Brimhall v. Ditech Fin. LLC
| Decision Date | 01 April 2021 |
| Docket Number | No. 20180544-CA,20180544-CA |
| Citation | 487 P.3d 165 |
| Parties | Tawnya BRIMHALL and Eric Brimhall, Appellants, v. DITECH FINANCIAL LLC and Ditech Mortgage Corporation, Appellees. |
| Court | Utah Court of Appeals |
Judson T. Pitts, Attorney for Appellants
Alex B. Leeman, Salt Lake City, and Matthew O. Stromquist, Attorneys for Appellees
Opinion
¶1 Ditech Financial LLC (Ditech) pursued non-judicial foreclosure after Tawnya and Eric Brimhall defaulted on their mortgage loan.1 The Brimhalls sought foreclosure relief, but Ditech asserted that the Brimhalls’ loss mitigation application was incomplete and that Ditech was therefore unable to review it. The Brimhalls sued Ditech after a trustee's sale of their property, contending they had timely submitted a complete application for mortgage relief and were still negotiating foreclosure relief with Ditech, a situation which they claim should have precluded Ditech from scheduling and conducting a trustee's sale. The district court granted summary judgment in favor of Ditech. The Brimhalls appealed, and we reverse and remand.
¶2 In 2007, the Brimhalls borrowed $268,000 from Countrywide Home Loans to purchase a house in Utah (the Property). The loan was secured by a deed of trust on the Property. The beneficial interest under that deed of trust was subsequently assigned to the Bank of New York Mellon (BNYM). BNYM retained Green Tree Servicing, which later became Ditech, as the loan servicer.
¶3 The Brimhalls defaulted on the loan in 2013, and Ditech sent a letter by certified mail, dated January 17, 2014, informing the Brimhalls of the default, specifically indicating that they had fifty payments past due. The successor trustee recorded a notice of default and provided legal notice to the Brimhalls of the default, the amount of debt, and the fact that the loan had been referred for foreclosure.
¶4 In July 2014, the Brimhalls jointly filed for bankruptcy, an event which suspended the foreclosure proceedings until January 2016, when the bankruptcy court entered an order terminating the automatic stay.
¶5 On February 25, 2016, Ditech sent the Brimhalls a letter regarding loss mitigation, a process through which borrowers and loan servicers can potentially work together to avoid foreclosure. The letter explained available loss mitigation options and advised the Brimhalls to act quickly to avoid losing the Property. The letter included a request for mortgage assistance (RMA) application for the Brimhalls’ use and urged the Brimhalls to "read these instructions carefully and complete the [RMA] application in its entirety so that Ditech may evaluate [their] eligibility for a loss mitigation option." The RMA "forms provid[ed] a list of the documents required for a complete loss mitigation application" and stated that the Brimhalls needed to "fill out and execute the [RMA] forms and provide all the applicable documents within thirty (30) days." The letter indicated that the RMA and required documents could be submitted by mail or fax. By way of explanation, the letter went on to clarify that the Brimhalls could contact their Ditech account representative once all the documents had been received to discuss mitigation options. Lastly, the letter informed the Brimhalls that if their RMA application was denied, they would receive a letter giving the reason for the denial. The letter also stated that "no foreclosure sale [would] be conducted while Ditech [was] reviewing the application," provided that the application was received by Ditech "more than 37 days prior to foreclosure sale."3 Tawnya asserted that she "began the process of submitting paperwork and a formal application for a loan modification" after receiving this information from Ditech.
¶6 On March 21, Ditech notified the Brimhalls by letter that their RMA application was incomplete. In addition to repeating the deadline for completing the RMA application, the letter specifically identified certain documents that remained missing from the Brimhalls’ application: a profit/loss statement and pay stubs. This letter informed the Brimhalls that Ditech would "not be able to move forward with review of [the RMA] application" unless it received the "required documents" by April 20. Ditech asserted that the Brimhalls failed to submit the required documentary information necessary to complete the RMA application by the April 20 deadline. However, the Brimhalls contended that they did, in fact, submit the required documentation prior to the deadline.
