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Foley v. Wells Fargo Bank, N.A.

United States District Court, D. Massachusetts

June 5, 2015

WELLS FARGO BANK, N.A., s/h/m to Wachovia Mortgage FSB, f/k/a World Savings FSB, Defendant.


LEO T. SOROKIN, District Judge.

Plaintiff Jonathan Foley ("Foley") brings four claims against Wells Fargo Bank, N.A. ("Wells Fargo" or "the bank"). Foley contends that Wells Fargo (1) failed to abide by the terms of a class action settlement agreement which required Wells Fargo to consider Foley for certain mortgage modification programs and (2) violated various Massachusetts state laws. Wells Fargo seeks to foreclose on Foley's home. Pending before the Court are three motions: Wells Fargo's Motion to Transfer this case to the Northern District of California, Doc. No. 80, Wells Fargo's Motion to Dismiss, Doc. No. 85, and Foley's Motion for a Preliminary Injunction, Doc. No. 64. The Court DENIES Wells Fargo's Motion to Transfer and DENIES IN PART and ALLOWS IN PART Wells Fargo's Motion to Dismiss. The Court ALLOWS Foley's Motion for a Preliminary Injunction and enjoins Wells Fargo from foreclosing on the residence at 61 Oceanside Drive, Unit 61, Hull, Massachusetts.

I. Background

"To set the factual stage for this case, we rely on the allegations set forth in Foley's complaint, the documents attached to the complaint, and relevant public records." Foley v. Wells Fargo Bank, N.A., 772 F.3d 63, 67 (1st Cir. 2014). The Court construes "the well-pleaded facts in the light most favorable to the plaintiffs... accepting their truth and drawing all reasonable inferences in plaintiffs' favor." Medina-Velázquez v. Hernández-Gregorat, 767 F.3d 103, 108 (1st Cir. 2014).

A. Foley's Mortgage with Wells Fargo[1]

Foley purchased a home in Hull, Massachusetts in March 2005. Doc. No. 59 ¶ 3. To finance this purchase, Foley obtained a "Pick-a-Payment" loan - an adjustable-rate home mortgage loan. Id. ¶¶ 2, 5. Foley lost his job in October 2008. Id. ¶ 9. Foley continued to pay his mortgage, but called Wells Fargo in January 2009 to discuss fixing his interest rate and his unemployment status. Id. ¶¶ 9, 10. The bank's representative told Foley that if he converted his mortgage to the fixed rate option, his monthly mortgage payment would more than double due to the negative amortization of the loan. Id. ¶ 10. The bank's representative told Foley that in order for the bank to assist Foley, he would first need to obtain a job and income. Id.

Foley did ultimately obtain a job in January 2010. Id. ¶ 9. In October 2010, Foley's father filed for bankruptcy and Foley became the sole provider of financial and medical support for his divorced mother. Id. ¶ 12. At that time, Foley stopped paying his mortgage in full. Id. ¶ 9. Foley made several partial mortgage payments between October 2010 and April 2011. Id. ¶ 16. Foley continued to call the bank to request loan modifications, but the bank's representatives told him "that he was not qualified for any propriety [sic] loan modifications and that the only relief available was [] HAMP [the federal government's Home Affordable Mortgage Program]." Id. ¶¶ 15, 17. Foley requested to participate in HAMP, and the bank's representatives stated that a HAMP modification application would be sent to him. Id. ¶ 18.

B. The Pick-A-Payment Class Action Settlement[2]

At this same time, presumably unbeknownst to Foley, he was a member of a class action in the Northern District of California regarding Pick-a-Payment loans. The class representatives and the bank reached a settlement agreement, which the court approved in May 2011. Doc. No. 207. The parties agree that Foley is a member of Settlement Class B. Foley v. Wells Fargo Bank, N.A., 772 F.3d 63, 68 (1st Cir. 2014). As a Settlement Class B member, Foley was entitled to have Wells Fargo consider him for a HAMP modification and, if he did not qualify or accept a HAMP modification, to have Wells Fargo consider him for a MAP2R modification. Id. As the First Circuit described,

"MAP2R" was a new proprietary modification program Wells Fargo created specifically for the settlement, and the step-by-step eligibility determination process for MAP2R (called the "waterfall" process) was spelled out in the agreement. The bank was required to apply seven specific (and rather complicated) sequential steps until a debt-to-income ratio of 31 percent was reached for the borrower. But if the bank followed the waterfall and could not reach 31 percent, it was not required to offer a MAP2R modification. The settlement agreement also imposed certain "servicing commitments, " created, according to the agreement, "[i]n order to ensure that Borrowers are appropriately considered for a MAP2R Modification in a timely manner." The agreement required, for instance, that Wells Fargo provide class members with clear, written explanations of modification denials, and in any foreclosure-related communications, a notification that the borrower was still being considered for a modification.

