Angela ANSANELLI, an individual; Charles Ansanelli, an...

, 2011 WL 914209 (2011)

2011 Thomson Reuters. No claim to original U.S. Government Works. 1

2011 WL 91209 !N.".#al.$ !Trial %lea&ing$
Unite& States "istrict #ourt' N.". #ali(ornia.
San )rancisco "ivision
*ngela *NS*N+LL,' an in&ivi&ual- #harles *nsanelli' an in&ivi&ual' %lainti((s'
v.
.%/0RG*N #1*S+ 2*N3' N.*- Se4uoia %aci(ic /ortgage #om5an6' ,nc.- an& "oes 1 through 27' inclusive'
"e(en&ants.
No. 10#809:92.
)e;ruar6 9' 2011.
.ur6 Trial "eman&e&
Se!nd A"ende C!"#lain$ %!r &a"ages, 'es$i$u$i!n and In(un$ive 'elie% (1) )reah !% C!n$ra$ (2) )reah !%
C!venan$ !% *!!d +ai$h and +air &ealing (,)%raud and &eei$, and-!r Negligen$ .isre#resen$a$i!n (4) Negligene (/)
0i!la$i!n !% 'es#a (1) 0i!la$i!n !% 2n%air C!"#e$i$i!n La3
Niall %. /c#arth6 !S2N 1<01=7$' nmccarth6>c5mlegal.com' +ric .. 2uescher !S2N 2=1929$' e;uescher>c5mlegal.com'
#otchett' %itre ? /c#arth6' LL%' :0 /alcolm Roa&' Suite 200' 2urlingame' #* 9010' Tele5hone@ !<70$ <9=A<000'
)acsimile@ !<70$ <92A9<0<' *ttorne6s (or %lainti((s.
.u&ge@ 1on. William *lsu5.
T*2L+ 0) #0NT+NTS
,. ,NTR0"U#T,0N ...................................................................................................................................... 1
,,. %*RT,+S ................................................................................................................................................... 1
*. %lainti((s .................................................................................................................................................... 1
2. "e(en&ants ................................................................................................................................................ 1
#. 0ther "e(en&ants ...................................................................................................................................... 2
". *genc6 ...................................................................................................................................................... 2
+. *i&ing an& *;ettingB#ons5irac6 ............................................................................................................... 2
). *lter +go .................................................................................................................................................... 9
,,,. 8+NU+ *N" .UR,S",#T,0N .............................................................................................................. 9
,8. T0LL,NG 0) ST*TUT+S 0) L,/,T*T,0N 2C )R*U"UL+NT #0N#+*L/+NT ....................... 9
8. )*#TU*L *LL+G*T,0NS .....................................................................................................................
*. The )oreclosure #risis ..............................................................................................................................
2. The 1*/% %rogram .................................................................................................................................
#. .%/organDs 0;ligations Un&er 1*/% ..................................................................................................... 7
". .%/organDs %urchase 0( Washington /utual .......................................................................................... :
+. %lainti((s %urchase 0( Their 1ome *n& the Su;Eect Loans ...................................................................... :
). %lainti((sD *ttem5ts To /o&i(6 The Loans With .%/organ ...................................................................... 11
8,. #*US+S 0) *#T,0N ............................................................................................................................ 1<
),RST #*US+ 0) *#T,0N 2R+*#1 0) #0NTR*#T !2reach o( #ontract *gainst "e(en&ant
.%/organ #hase 2ank' N.*.$ ........................................................................................................................
1<
S+#0N" #*US+ 0) *#T,0N 2R+*#1 0) #08+N*NT 0) G00" )*,T1 *N" )*,R "+*L,NG
!2reach o( #ovenant o( Goo& )aith an& )air "ealing *gainst *ll "e(en&ants$ ...........................................
19
*gainst "e(en&ant .%/organ ........................................................................................................................ 19
*gainst "e(en&ant Se4uoia %aci(ic /ortgage #om5an6 .............................................................................. 21
T1,R" #*US+ 0) *#T,0N )R*U" *N" "+#+,T *N"B0R N+GL,G+NT
/,SR+%R+S+NT*T,0N !)rau& an& "eceit' an&Bor Negligent /isre5resentation *gainst *ll
"e(en&ants$ ....................................................................................................................................................
22
)0URT1 #*US+ 0) *#T,0N N+GL,G+N#+ !Negligence A #al. #iv. #o&e FF 1=1!a$ an& 9999
*gainst *ll "e(en&ants$ ................................................................................................................................
2
),)T1 #*US+ 0) *#T,0N 8,0L*T,0N 0) R+S%* !8iolation o( 12 U.S.#. F 2<07!e$ !R+S%*$ A
)ailure to Res5on& to GWR *gainst "e(en&ant .%/organ$ .........................................................................
<
S,HT1 #*US+ 0) *#T,0N 8,0L*T,0N 0) T1+ UN)*,R #0/%+T,T,0N L*W !)or Un(air
#om5etition in 8iolation o( #al. 2us. ? %ro(. #o&e F 1=200 et se4. *gainst *ll "e(en&ants$ ....................
2=
%R*C+R )0R R+L,+) ................................................................................................................................. 90
"+/*N" )0R .URC TR,*L ...................................................................................................................... 92
I. IN4'5&2C4I5N
1. Small ;usiness oIners an& home oIners have ;een hit es5eciall6 har& ;6 the economic &oInturn &uring the 5ast several
6ears. %lainti((s #harles *nsanelli an& *ngela *nsanelli !J%lainti((sK$ (it into each o( these categories. The6 5urchase& a
home in 2000 an& Iere 5ersua&e& to re(inance that loan an& take out e4uit6 (rom their home &uring the J;oomK 6ears ;6
"e(en&ant Se4uoia %aci(ic /ortgage #om5an6 !JSe4uoiaK$ an& "e(en&ant .%/organ #hase 2ank !J.%/organK or J#haseK$
as Iell as ;6 Washington /utual 2ank !JWa/uK$ 5rior to it ;eing 5urchase& ;6 .%/organ. The result Ias more &e;t than
the %lainti((s coul& a((or& to 5a6' Ihich "e(en&ants an& Wa/u kneI Ioul& ;e the case Ihen the6 5rovi&e& the re(inance
loan an& a secon& loan to the %lainti((s. Un(ortunatel6' instea& o( Iorking Iith %lainti((s to resolve these issues' #hase (orce&
%lainti((s to engage in a Sis65hean task o( tr6ing to receive a mortgage mo&i(ication in or&er to re&uce their &e;t an& monthl6
5a6ments to a managea;le amount. L
2. *s a result o( the "e(en&ants con&uct' %lainti((s have ;een (orce& to take on signi(icant &e;t in or&er to continue to make
5a6ments on their loans' the6 have Eust receive& noti(ication that their home ma6 ;e (oreclose& u5on' an& /s. *nsanelliDs
5reviousl6 eMcellent cre&it has ;een tarnishe& an& signi(icantl6 &amage&. *ll o( this is noI coming to a hea& at a time Ihen
%lainti((s are ;eginning to get ;ack on their (eet an& their small ;usiness 5lans are recovering an& eM5an&ing.
II. 6A'4IES
A. 6lain$i%%s
9. %lainti(( #harles *nsanelli is' an& at all times herein Ias' a resi&ent o( /arin #ount6' #ali(ornia.
. %lainti(( *ngela *nsanelli is' an& at all times herein Ias' a resi&ent o( /arin #ount6' #ali(ornia
). &e%endan$s
7. "e(en&ant .%/organ #hase 2ank' N.*.' !J.%/organ or J#haseK$ is a National *ssociation organiNe& un&er the laIs o(
the Unite& States' having its 5rinci5le 5lace o( ;usiness in Seattle' Washington. .%/organ con&ucts ;usiness in #ali(ornia.
.%/organ 5urchase& Washington /utual 2ank !JWa/uK$ on Se5tem;er 27' 200:.
<. "e(en&ant Se4uoia %aci(ic /ortgage #om5an6 !JSe4uoiaK$ is a #ali(ornia #or5oration &oing ;usiness in /arin #ount6'
#ali(ornia.
1
C. 5$her &e%endan$s
=. The true names an& ca5acities' Ihether in&ivi&ual' cor5orate' associate' or otherIise' o( "e(en&ants "0+S 1 through 27
are unknoIn to %lainti((' Iho there(ore sues sai& "e(en&ants ;6 such (ictitious names 5ursuant to #o&e o( #ivil %roce&ure
section =. %lainti(( alleges that each o( sai& (ictitious "e(en&ants is in some manner res5onsi;le (or the acts hereina(ter set
(orth. %lainti(( Iill amen& this #om5laint to shoI the true names an& ca5acities o( these "0+ "e(en&ants' as Iell as the
manner in Ihich each (ictitious "e(en&ant is res5onsi;le' Ihen these (acts are ascertaine&.
&. Agen7
:. %lainti((s are in(orme& an& ;elieve' an& on that ;asis allege' that at all times herein mentione& each o( the "e(en&ants Ias
an agent' servant' em5lo6ee' an&Bor Eoint venturer o( each o( the remaining "e(en&ants' an& Ias at all times acting Iithin the
course an& sco5e o( such agenc6' service' em5lo6ment' an&Bor Eoint venture' an& each "e(en&ant has rati(ie&' a55rove&' an&
authoriNe& the acts o( each o( the remaining "e(en&ants Iith (ull knoIle&ge o( sai& (acts.
E. Aiding and A8e$$ing-C!ns#ira7
9. "e(en&ants' an& each o( them' ai&e& an& a;ette&' encourage&' an& ren&ere& su;stantial assistance to the other "e(en&ants
in ;reaching their o;ligations to %lainti((s' as allege& herein. ,n taking action' as allege& herein' to ai& an& a;et an&
su;stantiall6 assist the commissions o( these Irong(ul acts an& other Irong&oings com5laine& o(' each o( the "e(en&ants
acte& Iith an aIareness o( itsBhisBher 5rimar6 Irong&oing an& realiNe& that itsBhisBher con&uct Ioul& su;stantiall6 assist the
accom5lishment o( the Irong(ul con&uct' Irong(ul goals' an& Irong&oing.
+. Al$er Eg!
