                 FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT


PHILLIP R. CORVELLO ,                     No. 11-16234
                Plaintiff-Appellant,
                                             D.C. No.
                  v.                      3:10-cv-05072-
                                               JSW
WELLS FARGO BANK, NA, DBA
America’s Servicing Company,
DBA Wells Fargo Home Mortgage,
Inc.,
                Defendant-Appellee.



KAREN LUCIA ; JEFFREY LUCIA , on          No. 11-16242
behalf of themselves and all others
similarly situated,                          D.C. No.
                 Plaintiffs-Appellants,   3:10-cv-04749-
                                               JSW
                  v.

WELLS FARGO BANK, NA, AKA                   OPINION
Wells Fargo Home Mortgage, Inc.,
              Defendant-Appellee.


      Appeal from the United States District Court
         for the Northern District of California
       Jeffrey S. White, District Judge, Presiding
2             CORVELLO V . WELLS FARGO BANK

                   Argued and Submitted
         March 20, 2013—San Francisco, California

                       Filed August 8, 2013

        Before: Mary M. Schroeder, John T. Noonan,
           and Mary H. Murguia, Circuit Judges.

                     Per Curiam Opinion;
                 Concurrence by Judge Noonan


                           SUMMARY*


          Home Affordable Modification Program

    The panel reversed the district court’s dismissals of
diversity actions challenging the decision of Wells Fargo
Bank not to offer permanent mortgage modifications to
plaintiff borrowers.

    The panel held that under the Home Affordable
Modification Program the bank was contractually required to
offer the plaintiffs a permanent mortgage modification after
they complied with the requirements of a trial period plan
(“TPP”). The panel held that the district court should not
have dismissed the plaintiffs’ complaints when the record
before it showed that the bank had accepted and retained the
payments demanded by the TPP, but neither offered a


  *
    This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
            CORVELLO V . WELLS FARGO BANK                   3

permanent modification, nor notified plaintiffs they were not
entitled to one, as required by the terms of the TPP.

   Judge Noonan concurred in the judgment.


                        COUNSEL

Timothy G. Blood, Leslie E. Hurst (argued) and Thomas J.
O’Reardon, II, Blood Hurst & O’Reardon, LLP, San Diego,
California; Andrew S. Friedman, Elaine A. Ryan and Patricia
N. Syverson, Bonnett, Fairbourn, Friedman & Balint, P.C.,
Phoenix, Arizona; Todd D. Carpenter, Bonnett, Fairbourn,
Friedman & Balint, P.C., San Diego, California; James R.
Patterson, Patterson Law Group, San Diego, California, for
Plaintiff-Appellant Phillip R. Corvello.

Brian R. Strange, Gretchen Carpenter (argued) and Adrian R.
Bacon, Strange & Carpenter, Los Angeles, California; Hernán
Vera, Public Counsel, Los Angeles, California, for Plaintiffs-
Appellants Karen Lucia and Jeffrey Lucia.

Matthew G. Ball, K&L Gates LLP, San Francisco, California;
Irene C. Freidel (argued) and David D. Christensen, K&L
Gates LLP, Boston, Massachusetts, for Defendant-Appellee.
4            CORVELLO V . WELLS FARGO BANK

                          OPINION

PER CURIAM:

                     INTRODUCTION

    The U.S. Department of the Treasury, acting under the
direction of Congress, launched the Home Affordable
Modification Program (“HAMP”) in 2009 to help distressed
homeowners with delinquent mortgages, but the program
seems to have created more litigation than it has happy
homeowners. The issue we must decide is whether a bank
was contractually required to offer the plaintiffs a permanent
mortgage modification after they complied with the
requirements of a trial period plan (“TPP”). The district court
held the bank was not, and we reverse.

