United States District Court, D. Massachusetts
MEMORANDUM AND ORDER ON MOTION TO DISMISS
ALLISON D. BURROUGHS U.S. DISTRICT JUDGE
Marie Claire Ayoub filed this action against her current
mortgage servicer, Defendant CitiMortgage, Inc., based on the
denial of her applications for a loan modification. Currently
pending before the Court are Plaintiff's request for a
preliminary injunction, as set forth in the operative
Complaint [ECF No. 37], and Defendant's motion to dismiss
for failure to state a claim. [ECF No. 44]. For the reasons
that follow, the request for a preliminary injunction is
DENIED and Defendant's motion to dismiss is
GRANTED as to Count II and DENIED as to
Counts I and III.
evaluating Defendant's motion to dismiss, the Court
accepts the well-pleaded allegations as true. See Ruivo
v. Wells Fargo Bank, 766 F.3d 87, 90 (1st Cir. 2014).
Plaintiff has attached several documents to the Complaint,
which the Court may consider as part of the pleadings.
See Giragosian v. Ryan, 547 F.3d 59, 65 (1st Cir.
2008); Trans-Spec Truck Serv., Inc. v. Caterpillar
Inc., 524 F.3d 315, 321 (1st Cir. 2008). The Court may
also look to documents that are central to Plaintiff's
claim and documents sufficiently referred to in the
Complaint. See Watterson v. Page, 987 F.2d 1, 3 (1st
September 30, 2005, Plaintiff obtained a loan for $288, 000
from First Franklin, Inc. (“First Franklin”),
which was secured by a mortgage on her home in Methuen,
Massachusetts. Compl. ¶¶ 4, 6. First Franklin
represented to Plaintiff that she was entering into a
fixed-rate mortgage at 5.25%. The mortgage was, in actuality,
a “predatory” two-year adjustable-rate mortgage
with a fully indexed rate of 13%. Id. ¶¶
7-8. Once adjusted to the fully indexed rate, her monthly
mortgage payments exceeded 50% of her and her husband's
monthly household income, and the loan amount equaled or
exceeded the value of the property. Id. ¶¶
9-10. Plaintiff eventually defaulted on the mortgage.
Id. ¶ 12.
February 16, 2013, Plaintiff applied to Defendant for a loan
modification through the Home Affordable Modification Program
(“HAMP”). Id ¶ 13. HAMP was a
sub-part of the Troubled Asset Relief Program, which
delegated broad powers to the Secretary of the Treasury
Department “to mitigate the financial impact of the
foreclosure crisis and preserve homeownership.”
Bosque v. Wells Fargo Bank, N.A., 762 F.Supp.2d 342,
346-47 (D. Mass. 2011). HAMP was intended to “provide
relief to borrowers who [had] defaulted on their mortgage
payments or who [were] likely to default by reducing mortgage
payments to sustainable levels, without discharging any of
the underlying debt.” Id. at 347. Mortgage
servicers, including Defendant, Compl. ¶ 59, entered
into Servicer Participation Agreements with the government,
pursuant to which they “agreed to identify homeowners
who were in default or would likely soon be in default on
their mortgage payments, and to modify the loans of those
eligible under the program.” Young v. Wells Fargo
Bank, N.A., 717 F.3d 224, 228-29 (1st Cir. 2013)
(quoting Wigod v. Wells Fargo Bank, N.A., 673 F.3d
547, 556 (7th Cir. 2012)). The Treasury Department issued
“a series of directives that provide guidance to
servicers implementing HAMP.” Bosque, 762
F.Supp.2d at 347; see Charest v. Fed. Nat'l Mortg.
Ass'n, 9 F.Supp.3d 114, 125 (D. Mass. 2014)
(“HAMP guidelines impose a series of detailed
obligations on participating servicers . . . in processing an
application for a loan modification”).
eligible for HAMP, “the mortgage must be a first lien
mortgage that originated on or before January 1, 2009, the
mortgage must be delinquent or default [must be] reasonably
foreseeable, the current unpaid principal balance must be
less than a certain amount of money for a given type of
property, the required monthly payments on the mortgage must
exceed 31% of the homeowner's monthly income, and the
property must not be condemned.” Regal v. Wells
Fargo Bank, N.A., 205 F.Supp.3d 195, 202 (D. Mass.
2016). “If the servicer determines that the
borrower's mortgage meets those criteria, the servicer
must also subject each applicant's information to Net
Present Value (NPV) Testing.” Id. (citation
and quotation marks omitted). The NPV test “uses a
number of inputs to determine whether a loan modification
would create greater financial value than a foreclosure
sale.” Morris v. BAC Home Loans Servicing,
L.P., 775 F.Supp.2d 255, 260 n.3 (D. Mass. 2011).
“If the borrower appears to qualify under the HAMP
guidelines, he or she is given a document entitled Home
Affordable Modification Trial Period Plan (TPP).”
Durmic v. J.P. Morgan Chase Bank, NA, No. 10-10380,
2010 WL 4825632, at *1 (D. Mass. Nov. 24, 2010). A TPP
initiates a “period during which the [borrower] is to
make the modified mortgage payments.” In re
JPMorgan Chase Mortg. Modification Lit., 880 F.Supp.2d
220, 226 (D. Mass. 2012). If the borrower successfully
completes the TPP, “the servicer offers the [borrower]
a permanent mortgage modification.” Id.
