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Hannigan v. Bank of America, N.A.

United States District Court, D. Massachusetts

September 24, 2014

JOSEPH HANNIGAN and LINDA HANNIGAN, Plaintiffs,
v.
BANK OF AMERICA, N.A. and WELLS FARGO BANK, N.A., as Trustee for the Certificate holders of Banc of America Mortgage Securities, Inc., Mortgage Pass-Through Certificates, Series 2004-7, Defendants

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[Copyrighted Material Omitted]

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For Joseph Hannigan, Linda Hannigan, Plaintiffs: Josef C. Culik, LEAD ATTORNEY, CULIK LAW PC, Woburn, MA.

For Bank of America, N.A., Defendant: Elizabeth Timkovich, LEAD ATTORNEY, PRO HAC VICE, Winston and Strawn LLP, Charlotte, NC; Jameson J. Watts, LEAD ATTORNEY, PRO HAC VICE, Winston & Strawn LLP, Houston, TX; Stephen C. Reilly, Ryan M. Cunningham, LEAD ATTORNEYS, Sally & Fitch LLP, Boston, MA.

For Wells Fargo Bank, N.A., as Trustee for the Certificate holders of Banc of America Mortgage Securities, Inc., Mortgage Pass-Through Certificates, Series 2004-7, Defendant: Jameson J. Watts, LEAD ATTORNEY, PRO HAC VICE, Winston & Strawn LLP, Houston, TX; Stephen C. Reilly, Ryan M. Cunningham, Sally & Fitch LLP, Boston, MA.

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MEMORANDUM & ORDER

Nathaniel M. Gorton, United States District Judge.

This case involves the repeated efforts over the course of several years by plaintiffs Joseph and Linda Hannigan (" plaintiffs" ) to obtain a loan modification under the Home Affordable Modification Program (" HAMP" ) from the loan servicer, Bank of America, N.A. (" Bank of America" ), and the trustee of the note, Wells Fargo Bank, N.A. (" Wells Fargo" ) (collectively, " defendants" ).

Having been repeatedly stymied in their loan modification applications, plaintiffs filed suit for breach of contract, negligent misrepresentation, promissory estoppel and unfair trade practices under M.G.L. c. 93A. Pending before the Court is defendants' motion to dismiss plaintiffs' amended complaint.

I. Factual Background and Procedural History

A. Facts

The Court recites the facts as alleged in plaintiffs' amended complaint of January 7, 2014.

In May, 2004, plaintiffs refinanced an existing mortgage by obtaining a loan of $638,400 (" the loan" ) secured by a mortgage (" the mortgage" ) on residential property in Kingston, Massachusetts. In July, 2004, the mortgage was securitized into a trust pursuant to a " Pooling and Servicing Agreement." Under that agreement, Bank of America serviced the loan and Wells Fargo became the trustee.

In 2009, the plaintiffs stopped making payments and submitted an application for a loan modification. In June of that year, Bank of America offered plaintiffs a modification, according to which they were required (1) to submit monthly payments of $3,502 starting on September 1, 2009 and (2) to make a one-time, upfront payment of $7,000 within seven days. The loan's new principal balance was to be $614,572.

Plaintiffs were unable to make the $7,000 payment and sought alternate arrangements to fulfill that obligation. They were told by a Bank of America representative that the $7,000 payment could be made over the following three months under a forbearance agreement and that they would remain eligible for the modification. Bank of America admits that it allowed plaintiffs to make reduced payments for three months based on the forbearance agreement but disputes that that agreement waived the requirement to make the $7,000 payment. It is undisputed, however, that plaintiffs made three reduced monthly payments and that Bank of America did not modify the loan.

In November, 2009, Bank of America sent plaintiffs a notice of foreclosure but, the following month, sent them a second loan modification offer, according to which they were to make monthly payments of $3,907 and the new principal balance of the loan was to be $621,864. Plaintiffs rejected that offer, believing it to be a mistake.

In April, 2010, Bank of America invited plaintiffs to apply for another modification.

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After receiving plaintiffs' application, in September, 2010 Bank of America requested additional documentation. The following month, Bank of America sent plaintiff a letter acknowledging receipt of their application but subsequently denied it. The stated ground was that

the lender(s) on your junior lien mortgage(s) ... did not agree to keep its lien in a junior position to our modified lien.

From November, 2010 to March, 2011, plaintiffs submitted additional documentation to Bank of America but the bank responded that they were ineligible for a loan modification.

In May and June, 2012, plaintiffs, after retaining counsel, applied again for a modification. Those applications were denied. Plaintiffs then submitted four subsequent modification applications between September, 2012 and November, 2013, all of which were denied by Bank of America because they were incomplete or because the actual holder of the note, Wells Fargo, had not given it " contractual authority to modify [plaintiffs'] loan."

Plaintiffs claim that defendants' actions have caused them severe financial harm, including " huge" mortgage arrearages and significant damage to their credit. They also note that defendants' actions have " caused the imminent loss of their family home to an unnecessary foreclosure," though the record ...


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