    Similar issues have arisen in both state and federal courts.
We now follow the Seventh Circuit’s leading federal
appellate decision, which came down after the district court’s
ruling in this case, to hold that the bank was required to offer
the modification. See Wigod v. Wells Fargo Bank, N.A.,
673 F.3d 547 (7th Cir. 2012). The district court should not
have dismissed the plaintiffs’ complaints when the record
before it showed that the bank had accepted and retained the
payments demanded by the TPP, but neither offered a
permanent modification, nor notified plaintiffs they were not
entitled to one, as required by the terms of the TPP.

                      BACKGROUND

   In response to the unfolding financial crisis of 2008,
Congress passed the Emergency Economic Stabilization Act,
Pub. L. No. 110-343, 122 Stat. 3765. This law included the
            CORVELLO V . WELLS FARGO BANK                  5

Troubled Asset Relief Program (“TARP”), “which required
the Secretary of the Treasury, among many other duties and
powers, to ‘implement a plan that seeks to maximize
assistance for homeowners and . . . encourage the servicers
of the underlying mortgages . . . to take advantage of . . .
available programs to minimize foreclosures.’” Wigod,
673 F.3d at 556 (quoting 12 U.S.C. § 5219(a)). Pursuant to
this instruction, the Treasury Department in 2009 started the
HAMP program to incentivize banks to refinance mortgages
of distressed homeowners so they could stay in their homes.
Home loan servicers, including Defendant-Appellee Wells
Fargo Bank, N.A. (“Wells Fargo”), signed Servicer
Participation Agreements with Treasury that entitled them to
$1,000 for each permanent modification they made, but
required them to follow Treasury guidelines and procedures.

    The process of applying for and receiving a permanent
modification plays out in several steps, as set forth in
Treasury Supplemental Directive 09-01 (“SD 09-01”), the
controlling Treasury guideline during the events leading to
this suit. First, borrowers supply information about their
finances and their inability to pay their current mortgage to
the servicer, and the servicer must evaluate whether the
borrowers qualify for a loan modification. SD 09-01. The
servicer computes modified mortgage payments on the basis
of the borrowers’ information. Id.

    For borrowers who appear eligible to participate in
HAMP, the servicer then prepares a TPP. The TPP requires
borrowers to submit documentation to confirm the accuracy
of their initial financial representations, and to make trial
payments of the modified amount to the servicer. The
servicer must use the documentation to “confirm that the
6            CORVELLO V . WELLS FARGO BANK

borrower[s]” meet the eligibility criteria for a permanent
modification. Id.

    In the step most critical to this litigation, the servicer then
must report to the borrowers the results of the eligibility
determinations. Id. If a borrower does not qualify for the
HAMP program, the servicer must not only alert the
borrower, but must consider alternatives. The servicer should
“promptly communicate that [ineligibility] determination to
the borrower in writing and consider the borrower for another
foreclosure prevention alternative.” Id. For borrowers who
have made all their payments and whose representations
remain accurate, the servicer must offer a permanent home
loan modification. Id.

    Wells Fargo never offered plaintiffs Phillip Corvello and
Karen and Jeffrey Lucia a modification. They filed separate
actions against Wells Fargo, and their cases were
consolidated. Their situations differ factually in that
Corvello’s dealings with Wells Fargo were in writing, while
the Lucias dealt with the bank by phone. They both contend
that they reached agreements with Wells Fargo whereby
Wells Fargo was required to offer them permanent mortgage
modifications if they complied with the requirements of their
trial plans, including proving their eligibility for the
permanent modification and making the trial payments. If
they did not qualify for the modification, their agreements
required Wells Fargo to alert them immediately and end the
period of trial payments. They allege that they complied with
their trial plans and made the required payments, and should
have been offered permanent modifications.

