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Victorian v. Wells Fargo Home Mortgage

United States District Court, E.D. Missouri, Eastern Division

June 12, 2017




         This matter is before the Court on the joint motion (ECF No. 85) for summary judgment filed by Defendants Wells Fargo Home Mortgage (“Wells Fargo”) and Deutsche Bank National Trust Company (“Deutsche Bank”). Plaintiff's claims against these Defendants (the only remaining claims in this case) arise out of the foreclosure of Plaintiff's real property by Wells Fargo. On May 2, 2017, the Court gave the parties notice that it believed one of Plaintiff's claims may be subject to summary judgment on a ground not raised by Defendants, and allowed the parties an opportunity to submit supplemental briefing on this issue. Upon careful review of the parties' initial and supplemental briefs, and for the reasons set forth below, the Court will grant Defendants' motion.


         For purposes of this summary judgment motion, the record establishes the following. On October 27, 2006, Plaintiff purchased real property located at 471 Olde Court Road, St. Charles, Missouri 63303. The same day, she executed two adjustable rate notes, secured by deeds of trust on the property, in favor of MILA, Inc., DBA Mortgage and Investment and Lending Associates, Inc. (“MILA”). The first was in the amount of $408, 862 (“First Mortgage”), and the second was in the amount of $102, 216 (“Second Mortgage”). Wells Fargo acquired the First Mortgage in December 2006, and Chase Bank, a former Defendant in this case, at some point acquired the Second Mortgage.[1]

         Initially, Plaintiff's monthly payment on the First Mortgage was $2, 720.17, but on March 24, 2010, Wells Fargo entered into a loan modification agreement with Plaintiff, which lowered Plaintiff's monthly payment to $1, 889.65. On September 10, 2010, Plaintiff's personal liability for any future deficiency judgment on her mortgages, in the event of foreclosure, was discharged as part of a Chapter 7 bankruptcy proceeding.

         By March 2012, Plaintiff was more than 60 days delinquent on the First Mortgage and attempted to obtain another modification of her payment terms under the federal Home Affordable Modification Program (“HAMP”). Wells Fargo is a participating servicer under a HAMP Service Participation Agreement with the federal government.

         As explained in Topchian v. JPMorgan Chase Bank, N.A., 760 F.3d 843 (8th Cir. 2014):

HAMP modifications proceed in two steps. Step One involves the mortgage servicer of an eligible homeowner offering the homeowner a Trial Period Plan (TPP) agreement. A TPP agreement allows the homeowner to make modified mortgage payments for a specified term. If all conditions of the TPP agreement are satisfied, the homeowner then proceeds to Step Two, at which point he is offered a permanent loan modification agreement that outlines the terms of the final modification.

760 F.3d 843, 846 (8th Cir. 2014).

         Plaintiff submitted a HAMP application dated June 11, 2012, in which she left blank the fields titled “First Mortgage Payment” and “Second Mortgage Payment.” In her affidavit submitted in response to Defendants' motion, Plaintiff states that she left these fields blank because she was told to do this by a representative of Wells Fargo via telephone when she called to ask how to fill out the form. Plaintiff states that when she spoke to Wells Fargo about completing the HAMP application at this time, she informed a Wells Fargo representative of her Second Mortgage.

         Plaintiff later submitted updated HAMP applications, dated August 21, 2012 and September 24, 2012, [2] in which she entered “$2, 714” in the field for “First Mortgage Principal & Interest Payment” but entered “0” in the field for “Second Mortgage Principal & Interest Payment.” In her affidavit, Plaintiff states that she listed her Second Mortgage payment as “0” because “the NACA[3] representative told us . . . that Wells Fargo's system would automatically populate this field on the application when they ran a title report as part of the application process.” ECF No. 88-4 at 3.

         In Plaintiff's signed HAMP applications, she certified that all of the information in the applications was truthful; that she authorized the servicer, Wells Fargo, to investigate her eligibility for modification and the accuracy of the statements in her applications; and that she understood that Wells Fargo was not obligated to offer her assistance based solely on the representations in her applications.

