If a borrower meets all terms of a trial modification and the lender does not provide notice of failure to qualify, must the lender grant the modification?

Facts: A distressed borrower applied for a loan modification under the Home Affordable Modification Program (HAMP). The lender prepared a trial period plan (TPP) stating the borrower will receive a permanent modification if they make trial modification payments and submit qualifying documents or otherwise be notified. The borrower made trial modification payments and submitted all required documentation to confirm eligibility for a permanent modification. The lender did not offer the borrower a permanent modification and did not notify the borrower of their failure to qualify.

Claim:  The borrower sought to compel the lender to grant a permanent modification, claiming the lender accepted their trial payments and documents and never gave notification of the borrower’s failure to qualify for a permanent HAMP modification as required by the TPP.

Counter claim:  The lender claimed it was not required to grant a permanent modification since the TPP was not a contract obligating the lender to provide a permanent modification or notice of ineligibility.

Holding: The Ninth Circuit Court of Appeals held the lender was required to grant a permanent modification as the borrower met all of the terms of the TPP and was not notified by the lender that a permanent modification was not granted. [Corvello v. Wells Fargo Bank (9^th Cir. 2013) 728 F3d 878]