Promising a loan modification and failing to deliver, after pocketing trial mod payments, isn’t fair, said the 9th Circuit in Oskoui.
And if it isn’t fair, it can be actionable under California’s Unfair Competition Law (B&P 17200). Not to mention constituting a breach of contract.
Thus, there do seem to be some limits on the shenanigans a lender or mortgage servicer can engage in with impunity.
Just the facts
Ms. Oskoui was a 68 year old single registered nurse. She refinanced her house in 2007 with Washington Mutual, acquired after its collapse by J.P. Morgan Chase.
When she missed a payment in 2008, Chase sent her a letter proposing trial loan modification payments. If she made the payments, she would be sent a permanent loan modification for signature.
She made the payments and the bank didn’t send the loan mod. And it didn’t tell her that she was ineligible for a HAMP modification and had been ineligible since the beginning, by reason of the size of the loan balance and the debt to income ratios in the program regs.
Instead, Chase sent another “offer” of a modification, conditioned on further trial payments, which Oskoui made, bringing the total of “trial payments” to nearly $34,000 before she was turned down for a modification and served with a foreclosure sale notice.
Amazingly, Chase sent another solicitation for a modification within days of the scheduled foreclosure sale.
Facts are familiar
What happened to Mahin Oskoui sounds just like the lender behavior Bill Purdy outlined in his expose of mortgage lender practices: send conflicting instructions, promise the moon, and blame the borrower.
Hundreds of thousands of homeowners have lived through this nightmare, and courts have too often given lenders a pass on their behavior or swallowed the line that the borrower failed in some critical task.
As Bill points out, the servicers make it almost impossible to build a paper trail of what’s happening until it’s too late.
The good news in Oskoui
Good news from the courts for homeowners since the mortgage meltdown has been slow in coming. But it’s coming.
What buoys me is that the 9th Circuit’s decision is grounded in California’s unfair and deceptive practices act. Nearly every state has UDAP laws.
Just as encouraging, the appeals court found that the homeowner had a viable cause of action for breach of contract. And there’s a contract at the heart of every one of this loan modification farces.
To top it off, Ms. Oskoui filed her complaint with the district court pro se.
What’s needed now
Homeowners can’t count on bringing these actions themselves.
Those abused by unfair and deceptive loan modification practices need a corp of attorneys ready to take on these cases.
Ready to enlist?