WOLFSON, District Judge.
On February 28, 2012, I denied the appeal of pro se Appellants Verna Thomas and Mosell Thomas ("Appellants"), who sought reversal of the United States Bankruptcy Judge's denial of their motion for reconsideration of the Judge's grant of relief from the automatic bankruptcy stay to the primary mortgage holder on Appellants' home at 43 Winston Drive, Somerset, New Jersey ("the Property"), Appellee U.S. BANK National Association, as Trustee for CSMC Mortgage-back-through Certificates, Series 2006-H ("Appellee" or "U.S. Bank").
As explained in my February 28th decision, Appellants argued in their appeal to this Court that the Helping Families Save Their Homes Act of 2009, Pub.L. No. 111-22, 123 Stat. 1632 (the "Helping Families Act"), precludes mortgagors from instituting a foreclosure action without first granting mortgagees a modification of their
Before delving into the details of the Act, and the foreclosure mitigation programs developed thereunder, I first clarify the difference between a mortgage holder and a servicer of a mortgage loan. Generally, under New Jersey law, a mortgage holder is a lender which owns a homeowner's mortgage whereas a servicer is a separate entity that acts as the mortgage holder's agent to collect payments due on the mortgage. See U.S. Bank Nat. Ass'n v. Guillaume, 209 N.J. 449, 472 (2012) (noting that New Jersey's Fair Foreclosure Act, N.J.S.A. 2A:50-53 et seq., defines a "lender" as "any person, corporation, or other entity which makes or holds a residential mortgage, and any person, corporation or other entity to which such residential mortgage is assigned," N.J.S.A. 2A:50-55) (emphasis added); id. (describing a servicer as one who bears the "responsibility to collect mortgage payments and negotiate with homeowners on [the lender's] behalf"). Here, U.S. Bank is the holder of Appellants' mortgage and Americas Servicing Company is U.S. Bank's servicer. See Certification Re Post-Petition Payment History on the Note and Mortgage Dated 11/02/05, Bankr.Case No. 10-48206-RTL at ¶ 10 (March 3, 2011); Guillaume, 209 N.J. at 472 (referring to Americas Servicing Company as U.S. Bank's servicer in that case).
Prior to enacting the Helping Families Act, Congress enacted the Emergency Economic Stabilization Act of 2008 (EESA), 12 U.S.C. §§ 5201-5261. The EESA directed the Secretary of the Treasury to "implement a plan that seeks to maximize assistance for homeowners and use the authority of the Secretary to encourage the servicers of the underlying mortgages ... to take advantage of the HOPE for Homeowners Program [(`H4H')] under section 1715z-23 of this title or other available programs to minimize foreclosures." See McInroy v. BAC Home Loan Servicing, LP, No. 10-4342, 2011 U.S. Dist. LEXIS 49868, 2011 WL 1770947 (D.Minn. May 9, 2011); Williams v. Timothy F. Geithner, No. 09-1959, 2009 U.S. Dist. LEXIS 104096, 2009 WL 3757380, at *2 (D.Minn. Nov. 9, 2009).
Not long after the EESA was enacted, in February 2009, President Obama announced the Homeowner Affordability and Stability Plan, see Help for Homeowners, The White House Blog, http://www. whitehouse.gov/blog/09/02/18/Help-for-homeowners/, which spawned the Home Affordable Modification Program ("HAMP") managed jointly by the Treasury Department and the Department of Housing and Urban Development ("HUD"). See Alpino v. JPMorgan Chase Bank, Nat. Ass'n, 2011 WL 1564114, *2 (D.Mass. Apr. 21, 2011). HAMP was announced by the Treasury shortly thereafter in March 2009. See U.S. Dep't of the Treasury, Home Affordable Modification Program Guidelines, § VII, 610 (Mar. 4, 2009). It is one of four foreclosure mitigation programs instituted under the umbrella of the Treasury Department's and HUD's Making Home Affordable program ("MHA"). See Fannie Mae, Home Affordable Modification Program Overview, www.eFannieMae.com (April 11, 2012); see also Bosque v. Wells Fargo Bank, N.A., 762 F.Supp.2d 342, 347 (D.Mass.2011).
