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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF PENNSYLVANIA
f"\ .•, " . ,
MARIA V ASSALOTTI aka MARIE MCBRIDE, FEB 1 7 '- q;
Plaintiff
v.Civil Action No.: 08-5574
WELLS FARGO BANK, N.A.
Dba AMERICA'S SERVICING COMPANY
Defendant
MEMORANDUM OF LAW OF PLAINTIFF
IN SUPPORT OF HER RESPONSE TO DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
1. INTRODUCTION
I became delinquent on my mortgage and foreclosure action was brought against by
Defendant in August 2007. Defendant sent me a letter about workout solutions to avoid
foreclosure listing four different optional programs including the loan mod program
which was described as adding the delinquent interest, taxes, and/or insurance to the
unpaid balance and extending repayment of past due amounts over the remaining loan
term. Exhibit A, attached.
I was approved for a loan mod. The loan mod package arrived on January 10, 2008
and I signed the agreement and sent the paperwork. and required $S 120.3S "contribution
check" back to Defendant immediately so that they could cancel the Sheriff's sale which
was scheduled for January 18, 2008.
During the time I had waiting to hear from Defendant if a loan mod was possible, I
was also consulting a bankruptcy attorney, David Black, Esq. I was struggling
financially from my divorce and I was trying to do whatever I could to be able to afford
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to keep the house for me and my sons. The bankruptcy was filed after I executed the loan
mod and the modifications papers were given to the bankruptcy trustee. Bankruptcy for
me was personally humiliating and demeaning and was a low point in my life but that
combined with an affordable loan mod was the only way that I would be able to keep my
house.
Defendant ignored the loan mod agreement despite accepting the contribution
payment and my first two scheduled monthly payments. In April 2008, Defendant told
me I had no loan mod in place and I was delinquent and late fees were continuing to
accrue. I then agreed to do another loan mod to take the placeof
the first one that they
had, as they later admitted to, "inadvertently placed on hold".
The whole purpose of my agreeing to a loan modification with Defendant was for me
to be able to keep my house with a modified payment that I could afford. Included in the
terms of the loan mod were monthly amounts for principal, interest, and required escrow
payment for a total new monthly payment of$3,019.31. Notably, there was no reference
to any other deficient monies that would be addressed or charged at a later time.
I signed LM2 on May 22,2008 and mailed the first payment on June 27,2008 in the
amount of$3,019.31. On July 8,2008, I received Defendant's mortgage statement which
increased my payment to $4,078.08 because they were now charging my for the pre-loan
mod delinquent taxes they had represented would be included in the loan mod agreement
and which I would have no further obligation on. I could not afford a payment of
$4,078.08 and I would never have agreed to that. Defendant sent me a letter dated
August 10, 2008 stating that my account was seriously delinquent and sent an Act 91
foreclosure notice dated October 5,2008 stating they intended to foreclose on my house.
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I retained counsel in November and filed suit against Defendant in December 2008.
II. DISPUTES TO DEFENDANT'S STATEMENT OF MATERIAL FACTS
A: Plaintiff's Default on the Mort&aae Loan
1. In 2005, I refinanced my property to cash out some equity to not only repay credit
card bills as Defendant states but also to payoff a home equity line of credit that had
been used for new siding, windows, and a garage addition to my house. Vassalotti
Dep.2S:12-21 with Errata page, Exhibit F, attached. Subsequent to that, I did a no cash
out refinance through WMC mortgage to transfer title from my husband and myself to
myself at the beginning ofmy divorce case. This mortgage was at some later point sold
to a security trust and was then serviced by Defendant.
2. I began missing payments in 2007 contrary to Defendant's statement that it was
shortly after the cash-out refinance that I defaulted on the loan. My finances had become
seriously strained after my divorce. Defendant wrongly attempts to paint me in a
negative light by stating that I had cashed out a lot ofmoney then immediately defaulted.
B: Plaintiff's Firs t Loan Modification
3. I received a letter from Defendant dated August 21,2007 describing options to
resolve my mortgage deficiency including a loan mod program that would add the
delinquent interest and taxes into the unpaid balance and extend the repayment of the past
due amounts over the remaining terms of the loan . Exhibit A. Defendant's Loan
Modification package arrived at my home on January 10, 2008 which included the
approval letter stating the specific terms of the new loan mod payments which Defendant
fails to mention here. Exhibit B, attached. I signed it and had it notarized immediately
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and mailed it back that same day because Defendant wouldn't cancel the sheriff sale
scheduled for January 18, 2008 until they had my signed package and contribution check.