16, 2013, Defendant informed Plaintiff by telephone that her
application was denied, because the HAMP guidelines
“could not create an affordable payment for her
income.” Compl. ¶ 17; [ECF No. 37-2]. Plaintiff
appealed the decision on the grounds that she plainly
satisfied the HAMP eligibility requirements. Compl.
¶¶ 14-16. On July 29, 2013, Defendant affirmed the
denial of her application, but with little to no explanation
of its reasoning. Id. ¶¶ 17-19; [ECF Nos.
37-2, 37-3]. In support of the motion to dismiss, Defendant
filed a copy of a notice letter to Plaintiff dated July 31,
2013, stating that she was denied for the following reason:
“Application Discrepancy: we are unable to offer you a
[HAMP modification] because there was an irreconcilable
discrepancy with your application request.” [ECF No.
45-1]. The letter further stated that Defendant considered
Plaintiff's IRS Form 4506-T and most recent profit and
loss statement in reaching its decision. Id. On
April 28, 2014, Plaintiff sent Defendant a written demand for
a HAMP modification, pursuant to Mass. Gen. Laws ch. 93A
(“Chapter 93A”), based on the predatory terms of
her mortgage and her eligibility for a loan modification.
Compl. ¶ 21; [ECF No. 37-4]. Defendant disputed
Plaintiff's arguments therein and did not provide a
reasonable settlement offer in response. Compl. ¶ 22.
one year later, on June 3, 2014, Plaintiff submitted a second
HAMP application to Defendant. Id. ¶ 23. On
June 26, 2014, Defendant requested that Plaintiff supplement
her application with additional documents that Plaintiff
alleges were already included with her second application or
were not required under the HAMP guidelines. Id.
¶¶ 24-25. The June 26 request sought the following
from Plaintiff: (1) original bank statements from the past
two months; (2) resubmission of IRS Form 4506-T, because
Plaintiff's prior form contained an illegible or missing
social security number; (3) homeowner's association dues
statement or a letter indicating that there were no
applicable dues; (4) paystubs from the past 30 or 45 days,
because her documents on file were incomplete or illegible;
(5) business and personal tax returns for the year 2012; (6)
a contribution letter from Plaintiff's husband; and (7) a
profit and loss statement for any additional household income
that listed the business or owner's name and business
income and expenses. [ECF No. 37-5].
31, 2014, Defendant requested another set of documents that,
according to Plaintiff, had also been provided with
Plaintiffs second application. Compl. ¶ 28; [ECF No.
37-6]. Although Plaintiff resubmitted IRS Form 4506-T in
response to the June 26 request, the July 31 request again
sought a new IRS Form 4506-T, ostensibly because
Plaintiff's most recent submission included a different
address than on her original form. [ECF No. 37-6]. The July
31 request also asked for updated income and bank statements,
to the extent that Plaintiff had received any such documents
since filing her application, and a profit and loss statement
of additional household income. Id.
September 22, 2014, Defendant issued a third request for
documents that Plaintiff again states had already been
provided to Defendant, including: (1) a request for mortgage
assistance form (“RMA”) or hardship affidavit,
because the document on file had expired; (2) the four most
recent paystubs from Plaintiff's husband, because the
documents on file had expired; (3) a profit and loss
statement with itemized business expenses; (4) a signed and
dated August 2014 profit and loss statement; (5) bank
statements for July to August 2014 and August to September
2014; (6) a letter explaining why Plaintiff's or her
husband's self-employment income was not reflected on
their tax returns; (7) 2012 to 2013 business tax returns; and
(8) the three most recent business bank statements. Compl.
¶ 31; [ECF No. 37-8]. Plaintiff sent emails to Defendant
on October 20, November 17, and December 1, 2014, seeking an
update on the status of her application, but received no
response. Compl. ¶¶ 32-33; [ECF No. 37-9].
January 7, 2015, Defendant denied Plaintiff's second HAMP
application due to a “quality application
discrepancy.” Compl. ¶ 35; [ECF No. 37-10]. On
January 18, 2015, Plaintiff sent Defendant a second written
demand under Chapter 93A, but Defendant again did not respond
with a reasonable settlement offer. Compl. ¶ 38; [ECF
9, 2015, Plaintiff initiated this lawsuit in Massachusetts
Superior Court, and Defendant removed the case to this Court
on August 24, 2015. [ECF Nos. 1, 5]. On or around September
12, 2015, in connection with the parties' efforts to
resolve this action, Plaintiff filed a third HAMP
application. Compl. ¶ 41; [ECF No. 6]. On December 1,
2016, Defendant denied the application due to an
“irreconcilable discrepancy within her
application.” Compl. ¶ 42. The notice of the
denial of her application did not further explain the basis
for the decision. [ECF No. 37-13]. On January 3, 2017,
Plaintiff sent a written demand under Chapter 93A asking that
Defendant offer her a TPP. Compl. ¶¶ 43-45, 47.
result of Defendant's conduct, Plaintiff alleges that she
will lose her home, and has already lost equity, suffered
damage to her credit rating, and accumulated unnecessary
mortgage arrearages. Id. ¶¶ 39, 75. She
requests judgment in her favor on all counts, the issuance of
a preliminary injunction enjoining the scheduling of any
foreclosure on her home during the pendency of this ...