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Verna Thomas and Mosell Thomas v. U.S. Bank National Association

June 22, 2012


The opinion of the court was delivered by: Wolfson, United States District Judge:



On February 28, 2012, I denied the appeal of pro se Appellants Verna Thomas and Mosell Thomas ("Appellants"), who sought reversal of the United States Bankruptcy Judge's denial of their motion for reconsideration of the Judge's grant of relief from the automatic bankruptcy stay to the primary mortgage holder on Appellants' home at 43 Winston Drive, Somerset, New Jersey ("the Property"), Appellee U.S. BANK National Association, as Trustee for CSMC Mortgage-back-through Certificates, Series 2006-H ("Appellee" or "U.S. Bank").*fn1 Appellants now move for reconsideration of my February 28th decision. For the following reasons, Appellants' motion for reconsideration is denied.


As explained in my February 28th decision, Appellants argued in their appeal to this Court that the Helping Families Save Their Homes Act of 2009, Pub.L. No. 111-22, 123 Stat. 1632 (the "Helping Families Act"), precludes mortgagors from instituting a foreclosure action without first granting mortgagees a modification of their mortgages. In light of Appellants' reliance on that Act, and the recent explosion of litigation in this area of the law, the Court finds it helpful to provide further background on the Act and its related foreclosure mitigation programs in this Opinion.

Before delving into the details of the Act, and the foreclosure mitigation programs developed thereunder, I first clarify the difference between a mortgage holder and a servicer of a mortgage loan. Generally, under New Jersey law, a mortgage holder is a lender which owns a homeowner's mortgage whereas a servicer is a separate entity that acts as the mortgage holder's agent to collect payments due on the mortgage. See US Bank Nat. Ass'n v. Guillaume, 209 N.J. 449, 472 (2012) (noting that New Jersey's Fair Foreclosure Act, N.J.S.A. 2A:50--53 et seq., defines a "lender" as "any person, corporation, or other entity which makes or holds a residential mortgage, and any person, corporation or other entity to which such residential mortgage is assigned," N.J.S.A. 2A:50--55) (emphasis added); id. (describing a servicer as one who bears the "responsibility to collect mortgage payments and negotiate with homeowners on [the lender's] behalf"). Here, U.S. Bank is the holder of Appellants' mortgage and Americas Servicing Company is U.S. Bank's servicer. See Certification Re Post-Petition Payment History on the Note and Mortgage Dated 11/02/05, Bankr. Case No. 10-48206-RTL at ¶ 10 (March 3, 2011); Guillaume, 209 N.J. at 472 (referring to Americas Servicing Company as U.S. Bank's servicer in that case).

A. Helping Families Act

Prior to enacting the Helping Families Act, Congress enacted the Emergency Economic Stabilization Act of 2008 (EESA), 12 U.S.C. §§ 5201--5261. The EESA directed the Secretary of the Treasury to "implement a plan that seeks to maximize assistance for homeowners and use the authority of the Secretary to encourage the servicers of the underlying mortgages . . . to take advantage of the HOPE for Homeowners Program [("H4H")] under section 1715z--23 of this title or other available programs to minimize foreclosures." See McInroy v. BAC Home Loan Servicing, LP, No. 10--4342, 2011 U.S. Dist. LEXIS 49868, 2011 WL 1770947 (D.Minn. May 9, 2011); Williams v. Timothy F. Geithner, No. 09--1959, 2009 U.S. Dist. LEXIS 104096, 2009 WL 3757380, at *2 (D.Minn. Nov. 9, 2009).

Not long after the EESA was enacted, in February 2009, President Obama announced the Homeowner Affordability and Stability Plan, see Help for Homeowners, The White House Blog,, which spawned the Home Affordable Modification Program ("HAMP") managed jointly by the Treasury Department and the Department of Housing and Urban Development ("HUD"). See Alpino v. JPMorgan Chase Bank, Nat. Ass'n, 2011 WL 1564114, *2 (D.Mass. Apr. 21, 2011). HAMP was announced by the Treasury shortly thereafter in March 2009. See U.S. Dep't of the Treasury, Home Affordable Modification Program Guidelines, § VII, 610 (Mar. 4, 2009). It is one of four foreclosure mitigation programs instituted under the umbrella of the Treasury Department's and HUD's Making Home Affordable program ("MHA"). See Fannie Mae, Home Affordable Modification Program Overview, (April 11, 2012); see also Bosque v. Wells Fargo Bank, N.A., 762 F.Supp.2d 342, 347 (D.Mass. 2011).

