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Benner v. Wells Fargo Bank, N.A.

United States District Court, D. Maine

March 29, 2018

APRIL BENNER, Plaintiff,
v.
WELLS FARGO BANK, N.A., AS TRUSTEE FOR THE CERTIFICATE HOLDERS OF MASTR ASSET-BACKED SECURITIES TRUST 2007- CW, MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2007-NCW et al., Defendants.

          ORDER ON THE PARTIES' CROSS-MOTIONS FOR SUMMARY JUDGMENT AND PLAINTIFF'S MOTION TO SUPPLEMENT THE FIRST AMENDED COMPLAINT

          NANCY TORRESEN, UNITED STATES CHIEF DISTRICT JUDGE

         In this action, Plaintiff April Benner (“Ms. Benner”) asserts claims against Defendants Specialized Loan Servicing, LLC (“SLS”) and Wells Fargo Bank, N.A., in its capacity as Trustee for the Certificate Holders of the MASTR Asset-Backed Securities Trust 2007-NCW, Mortgage Pass-Through Certificates, Series 2007-NCW (“Wells Fargo”), arising out of the Defendants' purported mishandling of her mortgage loan modification applications.[1] Ms. Benner alleges that the Defendants' conduct violated the Real Estate Settlement Procedures Act (“RESPA”), the Maine Unfair Trade Practices Act (“UTPA”), and the Maine Consumer Credit Code (“MCCC”). Before me are the parties' cross-motions for summary judgment (ECF Nos. 66, 78) and Ms. Benner's motion to supplement her First Amended Complaint (ECF No. 70) (“Pl.'s MTS”). For the reasons set out below I GRANT IN PART and DENY IN PART the Defendants' motion for summary judgment, and I DENY Ms. Benner's motion for summary judgment and Ms. Benner's motion to supplement.

         FACTUAL BACKGROUND

         On February 22, 2007, Ms. Benner and her now ex-husband Robie Benner (“Mr. Benner”) executed a promissory note with a principal balance of $204, 000 payable to New Century Mortgage Corporation. SMF ¶ 1. The note was secured by a mortgage on real property located at 683 Main Street, Bowdoin, Maine (the “Property”). SMF ¶ 2. Ms. Benner and Mr. Benner were legally divorced via a Judgment for Divorce dated September 24, 2012. SMF ¶ 12. Mr. Benner transferred his interest in the Property to Ms. Benner at the time of their divorce. Ex. 44 (ECF No. 62-3).

         During all times relevant here, Wells Fargo has served as the mortgagee of record on behalf of the promissory note-holders, the Certificate Holders of the MASTR Asset-Backed Securities Trust 2007-NCW, Mortgage Pass-Through Certificates, Series 2007-NCW. SMF ¶¶ 3, 4, 211. Wells Fargo acts as mortgagee in its capacity as trustee. SMF ¶¶ 3-4. Since June 1, 2015, SLS has serviced Ms. Benner's mortgage loan as the sole servicer on behalf of Wells Fargo. SMF ¶¶ 5, 6, 7.

         I. Servicing and Loss Mitigation History

         Ms. Benner and Mr. Benner defaulted on their mortgage loan in April 2011 and remained in default thereafter. SMF ¶ 11; see SMF ¶ 13. On May 13, 2014, Wells Fargo filed a foreclosure action against Ms. Benner and her ex-husband in state court. SMF ¶ 22. The parties entered into Maine's Foreclosure Diversion Program, and the foreclosure action was put on hold. SMF ¶ 23.

         In August 2014, Ms. Benner submitted a loan modification application to Select Portfolio Servicing, Inc. (“SPS”), which had been the servicer for Ms. Benner's loan since December 1, 2012. SMF ¶¶ 8, 25. Between January 2015 and May 2015, SPS solicited and Ms. Benner provided additional information and documents in support of her application for the loan modification. SMF ¶¶ 30, 32. During that time, SPS twice indicated to Ms. Benner that it had received a complete application and that it would review her loan for a potential modification. SMF ¶¶ 26, 31. On both occasions, SPS then determined that Ms. Benner was eligible only for a proprietary Bank of America modification. SMF ¶¶ 27, 28, 31.[2] Because that modification was less favorable than modifications available under the Home Affordable Modification Program (“HAMP”), SPS did not offer Ms. Benner the proprietary modification and instead continued to review her application to see if she could qualify for a better modification. SMF ¶¶ 29, 31.

         Throughout this time, Wells Fargo, SPS, Ms. Benner, and Mr. Benner remained engaged in foreclosure mediation. SMF ¶ 34. Ms. Benner was represented in the mediation free of charge by a loan modification advocate named Jason Thomas (“Mr. Thomas”). SMF ¶ 35. In May 2015, she also retained an attorney, Andrea Bopp Stark (“Ms. Stark”). SMF ¶ 36. On May 29, 2015, SPS deemed Ms. Benner's application complete for a third time. SMF ¶ 33.

