Foreclosure Fraud – Lenders That Do Not Honor Loan Modifications After Full Compliance With Trial Payment Periods and Modification Terms

Are you a borrower facing foreclosure? Have you complied with the trial payment period of your loan modification and other terms of your Home Affordable Mortgage Program (“HAMP”)? Is your lender giving you the run around by not honoring the promised loan modification? If so, this article is for you.

In Bushell v. JPMorgan Chase Bank, et al., a borrower facing foreclosure engaged in loan modification negotiations with JP Morgan Chase Bank and ultimately complied with all terms of the proposed loan modification. The borrower paid all trial period payments on time, provided the lender with all the requested documentation and paperwork, and expected to avoid foreclosure and for their loan to be modified pursuant to the HAMP.

After making the first four trial period payments, the Bushell borrowers called their bank to inquire on the status of their loan modification. The bank advised them that the process was ongoing and to continue to pay the trial period payments. After making twenty six (26) payments between June 2009 to August 2011, the borrowers were advised by their bank that the investor “denied” their loan modification and the bank couldn’t accept any more payments.

Various communications ensued and the Bushell borrowers were surprised to later find out that their home was foreclosed upon and sold at a trustee sale. After suing the bank in state Court and filing an appeal on procedural grounds, the Plaintiff borrowers were successful in asserting claims of breach of contract, promissory estoppel, and other contract claims against the bank.

In sum, if a bank has promised you a loan modification and you have complied with all terms and reasonably and detrimentally relied upon the bank’s assertions, you may have state Court recourse against the bank if the bank fails to honor their promised loan modification.

If you have any questions about this opinion or find yourself dealing with a bank that is not honoring their promised loan modification please call the firm at (818) 835-5396.

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