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Jones v. Wells Fargo Bank, N.A.

United States District Court, D. Maryland

September 12, 2018



          Ellen Lipton Hollander United States District Judge.

         In this consumer protection action, plaintiff Tiavonde Jones has sued Wells Fargo Bank, N.A. (“Wells Fargo” or the “Bank”), alleging violations of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2601 et seq., and certain of its implementing regulations, known as Regulation X, 12 C.F.R. §§ 1024.1-1024.41. The suit is largely rooted in an application for a mortgage loan modification requested by plaintiff on or about May 24, 2017, in connection with real property that she owns in Catonsville, Maryland. See ECF 1 (“Complaint”). Plaintiff included numerous exhibits with her suit. ECF 1-2.

         In Count I of the Complaint, Jones alleges, inter alia, that the Bank violated RESPA, 12 U.S.C. § 2605, “by refusing to state specifically the basis for its denial of Ms. Jones' application in its denial letters . . . .” ECF 1, ¶ 48; see also id. ¶¶ 42, 47. She also complains that the Bank violated RESPA by failing “to review Plaintiff for all loss mitigation options available to her . . . .” Id. ¶ 4. In Count II, plaintiff asserts, inter alia, that Wells Fargo violated RESPA by “failing to . . . provide the name of the owner/investor of [plaintiff's] loan within 10 business days from [her] request . . . .” Id. ¶ 55.

         Plaintiff seeks injunctive relief, statutory damages, and actual damages under 12 U.S.C. § 2605(k)(1)(E) and 15 U.S.C. § 1641(f)(2). Id. ¶ 4. In particular, she seeks compensation for emotional distress, attorneys' fees, postage costs, and “lost time associated with” the alleged discrepancy in the identification of the owner of her loan. ECF 1, ¶¶ 44, 48, ¶ 54.

         Wells Fargo has moved to dismiss the Complaint (ECF 12), pursuant to Fed.R.Civ.P. 12(b)(6), supported by a memorandum of law (ECF 12-1) (collectively, the “Motion”). Plaintiff opposes the Motion. ECF 15 (“Opposition”). The Bank has replied. ECF 16 (“Reply”).

         No hearing is necessary to resolve the Motion. See Local Rule 105.6. For the reasons that follow, I shall grant the Motion.

         I. Factual and Procedural Background[1]


         Jones is the owner of a home located in Catonsville, Maryland (the “Property”). ECF 1, ¶ 10. On July 16, 2007, she executed a promissory note (“Note”) and deed of trust (“DOT”) in the amount of $526, 000.00 from the Bank for the Property (the “Mortgage” or the “Loan”). Id.; see also Id. ¶ 15.[2]

         At all relevant times, Wells Fargo has been the servicer of the Mortgage. Id. ¶ 11. Plaintiff states, id.: “Wells Fargo . . . acts as the mortgage servicer on behalf of either HSBC Bank, N.A. (‘HSBC'), as trustee for the certificate holders of the WFALT 2007-PA5, (‘WFALT PA5') or HSBC Bank, N.A. . . . as trustee for the certificate holders of WFALT 2007-PA3, (‘WFALT PA3').” Id.

         According to Jones, the Loan initially was “an interest only note until September of 2017 at which time the payments would include principal and interest.” Id. ¶ 15. On an unspecified date, the Note was “securitized” and “allegedly became held by a WFALT Trust.” Id. ¶ 16. Jones states: “Wells Fargo has claimed that two separate and distinct parties are the owner of the subject loan.” Id. ¶ 17. They are, id.: WFALT 2007-PA5 (“PA5”) and WFALT 2007-PA3 (“PA3”). HSBC acts as trustee for PA3 and PA5.

         According to plaintiff, “[e]ach securitized Trust or pool of loans has its own unique Pooling and Servicing Agreement that governs the servicer's requirements as to how it services the loans in that specific pool of loans.” Id. And, she asserts that, “over a number of years, ” Wells Fargo has provided plaintiff with “contradictory information” as to the owner of her Loan. Id.