C: Plaintiff's Bankruptcy
4. I had been consulting with my bankruptcy attorney, David Black throughout the
process of a workout solution with Defendant. It was to my benefit to obtain a loan mod
from Defendant rather than have it go through bankruptcy court because Defendant
offered to convert my 9.65% adjustable rate which was due to adjust to 12.65% in
January to a fixed 9.65% rate. Mr. Black waited to file the bankruptcy petition until after
I sent him a copy of the loan mod agreement I had signed with Defendant. Also, it was
our intent to file the petition prior to the Sheriff Sale date of January 18, 2008 in case
Defendant had not discontinued that action yet.
D: Plaintiff's Second Loan Modification
5. It was not a result of the bankruptcy that Defendant offered me a second loan mod.
It was because ofDefendant's breach ofLMI that they offered me LM2. I made timely
payments in accordance with LMI and Defendant accepted these payments in March and
April 2008. Defendant admits they "inadvertently placed LM 1 on hold" Exhibit E,
attached.
6. LM 2 contained terms beyond what Defendant states in their memorandum of law,
particularly including a required escrow payment. See Defendant 's Memorandum of law,
p. 3 #11, p. 3 #12. The terms ofLM 2 were detailed on the approval letter accompanying
the loan mod package stating that the new principal and interest payment is $2,691.86
and the required escrow payment is $327.45. Exhibit C, attached. Defendant's letter to
me dated November 17,2007 tells me that their loan modification program adds the
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delinquent interest, taxes, and/or insurance payments to my unpaid balance, Exhibit D,
attached. The loan mod did not state that any amounts deficient at the time of the loan
mod would be charged after the loan mod was in place.
DI. LEGAL STANDARD
A court should grant summary judgment only where the record shows that there is a
genuine issue as to any material fact and the moving party is entitled to judgment as a
matter oflaw. Fed. R. Civ. P. 56. A factual dispute is genuine if a reasonable jury could
return a verdict for the non-movant, and it is material if, under the substantive law, it
would affect the outcome of the suit. Anderson v. Liberty Lobby, In.c" 477 U.S. 242,248
(1986). Ideal Dairy Fanns, Inc. v. John Labatt, Ltd., 90 F.3d 737, 743 (3d Cir. 1996). The court
must accept as true all well-pleaded facts in the non-moving party's pleadings, as well as
admissions on file, giving them the benefit of all reasonable inferences to be drawn there
from. Hankin v. Mintz, 276 Pa. Superior Ct. 538,419 A.2d 588 (1980); Ritmanich v
Jonnell Enterprises Inc., 219 Pa Superior Ct. 198,280 A 2d 570 (1971).
Because material fact disputes preclude the entry of summary judgment against me,
Defendant's motion should be denied.
IV. ARGUMENT
A. Defendant is in Breach of Contract
The material facts at issue are the essential facts that must be alleged for this action:
there was a contract, the Defendant breached it, I performed my contractual duties, and I
suffered damages from the breach. Frederico v. Home Depot, 507 F-3d 188, 203 (3d Cir.
2007). Defendant did breach the Loan ModI agreement and later admitted they had
"inadvertently put the loan modification on hold". Exhibit E, attached. Further,
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Defendant erroneously applied monies from my "contribution check" and the first two
timely payments to the pre-mod mortgage deficiencies contrary to the loan mod
agreement which kept the mortgage in default.
Defendant argues I am estopped from asserting a breach of contract claim based on
LMI. However, the party asserting estoppel bears the burden of proofon each element
ofestoppel, International Union v. Skinner Engine Co., 188 F.3d 130 (1990).
The Breach ofContract claim in Count II of the Second Amended Complaint was
filed by my previous counsel which I incorporated only by reference into the Third
Amended Complaint that I filed on January 4, 2010 and which should have stated claims
in Breach ofContract on both LMI and LM2. Although the claim against LM2 was
omitted, it does not negate the claim against LMI and Summary Judgment should be
denied.
