Kent County Superior Court
For Plaintiff: Joanne Miller, pro se
For Defendant: Randall L. Souza, Esq. David Bizar, Esq.
Summary of Claims
This matter was tried before the Court sitting without a jury. Pro se Plaintiff, Joanne Miller (borrower), was a borrower. The loan was secured by a residential mortgage on property located at 233 Beach Avenue in Warwick, Rhode Island, originally owned jointly by the borrower and her now-former husband. The original complaint was handwritten and imprecise.Essentially, the complaint sets forth facts recounting the efforts the borrower made to obtain a loan modification in light of her then-current financial circumstances. In its penultimate sentence, there is the statement, "I am suing for fraudulent representation." That statement is the only reference to a cause of action associated with the facts she alleges in the original complaint. On or about March 2, 2011, before Defendants answered the original complaint, the borrower, without leave of Court, filed an amended complaint. The March 2 amendment-also filed pro se-repeats in paragraph 1 the facts that form the basis of the complaint. The borrower alleges a violation of the Deceptive Trade Practices Act and seeks injunctive relief to prevent Wells Fargo Bank, N.A. (the Bank) from initiating eviction proceedings. In a crude prayer for relief, the borrower also states she wants ownership of her house returned to her with clear title, as well as lost wages and compensation for pain and suffering. She also appears to allege a violation of the Deceptive Trade Practices Act. On October 12, 2011, the Court granted a motion to further amend the complaint, and on that day a pleading captioned "Amended Verified Complaint" was filed.
This pleading will hereafter be referred to as the "second amended complaint." As of the date of trial, October 1, 2014, the second amended complaint appears to be the borrower's operative pleading. Although not organized in the form of separate counts, the second amended complaint when construed liberally appears to allege the following claims:
1. That Defendants violated the provisions of the Rhode Island Mortgage Foreclosure Consultant Regulation, codified at G.L. 1956 §§ 5-79-1, et seq.
2. That the actions of Defendants violated the Rhode Island Deceptive Trade Practices Act, codified at G.L.1956 §§ 6-13.1-1, et seq.
3. That the Defendants violated the "mortgage-related provisions of the Omnibus Appropriations Act of 2009."
4. That the Defendants breached the implied covenant of good faith and fair dealing.
5. That the Defendants breached Section 2-101, et seq. of the Uniform Commercial Code
6. That Defendants by their agent/employee, Natura Gibbons, represented to borrower that her foreclosure would be rescinded; a representation which borrower relied on to her detriment. This statement suggests a claim for promissory estoppel.
The second amended complaint did not explicitly restate a claim of fraudulent representation as contained in the original complaint.
The facts which form the basis of each of the claims alleged are as follows:
The parties stipulated to certain facts, which stipulation marked as Joint Exhibit 1 is incorporated by reference in these findings of fact.
At trial, the borrower reviewed her efforts to obtain a loan modification or other workout option for her loan which had fallen into default as a result of changed financial circumstances. Her testimony regarding the details of her oral communications with the Bank, standing alone, was not convincing because of her failure to recall and failure to keep accurate notes of the dates of telephone conversations and the identity of the representatives of the Bank with whom she had spoken.
However, her testimony, when supported by the documentary evidence of communications with the Bank and the Bank's response thereto, evidenced a clear chronology of events upon which the Court relies concerning borrower's efforts to obtain a loan modification and the Bank's response.
On or about early August 2009, the borrower believed she would be unable to make her mortgage payments timely. Her fear of late payments followed several events in her personal life which materially changed her financial circumstances. The borrower decided to call the Bank. She explained to a woman whom she believed to be a customer service representative of the Bank or Wells Fargo Home Mortgage (a wholly-owned subsidiary of the Bank) that she had recently divorced her former husband, the co-obligor on the mortgage note. As a result of the divorce, the borrower was receiving child support payments, which had been reduced per court order. She also explained she was employed principally as a real estate broker, and that her income was sporadic and unpredictable as it was entirely comprised of sales commissions, and a recent property sale she had negotiated had fallen through, thus affecting the cash she had available to meet her mortgage payment. Her scheduled monthly mortgage payment was $1645.30. In the early August telephone conversation, the borrower indicated she had available cash of only $900. She stated she was willing to pay that amount towards the August mortgage payment and told the Bank representative she would pay the balance of the August installment as part of her next regularly-scheduled mortgage payment. There is no evidence that the Bank agreed to the modification suggested by the borrower. In response, the Bank representative told the borrower that she might be a good candidate for the Bank's loan modification program or other "work-out" alternatives designed to prevent foreclosure for qualified borrowers. The representative indicated she would send the necessary paperwork to begin the application and review process for loan modification. The borrower claims she was further told that while she was under review for loan modification she would not be required to pay her monthly mortgage payments. This statement lacks credibility as it would be inconsistent with the documentary evidence.