         II. Servicing Transfer to SLS

         Effective June 1, 2015, SPS transferred servicing of Ms. Benner's loan to SLS as part of a larger servicing transfer of 2, 450 loans. SMF ¶¶ 37, 39. It is SLS's practice to send transferor servicers a set of Servicing Transfer Instructions ahead of any servicing transfer. See SMF ¶ 38; Ex. 28 at 18 (ECF No. 60-7). The instructions ask the transferor to provide SLS with all documents associated with the transferred loans and to inform SLS if any of the transferred loans had a pending loan modification application. SMF ¶ 38; Ex. C at 19-21 (ECF No. 64-3). The instructions also ask the transferor to certify that it has sent SLS a complete servicing file for all transferred loans, including borrower-submitted loss mitigation documents. See SOF ¶ 38; Ex. 9 at 2 (ECF No. 57-8). SPS signed the required certification on May 29, 2015. SMF ¶ 39.[3]

         On or “slightly before” June 1, 2015, SPS sent a spreadsheet to SLS that contained information for all 2, 450 of the service-transferred loans. SMF ¶ 45; Ward Depo. Tr. at 36:7-20 (ECF No. 61). The spreadsheet included the following series of entries related to Ms. Benner's loan:

LOAN_NO

Workout Status Name

Workout Type Name

Product Name

Eligible

Is Opt Out

Is Denied

Product Status

Reason Display Name

Processing

Complete Package Review

HAMP Unemployment

1

0

1

Denied

Not Currently Unemployed

Processing

Complete Package Review

SPS Unemployment

1

0

1

Denied

Not Currently Unemployed

Processing

Complete Package Review

HAMP Tier 1 Trial Mod

1

1

1

Denied

HAMP-Escrow payment exceeds 31% payment

Processing

Complete Package Review

HAMP Tier 2 Trial Mod

1

0

1

Denied

HAMP-DTI Outside of Acceptable range

Processing

Complete Package Review

BAC Trial Mod

1

0

0

Processing

Null

Processing

Complete Package Review

Repayment Plan

1

0

1

Denied

Financials Do Not Support

         Ex. 8 (ECF No. 57-7). The spreadsheet indicates that Ms. Benner was reviewed for but denied multiple HAMP and other modifications. SMF ¶ 46. The spreadsheet also shows that SPS was “Processing” a workout for Ms. Benner for a product called a “BAC Trial Mod.” SMF ¶ 46.

         As part of a series of “document dumps” (mass transfers of files) on June 3, 2015, June 28, 2015, and July 8, 2015, SLS received from SPS certain documents that Ms. Benner had submitted to SPS in support of her loan modification application. See SMF ¶¶ 43, 48. However, SLS did not receive what it considered a complete loan modification application from Ms. Benner. See SMF ¶ 41; Ex. 28 at 7 (ECF No. 60-7). Specifically, SLS did not receive a Request for Mortgage Assistance (“RMA”) from each person who could contribute to repaying Ms. Benner's loan. SMF ¶ 44. SLS did not contact SPS to request any additional documents for Ms. Benner. SMF ¶ 165.

         III. June 8, 2015 Mediation Session

         Before the servicing transfer, the parties to Ms. Benner's foreclosure action had scheduled a mediation session for June 8, 2015. SMF ¶ 54. On June 2, 2015, Ms. Benner's loss mitigation counselor, Mr. Thomas, informed her attorney, Ms. Stark, that SPS had transferred servicing to SLS and that he did not expect SLS to attend the June 8th session or to have any information on the loan until mid-June 2015. SMF ¶ 55. Mr. Thomas suggested that Ms. Benner should nevertheless attend the mediation in order to make a case for mediation non-compliance against SPS and Wells Fargo. SMF ¶ 56.

         Ms. Benner did attend the mediation session, missing half a day of work and travelling to West Bath, Maine in order to do so. SMF ¶ 160. SLS did not appear at the mediation session. SMF ¶ 161. The mediator contacted SLS by phone during the mediation. SMF ¶ 161. Finding that neither SPS nor SLS was prepared to meaningfully participate in the mediation session, the mediator entered a report of non-compliance against Wells Fargo. SMF ¶ 162.

         IV. Ms. Benner's First Purported Qualified Written Request

         On June 18, 2015, Ms. Benner, through Ms. Stark, sent a letter to SLS. SMF ¶ 142. The letter purported to notify SLS of errors SPS had committed in handling Ms. Benner's loss mitigation applications. SMF ¶ 143. The letter also requested “an immediate determination and explanation for any denial of all loss mitigation options including modifications under the DOJ, HAMP, and any in-house programs on Ms. Benner's loan, ” and requested certain documents related to Ms. Benner's loan history. SMF ¶ 143; Ex. 24 at 2-4 (ECF No. 60-3).

