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Nickerson-Reti v. Bank of America, N.A.

United States District Court, D. Massachusetts

May 17, 2018

BANK OF AMERICA, N.A., successor by merger to BAC Home Loans Servicing, LP, Defendant.


          F. Dennis Saylor, IV United States District Judge.

         This is a dispute over an alleged right to a mortgage modification. Plaintiff Donnah Nickerson-Reti alleges that she received a modification to her mortgage loan under the Home Affordable Mortgage Program (“HAMP”) and made timely payments on it, but that defendant Bank of America did not honor the modification. The bank has moved for summary judgment in its favor. It contends that her claim is without merit for a variety of reasons, among them that she merely applied to be considered for a modification; that her application was properly denied because she did not submit the required documents; and that no contract between the parties was ever formed.

         This is yet another installment in the protracted nationwide litigation over the HAMP program. That litigation has been notable, among other things, for the widespread disagreement and confusion among borrowers, lenders, and the courts concerning the meaning of one of the critical program documents: the Trial Period Program, or “TPP, ” agreement. In substance, the Court concludes that the TPP process is intended to involve three steps leading up to the formation of a contract to modify a mortgage: (1) an invitation by a lender to a borrower to make an offer, (2) an offer by the borrower, and (3) acceptance by the lender. The attempted arrangement here failed at the third stage, because the bank never accepted the TPP agreement. Nonetheless, based on evidence of potential mistakes or misconduct by the bank, plaintiff's claim under Mass. Gen. Laws ch. 93A will survive.

         Accordingly, and for the reasons set forth below, that motion for summary judgment will be granted in part and denied in part.

         I. Background

         Except where otherwise noted, the following facts are set forth in the light most favorable to plaintiff.

         A. Factual Background

         Donnah Nickerson-Reti purchased a property at 133 Burlington St. in Lexington, Massachusetts, on June 22, 2007, with the help of a $417, 000 mortgage loan. (Def. SMF Ex. B at 23:5-11, 26:21-23, 48:1-3). She executed a promissory note promising to repay the debt with 5.625% interest over 30 years and gave a mortgage as security for the note. (Id. Ex. B at 28:22-23, 48:1-49:14). Her monthly payment was $2, 400.49. (Id. Ex. B at 48:1-19, 49:6-14).

         Nickerson-Reti made timely payments for almost two years, and even made additional payments in order to bring down the principal. (Id. Ex. B at 53:19-54:1; Pl. SMF Ex. P). As of the beginning of 2009, she was current on her payments. She contends that she could have afforded to continue making them in the near future, but that her financial situation had deteriorated. (Def. SMF Ex. B at 64:4-11).[1] She testified that in the next year or two she would have been required to apply for public assistance or sell her possessions in order to make her monthly payments. (Id. Ex. B at 73:11-75:4; see also Id. Ex. B at 64:13-17 (“I wanted to take a proactive approach and do something to lower my interest rate and keep things more manageable in case. . . . My credit rating was over 800, and I wanted to keep it that way.”)).

         Nickerson-Reti did not seek to refinance the loan, or to sell the property and move somewhere less expensive. Instead, she made an inquiry to Bank of America about her eligibility for a modification of her mortgage under the Home Affordable Mortgage Program (“HAMP”), a program intended to assist financially struggling homeowners avoid foreclosure. She made three or four calls for that purpose between February and April 2009. (Def. SMF Ex. B at 53:15-19).

         Again, at that point, Nickerson-Reti was current on her payments. A representative from Bank of America told her that in order to be considered for HAMP, she had to miss payments. (Def. SMF Ex. B at 52:23-24). The representative told her that the bank would not consider her for a HAMP modification because she had not missed two months' payments. (Id. Ex. B at 66:23-67:11). The bank did, however, offer to refinance her mortgage at ¶ 4% or 4.5% interest rate. (Id.). Nickerson-Reti declined that offer, specifically because she wanted her interest rate to be reduced to 2%, as allegedly promised by the HAMP program. (Id. Ex. B at 67:24-68:20).

