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WV Wit Ten Berg v First Independent 04-11-2011[1]

WV Wit Ten Berg v First Independent 04-11-2011[1]

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Published by Ashley Lovelace

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Published by: Ashley Lovelace on Nov 07, 2011
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IN THE UNITED STATES DISTRICT COURT FOR THENORTHERN DISTRICT OF WEST VIRGINIAMARTINSBURGDIANNA WITTENBERG,
Plaintiff,
v. Civil Action No. 3:10-CV-58(BAILEY)FIRST INDEPENDENT MORTGAGECOMPANY, et al., 
Defendants.
MEMORANDUM OPINION AND ORDER
Currently pending before the Court are Defendant U.S. Bank N.A.’s (“U.S. Bank”)Motion to Dismiss [Doc. 66], filed February 14, 2011; Defendant Wells Fargo Bank, N.A.’s(“Wells Fargo”) Motion to Dismiss [Doc. 68], filed February 14, 2011; Defendant MortgageElectronic Registration Systems, Inc.’s (“MERS”) Motion to Dismiss [Doc. 73], filedFebruary 22, 2011; Defendant First Independent Mortgage Company’s (“FirstIndependent”) Motion to Dismiss [Doc. 75], filed February 23, 2011; and the plaintiff’sMotion for Leave to File a Surreply [Doc. 93], filed April 7, 2011. These motions have beenfully briefed and are now ripe for decision. The Court has reviewed the record and thearguments of the parties and, for the reasons set out below, concludes that U.S. Bank’s,First Independent’s, and MERS’ motions should be
GRANTED
; Wells Fargo’s motionshould be
GRANTED IN PART
and
DENIED IN PART
; and the plaintiff’s motion should be
GRANTED
.1
Case 3:10-cv-00058-JPB Document 94 Filed 04/11/11 Page 1 of 40 PageID #: 2086
 
BACKGROUNDI.Factual AllegationsA.Consummation of Loan at Issue
In 2005, while attending a financial seminar, the plaintiff met a mortgage loan brokeremployed by First Independent named Andy Swanson (“Swanson”). ([Doc. 65] at ¶¶ 18-19). Swanson told the plaintiff that he could get her a refinance loan with beneficial andfavorable terms. (Id.). At some point thereafter, the plaintiff contacted Swanson torefinance her loan and extract equity for outstanding expenses. (Id. at ¶ 20). Swansoninformed the plaintiff that she had close to $200,000.00 of equity in her house and advisedthe plaintiff that she should take out 90% of her equity. (Id. at ¶ 21). The plaintiff, however,only agreed to withdraw 60% of her equity. (Id. at ¶ 22). Nevertheless, the plaintiff agreedto apply for a refinance loan under the terms that Swanson explained, including low closingcosts, a low interest rate, and a low monthly payment. (Id. at ¶ 23). Swanson requestedthe plaintiff’s financial information for the loan application, which the plaintiff then provided.(Id. at ¶ 24). In filling out the plaintiff’s loan application, Swanson overstated the plaintiff’smonthly income as $16,000.00. (Id. at ¶ 25). The plaintiff protested several times andinstructed Swanson to state her income correctly; however, Swanson said the incomeamount was just
pro forma 
and accuracy was unimportant. (Id. at 26). AlthoughSwanson promised to correct the plaintiff’s income in the loan application, he did not makethe correction. (Id. at ¶ 27).In February 2006, the plaintiff attempted to close on the refinance loan. (Id. at ¶ 28).However, after initially signing some of the proffered documents, the plaintiff walked awayfrom the closing because the closing costs were much greater than Swanson had2
Case 3:10-cv-00058-JPB Document 94 Filed 04/11/11 Page 2 of 40 PageID #: 2087
 
previously promised. (Id.). Swanson rescheduled the closing; however, the plaintiff againdeclined to execute the documents because they showed different closing costs. (Id. at ¶29). On March 21, 2006, the plaintiff also walked away from a closing, after partiallysigning a number of loan documents. (Id. at ¶ 30). At the end of each failed closing, theplaintiff was informed that the papers she signed would be shredded. (Id. at ¶ 31).Finally, on March 27, 2006, the plaintiff closed on her refinance loan at the office ofattorney George Glass (“Glass”), signing, initialing, and dating each page of the loandocuments, including a promissory note (“Note”) of $416,000.00
1
and deed of trust (“DOT”).(Id. at ¶ 32). The loan terms did not require payment of an amount for escrow for propertytaxes and insurance; instead, the plaintiff was to pay the taxes and insurance herself. (Id.at ¶ 33). The plaintiff did not receive copies of the signed loan documents that daybecause Glass said he would mail a copy of the documents to the plaintiff. (Id. at ¶ 34).The plaintiff did not receive copies from the March 27, 2006, closing until she went to Glass’office to retrieve them in June 2009. (Id. ¶ at 35). The copies obtained at that time did notaccurately reflect the loan terms to which the plaintiff had agreed. (Id. at ¶ 36).
B.Escrow Issues, Imminent Default, Loan Modifications
One year after the March 27, 2006, closing, Wells Fargo, the servicer of theplaintiff’s loan, began to send the plaintiff letters threatening to add tax and insuranceescrows to the monthly payments of the loan. (Id. at ¶ 37). In response, the plaintiff sentseveral letters and made numerous phone calls to Wells Fargo to address the escrow
1
Approximately $280,000.00 of the proceeds were used to pay off the existing loan,and approximately $125,000.00 of the proceeds were paid to the plaintiff in cash. ([Doc.69] at 1 n.1).3
Case 3:10-cv-00058-JPB Document 94 Filed 04/11/11 Page 3 of 40 PageID #: 2088

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