Case 08-00803 Doc 59 Filed 01/04/10 Page 1 of 7

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF MARYLAND
at Baltimore

IN RE: * Case No.: 07-18467-NVA

HERBERT B. HOLLAND * Chapter 11

Debtor
*

* * * * * * * * * * Adv. No.: 08-00803-NVA

HERBERT B. HOLLAND *
Plaintiff
*
v.
*
AURORA LOAN SERVICES, LLC.
f/k/a AURORA LOAN SERVICES, INC. *
Defendant
*

* * * * * * * * * * * * * * * * *

PRETRIAL STATEMENT

Herbert B. Holland, Plaintiff, by counsel, and pursuant to

Local Bankruptcy Rule 7016-1(b) submits this Pretrial Statement:

1. Plaintiff’s Brief Statement of Facts Alleged:

On November 7, 2005, the Plaintiff signed a promissory

note (the “Note”) with American Brokers Conduit in the amount

of $920,000.00. The interest rate on the Note was fixed at

8.125% and called for monthly installments of principal and

interest in the amount of $6,229.17 for the first 120 months

of the Note and thereafter payments of $7,766.97 until paid

in full on or before December 1, 2035. The Note was

secured by a Purchase Money Deed of Trust dated November 7,

2005, covering the property known as 6061 Moore Drive,

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Sykesville, Maryland 21784 (the “Property”), and recorded among

the Land Records of Carroll County in Liber No. 4670, Folio 63

et seq.

Plaintiff alleges that at loan closing he first discovered

that he needed $25,000.00 for closing costs when he had been

repeatedly told that no funds were needed by him at closing.

After discussions with the settlement agent, representatives of

Washington Mutual, and his real estate agent Anthony Tookes (who

reduced his commission to help the Plaintiff settle on the

Property), the Plaintiff closed on the Property. The loan was

not at the term or rate of interest originally disclosed to the

Plaintiff but in order not to lose his down payment on the

Property, the Plaintiff agreed to close the loan with the terms

presented.

Subsequently, Aurora became the holder of the Note.

No Assignment or sale of the Note or Deed of Trust to Aurora

is of record. Aurora alleges that it is merely the servicer

of the Note but the Plaintiff’s dealings after closing

with Aurora have led him to reasonably believe that Aurora is the

owner of the Note and the party with sole decision making power.

Beginning with his December 1, 2006 payment, the Plaintiff fell

behind on payments due under the Note. By April 26, 2007, the

arrearage to Aurora, including payments due from December 1, 2006

through April 26, 2007 plus late charges of $1,024.17, legal fees

of $1,356.00, and advances of $80.00, totaled $37,831.46.

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On or about April 26, 2007, the Plaintiff and Aurora entered

into a “Special Forbearance Agreement” wherein the Plaintiff was

to make monthly payments of $11,985.15 to Aurora commencing

May 30, 2007 and continuing until November 30, 2007. On

September 5, 2007, the Plaintiff filed his Bankruptcy petition

and Aurora was notified of the filing of the case. However,

Aurora did not reduce the Plaintiff’s monthly payment back to the

amount originally set forth in the Note but instead kept the

monthly payment at the $11,985.15 amount which included pre-

petition arrears.

Plaintiff alleges that Aurora, which was a subsidiary of

Lehman Brothers, specialized in originating and buying loans in

the “Alternative A” market which is comprised of loans approved

without proof of a borrower’s income. Plaintiff further alleges

that he was targeted as a candidate for an “Alternative A” or

subprime loan by representatives of Washington Mutual, American

Home Mortgage Servicing, and/or T&B Mortgage Enterprises, Inc.,

and that Aurora routinely purchased “Alternative A” and/or

subprime loans.

Plaintiff alleges that when Aurora obtained either the

ownership or servicing of the Note, it entered into a contractual

relationship with the Plaintiff. While the Plaintiff did not

choose to enter into a contractual relationship with Aurora, once

Aurora obtained either the ownership or servicing of his loan,

the Plaintiff became a party to the relationship.

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Plaintiff alleges that the origin of the contractual

relationship is strictly one directional. Notwithstanding the

origin of the contractual relationship between the Plaintiff and

Aurora, Plaintiff alleges that Aurora had an obligation under the

contract to deal both fairly and in good faith with the

Plaintiff.