   The district court dismissed both actions under Rule
12(b)(6), so we accept the allegations of the complaints as
             CORVELLO V . WELLS FARGO BANK                    7

true. Kahle v. Gonzales, 487 F.3d 697, 699 (9th Cir. 2007).
According to Corvello’s complaint, he provided Wells Fargo
with his financial information via a financial worksheet in
June of 2009. Wells Fargo then sent him a TPP. The TPP
stated in the first line that if Corvello’s representations were
accurate and he complied with the terms of the trial plan, he
would receive a modification offer. The TPP also, and on the
same page, assured him, as it was required to do by the
applicable Treasury Directive, that the bank would tell him
one way or another on his eligibility for a modification. It
read:

       If I am in compliance with this Loan Trial
       Period and my representations in Section 1
       continue to be true in all material respects,
       then the Lender will provide me with a Loan
       Modification Agreement, as set forth in
       Section 3, that would amend and supplement
       (1) the Mortgage on the Property, and (2) the
       Note secured by the Mortgage. . . . I
       understand that after I sign and return two
       copies of this Plan to the Lender, the Lender
       will send me a signed copy of this Plan if I
       qualify for the Offer or will send me written
       notice that I do not qualify for the Offer.

    Paragraph 2F of the TPP alerted the borrower to the
obligations of the parties before there could be a permanent
modification. It required, in addition to the borrower making
the payments and maintaining the accuracy of the
representations, that the servicer provide an executed copy of
the TPP and Modification Agreement to the borrower. It
stated as follows:
8            CORVELLO V . WELLS FARGO BANK

       If prior to the Modification Effective Date, (i)
       the Lender does not provide me a fully
       executed copy of this Plan and the
       Modification Agreement; (ii) I have not made
       the Trial Period payments required under
       Section 2 of this Plan; or (iii) the Lender
       determines that my representations in Section
       1 are no longer true and correct, the Loan
       Documents will not be modified and this Plan
       will terminate.

Paragraph 2G of the TPP stated that no modification would
take effect until the borrower received a signed copy of the
Modification Agreement. It read as follows:

       I understand that the Plan is not a
       modification of the Loan Documents and that
       the Loan Documents will not be modified
       unless and until (i) I meet all of the conditions
       required for modification, (ii) I receive a fully
       executed copy of a Modification Agreement,
       and (iii) the Modification Effective Date has
       passed. . . .

    After Corvello signed and returned the TPP, and despite
the notification representation on the first page of the TPP,
Wells Fargo, according to the complaint, never told Corvello
whether he qualified for a modification. Corvello alleges he
complied with the TPP’s terms, and made all three payments
on time. Wells Fargo still never offered him a permanent
modification, nor did it notify him that he did not qualify. He
seeks the permanent modification offer allegedly due him
under the TPP agreement, and damages for the payments he
made to Wells Fargo.
             CORVELLO V . WELLS FARGO BANK                   9

    The Lucias’ interaction with Wells Fargo was materially
similar to Corvello’s experience. They allege that Wells
Fargo offered them a trial plan, with the promise of a
permanent modification if they fully complied. They made
all of the required payments and submitted the documents
requested by Wells Fargo. Despite performance of their
obligations under the TPP, they, like Corvello, claim Wells
Fargo neither offered them a permanent modification, nor
alerted them that they were ineligible for a modification.
Instead, Wells Fargo foreclosed on their home and sold it.
Their complaint seeks rescission of the foreclosure, an offer
of permanent modification, and damages.

    The plaintiffs filed their complaints in United States
District Court for the Northern District of California,
invoking that court’s diversity jurisdiction and seeking to
apply California law. Their complaints alleged that because
they complied with the obligations of their TPPs by
submitting accurate documentation and making trial
payments, there was an enforceable contract that bound the
servicer, Wells Fargo, to offer permanent modifications.

    The district court concluded that accepting the plaintiffs’
allegations as true, the language of the TPP could not support
a contract for a permanent loan modification. The court
relied on Paragraph 2G of the TPP, which stated that the loan
would not be modified “unless and until” the borrower
received a “fully executed copy of a Modification
Agreement.” It concluded that under that provision, the
bank’s promise to offer a permanent modification was
conditioned on the bank’s sending the plaintiffs a signed
Modification Agreement. Because the bank did not send the
plaintiffs a signed Modification Agreement, the district court
10           CORVELLO V . WELLS FARGO BANK

ruled that the bank was not required to offer a permanent
modification, and dismissed the claims for breach of contract.

