## Facts

- After the 2008 housing downturn, the federal government implemented HAMP to reduce foreclosures.
- In 2009, Wells Fargo offered Lori Wigod a four-month HAMP Trial Period Plan (TPP) stating that if she complied with the TPP and qualified under HAMP guidelines, Wells Fargo would provide a permanent loan modification.
- Wigod alleged she qualified and fully performed by making all trial payments and providing all requested documentation.
- Wells Fargo allegedly denied a permanent modification after a second eligibility review, purportedly based on an erroneous property-tax calculation and without disclosing the basis at the time.
- Wigod alleged Wells Fargo’s communications led her to believe a permanent modification would follow, causing her to continue making payments and forgo other foreclosure-avoidance options.
- Wigod filed a putative class action asserting Illinois claims, including breach of contract, promissory estoppel, fraud-based claims, negligence-based claims, and a claim under the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA).
- The district court dismissed all claims under Rule 12(b)(6), reasoning that they were impermissible attempts to enforce HAMP, which provides no private right of action.

## Issues

1. Whether a borrower may pursue Illinois contract, promissory estoppel, fraud, and ICFA claims based on a signed HAMP TPP and related servicing conduct.
2. Whether HAMP’s lack of a private federal right of action, or federal preemption/conflict principles, bars otherwise valid state-law claims arising in the HAMP context.
3. Whether Illinois’s economic loss doctrine bars negligence-based claims seeking purely economic damages from a mortgage servicer.
4. Whether a fraudulent concealment claim is viable absent a fiduciary or other duty to disclose.

## Decision

- Reversed in part, affirmed in part, and remanded.
- Reinstated claims for breach of contract, promissory estoppel, fraudulent misrepresentation, and ICFA violations.
- Affirmed dismissal of negligent hiring/supervision and negligent misrepresentation/concealment as barred by Illinois’s economic loss doctrine.
- Affirmed dismissal of fraudulent concealment for failure to plead a duty to disclose.
- Held that HAMP creates no private federal cause of action, but that this does not preclude independent state-law claims based on the servicer’s own promises and representations.

## Legal Principles

- The absence of a federal private right of action under a federal program does not, by itself, bar state-law claims that seek to enforce independent contractual promises or to remedy deceptive practices.
- A HAMP TPP may constitute an enforceable contract under state law when the borrower plausibly alleges offer, acceptance, consideration (including trial payments and required disclosures), performance, and breach.
- Promissory estoppel may be stated where a borrower plausibly alleges a clear promise, reasonable reliance (including foregoing alternatives), and resulting detriment.
- Fraud-based and consumer-fraud claims may proceed at the pleading stage when the borrower plausibly alleges misleading statements or deceptive conduct inducing trial payments and disclosures, followed by denial inconsistent with the promised process.
- Illinois’s economic loss doctrine generally bars negligence claims seeking purely economic damages arising from a contractual relationship, absent an applicable exception.
- Fraudulent concealment generally requires a duty to disclose; absent a fiduciary or other special relationship creating such a duty, concealment claims fail.

## Conclusion

The Seventh Circuit held that a borrower’s state-law contract and consumer-fraud claims based on a signed HAMP Trial Period Plan and related representations may proceed even though HAMP provides no private federal right of action, while negligence-based claims seeking only economic loss and concealment claims lacking a duty to disclose were properly dismissed.


Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547 (7th Cir. 2012)