A few months following the announcement of HAMP, on May 20, 2009, Congress enacted the Helping Families Act.
Helping Families Act, 123 Stat. 1632, 1655, Sec. 401(a). The Act further provides, in section 401(e), that homeowners "for whose benefit any foreclosure proceeding or sale is barred under subsection (a) from being instituted ... should respond to reasonable inquiries from a creditor or servicer during the period during which such foreclosure proceeding or sale is barred." Id. at Sec. 401(e).
The HAMP announcement, and subsequent clarifications issued by the departments, made clear that Fannie Mae-approved servicers were required to participate in HAMP for all eligible Fannie Mae and Freddie Mac owned mortgage loans and MBS (mortgage backed securities) pool loans. See U.S. Dep't of the Treasury, Reissuance of the Introduction of the Home Affordable Modification Program, HomeSaver Forbearance™, and New Workout Hierarchy, Announcement 09-05R at 1-2 (Apr. 21, 2009). However, servicer participation for non-Fannie Mae, non-Freddie Mac backed loans was optional. Id. at 2. Because Fannie Mae and Freddie Mac are Government Sponsored Enterprises (GSEs), non-Fannie Mae, non-Freddie Mac loans are referred to as "Non-GSE Mortgages." Id. For consistency's sake, I refer to Fannie Mae and Freddie Mae owned loans as "GSE Mortgages" or "GSE loans." Accord Ording v. BAC Home Loans Servicing, LP, Civil Action No. 10-10670-MBB, 2011 WL 99016, *8 (D.Mass. Jan. 10, 2011) (referring to Fannie Mae or Freddie Mac owned loans as "GSE loans").
The Treasury Department issued a uniform guidance for loan modifications on March 4, 2009. Thereafter, on April 6, 2009, the department issued a supplemental directive, providing additional guidance to servicers "for adoption and implementation of the Home Affordable Modification program (HAMP) for mortgage loans that are not owned or guaranteed by Fannie Mae or Freddie Mac (Non-GSE Mortgages)." U.S. Dep't of the Treasury, Introduction of the Home Affordable Modification Program, Supplemental Directive 09-01 at 1 (April 6, 2009). The directive explained that "[i]n order for a servicer to participate in the HAMP with respect to Non-GSE Mortgages, the servicer must execute a servicer participation agreement and related documents (Servicer Participation Agreement) with Fannie Mae in its capacity as financial agent for the United States (as designated by Treasury) on or before December 31, 2009." Id.
The year following creation of HAMP, in March of 2010, the Department of Housing and Urban Development ("HUD") promulgated regulations instituting the H4H program also referenced in the Helping Families Act. See Department of Housing and Urban Development, 75 Fed.Reg. 1691 (Jan. 12, 2010). H4H is a temporary program "that offers to homeowners and existing loan holders (or servicers acting on their behalf), FHA insurance on refinanced loans for distressed borrowers to support
HAMP is designed to assist struggling homeowners in obtaining a modification of their existing mortgage loan from their mortgage servicer. See generally Cave v. Saxon Mort. Svcs., Civil Action No. 11-4586, 2012 WL 1957588, *1 (E.D.Pa. May 30, 2012); www.makinghomeaffordable. gov. As noted, Fannie Mae-approved servicers are required to participate in HAMP for eligible GSE loans. See Departments of the Treasury & Housing and Urban Development, What is "Making Home Affordable" all about?, http://www.makinghome affordable.gov/about-mha/faqs/Pages/ default.aspx (visited June 19, 2012). However, participation for non-GSE loans is optional. Id. Since most cases addressing HAMP deal with the guidelines applicable to non-GSE mortgages, I address that category of mortgages first.