A few months following the announcement of HAMP, on May 20, 2009, Congress enacted the Helping Families Act. Section 401(a) of the Helping Families Act includes a sense of Congress provision that discouraged mortgage servicers from initiating foreclosure proceedings until foreclosure mitigation programs like H4H and HAMP were implemented:

It is the sense of Congress that . . . mortgage servicers should not initiate a foreclosure proceeding or a foreclosure sale on any homeowner until the foreclosure mitigation provisions, like the Hope for Homeowners program, as required under title II, and the President's "Homeowner Affordability and Stability Plan" have been implemented and determined to be operational by the Secretary of Housing and Urban Development and the Secretary of the Treasury.

Helping Families Act, 123 Stat. 1632, 1655, Sec. 401(a). The Act further provides, in section 401(e), that homeowners "for whose benefit any foreclosure proceeding or sale is barred under subsection (a) from being instituted . . . should respond to reasonable inquiries from a creditor or servicer during the period during which such foreclosure proceeding or sale is barred." Id. at Sec. 401(e).

The HAMP announcement, and subsequent clarifications issued by the departments, made clear that Fannie Mae-approved servicers were required to participate in HAMP for all eligible Fannie Mae and Freddie Mac owned mortgage loans and MBS (mortgage backed securities) pool loans. See U.S. Dep't of the Treasury, Reissuance of the Introduction of the Home Affordable Modification Program, HomeSaver ForbearanceTM, and New Workout Hierarchy, Announcement 09-05 R at 1-2 (Apr. 21, 2009). However, servicer participation for non-Fannie Mae, non-Freddie Mac backed loans was optional. Id. at 2. Because Fannie Mae and Freddie Mac are Government Sponsored Enterprises (GSEs), non-Fannie Mae, non-Freddie Mac loans are referred to as "NonGSE Mortgages." Id. For consistency's sake, I refer to Fannie Mae and Freddie Mae owned loans as "GSE Mortgages" or "GSE loans." Accord Ording v. BAC Home Loans Servicing, LP, Civil Action No. 10--10670--MBB, 2011 WL 99016, *8 (D.Mass. Jan. 10, 2011) (referring to Fannie Mae or Freddie Mac owned loans as "GSE loans").

The Treasury Department issued a uniform guidance for loan modifications on March 4, 2009. Thereafter, on April 6, 2009, the department issued a supplemental directive, providing additional guidance to servicers "for adoption and implementation of the Home Affordable Modification program (HAMP) for mortgage loans that are not owned or guaranteed by Fannie Mae or Freddie Mac (Non-GSE Mortgages)." U.S. Dep't of the Treasury, Introduction of the Home Affordable Modification Program, Supplemental Directive 09-01 at 1 (April 6, 2009). The directive explained that "[i]n order for a servicer to participate in the HAMP with respect to Non-GSE Mortgages, the servicer must execute a servicer participation agreement and related documents (Servicer Participation Agreement) with Fannie Mae in its capacity as financial agent for the United States (as designated by Treasury) on or before December 31, 2009." Id.

The year following creation of HAMP, in March of 2010, the Department of Housing and Urban Development ("HUD") promulgated regulations instituting the H4H program also referenced in the Helping Families Act. See Department of Housing and Urban Development, 75 Fed. Reg. 1691 (Jan. 12, 2010). H4H is a temporary program "that offers to homeowners and existing loan holders (or servicers acting on their behalf), FHA insurance on refinanced loans for distressed borrowers to support long-term sustainable homeownership by, among other things, allowing homeowners to avoid foreclosure." 24 C.F.R. ยง 257.7. In other words, the program "assists in disputes between homeowners and mortgage companies ....," Stimus v. CitiMortgage, Inc., Civil Action No. 5:10--CV--435(MTT), 2011 WL 2610391, *3 ...

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