¶7 On April 26, Ditech sent a notice to the Brimhalls informing them that their RMA application remained incomplete and that because the Brimhalls had "not provided [Ditech] with all of the required information within the time frame requested," Ditech would "not be reviewing [their RMA] application at this time." Nevertheless, the letter informed the Brimhalls that they could contact Ditech "to discuss [their] situation and any loss mitigation that may still be available," including reinstatement (i.e., immediately bringing the account current), a repayment plan (i.e., requiring the Brimhalls to repay a fraction of the delinquent amount in addition to the regular payment each month), a forbearance (i.e., delaying foreclosure to allow time for the Brimhalls to bring their account current), a modification (i.e., adding the delinquent amount back into the loan), a short sale (i.e., selling the Property to settle the debt), or a deed-in-lieu (i.e., voluntarily deeding the Property back to Ditech).
¶8 The Brimhalls asserted that they fully complied with Ditech's requests to submit a complete RMA application. Specifically, Tawnya stated in her affidavit filed in support of the Brimhalls’ motion for summary judgment that she had submitted two complete RMA applications "in the first four months of 2016" and that "even though Ditech had sent [her] letters stating that [Ditech was] no longer considering" the RMA application because the "files were not ‘complete,’ " (1) she "had sent all requested documents," (2) she "was still engaged in phone communications from May–August 2016," and (3) Ditech "representatives ... were asking [her] to update documents in their system and submit new documents they had misplaced." Similarly, Eric stated in a declaration that he "had been frustrated with Ditech for months, because [he and Tawnya] had jointly prepared two prior RMA's for Ditech and had sent Ditech every form and piece of information that Ditech had requested, to the best of [their] knowledge and understanding, to complete [their] prior RMA's, but Ditech would never acknowledge receiving what [they] sent."
¶9 On July 1, the successor trustee issued a notice of sale of the Property, scheduled for August 16, posting it on the Property and in the county recorder's office, as well as publishing it in a local newspaper. On July 11, the Brimhalls received another letter from Ditech informing them that they were "not eligible for mortgage modification assistance" because they had "failed to timely return the documents requested by the program requirements."
¶10 Eric contended that when he called Ditech on July 15 to inquire about the status of the RMA application, he was told that the RMA "had been denied" by letter on July 11. He stated that at that time Ditech encouraged him to submit another RMA application. He claims that Ditech "interviewed" him "to qualify" for "a third RMA offer from Ditech that would arrive shortly at the office" of the Brimhalls’ bankruptcy attorney. Eric's declaration stated that the Ditech agent assured him that the sale of the Property "would be stopped and that [the Brimhalls] would receive another packet to begin the loan modification process again, and then would have 30 days to get information back to them."
¶11 Regarding the July 15 phone conversation, Ditech's representative averred, in an affidavit filed in support of Ditech's motion for summary judgment, that its agent explained to Eric that the RMA "application had been denied due to a number of documents that were missing, and provided him a fax number to which he could submit the missing documents." The representative further stated, "At no point in the course of the telephone call did Ditech state or represent in any way that the trustee's sale scheduled for August 16, 2016, would be stopped or cancelled."
¶12 Ditech recorded the July 15 phone conversation, a copy of which it submitted in conjunction with the affidavit of the Ditech representative who had knowledge of the events surrounding the Brimhalls’ interaction with Ditech. The Brimhalls acknowledged that the recording of the "phone call does not appear to contain any discussion of the Trustee's sale at all," but they pointed to "long pauses in the call that could call the authenticity of the recording into question." Even though the recording lacks mention of postponing the sale, "the Brimhalls recall[ed] that postponement of the sale was discussed" in the July 15 phone call. On appeal, the Brimhalls do not contend that Ditech represented that the trustee's sale would be stopped.
¶13 On July 30, not having received the RMA forms from Ditech, Eric stated that he again called Ditech to follow up on their request for mortgage assistance. Following that call, the Brimhalls received a letter, which was addressed to Tawnya and dated July 15, encouraging them to apply for mortgage modification. A blank RMA form was attached to the letter. The Brimhalls maintain that they submitted their third RMA application after receiving these forms.
¶14 Having seen no update on the status of the latest RMA application in their online account with Ditech—which characterized the application's status as "received and ... under review"—the Brimhalls claimed that they called Ditech several times during the next few weeks. The Brimhalls provided the first names of four...
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