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Castellan v. Bank of America

United States District Court, D. Nevada

March 25, 2015

DAVID A. CASTELLAN et al., Plaintiffs,
BANK OF AMERICA et al., Defendants.


ROBERT C. JONES, Chief District Judge.

This proceeding arises out of the alleged breach of a home loan modification agreement. Pending before the Court is a Motion to Dismiss the First Amended Complaint ("FAC") (ECF No. 36). For the reasons given herein, the Court denies the motion.


A. Purchase of the Property and Default

Plaintiffs David A. Castellan and Cecilia Castellan purchased real property located at 1801 Candle Bright Drive, Henderson, Nevada 89074 (the "Property") in June 2001 for $242, 000. (FAC ¶¶ 12-13, May 1, 2014, ECF No. 32). To finance the purchase of the Property, Plaintiffs obtained a loan, secured by a deed of trust ("DOT"). ( Id. ¶ 14). In 2007, Plaintiffs refinanced the mortgage on the Property for $300, 000 at an interest rate of 5.75% over 15 years, representing a monthly mortgage payment of about $2, 778 ("2007 Refinance Agreement"). ( Id. ¶ 15). Bank of America, N.A. ("Bank of America") owned the loan at all relevant times until assigning the DOT to Federal National Mortgage Association ("Fannie Mae") on October 22, 2012. ( Id. ¶ 17; Mot. Dismiss Ex. D, May 30, 2014, ECF No. 36-4).

In mid-July 2008, Plaintiffs requested that Bank of America agree to a home loan modification, extending their current 15-year mortgage to a 30-year mortgage in order to reduce their monthly mortgage payment. (FAC ¶ 18). Bank of America rejected the request, representing to Plaintiffs that because Plaintiffs were not at least 90 days delinquent on their mortgage, a modification was not possible. ( Id. ¶ 19). Relying in part on Bank of America's representation, Plaintiffs stopped making their monthly mortgage payments in July 2009. ( Id. ¶ 21).

B. Modification

At a foreclosure mediation in February 2010, Bank of America agreed to modify Plaintiffs' mortgage, extending it to 30 years with an interest rate of two percent for the first five years and increasing interest rates for the remaining years. ( Id. ¶ 27). A letter from Bank of America memorializing this trial modification agreement stated that Plaintiffs would make payments of $1, 240.84 for three months, beginning in March 2010. ( Id. ¶ 28). Plaintiffs made the three agreed-upon payments in March, April, and May 2010. ( Id. ¶ 29).

In May 2010, Bank of America sent Plaintiffs a final home loan modification agreement ("Final Modification"), indicating a new monthly mortgage payment of $1, 304.50 beginning in June 2010. ( Id. ¶ 30). Plaintiffs made monthly payments of $1, 304.50 from June to November 2010. ( Id. ¶ 35). Cecilia signed and returned the Final Modification on August 24, 2010 and Bank of America counter-signed on August 3, 2011. ( Id. ¶¶ 32-33). David did not sign the Final Modification.[1]

In December 2010, Bank of America increased Plaintiffs' monthly mortgage payment to $1, 354.65. ( Id. ¶ 37). Plaintiffs paid this amount in December 2010. ( Id. ). On the advice of Plaintiffs' counsel, Plaintiffs paid $1, 254.50 for their January 2011 payment. ( Id. ¶ 38). When Cecilia tried to pay the next month's payment, Bank of America informed her they would not accept the payment because of an incorrect amount paid for January 2011 and that the modification had been cancelled. ( Id. ¶ 39). In reliance on Bank of America's representation, Plaintiffs did not make mortgage payments for February, March, or April 2011. ( Id. ¶ 40).

Sometime in April 2011, Bank of America advised Cecilia to begin making payments again in the amount of $1, 304.50. ( Id. ¶ 41). Thereafter, Plaintiffs received conflicting information from Bank of America regarding the status of their loan. Plaintiffs first received a letter from Bank of America indicating that their "loan was [up-to-date] and current" as of April 15, 2011. ( Id. ¶¶ 42-43). Despite Bank of America's representations that their loan was "current, " Plaintiffs received a mortgage statement dated April 28, 2011 indicating an amount due of $2, 909.71 with an amount past due of $50, 083.00. ( Id. ¶ 45). In reliance on Bank of America's previous advice, Plaintiffs disregarded what they believed to be an inaccurate mortgage statement and made mortgage payments in the amount of $1, 304.50 in May, June, and July 2011. ( Id. ¶¶ 44, 46).

In a letter dated July 15, 2011, Bank of America indicated to Plaintiffs that the monthly mortgage payment of $1, 305.74 was not enough to bring the loan "current" while the total amount then due was $5, 514.63. ( Id. ¶ 48). In August 2011, Plaintiffs' monthly mortgage statement reflected a monthly amount due of $1, 305.74 and a delinquent amount of $3, 917.22. ( Id. ¶ 47). In a letter dated August 24, 2011, Bank of America indicated that the total amount due on Plaintiff's loan was $5, 114.64 and that payment received would be applied to the loan. ( Id. ¶ 50).

Plaintiffs paid approximately $1, 700 extra in August 2011 to try to make up for the missed February, March, and April 2011 payments. ( Id. ¶¶ 49, 51). However, a letter from Bank of America dated September 1, 2011 still showed a total amount due of $5, 114.64 despite these extra payments. ( Id. ¶ 52).

From September 1, 2011 until September 2012, Plaintiffs made monthly mortgage payments of $1, 305.74. ( Id. ¶¶ 54, 56). Plaintiffs also made one additional payment in March 2012 of $1, 033.23. ( Id. ¶ 55). During this time, Plaintiffs continued to receive letters from Bank of ...

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