The U.S. Court of Appeals for the Fifth Circuit recently reversed a trial court’s judgment in favor of a mortgage servicer ruling that the servicer had violated its obligations under a Trial Period Plan in connection with a proposed loan modification when the servicer failed to offer a permanent loan modification after the borrower made payments in compliance with the “grace period” provisions of the TPP.
Posts tagged as “loan modification”
The Illinois Court of Appeals for the First District recently held a bank was not justified in relying on borrowers’ misrepresentations made during a loan modification process, where the borrowers’ prior conduct presented the bank with reason to follow up on the borrowers’ misrepresentations, and the misrepresentations would not have been hard to discover.
The Court of Appeal of the State of California, Second Appellate District, recently held that an alleged oral agreement to refinance a home equity loan is subject to the statute of frauds and is unenforceable.
The Court of Appeal for the Third District of California recently affirmed in part, and reversed in part, an order granting a mortgage servicer’s motion to dismiss several causes of action brought by plaintiff borrowers for denying their requests to modify their mortgage loan. The appellate court affirmed the dismissal as to the borrowers’ counts for breach of contract, negligence, and intentional infliction of emotional distress. However, it also held that the borrowers stated a valid cause of action under California’s Homeowner Bill of Rights, section 2923.6, and reversed as to that claim. Specifically, the appellate court concluded that the servicer’s…
Disagreeing with contrary rulings from the First and Sixth Districts, the California Court of Appeal for the Second District recently affirmed a trial court’s ruling that no duty of care is owed to a borrower during contract negotiations for a mortgage loan modification. A copy of the opinion in Sheen v. Wells Fargo Bank, N.A. is available at: Link to Opinion. In 1998, the plaintiff borrower obtained a $500,000 loan secured by a deed of trust (the “first loan”). The first loan is not at issue. In 2005, the borrower obtained two junior loans from the defendant bank in the amounts $167,820 (the…
The Court of Appeal of the State of California, First Appellate District, recently held that California Civil Code § 2924c permits a borrower to reinstate a modified home mortgage loan by paying only the past due modified payments and associated fees and charges, and that a servicer cannot lawfully condition reinstatement of a loan on the payment of amounts that were deferred in the loan modification. In so ruling, the Appellate Court rejected the servicer’s argument that the loan modification agreement allowed it to nullify the modification upon the borrower’s default and to require payment of the earlier default according…
Adding to the growing split of authority among California’s various state appellate courts, and among various federal courts in California, the Court of Appeal of the State of California, Third Appellate District, recently held that a loan servicer may owe a duty of care to a borrower through application of the “Biakanja” factors, even though its involvement in the loan does not exceed its conventional role. In so ruling, the Third District “assumed without deciding” that California Civil Code § 2923.6(g) offers an affirmative defense to a negligence claim in loan modification cases where the borrower submits multiple loan modification…
The Supreme Court of New Jersey reversed the decision of the Appellate Court, and held that a settlement that a borrower and a lender reached during mediation pursuant to the Residential Mortgage Foreclosure Mediation Program was enforceable because the borrower fulfilled all contingent terms making the agreement permanent. A copy of the opinion is available at: Link to Opinion. The borrower obtained a home mortgage loan from the lender (“bank”). In 2006, the borrower defaulted on her loan. The bank filed a foreclosure complaint in chancery court. In August 2007, the bank obtained a final judgment in the foreclosure action. In 2010,…
The U.S. Court of Appeals for the First Circuit recently held that a borrower cannot invoke the discovery rule to assert an otherwise untimely Massachusetts UDAAP claim (Chapter 93A) relating to a loan modification agreement, because the alleged harm was not “inherently unknowable” at the time of its occurrence. In so ruling, the Court determined that the borrower knew he was required to make monthly payments when he signed the loan modification agreement. Therefore, the statute of limitations began to run when the borrower stopped making payments, not when the creditor provided notice of the default. A copy of the opinion…
The U.S. Court of Appeals for the Eighth Circuit recently reversed the dismissal of a borrower’s lawsuit against his mortgagee for failing to restore his title after a non-judicial foreclosure and subsequent execution of a loan modification agreement, holding that the borrower’s claims were not time-barred and accrued only when he tried to sell the home more than five years after the modification agreement. A copy of the opinion in White v. CitiMortgage, Inc. is available at: Link to Opinion. A borrower refinanced his home mortgage loan in 2003, and defaulted in 2008. The loan servicer gave the borrower notice and…
The Court of Appeal of the State of California, Third Appellate District, recently held that a mortgage servicer violated California’s Homeowner Bill of Rights (HBOR), Civ. Code § 2923.6(d), when it sent a borrower a loan modification denial letter stating that the homeowner had only 15 days to appeal the denial. In so ruling, the Appellate Court held that the servicer’s denial letter was a material violation of section 2923.6, and therefore the homeowner alleged a valid cause of action for injunctive relief under section 2924.12. A copy of the opinion in Berman v. HSBC Bank USA, N.A is available…
The Court of Appeal of California, Second District, recently held the dismissal of a borrower’s breach of contract claim in a prior lawsuit did not bar a claim in a subsequent lawsuit for violation of the federal Truth in Lending Act, 15 U.S.C. § 1601, et seq., even if the breach of contract and TILA claims were based on the same set of underlying facts, because the right to full disclosures under TILA was a distinct primary right from the common law rights in contract. However, although the Appellate Court determined that the dismissal based on the doctrines of res…