Johnson v. FHLMC, No. 13-35596 (9th Cir. 2015)Annotate this Case
Plaintiff, a homeowner, appealed the dismissal of his action against Freddie Mac, for breach of contract and breach of fiduciary duty where Freddie Mac purchased plaintiff's mortgage from Taylor Bean, the loan originator, on a secondary market. Taylor Bean failed to pay the insurance premium from an escrow account and caused plaintiff's insurance to be cancelled. The court concluded that plaintiff failed to allege facts that, if true, would establish
that Freddie Mac had a contractual duty to service the loan where the Deed of Trust expressly disavows any assumption of servicing obligations by a subsequent purchaser of the loan, and Freddie Mac never expressly assumed any such obligations. The court concluded that Washington law did not prohibit this arrangement and that this arrangement is typical for such home loans. Finally, the court concluded that plaintiff's breach of fiduciary duty argument failed because Section 20 of the Deed of Trust where the duty to hold the money for the insurance premiums in escrow remained with the loan servicer, Taylor Bean. Accordingly, the court affirmed the judgment.