BAC Home Loans Servicing LP f/k/a Countrywide Home Loans Servicing, LP v. Cunningham
N10L-01-106 ALR
| Del. Super. Ct. | Oct 11, 2016Background
- In 2007 Diana and Andre Cunningham executed a $600,619 promissory note and mortgage originally held by Countrywide; Bank of America (through acquisition) and its subsidiary BAC Home Loans Servicing LP is the plaintiff/note owner.
- Loan servicing changed multiple times (Bayview, Ocwen, Caliber); defendants say inconsistent communications followed and they entered a loan modification in 2010, made six months of payments, then servicer returned payments and disavowed the modification.
- Plaintiff filed foreclosure in 2010; the case was briefly placed on the Dormant Docket in 2011 and default judgment was entered the same day it was returned to active status; property was sold at sheriff’s sale and Plaintiff purchased it in 2016 and sought a writ of possession.
- Defendants allege they never received a 2012 modification offer from Ocwen that would have substantially reduced the loan balance and say they would have accepted it; Plaintiff cannot produce proof of mailing or documentation of the 2010 modification.
- The court found factual questions about the chain of ownership/servicing, the existence and legal effect of the 2010 modification, and the adequacy/legal basis of the 2011 default judgment; the court denied the writ of possession and scheduled an evidentiary hearing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 2007 Mortgage remains the controlling contract or was modified by a 2010 modification | 2007 Mortgage and Note control; no enforceable modification shown | 2010 modification was formed and performed (six months of payments); it alters mortgage terms | Court: factual dispute; 2010 modification may affect mortgage terms — directed evidentiary hearing to resolve whether modification is enforceable or was mere post-default negotiation |
| Whether the 2011 default judgment was properly entered | Judgment was properly entered after return to active status | Default judgment may lack adequate legal basis given case history and disputed facts | Court: questions exist about adequacy of default judgment; ordered evidence on whether judgment should be vacated to prevent injustice |
| Whether Plaintiff is entitled to a writ of possession now | As purchaser at sheriff’s sale and valid judgment, Plaintiff sought writ | Defendants assert outstanding modification issues and procedural irregularities that preclude possession | Court: Writ denied pending evidentiary hearing to resolve underlying contract and judgment issues |
| Whether defendants received the 2012 modification offer and whether failure to receive it affects relief | Plaintiff/servicer asserts an offer was made; modification option exhausted | Defendants say they never received the 2012 offer and would have accepted; no proof of mailing produced | Court: factual dispute; admissible evidence ordered at hearing to determine whether offer was communicated and its effect |
Key Cases Cited
- Allstate Ins. Co. v. Countrywide Fin. Corp., 842 F. Supp. 2d 1216 (C.D. Cal. 2012) (discussing Countrywide acquisition by Bank of America and related issues)
- Gordy v. Preform Bldg. Components, 310 A.2d 893 (Del. Super. 1973) (recognizing enforceable contractual modification and estoppel that can bar foreclosure)
- United States v. Golden Acres, Inc., 520 F. Supp. 1073 (D. Del. 1981) (treating judicial recognition of agreements modifying payment terms)
- Burge v. Fidelity Bond & Mortg. Co., 648 A.2d 414 (Del. 1994) (equitable power of courts to review and, where necessary, set aside defects in execution processes to prevent injustice)