Id. at 68-69.

C. Foley's Continued Attempts to Avoid Foreclosure

Foley, still presumably unaware of the settlement, did not receive the HAMP modification application until November 2011 after numerous telephone inquiries to Wells Fargo. Doc. No. 59 ¶ 19. Foley filled out the application and returned it to the bank shortly thereafter. Id. In January 2012, Foley received a letter from the bank, stating that his application had not been received. Id. ¶ 20. Foley made numerous phone calls to the bank's Home Preservation Specialist ("HPS"), but she did not return his calls. Id. ¶¶ 20-21. Instead, Foley received letters from her regarding "short sale" or "deed-in-lieu of foreclosure" options.[3] Id. ¶ 22. In August 2012, Foley received a Notice of Foreclosure from Wells Fargo. Id. ¶ 23. Foley continued to call the HPS, but she did not accept or return his calls. Id. ¶ 24. After a few months, Foley was able to speak to the HPS's supervisor, who verified that Foley's application had not been received and informed Foley that Wells Fargo would send him a new application. Id. ¶ 25. In November or December 2012, Foley received a second HAMP application, which he returned to Wells Fargo by the end of December 2012. Id. ¶ 26.

Foley received two letters from Wells Fargo in February 2013; one letter rejected Foley from HAMP and the other informed Foley that Wells Fargo was unable to offer him a modification due to Foley's "excessive financial obligations, " although the letter did not specify for which modifications Wells Fargo had considered Foley. Id. ¶ 29; id. at Ex. 6. Wells Fargo granted Foley an appeal, but sent Foley another Notice of Foreclosure. Id. ¶¶ 32-71. Foley continued to contact Wells Fargo; at one point, a bank representative told Foley that he "need[ed] to man up and move out." Id. ¶ 34. Foley reached out to the Massachusetts Attorney General's Office for assistance in April 2013. Id. ¶ 35. The Attorney General's representative connected Foley with a new HPS at Wells Fargo, and Foley received another HAMP application in late May 2013. Id. ¶¶ 36-44. In late June and early July 2013, Foley received a third and fourth denial letter from Wells Fargo, stating that he was again denied from HAMP and " a number of mortgage assistance options." Id. ¶ 45; id. at Ex. 10. The latter stated that Foley was denied due to "excessive financial obligations, " although the letters did not explain which debts the bank considered, what rendered them "excessive, " or which programs the bank considered. Id. ¶ 45; id. at Ex. 10. Although Foley's financial hardship conditions had changed since his previous modification request, Wells Fargo's rejections were identical. Id. ¶ 71. Foley contacted Wells Fargo again and, dissatisfied with the bank's answers, again spoke with the Office of the Attorney General. Id. ¶¶ 47-51. In mid-July 2013, a bank representative called Foley in response to Foley's request to the Office of the Attorney General. Id. ¶ 53. The representative told Foley that he was rejected from all modifications, including HAMP and MAP. Id. Foley, presumably now aware of the settlement, specifically asked the representative if he had been considered for MAP2R. Id. The representative said that Foley had not been considered for MAP2R; later, this representative told Foley that as he had been rejected from other modification programs, he had also been rejected from MAP2R. Doc. No. 59 ¶¶ 53, 80.

D. Litigation History

"With the threat of foreclosure looming, Foley filed a pro se suit in Plymouth Superior Court in Massachusetts." Foley, 772 F.3d at 70. Foley's complaint alleged breach of contract (Count One), violation of Mass. Gen. Laws ch. 244, §§ 35A and 35B (Count Two), violation of Mass. Gen. Laws ch. 93A (Count Three), and ...

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