According to recent California case law, a borrower who complies with a Trial Period Plan (“TPP”) must be offered a permanent loan modification.
In West v. JPMorgan Chase Bank, N.A., 214 Cal. App. 4th 780 (2013) after her home loan went into default the homeowner agreed to a TPP, a form of temporary loan payment reduction under Home Affordable Mortgage Program (“HAMP”). The homeowner complied with the terms of the TPP by making the necessary payments in a timely fashion. After the TPP JPMorgan Chase denied the homeowner a permanent loan modification, and her home was sold two days after JPMorgan informed the homeowner no foreclosure sale was scheduled. This is another case where the bank brought a demurrer after the homeowner filed suit. The trial court granted the demurrer without leave to amend.
The Appellate court reversed the trial courts decision finding that the homeowner had properly plead causes of action for fraud, negligent misrepresentation, breach of written contract, promissory estoppel and unfair competition.
The Court in reaching its decision stated in part, “that when a borrower complies with all the terms of a TPP, and the borrower’s representations remain true and correct, the loan servicer must offer the borrower a permanent loan modification. As a party to a TPP, a borrower may sue the lender or loan servicer for its breach.” (Emphasis Added)
What does this mean for you? If you, as a homeowner, have tried to work with the bank and entered into a TPP and at the end the bank didn’t offer you a loan modification after you made all your payments under the TPP you can go after them per this case.
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