     Plaintiffs also alleged claims of promissory estoppel,
breaches of the covenant of good faith and fair dealing, and
violations of California’s Unfair Competition Law, Cal. Bus.
& Prof. Code §§ 17200, et seq., and the Lucias further alleged
a violation of the Rosenthal Fair Debt Collection Practices
Act, Cal. Civ. Code § 1788.17. Because all these claims
depended on a promise by the bank to offer a permanent
modification if the plaintiffs met the conditions of the TPP,
the district court dismissed them as well, and without leave to
amend. Both Corvello and the Lucias appeal the dismissal of
all the claims.

                       DISCUSSION

    The issue we must decide is whether the bank was
contractually obligated under the terms of the TPP to offer a
permanent modification to borrowers who complied with the
TPP by submitting accurate documentation and making trial
payments. State and federal courts have dealt with similar
issues, in similar factual circumstances, in a number of cases.
See Sutcliffe v. Wells Fargo Bank, N.A., 283 F.R.D. 533,
549–50 (N.D. Cal. 2012) (collecting cases).

    The leading case on the contractual obligations of banks
under TPP agreements is the Seventh Circuit’s decision in
Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547 (7th Cir.
2012). That court held that banks were required to offer
permanent modifications to borrowers who completed their
obligations under the TPPs, unless the banks timely notified
those borrowers that they did not qualify for a HAMP
modification. Id. at 562–63. Other courts have since
             CORVELLO V . WELLS FARGO BANK                  11

followed the reasoning of Wigod. See, e.g., Young v. Wells
Fargo Bank, N.A., No. 12-1405, 2013 WL 2165262, at *6 (1st
Cir. May 21, 2013); Sutcliffe, 283 F.R.D. at 549–52; West v.
JPMorgan Chase Bank, N.A., 154 Cal. Rptr. 3d 285, 299 (Ct.
App. 2013).

    The Seventh Circuit in Wigod rejected the very
proposition that Wells Fargo asserts here, and which the
district court accepted when it concluded that there was no
contract. Wells Fargo contends, as it did in Wigod, that
Paragraph 2G of the TPP means there can be no contract
unless the servicer sends the borrower a signed Modification
Agreement. It points to the language in 2G stating that “the
Loan Documents will not be modified unless and until . . . (ii)
[the borrower] receive[s] a fully executed copy of a
Modification Agreement.”

    The Seventh Circuit rejected Wells Fargo’s position
because it made the existence of any obligation conditional
solely on action of the bank, and conflicted with other
provisions of the TPP, including the bank’s promise to send
the borrower a Modification Agreement if the borrower
complied with the obligations under the TPP and the
borrower’s representations continued to be true. Wigod,
673 F.3d at 563. Wells Fargo’s interpretation of the TPP was
suspect because it allowed banks to avoid their obligations to
borrowers merely by choosing not to send a signed
Modification Agreement, even though the borrowers made
both accurate representations and the required payments. As
the Seventh Circuit put it, Wells Fargo’s interpretation would
allow it to “simply refuse to send the Modification
Agreement for any reason whatsoever—interest rates went
up, the economy soured, it just didn’t like [the
12           CORVELLO V . WELLS FARGO BANK

Borrower]—and there would still be no breach . . . turn[ing]
an otherwise straightforward offer into an illusion.” Id.

    We believe the reasoning in Wigod is sound. Paragraph
2G cannot convert a purported agreement setting forth clear
obligations into a decision left to the unfettered discretion of
the loan servicer. The more natural and fair interpretation of
the TPP is that the servicer must send a signed Modification
Agreement offering to modify the loan once borrowers meet
their end of the bargain. Under Paragraph 2G of the TPP,
there could be no actual mortgage modification until all the
requirements were met, but the servicer could not unilaterally
and without justification refuse to send the offer. As the
Seventh Circuit stated in Wigod, the modification was not
complete until all of the conditions were met, “but under
paragraph 1 and section 3 of the TPP, Wells Fargo still had an
obligation to offer [the borrower] a permanent modification
once [the borrower] satisfied all [] obligations under the
agreement.” Id. (emphasis in original). This interpretation of
the TPP avoids the injustice that would result were Wells
Fargo’s position accepted and Wells Fargo allowed to keep
borrowers’ trial payments without fulfilling any obligations
in return. The TPP does not contemplate such an unfair
result.

