Facts: A property owner obtains an adjustable rate mortgage (ARM). When the monthly payment increases, the owner enters into a permanent mortgage modification agreement with the mortgage holder, increasing the mortgage balance but reducing the monthly payments. The owner makes a payment under the new agreement and the mortgage holder issues a statement stating it will no longer honor the agreement. The mortgage holder provides several revised agreements increasing the balance of the mortgage and entices the owner to send additional payments under assurance the mortgage holder will provide permanent modification terms. The owner ignores the revised agreements and continues making payments under the initial modification agreement. The mortgage holder serves the owner with notices of default and trustee’s sale and forecloses on the property.

Claim: The owner seeks money losses from the mortgage holder, claiming the mortgage holder wrongfully foreclosed since it misrepresented the initial and subsequent mortgage modification agreements.

Counterclaim: The mortgage holder claims it did not wrongfully foreclose since each revised mortgage modification agreement pertained to future performances which the owner ignored, thus, the foreclosure sale was valid.

Holding: A California court of appeals holds the owner is entitled to money losses since the mortgage holder reneged the terms of its initial mortgage modification agreement and failed to provide the promised changes to subsequent agreements, thus misrepresenting the agreements and wrongfully foreclosing the property. [Miles v. Deutsche Bank National Trust Company (2015) CA 4th G050294]


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