Jerry Vance v. Wells Fargo Bank, N.A.

Jerry and Fran Vance (plaintiffs) had a mortgage serviced by Wells Fargo Bank, N.A. (Wells Fargo) (defendant). The Vances fell behind on their mortgage payments. The Vances sent Wells Fargo a loan-modification package, but the package did not include a loss-mitigation application. Wells Fargo initiated a foreclosure action against the Vances. The Vances filed a lawsuit against Wells Fargo in federal district court, alleging that Wells Fargo violated the Real Estate Settlement Procedures Act (RESPA) and breached the implied covenant of good faith and fair dealing by failing to comply with regulations promulgated under the RESPA by the Consumer Financial Protection Bureau. Specifically, the Vances argued that Wells Fargo violated 12 C.F.R § 1024.39, which required a mortgage servicer to make live contact with a delinquent borrower and to inform the borrower about loss-mitigation plans, and § 1024.41, which required a mortgage servicer to evaluate and respond to a borrower’s completed loss-mitigation application. With regard to the implied-covenant claim, the Vances did not allege that Wells Fargo had breached a contract. Wells Fargo moved to dismiss the Vances’ case, arguing that § 1024.39 did not give the Vances a private right of action, that the Vances had not triggered § 1024.41 by sending Wells Fargo a completed loss-mitigation application, and that the Vances did not state a claim involving the implied covenant of good faith and fair dealing upon which relief could be granted.