         Accordingly, Nickerson-Reti deliberately went into default to try to qualify for the HAMP program. For “two months, [she] purposely did not make the mortgage payment, because the person on the phone at Bank of America told [her] that . . . it's what [she] needed to do to be considered for a HAMP modification.” (Id. Ex. B at 53:10-13).[2]

         Nickerson-Reti wrote a letter to the bank on April 13, 2009, explaining the “difficult circumstances related to my request for a Home Affordable Modification to my mortgage.” (Pl. SMF Ex. R). On April 29, 2009, the bank invited her to apply for a “workout alternative” and requested a checklist of certain documents. (Id.). One item on the checklist requested: “Verification of all sources of income (including last 30 days of pay stubs). If self employed, please provide current profit and loss statements.” (Id.). Nickerson-Reti returned the checklist at some point with that item checked off, and the handwritten notation next to it reads “Self employed. No. profit/loss statements. IRS 1040 sent previously.” (Id.). Nickerson-Reti apparently faxed to the bank her May 2009 real-estate tax bill and proof of her homeowners insurance policy. (Id.). It is not clear when Nickerson-Reti previously sent her Form 1040, or specifically what other proof-of-income documents she had sent at that point.

         On December 30, 2009, Bank of America sent Nickerson-Reti a written Loan Modification Trial Period Plan (“TPP”) package. The cover letter stated:

We recently sent you a letter with instructions on how to start making your new trial period mortgage payment of $1, 582.16 as part of the three-month trial period under the Federal Government's Home Affordable Modification Program. If you haven't already done so, it is important that you take the first step by making your first month's trial period mortgage payment as soon as possible. Making this payment allows you to begin the trial period while you gather the requested documentation.
If for some reason you are not eligible for the Home Affordable Modification Program once you've started the trial period, we will contact you and review other options. Once you've made your first trial period mortgage payment, the next step is for you to return the requested documents and enclosed forms in order to finalize the three-month trial period and qualify for the permanent modification of your loan.
Please complete the enclosed documents and return them with the required financial information by 2/1/2010.

(Def. SMF Ex. C at 1). Under the TPP, payments in the amount of $1, 582.16 (reduced from her existing requirement of $2, 400.49) were due on or before February 1, 2010; March 1, 2010; and April 4, 2010. (Id. Ex. C at 6).[3]

         The TPP package requested, among other things, that Nickerson-Reti provide a “Tax Information Form-IRS Form 4506-T” and certain “Additional Income Documentation.” The requested information included, in relevant part, the following:

b. For each borrower who is self-employed:
√ Copy of the most recently filed federal tax return signed and dated for each borrower with all schedules. . . .
√ Copy of the most recent quarterly or year-to-date profit/loss statement.
d. For each borrower who is relying on . . . child support as qualifying income:
√ Copy of divorce decree, separation agreement or other written agreement or decree that states the amount of the . . . child support and period of time over which it will be received. Payments must continue for at least three years to be considered qualifying income under this program.
√ Proof of full, regular and timely payments; for example, deposit slips, bank statements, court verification, or filed federal tax return with all schedules.
(Id. Ex. C at 4).

         The TPP further provided:

If I am in compliance with this Trial Period Plan (the “Plan”) and my representations in Section 1 continue to be true in all material respects, then the Servicer will provide me with a Home Affordable Modification Agreement (“Modification Agreement”), as set forth in Section 3, that would amend and supplement (1) the Mortgage on the Property, and (2) the Note secured by the Mortgage.
I understand that after I sign and return two copies of this Plan to the Servicer, the Servicer will send me a signed copy of this Plan if I qualify for the Offer or will send me written notice that I do not qualify for the Offer. This Plan will not take effect unless and until both I and the Servicer sign it and Servicer provides me with a copy of this plan with the Servicer's signature.

(Id. Ex. C at 5) (emphasis added).[4] The TPP also stated that “[i]f I comply with the requirements in Section 2 and my representations in Section 1 continue to be true in all material respects, the Servicer will send me a Modification Agreement for my signature which will modify my Loan Documents . . . .” (Id. Ex. C at 7).

