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Joseph Picini, Jr. and Michelle Picini v. Chase Home Finance LLC and Jpmorgan Chase Bank

February 16, 2012


The opinion of the court was delivered by: Seybert, District Judge:


Plaintiffs Joseph Picini, Jr. and Michelle Picini sued Defendants Chase Home Financing, LLC and JPMorgan Chase Bank, N.A. ("JPMorgan" and, together, "Defendants") in a case that arises out of Plaintiffs' attempt to modify their home mortgage loan. Pending before the Court is Defendants' motion to dismiss (Docket Entry 4); for the following reasons, this motion is GRANTED IN PART AND DENIED IN PART.


The following facts are taken from the allegations in Plaintiffs' Complaint and assumed to be true for the purposes of this motion. Plaintiffs are homeowners who, at all relevant times, lived in Farmingdale, New York. (Compl. ¶¶ 10-11.) Plaintiffs' home loan was secured by a note and mortgage to JPMorgan in the principal amount of $359,650. Chase Home Financing is a mortgage loan servicer and a wholly-owned subsidiary of JPMorgan. (Id. ¶ 12.)

I. The Home Affordable Modification Program

In 2009, in response to the housing crisis, the United States Department of the Treasury created the Home Affordable Modification Program ("HAMP"). (Id. ¶ 14.) HAMP was designed to incentivize mortgage lenders to modify first lien mortgage loans for eligible homeowners. (Id. ¶¶ 14-15.) The Treasury Department designated Fannie Mae, in its capacity as a financial agent of the United States, to administer HAMP. (Id. ¶ 15.)

In July 2009, JPMorgan and Fannie Mae entered into a "Service Participation Agreement for the Home Affordable Modification Program" (the "SPA") under which JPMorgan agreed to participate in HAMP and to be bound by HAMP's guidelines (the "HAMP Guidelines"). (Id. ¶¶ 16-17.) Chase Home Financing signed a similar agreement in April 2009. (Id. ¶ 17.) Among other things, the HAMP Guidelines laid out the criteria for borrowers who were eligible for loan modifications under the program. (Id. ¶¶ 19-21.) They also set forth what documentation would be required for candidates under the program, (id. ¶¶ 22-23), and they specified that lenders must halt foreclosure proceedings against borrowers whose applications for loan modifications were pending (id. ¶ 25).

Under HAMP, eligible borrowers would be enrolled in a Temporary Payment Plan ("TPP"). (Id. ¶ 26; Pl. Ex. A, HAMP Guidelines, § 8.) The TPP would typically last three months, during which time the borrower would have to make timely mortgage payments and provide certain financial documentation. The HAMP Guidelines provided that "[b]orrowers who make all trial period payments timely and who satisfy all other trial period requirements will be offered permanent modification." (HAMP Guidelines § 8.) "A borrower in a TPP may receive a permanent modification as long as the servicer has received all required trial period payments timely and all other required documentation from the borrower, including a fully executed Modification Agreement." (Id. § 9.)

II. Plaintiffs' Attempt to Modify their Home Mortgage Loan

The gravamen of Plaintiffs' case is that Defendants engaged in "deny and delay" tactics that prevented Plaintiffs from securing a permanent loan modification despite their timely compliance with their TPP. (See Compl. ¶ 30.)

A. Plaintiffs' TPP

After Mr. Picini lost his job in October 2008 (id. ¶ 33), Plaintiffs contacted Chase Home Financing to obtain a loan modification (id. ¶ 34). They were told that nothing could be done until they fell at least three months behind on their payments. (Id. ¶ 35.) Based on this advice, Plaintiffs did not make their December 2008 payment (id. ¶ 36), and they eventually defaulted on their loan (see id. ¶ 38). Nevertheless, their repeated requests for a loan modification fell on deaf ears. (See id. ¶¶ 41, 47.) Plaintiffs filed for bankruptcy in May 2009, but Defendants obtained relief from the automatic stay and initiated foreclosure proceedings in New York State Supreme Court, Nassau County (the "Foreclosure Action"). (Id. ¶¶ 45-46.)

While the Foreclosure Action was pending, Plaintiffs learned of HAMP through a friend, and they applied for a loan modification in February 2010. They were approved for a three-month TPP in March 2010. (Id. ¶¶ 55-56.) An unspecified representative of one of the Defendants told Plaintiffs that it was "pretty definite" that Plaintiffs would receive a permanent modification. (Id. ¶ 57.)

Under their TPP, Plaintiffs were required to make monthly payments of $1,600.02. (Id. ¶ 58.)*fn1 The TPP provided that, upon Plaintiffs' successful completion of the trial period, Defendants "will send [Plaintiffs] a Modification Agreement . . . which will modify the Loan as necessary to reflect this new amount." (Id. ¶ 61.) The TPP also stated that "[i]f all payments are made as scheduled, we will consider a permanent workout solution for your loan." (Id. ¶ 62.) Plaintiffs allege that, contemporaneously with offering the TPP, Defendants represented that the Foreclosure Action would be stayed while Plaintiffs were enrolled in the TPP. (Id. ¶ 64.)

B. Plaintiffs' Loan is not Permanently Modified Despite their Compliance with the TPP

The remainder of the Complaint describes Plaintiffs' ultimately unsuccessful attempt to obtain a permanent loan modification despite their timely compliance with the terms of their TPP contract. The Court will address specific allegations as necessary in the discussion below, but in general terms Plaintiffs allege that they made the required monthly payments during the three-month TPP term (id. ¶¶ 65, 66, 73) but did not receive any information from Defendants about their permanent loan modification (id. ¶ 69). An unspecified representative of Defendants eventually explained that the loan modification department was "backed up" and advised Plaintiffs to continue making payments under the TPP after the three-month trial period had run. (Id. ¶¶ 71-72; see also id. ¶ 186(e).) Plaintiffs made payments for another seven months but did not hear from Defendants during this time. (Id. ¶ 74.)

Plaintiffs eventually heard from Defendants in October 2010 in the first of what would be a frustrating series of conflicting communications. On October 18, a representative of Defendants named Bridget told Plaintiffs that they had been dropped from their TPP and that the Foreclosure Action would resume in February 2011. (Id. ¶¶ 75-84.) Bridget nevertheless advised Plaintiffs to continue making payments under the TPP. (Id. ¶ 85.) Plaintiffs were similarly advised to continue making TPP payments when they spoke with an unnamed representative of Defendants on the phone. (Id. ¶ 87.) Shortly after Plaintiffs complained to their representatives in state and federal government, however, Defendants sent Plaintiffs a letter congratulating them on completing the TPP. (Id. ¶¶ 88-89.) But when Plaintiffs called the phone number included in that letter, they were told that they had been dropped from HAMP. (Id. ¶ 90.)

On October 29, 2010, Plaintiffs received a phone call from Defendants informing them that Loretta Stephens, from the "Chase Resolutions Group," had been assigned to their case. (Id. ¶ 93.) Stephens and other representatives of Defendants allegedly provided Plaintiffs with conflicting information about what additional documents Plaintiffs needed to submit (e.g., id. ¶¶ 96-98, 113, 116-117; see also id. ¶¶ 108-09), the status of the Foreclosure Action (id. ¶¶ 103, 135-36), and even who from Defendants was responsible for Plaintiffs' file (id. ¶¶ 114, 119). After months of getting the runaround, Plaintiffs were told in March ...

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