For non-GSE mortgages, a servicer's participation in the program is governed by a set of guidelines (referred to as "the HAMP Guidelines") that apply to those servicers who executed a Servicer Participation Agreement ("SPA") in exchange for federal funds. See generally Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 556 (7th Cir.2012). The guidelines can be found in the MHA Handbook, which "is a consolidated reference guide outlining the requirements and guidelines for the Making Home Affordable (MHA) Program for non-GSE mortgages." Program Guidance, https://www.hmpadmin.com/portal/ programs/guidance.jsp (visited June 19, 2012).
According to the MHA Handbook, "[t]he MHA reflects usual and customary industry standards for mortgage loan modifications...." See MHA Handbook v. 3.4 at Section 1.1, https://www.hmpadmin.com/ portal/programs/docs/hamp_servicer/ mhahandbook_33.pdf. Furthermore, the MHA Handbook explains that "[a] servicer may not refer any loan to foreclosure or conduct a scheduled foreclosure sale unless and until ... [t]he borrower is evaluated for HAMP and is determined to be ineligible for the program...." Id. at Section 3.1.1. See also Parker v. Bank of America, N.A., 29 Mass. L. Rptr. 294, *6 (Mass.Super.Ct.2011). Those servicers that do not comply with the HAMP Guidelines may be held in default of their obligations under the SPA.
Importantly, the SPA inures only to the benefit of the parties who signed the agreement, i.e., Fannie Mae, in its role as the financial agent of the United States, and the servicer. See In re Bank of America Home Affordable Modification Program (HAMP) Contract Litig., Civil Action No. 10-md-02193-RWZ, 2011 WL 2637222 (D.Mass. Jul. 6, 2011); Newell v. Wells Fargo Bank, N.A., No. C 10-05138 WHA, 2012 WL 27783, at *1 (N.D.Cal. Jan. 5, 2012). While the SPA states that both parties' successors-in-interest may be bound by the agreement, those are the only additional entities referenced in the document. It makes no mention of homeowners or mortgagees.
In determining whether a mortgagee is entitled to a HAMP modification, the servicer must engage in a three-step process:
Servicers servicing eligible GSE loans follow similar guidelines for processing HAMP applications, see Freddie Mac, Supplemental Directive 09-26 (Nov. 2, 2009) (discussing the initial Treasury Supplemental Directive, U.S. Dep't of Treasury, Supplemental Directive 09-01 (Apr. 5, 2009), which announced the eligibility, underwriting and servicing requirements for HAMP, as applicable to Freddie Mac servicers), although the servicers are bound by certain "HAMP supplemental directives when ... specifically servicing a Fannie Mae [or Freddie Mac] owned or backed mortgage." Ording, 2011 WL 99016 at *8.
More to the point, there are two key differences between GSE and non-GSE loans for purposes of this case. First, there is no SPA for GSE loans — that agreement applies only to non-GSE loans because servicers are not obligated to participate in HAMP when servicing those loans. The SPA is the means by which the servicers may be held accountable.
Second, the NPV test of the HAMP application process differs for GSE loans. For example, in 2009, Freddie Mac required "[s]ervicers to process every modification under HAMP regardless of its Treasury NPV result, unless the Treasury NPV result is negative and the amount of principal forbearance would create an interest-bearing balance with a Mark-to-Market LTV Ratio of less than 100%." Id. at 3. That guideline was amended in December of 2009 to create different rules for loans with partial principle forbearance versus those without partial principle forbearance.
On November 2, 2005, Verna and Mosell Thomas executed a note and mortgage in connection with their purchase of the Property. See Certification Re Post-Petition Payment History on the Note and Mortgage Dated 11/02/05, Bankr.Case No. 10-48206-RTL at ¶ 10 (March 3, 2011), Exh. 1.
Several months after the Plan was filed, American Servicing Company, servicer for U.S. Bank, filed a motion for relief from the automatic bankruptcy stay imposed by 11 U.S.C. § 362(d). Appellants did not appear on the hearing date, and the Bankruptcy Judge granted the motion for relief from the stay. Thereafter, Appellants filed a motion for reconsideration which the Bankruptcy Judge denied. It is from this denial that Appellants appealed.