10. There is a unit6 o( interest ;etIeen "e(en&ants' an& each acts as the alter ego o( the other.
III. 0EN2E AN& 92'IS&IC4I5N
11. This matter Ias remove& to this #ourt ;6 the )e&eral "e5osit ,nsurance #or5oration' Iho Ias (ormerl6 a "e(en&ant in
this action' on *ugust 91' 2010. #ounsel (or %lainti((s Iere a55ointe& through the )e&eral %ro 2ono %roEect on .anuar6 9'
2011.
12. This #ourt (urther has Euris&iction un&er 2: U.S.#. FF 1991 an& 19<= in that %lainti((s are inten&e&' thir&A5art6
;ene(iciaries to a contract ;etIeen .%/organ an& the U.S. Treasur6 that Ias entere& into 5ursuant to an& un&er the &irection
o( the Trou;le& *sset Relie( %rogram !JT*R%K$. 12 U.S.#. F 7201 et se4.
19. This #ourt has 5ersonal Euris&iction over the 5arties in this action ;6 the (act that "e(en&ants are cor5orations that are
license& to &o ;usiness in the state o( #ali(ornia or otherIise con&uct ;usiness in the state o( #ali(ornia.
1. 8enue is 5ro5er in this #ourt as the unlaI(ul 5ractices an& con&uct are allege& to have ;een committe& in /arin #ount6'
#ali(ornia. %lainti((sD home' Ihich is the su;Eect o( this litigation' is in /arin #ount6' #ali(ornia' all "e(en&ants resi&e in this
&istrict Iithin the meaning o( 2: U.S.#. F 1991!#$' an& "e(en&ants regularl6 con&uct ;usiness in this &istrict.
I0. 45LLIN* 5+ S4A424ES 5+ LI.I4A4I5N ): +'A2&2LEN4 C5NCEAL.EN4
17. *n6 a55lica;le statutes o( limitation have ;een tolle& ;6 "e(en&antsD continuing' knoIing an& active concealment o( the
(acts allege& herein. 26 virtue o( "e(en&antsD concealment an& misre5resentations to %lainti((s' %lainti((s coul& not an& &i&
not &iscover "e(en&antsD actions.
1<. ,n the alternative' "e(en&ants shoul& ;e esto55e& (rom rel6ing on an6 statutes o( limitation. "e(en&ants oIe& %lainti((s
an a((irmative &ut6 o( (ull an& (air &isclosure' ;ut knoIingl6 (aile& to honor an& &ischarge such &ut6. )inall6' "e(en&antsD
con&uct is not ;arre& ;6 an6 statutes o( limitation ;ecause "e(en&antsD con&uct constitutes an ongoing violation o( %lainti((sD
rights' Ihich continues to the 5resent.
0. +AC42AL ALLE*A4I5NS
A. 4he +!rel!sure Crisis
1=. )or the 5ast three 6ears' the Unite& States has ;een in a (oreclosure crisis. ,n late 2009' one in eight U.S. mortgages Ias
in (oreclosure or &e(ault' an& 2.: million homeoIners receive& (oreclosure notices in 2009.
1:. #ali(ornia has ;een one o( the states har&est hit ;6 this crisis. #ali(ornia ha& the highest num;er o( (oreclosures in the
Unite& States (or all o( 2009. Realt6 Trac re5orts that the num;er o( total #ali(ornia 5ro5erties Iith (oreclosure (ilings in
2009 Ias <92'7=9. This re5resents a nearl6 21O increase over 200: an& a 179O increase (rom 200=. ,n the (irst 4uarter o(
2010' #ali(ornia 5oste& the nationDs (ourth highest (oreclosure rate- &uring that 5erio&' #ali(ornia accounte& (or 29O o( the
nationDs total (oreclosure activit6.
19. The (oreclosure crisis Jcontinues una;ate&'K as a #ongressional oversight 5anel state& in *5ril 2010.
). 4he ;A.6 6r!gra"
20. #ongress 5asse& the +mergenc6 +conomic Sta;iliNation *ct o( 200:' 12 U.S.#. F 7201 et se4.' on 0cto;er 9' 200: an&
amen&e& it Iith the *merican Recover6 an& Reinvestment *ct o( 2009' %u;. L. No. 111A7' 129 Stat. 117' on )e;ruar6 1='
2009 !together' the J*ctK$.
21. The 5ur5ose o( the *ct Ias to grant the Secretar6 o( the Treasur6 the authorit6 to restore li4ui&it6 an& sta;ilit6 to the
(inancial s6stem' an& to ensure that such authorit6 is use& in a manner that J5rotects home valuesK an& J5reserves
homeoInershi5.K 12 U.S.#. F 7201.
22. The *ct grante& the Secretar6 o( the Treasur6 the authorit6 to esta;lish the Trou;le& *sset Relie( %rogram' or T*R%. 12
U.S.#. F 7211 et se4. Un&er T*R%' the Secretar6 ma6 5urchase or make commitments to 5urchase trou;le& assets (rom
(inancial institutions. ,&. #ongress allocate& u5 to P=00 ;illion to the Treasur6 (or T*R%. 12 U.S.#. F 7227.
29. The *ct (urther man&ates' Iith regar& to an6 assets ac4uire& ;6 the Secretar6 o( the Treasur6 that are ;acke& ;6
resi&ential real estate' that the Secretar6 Jshall im5lement a 5lan that seeks to maMimiNe assistance (or homeoInersK an& use
the Secretar6Ds authorit6 over servicers to encourage them to take a&vantage o( 5rograms to JminimiNe (oreclosures.K 12
U.S.#. F 7219. The *ct grants authorit6 to the Secretar6 o( the Treasur6 to use cre&it enhancement an& loan guarantees to
J(acilitate loan mo&i(ications to 5revent avoi&a;le (oreclosures.K ,&.
2. 0n )e;ruar6 1:' 2009' 5ursuant to their authorit6 un&er the *ct' the Treasur6 Secretar6 an& the "irector o( the )e&eral
1ousing )inance *genc6 create& the /aking 1ome *((or&a;le !J/1*K$ initiative to hel5 atArisk homeoIners avoi&
(oreclosure ;6 restructuring their mortgages.
27. The 1ome *((or&a;le /o&i(ication %rogram' or 1*/%' is the 5ortion o( the /1* initiative that 5rovi&es man&ator6
&irectives (or im5lementation' an& Iith Ihich .%/organ has not com5lie&. 1*/% creates a uni(orm loan mo&i(ication
5rotocol' an& 5rovi&es (inancial incentives (or 5artici5ating servicers to mo&i(6 loans. The Treasur6 "e5artment has allocate&
at least P=7 ;illion in (e&eral (un&s to 1*/%' o( Ihich at least P70 ;illion is T*R% mone6' to kee5 u5 to J9 to million
homeoInersK in their homes ;6 2012.
C. 96.!rgan<s 58liga$i!ns 2nder ;A.6
2<. .%/organ acce5te& a55roMimatel6 P27 ;illion in (e&eral (un&s an& a&&itional loan guarantees. *s a result' it Ias an& is
re4uire& to 5artici5ate in 1*/% (or the loans on Ihich it (unctions as a loan Jservicer.K /ichael R. Qarro' .r.' then a Senior
8ice %resi&ent o( .% /organ' eMecute& a Servicer %artici5ation *greement !JS%*K$ Iith the (e&eral government on .ul6 91'
2009.
2=. The S%* eMecute& ;6 /r. Qarro eM5licitl6 incor5orates all Jgui&elines'K J5roce&ures'K an& Jsu55lemental &ocumentation'
instructions' ;ulletins' (re4uentl6 aske& 4uestions' letters' &irectives' or other communications'K re(erre& to as JSu55lemental
"irectivesK issue& ;6 the Treasur6' )annie /ae or )re&&ie /ac in connection Iith 1*/%. These &ocuments together are
re(erre& to as the J%rogram "ocumentationK !S%* L*.$' an& are incor5orate& ;6 re(erence herein. The S%* man&ates that a
%artici5ating Servicer Jshall 5er(ormK the activities &escri;e& in the %rogram "ocumentation J(or all mortgage loans it
services.K S%* ,.*.' 2.*.7.
2:. )annie /ae issue& the (irst JSu55lemental "irectiveK !JS" 09A01K$ in *5ril' 2009.
2
D That "irective' together Iith others
issue& since' sets out the activities .%/organ must 5er(orm J(or all mortgage loans it services.K !S%* F 2.*.$
29. )irst' .%/organ must evaluate all ;orroIers Iho are siMt6 or more &a6s in &e(ault' in Jimminent &e(ault'K or Iho re4uest
a loan mo&i(ication to see i( the loan an& ;orroIer meet ;asic eligi;ilit6 criteria.
9
!S" 09A01 at 1A2' 9A.$
90. NeMt' the Servicer is re4uire& to calculate Ihether' ;6 taking certain mo&i(ication ste5s' such as re&ucing the interest rate
or eMten&ing the term o( the loan' the ;orroIerDs total housing 5a6ment can ;e re&uce& to 91O o( the ;orroIerDs monthl6
income. !S" 09A01 at :A10- 1*/% #hecklist at <.$ )inall6' the Servicer must 5er(orm a Jnet 5resent valueK !JN%8K$
anal6sis' com5aring the net 5resent value o( cash (loI (rom these mo&i(ie& loan terms to the N%8 o( the loan Iithout
mo&i(ication. !S" 09A01 at A7- N%8 0vervieI- 1*/% )*Gs at 2=A29' G291.$
91. ,( the N%8 test 6iel&s a J5ositiveK outcome !i.e.' the value o( a 5er(orming mo&i(ie& loan eMcee&s the value o( (oreclosing
the 5ro5ert6$' the Servicer is re4uire& to o((er a trial mo&i(ication' or JTrial %erio& %lan'K !JT%%K$ un&er 1*/%. !S" 09A01 at
' 1A17.$ 1aving gone through the anal6sis &escri;e& in the 5rece&ing 5aragra5h' the Servicer knoIs' 5rior to o((ering the
T%%' all o( the material terms o( the 5ro5ose& mo&i(ication. ,( the N%8 test 6iel&s a JnegativeK outcome' the servicer is
re4uire& to consi&er the ;orroIer (or other (oreclosure 5revention measures. !S" 09A01 at - S" 09A0: at 2A9.$
92. The T%% consists o( a threeAmonth 5erio& in Ihich the homeoIner makes mortgage 5a6ments ;ase& on a&Euste& loan
terms &erive& (rom the ste5s (olloIe& ;6 the servicer un&er 1*/%. !S" 09A01 at 1=A1:- S" 10A01 at :.$
&. 96.!rgan<s 6urhase 5% Washing$!n .u$ual
99. ,n Se5tem;er o( 200:' Wa/u su((ere& a severe &ecline in value an& Ias taken over ;6 the 0((ice o( Thri(t Su5ervision
Iith the )e&eral "e5osit ,nsurance #or5oration as Receiver (or Wa/u.