The Bank never agreed to halt the foreclosure process by reason of the borrower's request for modification. The borrower was not entitled to a loan modification simply because she submitted a hardship letter. The Bank indicated that it would enforce its rights by declaring default and acceleration until the loan modification review was complete. The borrower was advised that during the process of determining eligibility for loan modification, "we may at times agree to postpone the date of foreclosure. But that foreclosure was not halted or suspended until a viable plan has been approved." It should be noted that the HAMP guidelines provide that during the HAMP evaluation a home will not be referred to foreclosure or sold at a foreclosure sale if foreclosure process has already been initiated.
Although the borrower may have honestly believed she was entitled to loan modification by reason of financial hardship, the requirements of the HAMP program were that she had to submit current and verifiable evidence of income in order for her loan to be considered eligible for the program
On September 3, 2009, the borrower received mail from Wells Fargo Home Mortgage in Fort Mills, S.C., which included a cover letter and financial forms. These forms, when completed and returned, would begin the application process for loan modification. The borrower was to complete and return the forms by September 18, 2009. She was further instructed to call the phone number identified in the letter and to make such contact as soon as possible. The borrower testified that she returned the requested financial documents before September 18, 2009, as instructed. However, there was no documentary evidence to corroborate her testimony of sending the information to the Bank before September 18, 2009. On or about November 3, 2009, the borrower received a letter from the Des Moines, Iowa office indicating the requested financial information had to be mailed or faxed to their Fort Mills, SC office within ten days. From the very outset, the communications concerning the need to return information to the Bank were contradictory and confusing. The borrower was told on September 3 that the requested information had to be sent no later than September 18, but on November 3, she was told by a different office of the Bank that the information had to be sent in ten days, that is by November 13, 2009, or her request would be cancelled. However, on October 29, 2009, the borrower was sent a denial letter because of her failure to provide the necessary information as required within the timeframe required by her trial modification period workout plan. At no time, more particularly on or before October 29, 2009, is there any evidence that the borrower agreed to a trial modification period workout plan or that such a plan was prepared. The borrower testified to a subsequent series of communications both in writing and in telephone calls which she placed to toll-free numbers referenced in the Bank correspondence. She received a letter dated September 14, 2009 from the California office of Wells Fargo Mortgage Company. The letter was unsigned but bore the letterhead of Wells Fargo Home Loan located in Temecula, California. This letter represents the first time the borrower received any communication from that office. The letter identified the total loan delinquency as $3350.94 and indicated further that if such delinquency amount was not paid in full by October 14, 2009, the Bank would proceed with acceleration of the mortgage note and foreclose. After that deadline passed, on October 29, 2009, the borrower received a final decision denying her request for loan modification.
On September 14, 2009, the borrower received another letter advising her that she was entitled to home ownership counseling from the United States Office of Housing and Urban Development (HUD). Since the borrower had received counseling from HUD sometime earlier, she chose not to repeat that process again. Thereafter, the borrower had several conversations with Bank representatives who she contacted as directed in correspondence from the Bank. The Bank requested that she refax documentation. The borrower claims to have recorded one of the phone conversations but was unable to locate the tape recording at the time of trial. In certain communications from the Bank, the borrower was advised that the financial information she submitted was incomplete or not current. The borrower believed she addressed these deficiencies by sending, usually by fax, additional information requested. When she was notified that her application remained incomplete, she became increasingly frustrated as she believed she had complied with every request for information. Eventually, on or about October 29, 2009, the borrower was advised by unsigned letter from Wells Fargo Home Mortgage in Des Moines, Iowa that the Bank was unable to adjust her mortgage as the Bank had not been provided all of the financial information within the timeframe required per her trial modification period workout plan. The borrower at no time, particularly before October 29, 2009, entered into a trial modification period workout plan nor is there evidence that such a plan ever was created. In fact, the Bank's employee, Ms. Bowles, testified that no such plan was ever created for the borrower. The October 29 letter on one hand stated that the information provided has been "carefully reviewed"; however, based upon the Bank's position at that time that they did not have the information necessary to evaluate her case, it is far from clear what information the Bank was "carefully reviewing." The borrower received several additional letters from either the Des Moines office or from the office in Fort Mills, SC stating that the Bank had not received the requested information and documentation. The borrower claims to have spoken with people who she believed were agents of the Bank. As stated earlier, her recollection of such telephone conversations was somewhat speculative in that she was unable to recall dates with specificity and unable to identify the persons with whom she spoke, although her recollection seemed consistent in that she attempted to confirm that the requested information had been received by the Bank.
