U.S. BANK NATIONAL ASSOCIATION, Plaintiff
JOHN S. MENZ and ELIZABETH MENZ, Defendants FIELDINGS OIL AND PROPANE INC., d/b/a PINE STATE FUELS, Party in Interest
ORDER ON REPORT OF NONCOMPLIANCE
Mills, Justice, Superior Court
the court is the Foreclosure Diversion Program Mediator's
Report of Noncompliance filed April 7, 2017. Hearing on the
report was held on July 6, 2017. Attorney Gibbons appeared
for plaintiff and Attorney Cox appeared for defendants. The
attorney for the party in interest did not appear.
original promissory note and mortgage were dated June 4,
2004. (Compl. ¶¶ 6-7 & Exs. A & B;
McLaughlin Aff. ¶ 6 & Exs. B, C.) The terms of the
note and mortgage were modified in 2005 and 2014. (Compl.
¶ 9, Ex. D; McLaughlin Aff. ¶ 6 & Exs. D, E.)
The 2014 loan modification was granted by PPH Mortgage
Company as subservicer for plaintiff. (McLaughlin Aff. ¶
10.) Because the 2014 modification increased defendants'
monthly payments to a level they could not afford, defendants
were in default by summer 2015. (Id. ¶ 21.)
Plaintiff's complaint for foreclosure was filed on June
21, 2016. The first mediation took place on September 30,
2016. The mediator identified the
documents to be provided by defendants. (FDP Document
Submission Worksheet 1.) Plaintiff then demanded more
documents, which delayed review of the modification
application. (McLaughlin Aff. ¶¶ 25-27 & Ex.
F.) Based on determinations made by the "Investor of
[defendants'] loan, " plaintiff denied
defendants' request for a modification by letter dated
December 30, 2016. (Id. ¶ 27 & Ex. G.)
Defendants filed a notice of error and appeal dated January
14, 2017. (Id. ¶ 31 & Ex. H.)
second mediation on January 20, 2017, the mediator wrote, in
1. Review and decision on appeal by homeowner to be provided
by plaintiff by Feb.21, 16.
2. Request for exception: decision in same to be
provided by plaintiff by Feb. 21, 16.
Following previous mediation on September 30. 16
(1st mediation), Homeowners request for
modification of the loan was denied by letter on Dec. 30. 16
by plaintiff. Homeowner had filed an appeal and notice of
error dated January 14th 17 on the denial, which
has been received by plaintiff. Plaintiff indicated at
mediation today that a response with decision would be
provided within 30 days on the appeal, by February 21. 17
appeal incorporated by reference. Plaintiff's underwriter
on phone today agrees to request an exception for
consideration of modification with an extension of the
maturity date. According to underwriter, this exception would
be to plaintiff's (investor guidelines) policy of not
extending maturity dates. Present loan was amortized for 20
years following change from interest only loan (see prior
report). Exception response shall be provided by plaintiff
within 30 days by Feb. 21. 17. Parties agree to another
mediation 45 days hence. Issue of document timeliness of
responses to be addressed at the next mediation.
(1/20/17 Mediation Report 2-4.) According to Kimberly
McLaughlin, a housing counselor, loan modification programs
have similar processes to help the borrower by reducing the
monthly payment while protecting the lender. (McLaughlin Aff.
¶¶ 14-18.) Plaintiff refused to consider step two
of the standard process, an extension of the term of the
loan. (Id. ¶ 18.) If the term of the loan had
been extended to thirty years from the original term of
twenty years or if the term remained at twenty years with an
amortization schedule of thirty years, the result would have
been an appropriate and affordable monthly payment for
defendants. (McLaughlin Aff. ¶¶ 18-20, 29-30.)
Instead, the modification was reviewed based only on the
remaining term of the loan. (Patterson Aff. ¶ 12 &
Ex. 3.) Neither defendants nor Ms. McLaughlin has received a
response from PPH regarding the request to the investor to
approve a term extension. (McLaughlin Aff. ¶¶ 34,
letter dated January 24, 2017, PPH again denied the
modification on the same grounds. (Id. ¶ 35
& Ex. I.) Defendants filed a notice of error and appeal
dated February 23, 2017 and requested copies of the investor
restrictions on extending the term of the loan. (Id.
¶ 36 & Ex. J.) By letter dated April 3, 2017, PPH
responded that the contracts PPH has with its clients are
"proprietary" and cannot be provided to consumers.
(Id. ¶ 37 & Ex. K.) According to Bernard
Patterson, a certified fraud examiner and forensic
accountant, and Ms. McLaughlin, these documents are not
proprietary. (Patterson Aff. ¶¶ 10, 14-27;
McLaughlin Aff. ¶ 39.)
on his review of the pooling and servicing agreement for the
trust involved in this case, Mr. Patterson saw no
restrictions on extending the term of the loan. (Patterson
Aff. ¶¶ 22-26.) In fact, loans owned by plaintiff
trust have been modified to extend the maturity date.
(Id. ¶¶14-21 & Ex.4.)
April 7, 2017 mediation, the mediator wrote, in part:
- Homeowners' stated desire is to remain in home and to
obtain an extension of the maturity date of their loan and
have requested modification to ...