9. 0n Se5tem;er 27' 200: the )",# as Receiver (or Wa/u an& .%/organ entere& into a %urchase an& *ssum5tion
*greement. %ursuant to that agreement' .%/organ agree& to 5a6 P1':::'000'000.00 to 5urchase Wa/u. The %urchase an&
*ssum5tion *greement &oes not s5eci(6 a closing &ate (or the transaction other than to state that the closing &ate Iill ;e J1:0
&a6s a(ter 2ank #losing... The Receiver R)",#S' in its &iscretion' ma6 eMten& the Settlement "ate.K !%urchase an&
*ssum5tion *greement' *rticle ,.$
97. %ursuant to the %urchase an& *ssum5tion *greement' .%/organ service& mortgages Ihich Iere 5reviousl6 service& ;6
Wa/u' inclu&ing one o( the loans at issue in this matter.
E. 6lain$i%%<s 6urhase 5% 4heir ;!"e And $he Su8(e$ L!ans
9<. ,n *5ril 2000' %lainti((s 5urchase& their home' locate& at 1=< Wil& 1orse 8alle6 Roa&' Novato' #ali(ornia !the J1omeK$.
%lainti((s 5ai& a P700'000 &oIn 5a6ment an& %lainti(( *ngela *nsanelli o;taine& a loan (or the remaining P979'000.
9=. ,n /arch o( 200<' %lainti((s Iere su((ering (inanciall6. The6 oIn a small ;usiness Ihich (altere& an& le(t them Iith
limite& income. "e(en&ant Se4uoia assiste& %lainti((s in securing an o((er (rom Wa/u to alloI %lainti((s to re(inance their
highAinterest mortgage Iith a loIer interest loan ;ase& on %lainti(( *ngela *nsanelliDs (laIless cre&it. This transaction is
re(erre& to as Loan Num;er 90<1<20=0. ,t is re(erre& to herein as the JRe(inance Loan.K
9:. ,n o;taining the Re(inance Loan' %lainti((s Iere le& to ;elieve that the o((er Ias an eMclusive ;ene(it to ;orroIers Iith
outstan&ing cre&it. The loan containe& a P200'000 cash out Ihich %lainti((s 5lanne& to use to hel5 them through their
imme&iate (inancial crisis. *t the a&vice o( "e(en&ant Se4uoia an& Wa/u' %lainti((s remove& /r. *nsanelli (rom the title to
the home an& use& /rs. *nsanelliDs cre&it to 4uali(6.
99. The Re(inance Loan Ias secure& ;6 a "ee& o( Trust recor&e& against the 1ome. *t all times &uring the a55lication'
%lainti((s Iere honest an& (orthcoming Iith their (inancial in(ormation an& com5lie& Iith Wa/uDs re4uests. Wa/u &i& not
5er(orm an6 cre&i;le anal6sis o( /rs. *nsanelliDs a;ilit6 to re5a6 the Re(inance Loan' inclu&ing ;ut not limite& to a
veri(ication o( her income' assets' or &e;tAtoAincome ration. ,nstea&' ;oth Wa/u an& "e(en&ant Se4uoia re5resente& to
%lainti((s that ;ase& on Wa/uDs anal6sis o( the (inancial in(ormation /rs. *nsanelli 5rovi&e&' she Ioul& ;e a;le to meet all
loan 5a6ments an& urge& her to enter into the transaction.
0. The Re(inance Loan Ias a no &ocument' interest onl6 loan' secure& ;6 the 1ome' ;ase& on Ihat Se4uoia an& Wa/u
kneI to ;e an unreasona;l6 in(late& a55raisal value' Ihich Ias 5rocure& ;6 Wa/u an& Se4uoia in or&er to 5ermit Wa/u to
make the Re(inance Loan. *(ter o;taining the Re(inance Loan (rom Wa/u' /r. *nsanelli Ias a&&e& ;ack onto the title ;6
means o( an ,nters5ousal Trans(er Grant "ee&.
1. 0ne 6ear later' in *5ril 200=' %lainti((Ds (inancial situation ha& continue& to &eteriorate. * secon& time the6 use&
"e(en&ant Se4uoia to 5rocure a loan in or&er to have a sa(et6 net (or their (amil6. Se4uoia arrange& (or a P200'000 1ome
+4uit6 Loan (or %lainti((s through .%/organ #hase 2ank' N.*. This transaction is re(erre& to as Re(erence Num;er
0=0=:191020 or *ccount Num;er HHHHHHHHHH. ,t is re(erre& to herein as the J1+L.K
2. The 1+L Ias also a no &ocument' interest onl6 loan. The amount o( the monthl6 5a6ment Ias calculate& ;ase& on a 9<0
month term' ;ut the 1+L re4uire& a ;alloon 5a6ment a(ter 1:0 months.
9. ,n *5ril 200=' %lainti((s signe& a close&Aen& "ee& o( Trust securing the 1+L Iith the 1ome.
. ,n 5rocessing the 1+L' "e(en&ants .%/organ an& Se4uoia &i& not 5er(orm a cre&i;le anal6sis o( %lainti((sD a;ilit6 to
re5a6 the loan. "e(en&ant Se4uoia eMecute& the entire 1+L loan a55lication Iith no in5ut (rom %lainti((s.
7. "e(en&ants Se4uoia an& .%/organ re5resente& to %lainti((s that' ;ase& on .%/organDs anal6sis o( the (inancial
in(ormation su55le& ;6 Se4uoia' the6 Ioul& ;e a;le to meet the o;ligations o( the 1+L. %lainti((s signe& the 5reAcom5lete&
loan &ocuments un&er the &irection o( Se4uoia. The 1+L Ias also ;ase& on an a55raisal contracte& ;6 Se4uoia. This
a55raisal Ias knoIingl6 an& unreasona;l6 in(late&.
<. *s a result o( these tIo loans' the 1ome secure& P=:7'000 o( &e;t an& %lainti((s Iere o;ligate& to make monthl6
5a6ments Ihich Iere Iell ;e6on& their means.
=. %lainti((s ;elieve& at all times that "e(en&ants .%/organ an& Se4uoia Iere acting in goo& (aith an& in %lainti((sD ;est
interests. %lainti((s truste& "e(en&ants to com5etentl6 assist them throughout the loan 5rocess. %lainti((s ha& no knoIle&ge o(
real estate transactions. #ontrar6 to %lainti((sD ;elie( at the time' "e(en&ants .%/organ an& Se4uoia an& Wa/u cons5ire& to
in&uce %lainti((s into signing tIo 5re&ator6 loans Ihich "e(en&ants kneI or shoul& have knoIn %lainti((s Ioul& ;e una;le
to re5a6.
:. ,n Se5tem;er o( 200:' /r. *nsanelli Ias (orce& to un&ergo knee surger6 Ihich immo;iliNe& him (or nearl6 one 6ear an&
&rasticall6 re&uce& his a;ilit6 to Iork. %lainti((s also incurre& other serious an& eM5ensive (amil6 me&ical issues. ,n .anuar6
2009 the seIer 5i5es un&er %lainti((Ds home ru5ture& &ue to a root in(estation re4uiring eMtensive an& eM5ensive re5air an&
re5lacement. These uneM5ecte& an& un(oreseen events 5ut %lainti((s in an incre&i;l6 5recarious (inancial 5osition.
9. %lainti((s ;orroIe& mone6 an& struggle& along' an& Iere a;le to (ul(ill their o;ligations un&er the loans an& make all
loan 5a6ments on ;oth the Re(inance Loan an& 1+L (or a 6ear an& a hal(. 1oIever' ;6 Novem;er 200:' %lainti((s
recogniNe& the6 coul& not sustain the (ull monthl6 5a6ments on the loans an& Iere in imminent &anger o( &e(ault.
+. 6lain$i%%s< A$$e"#$s 4! .!di%7 4he L!ans Wi$h 96.!rgan
70. ,n "ecem;er 200:' %lainti((s contacte& Wa/u an& .%/organ to re4uest a mo&i(ication to the Re(inance Loan an& 1+L in
or&er to re&uce their monthl6 5a6ments an& attem5t to avoi& &e(aulting. %lainti((s &i& not receive a res5onse until /arch o(
2009 to their re4uest.

71. 0n )e;ruar6 19' 2009' %lainti((s (ile& a com5laint Iith the 0((ice o( the #om5troller o( the #urrenc6 !J0##K$ Ihich
inclu&e& a letter o( har&shi5 an& their com5lete (inancial (ile. %lainti((s sent co5ies o( this letter to Wa/u an& .%/organ an&
again re4ueste& a loan mo&i(ication (or each o( their loans.
72. 0n /arch ' 2009' %lainti((s receive& letters (rom Wa/u an& .%/organ res5on&ing to the (iling o( the 0## com5laint'
in&icating an& assuring them that the matter Ias ;eing investigate& an& 5romising a 5rom5t res5onse to the matter.
79. "uring the time ;etIeen /arch ' 2009 an& *ugust 10' 2009 .%/organ !at times acting as Wa/u$ &ragge& the %lainti((s
along through a sloI' (rustrating' re&un&ant an& (rau&ulent mo&i(ication 5rocess. .%/organ continuall6 &eman&e& 5iecemeal
an& &u5licative 5a5erIork' in&icate& that the (ile Ias ;oth com5lete an& incom5lete an& that the 5rocess Ias stalle& an&
5rocee&ing.
7. .%/organ s6stematicall6 ignore& %lainti((s Iritten an& ver;al in4uiries an& misle& %lainti((s a;out the status o( their
mo&i(ication re4uest in or&er to eMtract (ull 5a6ments (rom %lainti((s an& to &iscourage %lainti((s (rom seeking legal counsel.
