Fenello v. Bank of Am., N.A.

• Decision Date: 15 February 2013
• Docket Number: No. 1:11–cv–4139–WSD.,1:11–cv–4139–WSD.
• Parties: Vito J. FENELLO, Jr., and Beverly H. Fenello, Plaintiffs, v. BANK OF AMERICA, N.A., and the Bank of New York Mellon (as Trustee for CWALT, Inc.), Defendants.
• Court: U.S. District Court — Northern District of Georgia

926 F.Supp.2d 1342

Vito J. FENELLO, Jr., and Beverly H. Fenello, Plaintiffs,

v.BANK OF AMERICA, N.A., and the Bank of New York Mellon (as Trustee for CWALT, Inc.), Defendants.

No. 1:11–cv–4139–WSD.

United States District Court,

N.D. Georgia,

Atlanta Division.

Feb. 15, 2013.

Vito J. Fenello, Jr., Woodstock, GA, pro se.

Beverly H. Fenello, Woodstock, GA, pro se.

Laura Elizabeth Reinhold, Andrew G. Phillips, Jarrod Sean Mendel, McGuireWoods LLP, Atlanta, GA, for Defendants.

OPINION AND ORDER

WILLIAM S. DUFFEY, JR., District Judge.

This matter is before the Court on Vito J. Fenello, Jr. and Beverly H. Fenello's (collectively, “Plaintiffs”) Motion for Leave to Amend their Complaint [30]. Also before the Court is Bank of America, N.A. (“BANA”) and The Bank of New York Mellon, as Trustee for CWALT, Inc.'s (“BONYM”) (together, “Defendants”) Motion to Dismiss [28] Plaintiffs' Amended Complaint [26].

I. BACKGROUND

On January 30, 2007, Plaintiffs obtained a loan from Pulte Mortgage, LLC (“Pulte”) in the amount of $181,352.00, to purchase real property located at 289 Balaban Circle, Woodstock, Georgia (the “Property”). (Am. Compl. ¶ 7; Pls' Ex. 13).¹ Repayment of Plaintiffs' loan was secured by a deed (“Security Deed”) to the Property, by which Plaintiffs granted to Mortgage Electronic Registration Systems, Inc. (“MERS”), as nominee for Pulte, title to the Property, including the power of sale. (Security Deed [28.2] at 1–3). ²

In late 2007, Plaintiffs, who are real-estate professionals wholly compensated through commissions on real-estate transactions, experienced a severe drop in income due to the financial collapse of the national economy. (Am. Compl. ¶ 8).

In early 2008, Plaintiffs contacted BANA—the “apparent loan servicer at the time”—and inquired about available options involving their loan, “including a mortgage modification, a short sale, and a deed in lieu of foreclosure.” ( Id. ¶ 9). BANA responded that relief was not available until Plaintiffs had missed at least two monthly payments, and suggested that Plaintiffs skip the next two payments and then contact BANA again to apply for relief under the Home Affordable Modification Program (“HAMP”). ( Id. ¶¶ 10–11). Relying on this suggestion, Plaintiffs skipped the next two monthly payments and on April 24, 2010, applied for relief under the HAMP. ( Id. ¶ 12).³ Plaintiffs called BANA multiple times but did not receive a decision on their HAMP application. ( Id. ¶ 14).

On April 5, 2011, Plaintiffs received a letter from Shuping, Morse & Ross, LLP (“Shuping”), on behalf of BAC Home Loans Servicing, LP (“BACHL”). ( Id. ¶ 15; Pls' Ex. 1). The letter states that BACHL is the servicer of Plaintiffs' loan, BONYM is the creditor, the principal balance of Plaintiffs' loan is $179,488.21, and foreclosure proceedings would be forthcoming. (Pls' Ex. 1). Shuping sent Plaintiffs similar letters on April 25 and May 5, 2011, containing the same information (Pls' Exs. 3, 4).

On April 13, 2011, MERS, as nominee for Pulte, assigned to BONYM (“Assignment”) “all right, title, interest, powers and options in, to and under [the Security Deed] as well as the land described therein and the indebtedness secured thereby.” (Assignment [28.3] at 1).

On April 25, 2011, Plaintiffs sent Shuping a “Demand for Proof of Standing,” requesting that Shuping provide documentation to support that BONYM is “the current beneficiary, ... Holder in Due Course, and that it has [s]tanding to pursue collections and/or foreclosure in this matter.” (Pls' Ex. 2).

On May 5, 2011, Shuping sent Plaintiffs a Foreclosure Advertisement and Notice of Sale Under Power (“May 5th NSUP”), which states:

By virtue of the power of sale contained in a Deed to Secure Debt by [Plaintiffs] to [MERS] as nominee for Pulte ... and securing a Note in the original principal amount of $181,352.00, last transferred to [BONYM], there will be sold at a public outcry ... on the first Tuesday in June, 2011, by [BONYM] as Attorney–in–Fact for [Plaintiffs] [the Property].

...

The indebtedness secured by said Deed to Secure Debt having been declared due and payable because of default in the payment of the indebtedness secured thereby, this sale will be made for the purpose of paying the same and all expenses of sale ....

...

Pursuant to O.C.G.A. § 44–14–162.2, the name, address and telephone number of the individual or entity who shall have the full authority to negotiate, amend or modify all terms of the above described mortgage is as follows: [BACHLS]. The foregoing notwithstanding, nothing in O.C.G.A. § 44–14–162.2 shall be construed to require [BACHLS] as servicer for [BONYM] to negotiate, amend or modify the terms of the Deed to Secure Debt described herein.

