Jeffrey J. Walker and Mary K. Walker, Plaintiffs,
Bank of America, N.A., BAC Home Loans Servicing, L.P., and Wells Fargo Bank, N.A., as Trustee for the Certificate Holders of Banc of America Securities, Inc. Alternative Loan Trust 2007-2, Defendants.
Jon Erik Kingstad, Esq., Oakdale, MN, on behalf of Plaintiffs.
Andre Hanson, Esq., and Leaf Dilts McGregor, Esq., Fulbright & Jaworski LLP, Minneapolis, MN, on behalf of Defendants.
MEMORANDUM OPINION AND ORDER
ANN D. MONTGOMERY, District Judge.
On September 4, 2013, the undersigned United States District Judge heard oral argument on Defendants Bank of America, N.A. ("Bank of America") and Wells Fargo Bank, N.A., as trustee for the certificate holders of Banc of America Securities, Inc. Alternative Loan Trust 2007-2's ("Wells Fargo") Motion to Stay or in the Alternative for Summary Judgment [Docket No. 30]. Plaintiffs Jeffrey J. Walker ("Mr. Walker") and Mary K. Walker ("Ms. Walker") oppose the motion. For the reasons set forth below, the motion to stay is denied, and the motion for summary judgment is granted.
Mr. Walker has worked as a real estate developer and broker for approximately ten years. Walker Aff., July 22, 2013 [Docket No. 37] ("Walker Opp'n Aff.") ¶ 2; Leon Decl., July 1, 2013 [Docket No. 35] Ex. F. ("Walker HAMP Aff."). In 2006, he worked with a contractor to develop several residential properties in Woodbury, Minnesota, one of which was the property subject to the mortgage at issue in this action. Shortly after building a house on the property, the contractor declared bankruptcy. Walker Opp'n Aff. ¶¶ 3-4. The Walkers took ownership of the house in satisfaction of the contractor's debts, obtained a loan to complete the house, and began living there. Id . ¶¶ 4-6.
On March 29, 2007, Mr. Walker refinanced his existing loans with a "jumbo" $833, 500 mortgage loan from Bank of America. Leon Decl. ¶ 6, Ex. A (the "Note"); Walker Opp'n Aff. ¶ 28. Because the Walkers had substantial assets in 2007, Bank of America offered the credit as a "no document loan, " which required minimal verification of the Walkers' income. See Walker Opp'n Aff. ¶ 9. Signing jointly, the Walkers secured the loan by granting Bank of America a mortgage interest in their newly-improved property. Leon Decl. Ex. B (the "Mortgage"). Defendant BAC Home Loans Servicing, L.P. ("BAC"), serviced the loan. The Walkers agreed Bank of America could transfer the Note without notice. Note at 1; Mortgage ¶ 20.
Two months later, on May 24, 2007, Bank of America assigned the Note to Wells Fargo. Leon Decl. ¶ 7. BAC continued to service the loan. Id . ¶ 8.
In September 2008, the Walkers defaulted on their mortgage loan. Mr. Walker's income decreased significantly, as the real estate market experienced a severe downturn. Walker HAMP Aff. Mr. Walker was also diagnosed with cancer shortly after obtaining the loan, and the resulting treatment costs exacerbated his financial difficulties. Id.
On October 6, 2008, the Walkers received two form letters from Bank of America. The first was from the "Homeownership Retention" department, which asked the Walkers to contact a loan counselor to discuss the potential for a "workout option." Walker Opp'n Aff. Ex. B. The letter also warned that debt collection activity, including foreclosure, could continue while the Walkers sought debt relief. Id . The second letter stated, "Your loan is now in a default status." Leon Decl. Ex. I. Bank of America stated in the letter that because the Walkers had not secured a payment plan, any payments "less than the total amount due" were not acceptable and could be returned. Id.
On October 15, 2008, Bank of America's "Home Ownership Retention Team" sent a third letter, advising the Walkers they may "qualify for a new program" to help them retain their home. Walker Opp'n Aff. Ex. C. Included with the letter was a pamphlet detailing possible assistance options, including "Repayment/Forbearance Plans, " "Loan Modifications, " and "Short payoff or Settlement." Id . Presumably, Bank of America offered some or all of these options to its customers because it had received funds through the Troubled Asset Relief Program (TARP), one condition of which was participation in Home Affordable Mortgage Program (HAMP).