         On October 11, 2012, Wells Fargo sent Plaintiff a packet of documents stating that she was approved to enter into a Trial Period Plan (“TPP”) agreement under HAMP. The TPP was comprised of several documents. First, it included an approval letter, which stated that Plaintiff was required to make three trial period payments instead of her normal monthly mortgage payments, during the trial period of November 1, 2012 to January 1, 2013, and that Plaintiff was to accept the TPP by calling Wells Fargo or by sending her first trial period payment within 14 days of the date of the letter. The letter further stated: “After all trial period payments are timely made and you have submitted all the required documents, your mortgage may be permanently modified.” ECF No. 86-2 at 44.

         Also included in the TPP was a “Frequently Asked Questions” document, which stated: “The trial period is temporary, and your existing loan and loan requirements remain in effect and unchanged during the trial period.” Id. at 46. This document further stated: “Once you make all of your trial period payments on time, we will send you a modification agreement detailing the terms of the modified loan.” Id. at 47.

         The next document, titled “Important Program Info, ” stated: “We will not proceed to the foreclosure sale during the trial period, provided you are complying with the terms of the Trial Period Plan.” But the document further stated:

Any pending foreclosure action or proceeding that has been suspended may be resumed if you are notified in writing that you failed to comply with the terms of the Trial Period Plan or do not qualify for a permanent modification.
* * *
The servicer's acceptance and posting of your new payment during the trial period will not be deemed a waiver of the acceleration of your loan (or foreclosure actions) and related activities, and shall not constitute a cure of your default under your loan unless such payments are sufficient to completely cure your entire default under your loan.

Id. at 48.

         Finally, the TPP included a second letter with additional information, stating: “Before your loan can be modified, you will need to successfully complete the trial period plan by making all trial payments on the dates they're due and meeting all other requirements. . . . If you don't comply with trial period terms, we will send you a Non-Approval notice. Examples of not meeting the terms of the [TPP] include not making your payments on time, or not sending us the required documents.” Id. at 42.

         Notably, although the HAMP guidelines provide that servicers “may include, as necessary, conditional language in HAMP offers and modification agreements indicating that the HAMP will not be implemented unless the servicer receives an acceptable title endorsement, or similar title insurance product, or subordination agreements from other existing lien holders, as necessary, to ensure that the modified mortgage loan retains its first lien position and is fully enforceable, ” ECF No. 24-3 at 16, Plaintiff's TPP did not contain such language.

         As required by the TPP, Plaintiff called Wells Fargo within 14 days to accept the TPP and also made her first trial period payment.

         On or about November 27, 2012, Wells Fargo ran a title report on Plaintiff's property as part of their standard HAMP review process. The title report indicated liens on Plaintiff's property, including federal and state tax liens and the Second Mortgage. The parties dispute whether Wells Fargo knew about the Second Mortgage before November 27, 2012. As discussed above, Plaintiff contends that she informed a Wells Fargo representative about the Second Mortgage earlier, when filling out her HAMP application.

         Wells Fargo shortly thereafter instructed Plaintiff that it required a subordination agreement from the second lien-holder (Chase).[4] In phone calls in November and December of 2012, Plaintiff informed Wells Fargo that Chase would not agree to subordinate the Second Mortgage. Plaintiff asserts that, more specifically, she informed Wells Fargo that Chase would not agree to subordinate the Second Mortgage at Plaintiff's request and that Chase required Wells Fargo to call Chase directly to request a subordination agreement.

         Wells Fargo asserts that Chase's agreement to resubordinate its loan after any loan modification was necessary to avoid Wells Fargo's relinquishing its senior lien position, and that its insistence on subordination was in accordance with the HAMP guidelines for servicers. In particular, Wells Fargo points to the HAMP guidelines, which state that “HAMP does not require extinguishment of subordinate lien instruments as a condition of modification. However, ...

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