Because we've been following the housing crisis since the beginning--and representing people who have fallen victim to it--we have written a lot about lawsuits seeking to enforce the Home Affordable Modification Program. This federal program was denounced in the media as not working, but in the opinion of Vincent Howard and our Riverside County foreclosure defense attorneys, it was always doomed because it created no way for borrowers to enforce their rights via litigation. A series of cases in the federal appeals courts have held that HAMP itself creates no private right of action for borrowers, and there have been mixed results on state-law claims such as breach of contract. That's why we were interested to see a partial victory for a Massachusetts borrower in Young v. Wells Fargo Bank, a First U.S. Circuit Court of Appeals case.
Young refinanced her house in September of 2006, receiving a variable-interest loan with a starting rate of 7.8 percent. In 2008, she fell behind due to the death of her father and recession-related troubles. A payment she made to catch up in August 2008 was rejected; Wells Fargo told her it intended to foreclose. She negotiated with the bank for a week and sent $5,628.42, which Wells Fargo told her would trigger a forbearance agreement, but no agreement arrived and Wells Fargo later said there was no such agreement. After she called again, the bank did send an agreement, which she signed even though it actually increased her monthly mortgage payments.
By April 2009, she couldn't sustain these payments and hired a lawyer to help her get a loan modification. Wells Fargo offered her a HAMP loan modification in the fall, and she made all the payments in the three-month trial period. Nonetheless, Wells Fargo denied Young a permanent loan modification in January 2010, claiming her payments had been late. After her attorney called Wells Fargo, it said this letter was in error and she would be getting a permanent modification, but no such letter arrived. She received the permanent modification offer in June 2010 (five months after it had been promised), but it increased her monthly payment by $300. She declined to sign it and eventually filed suit. After the complaint was dismissed, Young appealed.
Young first appealed the dismissal of her allegations that Wells Fargo breached the HAMP trial agreement contract by increasing her payments. The First Circuit disagreed, saying the trial agreement didn't guarantee that the permanent modification wouldn't see an increase. Young had more luck with her allegation that the bank breached the contract by failing to timely offer a permanent loan modification. The language of the contract assumes the permanent workout would be offered at the end of the trial one, the court noted, and any contradictory language only makes the contract ambiguous. Thus, it reversed dismissal of that part of Young's complaint. It upheld dismissal of various other counts, but reversed again on her state-law unfair debt collection allegation, as well as the complaint for equitable relief. The case was then remanded.
This is a long opinion, but that's because the facts in it deserve to be aired. The shoddy treatment Young received is, in the experience of Vincent Howard and our Anaheim foreclosure defense lawyers, often typical of the way borrowers were treated when they applied for HAMP modifications. We have come to believe that these "miscommunications" and delays were usually intentional behavior by loan servicers that stood to make money by driving borrowers into foreclosure. By delaying and denying help to people with strained budgets, servicers can often create more late fees and servicing fees--and they had no interest in the underlying loan, so nothing to lose. And because HAMP failed to build in servicer accountability, this was often declared legal. Vincent Howard and our Chino foreclosure defense attorneys are proud to represent Californians fighting to enforce HAMP agreements and basic fair dealing with their loan servicers.
If you have been denied a loan modification for no good reason, or been given the runaround when you applied, don't wait to call Howard Law, P.C. to discuss your legal options. You can send us an email or call 1-800-872-5925 today.