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

• Decision Date: 24 September 2014
• Docket Number: Civil Action No. 14–2498.
• Citation: 48 F.Supp.3d 787
• Court: U.S. District Court — Eastern District of Pennsylvania
• Parties: Bella WILSON, individually, and as Administrator and sole heir of the Estate of Damian Wilson, Plaintiff, v. BANK OF AMERICA, N.A., Defendant.

48 F.Supp.3d 787

Bella WILSON, individually, and as Administrator and sole heir of the Estate of Damian Wilson, Plaintiff

v.BANK OF AMERICA, N.A., Defendant.

Civil Action No. 14–2498.

United States District Court, E.D. Pennsylvania.

Signed Sept. 24, 2014.

Irv Ackelsberg, Langer Grogan & Diver PC, Philadelphia, PA, for Plaintiff.

Robert Warring, Reed Smith LLP, Philadelphia, PA, for Defendant.

MEMORANDUM

BUCKWALTER, Senior District Judge.

Currently pending before the Court is a Motion to Dismiss filed by Defendant Bank of America, N.A. (“BOA” or “Defendant”). For the following reasons, the Motion is granted in part and denied in part.

I. FACTUAL BACKGROUND

According to the facts set forth in the Complaint, Plaintiff Bella Wilson (“Plaintiff” or “Wilson”) is the sole owner of a two-story row house at 6014 Ogontz Avenue, Philadelphia, Pennsylvania (the “Property”). (Compl. ¶ 8.) The mortgage on the Property (the “Mortgage”) is owned and serviced by Defendant BOA. (Id. ¶ 9.) The Mortgage was originally made to Plaintiff's deceased son, Damian Wilson, who purchased the house in December 2006 with funds from a BOA mortgage loan. (Id. ¶ 10.) Damian Wilson died on September 21, 2007, and left Plaintiff as his sole heir. (Id. ¶¶ 10–11.) Plaintiff made several mortgage payments to BOA until receiving assurances from Damian's friends, who had been living in the house with him just prior to his death, that they would maintain the payments. (Id. ¶¶ 11, 13.) Although Plaintiff attempted to confirm with BOA that the mortgage was being maintained, BOA would not provide account information to her. (Id. ¶ 14.)

On April 8, 2008, Plaintiff was granted Letters of Administration by the Register of Wills for Philadelphia County, thereby making her the formal legal representative for Damian's estate. (Id. ¶ 15.) Thereafter, BOA changed the name of the account holder for the Mortgage to “Estate of Damian Wilson.” (Id. ¶ 16.) The Mortgage is presently “underwater,” meaning that the debt is in excess of the value of the Property. (Id. ¶ 17.) In April 2009, Plaintiff discovered that the people living in the house had moved out and damaged the property. (Id. ¶ 18.) She contacted BOA and indicated that she wanted to take control of the Property and make repairs, provided that BOA would work with her in bringing the mortgage account current. (Id. ) The BOA representative mentioned the possibility of a “loan modification.” (Id. )

These events coincided with the economic collapse that occurred in 2008 and the resulting response by the federal government, which included the enactment of the Home Affordable Modification Program (“HAMP”) on February 18, 2009. (Id. ¶¶ 19–20.) HAMP is funded by the federal government, primarily with funds from the Troubled Asset Relief Program (“TARP”), 12 U.S.C. § 5211. (Id. ¶ 23.) Because BOA accepted $25 billion in TARP funds and additional loan guarantees, it was required to participate in HAMP for the mortgage loans where it functioned as the mortgage “servicer,” and it entered into a written HAMP participation agreement with the Treasury Department on April 17, 2009. (Id. ¶ 24.) This participation agreement required BOA, among other things, to implement and operate a HAMP program in accordance with the program directives issues by Treasury, Fannie Mae and/or Freddie Mac. (Id . ¶ 25.) Under HAMP, qualified homeowners who are delinquent or otherwise financially distressed are eligible for a permanent modification of their mortgage so as to lower their monthly mortgage payment to affordable levels, and servicers must structure a hypothetical modified loan in accordance with a sequence called the “waterfall.” (Id. ¶ 26.) The terms of the modified loan are based on the borrower's monthly gross income, applying the waterfall. (Id. ¶ 27.) Once the hypothetical loan modification is determined, the servicer applies a “net present value” (“NPV”) test which, if passed (“NPV-positive”), qualifies the borrower for the modification. (Id. ¶ 28.)

HAMP directives define a two-step procedure for determining HAMP eligibility: (1) the participating servicer gathers financial information from the homeowner and, if the homeowner is qualified, offers a three-month Trial Period Plan (“TPP”) agreement based on its calculation of the appropriate modified mortgage payment; and (2) if the homeowner completes the required three TPP payments and continues to provide the relevant documentation, the servicer enters into a permanent loan modification agreement with the homeowner. (Id. ¶ 29.) HAMP program directives expressly provide for qualifying the surviving heirs of deceased borrowers. (Id. ¶ 30.) The program directives also require BOA to evaluate all loans in its servicing portfolios for possible eligibility for HAMP. (Id. ¶ 31.)

