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Thompson v. Bank of America, N.A.

United States Court of Appeals, Sixth Circuit

December 5, 2014

LORRIE THOMPSON, Plaintiff-Appellant,
v.
BANK OF AMERICA, N.A., et al., Defendants-Appellees

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Appeal from the United States District Court for the Middle District of Tennessee at Nashville. No. 3:13-cv-00817--Todd J. Campbell, District Judge.

ON BRIEF:

Carol A. Molloy, Lynnville, Tennessee, for Appellant.

Edmund S. Sauer, Frankie N. Spero, BRADLEY ARANT BOULT CUMMINGS LLP, Nashville, Tennessee, for Appellees.

Before: SILER, SUTTON, and STRANCH, Circuit Judges.

OPINION

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SILER, Circuit Judge.

This appeal concerns the extent to which the securitization of a mortgage note might affect the borrower's obligations to repay the loan or cloud the property's title. Lorrie Thompson was facing foreclosure. She asked Bank of America (BOA) to modify her repayment plan under the federal Home Affordable Modification Program (HAMP). BOA denied the modification on the grounds of insufficient documentation, even though she sent BOA the requested documents several times. She filed suit, seeking to quiet title and alleging, among other things, various theories of fraud. She claims that because her mortgage note was immediately " securitized" (sold to a pool of anonymous investors through a mortgage trust), BOA falsely induced her into signing the mortgage by pretending it was an actual lender. She alleges her title has become clouded on account of the transfer and securitization of the note. She also alleges that BOA fraudulently induced her to seek modification of her repayment plan while either knowing it lacked authority to modify her repayment terms or else intending to drive her into foreclosure by giving her the run-around. The district court dismissed Thompson's claims under Fed.R.Civ.P. 9(b) and 12(b)(6). For the reasons explained below, we AFFIRM.

I.

In 2006, Thompson signed a $354,800 mortgage note, with American Mortgage Express Corp. (AME) as the lender. Section 1 of the note states: " I understand that the Lender may transfer the Note." The " Prepayment Addendum" to the note states, " Borrower understands that Lender may transfer the Note, the related Mortgage, Deed of Trust, or Security Deed ('Security Instrument') and this Addendum." Similar language appears on the " Prepayment Rider."

The " uniform covenants" section of the deed of trust also states:

The Note or a partial interest in the Note (together with this Security Instrument) can be sold one or more times without prior notice to Borrower. A sale might result in a change in the entity (known as the " Loan Servicer" ) that collects Periodic Payments . . . and performs other mortgage loan servicing obligations . . . . There might also be one or more changes of the Loan Servicer unrelated to a sale of the Note.

The deed also authorizes the lender to appoint a successor or substitute trustee.

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The signature page of the note contains a signed, undated stamp memorializing AME's transfer of the note to Countrywide Bank, NA. The third page of the note is a blank allonge[1] bearing a signed, undated stamp whereby Countrywide Bank, NA transferred the note to Countrywide Home Loans, Inc., and another signed, undated stamp endorsed from Countrywide Home Loans to blank. BOA purchased Countrywide in 2008 and has possession of the note.

In 2012, Thompson received notice from BOA offering to short-sell her house in lieu of foreclosure. Thompson responded that she would rather pursue a modification of her repayment terms under the HAMP program. HAMP is a federal program enacted pursuant to the Emergency Economic Stabilization Act, 12 U.S.C. § § 5201-61, that gives lenders incentives to offer loan modifications to borrowers who have a mortgage payment-to-income ratio of over 31%. See Olson v. Merrill Lynch Credit Corp., 576 F.App'x 506, 511 (6th Cir. 2014). The goal of HAMP is to encourage mortgage holders to renegotiate qualifying loans to reduce the homeowner's mortgage payments to a sustainable level. Wilson v. HSBC Mortg. Servs., Inc., 744 F.3d 1, 6 n.3 (1st Cir. 2014).

Thompson states that over the next several months she received and complied with numerous, often redundant, document requests related to her modification application. BOA never granted her request for HAMP relief. She filed suit against BOA, Mortgage Electronic Registration Systems, Inc. (MERS), and other defendants, including unidentified persons she believes to be anonymous investors who are the true owners of her note. The district court dismissed her claims for failure to comply with the applicable pleading standards.

II.

Although Thompson's memoranda and briefs are not models of clarity, we can summarize the basic theories that underlie her statutory, tort, and property law claims.

Thompson's major claims emerge from the fact that AME sold her debt to a pool of anonymous investors in a series of transactions that she describes as " securitization" of her loan. She claims securitization has severed whatever contractual relationship she might have had with her lender, AME/BOA, with the effect that BOA is incapable of granting her a loan modification. Thompson believes she is entitled to a loan modification under the HAMP program. She claims BOA is only stringing her along, either because BOA lacks authority to grant a modification or because BOA's policy is to avoid granting modifications as BOA would prefer to foreclose.

She also claims to have been victimized by fraud at the time she bought the property. While Thompson admits she received a loan, she describes her entire closing as a sham and claims her mortgage documents were fraudulent. She alleges that because the money that funded her mortgage debt came from a pool of anonymous investors, AME was not a " lender" but " at most an originator." Thompson's theory is that AME provided no " ...


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