Neal v. The Money Source Inc

CourtDistrict Court, N.D. Alabama
DecidedMarch 18, 2025
Docket7:23-cv-01020
StatusUnknown

This text of Neal v. The Money Source Inc (Neal v. The Money Source Inc) is published on Counsel Stack Legal Research, covering District Court, N.D. Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Neal v. The Money Source Inc, (N.D. Ala. 2025).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ALABAMA WESTERN DIVISION

MARGARET A NEAL, ] ] Plaintiff, ] ] v. ] 7:23-cv-1020-ACA ] THE MONEY SOURCE, INC., et al., ] ] Defendants. ]

MEMORANDUM OPINION

Defendant The Money Source, Inc., is the mortgage servicer for Plaintiff Margaret Neal’s mortgage. After Ms. Neal exited a forbearance agreement that had paused her mortgage payments for a year, The Money Source offered her a two-step loss mitigation program under which (1) the Department of Housing and Urban Development (“HUD”) would pay The Money Source the amount for which Ms. Neal was delinquent in exchange for Ms. Neal contracting to pay HUD that amount at the end of her mortgage loan (a “partial claim” contract); and then (2) The Money Source would modify her loan to reduce the principal and interest rate owed. There is conflicting evidence about whether Ms. Neal accepted that offer by mailing all the required documents back in a timely fashion. The Money Source, taking the position that she did not timely accept the offer, eventually foreclosed on her home. Ms. Neal sues The Money Source, asserting claims of (1) breach of the loan modification agreement, the partial claim documents, and an oral agreement to

modify the loan (“Count One”); (2) negligence/wantonness (“Count Two”); and (3) breach of the duties imposed by 12 C.F.R. § 1024.41 (“Regulation X”), in violation of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C.

§ 2605(f) (“Count Three”). (Doc. 19 ¶¶ 20–31). The Money Source moves for summary judgment on all claims. (Doc. 37). The court WILL GRANT IN PART and WILL DENY IN PART the motion for summary judgment. The court WILL GRANT the motion and WILL

ENTER SUMMARY JUDGMENT in favor of The Money Source and against Ms. Neal with respect to (1) the part of Count One asserting that The Money Source breached an oral agreement to enter a written loan modification agreement; (2) the

part of Count One asserting that The Money Source breached the partial claim documents; and (3) the part of Count Two asserting that The Money Source negligently or wantonly serviced Ms. Neal’s mortgage. The court WILL DENY the motion for summary judgment with respect to all remaining claims.

I. BACKGROUND When ruling on a motion for summary judgment, the court “view[s] the evidence and all factual inferences therefrom in the light most favorable to the non-

moving party, and resolve[s] all reasonable doubts about the facts in favor of the non-movant.” Washington v. Howard, 25 F.4th 891, 897 (11th Cir. 2022) (quotation marks omitted). Where the parties have presented evidence creating a dispute of fact,

the court’s description of the facts adopts the version most favorable to the non- movant. See id.; see also Cantu v. City of Dothan, 974 F.3d 1217, 1222 (11th Cir. 2020) (“The ‘facts’ at the summary judgment stage are not necessarily the true,

historical facts; they may not even be what a jury at trial would, or will, determine to be the facts.”). In 2018, Ms. Neal and her mother took out a loan to purchase real property in Tuscaloosa, Alabama, secured by a mortgage on that property. (Doc. 57 at 22–25,

27–36; see doc. 41 at 120 (giving Ms. Neal’s mother’s name)). In 2020, Ms. Neal entered a forbearance plan temporarily pausing mortgage payments until May 31, 2021. (Doc. 57 at 38, 45; doc. 41 at 128–29). The letters notifying Ms. Neal of the

forbearance plan terms stated that although the plan paused her obligation to make payments, she would still have to repay the missed payments at the end of the plan, but not “all at once, unless [she was] able to do so.” (Doc. 57 at 38–41, 45–47; see also doc. 42 at 17).

The month after the forbearance plan expired, Ms. Neal received a statement indicating that she was delinquent on her loan and owed $10,846.57. (Doc. 41 at 337). Soon after, The Money Source sent Ms. Neal a letter informing her that it was

her new mortgage loan servicer. (Doc. 42 at 23). In September 2021, Ms. Neal called The Money Source. (See doc. 61 at 124– 25). According to The Money Source’s internal notes, she wanted “to know what

post [forbearance] options she had, she was under the impression that term extension was a modification, [the customer service representative] explained the difference to . . . her and [they] proceeded with mod[ification].” (Id.). In November 2021, a loss

mitigation employee reviewed documents and wrote several notes, including one titled “FHA POST COVID RECOVERY MOD WORKOUT,” which listed, among other things, a modified interest rate, a new unpaid principal balance, a new loan term, a monthly payment amount, and a monthly escrow amount. (Id. at 123).

The Money Source approved Ms. Neal for a loss mitigation plan. (Doc. 57 at 8 ¶ 14). On December 14, 2021, it mailed her two packets for her to fill out and return. (Doc. 61 at 7; doc. 44 at 26–50). The first packet related to HUD’s partial

claim program, under which “HUD loans the borrower money at no interest, which doesn’t have to be repaid until the end of the loan term. If HUD approves the claim, it pays the amount of the claim to the lender/servicer to reimburse it for the losses it incurs by modifying the loan.” (Doc. 57 at 8 ¶ 17). The “partial claim packet”

consisted of five parts: a promissory note from Ms. Neal to HUD, a partial claim mortgage on the real property, a notice of no oral agreements, a correction agreement, and an attorney selection notice. (Doc. 44 at 41–50). The Money Source

directed Ms. Neal to execute the documents and return them to The Money Source’s agent within fourteen days of receiving the packet. (Id. at 38). On receipt, The Money Source would submit the packet to HUD. (Doc. 57 at 9 ¶ 19).

The second packet related to modification of the loan agreement. (See doc. 58 at 42). The cover letter instructed Ms. Neal to ensure that the loan modification agreement was “consistent with [her] prior discussions with [The Money Source]”

and to execute and return the documents within fourteen days of receipt. (Id.). The proposed loan modification contemplated reducing the loan principal from $147,069 to $138,064.55 and the interest rate from 5.375% to 3.125%. (Doc. 44 at 26–33; see doc. 57 at 22). But The Money Source’s execution of the loan modification

agreement depended on Ms. Neal first executing the HUD partial claim documents and HUD approving the partial claim. (Doc. 57 at 9 ¶¶ 19–20). It is not clear when Ms. Neal received the two packets, but she signed and

notarized them on December 22, 2021. (Doc. 62 at 7–25). Ms. Neal testified that she mailed all the documents in both packets to The Money Source. (Doc. 41 at 198, 227, 236–37). On December 27, 2021, The Money Source received a FedEx packet from Ms. Neal. (Doc. 58 at 47; see doc. 57 at 11 ¶ 27). The Money Source’s

executive vice president attests that the envelope contained only the loan modification packet. (Doc. 57 at 11 ¶ 27). Although The Money Source provides evidence that its practice is to upload all documents received into an imaging system (id. at 12 ¶ 30), it does not cite to any evidence of what it uploaded from the packet it received (see generally doc. 60 at 12–14).

Instead, The Money Source provides evidence that on January 12, 2022, a loss mitigation employee noted that The Money Source “REC’D INCOMPLETE MOD DOCS.” (Doc. 58 at 64). The next day, the same employee filled out a modification

document checklist indicating that documents were missing. (Id.

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