As noted, I held in my February 28, 2012 decision that neither the Helping Families Act nor the HAMP Guidelines force servicers to grant modifications prior to pursuing foreclosure.
When the District Court is acting as an appellate court in a bankruptcy case, "[b]ankruptcy Rule 8015 provides the sole mechanism for filing a motion for rehearing." In re Lisanti Foods, Inc., No. 04-3868, 2006 WL 2927619, *4 (D.N.J. Oct. 11, 2006) (quoting Matter of Eichelberger, 943 F.2d 536, 538 (5th Cir.1991)). See also In re Rashid, 210 F.3d 201, 204-05 (3d Cir. 2000) superceded by statute on other grounds as stated in In re Thompson, 418 F.3d 362 (3d Cir.2005). Rule 8015 provides:
Bankr.Rule 8015. While Rule 8015 provides a mechanism for rehearing bankruptcy rulings, it does not set forth the standard of review for such motions.
In the absence of a Third Circuit standard, I have applied the standard articulated by In re Lisanti Foods, supra, which held that the standard applicable to an appellee's motion for rehearing should be "the test traditionally used to evaluate motions for reconsideration." 2006 WL 2927619 at *4. See In re Dahlgren, No. 09-18982 RTL, CIV.A. 10-1988 FLW, 2011 WL 2160884, *3 (D.N.J. Jun. 01, 2011).
In their motion for reconsideration, Appellants reassert the Helping Families Act challenge they asserted in connection with their original appellate briefs. Specifically, they argue that the Bankruptcy Court erred in granting U.S. Bank relief from the automatic bankruptcy stay because U.S. Bank was obligated to provide them with a mortgage modification application prior to instituting any foreclosure proceedings against the Property. Appellants further argue that "HUD law and rules prohibit Mortgage Companies from Profiting when they have violated HUD [and] Unfair Deceptive Acts and Practices ... Statutes." Appellants Open Br. at 2. At the outset, the Court rejects Appellants' attempt to make an argument not previously presented in their appeal; in their appellate briefs, Appellants made no mention of HUD or unfair practices statutes. As the Court cannot reconsider an issue never raised, the Court will not address Appellate's HUD and unfair practices arguments.
Turning to the Helping Families Act argument, that argument was also addressed in the Court's February 28, 2012 Opinion and is, therefore, not an appropriate subject for a motion for reconsideration. A motion for reconsideration must be premised upon the court patently misunderstanding a party, exceeding the scope of the issues presented by the parties, making an error of apprehension, or "a controlling or significant change in the law or facts since the submission of the issue to the Court." In re Lisanti Foods, supra at *4. Appellants have not met that standard here. Nevertheless, in light of the evolving case law in this area, and for the sake of completeness, I address the substance of Appellants' argument.
Appellants seize on the following language from section 401(a) of the Act:
Helping Families Act, 123 Stat. 1632, 1655, Sec. 401(a). Appellants rely on this language to argue that a servicer may not institute foreclosure proceedings without first offering mortgagees a modification.
Contrary to Appellants' argument, nothing in the language of section 401(a) suggests that a servicer must offer a mortgagee a modification. For one, as Defendant argues, this section is merely a "sense of Congress" provision — not a formal directive to servicers. See Dunn-McCampbell Royalty Interest, Inc. v. National Park Svc., 630 F.3d 431, 441 n. 16 (5th Cir.2011) ("[A]lthough a sense of Congress provision can, in some instances, provide valuable assistance in interpreting earlier legislation, such provisions are of limited legal effect.") (internal citation omitted);
Moreover, the language suggests that servicers institute a moratorium on foreclosures until the foreclosure mitigation programs developed by the Secretary of the Treasury and HUD go into effect. As explained above, the President's "Homeowner Affordability and Stability Plan" that spawned HAMP was implemented sometime in 2009 following the enactment of the Helping Families Act, and the Hope for Homeowners program went into effect in early 2010. Thus, when Appellants filed their bankruptcy petition in December 2010, those programs had already been operationalized. For this reason alone, section 401(a) could not have served as a bar to foreclosure and, more importantly, did not preclude the Bankruptcy Court from granting U.S. Bank leave to pursue foreclosure in this case. And, even if the aforesaid programs were not in operation at the time Appellants' bankruptcy petition was filed, at best, the language suggests that mortgage holders should consider modifications; the language does not suggest that modifications must be granted.
