HOMEOWNERS MAY SUE BANKS UNDER HAMP WHEN BANK DENIES PERMANENT LOAN MODIFICATION AFTER HOMEOWNER COMPLIES WITH THE TRIAL PERIOD PLAN
Genevieve West agreed to a trial period plan with JPMorgan Chase Bank after her home loan went into default. TPP was a form of temporary loan payment reduction under the Home Affordable Mortgage Program. West complied with the terms of the TPP and timely made every payment during the trial period and afterwards. Regardless Chase denied her a permanent loan modification via a letter dated April 5, 2010. West requested a re-evaluation, and on or about May 24, in a conference call with Chase, the bank promised her that she could resubmit her updated financial data for re-evaluation. Chase also assured her that there was no foreclosure date or sale scheduled. However, Chase sold her home at a trustee’s sale two days later. West then sued Chase for breach of contract, and other causes of action. Chase filed a demurrer with the trial court sustained without leave to amend. West appealed.
The 4th District Court of Appeal said reversed in part. The Appellate court reversed and allowed her to go forward to sue JPMorgan Chase Bank for (1) fraud; (2) negligent misrepresentation; (3) breach of written contract; (4) promissory estoppel; and unfair competition. Under the United States Dept. of Treasury, HAMP Supplemental Directive 09-01, if a lender approves a TPP, the borrower complies with all of the terms of the TPP, and all of the borrower’s representations remain true and correct, the lender must offer a permanent loan modification.
As a party to a TPP, a borrower may sue the lender or loan servicer for its breach. Here Chase approved West for a TPP, which West dutifully complied with. Consequently, Chase was required to offer West a permanent loan modification under HAMP and its failure to do so constituted a breach of their written contract. Accordingly, West properly pleaded a breach of written contract claim, and the trial court erred in dismissing her claim without leave to amend. (West v. JPMorgan Chase Bank N.A., California Courts of Appeal, 4th District, No. G046516, March 18, 2013; 2012 DJDAR 3471.)
Under these circumstances, if she can prove it and get a good trial lawyer, I would love to see the amount of punitive damages awarded against the bank if she wins. Remember, read the contract, word for word. Then when entering into agreements for modifications and Trial Payment Plans make sure you comply and read HAMP Supplemental Directive 09-01 very, very carefully for compliance and citation in any correspondence after the plan is completed successfully so you can cite to it! I would also represent to you Ms. West represented herself on appeal without an attorney arguing for her. It is more likely than not though, she had an attorney prepare the appeal.
CALIFORNIA LOAN OFFICER PLEADS GUILTY TO
On March 18, Reginald Dodson Sr. pleaded guilty to mail fraud charges in connection with a mortgage fraud operation. Dodson was a loan officer in a scheme to squeeze large kickbacks from unknowing financial institutions, federal prosecutors say. Prosecutors say the main conspirator, Buena Marshall recruited unqualified buyer Temika Reed to act as the person purchasing seven properties. Marshall acted as the agent on some of the properties. Another woman, Deborah Loudermilk, was the agent on two of the sales. Dodson, a loan officer for W.B. Financial, helped get three of the properties financed. The seven properties identified in the scheme were sold at inflated prices, and in most cases using 100% financing, prosecutors said. Marshall and Loudermilk allegedly structured the deals to provide large kickbacks in a cash-back-to-buyer scheme. If convicted, the defendants face a maximum statutory penalty of 20 years in prison, a $250,000 fine and a three-year term of supervised release. (modbee32213)
I bet you have all noticed the increase in California criminal prosecutions for mortgage fraud.
CALIFORNIA WOMAN CONVICTED OF MORTGAGE AND BANKRUPTCY FRAUD
On March 19, a federal jury convicted Myra Holmes of one count of bankruptcy fraud, one count of bank fraud, and three counts of making a false statement to a bank. The guilty verdict followed a three-week trial before U.S. District Court Judge Edward J. Davila. The jury acquitted Holmes on two other false statement counts.
Holmes enriched herself by knowingly receiving from her father his half-interest in a Vallejo residence in which she lived. Holmes knew at the time she received this property that her father had previously declared bankruptcy and that, as a result, his half-interest in the Vallejo property now belonged to his Chapter 7 bankruptcy estate. Holmes took this half-interest in the Vallejo property without paying anything to the bankruptcy estate and also without notifying or obtaining the permission of the United States Bankruptcy Court or the bankruptcy trustee.
After Holmes received her father’s half-interest in the Vallejo property, she drained the equity from the property through a fraudulent refinancing mortgage loan application. The jury found that Holmes falsely told World Savings Bank in her refinancing mortgage applications: (1) that she earned $15,000 a month; (2) that she had a bank account balance of $15,000; and (3) that she was not a party to a lawsuit. Evidence at trial showed that Holmes knew at the time she filed her refinancing mortgage applications that she was overstating her monthly income and account balance and also knew that the bankruptcy trustee had recently filed a lawsuit against her seeking to recover the bankruptcy estate’s half-interest in the Vallejo property.