Court Sides With Borrowers On Loan Mods

In a decision last Thursday, the Federal 9th Circuit Court of Appeals took the side of borrowers denied a permanent loan mod by their bank. The court said that even if the rejection by the bank was after a trial mod had been completed, the borrowers have the right to sue the bank for denying the permanent mod. It DOES NOT say the bank must agree to the permanent mod, just that the denied homeowner may then sue if it feels it has been wronged by the denial of the permanent mod. However, the court reversed the trial court on the issue, and giving an idea of how it felt about the merits of the case, noted that once the borrower had provided all required documents and paid all of its fees, the bank was contractually obligated to provide the permanent mod. The ruling came in two similar cases combined for appellate purposes: Corvello v. Wells Fargo Bank, NA and Lucia v. Wells Fargo Bank, NA. So, if you're having problems with your lender over a permanent mod, and the lender has previously provided a temporary mod and collected fees from you for it, you may want to have a conversation with your attorney and consider litigating the issue.