Wednesday, March 27, 2013

National Mortgage News - Bank Can Be Sued in HAMP Dispute - Compliance Matters Article

National Mortgage News - Bank Can Be Sued in HAMP Dispute - Compliance Matters Article

Compliance Matters

Bank Can Be Sued in HAMP Dispute

MAR 25, 2013 2:57pm ET


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. 


  1. Attorney of West v Chase Appeal Richard Rydstrom:

    West v JP Morgan Chase Appeal Quotes of Law

    West v Chase, some quotes from the Appellate Court:

    “We hold that West stated causes of action for fraud, negligent misrepresentation, breach of written contract, promissory estoppel, and unfair competition, and therefore reverse the judgment on those causes of action.”

    “In holding that West stated a cause of action for breach of written contract, we agree with the analysis and interpretation of HAMP presented in the recent opinion of the United States Court of Appeals for the Seventh Circuit in Wigod v. Wells Fargo Bank, N.A. (7th Cir. 2012) 673 F.3d 547, 556‑557 (Wigod). Core to our decision is the court’s conclusion in Wigod, supra, 673 F.3d at page 557, 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. (Id. at p. 559, fn. 4.) Because West complied with all the terms of the TPP, Chase Bank had to offer her a permanent loan modification.” (Emphasis Added)

    “The SPAs stated that servicers ‘shall perform the loan modification . . . described in . . . the Program guidelines and procedures issued by the Treasury . . . and . . . any supplemental documentation, instructions, bulletins, letters, directives, or other communications . . . issued by the Treasury.’”

    “Also on May 24, West made her 10th reduced payment of $1,931.86, which Chase Bank rejected and returned to her.

    “Although Chase Bank had told West no foreclosure sale had been scheduled, her home was sold at a trustee’s sale conducted on May 26, 2010. “In violation of its promises and said letter, and HAMP rules (and Supplemental Directives), two (2) days later, CHASE BANK secretly, sold [West]’s home, on May 26,[]2010 during the re‑evaluation period. CHASE BANK issued letters dated May[]20, 2010, received May 24, 2010, rejecting [West]’s 10th payment . . . , made pursuant to the continuing forbearance agreement.”

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  3. Rydstrom Law HAMP Lawsuits
    West v. Chase