After considering the testimony and documents in evidence, this Court is able to find with some confidence that prior to the final decision dated October 29, 2009, the Bank was in receipt of substantially all the information necessary to verify and evaluate the borrower's sources of income for purposes of acting on the loan modification request. Such information had been received by the Bank well before the borrower received denial on October 29, and well before she received the foreclosure notice dated January 15, 2010.
However, the Bank, in writing, repeatedly insisted that they still had not received the requested information. Based upon the credible evidence, the Court finds that the Fort Mills, SC office actually received the faxes dated November 13, 2009 (thirty-five pages) containing substantial information concerning the borrower's financial condition, and, in addition, the Bank received another significant amount of material by way of a forty-four page fax on January 5, 2010. In fact, the borrower's forty-four page fax delivery sent to Fort Mills, S.C., dated January 5, 2010, was comprehensive and appears to have responded to the statements from various Bank employees. Accordingly, the Court believes that by prior to January 15, 2010, the date borrower was notified of a scheduled foreclosure sale, the Bank had sufficient information, even if considered incomplete, to determine the borrower's eligibility for loan modification. Any correspondence from the Bank after January 12, 2010 stating that her file lacked information necessary for review was misleading to the borrower. Before the notice of foreclosure was sent on January 15, 2010, the borrower was entitled to a decision on the merits of her request, affirmative or negative, rather than being literally bombarded with communications from different offices of the Bank indicating that her request could not be evaluated due to incomplete documentation.
The Court does not find that the Bank was intentionally trying to deceive the borrower, but that the Bank is an enormous corporation, and the staff given the responsibility of communicating with borrowers about loan modification and loan default was so decentralized that no one office was aware of the status of the review process for any individual borrower. The borrower received correspondence from at least four different offices; Des Moines, Iowa; Fort Mills, South Carolina; Temecula, California; and Bloomington, Minnesota, operating within various departments, each having some responsibility to review requests for loan modification or to enforce mortgage debt obligations and to communicate with borrowers concerning necessary documentation; and ultimately to notify borrowers of the results of the review process and the status of loan payments/default. It should be noted that the borrower was notified on October 29, 2009 that her modification was denied not because her verifiable income rendered her ineligible, but due to insufficient information from borrower. Due to the facts supported by correspondence from the Bank, the Court finds that the Bank was communicating erroneous and misleading information to a borrower seeking loan modification. As stated earlier, the Court does not believe the Bank was intentionally trying to deceive or confuse the borrower. The inability or unwillingness of the Bank to better centralize the loan modification process leads to this level of misinformation and confusion to a borrower facing imminent loss of her home by foreclosure, clearly a disruptive and emotionally charged action.
Despite the borrower's efforts to obtain loan modification, the foreclosure sale was held as scheduled on March 10, 2010. Thereafter, the borrower, by letter dated March 28, 2010, began the process to request rescission of the foreclosure. The rescission request prompted consideration by the office of the President of the Bank, the Office of the Comptroller of the Currency (OCC), and Bank representatives operating out of the Bank's offices in Bloomington, MN. Communications similar in tone and substance were exchanged between the borrower and the Bank. Although the borrower alleges that Natura Gibbons, a Bank employee, made representations to her that the foreclosure would be rescinded, there is no evidence in the record to support this allegation of misrepresentation. The borrower's request for rescission was denied on August 12, 2010. The confusing nature of the Bank's contacts with the borrower concerning rescission is exemplified by letters sent by Andrew Rosaaen, one of several individuals identifying themselves as Executive Mortgage Specialist, Office of the President. For example, although the Bank had already foreclosed, and notwithstanding the fact that on September 9, 2010 the Bank's Des Moines office sent the borrower a letter confirming that loan modification and rescission were each denied, on September 20, 2010, Mr. Rosaaen sent a letter requesting more financial information to "provide assistance in exploring options to resolve [the borrower's] financial difficulties." Mr. Rosaaen sent an additional letter on September 28, 2010, again seeking financial information "to determine what workout options are available for your loan." It defies reason for Bank employees to continue to seek financial information for workout options after both loan modification and rescission have been denied. Nevertheless, on October 4, 2010, Mr. Rosaaen sent another letter to the borrower, advising her that her request for rescission was under review. On October 7, 2010, Mr. Rosaaen advised the borrower that the Bank had closed her file as a result of incomplete financial documentation. However, on November 22, 2010, Mr. Rosaaen sent yet another letter to the borrower advising her that her file was closed because the foreclosure was valid, stating "Wells Fargo Home Mortgage (WFHM) has thoroughly reviewed your account in extensive detail."
Once again, this Court finds this series of letters, all from the same individual at the Bank, to be confusing and inconsistent. There have been no further communications from the Bank concerning loan modification or rescission. At the time of trial, the property had been conveyed as a result of the foreclosure sale and rescission had been denied. The Court will now consider ...