77. 0n *ugust 10' 2009' %lainti((s receive& a letter on .%/organ letterhea& stating that their re4uest to mo&i(6 the Re(inance
Loan ha& ;een &enie& 5ur5orte&l6 ;ecause their Loan To 8alue !JLT8K$ ratio Ias too loI an& ;ecause %lainti((s allege&l6
ha& eMcessive cash reserves. 2oth the LT8 calculation an& the cash reserve amount on Ihich the &enial Ias ;ase& Iere
erroneous an& knoIn to ;e erroneous ;6 .%/organ.
7<. %lainti((sD attem5t to mo&i(6 the 1+L Ias e4uall6 mu&&le&' (rustrating an& contra&ictor6. .%/organDs J5rocessingK o( the
mo&i(ication re4uest laste& three months an& %lainti((s Iere in(orme& that their (ile Ias ;oth com5lete an& incom5lete an&
that the 5rocess Ias ;oth stalle& an& 5rocee&ing.
7=. 0n .une :' 2009' .%/organ agree& to 5lace %lainti((s on a trial mo&i(ication 5lan' guaranteeing that the mo&i(ication
Ioul& ;ecome 5ermanent i( %lainti((s ma&e 5a6ments on time an& in (ull (or the three month trial 5erio&' Ihich covere& the
months o( .une' .ul6 an& *ugust o( 2009. %lainti((s re4ueste& this Trial %lan *greement in Iriting.
7
.%/organ' hoIever'
re(use& to 5rovi&e the agreement in Iriting' Iith the intention o( &isavoIing the agreement i( it ;ecame a&vantageous (or
them to &o so.
7:. %lainti((s ma&e timel6 5a6ments o( the mo&i(ie& amount in .une' .ul6 an& *ugust o( 2009.
79. 0n *ugust 1=' 2009' %lainti((s receive& a letter (rom .%/organ stating that the 1+L Ias Jcurrentl6 in &e(ault.K This
came as a sur5rise to %lainti((s as the6 ha& never misse& a 5a6ment an& ha& ma&e the three trial 5erio& 5a6ments as re4uire&
an& re4ueste& ;6 .%/organ. %lainti((s contacte& .%/organ an& s5oke to /r. /ike 1arris a;out their concerns. /r. 1arris
re5resente& that %lainti((sD trial 5a6ments Iere ;eing hel& in a sus5ense account' Iere not ;eing a55lie& correctl6 an& that
&e(ault notices Iere sent out automaticall6. *&&itionall6' /r. 1arris in&icate& that the &e(aults Ioul& a&versel6 a((ect
%lainti((sD cre&it rating.
<0. This in(ormation Ias dire$l7 in !n%li$ Iith re5resentations ma&e ;6 /r. #huck +l6' an& em5lo6ee o( .%/organ' at the
outset o( the trial 5a6ment 5erio&. /r. +l6 state& that the %lainti((sD cre&it Ioul& remain intact an& Ioul& not ;e a((ecte& ;6
the trial mo&i(ication.
<1. The &amage &one to the %lainti((sD cre&it ma&e it im5ossi;le (or them to o;tain (inancial 5ro&ucts an& loans (rom other
institutions to assist %lainti((s in making the (ull 5a6ments on their Re(inance Loan an& 1+L.
<2. %lainti((s Iere tol& that the re5resentative Iho initiate& %lainti((s Trial %lan *greement ha& ;een trans(erre& to another
&e5artment an& that %lainti((s coul& not s5eak Iith him a;out their mo&i(ication agreement.
<9. %lainti((s s5oke Iith /r. Roger #onner' 6et another .%/organ em5lo6ee Iho re5resente& to %lainti((s that the6 Iere still
current on their trial mo&i(ication 5lan an& instructe& them to continue 5a6ing the mo&i(ie& amount. This in(ormation Ias
given to %lainti((s &es5ite the (act that the6 Iere receiving collection calls (rom .%/organ as earl6 as = a.m. &uring this time
5erio&. %lainti((s again sought to receive Iritten con(irmation or a Iritten Trial %lan *greement (rom .%/organ. *gain'
.%/organ &eli;eratel6 re(use& to 5rovi&e this in(ormation Iith the intent o( &isavoIing the agreement in the (uture.
<. 0n Se5tem;er 10' 2009' a(ter 5a6ing the mo&i(ie& 5a6ments (or (our months' %lainti((s Iere contacte& ;6 /s. 0lga
"anilova' a .%/organ em5lo6ee an& in(orme& that %lainti((s &i& not have enough (un&s to 4uali(6 (or a mo&i(ication to the
1+L. /s. "anilova (urther in&icate& that all 5a6ments going (orIar& nee&e& to ;e o( the (ull amount' an& that the
Joutstan&ing ;alanceK nee&e& to ;e 5ai& to .%/organ' Ihich ineM5lica;l6 inclu&e& late (ees an& 5enalties as a result o(
5a6ing the loIer' agree& u5on mo&i(ie& amount. *maNingl6' this meant that %lainti((s ha& ;een &enie& mo&i(ication o( the
Re(inance Loan ;ecause the6 ha& JeMcessiveK cash reserves an& J&enie&K mo&i(ication o( the 1+L ;ecause the6 &i& not have
enough cash reserves. This J&enialK occurre& a(ter %lainti((s ha& (ull6 com5lie& Iith their o;ligations un&er the trial
agreement ;6 making on time 5a6ments o( the mo&i(ie& amount (or more than three months.
<7. The neMt &a6' on Se5tem;er 11' 2009' con(use&' ;eIil&ere& an& (rustrate& ;6 the mo&i(ication 5rocess' %lainti((s
contacte& the eMecutive o((ices o( .%/organ to contest the cancellation o( their mo&i(ication. /r. Steve Regul' a .%/organ
em5lo6ee' re5resente& to %lainti((s that .%/organ Ioul& Iork Iith them on a mo&i(ication 5lan (or ;oth the 1+L an&
Re(inance Loan.
<<. 0ne Ieek later' /r. 2o; Smith' a .%/organ em5lo6ee' contacte& %lainti((s to J(inaliNeK their loan mo&i(ication. *s 5art
o( this 5rocess /r. Smith re4ueste& all o( the (inancial &ocuments an& in(ormation Ihich %lainti((s ha& 5rovi&e& to
.%/organ several times &uring the 5revious siM months.
<=. *t the same time .%/organ Ias allege&l6 J(inaliNingK the loan mo&i(ications' the 5a6ments %lainti((s Iere making on the
1+L Iere taking 5rogressivel6 longer to 5ost to their account. This resulte& in /r. Smith in(orming %lainti((s on 0cto;er 1'
2009 that the trial 5a6ment (or Se5tem;er ha& not ;een ma&e. %lainti((s 5ro&uce& &etaile& 5a6ment recor&s &emonstrating
that the 5a6ments ha& ;een ma&e an& ha& cleare& %lainti((sD checking account on time. /r. Smith a&mitte& that the 5ro;lem
Ias an accounting error ;6 .%/organ. /r. Smith instructe& %lainti((s to continue 5a6ing the mo&i(ie& amounts an& to ignore
the &e(ault notices. /r. Smith re5resente& that all (uture 5a6ments Ioul& ;e accuratel6 an& 5ro5erl6 a55lie& to their account.
<:. "es5ite .%/organDs re5resentation that ;oth loans Ioul& ;e mo&i(ie& an& &es5ite the agreement ;etIeen .%/organ an&
%lainti((s to mo&i(6 the 1+L i( %lainti((s ma&e on time 5a6ments (or three months' .%/organ re(use& to 5rovi&e an6
in(ormation in Iriting a;out the mo&i(ications. 2etIeen 0cto;er 11' 2009 an& )e;ruar6 19' 2010' %lainti((s contacte&
.%/organ several times to ensure that the6 Iere still on the mo&i(ication 5lan (or the 1+L. +ach time .%/organ con(irme&
that the6 Iere' ;ut (or the (irst time re5resente& that the 1+L mo&i(ication Ioul& not ;ecome 5ermanent until the Re(inance
/o&i(ication Ias a55rove&.
<9. 0n )e;ruar6 19' 2010 %lainti((s receive& a letter (rom .%/organ thanking them (or 5artici5ating in 1*/% an& in(orming
them that their (ile Ias missing critical &ocuments necessar6 to evaluate their mo&i(ication re4uest as re4uire& ;6 the Trial
%lan *greement 5reviousl6 sent to them. %lainti((s ha& never receive& a Iritten Trial %lan *greement' &es5ite their re5eate&
re4uests (or Iritten veri(ication an& agreement a;out the mo&i(ication 5lan' an& ha& sent all the necessar6 &ocumentation to
.%/organ several times.
=0. %lainti((s cease& making the mo&i(ie& 5a6ments on the 1+L in )e;ruar6 2010. %lainti((s have not misse& an6 5a6ments
an& are current on the Re(inance Loan. The Re(inance Loan is currentl6 sche&ule& to reset to a signi(icantl6 higher monthl6
5a6ment an& interest rate in *5ril' 2011. %lainti((s (ear the6 Iill not ;e a;le to make these 5a6ments unless the loan is
mo&i(ie&.
=1. ,n or&er to make the 5a6ments' %lainti((s Iere (orce& to ;orroI more than P<0'000 against their cre&it car&s' cashe& out
a55roMimatel6 P00'000 in e4uit6 (rom their home an& a55roMimatel6 P100'000 on a line o( cre&it through 2ank o( *merica.
<
=2. 0n "ecem;er 2' 2009' %lainti((s sent an o((icial Guali(ie& Written Re4uest !JGWRJ$ as &e(ine& ;6 the Real +state
Settlement %roce&ures *ct !R+S%*$' 12 U.S.#. F 2<07!e$!1$!2$' to .%/organ stating an& &etailing the reasons (or %lainti((sD
;elie( that their 1+L account Ias in error. %lainti((s receive& an acknoIle&gment o( recei5t o( the GWR (rom /s. 3a6
.ackson' an em5lo6ee at .%/organDs 1ome Len&ing +Mecutive 0((ice on .anuar6 <' 2010. The acknoIle&gment 5romise&
that .%/organ Ioul& 5rovi&e a Jcom5lete an& accurate res5onse as soon as 5ossi;le.K %lainti((s have never again hear& (rom
/s. .ackson or the 1ome Len&ing +Mecutive 0((ice regar&ing their GWR. This Ias the secon& GWR sent to .%/organ ;6
%lainti((s.
