Chase Home Finance, LLC v. Scarpace (WI)

Summary: A mortgagee is not obliged to extend a Home Affordable Modification Program to an unqualified mortgagor.


Chase Home Finance, LLC v. Scarpace, 2013 WI App 55, 347 Wis. 2d 548, 830 N.W.2d 722 review denied, 2013 WI 87, 350 Wis. 2d 727, 838 N.W.2d 636 (2013).


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Facts: In May 2004, Vincent Scarpace borrowed $299,995 from Chase, secured by a mortgage on his home. Scarpace also signed an Escrow/Impound Payment Rider in connection with the loan that made Scarpace responsible for timely payments of all property taxes. If Scarpace failed to make timely payments, Chase reserved the option to pay the taxes, establish an escrow account and seek immediate reimbursement from Scarpace.

In 2005, Chase sent four notices of delinquency to Scarpace demanding proof that Scarpace paid the outstanding taxes and to remind him of the payment rider allowing Chase to pay the taxes and increase Scarpace’s monthly payments.  In June 2007, Chase paid the taxes and raised Scarpace’s monthly payment.

After September 2008, Scarpace stopped making monthly payments and in January 2009 Chase sent Scarpace a Notice of Intent to Foreclose. In April 2009, Scarpace and Chase entered into a Forbearance Plan Agreement ("FPA") requiring Scarpace to pay a down payment and three monthly payments after which regular payments would be reinstated along with any fees or charges. Scarpace made all necessary payments and the FPA was terminated.

In August 2009, Scarpace applied to Chase for a loan modification under the Home Affordable Modification Program ("HAMP"). If Scarpace qualified under HAMP, he would be eligible for a Trial Period Plan ("TPP"), which allowed him to make modified mortgage payments for a specified term.

In December 2009, Chase notified Scarpace that he was not qualified for a HAMP loan modification because Scarpace’s income was insufficient and his loan failed the Net Present Value test. Scarpace did not cure his default and Chase subsequently filed the foreclosure action. Scarpace counterclaimed asserting that Chase breached its duty of good faith and failed to comply with HAMP. Chase moved for summary judgment and the circuit court granted the motion.


Holding: Affirmed. On appeal, the court held that the circuit court was correct in granting Chase’s motion for summary judgment because Scarpace’s counterclaims where premised on the erroneous notion that he and Chase had a contractual relationship under HAMP. Scarface did not have a HAMP contract with Chase. Chase notified Scarpace that he was unqualified for a HAMP modification, and thus Scarpace could not establish a prima facie showing for promissory estoppel for breach of contract. The court also denied Scarpace’s contention that Chase breached its duty of good faith and fair dealings in regards to paying the property taxes without giving Scarpace notice, and for arbitrarily shortening the escrow repayment time. The court reasoned that Chase was not required by the payment rider to give Scarpace notice, and Chase had authority under federal regulations to set a repayment period for one year.


Opinion Year: 
By: ATG Underwriting Department | Posted on: Mon, 10/27/2014 - 3:59pm