         In particular, plaintiff complains that the Bank periodically identified two different owners of her Loan: PA3 and PA5. ECF 1, ¶¶ 17, 18. Therefore, plaintiff's attorney wrote to the Bank on or about April 5, 2017. ECF 1-2 at 43-47; ECF 1, ¶ 18.[3] Plaintiff states that the letter constituted both a “Notice of Error” and a Qualified Written Request (“QWR”). ECF 1-2 at 43-47 (hereinafter, the “First QWR”); see Id. at 43-44.

         In the letter, plaitniff's counsel stated, inter alia, that from April 27, 2010 through February 16, 2016, “multiple parties have been named as the owner/investor of [plaintiff's] loan.” Id. Counsel asked the Bank to “provide the name of the owner/investor of Ms. Jones' mortgage . . . .” Id. at 43-44. Additionally, plaintiff's counsel acknowledged that plaintiff's previous attempts to modify the Loan had been denied by the Bank because, inter alia, plaintiff “ha[d] exceeded modification limits.” Id. at 44. Counsel requested additional documents and information as to the basis for the modification denials. Id. at 45-47.

         By letter dated April 24, 2017, Wells Fargo responded. Id. ¶ 19. It advised that PA5 was the “owner of her loan.” Id.[4] However, plaintiff avers that “as recently as August 17, 2017, ” Wells Fargo claimed that PA3 is the owner of the Loan. Id.

         According to Jones, on September 1, 2017, her monthly Loan payment was scheduled to increase from $3, 073.26 per month to $4, 149.56 per month. Id. ¶ 20. Concerned that she “would not be able to afford” the higher monthly rate (id.), Jones submitted a “complete loan modification application” to Wells Fargo (the “Application”) on or about May 24, 2017. Id. ¶ 21.[5] Notably, plaintiff had previously obtained two other Loan Modifications - one in or about April 2010 and one in December 2015. See ECF 1-2 at 31-34 (April 2010); ECF 1-2 at 35-40 (December 31, 2015).

         By letter to plaintiff dated May 31, 2017 (ECF 1-2 at 2-4), Wells Fargo informed plaintiff that it would review the Application “to determine if [she was] eligible for mortgage payment assistance through a loan modification.” Id. at 2. Additionally, Wells Fargo informed Jones that it may take “up to 30 days” for the review. Id. According to the Letter of May 31, 2017, “at least one bankruptcy case” had been filed in relation to the Property. Id.[6]

         In a letter from the Bank to plaintiff dated June 2, 2017 (ECF 1-2 at 6-8) (the “Denial Letter”), Wells Fargo informed plaintiff that she did not qualify for a “Piggy-Back or Piggy-[B]ack w/ Temporary Rate Reduction” Loan modification (hereinafter, the “Piggy-Back Program”). Id. at 6-7. It explained that, under the Piggy-Back Program, id. at 6, “[p]ast due payments are set aside but carried for the life of the loan as a zero interest, zero payment balance . . . [and become] due upon payoff of the loan or at maturity, whichever occurs first.” Plaintiff was advised that she did not qualify for the Piggy-Back Program because her Loan “has already received the maximum number of modifications allowed.” Id. at 7.

         Further, the Denial Letter provided, id.: “Once [Wells Fargo] determined that [Jones] did not meet the requirements” of the Piggy-Back Program, the Bank “moved to evaluate [her] for the next available program based on [her] information and the qualifications associated with [her] loan.” In particular, the Bank identified “other options, ” such as a “short sale, ” whereby Jones would list her home for sale at a price below the amount she owed on the Property. Id. Additionally, the Bank suggested a “deed in lieu of foreclosure, ” advising Jones that if she chose that option she “must agree to vacate the property within an agreed upon time.” Id. And, Wells Fargo informed Jones that she could appeal the Denial Letter “within 20 calendar days.” Id.; see also ECF 1-2 at 9 (the “Appeal Request Form”).