    The Seventh Circuit in Wigod was applying Illinois
contract law, and we deal with California law. There is now
no material difference. In West, 154 Cal. Rptr. 3d at 299, the
California Court of Appeal expressly adopted the reasoning
of Wigod and concluded that the trial plan agreement in that
case authorized banks, before offering a modification, to
evaluate only whether borrowers had complied with the
agreement’s terms and whether their representations
remained true. Once the bank determined that a borrower had
             CORVELLO V . WELLS FARGO BANK                  13

complied and the representations were still true, then the bank
was required by the agreement to offer a permanent
modification. Id.

     Wells Fargo contends, however, that West is not
controlling because it is not a California Supreme Court
decision and there is a conflict in the California Courts of
Appeal. Wells Fargo cites Nungaray v. Litton Loan
Servicing, LP, 135 Cal. Rptr. 3d 442 (Ct. App. 2011), as
proof of this conflict, but Nungaray does not apply because
the borrowers there had failed to submit the documents
required by the TPP. Id. at 447 (the bank never “receive[d]
the Nungarays’ complete financial information, despite
sending the Nungarays’ counsel three letters requesting the
information and returning one of the Nungarays’ payments
for lack of accompanying financial information.”). Where, as
here, borrowers allege, and we must assume, that they have
fulfilled all of their obligations under the TPP, and the loan
servicer has failed to offer a permanent modification, the
borrowers have valid claims for breach of the TPP agreement.
West, 154 Cal. Rptr. 3d at 299 (“Applying Wigod to this case,
‘[a]lthough [Chase Bank] may have had some limited
discretion to set the precise terms of an offered permanent
modification, it was certainly required to offer some sort of
good-faith permanent modification to [West] consistent with
HAMP guidelines. It has offered none.’” (quoting Wigod,
673 F.3d at 565)).

    Wells Fargo also contends that Wigod is materially
distinguishable, pointing to Paragraph 2F in the TPPs which
states, among other things, that the trial plan will end if the
borrower does not receive a signed copy of the TPP. In
Wigod the bank actually sent the plaintiffs a signed copy of
the TPP.
14           CORVELLO V . WELLS FARGO BANK

    Wigod’s holding, however, does not turn on that fact, but
instead on the bank’s failure to tell the borrowers that they
did not qualify. The TPP gives the bank a chance, after
borrowers submit the completed TPP, to notify them if they
do not qualify. “Under the terms of the TPP Agreement,
then, that moment [when Wells Fargo received the
borrower’s TPP] was Wells Fargo’s opportunity to determine
whether [the borrower] qualified. If [the borrower] did not,
it could have and should have denied [the borrower] a
modification on that basis.” Wigod, 673 F.3d at 562. This
notification obligation is also set out in the applicable
Treasury Directive. If after receiving the TPP the bank
determines that a borrower is not eligible for a modification,
the bank should “promptly communicate that determination
to the borrower in writing and consider the borrower for
another foreclosure prevention alternative.” SD 09-01. Wells
Fargo’s own failure to fulfill the notification obligation does
not deprive plaintiffs of the benefits of their agreement.

     Wells Fargo separately contends that the Lucias’ breach
of contract claim cannot survive the statute of frauds because
it is an oral agreement to modify a mortgage. The Lucias,
however, have alleged full performance of their obligations
under the contract. They therefore may enforce the remaining
promises. See Secrest v. Sec. Nat’l Mortg. Loan Trust
2002-2, 84 Cal. Rptr. 3d 275, 284–85 (Ct. App. 2008).

