In Wentzel v. CitiMortgage, Inc., the Honorable Michael J. Davis, of the United States District Court, District of Minnesota, provides us with a reminder of why it is SO important to “get it in writing.” In this case, the Plaintiffs (Richard & Debra Wentzel), experienced financial difficulty and contacted CitiMortgage to see whether they qualified for a loan modification.
(Sidenote: Plaintiffs contacted CitiMortgage because they had received notice that their loan was being transferred to CitiMortgage, but later on CitiMortgage told the Plaintiffs that they were waiting to receive an Assignment from the previous company. So, the Plaintiffs made an unjust enrichment claim against CitiMortgage based in part on Plaintiffs’ allegations that CitiMortgage had not demonstrated that it is assignee of their mortgage and note.)
In August 2008, Plaintiffs were told they qualified for an adjusted payment of $832.58/month. In July 2009, Plaintiffs spoke with a CitiMortgage representative who told them they were not in danger of foreclosure, but the next week they were told by someone else that they had to pay $1,332 in July and August to avoid foreclosure. In February 2010, Plaintiffs were told they qualified for a lower payment of $1,250.74, and that the paperwork for the loan modification would arrive by UPS. Plaintiffs made those payments in March 2010 through November 2010, but they never received the promised paperwork. When Plaintiffs sent in their December 2010 payment, CitiMortgage refused to accept it, and allegedly told Plaintiffs that they were waiting for an assignment from Harmonic Mortgage (who Plaintiffs originally obtained their loan from in April 2006) before proceeding further.
In February 2011, CitiMortgage wrote to Plaintiffs and told them that they had been pre-approved for a modification in February 2010, but that the modification was closed in April 2010 due to not receiving a response from the Plaintiffs. Plaintiffs claimed that they responded to ALL of CitiMortgage’s requests.
On March 17, 2011, when CitiMortgage refused to accept their monthly payment, CitiMortgage told them, “As you know, your loan is in foreclosure.”
Plaintiffs sued CitiMortgage for breach of contract, promissory estoppel, fraud and misrepresentation, consumer fraud pursuant to Minn. Stat. 325F.69, and unjust enrichment. CitiMortgage moved to dismiss, using Rule 12(b)(6) – failure to state a claim upon which relief may be granted.
The Court dismissed all of the Plaintiffs’ claims EXCEPT their claim for unjust enrichment. The reason for the dismissal of the breach of contract, promissory estoppel, and fraud and misrepresentation claims was based on the Plaintiffs not having their loan modification agreement in writing, and the fact that Minn. Stat. 513.33 requires credit agreements to be in writing. Plaintiffs’ claim for consumer fraud was dismissed because a public benefit is required to use the Private Attorney General Statute (Minn. Stat. 325F.69) and the Plaintiffs’ claim was based solely on the communications between Plaintiffs and CitiMortgage; there were no allegations by Plaintiffs that CitiMortgage made misrepresentations to the public.
The Court found that Plaintiffs had properly asserted a claim for unjust enrichment, and thus that claim was not dismissed.
The major lesson in this case, for a homeowner who is in the process of getting their loan modified, is to do everything possible to get something in writing from the bank. Until you have something in writing, the bank can change the terms of your modification at its own whim (or let your house go into foreclosure after it has told you your loan is modified and after it has accepted many modified payments from you). The phone conversations that you have with the bank are not enough – you need to get it in writing!