BAYVIEW LOAN SERVICING v. BAXTER

Citation: 2023 OK CIV APP 12Docket: 2023 OK CIV APP 12 530 P.3d 89

Court: Court of Civil Appeals of Oklahoma; March 24, 2023; Oklahoma; State Appellate Court

Original Court Document: View Document

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In the case of Bayview Loan Servicing v. Baxter, the Oklahoma Court of Civil Appeals vacated and remanded a summary judgment from the district court that granted foreclosure in favor of Bayview Loan Servicing, LLC. The appeal was brought by Bryan and Amanda Baxter, who contested the summary judgment, asserting that material questions of fact existed regarding an equitable defense against foreclosure.

The background reveals that Anna Tippie originally executed a mortgage in 1994, which was later assumed by Iva Baxter after her purchase from Tippie's estate in 2010. Bryan Baxter claims an interest in the property as Iva's sole heir. After Iva's death in 2012, payments on the mortgage ceased. A foreclosure petition was filed by Bank of America in 2014, asserting that the note was accelerated and a remaining principal of $19,025.79 was due.

The Baxters raised affirmative defenses, arguing that Bank of America failed to consider them for federally mandated foreclosure alternatives. In 2016, Bayview, which had acquired the mortgage from Bank of America, moved for summary judgment. The Baxters objected, providing an affidavit detailing their attempts to modify the loan after Iva's death. They claimed they were advised by Bank of America to default to qualify for a loan modification but received no communication regarding their application until the foreclosure proceedings were initiated.

The court found that the Baxters’ claims about their interactions with Bank of America and the lack of communication constituted material facts that warranted further examination, thus necessitating a remand for additional proceedings.

Amanda communicated multiple times with Mr. Kazinski regarding a new program, only to be informed that it was not yet active. On May 2, 2016, Bayview filed a motion for summary judgment, which was never ruled upon, as Bayview focused on negotiating a modification with the Baxters. In February 2019, Bayview withdrew the 2016 motion and submitted a new one. The Baxters responded with affidavits detailing their attempts to modify their mortgage, which involved multiple asset managers, resulting in confusion regarding their applications. They alleged that Bayview frequently deemed their applications incomplete without specifying the reasons or required additional information. When asset managers changed, earlier applications were reportedly lost or improperly submitted, despite Bayview providing the forms.

One asset manager, Ms. Goodell, notified the Baxters that their application was approved and required them to make three monthly 'good faith' payments of $660.31, initially communicated orally and later confirmed in a letter dated October 17, 2017. This letter outlined a Trial Period Plan aimed at qualifying for a permanent mortgage modification, with details on interest rates, principal deferral, and payment conditions. The Baxters responded on October 28, 2017, accepting the modification terms, with a first trial payment due December 1, 2017. They confirmed making all required payments, which Bayview acknowledged in two letters stating that the loan would be processed for permanent modification.

Communication will occur every fifteen days until the necessary paperwork is sent. The Baxters must continue making monthly trial payments to avoid delays in their modification process. They were informed by Bayview that a title evaluation and insurance in their name were required, which they completed. Ms. Goodell indicated that the Baxters were nearing closing on the assumption in early 2018, but after March, they were unable to contact her and learned she no longer worked for Bayview. The new asset manager found no assumption documentation and instructed them to restart the process, sending a new form for a modification instead. In April 2018, the Baxters received a denial letter for a Freddie Mac modification, claiming they did not accept an offer for a foreclosure alternative, which they disputed. Bayview did not contest this but argued that neither Bank of America's actions nor its own provided a defense to foreclosure, citing case law that indicated no violation of HAMP rules could serve as a defense in Oklahoma. They also contended that the modification offer was made to the deceased Iva Baxter and therefore could not be accepted by the Baxters. In February 2020, oral arguments were heard, and in April 2020, the district court granted summary judgment to Bayview. The Baxters appealed. 

The standard of review for summary judgment is de novo, affirming only if there are no material fact disputes and the moving party is entitled to judgment as a legal matter. Bayview's argument centered on whether the Baxters could defend against foreclosure based on Bayview's failure to comply with federal mortgage modification programs, to which the court concluded the answer is 'no.' Federal programs do not grant personal rights to modifications, but a promise of modification may create enforceable rights under state law. The Baxters claimed Bayview had made an unqualified offer to modify the loan, which they accepted and were prepared to perform, establishing private contractual rights under state law.

Wigod v. Wells Fargo Bank, 673 F.3d 547 (7th Cir. 2012), serves as a precedent affirming that an enforceable contract for loan modification can arise from a Trial Period Plan (TPP) under Illinois law, which parallels Oklahoma law. The court determined that Wells Fargo's commitment in the TPP to grant a permanent modification contingent upon the borrower's compliance with specific conditions constituted a contractual obligation. Wigod claimed to have satisfied these conditions but was denied the permanent modification, leading to a ruling that recognized a contractual relationship between the borrower and servicer based on state law.

Furthermore, the court acknowledged the potential for a promissory estoppel claim, stressing that a lack of a private right of action under federal law does not preclude state law claims that reference federal law elements. In a comparable case, Young v. Wells Fargo Bank, 717 F.3d 224 (1st Cir. 2013), the court found that the lender's assurances regarding the Modification Agreement established a contract under Massachusetts law, thus reinforcing the principle that actions taken during loan modification attempts could support state law claims, regardless of federal law violations.

The core conclusion drawn is that a borrower may invoke a state-law right to a modification agreement as a defense in foreclosure actions, as these proceedings, while legally grounded, are equitable in nature. This allows for equitable defenses to be raised, with courts having the discretion to refuse acceleration of a note based on equitable considerations. General estoppel principles are applicable in these foreclosure actions as well.

An enforceable right to modification under state law may serve as an equitable defense to foreclosure in Oklahoma. In this case, Bayview argued that its and its predecessor's actions prior to and following the acceleration of the loan were irrelevant, asserting that foreclosure could proceed regardless of any modifications accepted by the Baxters. The trial court agreed and granted summary judgment against the Baxters. However, the Baxters presented evidence of an agreement or enforceable promise to modify the note, raising a material factual question regarding their defense to foreclosure. Consequently, the trial court's ruling was found to be inappropriate. The record, viewed favorably towards the Baxters, indicated potential defenses based on their rights to modify. The summary judgment was vacated, and the case was remanded for further proceedings. Judges Fischer and Wiseman concurred.