A federal judge in Georgia on Sept. 20 awarded summary judgment to Wells Fargo Bank N.A. and the Federal Home Loan Mortgage Corp. (Freddie Mac) after finding that the lender never promised a couple that it would suspend foreclosure proceedings while their loan modification application was being considered (Marla Gould Holcomb, et al. v. Wells Fargo Bank N.A., et al., No. 12-CV-00111, S.D. Ga.; 2013 U.S. Dist. LEXIS 135182).
U.S. Judge William T. Moore Jr.
of the Southern District of Georgia rejected Marla and Henry Holcomb’s claim for promissory estoppel and overruled the couple’s argument that Wells Fargo agreed to depart from the terms of the mortgage loan when deciding whether to offer them a modification.
“The mere consideration by Defendant WFB [Wells Fargo Bank] of possibly departing from the terms of the original contract by modifying Mrs. Holcomb’s mortgage does not mean that they actually agreed to any departure,” Judge Moore explained. “Because there was no mutual departure from the terms of the original mortgage, Defendants are entitled to summary judgment on this claim.”
Instructed To Default
The Holcombs claim that they were able to make their monthly mortgage payments but wanted to modify the terms of the loan. According to the couple, a representative from Wells Fargo told them that to be considered for a loan modification, they had to default on the loan. Based on this representation, the couple did not make their payments for May, June and July 2011. On July 13, 2011, the lender informed the Holcombs that their loan file was being transferred to the law firm of McCalla Raymer with instructions to begin foreclosure proceedings.
In a letter dated Nov. 18, 2011, the firm told the couple that foreclosure proceedings had begun and that their home would be sold in January 2012. The firm also provided the Holcombs with the notices required by Georgia law. The couple contacted Wells Fargo about the letter, but were told to disregard it because their loan modification request was pending. The lender informed the plaintiffs that the foreclosure sale would not happen if their request was approved.
On Dec. 30, 2011, the Holcombs were informed that they would not be provided with a loan modification. On Jan. 11, 2012, McCalla Raymer sent the plaintiffs a letter telling them that Freddie Mac had purchased their home on Jan. 3.
The Holcombs filed suit in the Chatham County Superior Court, seeking compensatory and punitive damages based on claims for wrongful foreclosure, promissory estoppel and mental distress. Wells Fargo removed the suit and later moved for summary judgment, arguing that the couple failed to meet the standard for wrongful foreclosure under Georgia law and that promissory estoppel does not apply in this case. The lender also asserted that it did not mutually depart from the terms of the original mortgage agreement by agreeing to suspend foreclosure activities while the Holcombs’ request for a loan modification was pending.
The Holcombs countered that they never would have defaulted on the loan if Wells Fargo had not told them to do so to be considered for a loan modification and that the lender represented that foreclosure proceedings would be suspended while the loan modification application was being considered. The plaintiffs also argued that Wells Fargo never provided notice of the foreclosure or provided them with an opportunity to cure the default on the loan.
Judge Moore found that the documents provided by Wells Fargo to the Holcombs clearly stated that foreclosure proceedings would continue unless the plaintiffs’ loan modification was approved. As a result, the judge found that the plaintiffs’ promissory estoppel claim failed. In addition, the judge found that Wells Fargo did not agree to depart from the terms of the original mortgage agreement while the Holcombs’ loan modification request was pending.
“In this case, Plaintiffs appear to argue that Mrs. Holcomb’s request for a loan modification was somehow a mutual departure that required WFB to provide notice of its intent to return to the original contract and foreclose under the terms of the security deed,” Judge Moore concluded. “The problem with Plaintiffs’ theory, however, is that all evidence in the record is to the contrary.”
The Holcombs are represented by Stanley Earl Harris Jr. of Duffy & Feemster in Savannah. Dylan W. Howard of Baker Donelson Bearman Caldwell & Berkowitz in Atlanta is counsel for the defendants.