B. Defendant is in violation of the Fair Credit Reporting
My claim for Defendant's violation of the Fair Credit Reporting Act claim is based
on violation of 15 U.S.C. section 1681s-2B(b).
Contrary to Defendant's statement that the Third Amended Complaint contains no
allegations that Defendant was contacted by a CRA or furnish information to a CRA,
paragraphs 4 and 5 ofCount IV of the Third Amended Complain establish:
1. I contacted the CRA's in writing to do an investigation on this dispute.
2. The CRA's responded with the results of their investigation that
Defendant had verified the (inaccurate) information.
3. Defendant refused to rectify the disputed charges.
See Exhibit K.
Thus, I have met the required elements to allege Defendant 's violation ofFCRA
See Jaramillo v. Experian Info. Solutions. 155 F. Supp. 2d 356,362-63 (B.D. Pa. 2001).
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Defendant further argues that they cannot be held negligent in complying with section
1681s-2(b) in investigating my dispute with the CRAs because their reporting my
mortgage loan as "discharged in bankruptcy" is accurate. Both ofmy loan mods
constituted reaffirmation agreements and timely payments on both loan mods were paid
by me and accepted by Defendant. The mortgage was never overseen by the trustee nor
foreclosed on nor discharged or "forgiven" in the bankruptcy
Whereas factual disputes exist, Summary Judgment is inappropriate. See Reeves v.
Equiax Info. Serv., LLC, 2010 U.S. Dist. Lexis 5024 (S.D. Miss.May 20,2010). Thus,
Summary Judgment should be denied.
C. Defendant is in violation of the Unfair Trade Practice and Consumer
Protection Law.
My claim for Defendant's violation ofUTPCPL is a claim under the "catch all"
provision of the Unfair Trade Practices and Consumer Protection Law, 73 P.S. 201
2(4)(xxi) that a person violates the UTPCPL by engaging in any other fraudulent or
deceptive conduct which creates a likelihood of confusion or ofmisunderstanding, that
justified reliance was placed on that misrepresentation, and that the reliance caused loss.
Hunt v. United States Tobacco Co., 538F.2d 217, 219 (3d Cir.2008).
At issue is whether or not the Defendant's letters and the loan mod agreements were
deceptive and if I was justified in placing reliance on them to sign the agreements. In
fact, the Defendant did engage in fraudulent or deceptive conduct by sending me a
specific letter representing their loan mod program as adding the deficient interest and
taxes to the new loan and attaching a formal approval letter with the loan mod package
itself stating the new terms included a required escrow payment and, further, not
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disclosing that I would later be obligated on any amounts that were deficient at the time
of the loan mod. I relied on those documents to sign the loan mod. These are material
omissions and deceptive representations. See Craftmatic Securities Litigation v.
Kraftsow, 890 F.2d 628 (3 ed Cir.1990) citing TSC Industries v. Northway, Inc . 426 US.
438, 449 (1976). My reliance on these documents was justified and Defendant is not,
under Pennsylvania law, entitled to summary judgment in Consumer Protection Law
action where genuine issue of fact existed in regard to my reliance. See. Toy v. Metro.
Life Ins. Co., 593 Pa.20, 928 A.2d 186,208 (Pa.Sup.Ct.2007). Fisher, 320 B.R. 52
(E.D.Pa. 2005) (citing Fav v. Erie Ins Group, 723 A.2d 712, 714 (Pa.Sup. 1999).
When Defendant subsequently charged me for a pre-mod tax deficiency contrary to
the modified new monthly payment which we had agreed on, I was unable to pay the
additional amounts and Defendant called my loan in default and initiated foreclosure
proceedings. For the above states reasons, Defendant's motion for summary judgment
should be denied.
1. The November 17, 2007 letter was deceptive and my reliance on this
letter along with the stated terms on the rormal approval letter was
justified.
Defendant's statement that their letter to me dated November 17, 2007, Exhibit D,
was not deceptive and that my reliance on it to state the terms ofmy loan modification is
completely inaccurate. Defendant misstates when they say "Plaintiff states that she
executed LM1 in reliance on the terms of a November 14, 2007 generic letter from Wells
Fargo to Plaintiff.". See Defendant's Memorandum ofLaw p. 11. I relied on that
November 17, 2007 letter as a specific description ofwhat Defendant's loan modification
program entailed particularly that their loan modification program adds the delinquent
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taxes to my unpaid balance. My reliance on what the terms of the loan mod were the
documents in the actual loan mod package itself stating the terms specifically as the new
principal, interest, and escrow payments. Exhibit B.
