construed to protect those who have been obliged to drop their own affairs to take up the burdens of the nation.'"
Judge Jay Bybee and U.S. District Judge Edward Chen, sitting by designation from San Francisco, joined Gould in remanding the case for further proceedings.
The Servicemembers Civil Relief Act, or SCRA, requires court approval of foreclosures, according to the ruling.
"The SCRA sets a serious prohibition aimed at keeping members of the armed forces free of foreclosures which would be distractions and unfair while they serve their country," Gould wrote.
Though not the initial servicer, Nationstar still can be included in the lawsuit, the court found.
"Nationstar gained servicing rights on Brewster's mortgage in November 2010, while Brewster was on active-duty service. Over the next five months, while Brewster remained on active duty (and deployed overseas for a large portion of the time), Brewster alleges that they attempted to collect fees from him," the 8-page ruling states. "Even though Nationstar did not issue the notice of default that began the foreclosure proceeding, Brewster has pled facts sufficient to allege that Nationstar's continuing failure to remove the fees incidental to the notice of default was a continuation of that foreclosure proceeding while Brewster was on active duty service in violation of § 533 of the Servicemembers Civil Relief Act."
Brewster is represented by Kenneth Lee with Brewster & Lee, of Costa Mesa, Calif.