         SLS received the letter on June 23, 2015 and acknowledged receipt on June 26, 2015. SMF ¶¶ 145, 146. By letter dated June 30, 2015 and mailed to Ms. Stark, SLS responded more fully and provided documents including a copy of Ms. Benner's promissory note, a copy of the deed of trust, a welcome letter, payment history and transaction codes, and the previous servicer's payment history. SMF ¶ 147.

         V. Ms. Benner's Loss Mitigation Applications to SLS

         A. Application Transferred from SPS

         On June 20, 2015, SLS sent a letter to Ms. Benner and Mr. Benner that informed them they were delinquent on their loan and that asked them to contact SLS to discuss possible loss mitigation options. SMF ¶ 63.

         On June 29, 2015, SLS sent a letter to Ms. Benner care of Ms. Stark. SMF ¶ 64. The letter stated that on June 28, 2015, the date of SPS's second file transfer to SLS, SLS had received nine documents that could support a loan modification application for Ms. Benner. SMF ¶ 65. The letter also listed several additional documents that SLS believed it needed in order to review Ms. Benner for a modification. SMF ¶ 65. Specifically, the letter asked Ms. Benner to submit an RMA form, Dodd-Frank Certification, and Hardship Verification from all “financial contributors” on the loan by July 29, 2015. SMF ¶ 66. The letter contained descriptions of the requested forms, and directed Ms. Benner or her attorney to contact SLS if they had any questions. SMF ¶ 67. The letter did not define the term “financial contributor.” SMF ¶ 171.

         On July 15, 2015, SLS sent a letter to Ms. Stark to inform her that SLS still needed the documents requested in its June 29th letter. SMF ¶ 68.

         On August 5, 2015, SLS informed Ms. Benner and Mr. Benner that it was unable to review them for modification options because they had not provided all requested documents. SMF ¶ 72.

         B. August 20, 2015 Application

         On August 6, 2015, SLS sent Ms. Benner a HAMP solicitation letter asking her for a new loss mitigation application. SMF ¶ 181. Mr. Thomas prepared a loss mitigation application for Ms. Benner, and, on August 20, 2015, Ms. Stark submitted the application to SLS. SMF ¶¶ 79, 182.

         That afternoon, SLS informed Doonan, Graves & Longoria (“Doonan Graves”), Wells Fargo's counsel in the foreclosure suit, that it had reviewed the documents that Ms. Benner's counsel had provided earlier that day. SMF ¶ 82; see SMF ¶ 73. SLS noted that it had follow-up legal questions and that it would need additional information and documents from Ms. Benner. SMF ¶ 82. Doonan Graves then emailed Mr. Thomas and Ms. Stark to describe what information SLS still needed and why, which included (i) two months proof of receipt for all rental income along with either bank statements marking each deposit of rent or cancelled checks; (ii) a mortgage statement for a rental property; (iii) signed and dated tax returns or a 4506-T form from Ms. Benner's grandmother Edith Rossignol (“Ms. Rossignol”); and (iv) a corrected letter of explanation regarding the discrepancy between Ms. Benner's stated gross wages and her paystubs. Ex. 18 at 8-9 (ECF No. 59-7); see also SMF ¶ 83. The email also requested “a copy of the court entered divorce decree . . . [o]r something from the court indicating that no appeal had been taken and therefore the decree provided is final.” Ex. 18 at 9.

         On August 24, 2015, SLS wrote to Ms. Stark, requesting the following documents by September 23, 2015:

• From Mr. Benner, one of the following: (i) “4506T and Unemployment Benefits - Proof of Receipt, ” (ii) “4506T and Unemployment Benefits, ” (iii) “Tax Returns/Tax Transcripts and Unemployment Benefits - Proof of Receipt, ” or (iv) “Unemployment Benefits and Tax Returns/Tax Transcripts.”
• From Ms. Benner, one of the following: (i) “Mortgage Statement” or (ii) “Mortgage Statement and Rental Income - Proof of Receipt.”
• From Ms. Rossignol, a “Contributor Credit Authorization” and one of the following: (i) “Mortgage Statement and Tax Returns/Tax Transcripts, ” or (ii) “Rental Income/Lease Agreement and Mortgage Statement and Rental Income - Proof of Receipt.”

See Ex. 17 at 31 (ECF No. 59-6); SMF ¶ 84.

