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4th Cir.: Wesker v. Bank of America- Failure to State Claims following Denial of Mortgage Modification Application

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By Ed Boltz, 20 December, 2024

Summary:

The Fourth Circuit Court of Appeals affirmed the district court’s dismissal of Mark and Natasha Wesker’s claims against Bank of America. The Weskers alleged the bank mishandled their application for a modification of their home equity line of credit, leading to financial harm and damage to their credit score.

The Weskers asserted the following claims against Bank of America:

  • Professional negligence and negligent misrepresentation
  • Detrimental reliance
  • Fair Credit Reporting Act (FCRA) violations (negligent and willful)
  • Maryland Consumer Protection Act (MCPA) violation
  • Tort Claims (Negligence and Misrepresentation):

The court held that under Maryland law, a bank owes no duty of care in handling loan modification applications unless there is contractual privity or "special circumstances." Here, the Weskers failed to establish either because neither the line of credit contract imposed  any modification obligations on Bank of America nor did Bank of America  provide any extraordinary services or derive abnormal benefits. As to detrimental reliance, the Weskers failed to allege any "clear and definite" promises made by the bank that could support their claim.  Bank of America's reporting of the Weskers’ delinquency and charge-off to credit agencies was found to be accurate, with  no basis to challenge the completeness or accuracy of the reporting under the FCRA. The Weskers’ allegations also did not meet the heightened pleading standard for fraud under Rule 9(b), which was required for a deceptive practices claim under tort and the MCPA. 

Commentary:

For other cases related to when a mortgage lender can and cannot be held liable,  see:

  • Bankr. E.D.N.C.: In re Alvarez
  • Bankr. E.D.N.C.: McClendon v. Walter Home Mortgage
  • Bankr. M.D.N.C.: Rutledge v. Wells Fargo Bank, N.A.

 

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To read a copy of the transcript, please see:

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