Denial to Approval

Loan Modification Problem

The mortgage company filed a foreclosure lawsuit against our client after she fell on hard times.  She asked the mortgage company for help.  It told her she could apply for a home loan modification.  The mortgage company sent contradictory information about the status of the loan modification application.  Ultimately, it offered to modify her mortgage if she signed final modification documents within a set time period.  Our client experienced the sudden death of her brother and had to reschedule the appointment to sign the final modification documents.  She was still within the timeframe to complete the modification process.  However, the mortgage company withdrew the modification offer and went forward with a sheriff’s sale of our client’s home.  The mortgage company bought the home at the sale

Challenge

To unwind the sheriff sale and keep our client and her family in their home.  Also, to hold the mortgage company accountable for its errors in handling the loan modification application and making false and misleading representations to our client. 

Solution

We filed a federal lawsuit against the mortgage company for violations of the loan modification process and fair debt practices.  We argued  that federal law prohibited the mortgage company from withdrawing the loan modification offer and moving forward with the sheriff’s sale.  We also argued the mortgage company violated federal law in its over handling of the loan modification application. 

Results

After filing the federal lawsuit, the mortgage company vacated the sheriff’s sale and offered our client a new loan modification.  Our client was able to stay in her home! However, the lawsuit did not end there.  The judge agreed with our arguments and found the mortgage company violated federal law by (1) failing to exercise reasonable diligence in reviewing the loan modification application, (2) going forward with the foreclosure sale, (3) not providing proper notices regarding the status of the application, (4) not providing sufficient time to accept the final modification, and (5) making false and misleading statements in connection with the collection of a debt.  The judge found this entitled our client to an award of damages.    

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