351 P.3d 622
Idaho2015Background
- Russell Hafer obtained a HAMP trial period plan (TPP) from servicer Homeward (formerly American Home Mortgage) after submitting required documents and making TPP payments. Homeward sent a Permanent Modification Agreement (PMA) to finalize modification.
- Dispute over two PMAs: Hafer asserts the first PMA was timely returned (UPS proof for July 13) and properly notarized; Homeward contends it received the first PMA late or improperly notarized and sent a second PMA later, which Hafer returned after Homeward had closed the file.
- Trustee recorded notice of default in August 2011 and FNMA purchased the property at a non-judicial foreclosure sale in December 2011; FNMA then sued for possession and ejected the Hafers when they refused to leave.
- The Hafers filed third-party claims against Homeward (11 causes of action), principally alleging Homeward contracted to modify the loan so Hafer was not in default, making the foreclosure void; they sought quiet title and damages.
- District court granted summary judgment to FNMA and dismissed most claims against Homeward, relying on a PMA clause requiring lender signature; the Hafers appealed challenging (1) the court’s sua sponte focus on the lender-signature issue and (2) the substantive conclusion that no binding modification existed without a Homeward signature.
Issues
| Issue | Plaintiff's Argument (Hafers) | Defendant's Argument (Homeward/FNMA) | Held |
|---|---|---|---|
| 1. Was there a binding loan-modification contract? | Homeward offered a permanent modification that Hafer accepted by completing TPP payments and returning required documents; objective communications created an offer and acceptance. | No binding contract because PMA conditioned modification on Homeward signing/returning the agreement; Hafer failed to timely and properly return a notarized PMA. | Court held a triable issue exists: servicer’s communications constituted an offer reasonably accepted by Hafer; ambiguous signature clause construed against drafter; vacated summary judgment and remanded. |
| 2. Did the district court err by raising the signature-issue sua sponte? | Yes — the signature requirement was not the basis of the joint summary-judgment motion; Hafer lacked notice/opportunity to address it. | Respondents had argued absence of an executed PMA; court’s focus followed parties’ submissions. | Court agreed district court erred to the extent it decided an issue not raised, but resolved merits anyway—remanded on substantive grounds. |
| 3. Was FNMA entitled to possession despite servicer conduct? | If a valid modification existed pre-sale, Hafer was not in default at sale time and the non-judicial foreclosure was unauthorized and void. | Trustee’s sale was final; FNMA relied on recorded trustee’s deed and statutory presumptions of compliance. | Court held summary judgment for FNMA was erroneous because the modification issue is material; vacated FNMA judgment and remanded. |
| 4. Are Hafer entitled to appellate attorney fees under I.C. § 12-120(3)? | Hafer sought fees as prevailing party in a commercial transaction. | Respondents opposed. | Denied: home-loan modification is a personal/household transaction, not a "commercial transaction" under the statute. |
Key Cases Cited
- Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547 (7th Cir. 2012) (TPP acceptance by completing trial payments and returning documents can form binding modification despite signature clause).
- Corvello v. Wells Fargo Bank, N.A., 728 F.3d 878 (9th Cir. 2013) (similar holding rejecting servicer’s unfettered discretion argument regarding HAMP modifications).
- Intermountain Forest Mgmt., Inc. v. Louisiana Pac. Corp., 136 Idaho 233 (Idaho 2001) (unsigned instrument may not be offer where offeree knows party lacks authority to conclude bargain).
- Taylor v. Just, 138 Idaho 137 (Idaho 2002) (trustee’s sale requires default to exist at time of sale; sale void if no default at sale time).
- Spencer v. Jameson, 147 Idaho 497 (Idaho 2009) (limitations on setting aside trustee’s sale; statutory finality provisions do not override absence-of-default rule).