         On September 10, 2015, SLS sent another letter to Ms. Benner, care of Ms. Stark, which noted that SLS had not received the information requested in its August 24th letter and which gave Ms. Benner until September 25, 2015, to submit those documents. SMF ¶ 88. On the same day, Doonan Graves emailed Mr. Thomas and Ms. Stark to explain that SLS still needed certain documents “to complete the underwriting review, ” including (i) a “signed/dated complete Contributor Credit Authorization;” (ii) a “Mortgage Statement for non-subject property to show current and escrow account verification;” (iii) a “judge executed Divorce Decree with Property award clause;” and (iv) “2 more consecutive weekly paystubs for the borrower [because] (paystubs received were not consecutive and did not cover a FULL 30 days).” Ex. 19 at 39 (ECF No. 59-8); see also SMF ¶ 89. Ms. Stark instructed Ms. Benner to submit these documents to SLS “ASAP.” SMF ¶ 90.

         On September 23, 2015, Mr. Thomas emailed several documents to Doonan Graves on Ms. Benner's behalf. SMF ¶ 98. These included (i) a letter explaining Ms. Benner's income sources; (ii) a contributor credit authorization form for Ms. Rossignol; (iii) paystubs from Ms. Benner's new job and from her time at L.L. Bean; (iv) two months of bank statements; (v) a 4506-T form for Ms. Rossignol; (vi) four rental receipts; (vii) a mortgage statement for Ms. Benner's rental property; and (viii) her judgment for divorce and quitclaim deed. SMF ¶ 190.

         On September 29, 2015, SLS sent a letter to Ms. Stark that requested the same documents listed in SLS's letters of August 24 and September 10, 2015, as well as an RMA for all financial contributors, to be provided by October 14, 2015. SMF ¶ 99.

         In early October of 2015, Bendett & McHugh replaced Doonan Graves as Wells Fargo's foreclosure counsel in Ms. Benner's action. SMF ¶ 101. On October 16, 2015, Bendett & McHugh emailed Ms. Benner's counsel to inform her that:

[T]he following docs are needed to proceed with loss mitigation review:
-Please indicate on the submitted Bank statements the SSI income in August and September, so that we can understand which income corresponds to which source.
-Please provide a LOE as to (1) why the SSI amounts vary, and (2) please state that income is deposited for Edith into April's account (just so it is fully documented).
-Please provide proof of residency for Edith since her bank statements show a PO box (ie: third party documentation will be needed such as driver license/utility bill).

Ex. 12 at 2 (ECF No. 59-1); see SMF ¶¶ 101-02.

         Just three days later, on October 19, 2015, SLS sent another letter to Ms. Stark, which stated that SLS was unable to review Ms. Benner and Mr. Benner for a modification because SLS had not received required documents. SMF ¶ 100. SLS has testified that it issued the October 19, 2015, denial letter because Ms. Benner had not submitted the requested August and September 2015 bank statements flagging her social security income, evidence that Ms. Rossignol's rental income was deposited into Ms. Benner's bank account, or the requested RMAs from financial contributors. SMF ¶ 192 (citing Ward Depo. Tr. at 118:2-123:10).

         On October 20, 2015, SLS sent Ms. Benner a new HAMP solicitation letter. SMF ¶ 198. On October 21, 2015, Mr. Thomas emailed Ms. Stark with “the three documents requested by [Bendett & McHugh].” SMF ¶ 104; Ex. 18 at 75. Ms. Stark suggested several changes to bring those documents in line with Bendett & McHugh's requests. SMF ¶ 105. The parties do not dispute that Ms. Benner submitted additional documents October 23, 2015, but neither party has presented evidence of whether those documents incorporated Ms. Stark's suggestions. SMF ¶¶ 105-06.

         On October 26, 2015, SLS sent a letter to Ms. Stark to inform her that SLS was still missing RMAs from all financial contributors to the loan and a contributor credit authorization from Ms. Rossignol. SMF ¶ 106. SLS asked Ms. Benner to provide those documents by November 25, 2015. SMF ¶ 107.

         On November 2, 2015, Bendett & McHugh emailed Mr. Thomas and Ms. Stark that SLS needed paystubs from Ms. Benner's former employer, L.L. Bean, for the full month of August 2015. SMF ¶ 109. On November 5, 2015, Mr. Thomas emailed Bendett & McHugh to explain that Ms. Benner did not work for L.L. Bean at the end of August 2015, and therefore had no L.L. Bean paystubs for August 14, 2015 or August 21, 2015. SMF ¶ 111.[4] Bendett & McHugh responded by email the same day to ask whether Ms. Benner had any additional paystubs from L.L. Bean, as SLS was trying to utilize an exception for non-consecutive paystubs but needed to have a full 30 days of paystubs from some time period in order to do so. SMF ΒΆ 112. On November 6, 2015, Ms. Stark responded to Bendett & McHugh by email, telling them that SLS already had Ms. Benner's paystubs from June 12 through August 26, 2015 and reattaching those paystubs as reference. ...


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