         Plaintiff's lawyer submitted an appeal to the Bank as to the Denial Letter, dated June 20, 2017. ECF 1, ¶ 29; ECF 1-2 at 11-14 (the “Appeal Letter”). Counsel argued, inter alia, that “Wells Fargo ha[d] failed to state specifically what the program and/or investor requirements are regarding the maximum number of allowable modifications” on the Loan, in violation of 12 C.F.R. § 1024, Supp. I, § 41(d). Id. at 13. Additionally, counsel complained that “Wells Fargo failed to provide the number of previous modifications it claims that Ms. Jones has had and . . . the exact number of the allowable loan modifications under the ‘Piggy-Back' program and the investor guidelines.” Id. According to counsel, without this information, plaintiff could not “effectively dispute the validity of [the Bank's] reason for a denial.” Id.

         Plaintiff has acknowledged that the “investor guidelines” she demanded from Wells Fargo were “publically available.” ECF 1-2 at 13 (citing SEC Info, Wells Fargo Alternative Loan 2007-PA5 Trust - ‘8-K' for 10/29/07 - EX-10.1 (last visited August 16, 2018), (hereinafter, the “Investor Guidelines”). Her lawyer insisted that the Investor Guidelines contain “no requirement limiting the number of modifications available to a borrower.” ECF 1-2 at 13; see also ECF 1, ¶ 27.[7]

         The Investor Guidelines cited at ECF 1-2 at 13 provide: “No modification, recast, extension, or capitalization of delinquent payments of a Mortgage Loan other than as provided in Section 12.3.6 hereof shall be permitted with respect to a Mortgage Loan.” See Investor Guidelines, § 12.3.7. Under § 12.3.6 of the Investor Guidelines, the Bank may enter into a forbearance plan in which the Bank “provides that the total amount owed during such Delinquency, including costs and expenses, will be repaid within the shortest period practicable, commencing immediately.”

         In the Appeal Letter, plaintiff's counsel also complained that although Wells Fargo offers multiple programs, plaintiff was only evaluated for the Piggy-Back Program. ECF 1-2 at 13. According to plaintiff's attorney, the Bank's failure to “identify with specificity all loss mitigation options for which [Jones] may be eligible . . .” constituted a RESPA violation. Id. And, plaintiff's counsel requested additional “information immediately” as to “all of [the] loss mitigation options available to [plaintiff].” Id.

         Wells Fargo wrote to plaintiff on July 11, 2017 (ECF 1-2 at 16-17), stating that it had reviewed the Appeal Letter and had determined that she “still do[es] not meet the requirements for a loan modification.” Id. at 16; see ECF 1, ¶ 30. The Bank reiterated the options previously made available to Jones, which included a short sale or deed in lieu of foreclosure. ECF 1-2 at 16.

         Plaintiffs lawyer responded to the Bank on July 25, 2017, in correspondence he identified as a notice of error and a QWR. ECF 1, ¶ 32; see ECF 1-2 at 20-23 (“Second QWR”). He claimed that the Bank's letter of July 11, 2017, “failed to adequately address the issues raised” in the Appeal Letter. Id. Moreover, counsel asked Wells Fargo to address the alleged errors “immediately.” Id. at 22. And, he “itemized” what he deemed to be the pertinent errors, as follows, id. at 21-22:

• Wells Fargo is to provide the source of the requirement that resulted in Wells Fargo's statement “Your loan on the property noted above has already received the maximum number of modifications allowed[.]”
• If the source of this requirement is an investor restriction and/or guideline, then Wells Fargo must provide where that restriction and/or guideline is found, i.e. the Pooling and Servicing Agreement.
• Wells Fargo is to provide the maximum number of loan modifications allowed.
• Wells Fargo is to provide the date of each loan modification it purports that Ms. Jones has obtained on the subject property.
• Wells Fargo is to provide the name, eligibility requirements and results of “the next available program” it claims it reviewed [as to] Ms. Jones pursuant to Wells Fargo's letter dated June 2, 2017.