    The Lucias’ complaint also contains a claim for violation
of California’s Rosenthal Act, Cal. Civ. Code § 1788.17, the
state’s version of the federal Fair Debt Collection Practices
Act, 15 U.S.C. §§ 1692e, 1692f. Wells Fargo concedes it is
a debt collector under the meaning of the Rosenthal Act.
Wells Fargo contends, however, that it was not engaged in
debt collection activities when it offered the TPP with its
             CORVELLO V . WELLS FARGO BANK                   15

concomitant demand for trial payments. The district court,
while dismissing the claim on other grounds, correctly
recognized that Wells Fargo was engaged in debt collection.
The TPP was more than an informational circulation. This is
the same conclusion reached by other district courts. See In
re Bank of Am. Home Affordable Modification Program
(HAMP) Contract Litig., No. 10-MD-02193-RWZ, 2011 WL
2637222, at *6 (D. Mass. July 6, 2011); cf. Reyes v. Wells
Fargo Bank, N.A., No. C-10-01667JCS, 2011 WL 30759, at
*20 (N.D. Cal. Jan. 3, 2011).

    As a final matter, we must reiterate that the district court
granted Wells Fargo’s motion to dismiss the complaints
under Rule 12(b)(6), so we therefore must accept the
allegations of the complaints. In oral argument, Wells Fargo
indicated that it did in fact determine that the plaintiffs were
not qualified, and thus followed Treasury guidelines in
choosing not to offer them permanent modifications. SD 09-
01. We are unable to consider any such factual assertion on
this record and at this stage of the proceedings. We are in the
same position as the Seventh Circuit when it posited that
Wells Fargo would offer this sort of defense, and similarly
concluded that such a defense “presents a factual dispute that
cannot be resolved [at the motion to dismiss stage].” Wigod,
673 F.3d at 579. We therefore must reverse the judgment and
remand the case for further proceedings.

                      CONCLUSION

   The district court’s judgment granting Wells Fargo’s
motion to dismiss is REVERSED and REMANDED.
16          CORVELLO V . WELLS FARGO BANK

NOONAN, Circuit Judge, concurring:

    Read as a whole the TPP between Corvello and Wells
Fargo makes no sense. It is self-contradictory. Page one
promised Corvello in two places that if his representations
were accurate and if he were in compliance with the Trial
Period Plan, the Lender “would provide” him “with a Loan
Modification Agreement.” Paragraph 2G stated: “the Loan
Documents will not be modified unless and until (i) I meet all
of the conditions required for modification; (ii) I receive a
fully executed copy of a Modification Agreement and (iii) the
Modification Effective Date has passed.”

     Wells Fargo drafted this document, and Wells Fargo must
be held responsible for it. The document promises a
substantial benefit to Corvello if he meets its terms. The
document then makes these benefits illusory because they
depend entirely on the will of Wells Fargo. To say, “I give
$100 for your watch but I will decide whether I pay you
$100” is not to make a contract but to engage in a flim-flam
or, in plain words, to work a fraud. You promise so that the
other will perform. You reserve your promise so that the
promise is empty while you have gotten what you wanted
from the promisee.

    No purpose was served by the document Wells Fargo
prepared except the fraudulent purpose of inducing Corvello
to make the payments while the bank retained the option of
modifying the loan or stiffing him. “Heads I win, tails you
lose” is a fraudulent coin toss. Wells Fargo did no better.

   According to the Lucias’ complaint, their dealings with
Wells Fargo were oral. Ms. Lucia “was interviewed by phone
and pre-approved for the [HAMP loan] modification.” She
            CORVELLO V . WELLS FARGO BANK                  17

was informed that if she and her husband “sent in all the
required documents and made all their payments on time,
their reduced monthly payment would become permanent.”
The Lucias allege that they made their “trial period plan
payments as scheduled.” The bank foreclosed. These
allegations are sufficient to make the Lucias’ position
analogous to Corvello’s.

    Confined as we are to the pleadings before us, I concur in
the judgment of the court.