Defendant's assertions that I relied on a "generic" letter is misleading. See
Defendant's Memorandum ofLaw p. 11-12. This letter was not generic. It was
specifically addressed to me, included my loan number, and was in response to my
contact with Defendant on a workout solution to prevent foreclosure ofmy home.
Further, the letter was accompanied by a financial application with a deadline date for
completion of the application. This letter was not generic but rather very specific to me,
to my current situation, and to which program I could be approved for pending my
financial application.
Defendant then wrongly states that I sought to "transform the generic letter into a
binding contract". See Defendant's Memorandum ofLaw p. 12 par. 1. I admitted at my
deposition that I did not believe this letter to be a binding contract but rather a description
of their loan mod program. Vassalotti Dep. 41: 16-22. This letter stated in plain text that
the loan mod program" adds the delinquent interest, taxes, and/or insurance payments to
your unpaid balance if applicable". Since there were delinquent interest and taxes on my
loan as stated in Defendant's foreclosure judgment against me, they were applicable.
filled out their application that was attached with the letter and was subsequently
approved for a loan
Defendant's assertions regarding the use of the words and/or in the November 17,
2007 are incorrect. See Defendant's Memorandum ofLaw, p. 12 par. 2. The use of
"and/or" in the sentence did not establish that ifI met the criteria for a loan mod, the
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Defendant may capitalize one or more of those delinquent amounts. The words "and/or"
refer to delinquent taxes and/or delinquent insurance amounts, whichever or both that
were delinquent. My taxes were delinquent. My insurance was not delinquent as
Defendant never had advanced any insurance amounts on my behalf Therefore, the
word "or" was applicable to me rather than the word "and" meaning that delinquent taxes
would be added to the unpaid balance.
My reliance on the November 17, 2007 that the Defendant 's loan mod program adds
the delinquent interest and taxes to the unpaid balance and extend the repayment of the
past due amounts over the remaining term ofmy loan is justified as it was clearly stated
in the letter representing its own loan mod program. Therefore, the letter is deceptive
and my reliance on it is justified.
2. LM 1 is deceptive and my reliance on the approval letter which
accompanied it stating the terms of the loan mod is justified.
Defendant misstates what constituted the loan mod. In their Exhibit G which they
purport to be LMI in its entirety, Defendant leaves out the first page of the loan mod
package which was the formal approval letter detailing the terms of the loan mod.
Defendant now calls this the "transmittal letter" . Defendant then attempts to confuse by
stating that "LM 1 does not state the amount of any monthly escrow payments .".
Whereas, in fact, this formal approval letter which was the first stapled page of the loan
mod package clearly details the terms of the loan mod including an escrow payment of
$327.45. See Exhibit B.
Defendant goes on to wrongfully state that I admitted during my deposition testimony
that "the plain text ofLM 1 indicates that Wells Fargo did not waive Plaintiff's escrow
deficiency and Plaintiff continued to be liable for repayment escrow amounts advanced
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on her behalf '. First, Defendant never asked me directly about being liable for
repayment of escrow amounts advanced. Vassalotti Dep. 52:24-53:1-6. Exhibit F.
Defendant's exact question was "This document does not state that Wells Fargo or
America's Servicing Company is waiving any amounts that are owed to them, including
the escrow amounts that were due?". My exact answer in the deposition was "Correct.
It's supposed to include all of them". Vassalotti Dep. 53:5-6. Nowhere in the loan mod
did it state that I would have further obligation to pay any amounts that were deficient at
the time of the loan mod. Since I relied on the clearly stated terms including the required
escrow payment and monthly payment to agree to and sign the loan mod, the loan mod
was also deceptive.