Appellants further cite to language in section 401(e), which they argue demonstrates the binding nature of section 401 of the Helping Families Act. Section 401(e) provides that homeowners "for whose benefit any foreclosure proceeding or sale is barred under subsection (a) from being instituted ... should respond to reasonable inquiries from a creditor or servicer during the period during which such foreclosure proceeding or sale is barred." Id. at Sec. 401(e). Even assuming this language is mandatory, it clearly refers back to section 401(a) which became irrelevant once the "Homeowner Affordability and Stability Plan" and H4H program went into effect. Thus, Appellants' reliance on section 401 is misplaced.
To the extent that Appellants intend to assert that U.S. Bank failed to comply with HAMP, and that this alleged failure precluded the Bankruptcy Court from granting U.S. Bank leave from the automatic stay, that argument fails. For one, Appellants have not argued, neither before this Court or the Bankruptcy Court, whether their mortgage was a GSE or non-GSE loan. (This can be determined through a simple search on Fannie Mae's website. See Fannie Mae Loan Lookup, www. fanniemae.com/loanlookup (visited Jun. 19, 2012).) This distinction is important because it determines whether U.S. Bank was required to participate in HAMP because Appellants' loan was a GSE loan, or if U.S. Bank chose to participate in HAMP through executing an SPA because Appellants' loan was a non-GSE loan. Furthermore, the HAMP obligations on servicers servicing GSE loans exceeds those placed on servicers when servicing non-GSE loans. While it appears from the motion papers before the Bankruptcy Court that the loan is not owned by Fannie Mae or Freddie Mac, Appellants should be cognizant
More to the point, since my February 28, 2012 decision, federal courts have continued to hold that HAMP does not provide for a private right of action. See, e.g., Wigod, 673 F.3d at 555; O'Connor v. First Alliance Home Mtg., Civil Action No. 12-111, 2012 WL 762351 (D.N.J. Mar. 6, 2012); Cave, 2012 WL 1957588, *4 n. 4. Additional federal courts have held that the HAMP Guidelines, effectuated through the servicer's execution of an SPA, may not be enforced by a mortgagee under a third-party beneficiary theory.
Therefore, even if I were to reconsider to my ruling on Appellants' Helping Families Act challenge to the Bankruptcy Court's ruling, I would affirm my prior decision. I add one final note, however, to make clear that the Court is not without sympathy to those homeowners who experience difficulties in attempting to modify their mortgages in the midst of experiencing financial challenges. Legal commentators have argued that HAMP and similar foreclosure mitigation programs have failed to stem the growing, and apparently unending, tide of foreclosures. See Diane E. Thompson, Foreclosure Modifications: How Servicer Incentives Discourage Loan Modifications, 86 Wash. L.Rev. 755, 825-26 (2011). HAMP's non-GSE, SPA-based program has not produced a meaningful
Some have further argued that, in the absence of private rights of action, the Treasury Department should more vigorously enforce the HAMP Guidelines. Yet, thus far, that has not been the Department's approach. Richard E. Gottlieb and Brett J. Natarelli, Update on Loan Modification Litig., 66 Bus. Law. 539, 549 (2011). See also Parker, supra at *7 (quoting United States Government Accountability Office ("GAO"), GAO-10-634, "Troubled Asset Relief Program, Further Actions Needed to Fully and Equitably Implement Foreclosure Mitigation Programs" (June 2010), pp. 14-27 ("GAO Report") available at http://www.gao.gov/ new.items/d10634.pdf).
For the foregoing reasons, Appellants' motion for reconsideration is DENIED.
Id. (quoting GAO Report at 27).