• DYE CULIK PC | Consumer Protection Division

Boston Federal Court Rules Loan Modification Delays and Misrepresentations Violate Consumer Protecti


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The unfair acts allegedly committed by SLS were a laundry list of homeowners’ common complaints about the loan-modification process: refusing to review an application; charging interest and late fees; claiming documents had not been submitted; requiring resubmission of the same documents over and over; denying her application on false pretenses; and ultimately initiating foreclosure.

When the homeowner sent a demand letter to SLS pursuant to the Massachusetts Consumer Protection Act, Chapter 93A (which requires businesses to make a reasonable settlement offer within 30 days), SLS failed to respond even though she made “repeated requests” that it do so.

Then SLS filed a motion to dismiss the case, arguing that its actions were legal and did not violate Chapter 93A.

Denying the motion to dismiss and finding in favor of the homeowner, the judge wrote that although not all technical violations and clerical errors violate Chapter 93A, it does violate Chapter 93A where there is “a pattern or course of conduct involving misrepresentations, delay, and evasiveness in evaluating a HAMP application.”

The lesson from this case is that not all violations of HAMP guidelines rise to the level of being illegal. But, as many homeowners who have struggled with loan modifications know, there is often a back-and-forth with one’s mortgage company that rises to the level of “repeated delay, evasion, and misrepresentation” such as what the court mentioned here.

The decision is available here: Hanrahan v. Specialized Loan Servicing.

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