Mr. Walker called the phone number provided, and spoke with a loan counselor. According to Mr. Walker, this Bank of America employee told the Walkers they would not qualify for any loan assistance until they were "behind or delinquent three payments" on the loan. Walker Opp'n Aff. ¶ 16. Bank of America offers no evidence to dispute this representation. The Walkers claim that despite being able to potentially make a late mortgage payment, they relied on the loan counselor's statement and chose not to make loan payments in September, October, or November 2008. Id . ¶¶ 13, 16.
Bank of America claims that it sent a letter on October 22, 2008, which again notified the Walkers of their default. Leon Decl. Ex. J. The letter also stated that if the Walkers did not cure the default by paying the full amount past due within 30 days, Bank of America could accelerate the Note and sell the mortgaged property. Id . The Walkers deny receiving this letter. Walker Opp'n Aff. ¶ 29.
On November 18, 2008, the Walkers submitted a "Home Affordable Mortgage Program Hardship Affidavit" (referred to previously as the "Walker HAMP Affidavit") to Bank of America. In his affidavit and attached letter, Mr. Walker explained his financial and medical struggles, and requested a loan modification under HAMP. Walker HAMP Aff. On January 28, 2009, Bank of America denied the Walkers' application, stating the Walkers lacked sufficient income "to meet affordability requirements." Walker Opp'n Aff. Ex. D. Bank of America suggested the Walkers list their home for sale. Id . There is no evidence proffered that the Walkers did so at this time.
The Walkers maintain that because they had not received a notice of intent to accelerate, they "trusted and relied upon Bank of America that [they] were not in default and had additional time to avoid foreclosure by loan modification or other loan workout options." Walker Opp'n Aff. ¶¶ 19, 21. The Walkers also state that although they had no income from October 2008 to July 2010, they owned several valuable assets, including two airplanes, construction equipment, a motorcycle, and a boat. Id . ¶ 20.
On June 30, 2009, Bank of America notified the Walkers their matter was referred to legal counsel to initiate foreclosure proceedings. Leon Decl. Ex. K. Bank of America informed the Walkers that they could still avoid foreclosure by paying "the total due" or by qualifying for a loan workout, but that the foreclosure action would continue regardless. Id . Shortly thereafter, the Walkers consulted a foreclosure counselor at the Washington County Housing Redevelopment Authority. Walker Opp'n Aff. ¶ 22. Through this process, they learned that their "jumbo" mortgage loan exceeded HAMP eligibility limits, and thus could not be modified under the program. Id . ¶¶ 23, 28.
On September 16, 2009, Bank of America executed a Notice of Pendency of Proceeding and Power of Attorney to Foreclose Mortgage (the "First POA"), in which it assigned a limited power of attorney to Wilford & Geske, P.A., to foreclose on the Walkers' mortgage. Compl. [Docket No. 1] Ex. A. Bank of America recorded the First POA on September 25, 2009. Id . On or about October 19, 2009, the Walkers received a notice for the foreclosure sale of their property, which was scheduled for November 19, 2009. Walker Opp'n Aff. Ex. E. Apparently, the Walker's Washington County foreclosure counselor contacted Bank of America on their behalf and obtained a cancellation of the foreclosure sale. Walker Opp'n Aff. ¶ 25. The Walkers learned of the cancellation through their counselor. Id.
On May 6, 2010, Bank of America restarted the foreclosure process. Wilford & Geske notified the Walkers it had been retained by BAC and Wells Fargo. Wilford & Geske stated the Walkers had defaulted on their loan, and further stated that the full balance of the loan, $939, 566.67, was the amount due. Hanson Decl., July 1, 2013 [Docket No. 34] ("Hanson Decl.") Ex. 7.
On May 21, 2010, Wells Fargo executed its own Notice of Pendency of Proceeding and Power of Attorney to Foreclose Mortgage (the "Second POA"), in which it authorized Wilford & Geske to foreclose the Walkers' mortgage. Compl. Ex. B. Then, on May 24, 2010-three days after Wells Fargo executed the Second POA-Wilford & Geske executed an Assignment of Mortgage on behalf of Bank of America (the "AOM") that assigned the mortgage to Wells ...