Soon after BOA signed its HAMP participation agreement, it identified the Mortgage at issue as one potentially eligible for a HAMP modification, and, in accordance with BOA's instructions, Plaintiff submitted HAMP-related documentation to BOA. (Id. ¶ 32.) The Mortgage was qualified for HAMP in that it was NPV-positive and, by application of the waterfall, the Mortgage could be made current and affordable through a combination of reducing the interest, extending the term, and/or deferring a portion of the principal.

(Id. ¶ 33.) Nonetheless, on May 20, 2009, BOA initiated a foreclosure action against the Property, naming as defendants “the Estate of Damian Wilson” and “Bella Wilson, as Administratrix and Heir.” (Id. ¶ 34.) As part of the foreclosure packet served on her, Plaintiff was encouraged to seek the assistance of a housing counseling agency and to participate in the local state court's Mortgage Foreclosure Diversion Program. (Id. ¶ 36.) Shortly thereafter, Plaintiff arranged to meet with a housing counselor, executed a deed to the Property from herself as Administratrix to herself as the sole heir, and remained in contact with BOA. (Id. ¶ 37.) After meeting with a housing counselor on June 9, 2009, Plaintiff began the process of becoming qualified for the HAMP loan modification. (Id. ¶ 38.)

On July 2, 2009, Plaintiff, her counselor, and BOA appeared at a “conciliation conference” under the state court's Foreclosure Diversion Program, at which point BOA acknowledged that the HAMP application was being processed, represented that the loan would be modified if Plaintiff provided proof that the deed naming her as owner had been duly recorded, and entered into a written agreement with Plaintiff to suspend the foreclosure action. (Id. ¶ 39.) This agreement was submitted to the court and subsequently entered as an order. (Id. ) Thereafter, on July 6, 2009, Plaintiff recorded the deed to the Property from the Estate to herself. (Id. ¶ 40.)

On July 25, 2009, by letter addressed to “the Estate of Damian Wilson” at the Property address, and referencing the Mortgage account number, BOA advised Plaintiff that, “[b]ased on an initial review of your current financial situation, you may be eligible for a loan modification as part of the federal government's Home Affordable Modification Program to help homeowners.” (Id. ¶ 41.) The letter included the offer of a three-month Home Affordable Modification Trial Period Plan (“TPP Agreement”) providing for a “trial period payment” (“TPP”) of $636.24 per month commencing September 1, 2009. (Id. ) The letter further advised Plaintiff that the amount of the TPP was “based on the income information that you previously provided to us,” and asked Plaintiff to provide supplemental financial information and a Hardship Affidavit explaining the circumstances of the delinquency. (Id. ¶ 42.) It represented that if Plaintiff's additional information confirmed her eligibility for HAMP and she made the three trial payments, “a new loan modification agreement will be sent to you.” (Id. )

With the assistance of her housing counselor, Plaintiff prepared the “hardship affidavit,” gathered the requested financial information, and sent these materials and the signed TPP agreement to Defendant. (Id. ¶ 43.) Plaintiff mailed to BOA her three TPP payments from September to December 2009. (Id. ¶ 44.) Nonetheless, she never received the permanent HAMP modification agreement before the end of her trial period, as promised. (Id. ¶ 45.) Plaintiff continued to tender monthly payments in the amount specified in the TPP Agreement while awaiting the arrival of the promised modification agreement. (Id. )

On March 11, 2010, BOA sent a letter to Plaintiff personally, not as administratrix, thanking her for “sending us your Trial Period Plan agreement and some of the required documentation,” but asking for recent pay stubs and bank statements. (Id. ¶ 46.) Plaintiff complied with this request. (Id. ) On May 6, 2010, BOA sent Plaintiff a letter stating that she had been determined not eligible for HAMP because “you did not make all the required Trial Period Plan payments by the end of the trial period.” (Id. ¶ 47.) Having already made nine payments of $636.24, Plaintiff sent her tenth payment in June 2010. (Id. ¶¶ 48–49.) BOA, however, returned the payment in July stating that the funds paid had not been certified, despite the fact that it had never required certified funds before and had accepted her nine previous personal checks. (Id. ¶ 49.) In light of these developments, Plaintiff again sought the assistance of her housing counselor. (Id. ¶ 50.) BOA asked for a new set of financial documents, which Plaintiff and her counselor submitted. (Id. ¶ 51.)

On August 9, 2010, BOA sent Plaintiff a letter entitled “Partial Payment Agreement,” which provided for new monthly payments of $700/month. (Id. ¶ 52.) She signed and returned the letter with a payment of $700. (Id. ) That letter did not refer to the HAMP program or explain what happened to either her pre-existing TPP Agreement or the funds she paid pursuant to that agreement. (Id. ¶ 53.) Instead, it represented that, on December 1, 2010, BOA would decide, at its sole discretion,...