Defendant also states that my claims of relying on the terms written in the loan mod in
assuming the escrow deficiency was included in LM 1 (See Third Amended Complaint,
par.l3) is incorrect. They argue that the actual terms ofLM 1 are the new monthly
principal and interest payment with no stated monthly escrow payment. However, the
new escrow payment was clearly stated to be $322.03. They further argue that the
paragraph below taken from the loan mod specifically states that I am obligated to repay
the escrow deficiency after signing the loan mod:
Borrower also will comply with all covenants, agreements, and requirements of thesecurity instrument, including without limitation, Borrower's covenant andagreements to make all payments of taxes, insurance premiums, assessments, escrowitems, impounds, and all other payments that Borrower is obligated to make underthe Security Instrument ...
This paragraph does not state that I am obligated to further pay any escrow deficiency
In fact, I believe this paragraph refers to the original security instrument dated December
1,2005 that I signed with WMC mortgage and which the loan mod is amending. Again,
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principal, interest, and required escrow payment, new rate, modified term, and due date
of first payment.
Defendant refers to a paragraph within the loan mod stating that "nothing in this
Agreement shall be understood or construed to be a satisfaction or release, in whole or in
part of the Borrower's obligations under the Note or Mortgage". Defendant says this
means that my "escrow deficiency remained outstanding". This paragraph, in fact, does
not state or refer to my escrow deficiency remaining outstanding. Similar to LM 1, it
refers to the covenants in the original security instrument dated December 1, 2005 which
the loan mod is amending. Defendant wrongly states that "the proposed monthly
payment clearly included only principal and interest and specifically states that is does
not include any escrow deposit". See Defendant Memorandum ofLaw: p. 15.
Whereas, the actual terms of the loan mod are stated as follows:
1. Due date of first payment: 07/01/2008
2. New principal and interest payment amount: $2,691.86 3. Required escrow payment based on previous analysis: $327.454. Estimated new net payment: $3,019.31
5. Modified maturity date: 12/0112035
6. Interest rate: 9.650%
As with LMl, the terms ofLM2 are clearly stated as to my required escrow payment.
Nowhere in LM2 does Defendant state that I have any further obligation to pay any other
deficiencies including an escrow deficiency owing at the time of the agreement.
I signed the Loan Mod on May 22,2008 and mailed the first payment on June 27,
2008 in the amount of $3,019.31. On July 8, 2008, I received Defendant's mortgage
statements stating there was an overdue payment owing from 07/01/08 in the amount of
$4,078.08 which Defendant admits. Exhibit J: Plaintiff's Request for Admissions #24,
Exhibit H: mortgage statements. This was contrary to the agreement as it increased my
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payment because they were now charging my for the pre-loan mod delinquent taxes they
had represented to be included in the loan mod agreement and for which I would have no
further obligation. Therefore, LM2 is deceptive. I could not afford a payment of
$4,078.08 and I would never have agreed to that. Defendant then sent me a letter dated
August 10,2008 stating that my account was seriously delinquent. Exhibit G. In
October sent an Act 91 foreclosure notice stating they intended to foreclose on my house.
Exhibit I, attached.
Defendant next argues that because it is dated May 10, 2008 and I signed the
agreement on May 22, 2008 that it was not partof
the loan mod package. See
Defendant's Memorandum ofLaw p. 15. Defendant separates it from the loan mod in
their exhibit, whereas, in fact, similar to loan LM 1, the approval letter was the first
stapled page of the entire loan mod package and did not arrive under separate cover.
Defendant continues to call this document a "transmittal letter" whereas, this document
reads "This letter will confirm the formal approval of a loan modification/restructure of
your mortgage loan". My reliance on this approval letter detailing the terms ofmy new
payment amounts and not disclosing any further obligation on any other deficient monies
owing is fully justified .
Therefore, LM 2 is deceptive and I relied on it along with the Defendant's description
of its loan mod program to sign the agreement. Thus, for these reasons as well as the
reasons discussed above, Defendant is in violation ofmy claims under UTPCPL because
they engaged in deceptive conduct which created a likelihood of confusion or
misunderstanding and I justifiably relied on the alleged deceptive conduct to my
detriment. Therefore, Summary Judgment should be denied.
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v. CONCLUSIONFor the foregoing reasons, material facts are disputed on all counts and Plaintiff
requests the Court to deny Defendant's Motion for Summary Judgment on all counts.
Respectfully submitted,
Dated: February 15, 2011
Marie Vassalotti521 Paxon Hollow Road
Broomall, P A 19008610-353-3904
Pro Se Plaintiff
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