Vassalotti v. Wells Fargo Bank, N.A., Civil Action No. 08–5574.

• Citation: 815 F.Supp.2d 856
• Decision Date: 22 September 2011
• Docket Number: Civil Action No. 08–5574.
• Parties: Maria VASSALOTTI a/k/a Marie McBride, Plaintiff v. WELLS FARGO BANK, N.A. d/b/a America's Servicing Company, Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

815 F.Supp.2d 856

Maria VASSALOTTI a/k/a Marie McBride, Plaintiff

v.WELLS FARGO BANK, N.A. d/b/a America's Servicing Company, Defendant.

Civil Action No. 08–5574.

United States District Court, E.D. Pennsylvania.

Sept. 22, 2011.

Maria Vassalotti, Broomall, PA, pro se.

Gregory F. Vizza, John E. Lucian, Blank Rome LLP, Philadelphia, PA, for Defendant.

MEMORANDUM

ANITA B. BRODY, District Judge.I. Introduction

Plaintiff Marie Vassalotti ¹ brings this action against Defendant Wells Fargo Bank, N.A. d/b/a America's Servicing Company (“Wells Fargo”), claiming that Wells Fargo failed to service her mortgage loan in accordance with the terms of the original note and mortgage, two loan modification agreements, and state and federal law.

Wells Fargo moves for summary judgment on the three remaining claims in Vassalotti's Third Amended Complaint (“3AC”): ² breach of contract (Count II), violation of the Fair Credit Reporting Act (“FCRA”) (Count IV), and violation of Pennsylvania's Unfair Trade Practices and Consumer Protection Law (“UTPCPL”) (Count V).³

Vassalotti seeks the following forms of relief against Wells Fargo: declaratory judgment and damages for breach of contract; civil damages under the FCRA; actual, treble, and punitive damages for violation of the FCRA; and reasonable attorney's fees, litigation expenses, and costs of suit.

II. Background

In August 2007, Wells Fargo, as servicer of Vassalotti's mortgage loan, filed a foreclosure action against Vassalotti because she failed to make the required payments under her mortgage agreement.⁴ Pl.'s Resp. 1. On November 14, 2007, Wells Fargo sent Vassalotti a letter describing four potential solutions for distressed borrowers, including its loan modification program.⁵ Pl.'s Resp., Ex. D. Loan modification programs generally assist delinquent borrowers by extending their overdue payment obligations over the remaining term of the loan. Typically, the borrower's deficit (“capitalized amount”) is added to the original loan's remaining balance, to create an increased overall balance. The borrower then agrees to make payments toward the modified balance and has no further obligations with respect to the original shortfall. The “capitalized amount” may include delinquent interest, taxes and/or insurance payments. The latter two are generally grouped together under “escrow.” An escrow account is an “account that a servicer establishes or controls on behalf of a borrower to pay taxes, insurance premiums (including flood insurance), or other charges with respect to a federally related mortgage loan.” 24 C.F.R. § 3500.17.

In the November 14, 2007 letter, Wells Fargo described its own loan modification program as follows: “This program adds the delinquent interest, taxes, and/or insurance payments to your unpaid balance if applicable. If you qualify, we may be able to extend the repayment of the past due amounts over the remaining term of your loan.” Pl.'s Resp., Ex. D. Over the next six months, Vassalotti and Wells Fargo executed two loan modifications (“LM1” and “LM2”). This action arises in part out of a dispute over whether LM1 and LM2 cured the deficit in Vassalotti's escrow account by including it in the total deficit amount that was capitalized—and regardless, whether the loan modification agreements were themselves deceptive.

On December 14, 2007, Wells Fargo sent Vassalotti LM1. Pl.'s Resp., Ex. B. LM1 included a cover letter stating:

This letter will confirm the formal approval of a loan modification/restructure of your mortgage loan.... Please sign the enclosed loan modification agreement and return it, along with any payment(s) and/or contribution due as reflected in the terms of this letter.... The terms of your modification/restructure are outlined below:

1. Due date of first payment: 03/01/2008

2. New principal and interest payment amount: $2,624.88

3. Required escrow payment based on previous analysis: $322.03

4. Estimated new net payment: $2,946.91

5. Modified Maturity Date: 12/01/2035

6. Interest rate: 9.650% ... This proposal is valid for five (5) days from the date of this letter....

Pl.'s Resp., Ex. B. A five-page agreement followed the two-page cover letter. The monetary figures listed in the agreement make no reference to a required escrow payment of $322.03. The only reference to “escrow” appears in the fourth paragraph of page 2, which states:

Borrower also will comply with all other covenants, agreements, and requirements of the Security Instrument, including without limitation, Borrower's covenants and agreements to make all payments of taxes, insurance premiums, assessments, escrow items, impounds, and all other payments that Borrower is obligated to make under the Security instrument ....

