Lender Modification Practices Under Increasing Scrutiny

By Marc Dann

Homeowners who were promised permanent loan modifications by Wells Fargo if they made three lender approved trial payments were granted the right to prosecute their case by the Federal Court of Appeals for the 9th Circuit. While the case, like our Hlavsa v. Bank of America case which is being prosecuted as a multidistrict case in Boston, In Corvello v. Wells Fargo the court held that a narrow group of homeowners who were parties to a written Trial Payment Plan agreement that most major servicers used in their HAMP modification programs during 2009 and 2010 were entitled to pursue their claim of entitlement to a permanent modification on the same terms.

While this holding is limited to a narrow group of homeowners, any one who had been approved for a trial modification, made the payments and then were denied a permanent modification should consult with counsel to determine whether or not they may have claims. Homeowners who are currently in judicial foreclosure may be able to raise such claims by way of a counterclaim.

In addition to those who were promised modifications and made trial payments in good faith, millions of other homeowners have been victimized by deceptive practices by mortgage loan servicers underwriting loan modifications over the past 5 years. The conduct of lenders who undertake to modify loans under federal incentive programs like HAMP and internally has at best been negligent and in many cases we’ve reviewed been fraudulent.

We’ve learned through discovery in our cases of a variety of perverse incentives for loan servicers to keep homeowners in default for longer to the detriment of both borrower and the bondholders and GSEs who the Loan Servicers allegedly are working for.

If you have tried in good faith to apply for loan modification and been denied that might also be worth a look by a lawyer versed in consumer law issues.

Marc Dann, a former Ohio Attorney General is a partner in The Dann Law Firms, which include the Ohio Law Firm of Dann, Doberdruk & Harshman, the Oregon Consumer Law Center and Payton Dann in Chicago Illinois

In Ohio http://www.dannlaw.com

In Illinois http://www.paytondann.com

In Oregon http://www.oregonconsumerlawcenter.com

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