Plaintiff alleges that Aurora has breached its contract with

the Plaintiff by its failure to deal fairly or in good faith with

the Plaintiff. Aurora alleges that it is the servicer and

not the owner of the Plaintiff’s loan. Even if Aurora’s

contention is correct, the manner in which a servicer is

compensated for its services provides a reasonable explanation

for Aurora’s breach of its underlying contractual duties to the

Plaintiff.

Plaintiff alleges that Aurora is the only party with copies

of all documents related to the loan, including a “Good Faith

Estimate” which Plaintiff never saw until after this Adversary

Proceeding was filed. Aurora had been told on numerous occasions

by Plaintiff that he was not provided with the loan terms he was

promised and that he had not received required disclosures,

including a “Good Faith Estimate”, prior to loan closing.

Plaintiff alleges that despite his complaints to Aurora, Aurora

continued to act in a manner that eventually led to Plaintiff

seeking Bankruptcy protection.

Plaintiff alleges that prior to entering into the Special

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Forbearance Agreement, Aurora had ample opportunity to review

his financial situation and to consider the implications

of Plaintiff’s then-recent health problems upon his earnings

capacity and his ability to make payments to Aurora.

Plaintiff alleges that Aurora knew or should have known that

the terms of the Special Forbearance Agreement were not feasible

in that in addition to the $11,985.15 per month payment to

Aurora, Plaintiff had a monthly second mortgage payment of

$2,251.54 to make to American Home Mortgage Servicing, Inc..

Upon the filing of the Plaintiff’s Bankruptcy case,

Aurora did not change its monthly billings to Plaintiff back

to the original payment amount (with the anticipation that

the pre-petition arrearage would be paid under the Plaintiff’s

Bankruptcy plan) but kept the monthly payment at the higher

amount set forth in the Special Forbearance Agreement, ensuring

that it would be difficult for the Plaintiff to make post-

petition payments to Aurora.

Plaintiff will present evidence about each of his

allegations by witness testimony or examination of exhibits

presented.

2. Pleading Issues: Plaintiff has amended his Complaint per

the Court’s September 1, 2009 Order and has no intent to file

further amendments.

3. Stipulations: None.

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4. Exhibits: Plaintiff, by agreement with Aurora’s counsel,

adopts the following of Aurora’s Exhibits as Plaintiff’s

Exhibits:

A. Sales contract and related material for 6061 Moore

Drive (Aurora Exhibit 1);

B. T&B Mortgage materials and loan application (Aurora

Exhibit 2);

C. HUD-1 Statement dated November 7, 2005 for purchase

of the Property (Aurora Exhibit 3);

D. Land America Lawyer’s Title Insurance materials

dated November 2, 2005 (Aurora Exhibit 4);

E. Deed for the Property dated November 7, 2005

(Aurora Exhibit 5);

F. Note and Purchase Money Deed of Trust dated

November 7, 2005 (Aurora Exhibit 7);

G. Repayment Agreement dated February 21, 2007 (Aurora

Exhibit 10);

H. Special Forbearance Agreement dated April 26, 2007

(Aurora Exhibit 11);

I. Special Forbearance Agreement dated April 30, 2007

(Aurora Exhibit 12);

J. Explanation of delinquency (Aurora Exhibit 13).

Plaintiff offers the following additional Exhibits:

K. American Home Mortgage letter to Plaintiff

concerning refund of $6,830.97 overpayment on second mortgage

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which was forwarded to Aurora and not Plaintiff; and

L. Good Faith Estimate.

Date: January 4, 2010

/s/ Edward M. Miller

Edward M. Miller #024281
Miller & Miller, LLP
129 East Main Street #205
Westminster, MD 21157
E-mail: mmllplawyers@verizon.net
410-751-5444
Attorneys for Plaintiff

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on this 4th day of January, 2010,

a copy of the foregoing Pretrial Statement was mailed
electronically or by postage prepaid, first class, U.S. Mail,
to Michael T. Pate, Esq., Law Offices of Michael T. Pate, LLC,
20 South Charles Street #702, Baltimore, MD 21021, Attorney for
Defendant; with a courtesy copy to Gerard F. Miles, Jr., Esq.,
Huesman, Jones, and Miles, LLC, 606 Baltimore Ave. #306, Towson,
MD 21204.

/s/ Edward M. Miller

Edward M. Miller