         Nickerson-Reti signed the TPP on January 13, 2010, and returned it to the bank. (Def. SMF Ex. B at 79:21-80-21; id. Ex. D at 4). Neither party has provided the Court with Nickerson-Reti's full application. However, her attorney questioned Chad Anderson, the deposition witness produced by the bank under Fed.R.Civ.P. 30(b)(6), about the contents of that application. Anderson acknowledged that Nickerson-Reti provided the bank with a signed and dated hardship affidavit; a signed and dated 4506-T form; two signed and dated copies of the TPP; at least two bank statements from her account at Eastern Bank; five checks made out to her by her husband, Kelman Reti, for child support; and a signed 2008 tax return, including Schedule C, titled “Profit or Loss from Business.” (Def. SMF Ex. E at 89:14-97:14). Having reviewed that application, Anderson testified that the only document that was missing was a copy of the written agreement stating the amount of child support and the period of time over which it would be received. (Id. Ex. E at 97:15-98:2).

         Nickerson-Reti timely made the three trial-period payments in February, March, and April, 2010.[5] She continued to make monthly payments in the amount of $1, 582.16 for more than three and a half years, until she sold the house. (Def. SMF Ex. B at 83:24-84:10; Pl. SMF Ex. P).

         Nickerson-Reti testified that for eight months, Bank of America sent her statements telling her that she was in the trial modification period. (Def. SMF Ex. B at 83:2-84:2; see Id. Ex. B 86:16-17 (“I received a signed statement every month saying they had accepted it.”)).

         On July 30, 2010, the bank sent Nickerson-Reti a letter stating that it was

unable to finalize [her] Home Affordable Modification until [it] receive[d] the following additional and/or correct and complete information from each borrower:
• The Request for Modification and Affidavit (RMA) completed and signed by each borrower
• Signed copy of the most recently filed federal tax return with all schedules
• Copy of the two most recent pay stubs not more than 90 days old indicating year-to-date earnings (clean and readable)
• If self-employed, copy of the most recent filed federal tax return with all schedules, and copy of the most recent quarterly or year-to-date profit/loss statement
• Copy of two most recent bank statements for two consecutive months
• A signed and dated copy of the IRS form 4506-T or form 4506-T-EZ

(Def. SMF Ex. F at 1).

         When asked about this document, Nickerson-Reti testified that she had received many letters like that, but had been told to ignore them. (Def. SMF Ex. B at 122:5-22). According to Nickerson-Reti, she provided the bank with the documents it requested on multiple occasions. She testified that she sent her personal budget worksheet, a hardship letter, and her tax return to the bank for the first time in April 2009. (Id. Ex. B at 71:10-72-17). She stated that her income came from Social Security, child support payments from her husband, and some medical consulting. (Id. Ex. B at 16:18-21, 20:1-14, 21:18-19). Although she was self-employed as a consulting physician, she stated that she did not have any quarterly or year-to-date profit/loss statements, and that she “provided Schedule Cs from tax returns. That's the only thing I have ever used as such a statement, and I explained that to somebody on the phone and they said okay.” (Id. Ex. B at 117:2-7).

         The July 30, 2010 letter did not refer to missing documentation relating to child-support income. (See Def. SMF Ex. F). As to that issue, Nickerson-Reti testified that she was in fact still married to her husband (although they have been separated for twenty years) and that there was no court order or divorce decree concerning the child support; rather, her husband made payments voluntarily, if erratically. (Id. Ex. B at 14:2-9, 20:1-21:17).

         Nickerson-Reti testified that after she received the July 30 letter, she sent more documents to the bank. (Id. Ex. B at 122:5-123:7). She testified that the bank repeatedly lost her application, forcing her to resubmit documents. (Id. Ex. B at 114:11-13, 184:24-185:9, 189:3-9).

         As noted, the TPP provided that it would not take effect unless the bank sent a signed copy of the TPP to Nickerson-Reti. She acknowledges that she never received a copy signed by the bank. She nonetheless alleges that a representative of the bank did in fact sign it. (Def. SMF Ex. B at 82:10-83:24). The basis for that claim is unclear, and in any event ...

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