=9. 0n or a;out .anuar6 20' 2011' %lainti((s receive& a letter (rom .%/organ in&icating that the 1+L Ias in &e(ault an& that
(oreclosure 5rocee&ings ha& ;een initiate& on the account. The letter 5rovi&e& a 5hone num;er (or the #ali(ornia
Reconve6ance #or5oration' Iho Ias i&enti(ie& as the J(oreclosure attorne6sK (or .%/organ an& instructe& %lainti((s to
contact them (or (urther in(ormation. That 5hone num;er' !:19$ ==7A290' Ias an& continues to ;e inactive.
0I. CA2SES 5+ AC4I5N
+I'S4 CA2SE 5+ AC4I5N )'EAC; 5+ C5N4'AC4
()reah !% C!n$ra$
Agains$ &e%endan$ 96.!rgan Chase )an=, N.A.)
=. %lainti((s reallege each an& ever6 allegation a;ove as i( set (orth in its entiret6 in this #ause o( *ction.
=7. %lainti((s entere& into an oral Trial %erio& %lan !JT%%K$ contract Iith .%/organ regar&ing the 1+L. .%/organ ma&e an
oral T%% o((er to %lainti((s on or a;out .une :' 2009. %lainti((s (orme& a ;in&ing' en(orcea;le agreement Iith .%/organ Ihen
the6 ma&e the three trial 5erio& 5a6ments in .une' .ul6 an& *ugust o( 2009.
=
B %a6ments ma&e in accor&ance Iith the oral T%%
o((er constitute consi&eration. ,n the alternative' the T%% #ontracts or o((ers' cou5le& Iith %lainti((sD 5a6ments constitutes an
im5lie& contract.
=<. .%/organ (aile& to 5er(orm un&er the T%% contract Iith %lainti((s. .%/organDs re(usal to 5er(orm its &uties un&er the
T%% contract Ias unlaI(ul' Iithout Eusti(ication an&Bor eMcuse' an& constitute& a total an& material ;reach o( the T%%
contract ;etIeen the 5arties.
==. .%/organ ;reache& the T%% contract Iith %lainti((s ;6 (ailing to o((er %lainti((s a 5ermanent 1*/% mo&i(ication a(ter
5a6ment o( the trial 5erio& 5a6ments Ias ma&e on time an& in (ull.
=:. %lainti((s gave consi&eration that Ias (air an& reasona;le' an& have 5er(orme& all con&itions' covenants' an& 5romises
re4uire& to ;e 5er(orme& un&er their contract Iith .%/organ.
=9. *s a result o( .%/organDs ;reach o( the T%% contract' %lainti((s su((ere& an& continue to su((er reasona;le an& (oreseea;le
conse4uential &amages' inclu&ing 5a6ment o( increase& interest' longer loan 5a6o(( times' higher 5rinci5le ;alances'
&eterrence (rom seeking other reme&ies to a&&ress their &e(ault an&Bor una((or&a;le mortgage 5a6ments' &amage to their
cre&it' a&&itional income taM lia;ilit6' costs an& eM5enses incurre& to attem5t to 5revent an& (ight 5en&ing (oreclosure' an&
other &amages (or ;reach o( contract.
:0. 0n .ul6 91' 2009 .%/organ an& the Unite& States !through )annie /ae acting as )inancial *gent o( the Unite& States$
entere& into the Servicer %artici5ation *greement !JS%*K$ Ihich is a vali& an& en(orcea;le contract.
:1. %lainti((s are inten&e& thir&A5art6 ;ene(iciaries un&er the S%*' an& the S%* states the eM5ress intention that JhomeoIners
Iho are in &e(ault an&... Iho are at imminent risk o( &e(aultK ;e grante& mo&i(ication to re&uce Jmonthl6 5a6ments to
sustaina;le levels.K !S" 09A01 at 1.$
:2. 26 entering into the S%*' .%/organ agree& to com5l6 Iith the re4uirements set (orth in the S%* an& the %rogram
"ocumentation incor5orate& ;6 re(erence into the S%*. ,n eMchange' Treasur6 agree& to 5a6 certain amounts set (orth in the
S%* an& the %rogram "ocumentation to .%/organ in consi&eration o( its com5liance Iith the S%*.
:9. The central 5ur5ose o( the S%* is to ensure that ;orroIers Ihose loans are service& ;6 .%/organ an& Iho are eligi;le (or
loan mo&i(ications un&er 1*/% are 5ro5erl6 consi&ere& (or mo&i(ication in com5liance Iith the %rogram "ocumentation
re4uirements incor5orate& in the S%*.
:. .%/organ (aile& to 5er(orm un&er its S%* contracts in a manner that &irectl6 im5acts %lainti((s. .%/organDs re(usal to
5er(orm the S%* contracts Ias unlaI(ul' Iithout Eusti(ication an&Bor eMcuse' an& constitute& a total an& material ;reach.
:7. .%/organ ;reache& the S%* ;6 &oing' inter alia' the (olloIing@
a. )ailing to 5ro5erl6 &etermine Ihether %lainti((s 4uali(6 (or 1*/% mo&i(ications ;6 checking investor restrictions an&Bor
5er(orming an& N%8 test-
;. ,m5osing re4uirements on %lainti((s not 5ermitte& un&er the S%* an& %rogram "ocumentation-
c. )ailing to (olloI the 5rocess re4uire& to &etermine eligi;ilit6 (or mo&i(ications' inclu&ing' Iithout limitation' (ailing to
consi&er &ocumentation 5ro5erl6 su;mitte& in su55ort o( %lainti((sD 1*/% a55lications' an& &eman&ing &ocumentation that
Ias not re4uire&-
&. )ailing to o;tain Iaivers or a55rovals (rom the investor' i( necessar6' to carr6 out mo&i(ications un&er 1*/%- an&
e. )ailing to timel6 convert tem5orar6 mo&i(ications into 5ermanent mo&i(ications in the manner re4uire& ;6 the S%*
:<. *s a result o( .%/organDs ;reach o( the S%*' %lainti((s su((ere& an& Iill continue to su((er reasona;le an& (oreseea;le
conse4uential &amages' inclu&ing 5a6ment o( increase& interest' longer loan 5a6o(( times' higher 5rinci5le ;alances'
&eterrence (rom seeking other reme&ies to a&&ress their &e(ault an&Bor una((or&a;le mortgage 5a6ments' &amage to their
cre&it' a&&itional income taM lia;ilit6' costs an& eM5enses incurre& to 5revent or (ight (oreclosure' an& other &amages (or
;reach o( contract.
:=. %lainti((s have ;een &amage& ;6 .%/organDs ;reach o( the T%% contract in an amount to ;e 5roven at trial.
::. %lainti((s have ;een &amage& ;6 .%/organDs ;reach o( the S%* contract in an amount to ;e 5roven at trial.
:9. %ursuant to #ali(ornia #o&e o( #ivil %roce&ure F 1021.7' %lainti((s are entitle& to recover reasona;le attorne6D (ees' costs'
an& eM5enses incurre& in ;ringing this action.
SEC5N& CA2SE 5+ AC4I5N )'EAC; 5+ C50ENAN4 5+ *55& +AI4; AN& +AI' &EALIN* ()reah !%
C!venan$ !% *!!d +ai$h and +air &ealing
Agains$ All &e%endan$s)
90. %lainti((s reallege each an& ever6 allegation a;ove as i( set (orth in its entiret6 in this #ause o( *ction.
Agains$ &e%endan$ 96.!rgan
91. Un&er common laI' a covenant o( goo& (aith an& (air &ealing is im5lie& in ever6 contract' inclu&ing the Iritten an& oral
T%% contracts &escri;e& a;ove' Ihich 5revents one contracting 5art6 (rom un(airl6 (rustrating the other 5art6Ds right to
receive the ;ene(its o( the contract. .%/organ is o;ligate& to act in goo& (aith an& &eal (airl6 %lainti((s 5ursuant to the oral
T%% contract.
92. .%/organ has violate& an& continues to violate this covenant o( goo& (aith an& (air &ealing in its T%% contracts Iith
%lainti((s ;6 &oing' inter alia' the (olloIing@
a. )ailing to 5er(orm loan servicing (unctions consistent Iith its res5onsi;ilities to %lainti((s-
;. )ailing to 5ro5erl6 su5ervise its agents an& em5lo6ees' inclu&ing Iithout limitation' its loss mitigation an& collection
5ersonnel' (oreclosure 5ersonnel' an& 5ersonnel im5lementing its mo&i(ication 5rograms-
c. )ailing to 5ermanentl6 mo&i(6 loans an&Bor 5rovi&e alternatives to (oreclosure an& using un(air means to kee5 %lainti((s in
a tem5orar6 mo&i(ication contract' inclu&ing' Iithout limitations' routinel6 &eman&ing in(ormation it alrea&6 ha& an& (ailing
to communicate accuratel6 or consistentl6 Iith %lainti((s a;out the status o( their loan mo&i(ication a55lications-
&. /aking inaccurate calculations an& &eterminations o( %lainti((sD eligi;ilit6 (or trial or 5ermanent mo&i(ications-
e. )ailing to res5on&' or res5on& in a timel6 manner' to %lainti((sD re4uest to ;e evaluate& (or a mo&i(ication un&er 1*/%'
even a(ter %lainti((s 5rovi&e& all in(ormation re4ueste& ;6 .%/organ-
(. Shu((ling an& trans(erring %lainti((s ;ack an& (orth ;etIeen &i((erent re5resentatives' Iho o(ten 5rovi&ing con(licting
in(ormation an& instructions-
g. )ailing to 5ro5erl6 &etermine Ihether %lainti((s 4uali(ie& (or 1*/% mo&i(ications ;6 checking investor restrictions an&Bor
5er(orming an N%8 test-
h. ,m5osing re4uirements on %lainti((s not 5ermitte& un&er the S%* an& %rogram "ocumentation-
i. )ailing to (olloI the 5rocess re4uire& to &etermine eligi;ilit6 (or mo&i(ications' inclu&ing' Iithout limitations' (ailing to
consi&er &ocumentation 5ro5erl6 su;mitte& in su55ort o( %lainti((sD 1*/% a55lications' an& &eman&ing &ocumentation that
is not re4uire&-
E. )ailing to o;tain Iaivers or a55rovals (rom the investor' i( necessar6' to carr6 out mo&i(ications un&er 1*/%-
k. )ailing to timel6 convert tem5orar6 mo&i(ications into 5ermanent mo&i(ications in the manner re4uire& ;6 the S%*-
1. )ailing to &e&icate su((icient resources to 5ro5erl6 o5erate the 1*/% 5rogram' an& trans(erring 5ersons Ihom %lainti((s
ha& contact Iith out o( the mo&i(ication &e5artment so as to avoi& alloIing %lainti((s to contact the same 5erson at .%/organ
regar&ing the status o( their mo&i(ication-
m. Telling %lainti((s' Iho maile& or (aMe& re4ueste& in(ormation to .%/organ that .%/organ &i& not receive the re4ueste&
in(ormation-
n. Telling %lainti((s that the6 4uali(6 (or a trial 5erio& 5lan' then (ailing to sen& an o((icial trial 5lan agreement-
o. Telling %lainti((s' Iithout legitimate ;asis' that the6 Iill JIorkK Iith them to get a 5ermanent mo&i(ication' then (ailing to
&o so an& &en6ing the mo&i(ication- an&
5. ,ntentionall6 setting u5 its loan mo&i(ication 5rogram to (ail.