         On August 10, 2017, plaintiff filed a complaint with the Consumer Financial Protection Bureau (“CFPB”). ECF 1, ¶ 33. She provides no additional information as to her CFPB complaint.

         Wells Fargo sent a letter to plaintiffs counsel, dated August 17, 2017 (ECF 1-2 at 25-26), in which it responded to the Second QWR. See also ECF 1, ¶¶ 34, 35. The Bank stated, inter alia, that it was reviewing “the investor guidelines, ” the “[n]umber of allowable modifications” for plaintiffs account, her “[previously completed modifications, ” and other “Note holder information.” ECF 1-2 at 25. In addition, the Bank indicated that it would provide a complete response by August 24, 2017. Id. But, it also provided “an update” as to the concerns voiced by plaintiff. Id. In particular, the Bank stated that it was “unable to provide” the “investor guidelines” because the Bank had determined that the guidelines are “confidential privileged and/or proprietary information of Wells Fargo.” Id. Further, the Bank stated that it was the “servicer” of plaintiff's Loan, on behalf of “owner/assignee” PA3. Id. at 26; see also ECF 1, ¶ 35.

         In a letter from the Bank to plaintiff's attorney dated August 21, 2017 (ECF 1-2 at 29-30) (the “Final Review Letter”), Wells Fargo stated that it had finished researching plaintiff's concerns. Id. at 29; see ECF 1, ¶ 36. It identified plaintiff's Loan as “an asset-backed security that is secured by a mortgage, or more commonly a collection (‘pool') of mortgages.” ECF 1-2 at 29. The Bank explained, id.: “These mortgages are sold to a group of individuals (a government agency or investment bank) that ‘securitizes' or packages the loans together into a security that can be sold to investors.”

         According to the Bank, “[t]here are many workout limitations associated with this type of loan, ” including, inter alia, that the Bank cannot “set aside or forgive any portion of the principal balance”; it cannot “increase the principal balance of the loan”; it cannot “permanently reduce the mortgage interest rate . . . .” Id. Moreover, the Bank stated that the Loan was not eligible for the Home Affordable Modification Program (“HAMP”). Id. In addition, the Bank reiterated that it was “unable to provide” plaintiff with a copy of the “investor guidelines.” Id.

         Of import, the Bank stated that it was bound by “[f]requency limitations (Per investor guidelines, the account is eligible after five years have passed since the most recent completed modification)[.]” Id. As to the number of allowable modifications for plaintiff's Loan, the Bank stated that “there isn't a specific number of modifications the account is allowed.” Id. at 30. Rather, it said that plaintiff's Loan “can qualify for an additional modification once every five years has passed since the previous modification finalized.” Id. According to the Bank, plaintiff's most recent “modification was completed on January 14, 2016.” Id.[8] Accordingly, plaintiff was deemed ineligible for a Loan modification with respect to the Application she filed on May 24, 2017 (ECF 1, ¶ 21). See ECF 1-2 at 30.

         Further, the Bank stated that “there are a few workout options for which [plaintiff's] account could qualify, ” including “up to 12 past due payments to be combined into a ‘piggy-back.'” Id. at 29. Additionally, the Bank stated that plaintiff's Loan could qualify for a “[t]emporary rate reduction” or a “[r]epayment plan[.]” Id. However, the Bank stated that it was unable to “provide specifics for which options the account may qualify because if [an account] is found outside the guidelines, the review is complete.” Id. at 30.

         According to plaintiff, “Wells Fargo has demonstrated a pattern and practice of violating federal servicing laws as they relate to loan modifications.” ECF 1, ¶ 12. She also maintains that between July 2014 and September 2017, the Bank provided contradictory information as ...

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