Pl.'s Resp., Ex. B (emphasis added). Vassalotti accepted and signed LM1, and Wells Fargo cancelled the pending Sheriff's sale of her home that was scheduled for January 18, 2008. Pl.'s Resp. 1. She paid the mutually agreed upon contribution of $5,120.35 ⁶ listed in the first paragraph of the cover letter and made the first two months of payments. Pl.'s Resp., Ex. B.

On January 16, 2008, Vassalotti filed for bankruptcy. Vassalotti's primary purpose for filing for bankruptcy was to discharge credit card debt. Vassalotti Dep. 54:23–24. On February 12, 2008, Wells Fargo “inadvertently placed [LM1] on hold due to the bankruptcy status of the loan.” Pl.'s Resp., Ex. E. This meant that in spite of accepting Vassalotti's payments, Wells Fargo did not apply them towards her account and instead considered her to be delinquent.⁷ On April 18, 2008, Vassalotti was granted a discharge in bankruptcy under section 727 of Title 11 of the United States Code. Def.'s Mot. Summ. J., Ex. I.

On May 10, 2008, Wells Fargo offered Vassalotti LM2, which she signed and accepted. Pl.'s Resp., Ex. C. As was the case with LM1, LM2 also included a cover letter stating: ⁸

This letter will confirm the formal approval of a loan modification/restructure of your mortgage loan.... Please sign the enclosed loan modification agreement and return it, along with any payment(s) and/or contribution due as reflected in the terms of this letter.... The terms of your modification/restructure are outlined below:

1. Due date of first payment: 07/01/2008

2. New principal and interest payment amount: $2,691.86

3. Required escrow payment based on previous analysis: $327.45

4. Estimated new net payment: $3,019.31

5. Modified Maturity Date: 12/01/2035

6. Interest rate: 9.650% ...

This proposal is valid for five (5) days from the date of this letter.

Pl.'s Resp., Ex. C.

As was the case with LM1, LM2 included a five-page agreement that followed the two-page cover letter. The monetary figures listed in the agreement make no reference to a required escrow payment of $327.45. The first reference to “escrow” appears in Section D of Paragraph 2 on the first page of LM2. ⁹ The Section states:

The borrower promises to pay the unpaid principal balance plus interest, to the order of the Lender. Interest will be charged on the unpaid principal balance of U.S. $310,926.76. The borrower promises to make monthly payments of principal and interest of U.S. $2,691.86, at a yearly rate of 9.650%, not including any escrow deficit, if applicable ....Pl.'s Resp., Ex. C (emphasis added). The second reference to “escrow” appears in the fourth paragraph of page 2, which states:

Borrower also will comply with all other covenants, agreements, and requirements of the Security Instrument, including without limitation, Borrower's covenants and agreements to make all payments of taxes, insurance premiums, assessments, escrow items, impounds, and all other payments that Borrower is obligated to make under the Security instrument .... ¹⁰

Pl.'s Resp., Ex. C (emphasis added).

Unlike LM1, LM2 also includes a “Loan Modification Transmittal Form” that follows the five-page agreement. Pl.'s Resp., Ex. C. The “Transmittal Form” includes “Part C: Modification Data,” which includes a subsection, entitled “Breakdown of Amounts Due.” This subsection lists figures that add up to the total deficit (also referred to as the “capitalized amount”) that was added to the overall balance due. The column lists “.00” for “Escrow.” Vassalotti argues that the entry of “.00” with respect to the escrow balance demonstrates that the loan modification brought her escrow account deficit to zero. In contrast, Wells Fargo contends that the “Breakdown of Amounts Due” subsection lists only the amounts that were capitalized into the modified balance. It argues that the “.00” entry for the escrow line item reflects that Vassalotti's escrow obligations were not capitalized into the modified balance.

On June 27, 2008, Vassalotti mailed in the first LM2 monthly payment of $3,019.31, as listed on LM2's cover letter. The payment included $327.45 in escrow. In July, Wells Fargo informed Vassalotti that her escrow account maintained a deficit of $10,220.35 and that it was increasing her monthly escrow payments to $1,214.35, thereby raising her total monthly payments by $886.55. Pl.'s Resp., Ex. H. On August 10, 2008, Wells Fargo wrote Vassalotti informing her that she was delinquent on the required payments under the mortgage agreement. Pl.'s Resp., Ex. G.

On August 19, 2008, Vassalotti wrote Wells Fargo disputing her mortgage loan's accounting.¹¹ Pl.'s Second Am. Compl., Ex. T. The letter expressed Vassalotti's belief that Wells Fargo erred by carrying over a negative escrow balance from her original mortgage agreement and increasing her required escrow payments. On October 5, 2008, Wells Fargo sent Vassalotti an Act 91 foreclosure notice. Pl.'s Resp., Ex. I.

Despite already issuing the October foreclosure notice, Wells Fargo responded to Vassalotti's August letter on November 12, 2008, explaining that the loan modification agreements failed to cure Vassalotti's escrow deficit. Def.'s Mot. to Dismiss, Ex. 1. Seven months after inadvertently placing LM1 on hold, Wells...