99. %lainti((s remain rea&6' Iilling' an& a;le to enter into 5ermanent 1*/% mo&i(ications.
9. *s a result o( .%/organDs ;reach o( this im5lie& covenant' %lainti((s su((ere& an& Iill continue to su((er reasona;le an&
(oreseea;le conse4uential &amages resulting (rom such ;reaches' inclu&ing 5a6ment o( increase& interest' longer loan 5a6o((
times' higher 5rinci5le ;alances' an& other &amages.
Agains$ &e%endan$ Se>u!ia 6ai%i .!r$gage C!"#an7
97. Un&er common laI' a covenant o( goo& (aith an& (air &ealing is im5lie& in ever6 contract' inclu&ing the contract ;etIeen
%lainti((s an& Se4uoia Ihich resulte& in the origination o( the Re(inance Loan an& 1+L' Ihich 5revents one contracting
5art6 (rom un(airl6 (rustrating the other 5art6Ds right to receive the ;ene(its o( the contract.
9<. *&&itionall6' as ;roker an& (i&uciar6 (or ;oth loans' Se4uoia oIe& an in&e5en&ent &ut6 to %lainti((s to act in goo& (aith to
make' an& (acilitate the making o(' &ecisions in %lainti((sD ;est interests.
9=. Se4uoia violate& this covenant o( goo& (aith an& (air &ealing in its contracts Iith %lainti((s to ;roker the Re(inance Loan
an& 1+L ;6 &oing' inter alia' the (olloIing@
a. Steering %lainti((s into tIo no &ocument' interest onl6 loans Iith reason to knoI that %lainti((s ha& no a;ilit6 to re5a6 the
loans-
;. #om5leting the loan a55lications (or %lainti((s an& ensuring that the6 Ioul& 4uali(6 (or the Loans-
c. )ailing to &isclose the 5re&ator6 nature o( the loan agreements to %lainti((s-
&. Rel6ing u5on a55raisals o( %lainti((sD 1ome Ihich it kneI to ;e unreasona;l6 in(late& an& cra(te& solel6 (or the 5ur5ose o(
ensuring that %lainti((s Ioul& 4uali(6 (or the loans-
e. )ailing to &isclose to %lainti((s the risks involve& in o;taining the loans- an&
(. +ncouraging %lainti((s to stri5 the e4uit6 (rom their 1ome.
9:. "e(en&ant Se4uoiaDs ;ehavior cause& %lainti((s to enter into the Loan *greements. *s a result' %lainti((sD cre&it has ;een
&estro6e&' the6 have ;een (orce& to ;orroI eMcessive amounts o( mone6' the e4uit6 has ;een stri55e& (rom their home an&
the6 are (acing (oreclosure.
99. %lainti((s have ;een &amage& ;6 Se4uoiaDs ;reach o( the im5lie& covenant o( goo& (aith an& (air &ealing in an amount to
;e 5roven at trial.
100. %lainti((s have ;een &amage& ;6 .%/organDs ;reach o( the im5lie& covenant o( goo& (aith an& (air &ealing in an amount
to ;e 5roven at trial.
101. %ursuant to #ali(ornia #o&e o( #ivil %roce&ure F 1021.7' %lainti((s are entitle& to recover their reasona;le attorne6Ds
(ees' costs' an& eM5enses incurre& in ;ringing this action.
4;I'& CA2SE 5+ AC4I5N +'A2& AN& &ECEI4 AN&-5' NE*LI*EN4 .IS'E6'ESEN4A4I5
(+raud and &eei$, and-!r Negligen$ .isre#resen$a$i!n Agains$ All &e%endan$s)
102. %lainti((s reallege each an& ever6 allegation a;ove as i( set (orth in its entiret6 in this #ause o( *ction.
109. "e(en&ants collu&e& in the (acilitation an& 5rocurement o( the Re(inance Loan an& the 1+L' Ihich Iere 5re&ator6 in
nature an& inEurious to %lainti((s.
10. "e(en&ants at various times throughout the origination an& servicing o( the loans knoIingl6 misre5resente&' inter alia'
the (olloIing@
a. The nature an& terms o( the loans-
;. That the loans Iere a goo& (inancial &ecision (or %lainti((s-
c. The mo&i(ication 5rocess o( the loans- an&
&. The value o( the %lainti((sD 1ome Ihich Ias use& to Eusti(6 the loans.
107. "e(en&antsD knoIingl6 or negligentl6 &e(rau&e& %lainti((s' causing them to agree to enter into loans Ihich "e(en&ants
kneI %lainti((s Iere unlikel6 to ever ;e a;le to 5a6 o((. 2ecause o( %lainti((sD &es5eration an& &esire to sta6 in their 1ome'
the6 Eusti(ia;l6 relie& on "e(en&antsD misre5resentations a;out the terms o( the loans' their a;ilit6 to a((or& the loans an& the
value o( their home. This reliance Ias &etrimental to the %lainti((s.
10<. "e(en&ant .%/organ (alsel6 re5resente& to %lainti((s that the trial mo&i(ication o( the 1+L loan Ioul& ;ecome
5ermanent i( %lainti((s remitte& the mo&i(ie& 5a6ment (or three months' on time an& in (ull. .%/organ kneI this Ias (alse'
5er its oIn 5olicies an& 5roce&ures. "e(en&ant .%/organ intentionall6 or negligentl6 misre5resente& to %lainti((s that the6
Iere still on a trial mo&i(ication 5lan' Ihen in (act' %lainti((sD mo&i(ie& 5a6ments Iere ;eing recor&e& as insu((icient.
%lainti((s Eusti(ia;l6 relie& on these statements as .%/organ is the servicer an& originator o( the 1+L loan an& ha& authorit6
to a55rove the re4ueste& mo&i(ication. .%/organDs misre5resentation resulte& in escalating late (ees' 5enalties an& other
charges an& ultimatel6 sent the 1+L into &e(ault an& noI 5laces the 1ome at risk o( (oreclosure.
10=. "e(en&ant Se4uoia committe& (rau& Ihen it knoIingl6 misre5resente& %lainti((sD income on the loan a55lications.
%lainti((s &i& not re5ort' nor Iere the6 aske& to re5ort their actual income (or the 5ur5ose o( &etermining Ihether the6
4uali(ie& (or the loans. "e(en&ant Se4uoia kneI o( the (alsit6 ;ecause' Iithout the con(i&ential em5lo6ment in(ormation that
coul& onl6 ;e su55lie& ;6 %lainti((s' the income in(ormation inclu&e& on the a55lication is necessaril6 (alse. Se4uoia
intentionall6 entere& the (alse in(ormation on the a55lications in or&er to 4uali(6 %lainti((s (or 5re&ator6 loans Ihich the6 ha&
no a;ilit6 to re5a6.
10:. ,t Ias in Se4uoiaDs ;est interest to see that all loans it ;rokers ;e consummate&' regar&less o( a;ilit6 to re5a6 or
5ro5riet6 o( entering into the loans. %lainti((s Eusti(ia;l6 relie& on "e(en&ant Se4uoia to com5l6 Iith reasona;le stan&ar&s o(
5ro(essional con&uct an& ethics in using its eM5ertise to match them Iith an a55ro5riate loan 5ro&uct.
109. *s a result o( "e(en&antsD misre5resentations' %lainti((s have ;een &amage& in an amount to ;e 5roven at trial.
110. %ursuant to #ali(ornia #o&e o( #ivil %roce&ure F 1021.7' %lainti((s are entitle& to recover their reasona;le attorne6Ds
(ees' costs' an& eM5enses incurre& in ;ringing this action.
+52'4; CA2SE 5+ AC4I5N NE*LI*ENCE
(Negligene ? Cal. Civ. C!de @@ 1A14(a) and ,,,, Agains$ All &e%endan$s)
111. %lainti((s reallege each an& ever6 allegation a;ove as i( set (orth in its ntiret6 in this #ause o( *ction.
112. *ll "e(en&ants oIe& a &ut6 o( care to avoi& (oreseea;le inEur6 to %lainti((s 5erson or 5ro5ert6. "e(en&ants ;reache& that
&ut6 ;6 collu&ing to lure %lainti((s into 5re&ator6 loans that "e(en&ants kneI or shoul& have knoIn %lainti((s Ioul& &e(ault
on.
119. *s a &irect an& (oreseea;le result o( "e(en&antsD ;ehavior' %lainti((s su((ere& harm' inclu&ing ;ut not limite& to the
&estruction o( their cre&it' ;eing (orce& to ;orroI eMcessive amounts o( mone6' having the e4uit6 stri55e& (rom their home
an&' noI' (acing (oreclosure.