...

(May 5th NSUP, Pls' Ex. 21 [26.2] at 2–3). The May 5th NSUP was published in the Cherokee Tribune on May 5, 2011. (Am. Compl. ¶ 68).

On June 6, 2011, Shuping notified Plaintiffs that the foreclosure sale scheduled for the next day had been withdrawn. (Pls' Ex. 5).

On June 13, 2011, Plaintiffs received from BANA a “Special Forbearance Agreement” modification offer. (Am. Compl. ¶ 19). The proposed modification would have more than doubled Plaintiffs' original monthly, interest-only payment. ( Id.). BANA told Plaintiffs that they could accept the modification or refuse it and re-apply in thirty days. ( Id. ¶ 20).

On July 1, 2011, BACHLS merged with and into its parent company, BANA. ⁴

On July 7, 2011, Plaintiffs received a letter (the “July 7th Letter”) from BANA stating that “[e]ffective July 1, 2011, the servicing of home loans by [its] subsidiary—BAC Home Loans Servicing, LP, transfers to its parent company—Bank of America, N.A.” (Am. Compl. ¶ 21; Pls' Ex. 7). The July 7th Letter states that “[u]nder the federal Fair Debt Collections [sic] Practices Act and certain state laws, [BANA] is considered a debt collector” and “that this communication is from a debt collector attempting to collect a debt ....” (July 7th Letter at 1). The July 7th Letter asserts that, as of July 7, 2011, Plaintiffs owes $198,432.72 to “BANK OF N.Y. (CWALT 2007–5CB) G1” and that Plaintiffs are required to dispute the debt within thirty (30) days or else BANA would assume it was valid. ( Id. at 3). The July 7th Letter further states that if Plaintiffs dispute the debt, BANA will obtain verification of the debt and mail it to them. ( Id.).

On July 27, 2011, “Plaintiffs sent a certified letter disputing the debt, indicating that the purported creditor was unknown to Plaintiffs, and demanding that Bank of America provide ‘documentation that BANK of N.Y. is the legal holder in due course, along with proof of each and every transfer in the chain of assignments that resulted in BANK of N.Y. attaining this status.’ ” (Am. Compl. ¶ 22; Pls' Ex. 8). Plaintiffs claim they never received verification of the debt from BANA. (Am. Compl. ¶ 23).

On September 8, 2011, Shuping, on behalf of BANA, sent Plaintiffs a letter (the “September 8th Letter”) seeking to collect on Plaintiffs' indebtedness to BANA and stating that “[i]t is anticipated that foreclosure proceedings will be forthcoming.” ( Id. ¶ 30; Pls' Ex. 9). The September 8th Letter states also that “[u]nless you notify us within 30 days from the date of your receipt of this notice that you dispute the validity of this debt or any portion thereof, we will assume the debt is valid.” (Pls' Ex. 9).

On September 14, 2011, Plaintiffs replied to Shuping's September 8th Letter and again demanded “written documentation that CWALT, Inc. is indeed the current creditor/beneficiary, that it is indeed the Holder in Due Course, and that it has Standing to pursue collections and/or foreclosure in this matter.” (Am. Compl. ¶ 32; Pls' Ex. 10).

On September 19, 2011, Shuping replied to Plaintiffs' demand for verification of their indebtedness and provided a “Payoff Demand Statement” from BANA and a copy of the promissory note Plaintiffs signed when they obtained their loan. (Pls' Exs. 11–13).

On September 26, 2011, Plaintiffs replied to the verification of indebtedness provided by Shuping, asserted that it was deficient, and stated that the Fair Debt Collection Practices Act requires Shuping and Defendants to “cease collection efforts until [they] are able to verify [their] claims” of indebtedness against Plaintiffs. (Am. Compl. ¶ 38; Pls' Ex. 14).

On September 29, 2011, Shuping sent Plaintiffs another demand letter stating that “foreclosure proceedings are being instituted in the manner provided in the Promissory Note and Deed to Secure Debt;” seeking to collect on their indebtedness to BANA; and stating “you have 10 days from the date of your receipt of this notice to pay the entire principal balance and accrued interest due on the Promissory Note” without being required to also pay attorney's fees. (Am. Compl. ¶ 39; Pls' Ex. 15).

Also on September 29, 2011, Shuping sent Plaintiffs a second Foreclosure Advertisement and Notice of Sale Under Power (“September 29th NSUP”), which states:

By virtue of the power of sale contained in a Deed to Secure Debt by [Plaintiffs] to [MERS] as nominee for Pulte ... and securing a Note in the original principal amount of $181,352.00, last transferred to [BONYM] by Assignment filed for record May 3, 2011 ... there will be sold at a public outcry ... on the first Tuesday in November, 2011, by [BONYM] as Attorney–in–Fact for [Plaintiffs] [the Property].

...

The indebtedness secured by said Deed to Secure Debt having been declared due and payable because of default in the payment of the indebtedness secured thereby, this sale will be made for the purpose of paying the same and all expenses of sale ....

...

Pursuant to O.C.G.A. § 44–14–162.2, the name, address and telephone number of the individual or entity who shall have the full authority to negotiate, amend or modify all terms of the above described mortgage is as follows: [BANA]. The foregoing notwithstanding, nothing in O.C.G.A. § 44–14–162.2 shall be construed to require [BANA] as...