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Kirtz v. Wells Fargo Bank N.A.

United States District Court, D. Massachusetts

August 5, 2014

LAUREL KIRTZ, Plaintiff,


DENISE J. CASPER, District Judge.

I. Introduction

Laurel Kirtz ("Kirtz") has filed this lawsuit against Wells Fargo Bank, N.A. ("Wells Fargo") asserting claims that arise out of the denial of her loan modification application under the Home Affordable Modification Program ("HAMP") and the subsequent foreclosure on her residence in November 2011 by Wells Fargo. Wells Fargo has now moved for summary judgment. D. 33. The Court ALLOWS Wells Fargo's motion.

II. Factual Allegations

Unless otherwise noted, the following facts are as stated in Wells Fargo's Statement of Facts ("SOF"). D. 35. Under Local Rule 56.1, the facts proffered by Wells Fargo are deemed admitted, because Kirtz has not filed a response that complies with Local Rule 56.1 to Wells Fargo's SOF. Stonkus v. City of Brockton Sch. Dep't , 322 F.3d 97, 102 (1st Cir. 2003) (quoting D. Mass. L.R. 56.1 (providing that "[m]aterial facts of record set forth in the statement required to be served by the moving party will be deemed for purposes of the motion to be admitted by the opposing parties unless controverted by the statement required to be served by opposing parties")).[1]

On September 26, 2005, Kirtz purchased her home located at 92 Moreland Street in Boston, Massachusetts (the "Property") for approximately $680, 000. SOF ¶ 1. In October 2006, Kirtz refinanced the Property with a mortgage for $600, 000. Id . ¶ 2. Wells Fargo became the servicer of the loan in July 2007. Id . ¶ 4.

In May 2010, Kirtz defaulted on her mortgage. Id . ¶ 6. In June 2010, Wells Fargo sent Kirtz a letter introducing her to the Home Affordable Modification Program ("HAMP") and Kirtz indicated her desire to participate in the program. Id . ¶ 11. Wells Fargo requires borrowers seeking a HAMP modification to submit proof of their current income to lenders demonstrating their eligibility for the program. D. 35-2. Wells Fargo requires self-employed employees like Kirtz to submit (1) a copy of their most recent filed tax return[2] with all schedules; and (2) copy of their most recent quarterly or year-to-date profit and loss statement. Id. at 4. Wells Fargo communicated these requirements to Kirtz when she submitted her initial application. See D. 35-2; D. 35-3 (letters from Wells Fargo).

In September 2010, Kirtz submitted her initial HAMP application. D. 35 ¶ 12. In October, Wells Fargo told Kirtz that she needed to submit additional documentation for Wells Fargo to consider her HAMP application. Id . ¶ 13. After an initial review of her application, Wells Fargo told Kirtz that she lacked sufficient income to be eligible for a HAMP modification, but encouraged her to increase her income. Id . ¶¶ 14-15.

On December 16, 2010, Kirtz initiated her second HAMP modification review. Id . ¶ 18. Wells Fargo sent Kirtz a HAMP loan modification package to complete and asked that the documentation be submitted by December 31, 2010. Id . Kirtz understood that she needed to submit certain documents to be considered for a loan modification, but provided no such documentation as of December 31, 2010. Id . ¶¶ 19-20.

Wells Fargo then sent Kirtz a third HAMP application package on January 1, 2011 and asked that she submit the required documentation by January 16, 2011. Id . ¶ 21. Kirtz submitted some documents on February 4, 2011, which she believed completed her application, but in fact was deficient because she had not submitted her 2009 taxes, her most recent profit/loss statement or her profit/loss statement for 2010. Id . ¶¶ 23-24.

During this time, Wells Fargo attempted to verify Kirtz's income independently. However, after requesting a transcript of her 2009 tax returns from the Internal Revenue Service on February 7, 2011, Wells Fargo learned that Kirtz had not filed her tax returns for 2009. Id . ¶¶ 25-26. Wells Fargo made similar requests of the IRS in March, April and May 2011, but each request was denied because Kirtz had not filed a tax return. Id . ¶ 28. Consequently, on May 6, 2011, Wells Fargo denied Kirtz's HAMP modification because she had failed to provide sufficient documentation of her income. Id . ¶¶ 30-32.

That same day, Kirtz resubmitted a loan modification package (her fourth attempt) and "felt that this meant [her] file was complete, " but Wells Fargo made no such representation. Id . ¶ 37. In fact, the May 6, 2011 package did not include: Kirtz's 2009 federal tax return, 2010 profit and loss statement, current paystubs, information relating to her earnings at Sherman Market, current bank account statements, a breakdown of her freelance income, quarterly bed and breakfast income, savings account statements or records of all PayPal transactions for the bed and breakfast. Id . ¶ 38. On May 10, 2011, Wells Fargo again requested Kirtz's 2009 federal income tax transcript from the IRS, but learned no return had been filed. Id . ¶ 41; D. 35-7 at 5. Accordingly, on May 12, 2011, Wells Fargo sent a letter to Kirtz requesting that she submit her 2009 tax return and updated earnings information to Wells Fargo by June 11, 2011. Id . ¶ 42. Kirtz submitted a 2011 profit and loss statement from her business as well as her income from Sherman Market on June 11, 2011 and a revised profit and loss statement on June 16, 2011. Id . ¶¶ 45-46; D. 35-16; D. 35-17. Nevertheless, Kirtz never submitted her 2009 tax return despite Wells Fargo's numerous written and oral requests. Id . ¶ 47. Because Wells Fargo had not received Kirtz's 2009 tax returns, Wells Fargo denied Kirtz's HAMP modification. Id . ¶ 48.

Kirtz asserts, however, that she filed her taxes in May 2011 and that this made her HAMP application complete. D. 36 ¶¶ 1-2.[3] Moreover, Kirtz asserts that had she been aware of a deficiency in her application, she would have updated her file. Id . ¶ 3. According to Kirtz, Wells Fargo indicated the application was complete except for the 2009 tax return. D. 35 ¶ 49; D. 36 ¶ 4.

In her fifth and final attempt, Wells Fargo invited Kirtz to reapply to the program in July 2011. D. 35 ¶ 51. On or about August 28, 2011, a representative of Wells Fargo contacted Kirtz about her application for the HAMP program, because Kirtz had not submitted a completed application. D. 38-1; D. 38 at 6. During this call, Kirtz acknowledged not having completed the application. Id . Wells Fargo's representative stated during this call that because the application was pending and incomplete for longer than thirty days, Wells Fargo removed the application from the review process, but that it could process a new application once it received ...

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