11. "e(en&ant .%/organ 5rocesse& an& a55rove& the 1+L un&er a JState& ,ncomeK 5rogram that re4uires em5lo6ment
veri(ication ;ut &oes not re4uire income veri(ication. Wa/u 5rocesse& an& a55rove& the Re(inance Loan un&er a JState&
,ncomeK 5rogram that re4uires em5lo6ment veri(ication ;ut &oes not re4uire income veri(ication. .%/organ has assume&
lia;ilit6 (or Wa/uDs negligence.
117. 2oth Wa/u an& .%/organ ha& a &ut6 to investigate the reasona;leness o( the state& income an& con(irm that %lainti((s
ha& the a;ilit6 to re5a6 the loans. Wa/u an& .%/organ ;reache& that &ut6 Ihen the6 4uali(ie& %lainti((s (or the Re(inance
an& 1+L loans ;ase& on the overstate& income su55lie& ;6 "e(en&ant Se4uoia.
11<. Wa/u an& .%/organ also ;reache& their &ut6 Ihen the 4uali(ie& %lainti((s (or the initial interestAonl6 5a6ment' Iith
knoIle&ge that the initial interestAonl6 5a6ment Ias sche&ule& to convert to a (ull6 amortiNe& 5a6ment. Wa/u an&
.%/organ (aile& to 4uali(6 %lainti((s at the (ull6 in&eMe&' (ull6 amortiNe& 5a6ment amount.
11=. "e(en&ant Se4uoia Ias negligent in &irecting %lainti((s into loans (or Ihich the6 Iere not 4uali(ie&. Se4uoia Ias
%lainti((Ds ;roker in the origination o( ;oth the Re(inance Loan an& 1+L. *s %lainti((sD ;roker an& (i&uciar6' Se4uoia oIe& a
&ut6 to %lainti((s to eMecute &ecisions in the ;est interests o( the %lainti((s. Se4uoia ;reache& that &ut6 Ihen it negligentl6
4uali(ie& %lainti((s (or loans Iithout reasona;le !or an6$ investigation into Ihether or not %lainti((s coul& sustain 5a6ments
on the loans. "e(en&ant ma&e no e((ort to e&ucate %lainti((s as to the nature' risks or 5ossi;le conse4uences associate& Iith
the loans.
11:. *s a result o( "e(en&antsD con&uct' %lainti((s have an& Iill continue to su((er reasona;le an& (oreseea;le conse4uential
&amages resulting (rom such actions an& re5resentations' inclu&ing 5a6ment o( increase& interest' longer loan 5a6o(( times'
higher 5rinci5le ;alances' &eterrence (rom seeking other reme&ies to a&&ress their &e(ault an&Bor una((or&a;le mortgage
5a6ments' &amage to their cre&it' a&&itional income taM lia;ilit6' costs an& eM5enses incurre& to 5revent or (ight (oreclosure'
an& other &amages (or ;reach o( contract.
119. %lainti((s have ;een &amage& ;6 "e(en&antsD actions an& re5resentations in an amount to ;e 5roven at trial.
+I+4; CA2SE 5+ AC4I5N 0I5LA4I5N 5+ 'ES6A
(0i!la$i!n !% 12 2.S.C. @ 210/(e) ('ES6A) ? +ailure $! 'es#!nd $! BW' Agains$ &e%endan$ 96.!rgan)
120. %lainti((s reallege each an& ever6 allegation a;ove as i( set (orth in its entiret6 in this #ause o( *ction.
121. %lainti((s sent a GWR to "e(en&ant .%/organ on tIo occasions' *ugust 2<' 2009' an& "ecem;er 2' 2009. %ursuant to
12 U.S.#. F 2<07!e$!2$' "e(en&ant ha& siMt6 !<0$ &a6s to res5on& to the GWR an& tIent6 !20$ &a6s to acknoIle&ge recei5t
o( the GWR.
122. The *ugust 2<' 2009 corres5on&ence (rom %lainti((s to .%/organ state& the names o( %lainti((s an& their 5artial account
num;ers' in(ormation su((icient to i&enti(6 the account o( the ;orroIer. The letter (urther state& the errors %lainti((s ;elieve&
.%/organ Ias making in misa55l6ing loan 5a6ments' ;ase& on their 5a6ing a mo&i(ie& amount on their 1+L an& seeking to
ensure that the mistaken actions .%/organ Ias taking &i& not hurt their cre&it an& seeking corrections o( those mistakes ;6
.%/organ.
129. The "ecem;er 2' 2009 corres5on&ence (rom %lainti((s to .%/organ inclu&e& the name an& loan num;ers !(or ;oth the
Re(inance Loan an& the 1+L$ o( %lainti((s. The letter (urther state& it Ias a JGuali(ie& Written Re4uestK un&er R+S%*.
+nclose& Iith the "ecem;er 2' 2009 letter Ias a letter sent (rom %lainti((s to the 0## &etailing %lainti((s ;elie( as to Ih6
their account Ias in error an& the actions taken ;6 .%/organ Ihich %lainti((s ;elieve& Iere incorrect in &en6ing the
mo&i(ications an& misa55l6ing 5a6ments.
12. .%/organ violate& R+S%* ;ecause it (aile& to 5rovi&e a Iritten res5onse acknoIle&ging recei5t o( the (irst GWR
Iithin 20 &a6s o( the recei5t o( the (irst re4uest. .%/organ also (aile& to make a55ro5riate corrections to %lainti((sD account
in res5onse to this GWR' or to investigate or to eM5lain Ih6 it Ioul& not or coul& not &o so.
127. %lainti((s receive& acknoIle&gment o( the recei5t o( the secon& GWR on .anuar6 <' 2010. 1oIever' %lainti((s never
receive& an6 (urther res5onse to their GWR.
12<. "e(en&ant .%/organ thus violate& R+S%* ;6 (ailing to make a55ro5riate corrections to %lainti((sD account in res5onse
to an6 o( their GWRs' or to investigate or to eM5lain Ih6 it Ioul& or coul& not &o so.
12=. U5on in(ormation an& ;elie(' .%/organ has violate& R+S%*' 12 U.S.#. F 2<07!e$!9$' ;6 5rovi&ing in(ormation to
consumer re5orting agencies regar&ing over&ue 5a6ments allege&l6 oIe& ;6 %lainti((s that Iere relate& to their GWRs' man6
o( Ihich Iere neither late nor over&ue.
12:. "e(en&ant .%/organ has engage& in a 5attern an& 5ractice o( nonAcom5liance Iith the re4uirements o( R+S%* set (orth
in 12 U.S.#. F 2<07' as evi&ence& ;6 its (ailure to res5on& to %lainti((sD tIo GWRs. U5on in(ormation an& ;elie( %lainti((s
allege that "e(en&ant .%/organ has engage& in a much ;roa&er 5attern an& 5ractice o( (ailing to com5l6 Iith R+S%* ;6 not
res5on&ing to GWRs.
129. *s a result o( .%/organDs violations o( R+S%* %lainti((s have su((ere& actual &amages' inclu&ing ;ut not limite& to
&evastation o( their cre&it' monetar6 &amages' an& threatene& (oreclosure o( their home.
190. %ursuant to 12 U.S.#. F 2<07!($!1$!2$' %lainti((s are entitle& to statutor6 &amages in the amount o( P2'000 5er violation
5lus their actual &amages.
191. %ursuant to 12 U.S.#. F 2<07 !($!9$' %lainti((s are entitle& to reasona;le attorne6s (ees in connection Iith this action.
SIC4; CA2SE 5+ AC4I5N 0I5LA4I5N 5+ 4;E 2N+AI' C5.6E4I4I5N LAW
(For Unfair Competition in Violation of Cal. Bus. & Prof. Code 17200 et seq. Agains$ All &e%endan$s)
192. %lainti((s reallege each an& ever6 allegation a;ove as i( set (orth in its entiret6 in this #ause o( *ction.
199. The #ali(ornia Un(air #om5etition LaI' #al. 2us. ? %ro(. #o&e F 1=200 et se4. !JU#LK$' &e(ines un(air com5etition to
inclu&e an6 JunlaI(ul'K Jun(air'K or J&ece5tiveK ;usiness act or 5ractice. #al. 2us. ? %ro(. #o&e F 1=200. The U#L
authoriNes this #ourt to issue Ihatever or&ers or Eu&gments ma6 ;e necessar6 to 5revent un(air or unlaI(ul 5ractices' or to
Jrestore to an6 5erson in interest an6 mone6 or 5ro5ert6' real or 5ersonal' Ihich ma6 have ;een ac4uire& ;6 means o( such
un(air com5etition.K ,&. F 1=209.
19. .%/organDs acts an& 5ractices allege& herein are unlaI(ul ;usiness 5ractices in that the6 violate state an& laI' inclu&ing
;ut not limite& to violations o( R+S%* an& #al. #iv. #o&e FF 1=1!a$ an& 9999' as allege& in this #om5laint.
197. Se4uoiaDs acts an& 5ractices allege& herein are unlaI(ul ;usiness 5ractices in that the6 violate state laI' inclu&ing ;ut
not limite& to violations o( #al. #iv. #o&e FF 1=1!a$ an& 999L.
19<. .%/organDs acts an& 5ractices allege& herein constitute un(air ;usiness 5ractices' inclu&ing' Iithout limitation' the
(olloIing 5ractices@
a. )ailing to 5er(orm loan servicing (unctions consistent Iith its res5onsi;ilities to %lainti((s an& its res5onsi;ilities un&er
1*/%-
;. )ailing to 5ro5erl6 su5ervise its agents an& em5lo6ees' inclu&ing Iithout limitation' its loss mitigation an& collection
5ersonnel' (oreclosure 5ersonnel' an& 5ersonnel im5lementing its mo&i(ication 5rograms-
c. )ailing to 5ermanentl6 mo&i(6 loans an&Bor 5rovi&e alternatives to (oreclosure' an& using un(air means to kee5 %lainti((s in
tem5orar6 mo&i(ication contracts' inclu&ing' Iithout limitations' routinel6 &eman&ing in(ormation it alrea&6 ha& an& (ailing
to communicate accuratel6 or consistentl6 Iith %lainti((s a;out the status o( their loan mo&i(ication a55lications-
&. /aking inaccurate calculations an& &eterminations o( %lainti((sD eligi;ilit6 (or 5ermanent mo&i(ications- an&
e. +ngaging in acts an& 5ractices that 5rolong o( the 1*/% 5rocess.
