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. The borrower successfully made all TPP payments and submitted the required documents but the lender denied the borrower a permanent loan modification and the home was later sold at a trustee’s sale.
Claim: The borrower sought to void the trustee’s sale and regain possession, claiming the bank was obligated under HAMP to offer a permanent loan modification when the borrower successfully complied with the terms of the TPP.
Counterclaim: The lender sought to validate the trustee’s sale, claiming it complied with HAMP since it was only obligated to reevaluate the borrower’s eligibility for a permanent modification when the borrower successfully completed the TPP.
Holding: A California Court of Appeals held the trustee’s sale is void since the bank was obligated under HAMP to offer a permanent loan modification when the borrower successfully fulfilled the terms of the TPP. [West v. JPMorgan (2013) __ CA4th__]
Related articles:
Automatic loan modifications begin. Will mods nibble at negative equity’s heel?
