## Facts

- Jerry and Fran Vance had a residential mortgage loan serviced by Wells Fargo Bank, N.A.
- The Vances became delinquent on their mortgage payments.
- The Vances submitted a loan-modification package to Wells Fargo seeking loss-mitigation relief.
- The submission did not qualify as a “complete loss-mitigation application” under 12 C.F.R. § 1024.41.
- Wells Fargo initiated foreclosure proceedings after the default.
- The Vances sued alleging violations of RESPA based on Regulation X, including 12 C.F.R. § 1024.39 (early intervention/live-contact requirements) and 12 C.F.R. § 1024.41 (loss-mitigation procedures).
- The Vances also asserted a Virginia claim for breach of the implied covenant of good faith and fair dealing, without alleging breach of any specific term of the note or deed of trust.
- Wells Fargo moved to dismiss under Rule 12(b)(6).

## Issues

1. Whether borrowers have a private right of action under RESPA to sue a mortgage servicer for alleged violations of 12 C.F.R. § 1024.39.
2. Whether a borrower states a claim under 12 C.F.R. § 1024.41 without plausibly alleging submission of a “complete loss-mitigation application.”
3. Whether Virginia law recognizes an independent claim for breach of the implied covenant of good faith and fair dealing absent breach of an express contractual term.

## Decision

- The court granted Wells Fargo’s Rule 12(b)(6) motion and dismissed all claims.
- The court held there is no private right of action to enforce 12 C.F.R. § 1024.39 through RESPA’s civil-liability provision.
- The court dismissed the § 1024.41 claim because the complaint did not plausibly allege submission of a complete loss-mitigation application, a prerequisite to the regulation’s duties.
- The court dismissed the implied-covenant claim because Virginia does not permit it as a standalone cause of action without an alleged breach of an express contract term.

## Legal Principles

- RESPA’s private civil-liability provision (12 U.S.C. § 2605(f)) does not authorize borrower suits for every Regulation X servicing requirement; a regulation is privately enforceable only where Congress and the implementing rules make it so.
- A servicer’s obligations under 12 C.F.R. § 1024.41 are triggered only upon receipt of a “complete loss-mitigation application”; absent that predicate, alleged failures to evaluate or provide notices do not state a claim.
- Under Virginia law, the implied covenant of good faith and fair dealing is a rule of contract construction and cannot be used to impose duties not found in the contract; it does not support an independent claim without breach of an express contractual provision.

## Conclusion

The court dismissed the borrowers’ RESPA claims because the early-intervention rule cited was not privately enforceable and the loss-mitigation rule was not triggered without a complete application, and it dismissed the Virginia implied-covenant claim because no breach of an express loan term was pleaded.


Vance v. Wells Fargo Bank, N.A., 291 F. Supp. 3d 769 (W.D. Va. 2018)