19=. Se4uoiaDs acts an& 5ractices allege& herein constitute un(air ;usiness 5ractices' inclu&ing' Iithout limitation steering
%lainti((s into loans Se4uoia kneI %lainti((s coul& not ever re5a6 an& ;reaching the (i&uciar6 &ut6 oIe& to %lainti((s in or&er
to increase its oIn 5ro(its ;6 closing the mortgage transaction.
19:. .%/organDs acts an& 5ractices allege& herein constitute (rau&ulent ;usiness 5ractices' inclu&ing' Iithout limitation' the
(olloIing 5ractices@
a. .%/organ ma&e misre5resentations an& omissions o( material (acts that in&uce& %lainti((s to enter T%% contracts in or&er
to o;tain a 5ermanent mo&i(ication-
;. .%/organ ma&e misre5resentations an& omissions o( material (act regar&ing the status o( %lainti((sD loan mo&i(ications an&
loan 5a6ments-
c. .%/organDs misre5resentations an& omissions are likel6 to &eceive the reasona;le consumer' an& &i& in (act &eceive
%lainti((s-
&. .%/organDs misre5resentations are o;Eectivel6 material to the reasona;le consumer' an& there(ore reliance u5on such
re5resentations ma6 ;e 5resume& as a matter o( laI' an& %lainti((s &i& in (act ;elieve the misre5resentations Iere reasona;le
an& &i& in (act rel6 u5on them.
199. Se4uoiaDs acts an& 5ractices as allege& herein constitute (rau&ulent ;usiness 5ractices' inclu&ing' Iithout limitation
making misre5resentations an& omissions o( material (acts that in&uce& %lainti((s to enter into 5re&ator6 loans Ihich the6
coul& not re5a6.
10. %lainti((s Eusti(ia;l6 an& reasona;l6 relie& u5on these misre5resentations an& omissions o( material (acts.
11. *s a result o( these violations an& unlaI(ul' un(air' an& (rau&ulent ;usiness 5ractices' %lainti((s su((ere& inEur6 in (act
an& lost mone6' inclu&ing ;ut not limite& to' 5a6ment o( increase& interest' longer loan 5a6o(( times' higher 5rinci5le
;alances' an& 5a6ment o( other charges collecte& ;6 .%/organ.
12. %ursuant to #ali(ornia 2usiness an& %ro(essions #o&e section 1=200 et se4.' %lainti((s are entitle& to enEoin the 5ractice
o( un(airl6 &en6ing an& (ailing to enter into 5ermanent loan mo&i(ications (or homeoIners Iho have com5lie& Iith the
contractual o;ligations o( a T%% #ontract' an& grant such other an& (urther relie( as the #ourt ma6 &eem 5ro5er an& Eust.
19. %ursuant to #o&e o( #ivil %roce&ure F 1021.7' %lainti((s are entitle& to recover their reasona;le attorne6Ds (ees' costs'
an& eM5enses incurre& in ;ringing this action.
6'A:E' +5' 'ELIE+
W1+R+)0R+' %lainti((s 5ra6 (or Eu&gment against "e(en&ants as (olloIs@
1. )or +4uita;le relie(' inclu&ing an 0r&er (or .%/organ to rescin& all Notices o( "e(ault against %lainti((sD account an& to
engage in reasona;le e((orts to restore %lainti((sD cre&it to its 5revious stan&ing-
2. The #ourt grant a Tem5orar6 Restraining 0r&er 5reventing (oreclosure against the %lainti((sD 1ome-
9. The #ourt enter a Eu&gment &eclaring .%/organDs acts an& 5ractices com5laine& o( herein to constitute a ;reach o(
contract' an& all "e(en&antsD acts an& 5ractices com5laine& o( herein to constitute a ;reach o( the covenant o( goo& (aith an&
(air &ealing an& to ;e unlaI(ul' un(air an& (rau&ulent as Iell as a &eclaration that .%/organ is re4uire& ;6 the &octrine o(
5romissor6 esto55el to o((er 5ermanent mo&i(ications o( the loans to %lainti((s-
. )or inEunctive relie( against "e(en&ants to 5revent (uture Irong(ul con&uct-
7. )or actual statutor6 &amages accor&ing to 5roo( at trial (or violations o( the Rosenthal *ct' ;reach o( contract' ;reach o(
covenant o( goo& (aith an& (air &ealing' an& 5romissor6 esto55el' or in the alternative' that .%/organ ;e or&ere& to make
restitution to %lainti((s 5ursuant to #al. 2us. an& %ro(. #o&e F 1=209-
<. )or 5unitive &amages 5ursuant to #al. #iv. #o&e F 929 et se4.-
=. )or an aIar& o( attorne6sD (ees an& costs 5ursuant to #al. #o&e o( #iv. %roc. F 1021.7' #al. #iv. #o&e F 1=::.1= an&
1=::.90!#$' an& 12 U.S.#. F 2<07!($!9$-
:. )or such other an& (urther relie( as this #ourt ma6 &eem 5ro5er.
"ate&@ )e;ruar6 9' 2011
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&E.AN& +5' 92': 4'IAL
%lainti((s here;6 &eman& a trial ;6 Eur6 o( each an& ever6 claim so tria;le.
"ate&@ )e;ruar6 9' 2011
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)ootnotes
1 %lainti((s (ile& their original an& (irst amen&e& com5laints in /arin #ount6 Su5erior #ourt 5rior to o;taining counsel.
%lainti((sD current counsel Ias a55ointe& through the )e&eral %ro 2ono %roEect ;6 or&er o( this #ourt on .anuar6 9' 2011. The
5rior com5laints name& three a&&itional "e(en&ants' the )",# as receiver (or Wa/u' )irst *merican Title #om5an6 an&
)i&elit6 National Title #om5an6. These "e(en&ants have ;een &ismisse& (rom the case Iith 5reEu&ice ;6 %lainti((s.
2 The %rogram "ocumentation also inclu&es@ Su55lemental "irective 09A01 !JS" 09A01K$' *5r. <' 2009'
htt5s@BBIII.hm5a&min.comB5ortalB&ocsBham5T servicerBs&0901.5&(- Su55lemental "irective 09A0= !JS" 09A0=K$' 0ct. :' 2009'
htt5s@BBIII.hm5a&min.comB5ortalB&ocsBham5TservicerBs&090=.5&(- Su55lemental "irective 09A0: !JS" 09A0:K$' Nov. 9' 2009'
htt5s@BB III.hm5a&min.comB5ortalB&ocsBham5TservicerBs&090:.5&(- Su55lemental "irective 10A01 !JS" 10A01K$' .an. 2:'
2010' htt5s@BBIII.hm5a&min.comB5ortalB&ocsBham5T servicerBs&1001.5&(- Su55lemental "ocumentation A )re4uentl6 *ske&
Guestions A 1ome *((or&a;le /o&i(ication %rogram !J1*/% )*GsK$' *5r. 2' 2010' htt5s@BB
III.hm5a&min.comB5ortalB&ocsBham5TservicerBham5(a4s.5&(- Su55lemental "ocumentation A )re4uentl6 *ske& Guestions A
1ome *((or&a;le /o&i(ication %rogram 2009A2010 #onversion #am5aign !J1*/% #onversion )*GsK$' .an. :' 2010'
htt5s@BBIII.hm5a&min.comB5ortalB&ocsBham5 servicerBham5conversion(a4s.5&(- #hecklist (or Getting Starte& an&
%artici5ating in 1*/% (or NonAGS+ Loans' Gui&ance +((ective (or 8eri(ie& Trial %erio& %lans' )e;. 22' 2010 !J1*/%
#hecklistK$' htt5s@BBIII.hm5a&min.comB5ortalB&ocsBham5T servicerBham5checklistveri(ie&.5&(- an& 1ome *((or&a;le
/o&i(ication %rogram 2ase Net %resent 8alue !N%8$ /o&el S5eci(ications !JN%8 0vervieIK$' .un. 11' 2009'
htt5s@BBIII.hm5a&min.comB5ortalB&ocsBham5TservicerBn5vovervieI.5&( !all last visite& /a6 19' 2010$. These &ocuments
together &escri;e the ;asic activities re4uire& un&er 1*/%.
9 *si&e (rom criteria that re4uire that the loan ;e a (irst lien mortgage originate& ;e(ore 2009' that the 5ro5ert6 ;e occu5ie&' an&
that it ;e the ;orroIerDs 5rinci5al resi&ence' the most salient con&itions are that the loan must ;e &elin4uent or that &e(ault is
reasona;l6 (oreseea;le- that the ;orroIer &ocument a (inancial har&shi5' as &e(ine& in the %rogram "ocumentation' an& that the
J;orroIer has a monthl6 mortgage 5a6ment ratio o( greater than 91 5ercentK o( the ;orroIerDs monthl6 income. !S" 09A01 at
1A2.$
"e(en&ant .%/organ ke5t the Re(inance Loan an& 1+L se5arate &uring the mo&i(ication 5rocess. 1oIever' .%/organ Ias
res5onsi;le (or servicing ;oth loans' although (or much o( the time it continue& to &o so in Wa/uDs name. %lainti((s re5eate&l6
re4ueste& that the tIo loans ;e consi&ere& (or consoli&ation together' 6et "e(en&ant .%/organ re(use& to &o so.
7 *t the time the6 ma&e this re4uest the .%/organ ha& not 6et signe& the S%* un&er 1*/%. 1oIever' .%/organ kneI o( the
re4uirements o( the 1*/% 5rogram an& likel6 kneI o( their 5lanne& 5artici5ation in that 5rogram. *&&itionall6' ;e(ore the
conclusion o( the trial 5erio& (or the %lainti((sD 1+L mo&i(ication' .%/organ signe& the S%*.
< %lainti((s no longer have the cre&it line through 2ank o( *merica as a result o( the &amage &one to their cre&it ;6 the actions o(
.%/organ in issuing notices o( &e(ault on the 1+L even though %lainti((s Iere making timel6 5a6ments.
= %lainti((s ma&e 5a6ments 5ursuant to the T%% (rom .une 2009 through )e;ruar6 2010.
End !% &!u"en$ 2011 Thomson Reuters. No claim to original U.S. Government Works.