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Jose v. Wells Fargo Bank, N.A.

Appeals Court of Massachusetts, Essex

July 22, 2016

TOMAS JOSE
v.
WELLS FARGO BANK, N.A.

          Heard: May 6, 2016.

         Civil action commenced in the Superior Court Department on March 5, 2012.

         The case was heard by Thomas Drechsler, J., on a motion for summary judgment.

          Thomas J. Gleason for the plaintiff.

          David Fialkow for the defendant.

          Present: Cohen, Green, & Hanlon, JJ.

          GREEN, J.

         Regulations promulgated by the Federal Department of Housing and Urban Development (HUD) require a mortgage lender to conduct a face-to-face meeting with defaulting borrowers before foreclosing on certain federally insured mortgages. The defendant, Wells Fargo Bank, N.A., (Wells Fargo), acknowledges that failure to comply with those regulations may serve as a basis to invalidate its foreclosure of the mortgage it held on the plaintiff's property, but asserts that it qualifies for an exemption. We conclude that Wells Fargo does not qualify for the exemption from the face-to-face meeting requirement, and reverse so much of the judgment as dismissed that part of the plaintiff's complaint.

         Background.

         On March 28, 2005, the plaintiff, Tomas Jose, executed a promissory note in the amount of $440, 002 to refinance a prior mortgage loan on 499 Boston Street in Lynn (property). To secure the note, Jose granted a mortgage (mortgage) to Mortgage Electronic Registration Systems, Inc. (MERS), solely as nominee for the lender and the lender's successors and assigns. The mortgage was insured by the Federal Housing Administration, and incorporated applicable HUD regulations by reference. More specifically, under par. 9(d) of the mortgage, acceleration or foreclosure of the mortgage is not authorized "if not permitted by regulations of the [HUD] Secretary." On February 4, 2009, MERS assigned the mortgage to Wells Fargo. At all relevant times, Wells Fargo serviced Jose's mortgage loan. Wells Fargo does not maintain a servicing branch within 200 miles of the property. However, Wells Fargo does maintain deposit and home loan origination branch offices within 200 miles of the property. Wells Fargo never scheduled or conducted a face-to-face meeting with Jose to discuss an alternative to foreclosure.

         Despite the absence of a face-to-face meeting, however, Wells Fargo and Jose entered into several forbearance agreements and three permanent modifications. Jose breached each of those agreements. Additionally, while in default, Jose twice filed for bankruptcy to avoid foreclosure. Wells Fargo eventually obtained relief from the bankruptcy court's automatic stay so that it could foreclose on the property.[1]

         On February 28, 2012, shortly before a scheduled foreclosure sale, Jose called Wells Fargo to request a fourth loan modification. Wells Fargo told Jose that because the foreclosure sale was scheduled a few days later, he should submit an application and supporting documents for his requested modification "ASAP." Jose submitted the application and supporting documents that same day. Wells Fargo did not approve a further loan modification and, on March 5, 2012, Wells Fargo conducted a foreclosure sale. Wells Fargo was the high bidder at the foreclosure.

         Jose commenced this action by complaint filed on March 5, 2012, the day of the foreclosure. After Wells Fargo filed its answer to that complaint, Jose moved successfully to file an amended complaint. In his amended complaint, Jose alleged breach of the covenant of good faith and fair dealing (count 1), breach of contract (count 2), and violation of G. L. c. 93A (count 3). Count 2 and the portion of count 3 relying on count 2 center on Jose's contention that Wells Fargo's failure to conduct a face-to-face meeting with him prior to the foreclosure rendered its foreclosure of the mortgage invalid. Wells Fargo moved for summary judgment and, after a hearing, a judge of the Superior Court allowed the motion. Judgment entered thereafter, dismissing the complaint. Jose appeals.[2]

         Discussion.

         Though Wells Fargo argued in the Superior Court that noncompliance with applicable HUD regulations would not invalidate a foreclosure unless the nature of the noncompliance rendered the foreclosure fundamentally unfair, it has abandoned that argument on appeal in light of Pintiv.Emigrant Mort. Co., 472 Mass. 226 (2015), and Wells Fargo Bank,N.A. v.Cook, 87 Mass.App.Ct. 382 (2015).[3] Instead, it presses its argument that the ...


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